Tuesday, 19 March 2024

TUESDAY, 19 MARCH 2024

TUESDAY, 19 MARCH 2024

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

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

Obituaries

Rt Hon Jonathan Lucas Hunt ONZ

SPEAKER: Members, I regret to inform the House of the death, on 8 March 2024, of the Rt Hon Jonathan Lucas Hunt ONZ, who represented the electorate of New Lynn from 1966 to 1993 and continued to serve as a list member until 2005. He was the Speaker of the House of Representatives from 1999 until 2005. Before becoming Speaker, he held several ministerial portfolios, including Minister of Broadcasting, Postmaster-General, Minister of Tourism, and Minister of Communications. I desire, on behalf of this House, to express our sense of loss to his family along with our sympathy as they deal with the death of the late former member. I now ask members to stand with me to observe a period of silence as a mark of respect for his memory.

Members stood as a mark of respect.

Visitors

Cook Islands—Cook Islands Parliament

SPEAKER: I’m sure that members would wish to welcome the Hon Tingika Elikana, Chairperson of the Cook Islands Parliament Public Accounts Committee, and his accompanying delegation, who are present here in the gallery today.

Motions

Dame Kiri Te Kanawa—80th Birthday

SPEAKER: We come now to a very special occasion for Parliament. In accordance with a determination of the Business Committee, I call on the Hon Paul Goldsmith to move a motion without notice.

Hon PAUL GOLDSMITH (Minister for Arts, Culture and Heritage): Thank you, Mr Speaker. I move, That this House recognise the achievements and career of Dame Kiri Te Kanawa and congratulate her as she celebrates her 80th birthday.

Very few New Zealanders attain global pre-eminence in their field; even fewer hold on to that pre-eminence for decades. Dame Kiri Te Kanawa was one such Kiwi. Her 80th birthday provides an opportunity for us to acknowledge her talent and her distinguished career. This House is a place of debate and confrontation, as well as cooperation, but it should also be a place where, from time to time, we pause to reflect on the great deeds of some of our fellow New Zealanders.

Kiri began her journey in Gisborne, then travelled with her adopted family to Auckland to learn her craft from Sister Mary Leo. In 1971, she made her Covent Garden debut as the Countess in Mozart’s Marriage of Figaro. From there, she ascended to the highest levels of international opera, thrilling audiences and reviewers alike. One wrote, “She makes hideously difficult music sound easy as pie.” When Charles and Diana married in 1981, before a global audience of 600 million, the royal family turned to Kiri Te Kanawa to sing Handel’s Let the bright Seraphim—the seraphim is a form of angel, Willie. I remember watching the wedding in the middle of the night and feeling the feeling of pride that came with seeing a Kiwi at the heart of such an event.

Honours have been heaped on her, including the Order of New Zealand and the Order of Australia. As well as thrilling audiences, she’s inspired many fellow New Zealanders to reach for the stars. She inspires, but she also helps. Twenty years ago, her Kiri Te Kanawa Foundation, as King Charles noticed, was established and has helped more than 40 singers succeed globally as well. Dame Kiri Te Kanawa, we honour you today.

Hon WILLIE JACKSON (Labour): Mihi ki a koe e te whaea, tae mai nei whakarangatira i a mātou i tēnei wā, haere mai, haere mai, haere mai.

[Warm convivial greetings to you, madam. It is an honour to have you here with us today. Welcome, welcome, welcome.]

I rise to salute and celebrate the 80th birthday of Dame Kiri Te Kanawa, on behalf of the Labour Party and particularly our Labour Māori caucus. And I emphasise “Māori” because Dame Kiri is probably the most famous Māori performer of the last two generations. She comes, of course, from two very humble tribes: the first humble one, Ngāti Maniapoto, and then the even more humble tribe of Ngati Porou, which, coincidentally, happens to be my iwi also, which, I think, makes us relations. But we do want to wish her happy birthday and, of course, thank her for her significant contribution to music and the fine arts as one of the great world sopranos.

We know, of course, of her beautiful renditions of great composers such as Puccini, Mozart, and Strauss, but it is in the Māori language area that I really want to thank her. Her Māori language album in 1999 and her 2014 album Waiata really elevated te reo Māori to the world stage. Beautiful songs like “Karu Karu”, “Pōkarekare Ana”, and “Tarakihi” are now absolutely huge hits around the world. So we thank her; we thank her for her contribution to our Māori language. And I was reminded by the Māori caucus that we’ve lost a few seats and we have an available spot in the North at the moment, Dame Kiri! So feel free to get in touch with me if you feel the need to join politics.

Tēnei te mihi ki a koe e te whāea, mihi nui ki a koe mō tō tautoko i tō tātou reo. E te māreikura, ko tēnei te mihi maioha ki a koe, ko koe tētahi o ngā tauira mana wahine i te ao Māori i te ao whānui. Kia ora tātou.

[This is a warm greeting to you, madam, and a thankyou also for supporting our language. Dear madam, this is a warm convivial greeting to you. You are a true reflection of Māori woman for the Māori people and everyone else as well. Cheers, everyone.]

Hon MARAMA DAVIDSON (Co-Leader—Green): E te Māngai, tēnā koe. E te māreikura, tēnei te mihi haritau ki a koe e te whāea, e te kuia. Nei rā taku hōnore te mihi ki a koe i tō huritau me ngā piki me ngā heke o tō haerenga, tēnā koe, tēnā koutou.

[Dear friend, happy birthday to you, dear matriarch, dear esteemed one. It is my honour to acknowledge you on your special born day and the trials and tribulations of your journey. Greetings to you.]

It was indeed my honour today to want to speak and put my hand up to be able to honour Dame Kiri Te Kanawa, who I’m not sure will remember, but back in, I think, the mid to late 1980s—my father is Rawiri Paratene. He directed and toured with you for a documentary that was made at the time, and I toured with him. I was on that road trip, which I believe might have started at Te Poho-o-Rawiri Marae, in Tūranga-nui. I think we travelled around Ūawa, Hauiti. We spoke to the Kerekere whānau, the Te Kani whānau, Bob Mahuika. In that documentary, Dame Kiri Te Kanawa was also spreading waiata Māori in among the different captions and the different parts of that documentary.

I was a young girl, and I was very, very pleased today—I don’t think that I have had the chance to see you up close since those decades ago. It was one of the proudest moments for my father to be able to be involved with touring with you. We got to see a part of the countryside that we hadn’t seen before in many of the times.

I remember that we also went through the sort of Waitomo Caves area, and one of the biggest memories of that whole trip was, I remember, us also staying on Lake Taupō for some of your visit, and the interviews that we were doing. I remember us being able to fit in a trip to Waitomo Caves while we were in these areas.

I just remember the grace. I was a young girl who wasn’t fully steeped in the land of opera, but what I do remember is the grace with which Dame Kiri held what seemed to me like the privilege of returning home and being with whānau on marae. I remember the stays on the various marae, and the whānau being really clear that they wanted to source some caravans for you to also have some space, and we really wanted to honour that. But I just remember your grace and your wanting to be a part of all of these connections back to tūrangawaewae and whakapapa and whānau at the time.

My father will be so pleased to know that I have been able to raise that on the floor today, to congratulate you on your incredible international and decades of longstanding fame because of your unique talent and ability—fancy having one of our own wahine Māori right at the top of international and longstanding acknowledgment of talent in opera in the singing space. So it really is my pleasure. Thank you, Mr Speaker. Hari huritau [Happy birthday], Dame Kiri Te Kanawa.

Hon DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. On behalf of ACT, I’d like to join with other party leaders in offering congratulations and respect and aroha to you, Dame Kiri, at the time of your 80th birthday and for your magnificent career.

I think it’s fair to say, as Paul Goldsmith has said, that Kiwis love it when one of us stands on top of the world, a pre-eminent for such a long period of time, but also, the fact that you did it at a time when most of us were best known for rugby, racing, and beer, showed the world and ourselves that we could be something different, that we could be at the top of the world in opera. I think it helped New Zealanders find out who we are in the world and not just stand proudly but stand in a different way. And for so many New Zealanders who stand differently in many respects of their life, I suspect that what you did was a revelation.

Other members have shared stories and anecdotes of their connection to you throughout their lives. I was unfortunate to have to wait until just this afternoon to meet you, but it was well worth it. And I hear stories about your very accurate shooting of pheasants with none other than the Queen. Now, you know, the Labour Party have offered you a membership, but could I just suggest that maybe they’re not the right party for you after all. And besides, I hate to think what they’d tax you!

Dame Kiri, you are a true gem and a treasure for our nation. We’re so honoured to have you here in our Parliament today. When we hear that soaring note—which I promise I will not repeat—at the end of the first line of “Pōkarekare Ana”, the hairs on the back of our necks stand up because it reminds us of who we are and the best of all New Zealand. Happy birthday and thank you.

JENNY MARCROFT (NZ First): Thank you, Mr Speaker. I begin my contribution on behalf of my leader, the Rt Hon Winston Peters, and the New Zealand First caucus in joining the House in celebrating Dame Kiri Te Kanawa’s 80th birthday, acknowledging you here today. We are blessed to have you amongst us.

I begin with this whakataukī, Ko te pae tawhiti whāia kia tata, ko te pae tata whakamaua kia tina—seek out distant horizons and cherish those you attain. Today, as we celebrate your birthday, of the legendary New Zealand soprano who has made a remarkable rise to global fame, and started with your very first public appearance at the age of six years old on Gisborne’s radio station—boy, the careers that radio has launched! You sang an 1892 ditty called “Daisy Bell”. I don’t think anyone knows it, but once I say these lyrics, I’m sure many of us know the song:

Daisy, Daisy

Give me your answer do

I’m half crazy

All for the love of you

You also went on, in terms of music and your career, receiving New Zealand’s first ever gold disc for music sales—what an achievement.

Others in this House have acknowledged those incredible tohu, those attainments you achieved in your career, but one, for me, really stands out. This is my most favourite period drama ever created for television: Downton Abbey. You performed in that just so beautifully, playing the Australian soprano Dame Nellie Melba, so I think it’s appropriate that we also acknowledge your film and stage performances alike. Not only that, you had all the cast and crew in tears throughout your practices for that show. That’s the power of your voice, to bring people to an emotional place in themselves. Not only that, you had two little dogs that you took on set, and then your third little dog was named Abbey once she was born, after Downton Abbey.

Kiri Te Kanawa, you have enjoyed one of the longest careers in operatic history—we acknowledge you for that—but you continue to make a difference by nurturing new talent, dedicating your time to training and the next generation of singers. As one of the world’s greatest opera singers, the iconic New Zealander of the Year in 2012, you never forgot where you came from. As a Māori opera singer, you brought a piece of New Zealand to the world in a vehicle that wasn’t Māori. We congratulate you for that.

So, to conclude, I’ll finish with a whakataukī from a beautiful book titled Mauri Ora: Wisdom from the Māori World, “Tohaina ō pāinga ki te ao”—share your gifts with the world. Those gifts we receive, and the impact that these gifts can have on the world, are amplified when we share them, when we share our knowledge with a new generation. So, today, in this House of Parliament, we celebrate our Dame, our Kahurangi, on her 80th birthday.

MARIAMENO KAPA-KINGI (Te Pāti Māori—Te Tai Tokerau): Tēnā koe. Waimarie ana au ki te tū ki te mihi atu ki tēnei tōku nei rangatira, e Kiri tēnā koe, e te Speaker tēnā koutou katoa. Tēnā koe e Kiri i tēnei rā whakanui i a koe kua eke ki te 80 tau. E te kura wahine o Ngāti Maniapoto and Willie’s crew, tēnā koutou.

[I am honoured to stand before you and acknowledge our esteemed leader, Kiri. Greetings to you, dear Speaker, and everyone present. Greetings to you all. Acknowledgments to you, Kiri, on this special day of yours turning 80. Dear madam of Ngāti Maniapoto and of Willie’s crew, warm convivial greetings.]

A woman of many accolades that, of course, would not fit into this brief address to the House. Heoi anō, what I can and do admire the most is your significant and sustained effort to foster the talent of the younger generations, particularly through the Kiri Te Kanawa Foundation. You’ve inspired, as well as helped, young Māori invoke the ancestral magic that lies in their whakapapa, and provided the platform to expose that to the world. That is mana tuku iho [handed down], and that is also what we stand for as Te Pāti Māori: creating a mokopuna-centric world, where we can be whole, as opposed to lesser than. Of course, we need look no further than our darling of Te Tai Tokerau Kawiti Waetford, who will be gracing us shortly with his Māori magic. Nāu ia i ako i poipoi nō reira tēnā koe, hari rā whānau, e Kiri, tēnā koutou katoa.

[You nurtured and mentored him, and so thank you. Happy birthday, Kiri. Thank you, everyone.]

SPEAKER: The question is, That this House recognise the achievements and career of Dame Kiri Te Kanawa and congratulate her as she celebrates her 80th birthday.

Motion agreed to.

Waiata—“Pōkarekare Ana”

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

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

SPEAKER: Petitions have been presented to the Clerk for presentation.

CLERK:

Petition of Louise Bint requesting that the House make available low-interest loans or force mortgagors to reduce interest rates for property owners displaced due to the North Island weather events

petition of Brian Webb requesting that the House pass legislation to allow all those on benefits to earn an amount equivalent to eight hours at the minimum wage a week before any deductions to their benefit and to reduce reduction rates

petition of Focus on Iran requesting that the House urge the Government to consider and take appropriate action to expel the Iranian ambassador.

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

CLERK:

Government responses to the report of the Foreign Affairs, Defence and Trade Committee on its inquiry into illegal, unregulated, and unreported fishing

report of the Justice Committee on its inquiry into the 2022 local elections

report of the Primary Production Committee on its inquiry into the future of workforce needs in primary industries in New Zealand

report of the Regulations Review Committee on its inquiry into bylaws

2023-24 statement of performance expectations for Te Taura Whiri i te Reo Māori

Reserve Bank of New Zealand Monetary Policy Statement.

SPEAKER: Those papers are published under the authority of the House. Select committee reports have been delivered for presentation.

CLERK:

Report of the Finance and Expenditure Committee on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill

reports of the Foreign Affairs, Defence and Trade Committee on the

2022-23 annual review of the Ministry of Defence and the New Zealand Defence Force

European Union Free Trade Agreement Legislation Amendment Bill

report of the Health Committee on the Misuse of Drugs (Pseudoephedrine) Amendment Bill

reports of the Justice Committee on the

2022-23 annual reviews of the Criminal Cases Review Commission, Crown Law, and Electoral Commission; Executive Board for the Elimination of Family Violence and Sexual Violence, HRC, and IPCA; Judicial Conduct Commissioner, Law Commission, and Parliamentary Counsel Office; Privacy Commissioner and Serious Fraud Office

Electoral (Lowering Voting Age for Local Elections and Polls) Legislation Bill

report of the Transport and Infrastructure Committee on the Road User Charges (Light Electric RUC Vehicles) Amendment Bill.

SPEAKER: The bills are set down for second reading. No bills have been introduced.

Oral Questions

Questions to Ministers

Question No. 1—Prime Minister

1. Rt Hon CHRIS HIPKINS (Leader of the Opposition) to the Prime Minister: Does he stand by all his Government’s statements and actions?

Rt Hon CHRISTOPHER LUXON (Prime Minister): Absolutely, and including yesterday’s announcement that this Government will finally hold Kāinga Ora (KO) tenants who are threatening, abusive, and violent towards their neighbours to account for their actions. Our Government believes in rights and responsibilities, so if you contribute to a culture of intimidation and abuse, it’s time to change your behaviour, and if you don’t, you may not keep your taxpayer-funded State house. There are just far too many families on the wait-list who would respect that property and respect their neighbours to just privilege those current KO tenants who wage a war of abuse in the community. It’s not right, and I agree with the member when he said that after six years in Government, he didn’t do enough to crack down on unruly tenants. Well, the good news is enough is enough. This Government was elected to change, and we’re going to do exactly that.

Rt Hon Chris Hipkins: Is the Deputy Prime Minister correct that the Government has a $5.6 billion Budget shortfall and that there is “a huge gap” in its pre-election costings?

Rt Hon CHRISTOPHER LUXON: Well, I can tell you I’m not going to take any lectures from that member about economic management. That was a Government that was characterised by spending more, taxing more, borrowing more, and we heard from the new finance spokesperson they want to continue to do more of it.

Rt Hon Chris Hipkins: Point of order, Mr Speaker. It was a very straightforward question as to whether a statement by the current Deputy Prime Minister was correct. It had nothing to do with the previous Government at all.

SPEAKER: Yes, that’s true. It could’ve been answered with one word and then perhaps some elaboration. The Prime Minister might like to have another go at that.

Rt Hon CHRISTOPHER LUXON: Well, we’ve inherited a struggling economy from the previous Government’s economic mismanagement, and we’ve got some big fiscal challenges ahead of us, but we’re the Government that’s going to fix it. We’ll do it; that’s what we always do, and we’re going to clean up after your last Government.

Rt Hon Chris Hipkins: Is the IRD correct that his Government’s proposed tax on offshore online casino operators will raise $155 million over four years, or are the “rock-solid” costings that he and Nicola Willis produced correct, suggesting the change will bring $716 million of revenue over the same period—a difference of over $500 million?

Rt Hon CHRISTOPHER LUXON: What I can reassure the member about is that this is a Government that’s going to give tax relief to working New Zealanders, low and middle income workers who actually deserve a tax break after 14 years of not getting one, particularly from that previous Government. That’s what we’re going to deliver for them.

Rt Hon Chris Hipkins: Which numbers are correct: his rock-solid estimate of the savings that his cuts to benefit adjustments will make, or the latest official advice that they’ll save $1.3 billion less than he promised before the election?

Rt Hon CHRISTOPHER LUXON: Well, I can tell the member the numbers that we’re not going to be doing. We’re not going to increase Government spending by 84 percent. We’re not going to hire 16,000 more public servants. We’re not going to increase Government debt from $5 billion to $100 billion and actually have nothing to show for it. We’re a Government that’s going to fix this economy, we’re going to grow the economy, give people tax relief, and ensure there’s a culture of fiscal discipline.

Rt Hon Chris Hipkins: Well, which numbers are correct: his rock-solid pre-election estimate of the cost of tax cuts for landlords or the latest official advice that they will cost $800 million more than he promised before the election?

Rt Hon CHRISTOPHER LUXON: I think what’s great is we care about renters, a group that the Labour Party used to care about a lot. Actually, we’re increasing the supply of rental properties, we’re lowering costs that have just been passed through to renters—because under that Government, average rents went up $170 a week. That’s not going to happen under our Government. We want downward pressure on rents, not upward pressure.

Rt Hon Chris Hipkins: Why did he claim on 11 March that he hadn’t seen the advice that his Government’s tax cuts for landlords had blown out by $800 million, given his finance Minister had already publicly confirmed that that was the case, or has he just given up on trying to keep track of all of his Government’s Budget blowouts?

Rt Hon CHRISTOPHER LUXON: I’ll tell you who I haven’t given up on, and it’s the renters of New Zealand. Under that Government, average rents went up $170 a week. Well, I’m sorry, we’re here to fix things. We’re here to get the country turned around. We’re going to get things done, and we’re going to make sure that there’s more rental property available. We don’t just load up landlords with costs that pass on to renters that lead to higher rents. We want lower rents, downward pressure on rents.

Rt Hon Chris Hipkins: Will tenants get $800 million worth of rent reductions as a result of this policy?

Rt Hon CHRISTOPHER LUXON: What we will be doing is increasing the supply of rental property and putting downward pressure on rent, as he has received in formal advice before in Government. That’s why his policies didn’t work. They ended up increasing average rents—that’s not acceptable. We’re on the side of renters in New Zealand.

Rt Hon Chris Hipkins: Point of order, Mr Speaker. I accept the Prime Minister hasn’t answered any of my questions thus far, but that was a relatively simple and straightforward question about an $800 million policy which he claims is going to lower rents. I’ve asked whether it will result in $800 million worth of rent reductions.

SPEAKER: Well, as I said just recently in Parliament, it’s a good idea if people refer to the point of order or the matter of order they’re referring to. Given your opening statement there, I think you probably closed off some opportunities. But can I just say that no member has the right to expect a yes or no answer, and the final line of that line of questioning really did invite the response that the member got.

Rt Hon Chris Hipkins: Does he agree with Christopher Luxon, “I can tell you in the National Party we understand the economy and we are rock solid in our numbers.”, given his tax promises were $800 million out on interest deductibility, more than $500 million out on gambling, and $1.3 billion out on benefit indexation?

Rt Hon CHRISTOPHER LUXON: Well, look, I can tell you it is ironic that you are trying to lecture me on economics after six years of being in Government, of actually causing huge damage to our books, having had economic mismanagement and vandalism on a scale we’ve never seen before, an 84 percent increase in Government spending. You drove up domestic inflation, you drove up interest rates, the last three quarters of the last year’s economic growth went down, and you’ve got rising unemployment. So I don’t take lectures from you on anything to do with economics, thank you very much.

SPEAKER: I just point out that it wasn’t me lecturing the Prime Minister of any of those things.

Hon David Seymour: Can the Prime Minister confirm that the fiscal impact of the mortgage interest deductibility changes is greater than the estimate of one party and closer to the estimate of another party in the coalition, because this Government is actually a coalition of three partners working together for a better New Zealand, and does he have any advice for the guy on the other side who has no friends?

Rt Hon CHRISTOPHER LUXON: I’m very proud of the way that the three parties in this coalition Government are working to actually get things done for New Zealanders.

Question No. 2—Finance

2. STUART SMITH (National—Kaikōura) to the Minister of Finance: By how much has Government debt increased in recent years?

Hon NICOLA WILLIS (Minister of Finance): In 2008, net core Crown debt—a measure which includes Government financial assets as well as financial liabilities—was 5 percent of GDP. Despite the global financial crisis (GFC), both the Key-English Government and the following Labour Government, at least initially, had a goal of keeping net debt to 20 percent of GDP or below. In 2019, it was 19 percent. What is it now? Net core Crown debt, according to the latest forecasts—[Interruption] Members opposite laugh, but I think most New Zealanders would be interested in this grave number. They don’t think it’s very laughable—

Rt Hon Chris Hipkins: Point of order, Mr Speaker. Previous Speakers have ruled very clearly that Ministers can’t ask themselves questions, and they particularly can’t ask themselves questions when they’re in the process of answering one.

SPEAKER: That’s quite true, but I think, in this case, the question that was asked was being paraphrased. I’m taking a generous view on that. We will have the answer with the appropriate brevity.

Hon NICOLA WILLIS: Net core Crown debt, according to the latest forecasts, is now 44 percent of GDP—44 percent—a considerable increase in only five years. To put it in perspective, members, 44 percent of GDP is the highest that net debt has been as a proportion of the overall economy in 30 years, comparable only with the period from the late 1980s to the mid-1990s.

Stuart Smith: What has caused debt to increase so quickly?

Hon NICOLA WILLIS: Well, COVID-19 was a big reason that net core Crown debt increased so quickly, but Government spending outside of COVID has also increased significantly, with Treasury advising me that the previous Government left us with a structural operating deficit of around 2 percent of GDP. The result is that net core Crown debt increased from around $59 billion in 2017 to $183 billion this year, an increase of more than $100 billion in six short years.

Stuart Smith: Has she seen any other explanations for the recent increase in debt?

Hon NICOLA WILLIS: Well, yes, I have seen reports that the reason debt increased so much was that the previous Government was making so many high-quality infrastructure investments. In particular, one not exactly impartial observer recently said that increasing debt “has enabled us to invest more in transport, into health and education capital, more into the things we need to underpin the kind of society and economy we want”. I have searched for evidence of such high-quality investment, but amongst the wreckage of light rail, the Auckland harbour cycle bridge—

SPEAKER: That’ll be enough—[Interruption] That’s enough. Can I just remind the member asking the question that you can’t use the question process to attack the Opposition. You can, of course, ask it in a way that is reflective of what conditions Ministers may find themselves in.

Stuart Smith: Should the Government borrow for productive investments?

Hon NICOLA WILLIS: Absolutely. That is one of the reasons the Government should borrow: to fund high-quality investments that provide benefits to New Zealanders over time, including those that increase the productive capacity of the economy. But I would add one important note of caution: economic shocks push up debt quite considerably. We’ve seen this recently with the global financial crisis and with COVID. After a shock, Governments have to either bring debt down again as a percentage of GDP, which necessarily requires constraint, or let debt settle at a higher level. New Zealand has seen public debt ratchet up like this since 2008. I would invite members to engage in a little thought experiment, where we went through the GFC and COVID with a starting point for net debt of 50 percent of GDP rather than 5 percent; so Governments should always be thinking about the next shock that’s around the corner, not just maxing out the credit card today.

Stuart Smith: Has she seen any commentators arguing for higher debt?

Hon NICOLA WILLIS: Well, yes. I have seen a report saying that a future Government would consider taking on more debt, despite New Zealand’s debt being the highest for 30 years, despite us having little to show for it, and despite interest costs rising to $8.8 billion this year. I’m disappointed to hear that coming from a member of this House, Barbara Edmonds.

Hon Barbara Edmonds: Does she agree with the Treasury chief economist who has stated, “Our key point is that current debt levels in New Zealand are well within the range that we would consider prudent.”?

Hon NICOLA WILLIS: I agree that that definition of “prudent” is met. What I question is whether New Zealanders can see $123 billion worth of value generated by that Government for the $123 billion worth of debt that they have saddled this and future generations with.

Question No. 3—Prime Minister

3. CHLÖE SWARBRICK (Co-Leader—Green) to the Prime Minister: Does he stand by his statement, and I quote, “I think everyone agrees that the State must always provide a safety net for New Zealanders who have fallen on hard times … and State houses will … play a very important part of that safety net”?

Rt Hon CHRISTOPHER LUXON (Prime Minister): Absolutely. But, before I begin, can I just congratulate the member on her ascendancy to the leadership of the Green Party, or co-leadership of the Green Party. Absolutely, including those State tenants who have been abused and victimised by their neighbours. Take Cheyne Smith, who’s been a Kāinga Ora (KO) tenant since 2015 and described the actions of some of his neighbouring KO tenants. He said, “I’ve been beaten, the house has been robbed, egged, bottled. Visitors were assaulted, vehicles got stolen. It was a nightmare.” The previous Government and their friends in the Green Party promoted a policy that facilitated a culture of intimidation and abuse, and I’m very proud that our Government is going to deliver change.

Chlöe Swarbrick: Can he guarantee that no children in this country will be made homeless as a result of his Government’s policies?

Rt Hon CHRISTOPHER LUXON: Well, we don’t want to actually see KO tenants being evicted from KO housing, but, actually, the parents are adults and they have a choice to make about whether they want to meet their obligations and their responsibilities. That is the first port of call.

Chlöe Swarbrick: Will he resign if any children are made homeless as a result of his Government’s policies?

Rt Hon CHRISTOPHER LUXON: There are children that are growing up in motels today, that are living on floors of family or friends, or in community housing provider housing, who actually want a shot, and their families want a shot, at being able to get into the State house. The problem today is that there are 24,000 people on a State house wait-list, which went up four or five times under the previous Government. There are neighbours in those KO communities who are getting abused, and I’m sorry, but we’re standing up for those folk and saying to them, “There are rights and responsibilities in this country”.

Chlöe Swarbrick: So is the game plan here that those who are evicted—

SPEAKER: No, stop—stop. Start with a question word.

Chlöe Swarbrick: Is the plan here that those evicted from public housing are made homeless or eventually end up in prison?

Rt Hon CHRISTOPHER LUXON: The plan here is to give people a shot of getting a State house—who deserve a shot at getting a State house and are going to appreciate it and value it, and actually make sure that they can actually get their shot at the Kiwi Dream. That’s what this is about. What this plan is about is making sure that neighbours of KO tenants, who are getting abused and threatened every single day—that stops. It stops.

Chlöe Swarbrick: Does he care at all about the evidence that his Government’s policies will increase homelessness, poverty, and inequality, or is he intent on running this Government on vibes?

Rt Hon CHRISTOPHER LUXON: We are wanting to grow this economy so we can drive more prosperity in this economy and lift wages and incomes for everybody.

Rt Hon Winston Peters: Can I ask the Prime Minister as to whether he’s seen or heard of any policy, either here or anywhere in the world, where a tenant can have absolute contempt for the landlord, whether it be State or whether it be private, and yet be the beneficiary of the largess being suggested by that questioner?

Rt Hon CHRISTOPHER LUXON: The deal’s very simple in New Zealand: you have rights to a State house when you need it, but you also have responsibilities to look after it like it’s your own house. That’s the deal. Because a taxpayer has woken up this morning—a low and middle income worker that the Labour Party used to care about, who’s actually paying their taxes, going to work, giving it to the Government—to actually subsidise the living of some other fellow Kiwi. They need to respect their property; they need to respect and have responsibilities as well as rights.

Hon David Seymour: Is the Prime Minister trying to say that our society needs people to treat each other well and take responsibility for themselves?

Rt Hon CHRISTOPHER LUXON: That is exactly right: our society should be built on the notion of we have rights but we also have responsibilities to each other and to the country.

Question No. 4—Finance

4. Hon BARBARA EDMONDS (Labour—Mana) to the Minister of Finance: Kia orana kātoatoa, Mr Speaker. Does she stand by all her statements and actions?

Hon NICOLA WILLIS (Minister of Finance): Yes, in the context in which they were given. I particularly stand by my commitment to give tax relief to hard-working New Zealanders in the upcoming Budget in May.

Hon Barbara Edmonds: Does she stand by both her statements that she knows a front-line service “when I see it” and that there would be no cuts to front-line public services?

Hon NICOLA WILLIS: Yes.

Hon Barbara Edmonds: Does she see front-line services when she looks at Customs staff, police officers, firefighters, free school lunches, and carers funded through Whaikaha, and, if so, why is her Government cutting the support for these front-line services?

Hon NICOLA WILLIS: Well, what a gift of a question! This is a Government that sees police as front line and is increasing the number of police. This is a Government that wants to continue the school lunch programme that the other Government didn’t leave any budgeted funding for, so we’re prioritising it in our upcoming Budget.

Hon Barbara Edmonds: Does she stand by her statement that she is committed to delivering tax cuts without borrowing a cent?

Hon NICOLA WILLIS: That’s right.

Hon Barbara Edmonds: Does she agree with the Prime Minister when he committed to no new taxes or increasing existing taxes; if so, how does she reconcile that with breaking her promise to axe the app tax, increasing petrol taxes by 22c a litre, and introducing an additional $50 tax on every New Zealanders’ vehicle?

Hon NICOLA WILLIS: I’ll give the member a little instruction on coalition Government, because the Government’s tax and fiscal plans reflect coalition negotiations which resulted in a number of amendments to the proposals that National and other parties campaigned on. And I’d just reassure the member that we will be delivering tax relief to the hard-working Kiwis who missed out on her Government’s watch and who haven’t had a tax reduction since 2010.

Hon Barbara Edmonds: Why is she introducing at least three new taxes she promised not to, cutting funding for wheelchair servicing, refusing to commit to funding school lunches as set out in her fiscal plan, and is she worried she will run out of election commitments to break?

Hon NICOLA WILLIS: Look, the member can list a bunch of assertions that are completely incorrect but it doesn’t reflect well on her. Because we are committed to funding the school lunch programme, we are committed to funding disability services, we are committed to sustaining good front-line services—our Budget will reflect that. And here’s the thing: when you’re actually careful about eliminating waste in the back office, when you actually drive down the amount wasted on consultants and contractors and ridiculous processes and low-value programmes, that frees up more cash for front-line services that New Zealanders rely on. Our Government’s doing it; their Government should have—sorry about that.

Question No. 5—Housing

5. KATIE NIMON (National—Napier) to the Minister of Housing: What actions has he taken setting out his expectations for Kāinga Ora-Homes and Communities?

Hon CHRIS BISHOP (Minister of Housing): Oh, well, yesterday, the Minister of Finance and I, as shareholding Minister, sent an interim letter of expectation to the board of Kāinga Ora - Homes and Communities (KO), instructing them to end their Sustaining Tenancies Framework, the policy of the last Government that enabled intimidation, abuse, and destruction in communities up and down this country. We have directed Kāinga Ora to make better use of tools in the Residential Tenancies Act 1986, including formal warning notices, relocations, and, in severe and persistent cases, terminating tenancies. KO records hundreds of serious incidents every month, including alleged illegal activity, harassment, intimidation, threatening behaviour, and verbal abuse. Despite this, only three people were evicted last year for bad behaviour. There is no incentive for tenants to improve their behaviour or to stop damaging their taxpayer-funded house unless they know there are consequences. We’re bringing them back.

Katie Nimon: What prompted the Government to make this change?

Hon CHRIS BISHOP: Well, we’ve all seen the stories of the kind of misery that the last Government’s policy enabled, which is why we have directed Kāinga Ora to stop it. This also fulfils a coalition commitment between the National and ACT parties. To name just one example, we saw the elderly Whangārei couple subject to death threats from the patched Black Power Kāinga Ora tenants next door. They allegedly threatened to slit the 82-year-old man’s throat and watch him bleed out. To give you another example, we heard the heartbreaking story from a Te Awamutu homeowner who said a campaign of abuse from his Mongrel Mob Kāinga Ora neighbours cost him his marriage and left him with post-traumatic stress disorder. He told the New Zealand Herald of a night where a meth-crazed man linked to a Kāinga Ora property next door smashed up his house at 3 a.m. and tried to break in. These sorts of activities and behaviours need to stop, and under this Government, they will.

Katie Nimon: What did this interim letter of expectations say about rent arrears?

Hon CHRIS BISHOP: Well, the Government has laid out its expectation that Kāinga Ora stops letting tenants go into massive rent arrears, as we’ve seen happen over the last few years. To give you the exact numbers, in 2017, tenants’ rent debt was $1 million; six years later, it has ballooned to $21 million. At the moment, there are more than 450 Kāinga Ora tenants who each owe more than $10,000. That is a staggering amount of debt to let a State house tenant get into. It’s not fair on taxpayers. It’s not fair on the tenants themselves. We have instructed Kāinga Ora to be much more proactive about preventing this from happening in the first place.

Katie Nimon: What else did the letter of expectation say?

Hon CHRIS BISHOP: We’ve made it clear that we expect Kāinga Ora to move families into vacant homes much more quickly than they are currently doing. There are hundreds, if not thousands, of homes vacant at any given time, and when the wait-list is over 25,000 people, that is not OK. We are also concerned about the loss of social licence for social housing in communities, often because communities feel that social housing developments happen without engagement from Kāinga Ora. We have therefore instructed them to do more to genuinely engage with local communities about their development plans and activities, above and beyond their existing legal requirements. We’ve sent this interim letter to make sure that they are focused on the right things right now, and we intend as a Government to issue an updated letter of expectation later this year in response to the independent review led by Sir Bill English, which is reporting to Ministers very soon.

Question No. 6—Police

6. Hon GINNY ANDERSEN (Labour) to the Minister of Police: Does he stand by all his statements and actions?

Hon MARK MITCHELL (Minister of Police): Yes.

Hon Ginny Andersen: Does he stand by his statement regarding the police pay offer: “No, we are not offering less than what Labour offered. That’s not true at all.”?

Hon MARK MITCHELL: Yes.

Hon Ginny Andersen: Does he agree with the president of the New Zealand Police Association, Chris Cahill, “It’s like a slap in the face. It’s like saying how dare you turn us down, we’re going to give you an even lower offer. They just misread the room. They’ve misread it badly.”; if not, why not?

Hon MARK MITCHELL: I respect the role of the president of the Police Association and he respects our role. The police and the Police Association are engaged in good-faith negotiations, and they carry on.

Hon Ginny Andersen: Is the real reason the police pay offer is not backdated and contains three significant clawbacks due to funding now going to tax cuts for landlords?

Hon MARK MITCHELL: No.

Hon Ginny Andersen: Which is correct: the coalition agreement that promises 500 new police in two years, or Christopher Luxon’s statement that it’s “a clear goal that we are heading towards”?

Hon MARK MITCHELL: Well, we’ve been very clear that the coalition agreement says that we will deliver 500 additional police officers in two years, and the Prime Minister is absolutely right in restating that.

Rt Hon Winston Peters: Could I ask the Minister whether he’s actually dealing with pay for the police from last year, and why would that be?

Hon MARK MITCHELL: Well, the offer made by the previous Government was rejected by the police—[Interruption]—that’s right, and they failed to really act on that quickly. Whereas the incoming Government—we take it seriously, we’ve acted quickly, and we negotiate in good faith.

Hon Nicola Willis: Can the Minister confirm that where the previous Government was very flinty, our Government has come in and agreed, on this issue, to provide more funding so that a more generous offer could be made to front-line police officers?

Hon MARK MITCHELL: Yes, I can confirm that and I can also confirm that probably under the previous Minister that the Labour Government—against convention—asked the police to provide within baseline the competency service increments payment, which is a very important payment that goes to police officers to recognise their progression through the ranks, and that is something this Government has reinstated.

SPEAKER: Yeah, just to remind people that asking questions of a Minister about the responsibility of a previous Government’s Minister is not within Standing Orders. It might be fun, but it’s not helpful.

Hon Kieran McAnulty: Point of order, Mr Speaker. Thank you for that, and it is indeed consistent with other rulings that you’ve made. It would be helpful to the order of the House if that direction was given before the Minister had the opportunity to answer, given that it was the question that was against Standing Orders, not the response.

SPEAKER: Yeah. Thank you for your advice and I’ll take it on board.

Question No. 7—Prime Minister

7. Hon MARAMA DAVIDSON (Co-Leader—Green) to the Prime Minister: Does he stand by his Government’s policies and actions?

Rt Hon CHRISTOPHER LUXON (Prime Minister): Absolutely—in the context that they were made.

Hon Marama Davidson: Does he stand by his Minister Responsible for RMA Reform’s statement about the fast-track approvals bill that “people who are keen on having the projects inserted into the bill will be able to submit them to the expert panel”, and, if so, will experts, local communities, and iwi Māori groups concerned by these proposed projects also be able to submit to the panel?

Rt Hon CHRISTOPHER LUXON: Well, we’ve got a very good process that involves Ministers, expert panels, and decisions by Cabinet.

Hon Marama Davidson: What advice, if any, has he received on the constitutional appropriateness of adding a list of projects into the legislation after the select committee stage, and the ways in which this could undermine public input, scrutiny, and transparency?

Rt Hon CHRISTOPHER LUXON: Completely appropriate, but what I’d say to you: the purpose of fast-track consenting is it’s taking too long to get anything done in this country. We have built an obstruction economy. We are here to get things done. That’s why we’re taking fast track, introduced by David Parker, beefed it up, put it on steroids, and are actually going to get some outcomes for some people.

Hon Marama Davidson: Does he stand by his statement that he will “ensure the fast-track consenting legislation upholds Te Tiriti”, and, if so, can he guarantee that his Government will not fast track any mining consents that may impact Treaty settlements?

Rt Hon CHRISTOPHER LUXON: In answer to the first part of the question, yes.

Hon Marama Davidson: Does he agree with former chief press secretary for the National Party Janet Wilson that “the fast-track consenting bill is not an act of political alliance so much as pork barrelling at its finest, providing a new golden age for National and New Zealand First’s backers”, and, if not, why not?

Rt Hon CHRISTOPHER LUXON: Absolutely rubbish. I mean, the bottom line here is that we have an obstruction economy. We’ve actually taken an awful long time to consent something, and it’s costing a huge amount of money. We want to actually deliver on our climate goals, something that I think the Green Party would want to identify and align with us around, but you can’t take eight years to consent a wind farm and two years to build it. Why don’t we just take one year to consent and build renewable energy and then two years to build it, and get the benefit in three years, not 10 years?

Question No. 8—Health

8. Dr VANESSA WEENINK (National—Banks Peninsula) to the Minister of Health: What steps has the Government taken to deliver better health outcomes for all New Zealanders?

Hon Dr SHANE RETI (Minister of Health): The Government recently announced that we are putting health targets at the forefront of our health policy. We are introducing five key targets that clearly spell out faster cancer treatment, improved immunisation for children, shorter stays in emergency departments, and shorter wait times for both first specialist assessments and planned care. We are an outcomes-driven Government, and these health targets show that.

Dr Vanessa Weenink: Why was it so important to shift health targets to the forefront of the Government’s health policy?

Hon Dr SHANE RETI: This Government believes that health targets help direct attention and resources and sets a clear agenda for where our health system should be heading. That is why it is important to have targets at the forefront of decision making. Targets are also accountability and transparency at all levels of our health system, which is vitally important for ensuring the delivery of timely access to quality healthcare for all New Zealanders.

Dr Vanessa Weenink: How will the Government ensure that the health targets are robust and will deliver better outcomes?

Hon Dr SHANE RETI: I am aware of the potential for gaming targets and will keep a close eye on this. There will be mechanisms to ensure that our health targets will remain robust. These include quality assurance processes to validate data, clinical engagement with discussions on emerging concerns, and the use of independent agencies such as the Health Quality and Safety Commission to support reviews, as needed.

Dr Vanessa Weenink: Why has the Government chosen immunisation for children as a key target?

Hon Dr SHANE RETI: In 2015, when targets were still at the forefront of Government policy, the immunisation rates for children stood at just over 93 percent. Today, that number is worrisome, at 83 percent. This is well behind countries like the UK, Australia, and Canada. We should be doing much better for our children, and this target is one step to enable that.

Question No. 9—Environment

9. LAN PHAM (Green) to the Associate Minister for the Environment: Does he stand by his statement, “For now, the Government has agreed to suspend the obligation to impose SNAs under the NPS Indigenous Biodiversity, and we’re sending a clear message that it would be unwise to bother”?

Hon ANDREW HOGGARD (Associate Minister for the Environment): I stand by my statement that the Government has agreed to suspend the obligations for councils to impose significant natural areas (SNAs) under the national policy statement (NPS), Indigenous Biodiversity. I also stand by my statement last week that there has been no change to statutory or regulatory obligations on councils. Those obligations continue to apply until they are amended. Cabinet has agreed to amend the NPS for Indigenous Biodiversity through a legislative vehicle, and suspend the NPS requirements for councils to adopt new SNAs into their plans.

Lan Pham: What, if anything, does he consider the biodiversity collaborative group—set up under the Hon Dr Nick Smith—got wrong when they developed the framework of rules for councils to follow when working with farmers and iwi Māori landowners to identify significant natural areas?

Hon Chris Bishop: Point of order, Mr Speaker. I’m struggling to work out how that is connected. With the greatest respect to the member, who I know is a new member, I’m struggling to understand how something to do with Dr Nick Smith in relation to something that the member said relates to the actually quite specific primary question around something that the new Minister has said in relation to the NPS for Indigenous Biodiversity.

Ricardo Menéndez March: Speaking to the point of order. The primary did contain elements of the policy that the supplementary questions followed. Additionally, it is following comments from the answer to the primary question, so that’s well within what has happened before, where people pick up on a statement that touches on a policy and then they ask supplementary questions in relationship to that policy.

SPEAKER: Well, the member is a very good advocate for that cause. I’ll hear from the Hon James Shaw.

Hon James Shaw: Thank you, Mr Speaker. According to the point of order, the national policy statement—

SPEAKER: Just a minute—just a minute. You’re very hard to hear there. People might need to do something about that.

Hon James Shaw: Speaking to the point of order, Mr Speaker.

SPEAKER: Oh, now you’re there. Welcome back.

Hon James Shaw: Thank you very much. The National Policy Statement for Indigenous Biodiversity is derived from the work that was established by Dr Nick Smith in the biodiversity collaborative group for that purpose. I would have thought that the Minister Responsible for RMA Reform and the Minister responsible for that national policy statement would know that.

SPEAKER: Yes, I think the point is, though, it doesn’t matter who was the Minister at the time, policy endures. So I think the question might be better worded. Do you want to have another crack at that question, Lan Pham?

Lan Pham: Thank you, Mr Speaker. What, if anything, does he consider the biodiversity collaborative group got wrong when they developed the framework of rules for councils to follow, when working with farmers and iwi Māori landowners to identify significant natural areas?

Hon ANDREW HOGGARD: The biodiversity collaborative stakeholder group did not actually reach a consensus in the end. There was a minority statement, by a number of groups, so there was no consensus on an outcome. The decision was not taking into account what the biodiversity stakeholder group—actually, they didn’t land on a decision. So that’s the answer.

Lan Pham: What, according to his own ministry’s reporting, is the proportion of native species in Aotearoa that are threatened or at risk of extinction?

Hon ANDREW HOGGARD: I do not have those numbers on hand at the moment. I can come back to it.

Mark Cameron: Why is it important to make this amendment to the national direction to remove the obligation on councils?

Chlöe Swarbrick: Kill the birds faster.

Hon ANDREW HOGGARD: Because the current use of SNAs are an unjustified intrusion on private property rights, and they are a barrier to the great work that landowners have already been doing on their farms. This change will give us time to review the operation of SNAs and formulate ways to work with landowners to recognise them for the work they’re already doing and to incentivise them to do more.

Hūhana Lyndon: Did the Minister engage specifically with whenua Māori landowners in the suspension of SNAs, and, if you did, what was their feedback?

Hon ANDREW HOGGARD: No consultation has been undertaken in this. There will be consultation going into what will be the future use of SNAs. Basically, this was signalled in our coalition agreement in the 100-day plan.

Hon David Seymour: What is the effect on people in rural New Zealand when they hear statements from urbanites such as “they want to kill the birds faster”, as the Green co-leader Chlöe Swarbrick just heckled while he was answering questions about a serious topic?

SPEAKER: Yeah, we’ll try the question a different way.

Hon David Seymour: What is the effect on the psyche, morale, and mental health of those in rural New Zealand when it is assumed they want to remove intrusive regulations such as SNAs in order to “Kill the birds faster.”, as I just heard from a member opposite?

Ricardo Menéndez March: Point of order. I don’t believe the Associate Minister has any responsibility for the first part of that question, beyond the fact that it is, frankly, just ridiculous that it is even being asked.

SPEAKER: Well, that would really render question time quite useless if we took that view, because, in the end, every Minister’s decision affects New Zealanders. If you couldn’t ask a question related to that, then we’d be in big trouble here.

Hon ANDREW HOGGARD: I think rural New Zealand are sick and tired of being portrayed as people who don’t care about their land. Our land is so important to us—it is vital. Up and down this country, I see more and more farmers engaging in planting activities on their farms, creating wetlands, planting off streams, riparian planting—this is all happening. This is happening under farmers’ own steam at the moment. We intend to encourage that and incentivise them to do more.

Hūhana Lyndon: How, then, will this Government protect indigenous biodiversity and taonga species on private land once the requirement for councils to do so has been stripped away and undermined?

Hon ANDREW HOGGARD: How we will encourage this is by encouraging the behaviour that has already been happening. As I have said to this House a number of times, in my time in farming, I have seen a complete mind shift from farmers, who are doing more and more every day on protecting biodiversity on their farm, encouraging more of it. That is how we are going to be working with farmers to do more of this.

SPEAKER: Before we move to question 10, can I just make a broad plea to the House that when questions are being asked or lodged with the Clerk’s office, the use of acronyms is absolutely minimised so that everybody reading the question can know fully what it’s about. During the course of the answers there, we had those various acronyms used in their full names—it would be good if they were also in the question. So if the House could take that on board, that would be useful.

Question No. 10—Police

10. SAM UFFINDELL (National—Tauranga) to the Minister of Police: What recent results has he seen from Operation Emerald?

Hon MARK MITCHELL (Minister of Police): Today, Police announced outstanding results, including in the member’s electorate. In a recent five-day operation, Bay of Plenty police have delivered a massive blow in stopping a major source of funding for organised crime groups. The execution of 39 search warrants saw 29 firearms seized and 25 arrests made. Additionally, police seized more than 80 grams of methamphetamine, over $7,000 in cash, two stolen vehicles, and a stolen motorbike. During the operation, 11,372 cannabis plants were destroyed. Operation Emerald targets the back pockets of gangs and organised crime by targeting the large-scale commercial cultivation of cannabis, and I’m proud of the work that police have done around the country to keep their communities safe.

Sam Uffindell: How much money did Operation Emerald prevent going into the hands of gangs last year?

Hon MARK MITCHELL: Police destroyed over 35,000 cannabis plants and prevented $128 million going into the pockets of gangs through Operation Emerald. Based on the drug harm index, the estimated social harm prevented by Operation Emerald last year was $127 million.

Sam Uffindell: Does the Minister agree with the characterisations of Operation Emerald as “ineffective” and “police playing tin soldiers in the sky”?

Hon MARK MITCHELL: Comments like that show a lack of respect or understanding for the outstanding job our police officers do, in often difficult situations and circumstances, keeping our community safe and slowing down and disrupting the flow of harmful drugs into our communities.

Sam Uffindell: What is the Minister’s message to criminals taking part in large-scale cultivation of cannabis?

Hon MARK MITCHELL: My message is quite simply this: if you choose to cultivate a drug that remains illegal and if you use it to fund your criminal lifestyle and perpetuate misery in our communities, you can expect police to hold you to account and to seize illegal firearms, drugs, and ill-gotten gains. I’m proud of the police and the work that they do in targeting organised crime, and I back Operation Emerald 100 percent.

Question No. 11—Disability Issues

11. Hon PRIYANCA RADHAKRISHNAN (Labour) to the Minister for Disability Issues: Does she stand by her statement regarding changes to purchasing rules and equipment and modification services, “These changes are happening from 18 March and are intended to be temporary changes until later this year”; if so, will she commit to restoring flexibility of funding as was available to the disability communities prior to 18 March 2024?

Hon PENNY SIMMONDS (Minister for Disability Issues): These changes are happening from 18 March 2024 and are in place while we complete work on the long-term settings for the use of flexible funding. Whaikaha is working to manage a forecast overspend in the disability support system in this financial year. It is important to take a balanced and fair approach to prioritising disability support funding within the budget available. Whaikaha is prioritising across the system and making changes from 18 March 2024; changes to the purchasing rules which are intended to provide clarity about what supports can be purchased using disability funding, and to prioritise spending towards supports accessed by disabled people. Equipment and modification services will be prioritised to provide support to those disabled people with the highest needs first.

SPEAKER: I just say to members on the left, I do need to hear the answers to these questions.

Hon Priyanca Radhakrishnan: Why was there no consultation with those who would be most impacted by these changes?

Hon PENNY SIMMONDS: As I said, the increase in the use of these services has caused a funding blowout, and it is somewhat disingenuous for the member of that party, who put the policies in place that set up the situation that Whaikaha is now facing in terms of flexibility of purchasing and ring-fencing the funding, taking it out of a demand-funding situation.

Hon Priyanca Radhakrishnan: What does the Minister say to a mother who contacted me today to say that “flexible use of respite funding has been absolutely essential for the wellbeing of our whānau”, and she goes on to say that “we cannot use a professional support person, so then you have effectively taken our respite funding away”?

Hon PENNY SIMMONDS: I say, as I said in my initial answer, that we need to take time to have a look at the flexible funding and how we are going to manage it going forward. But the manner in which it was put in place, without criteria and without support there for how it can be used, has seen more than doubling of the use of that fund and therefore the pressure that Whaikaha are now under.

Debbie Ngarewa-Packer: How do you respond to Carlos Cordero, who is concerned that the new rules restrict funding for whānau carers and ignores their experience as whānau carers who actually are on the ground doing the mahi?

Hon PENNY SIMMONDS: This has been a difficult time for Whaikaha trying to deal with the policy settings that the previous Government put in place of ring-fencing the funding but still allowing major flexibility for purchasing using that funding. That funding is for disabled people, and the priority has to be for use of that funding for those with a disability.

Hon Priyanca Radhakrishnan: Does the Minister agree with Maureen Pugh, who said, and I quote, “If you’re talking about wasted expenditure then that’s very much where we’ll go. But reducing funding and support for those in need, we are actually looking to increase support.”, and will she commit to increasing support in Budget 2024?

Hon PENNY SIMMONDS: The fund for the equipment and modification of services has been increased by 10 percent. So the misleading statements from the Opposition about funding cuts is completely incorrect. The issue is the policy settings that were put in place by the previous Government that has seen a blowout in the funds available.

Debbie Ngarewa-Packer: What does the Minister say to Huana Hickey, a tāngata hauā advocate, who feels these changes attack the very heart of the disabled’s needs?

Hon PENNY SIMMONDS: It is a difficult time for Whaikaha trying to prioritise the funding. There is not an open cheque book, and therefore they do have to make priorities. So the priority has been that the funding must be spent on the person with the disability, when, in the past, the previous Government allowed such flexibility for carers to be able to spend on such things for themselves as pedicures, as massages, as overseas travel. So when the funding is under constraint, then the priority must be for the disabled person to receive the funding.

Hon Priyanca Radhakrishnan: Mr Speaker?

SPEAKER: No, you’ve used them all up.

Question No. 12—Health (Pharmac)

12. TODD STEPHENSON (ACT) to the Associate Minister of Health (Pharmac): What recent announcements has he made about improving New Zealanders’ access to medicines?

Hon DAVID SEYMOUR (Associate Minister of Health (Pharmac)): Thank you to the member for his question. Pharmac is changing its processes so that it can assess a funding application at the same time Medsafe is assessing an application for regulatory approval of the same product. This means that medicines will be able to be considered sooner for funding in New Zealand. Access to medicines is a crucial part of many Kiwis’ lives, and this Government is speeding up the process so that more people have access to the medicines they need, quicker and sooner.

Todd Stephenson: How will the parallel assessment process that the Minister has outlined improve access to medicines?

Hon DAVID SEYMOUR: Well, currently, Pharmac waits until Medsafe has completed its assessment before it begins a funding assessment, unless the treatment is in relation to cancer. Doing both the regulatory assessment to see if it’s safe at Medsafe and the funding assessment to see if it is a good use of taxpayer funds at Pharmac at the same time is common sense. It’s a change that costs nothing but it will help Kiwis in need by shaving up to nine months off the approval process. It will also bring us into line with countries such as Australia and Canada, which do it and have been doing it exactly the way that we now will.

Todd Stephenson: Has he seen any reports of any risks to access to medicines for New Zealanders?

Hon DAVID SEYMOUR: Yes. In fact, I have been looking at Budget documents that show that Pharmac’s funding over the next three years was left by the previous Government as reducing by several hundred million dollars each year for the next four years. In total, to maintain the level of pharmaceutical funding that New Zealanders are used to, the Government would have to find nearly $2 billion of extra funding over four years, and that is something that this Government is now working very hard to do in challenging economic conditions.

Todd Stephenson: What steps is he taking to ensure even more access to medicines for New Zealanders?

Hon DAVID SEYMOUR: The coalition Government is based in part on an ACT-National coalition agreement which contains a commitment to updating the rules for Medsafe to speed up the processing of new medicines for regulatory approval to within 30 days if two recognised overseas regulators have already approved it. It is to design and publish a medicines strategy and to update Pharmac’s decision-making model to ensure that it appropriately accounts for patient voice.

Urgent Debates Declined

Disability Funding—Purchasing Rules

SPEAKER: I have received a letter from the Hon Priyanca Radhakrishnan seeking to debate under Standing Order 399 an announcement about purchasing rules for disability funding. This is a particular case of recent occurrence for which there is ministerial responsibility. However, I’ve listened to the answers to questions asked today and considered the matter because I have an interest in it, but I am not convinced that the time of the House should be set aside today to debate the matter. The annual review debate would be an appropriate vehicle to debate this matter since it covers the performance and current operations of departments. The Leader of the House has indicated that that debate will start in April and has called for parties to nominate which Ministers will appear before the committee of the whole House during the debate. The application is therefore declined. I call on order of the day—

Hon KIERAN McANULTY (Labour): Point of order, Mr Speaker. Thank you, Mr Speaker. We accept that. The concern that I have, however, is that there is still no requirement for the Government to accept the proposals from the Opposition on the topics and portfolios which will be debated during the annual review debate, so this House can’t be assured that the opportunity to debate this will be given during the annual review debate.

SPEAKER: Well, that’s true. But the member knows also that the Business Committee will be involved in that process, and I would certainly be an advocate for the Opposition having the opportunities that they seek.

Bills

Appropriation (2022/23 Confirmation and Validation) Bill

First Reading

Hon NICOLA WILLIS (Minister of Finance): I move, That the Appropriation (2022/23 Confirmation and Validation) Bill be now read a first time.

Motion agreed to.

Bill read a first time.

Bills

Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill

Second Reading

Hon SIMON WATTS (Minister of Revenue): I present a legislative statement on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill.

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

Hon SIMON WATTS: I move, That the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill be now read a second time.

The purpose of this bill is to set the annual rates for income tax for the 2023-24 tax year. The bill also makes proposals to improve the current settings for a broad based - low rate framework. Public consultation is an important part of the tax development process and it is also equally important to the parliamentary process.

As reported back from the Finance and Expenditure Committee, the bill contains a range of adjustments as a result of public feedback. These adjustments have strengthened the bill, and I wish to acknowledge the members of the Finance and Expenditure Committee across the House for their input into this bill.

I would like to briefly touch on the more significant changes that have been made to the bill since its introduction. The centrepiece of the bill is a measure aimed at reducing the benefit to multinational corporations of profit shifting. Under the existing setting, some countries have attempted to attract economic activity by offering multinationals low effective income tax rates. This is particularly problematic when the income is from cross-border capital investment or the use of intellectual property. It has helped contribute to base erosion and profit shifting, where a multinational can achieve low or even no taxation by shifting their profits to low-tax jurisdictions.

To tackle profit shifting, the OECD has led the development of a global minimum tax, the GloBE rules, which ensures that large multinationals at least pay 15 percent tax on their mobile income where it is earned. Adoption of the GloBE rules by a critical mass of countries will help reduce the profit-shifting pressures on countries like New Zealand with higher corporate tax rates without preventing the use of tax incentives to attract real investment. Now that it is clear that a critical mass of countries will be adopting these GloBE tax rules, we are proposing in this bill to enact dates for its imposition by the New Zealand Government. On 1 January 2025, the income inclusion rule and under-taxed profits rule will be enacted, and on 1 January 2026, the domestic income inclusion rule will be enacted.

The GloBE rules are extremely complex. Rather than enacting them directly into our legislation, we are proposing law that will make sure that these rules are modelled through and developed in effect with the OECD countries along with New Zealand. This is the best approach to ensure that our rules are internationally consistent while keeping the Government’s implementation and administration costs low. Crucially, future Governments remain free to disapply any future updates to the OCED’s commentary or guidance on the GloBE rules which affect their application, so there’s no loss of sovereignty involved.

Another significant measure in the bill is the trustee tax rate proposal. Following consultation and public submissions, we have made a number of adjustments to this proposal. While most trusts will be unaffected by the proposals in the bill, there did remain a risk of over-taxation of trusts with lower-rate beneficiaries and settlors. That is a crucial point because over-taxation can’t be determined by looking at the income earned by the trust, but only by reference to the income of settlors and the beneficiaries in the trust.

Inland Revenue estimates that there are at least 400,000 trusts. In 2022, approximately 76,000 trusts paid taxes at the trustee tax rate. To help mitigate the risk of over-taxation, we are proposing a $10,000 trustee income de minimis. This will mean that a further 27,000 trusts will not be affected by the 39c tax rate. Based on this, only 12 percent of all trusts would be affected by the 39c tax rate. This reduces the risk of over-taxation while also addressing the vast majority of the under-taxation of trustee income. Trusts in estates with up to $10,000 in trustee income in an income year would continue to be subject to the 33 percent tax rate. Trusts with over $10,000 in trustee income in an income year would be subject to the 39c tax rate on all income. At the committee’s recommendation, disabled beneficiary trusts would be taxed at 33 percent instead of a 39 percent personal tax rate.

We are also simplifying and expanding the proposals relating to estates. An estate would continue to be taxed at 33c in the dollar for the year of death, plus a further three years. We’re also making sure that energy consumer trusts and legacy superannuation funds are excluded from the 39c tax rate.

The committee also made a number of recommendations to improve the fairness, certainty, and consistency of tax treatment. For instance, to improve the current proposal on the tax treatment of backdated lump-sum payments from ACC and Ministry of Social Development, the committee recommended including backdated lump-sum payments for attendant care, and related to the Cyclone Gabrielle in North Island flooding event relief measures, the committee made a number of recommendations, including adding the August 2022 Nelson flood buy-out to the list of events covered, by turning off the brightline and other timing tests.

The committee was also concerned at the potential for overreach in the proposed charities and the deregistration tax integrity measures. They therefore recommended providing relief when assets are transferred to other New Zealand tax resident exempt entities and deferring the application date. Along with these, there are a number of other smaller policy matters which have been suggested by policy officials in response to issues brought to them by third parties. This is good news. It shows that the Inland Revenue is working in collaboration with the private sector and with the wider Public Service in order to improve efficiency. An example is the new proposal relating to the Ministry of Disabled People.

District health boards and the Ministry of Health had historically made direct funding for disability support payments to their clients. The Income Tax Act provides an income tax exemption for these payments. However, due to an oversight, the exemption was not correctly updated to reflect the fact that the newly established ministry was now responsible for administering some of the direct funding disability support payments. This means that those support payments won’t technically meet the requirement for the exemption. The remedial amendment makes these payments exempt and has retrospective application to July 2022, as these payments were always intended to be exempt.

Similarly, Health New Zealand has taken over contact tracing from the Ministry of Health. Inland Revenue shares information with the Ministry of Health to help make more efficient processes and procedures; however, that arrangement cannot continue for the purpose of the legislation enabling such sharing of information for Health New Zealand as it was not referred to as a Government agency. For the purposes of information sharing, the bill therefore proposes adding Health New Zealand to the definition of a Government agency.

Another adjustment to the bill is a proposal to provide more certainty to the early payment discount offered by the IRD. This intends to encourage businesses to pay their taxes in the first year. Inland Revenue applies interest to unpaid tax bills, which is known as the use of money interest. That interest charged depends on the economic conditions of the entity. The application rate for this discount has moved more often than was envisaged in recent times, and due to economic conditions, this has created uncertainty for taxpayers and has undermined the ability of an early payment discount to incentivise voluntary tax payment by businesses in their first year. To maintain this incentive, the bill proposes tidying up and ensuring the early payment discount rate for the use of money interest at 31 March of the preceding income year. This would be applied to the 2024-25 and later income years.

As you can see, this is a comprehensive, complex, and detailed tax bill. There have been significant changes and modifications as a result of the Finance and Expenditure Committee working across party lines in order to listen to feedback from a large number of people making consultation and inputs into this bill. It is important to note that many of these changes that were made by submitters to the select committee have been very carefully and diligently considered by the select committee and, as a result, have been reflected in the bill which we are tabling in this House today. That is an appropriate use of parliamentary time. That is an appropriate mechanism, and it is a good example of how legislation can and should be improved by a select committee process, and, again, I acknowledge those members of that committee for their contribution. I commend this bill to the House.

ASSISTANT SPEAKER (Greg O’Connor) The question is that the motion be agreed to.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Speaker. The first part of what I would like to say today is that I would like to draw the House’s attention to page 14 of the report back from the Finance and Expenditure Committee and a particular paragraph in there, in which the committee says—and I want to read this into the record—“We wish to register our sincere thanks to Therese Turner for her work as the independent specialist adviser on tax bills over the last 25 years. Her advice has been invaluable to members of the Finance and Expenditure Committee and undoubtedly improved parliamentary scrutiny of tax legislation. We wish her all the best.”

Therese Turner was the independent adviser to the committee for a long, long time. In fact, when I started work at Inland Revenue back in 2004, in the policy advice division then, Therese Turner was then the specialist adviser whom we consulted as tax officials, whom the select committee worked with, and who has provided extraordinary advice to the committee over a very, very long time. Tax can be complicated. Therese Turner looked at it, reviewed it, explained it to committee members, and gave us that independent advice—independent from officials, independent from Treasury, independent from political processes—as to whether or not the tax legislation in front of us was workable. The Finance and Expenditure Committee, over 25 years, owes a great deal to Therese Turner, as does this House, and so I’m very glad to have that recorded in the select committee report.

Mr Speaker, and other members of the House, you will notice as you read this report—as I’m sure you all do—that it was unanimously agreed to by the Finance and Expenditure Committee. That is unsurprising. This bill started in the previous Parliament, under the previous Ministers of Revenue, and then continued in the current Parliament, so these are tax measures that were introduced during the last Parliament. It is unsurprising that members on this side of the House agree to these tax measures. There has, however, since then been an Amendment Paper introduced, which will be introduced at the committee of the whole House stage. Obviously, we will want to debate that Amendment Paper, but the bill as it stands at the moment is one which all members in this House agree to.

However, there are some matters that I would like to address a little. I first want to point out that it is the annual rates bill. As a constitutional requirement, the Government is required to ensure that the tax rates are set by legislation every year, by 31 March of the year for which the tax rates apply. This bill does that job, and it is the Government’s responsibility to ensure that it is passed through all its stages by 31 March, and so members will find that the tax rates are set in, I think, clause 3 of this bill.

But I do want to take issue with something that the Minister of Revenue has said in his speech. He said that setting the tax rates confirmed—I think he said that it confirmed it was part of the commitment we have to a broad based - low rate tax system. As I’ve said many times before, we do not have a broad based - low rate tax system. There is a significant gap in our tax system where capital income is not treated as income for income tax purposes. Now, to a large extent the brightline test addresses that. However, coming up in the amendment bill, the Government is proposing to remove the brightline test, or to reduce it down to two years. It is moving further away from a broad based - low rate system, and we need to remember that we might have a low-rate system, but we do not have a broad-based tax system.

However, aside from that, there is a great deal in this bill which we do agree with, and which I think it is important for people to understand. There are a couple of matters I would like to talk through and, if I have time, a third. But I’m sorry, Mr Speaker, when I start talking about tax, I sometimes get a little carried away and concentrate a little too much.

ASSISTANT SPEAKER (Greg O’Connor): Yeah, well, five minutes in to get to the bill wasn’t bad, actually, Ms Russell.

Hon Dr DEBORAH RUSSELL: I’ve been speaking to the bill all along, Mr Speaker. I want to talk about the changes to the trustee tax rates. Now, the bill as introduced proposed increasing the trustee tax rate to 39 percent to align it with the top personal tax rate. However, we received a number of submissions—quite a significant number of submissions—from accounting firms, from lawyers, from practitioners, and from people affected by this, saying that that might be inappropriate for a large number of trusts in this country. It might be appropriate to have trusts which earn a large amount of income to have that 39 percent tax rate aligned with the top income tax rate, but a great many trusts in this country do not earn a lot of income, and that might have been overreach, going for the 39 percent rate.

So the committee and officials and submitters all worked together to work out what would be an appropriate threshold if we had two trust tax rates—one for tax below a certain threshold; one tax rate for trusts above that threshold—and it turns out that there’s an appropriate flex point. It’s at about $10,000 or so. Now, $10,000 is a nice, round figure, so we’ve worked with that. What it means is that in the bill, as it has come back from the committee, if a trust earns over $10,000 in trustee income, then that income will be taxed at 39 percent—all of it, from the first dollar right up through. If a trust earns below $10,000, then the trustee income will be taxed at 33 percent, and that provides small trusts with a bit of relief from that top tax rate.

However, that figure was chosen quite carefully, because at that $10,000 point, the advantage of having a 33 percent tax rate over a 39 percent tax rate is just $600, right? So a person could be better off by $600 if they kept the income below $10,000, or if you set up a number of trusts, you could maybe spread all the income across a number of trusts to try to get around that top tax rate. So, instead of having one trust with $100,000 of income taxed at 39 percent, you could maybe have 10 trusts with $10,000 of income each, taxed at 33 percent. But the compliance costs of running a trust, of getting it set up, and of doing all the processing for it is probably more than the $600 is worth. It’s a good flex point to choose, both in terms of the number of trusts which actually fall below that threshold but also in terms of working out where the point is where compliance costs outweigh the benefit of a particular tax gain, so we all supported that threshold.

I think the committee showed really good sense too with the changes it made with respect to deceased estates, where, again, taxing them all at 39 percent was inappropriate. Most deceased estates don’t have that kind of income sitting in them, but, more to the point, it can take a bit of time to wind up a deceased estate. When we talked to practitioners, we found that they were telling us that, actually, most deceased estates can get wound up within 18 months to two years, and some may take a little bit longer, so what we have put in place is three years. There’s a three-year grace period to get those deceased estates wound up; so that’s three years past the income year in which the trust begins. So that’s quite a considerable period of flexibility, and it’s a very sensible change.

I just wanted to speak very briefly to the taxation of backdated lump-sum payments. This is where ACC lump-sum payments are backdated. If a person gets a lump-sum piece of income in one year by chance—so, for example, if they got, say, $200,000 of backdated income—then some of that would be taxed at the top tax rate of 39 percent because it was all received in a lump. So what we’ve said is that in actual fact, what should happen is that for that sum of money, the appropriate tax rate should be determined by looking at the average tax rate over the previous four years and applying that rate. So that seems to be a fair thing to do, and I think having that spread over four years is quite reasonable.

I suppose we could try to go back many years to when the injury was first incurred for ACC purposes, but, in actual fact, in some cases, there might have been higher tax rates in force at the time. I think that spreading it back over the four previous years strikes a reasonable balance between getting it right for the individual taxpayer and making it comparatively easy to calculate, and I think that, in the large majority of cases, it means that the actual amount that is taxed is about right. It won’t be perfect, but it will be pretty good, and so, for that reason, we support that change.

So there’s a lot to talk about in this bill. I could take another call, perhaps, or maybe not. There is plenty for people to talk about and it is a good bill, and, at this second reading, I commend it to the House.

CHLÖE SWARBRICK (Co-Leader—Green): E te Māngai, tēnā koe. Tēnā koutou e te Whare. I hope I’m not betraying the confidence of my mates across these seats, but Rawiri Waititi, the co-leader of Te Pāti Māori, just dared me to make this exciting—so, Mr Speaker, if you will indulge me. Unfortunately for Mr Waititi, the fact of the matter is that the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill as recommended back from the Finance and Expenditure Committee, as the Hon Dr Deborah Russell just outlined very articulately and very clearly, was unanimously supported. I think the fireworks are probably going to fly at the committee of the whole House stage.

So let me just unpack some of that kind of technical basis that I’m talking about here, for those who are following along at home. What the bill does, the Minister of Revenue just outlined pretty clearly, and it was, with that unanimous support, to raise the trustee tax rate to 39 percent to align with the top income tax rate. That, of course, is to stop people from moving their money around in such a way that they avoid paying that top tax rate of 39 percent, some evidence of which we saw borne out in some of the reporting from IRD to the Finance and Expenditure Committee. There also is the establishment in law requiring multinationals headquartered in Aotearoa to pay a top-up tax to the IRD if their effective tax rate is lower than 15 percent. And this is, of course, part of an international coordinated push by the OECD to implement a set of rules to stop a race to the bottom when it comes to corporate taxation. Also, those changes with regard to ACC and Ministry of Social Development payments and lump sums, requiring the Government to match the 3 percent contributions to KiwiSaver made by those on paid parental leave, and relief from recognising insurance income for businesses impacted by flooding and cyclones recently—those are the relatively uncontroversial pieces of this legislation.

However, for those following along at home, they may have seen that this Government has recently stated that they will be putting forward a number of new policies, as tabled by the Minister and foreshadowed by the Hon Dr Deborah Russell, which we will be debating at the committee of the whole House stage. So I just want to make it really clear to those who are following along at home that the Green Party of Aotearoa New Zealand currently supports the bill at the second reading because it is the version of the bill that does those things which I have just outlined. It is not the version of the bill which will come into effect after the Government uses its three-headed taniwha majority to push through the changes for repealing back to the two-year brightline test and those interest deductibility changes, as well as removing depreciation deductions. So, relatively uncontroversially, again, the Greens support this.

So if I can just offer some broader reflections, particularly on that select committee process. I also wanted to join with the Hon Dr Deborah Russell in offering our appreciation to Therese Turner, who, as the Hon Dr Deborah Russell outlined, offered many, many years of service, expertise, and independent advice to subsequent Finance and Expenditure Committees in this Parliament and those beforehand.

Ryan Hamilton: When’s the exiting part?

CHLÖE SWARBRICK: So to the exciting parts, as the members of the Government are asking me for. Well, the exciting part is—or, rather, the rather depressing part is—that we know, based on IRD’s other reporting from, for example, last year, with subsidiary papers from Treasury, that we have a tax system in this country that sees the top 311 families pay an effective tax rate less than half of that of the average New Zealander. And, unfortunately, this bill does nothing to fix that unfairness—that fundamental unfairness—in the way that our tax system operates. And, in fact, even worse than that, prior to Christmas, under urgency, this Government introduced legislation which repealed requirements for the IRD to report against a set of tax principles, basically to showcase to New Zealanders whether the tax system is working efficiently and fairly in such a way that all of us could expect—i.e., to inform the public debate on tax with evidence. Spooky stuff—spooky stuff—as far as the tax debate here in Aotearoa New Zealand is concerned!

If I can allude to other hearings that we’ve had at the Finance and Expenditure Committee, particularly related to the subject of tax, we recently had Treasury officials in, who I questioned about the productivity implications of our tax system, and they made it abundantly clear that were we to introduce the capital gains tax, we would not only generate the revenue necessary to invest in the infrastructure that all New Zealanders deserve but also that we would have a fundamentally more productive economy.

So, finishing on that point, the Green Party supports the bill in its current version, but the far more deeply unequal and, dare we say, rather undemocratic process to introduce substantive and material changes at the committee of the whole House stage, whereby we are not going to be able to have that select committee process, such as the Government intends to do by virtue of what they themselves have tabled in the House today, is something that we will be opposing further down the track. So just to make that abundantly clear to all who may be following along at home—I apologise for not being able to make all this too exciting, but I guarantee you the fireworks will be coming, because we will not be letting this Government get away with increasing inequality, which, they know full well and their advice bears out, will occur as a result of them progressing this policy agenda.

TODD STEPHENSON (ACT): Thank you. I rise to speak in support of the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, which is—yes, it’s not very exciting, but I did think that the Hon Dr Deborah Russell did do a good job of trying to make it exciting. I just want to join with her and Chlöe Swarbrick in just acknowledging Therese Turner. Obviously, I’m a first-term member of both this House and of the Finance and Expenditure Committee—

Chlöe Swarbrick: Great committee!

TODD STEPHENSON: Thank you, it is a great committee—and I do want to thank Ms Turner for her contribution. Obviously, 25 years of providing advice to the select committee is quite an achievement, and she again delivered when giving advice to the select committee on this bill.

This was, I think, a process where we actually did improve the bill at the select committee. A lot of that has been touched on, but I just do want to mention that we actually did listen to submitters and some of the, you know—

Chlöe Swarbrick: De minimis.

TODD STEPHENSON: Yeah—the problems that were raised and the issues they saw as problematic, and we actually did address them. And, yes, the de minimis tax threshold for trustees rates is one such issue, where we ensured that some common sense was applied so that people wouldn’t actually be making decisions regarding their trusts which could be detrimental but also ensuring that they were being taxed at the correct rate.

Another one was the deceased estates. Again, we had a lot of submissions talking about how one year would be too short a period to make sure that deceased estates could actually be wound up. Again, we reflected on that, we took advice, and we arrived at the three-year position—which, again, I think is a really sensible one to make sure that in this important area the affairs of a deceased estate can be properly wound up, but done so in a timely manner but one which also doesn’t disadvantage those taxpayers.

I think—again, it’s already been touched on—the lump-sum payments and ACC and making sure, again, we delivered some fairness to taxpayers when they receive a lump-sum payment. Again, this can often be where it takes a number of years for a complex ACC case to be worked out and actually for someone to receive their lump-sum payment and, again, making sure that they weren’t disadvantaged by the time taken. I think, again, we arrived at a really pragmatic and sensible solution to that issue.

For me, it was obviously interesting watching all parties represented on the select committee actually working together—and, again, there were some very experienced members on the select committee, and I think it was really useful to have their insights and knowledge as we worked through the issues and tried to find pragmatic solutions. So I really want to say thanks to my fellow select committee members. I think there will be a lot more discussion and, obviously, further readings on this bill, but I want to commend this bill to the House. Thank you.

TANYA UNKOVICH (NZ First): Thank you. I rise on behalf of New Zealand First and the challenge to make this exciting. I will do my best. As they say, to become good at speaking in the House, one needs to keep speaking in the House, so I will do that. I apologise if there is repetition, and I will completely understand if there are more cellphones being lifted up, but it is a very good bill to speak on.

Now, it’s called the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. That was a bit of a mouthful. Now, this omnibus bill introduces amendments to a number of Acts, with the addition of proposing amendments to the Income Tax Act 2004. One of the purposes of this bill is to set the annual rates of income tax for this 2023-24 financial tax year. Another purpose of this bill is to improve the current settings within a broad based - low rate framework for income tax. Also, this bill aims at improving settings for tax administration, KiwiSaver, and child support rules administered by the Inland Revenue Department.

Now, to speak on some of the items of the bill which I know have been spoken on, but I will once again speak about the increase of the tax rate from 33 percent to 39 percent: when originally drafted, this bill would have required many lower-income trusts to pay this top rate of 39 percent, or 39c in the dollar, but, thankfully, the Finance and Expenditure Committee has accepted the Government’s advice that a $10,000 trustee income de—my Latin’s not that good—minimis be introduced. So that has been done, and this is excellent as it will stop people trying to set up multiple trusts and avoid taxation.

The other part that I will speak about is the disabled beneficiary trust. To mitigate over-taxation, this bill proposes—maybe I’m not going to repeat myself too much there, because otherwise I will see a few more cellphones coming up, but, in short, it is recommended that a 33 percent flat tax rate is applied to beneficiary trusts as well. Also, deceased estates—trustee income of estates would continue to be taxed at 33 percent.

There are many other areas that I could speak on. I will touch on the energy consumer trusts. Submissions were received that trusts with beneficiaries representing a wide range of the public, such as trusts that own electricity distribution companies, should be excluded from the 39 percent trustee tax rate due to the risk of over-taxation. So, again, it is agreed that a 33 percent rate should remain.

Also, legacy superannuation funds—they will be excluded from the 39 percent trustee tax rate. They will be subject to the same tax treatment as widely held superannuation funds, currently at 28 percent. Now, I won’t touch on a couple of items that I feel might change the mood of the House. Just, in short, New Zealand First will happily recommend this bill to the House. Thank you.

RAWIRI WAITITI (Co-Leader—Te Pāti Māori): Kia ora, Mr Speaker, otirā, tēnā tātou. Tēnā tātou i tēnei rā i runga i te āhuatanga o tēnei pire—

[Kia ora, Mr Speaker, and everyone else present here today. Greetings to us on this day, and in regards to this bill—]

I’m not going to speak too long on this particular bill, but I do find it exciting to listen to everybody’s kōrero. I think the most exciting part is to acknowledge Therese Turner for the mahi that she’s done over the few years—25 years, in actual fact—advising this particular Finance and Expenditure Committee. You know, it’s people like that that make this—it must’ve been an exciting job for her to be here 25 years and to advise this particular committee. I’m new to the committee, so I was new to the people and the people who are part of the committee, but I just want to support all the kōrero and acknowledge her mahi at this particular time.

In particular, increasing the trustee tax rate from 33 to 39 percent for trustee income over $10,000 is a small part of actually what Te Pāti Māori’s tax policy was to address in terms of the injustices within our tax system. The tax system has only been there to service the wealthy and actually put a pinch on the working class and the poorer whānau. What this tax bill actually does—its current form we support, and so we supported it to the second reading, we supported it to select committee, and I think that was unanimous across the House. We are going to support this to there, but the amendments on the other hand we take issue with. While the average person in Aotearoa is paying 20.2 percent in tax, the wealthy are only paying 9.4 percent, and they are the ones that usually benefit from these trusts. Our tax system allows the wealthy to illegally avoid tax through housing, investment funds, property, and through trusts, hence why we are supportive of this particular bill in its current form, introduced originally by the last Government—so we probably would’ve supported it if it was still a Labour Government.

We’re supporting this bill in this current form, because it’s still in the form that they presented, but the amendments that actually give tax breaks to the more wealthy, I think, coming into the committee, that’s where we’re going to get some—like Chlöe said, it’s going to get exciting. It’s going to get exciting, because what it does is—in actual fact, it does not benefit the 98 percent of the people who pay more tax in this country. Again, what it does is it gives support to the 2 percent who control 50 percent of this country’s wealth and continue to get the tax breaks that this Government is so openly supportive of—and you can see it across a whole lot of other legislation. You know, it is unacceptable that over 2 million people in Aotearoa earn less than $30,000 per year while the rich use trusts to illegally avoid paying taxes. Now, if the current form of this particular bill holds on to that, we would support it all the way through to third reading, but it will not—it will not—and we will head into the committee having to challenge and continue to challenge this Government’s agenda for tax breaks for the rich and for the wealthy.

I told you I was going to take a short call on this, Mr Speaker, and so I thank you for that particular opportunity. We will be supporting this particular bill at second reading but we look forward to the robust discussions within the committee process. Therefore, we commend this bill, in the second reading, to the House. Kia ora tātou.

ASSISTANT SPEAKER (Greg O’Connor): Steve Abel—and I should’ve announced that this is a five-minute call.

STEVE ABEL (Green): Kia ora. I appreciate that, Mr Speaker. I’d be very willing to take a shorter call if it was permitted. I mean, we all love taxation, but taxation does have a real effect on people’s lives; it does very much determine the fairness of our society. What this current version of the bill before us does is it makes a fairer taxation system, therefore we will be supporting it at this reading. But, as has been articulated by other members from this side of the House, the proposed changes in the lodged Amendment Paper—which we’re not discussing right now—will reinstate interest deductibility, reduce the brightline test from 10 years to two years, and remove depreciation deductions for commercial and industrial buildings.

Now, I want to speak to why a brightline test at 10 years is such an important thing and why it shouldn’t be moved to two years; that would be a terrible amendment. What we currently have with a brightline test at 10 years—in the current proposal, it means that sellers, if they had a shorter time frame, which they used to, would be required to pay income tax on profits from the sale of residential properties when they are sold within two years of purchase and don’t qualify as the main home. That is why it was moved to 10 years. The objective in doing that was to incentivise development and put downward pressure on rents.

Now, this change is, essentially, retrospective, as investors who may have previously been willing to wait five years or 10 years to sell their property will now be able to sell much sooner and pay no additional tax—that is, if it is to be amended and changed. A fair taxing tax system is—

ASSISTANT SPEAKER (Greg O’Connor): Mr Abel, the rules of the second reading are: you can refer to possible amendments at the committee but not discuss them in detail—just for your information.

STEVE ABEL: OK. Thank you, Mr Speaker. So we do not want legislation in our tax system that constitutes a significant tax break for property investors. That is why the current formulation of this legislation does make a fairer tax system. That is what we should be endeavouring to do, because fairness is a core principle of our society; that is agreed to by members of the public. We want a fairer system, and that is why we commend this current version of the bill to the House, and we will be debating at further readings the harms done to this bill by the proposed amendment. Thank you, Mr Speaker.

CAMERON BREWER (National—Upper Harbour): Thank you, Mr Speaker. It gives me great pleasure to rise in support of the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. Again, I commend all the work and observations that have been made to get us to this point on this omnibus bill. I was hoping to talk more to the Government’s Amendment Paper, but I respect the process in the Chamber and that that will come at the next stage.

Although referring to it—as you’ve said, we’re allowed to in passing—this omnibus bill with the Government amendments will certainly restore a lot of fairness to those mum and dad landlords that dominate our landscape. In fact, about 80 percent of landlords in New Zealand own one property—they are mum and dad landlords. So restoring interest deductibility for them and returning the brightline test to two years is going to make a real difference. And as this bill will cover off, a lot of us heard on the doorstep just how much people, mum and dad landlords, were looking forward to the Government looking at that restoration of interest deductibility. Again, that is a legitimate cost, a tax expense that should be claimed as an expense, and that is something—

ASSISTANT SPEAKER (Greg O’Connor): Having pointed out you understood the ruling, you’re probably putting it a little bit far there, Mr Brewer.

CAMERON BREWER: Oh, it’s the much more exciting part of the legislation. Like member Swarbrick said, it’s difficult to make it exciting—

ASSISTANT SPEAKER (Greg O’Connor): Well, another good rule of the House is don’t get ahead of yourself.

CAMERON BREWER: Thank you. The main provisions—if we go back to the purpose of the bill—are about redefining New Zealand’s tax framework towards a broad based - low rate model, and improving the administration of taxes, KiwiSaver, and child support by the Inland Revenue Department. Just to recap for those viewers as to what this omnibus bill actually looks at and addresses, it is setting annual tax rates; global anti-base erosion measures; the trustee tax rate, which has been well-exercised, to align with the top personal tax rate; the taxation of backdated lump-sum payments; taxation rollover relief; the Nelson floods and the brightline test there; and the overseas donee status; and correcting extra pay inaccuracy on termination.

So, as our Minister of Revenue, Simon Watts, introduced this stage with, this is something that’s been a huge effort and that pulls a lot of strings together. And as I alluded to and I will allude to one more time, with the amendment bill that’s coming to this taxation bill, it will focus on the Government’s determination to reform our tax policies and address tax anomalies. The residential property investment support—again, measures restoring interest deductibility and reducing that brightline test, which is key.

Regarding the select committee report that others have referred to, the Finance and Expenditure Committee examined this and unanimously recommended its passage, along with unanimous amendments and further recommendations for streamlining the legislative process for tax purposes and emergency responses.

So I finish as I began: I am looking forward to talking about the Government’s Amendment Paper, where we’re looking at, and the Minister’s proposing, the restoration of interest deductibility on rental properties and reducing that brightline test from 10 years to two. I commend this bill.

Hon BARBARA EDMONDS (Labour—Mana): Thank you, Mr Speaker. It’s a pleasure to be able to rise for the second reading of the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill.

This particular bill has had two fathers and one mother. The two fathers: it first started in the office of the Hon David Parker. I then became its mother and took over the bill as it was progressing through the last stages of the previous Government. Then the final father, who will be shepherding this bill through the rest of the stages, is the Hon Simon Watts. So I just want to make it really clear that there will be parts of this bill that this side of the House will absolutely agree with and we will provide our support for this second reading; however, the last bit that is on the Table, by the new Minister of Revenue, the new father, we will have a lot to say on during the committee of the whole House stage, so I hope the other side of the House is ready for some good debate.

I do want to take this opportunity to thank the Inland Revenue officials who have worked on this bill, and the drafters that sit within the Inland Revenue Department. A lot of them are actually colleagues that I have worked with in my previous career. They are good folk and they have been able to do their best with this bill and the changes that the Finance and Expenditure Committee (FEC) wanted.

I also want to take the opportunity, which is covered briefly in our report, to thank the independent specialist adviser Therese Turner. Now, for any members who have been in this House for a longer time, basically, for any tax bill that has come through this House in the last 15 years, I would say, Therese Turner has been the independent adviser for the select committee and has provided some of the best advice that I’ve seen. I have a little bit of bias because I went to tax camp with Therese Turner in my first—yep, tax camp; that one time at tax camp! I went to tax camp with Therese Turner—

Rawiri Waititi: Were there flutes?

Hon BARBARA EDMONDS: Well, you know! So I went to tax camp with Therese Turner. She, basically, managed to distil what I had learnt in taxation law in university over 12 weeks into five days. It was intense, and it was definitely a really good reminder of the reason why I chose to become a tax lawyer. So I want to mihi to Therese Turner, thank her, and thank her husband, Ian, for supporting Therese to be able to do a stellar job for New Zealand and for our Parliament.

So, going back to the bill, I’d like to acknowledge, actually, the Government members of the Finance and Expenditure Committee. They’ve come on to the bill at quite a sort of a difficult stage, but the work that we did within the select committee, particularly on the revision-tracked version of the bill, was very cordial. So I want to acknowledge those members, because it’s not easy just picking up a tax bill sort of part-way through the process and then, basically, listening to a lot of long hours of submissions and being able to work cordially with the other side. So I just want to mihi to them as well.

One of the elements of this particular tax bill is the Global Anti-Base Erosion (GLoBE) model rules. For a long time, there’s been what’s called the base erosion and profit shifting policy work that’s been happening in the OECD in Paris. Inland Revenue has been sending people to be part of the working group to, basically, remove the ability to arbitrage between different jurisdictions for tax purposes. So the GLoBE rules that this particular bill brings in remove another element of that arbitrage.

We had a number of submitters come to the committee, because what this particular bill says is that we will enforce these new particular rules but with reference to the OECD guidelines. So that’s, basically, what this bill does. We had a number of submitters come to FEC saying that, well, actually it shouldn’t be in reference to the OECD rules, because if the OECD changes the rules and then here in New Zealand we don’t agree with them, we don’t really have an ability to be able to change that quickly. However, some of these submitters said that, actually, we should just have those particular rules in this primary legislation.

However, the advice from officials and, actually, through a number of submitters—because the FEC worked really cordially together and we tested the other submitters as they came through—was that because the way that arbitrage is happening across different tax jurisdictions can happen quickly, the OECD, who, basically, have a full unit that works with the different countries, can make those changes and New Zealand can input into that process through the working group. So the committee agreed with officials, which is why it’s still by reference in this particular revision-tracked version.

However, the FEC did say to officials that we want to ensure that people have certainty of those rules, and we asked them where they will publish them. They advised that it would be in a web page, the tax information bulletin, but, basically, we were comforted by the fact that, actually, Inland Revenue would do their job to make sure that taxpayers here—because it’s only if you earn a significant revenue that you would come within these new GLoBE rules. The Inland Revenue, basically, said, “Well, actually, we have case managers for a number of those significant enterprises, and we will make sure that they can comply with these rules even if the OECD in France changes it.”

One of the things that we did look at was around the application date of those GLoBE rules, and the select committee—the bill when it was introduced, it was through Order in Council. However, through our deliberation as a select committee, we decided, actually, we believe that we should have an application date within the bill. So that is a change from the bill that was introduced to this revision-tracked version. So the FEC has recommended amending the bill so that the income inclusion rules, part of the GLoBE rules, under tax profits rules apply from 1 January 2025, and the domestic income inclusion rule applies from 1 January 2026. So that’s a small change, which, even though it looks small on paper and in our report back, is actually a bigger change, because previously it was through regulation.

The trustee tax rate: this side of the House believed, when we introduced some of the changes, actually, a couple of years ago—the trustee tax rate was at 33 percent. Basically, what the Hon David Parker said to his officials at the time was “Keep an eye on this change between 33 percent and 39 percent.”, which is the top personal tax rate, which they had changed in the 2024-25 tax year. So he said to his officials, “Just keep an eye on that. If you think that we need to change it for integrity reasons, then we will look at doing so.” So, therefore, that’s why this particular bill does include an increase to 39 percent, to align with the top personal tax rates from the 2024-25 tax year.

One minor change, though, that came out strongly through the submitters who came to the Finance and Expenditure Committee was that they were saying, “If you don’t put in a threshold, there’s going to be a lot of compliance cost for barely any revenue.” So the recommendation that came out quite strongly from submitters was that we should bring in a threshold of $10,000. The committee did have some good debate on it, and, basically, we agreed with those submitters, which is the change that you’ll see in this bill, which is a de minimis rule—so that’s for trusts that have under $10,000.

There’s a couple of changes there around the disabled beneficiary trust rule, and, again, it’s to make sure that they’re not being over-taxed. That is a change which we believed as a committee needed to be done—especially for those who are beneficiaries of trusts and who are disabled, to make that compliance a little bit easier for them as well.

A really important change that is in this bill—which I have seen through various roles, probably over the last maybe eight years—is the taxation of backdated lump-sum payments. This bill changes the way that backdated lump-sum payments from ACC and the Ministry of Social Development (MSD) are treated. So, basically, rather than a person getting a lump-sum payment and they’re getting fully taxed on the year that they received that backdated lump-sum payment, this bill changes it to look over the four previous tax years. We believe that this was bringing greater fairness into the system, because a lot of these ACC clients and MSD clients, through no fault of their own, were absolutely eligible for these backdated payments, and we just thought, to be able to treat it a bit more fairly, you’d look back over the four years.

So, just to finish off, probably the last bit, which is at the time I was the mother of the bill, the taxation rollover relief for the 2023 North Island floods—I want to thank the Minister for agreeing to that particular Supplementary Order Paper (SOP). That was introduced after the bill was introduced, but we could allow for submissions on it through releasing that SOP. I want to thank the Hon Simon Watts, because one of the early deliberations of the committee was whether he was going to accept it or not; he did accept it. I believe, for those who were in the North Island floods, in those particular areas who have already had a difficult time, some of this rollover relief will be absolutely pivotal for them.

So I do support this bill at the second reading. We will have a lot to say in the committee of the whole House. I commend this stage to the House.

ASSISTANT SPEAKER (Greg O’Connor): Thank you. And just for the clarification of members, the previous speaker spoke on an amendment that had actually gone through the committee, so she was able to speak at some detail about that amendment.

NANCY LU (National): As a member of the Finance and Expenditure Committee, I am very pleased to stand in front of you today to commend the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill second reading, to the House.

The Finance and Expenditure Committee met multiple times and heard many public submissions from industry experts, tax experts, independent specialist advisers, policy advisers, as well as individual, day-to-day New Zealanders who had a genuine interest, and their best intention was to give their recommendation to the Finance and Expenditure Committee. If I can share a little bit of the public submissions that we heard, there were 67 interested groups of written submissions and individuals that we received and considered. As the select committee, we also heard oral evidence from 25 submitters. As a Finance and Expenditure Committee member, and as my first term as a new member of Parliament, I really wanted to say a big thankyou to these New Zealanders who have come forward to give their best advice to the House, to the select committee, on what they see is the best future for New Zealand.

If I may now—to join the many people before me, the many members before me—thank Therese Turner for her excellent contribution over 25 years as an independent specialist adviser on many, many tax bills. When I had the opportunity to listen to her, and to have her advice, I thought she would have been one of the best tax lecturers I could have wished for during my university years. And, during the later stages of our select committee meeting, when I found out that she had decided to take a step back and step down as an adviser to us, I felt very disappointed—disappointed that I hadn’t met her earlier, so that I could learn more from her and make a good contribution to the House. So I look forward to the second Therese Turner, to the third Therese Turner, who can be very helpful to us.

If I can, in my time, bring us back to the 10 main provisions of this bill in front of the House. Those were clearly laid out by members before me already, so I won’t repeat them. But the main provisions that I really, really wanted to talk on today are the three which are the global anti-base erosion (GloBE) rules, the trustee tax rate, as well as the restoring of the brightline test back to two years.

The reason why I wanted to address these three main provisions particularly are because of the messages that I have received, through email, on doorsteps, through phone calls, through many, many of my former colleagues in the tax and accounting industry, who have come forward to say to me, “Finally, finally, you guys”—“you guys” referring to the Government—“are finally listening to what people in the industry really wanted.” For that, I wanted to give three key messages that I have received. One is around our adoption of the OECD’s GloBE rules. The key point that I received was: we are not re-creating the rules; we are learning from the best practices, and we are adopting them. We are looking for ways that we can be efficient and effective, and we are bringing the best practices to New Zealand.

Also, on the trust tax rates, what I have also heard was our best effort to understand what is really captured between the trusts and between the individual tax rate—the discrepancies in the tax system. The compliments that I have received were about the de minimis of $10,000—that we have thought about the alignment but we have also thought about what is practical for New Zealand.

Lastly, the amendment that I have received a lot of compliments about was restoring the brightline test to two years. From the many, many doors that I have knocked on and phone calls that I have made, the fact is that most of the households here are mums and dads who really just wanted the two years back, because they need the flexibility—

ASSISTANT SPEAKER (Greg O’Connor): Ms Lu, you’ve been sitting in the House. You know that’s a proposed amendment that you can refer to, but you’re getting into some tintacks.

NANCY LU: Thank you, Mr Speaker. So, if I can say, listening to all the opinions—from the many different perspectives, different political backgrounds on the select committee, but also the many different social backgrounds, many different targets and different goals, and from the many stakeholders—I wanted to say I am honoured to be part of a team that was able to see across all the differences and rise above, stand back, and finally, agree on something, so that we can highlight New Zealand’s dedication to forming tax policies that are modern, that are efficient, and that are effective.

As a member of the Finance and Expenditure Committee, and for the National Party, I am pleased to present this bill to you, which we’ve agreed on unanimously, and to recommend this stage to the House. Thank you, Mr Speaker.

ASSISTANT SPEAKER (Greg O’Connor): This is a five-minute split call—Rachel Boyack.

RACHEL BOYACK (Labour—Nelson): Thank you, Mr Speaker. It’s a pleasure to take a short call on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill.

This is a very good bill, and I want to begin my contribution by thanking the three Ministers that have worked across this bill and also to put on record my thanks to the Finance and Expenditure Committee—of which I’m not a member, so I haven’t been part of the select committee process. My thanks to both the former committee and the current committee and all of the officials—particularly Therese Turner—who have worked in providing advice to Ministers and also to the committee.

It is a very good bill. Unfortunately, as other members have noted during their contributions—and I’ll just speak briefly to it—we have seen some of the proposed amendments from the Government that will come forward at the committee stage. Unfortunately, it’s the opinion on this side of the House that the bill will no longer be as good as it is today. So I wanted to take some time today to talk to two particular matters in the bill that are relevant to the work that I do as a parliamentarian. The first is around my role as spokesperson for ACC, and, secondly, there is some improvement here in the bill that will affect some of our homeowners who were affected by the Nelson floods nearly two years ago, and I’ll talk to that briefly also.

So I’ll begin by just speaking around the changes that the bill makes to the taxation of backdated lump-sum payments. As ACC spokesperson, but also as a constituent MP, I have spoken to people who have received these lump-sum payments, and I’m sure nearly every electorate MP and many other MPs would have spoken to people in those situations. I want to talk specifically around ACC lump-sum payments given to those who have had sensitive claims. Sensitive claims are an important part of the ACC system—so people who may have been subjected to often quite horrific examples of sexual abuse, often when they were younger, who, later in life, have been able to take a claim from ACC and receive both support through things like counselling but also a lump-sum payment that allows them to have access to some income.

I want to speak particularly to a constituent who I’ve gotten to know very well over the last couple of years who came to me about this very issue. What she’s told me is that the impact of that abuse when she was a little girl has robbed her of her opportunities. It has robbed her of the income that she could have earned if she’d been able to go to work like others who haven’t had such significant offences committed against them. One of the things that I think this bill addresses so very well is that people who receive these payments would often end up receiving a large payment that would pop them up sometimes into the highest tax bracket. Even if you looked at it only over a year, often it would be significantly more income than a person would earn in previous years. So it is a very good change in the bill that people will be able to have that lump-sum payment assessed across a four-year period. I think it’s one of those issues where all of us across the House would have met with people who have been subject to these particular circumstances.

I think the only message I would want to send to my constituent—who I’ve met with on many occasions and who has lobbied for this type of change—is just how unfortunate it is that we can’t make these changes retrospective. That is the nature of our lawmaking. Unfortunately, we can’t go back in time across all of those lump-sum payments that have occurred. But what I do want to be able to say to my constituent is that she and others like her have been heard—you have been heard by the House—and this is one of those changes that does make this bill a very good bill.

Just in the final few seconds of my contribution, I want to acknowledge the change here for the small number of people who were impacted by the Nelson floods nearly two years ago, and I’d just like to put on record, before he gives his final speech tomorrow, my thanks to the Hon Grant Robertson, who made this happen. It was a couple of phone calls—after we’d been having real challenges, to be honest, with officials both at the council and departmental level—that actually got this buy-out across the line. My thanks specifically to Grant Robertson for making that happen. What this bill would have meant was that, again, those affected by Cyclone Gabrielle and the Auckland floods would have had the benefit of this bill, but not my constituents in Nelson. So it’s a very good change, and I do want to thank the committee from the bottom of my heart that, once again, my constituents in Nelson have been treated fairly, as they needed to be.

It’s a great bill at this stage—might not be so great in a few weeks’ time—so I commend it at this stage to the House.

DAVID MacLEOD (National—New Plymouth): Thank you, Mr Speaker. It’s a pleasure for me to stand and talk to this bill, the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. And it’s very pleasing to have just recently returned to the House to find that everybody is, basically, supporting this through this particular stage, although it may be questionable about future parts, according to the Opposition there.

But when I joined Parliament and was lucky enough to be on the Finance and Expenditure Committee, I soon realised the amount of work that had already been done. And, as was previously mentioned, I think it was Barbara Edmonds who called this the “Two Fathers and a Mother Bill”. It’s been through a number of Ministers’ hands to get to where it is today. I look at the process that has been run, and I do feel that what I have been involved with—the many submitters that have come forward to present and the way in which the committee has resolved with what it has presented to the House today—has been a very thorough process.

If I look at the purpose, and without reading the purpose of the bill, I would summarise it as being a bill about fairness. It’s about the fairness of individuals not being overtaxed; it’s about the fairness of entities, being trusts and that, not being overtaxed; but it’s also about reasonableness, and that’s about individuals and entities that have earned profits actually paying their fair share of tax as a result of that.

There are many other main purposes of this bill. One of them that I would like to speak to is the global anti-base erosion (GloBE) rules, and that is the one with regards to multinational entities. Obviously, we’re talking about entities that do have a significant revenue. In fact, they only reach the threshold of being attached to these rules once they’ve reached €750 million, which provides them the position of having the effective rate of 15 percent. That rule is all about making sure that we don’t have entities shifting their profits around the world and removing the ability to pay taxes. The many countries that have already signed up to the GloBE rules is a very good step forward to making sure that any profits that are earned in a jurisdiction are paying a fair and reasonable tax in that jurisdiction. I’m hoping that the GloBE rules will actually, ultimately, affect that outcome, particularly once more countries attend. I understand it’s north of 130 countries that are looking at that at this particular point in time, and I’m sure many of those countries are very fortunate that they’ve actually got that passed through.

Obviously, with those GloBE rules administered at an OECD level, they are up for change. There are clauses within the bill that allow our country to have our autonomy if we don’t agree with it, so it’s not like it’s a catch-all. So I think we’ve got sensible clauses within the bill that protect our sovereignty, but at this stage, joining with the rest of them, I think, makes sense as well.

There’s been considerable debate amongst the submitters. There’s been plenty of submissions about the trust tax rate. Clearly, on that, I think there was argument about what is a reasonable threshold. At the beginning, every trust was going to be paying the highest tax rate of 39c in the dollar for all of their profits or income earned. Obviously, it came to the point with the submissions that we felt that that wasn’t actually fair, and the $10,000 threshold for the 39c tax rate coming into play, the committee felt, was fair and reasonable. We did have a look at many different levels, including right up to as high as $100,000 and maybe even further north of that. Probably for every action there’s an equal and opposite reaction, and we felt that this $10,000 threshold ensures that maybe large trusts aren’t incentivised to cut themselves down into smaller revenue-earning trusts and endeavouring to play the tax system that way. The cost of not just starting up a trust but also yearly or annually administering a trust probably dissuades people from actually doing that. So I’m pleased to take this short call, and I’m happy to support the bill to the House.

INGRID LEARY (Labour—Taieri): Mr Speaker, if you’ll indulge me, I’d like to acknowledge the previous speaker, David MacLeod, and seeing him enjoy WOMAD in his rohe yesterday. It was great to see such a great arts event. Congratulations to you as the local MP and to the organisers, and I do hope that he goes into bat for the artists when the inevitable cuts come, around the 6.5 to 7.5 percent, because we do know they’re a vulnerable group.

But, Mr Speaker, you will be happy to know that I plan today to talk about the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, and I would like to focus my comments on the brightline test. I do so because of the report, on page 11, around the Nelson floods and the brightline test, alluded to by my colleague Rachel Boyack. What this bill does—we know that there is unanimous support for it across the House—one of the really good things it does, is it proposes section CZ 26B of the Income Tax Act, to be inserted by new clause 18C, to ensure that the brightline and other time-related tests do not apply to a property that’s been affected by North Island adverse weather events and subsequently bought out by the Crown or a local authority. As Rachel Boyack said: in Nelson, there are actually about 14 properties that the local council is looking to buy out, and without this proposed amendment that was suggested by the Finance and Expenditure Committee, it would mean that the brightline test would have applied.

Now, would that be a good idea if a local council was purchasing a property in those situations? Let me unpack that a little bit. First of all, for those who are following along, a brightline test is, basically, a way to tax the financial gains that people make when they buy or sell a house for income. We know that the brightline test currently is at five years, and other members have alluded to a tabled—but not moved—amendment that proposes to move that to two years. Now, if we did not have the suggestion in the report by the select committee and the change to the bill, those 14 houses would be subject to the current brightline test of five years, which would seem terribly unfair, to tax the owners of those houses; to say, even though these weather events mean they are forced to sell their houses, effectively, to the Nelson Council—it would seem very unfair to tax them. So the fairness principle does seem to apply here.

That also raises the question of when is it fair to tax properties in those circumstances. Now, as other speakers have said, if we had retained the taxation principles Act, we might have had a better barometer, in my view, because that did have six criteria—universally accepted criteria—by which to say, very clearly, we could measure vertical and horizontal equity, and so on. We no longer have that Act, so the idea about when it is or isn’t fair becomes, effectively, a political judgment. And that, then, for me, raises the question, “Well, if we’re looking at brightline tests”—which is brought into this debate under the Nelson changes and recommendations. I’d just like to make a few comments about that, because there are assumptions about brightline tests and interest deductibility that have been made, about increasing housing supply, and they’ve been made in this debate. But, actually, that only applies in a competitive market. And the issue we have here, as everybody knows across the House, is that New Zealand does not have enough houses being built.

I’d like to add that there’s also $2 billion going each year to landlords for an accommodation supplement. So it starts to create perverse drivers, where a brightline test and interest deductibility are a way of allowing people to double dip. They don’t pay tax on their capital gain if they are selling the house outside of the brightline and yet they are able to claim interest deductibility. That will encourage more landlords to purchase large numbers of houses, which is what we have seen previously, which makes the market tighter. They’re incentivised by the accommodation allowance—$2 billion a year—and, ultimately, rents go up. And I would say that the justification of a kind of trickle-down economics in this kind of scenario doesn’t work, especially in an environment where councils are adding significantly to rates bills because they have repealed the affordable water reforms that the previous Government brought in and, therefore, there are incentives for landlords to actually use any surplus that they generate or any profit to try and offset those increased costs.

As I say, I raise this because there is an amendment that’s been referred to, and I’m not going to go into the provisions of that amendment; I know, under Standing Orders 122(3) and 123(1), that wouldn’t be appropriate, but I do note that I can refer to the subject matter, and that subject matter has certainly been traversed by speakers on both sides of the House. So I would just ask those who are listening in—this is a little bit of my view on why we are signalling that, although we support this bill as it currently stands, there is a tabled amendment yet to be moved which raises these very issues that are also raised by the Nelson scenario, which we will be vehemently opposing.

The other element to that is that it’s very cynical, in my view, to introduce that amendment after the select committee process. So the debate has been confined. The debate that we had on this very issue—about the brightline and interest deductibility, and what’s fair, and how markets may or may not move—will not be able to take place now. I understand that; it has to happen at the committee of the whole House stage. But I would urge people to be watching at the committee stage, because that is when we will have licence to do so.

So, in summary, I just want to say that it’s very useful having this reference to the Nelson situation, to the 14 houses. It gives us an example of where the brightline does have a direct impact and where we can see that it would be very unfair to apply that test, or only let North Island flood-affected houses have the benefit of that, where Nelson wouldn’t have been able to. And I also think it’s really important to acknowledge Therese Turner. As a former chair of the Finance and Expenditure Committee, I also had the benefit of her very pragmatic and sound and solid tax advice as we worked through similar complex bills in the committee.

Finally, just also to endorse—and thank, actually—the chair of the select committee and the comments that have been made about making sure that taxation on lump-sum payments, under the Ministry of Social Development in particular, are now fairer through the amendments of this bill. I remember when I was at the Brighton fair a couple of years ago and one of my constituents came up to me. I do hope he is still with us. He had stage 4 terminal cancer. He had been able to get a lump-sum payment on the basis of medical misadventure associated with treatment for that, but because the lump sum had come in at the end of a very late period, he was due to pay a lot of tax on it. He had been fighting for many years to get equity around that issue. So this is a great day if he’s still with us; if he’s not, I want to salute the work that he did and his advocacy for this. It is only fair that lump sums are paid at the equitable rate of when the tax payment would have been due, not a lump sum at the end, which is likely to increase people’s income and, therefore, lead to a higher tax rate.

So, in the dying moments of this debate, while we do support the bill, it has had many mothers and fathers, as the Hon Barbara Edmonds has said. I look forward to some fireworks at the committee stage, when these very important questions about tax fairness, about the brightline test, about interest deductibility, and about what is appropriate and what is the true impact for renters in the market will come to the fore. It will feel truncated because it hasn’t been to select committee, and therefore, we will certainly make our views known, and we invite viewers out there to follow the debate closely, because there is something about the logic of the National-led Government that doesn’t add up. It’s trickle-down economics. So I’ll reserve my comments for then and commend this bill currently as it is to the House.

CATHERINE WEDD (National—Tukituki): Look, I thank you for this opportunity to speak in support of this bill. It’s great to see cross-party agreement across the House on this, and we’ve enjoyed our discussions through the select committee process and listening to submissions on various parts of the bill. But, you know, on this side of the House, we are laser focused on creating a better tax system in New Zealand, one that is fairer and does enable hard-working New Zealanders to keep more of what they earn and get ahead. There are many parts to this bill and there are many complexities to it, but it is all focused on creating a fairer tax system for all New Zealanders.

One area that I do particularly want to comment on is the tax relief that it will provide for a lot of the victims of Cyclone Gabrielle. I’m the MP for Tukituki, and in my electorate we still have hundreds of families that are doing it really, really tough out there, in our cyclone-ravaged region. The amendments to this bill will ensure that those property owners whose assets have been destroyed by the cyclone get deferral of tax liability on insurance proceeds for assets affected by the floods. This is a practical approach for many people who are going through an extremely stressful time, and they just don’t need the added stress of tax at this very, very tough time—the last thing they need is that, when they have so much to do to, basically, repair their properties. Many are currently going through category 3 buy-outs of their homes. It’s really, really tough. It’s a year on, and they’re still dealing with quite a slow process, trying to get the buy-outs for their homes.

Also, adjusting the brightline test will provide relief for flood victims as well. So this is something that I think we should all be very, very supportive of, particularly for so many doing it tough, not only in Hawke’s Bay and the East Coast but also across Nelson and that particular area as well, where those property owners are going to be given a lot of relief through this bill. Similar tax relief was provided in Christchurch, with the earthquake in Kaikōura, so it makes sense that we are looking at practical solutions around tax and providing tax relief and respecting those people that are doing it tough across the East Coast and Nelson. So I do really, really support this particular area of the bill.

We made a number of recommendations around the select committee process, when it came to tax relief around Cyclone Gabrielle and the Nelson floods and the North Island weather events. And I do believe that this bill is very supportive of the people in those regions and what they’re going through, and will be very, very beneficial for them. But I think that, overall, this bill is about fairness; it’s about creating a tax system that is fair for everyone. We spoke, in the select committee process, around the global anti-base erosion rules, which will prevent tax-base erosion by multinational companies, to ensure global consistency. That, again, is going to create more fairness within the tax system. And the trustee tax—to create more consistency, again, across the tax system, to ensure that we do have a fairer, broader, better tax system. Then the lump payments—as the member across the House has also alluded to earlier, that this is fairer. We heard submissions about people that were getting lump sums, and it only seems fair that it shouldn’t be all specifically taxed at once.

So these are all targeting a fairer system, which we absolutely agree with because, on this side of the House, we are very, very focused on ensuring that hard-working New Zealanders are able to keep more of what they earn. And, as the member across the House has also spoken about, the brightline test, and looking at where we can see benefits in reducing that brightline test back to two years, is going to be very, very beneficial. Then, when we look at the select committee process, as she spoke about, in terms of interest deductibility and the benefit that that is going to have on our housing sector and relieving the housing crisis—because we have seen rents go up $170 a week in this country. So restoring interest deductibility is really going to look at downward pressure, it’s going to look at lowering rents, opening more houses up, so that we’re not inflicting more cost on landlords. So there’s no types of things—

Ingrid Leary: Point of order. Mr. Speaker, I just refer you to Speakers’ rulings 122/3 and 123/1, where the speaker may refer to matters in the amendment but not speak to that. The points that I made were in relation to Nelson, which was mentioned in the current bill, but I believe the speaker is going outside of that purview.

ASSISTANT SPEAKER (Teanau Tuiono): I’ll just take some advice.

CATHERINE WEDD: That’s OK, I will round it up now, anyway.

ASSISTANT SPEAKER (Teanau Tuiono): I’ll take this point of order, thank you. Thank you to the member for that point of order. I do understand that the previous Speaker that was sitting in the Chair had taken your point, so I hear your point. So I would invite the member to wrap it up.

CATHERINE WEDD: Yes, OK. Absolutely. There’s many great things about this bill that we have discussed through the select committee process—many benefits, particularly in cyclone-ravaged Hawke’s Bay. So I do commend this bill to the House.

Motion agreed to.

Bill read a second time.

Bills

Road User Charges (Light Electric RUC Vehicles) Amendment Bill

Second Reading

Hon SIMEON BROWN (Minister of Transport): I move, That the Road User Charges (Light Electric RUC Vehicles) Amendment Bill be now read a second time.

This bill, which we are now putting through Parliament, through its second reading, is an important bill in order to ensure that all vehicles that use our roads are paying towards, contributing towards, the maintenance and upkeep of our roading network. In 2009, the previous National Government put in place an exemption for light electric vehicles and plug-in hybrid vehicles from paying road-user charges (RUCs) in order to encourage their uptake. The exemption was always to end once those classes of vehicles reached around 2 percent of the light vehicle fleet, which they have now passed, so this legislation has been brought into the House in order to transition those vehicles into the road-user charge system on 1 April.

I note that this legislation has been brought to the House and has had to go through a relatively quick process through a select committee due to the fact that the last Government failed to address these issues prior to the last election. They consulted back in 2022 in relation to what changes were needed to transition plug-in hybrids and electric vehicles into the system but failed to make any actual legislative changes.

One of the key issues which I asked the Transport and Infrastructure Committee to look at is in relation to plug-in hybrid vehicles, because, of course, if we didn’t bring this bill to the House, those vehicles would have to pay the full road-user charge rate, by means of the fact that they both are powered by a petrol engine and also by an electric battery which can be plugged into the wall and receive electricity. So if this legislation wasn’t brought to the House, on 1 April this year, the reality is that the owners of plug-in hybrid electric vehicles would be paying the full road-user charge rate of $76 for 1,000 kilometres. In order to ensure that that didn’t happen, because, of course, that would be unfair based on the fact that they do consume fuel and pay fuel excise duty, we put this legislation to Parliament in order to address the fact that the RUC rate needed to reflect the fact that they were also paying petrol excise as well. We proposed in that legislation a 30 percent RUC rate reduction based on the fact that those vehicles consume on average around 2 litres per 100 kilometres, but also reflecting the fact that the real-world usage is often different from what the manufacturer data says. And, of course, we asked the committee to particularly look at that issue to ensure that we had a fair outcome from it.

The Government has announced today that we will be ensuring that that RUC rate is extended to 50 percent, reflecting the fact that, actually, particularly, older plug-in hybrid vehicles do have a higher fuel consumption due to their battery life being either diminished or not being as good as some of the newer plug-in hybrid vehicles. So we think this is an ability to compromise and get to a better approach on this particular issue.

Of course, the select committee heard from hundreds of submitters over a very short period of time. We thank the select committee for the time that it took to listen to those submitters. As I outlined, the reason for the short select committee was, unfortunately, due to the fact that the last Government didn’t deal with this problem, but I do just want to thank the committee for dealing with those hundreds of submitters and to be able to come back to the House in such a short period of time, and I want to thank all the members of the committee for their contribution towards that.

Of course, the other change that this bill does make is in relation to battery electric vehicles, and, of course, it requires those vehicles to pay the RUC rate of $76 per 1,000 kilometres from 1 April this year. Of course, this legislation isn’t proposing to adjust the RUC rate, as other members may be wanting to do.

But I do just want to make the final point in this debate—two final points—in relation to the next steps. Firstly, this is a transition. The reality is that this bill has highlighted the fact that there are significant variances in terms of how much vehicles pay to use the road depending on what type of fuel they use. So if you have a hybrid or a plug-in hybrid or a battery electric or a diesel, the reality is that vehicles are paying a different amount to use the roads compared to others, based on the fuel that they’ve used. That’s because our system for paying to use the road has been based on fuel excise duty, which charges a certain number of cents per litre, rather than a predominantly road-user charge system, which charges based on how many kilometres we use the roads. So it’s this Government’s intention that this is the first step in transitioning all vehicles to a road-user charge so that all vehicles, regardless of what type of fuel they use, whether they’re a petrol car, whether they’re a hybrid, whether they’re a plug-in hybrid, whether they’re diesel, whether they’re battery electric, whether they’re hydrogen—regardless of what type of vehicle is using the road, ultimately, it is this Government’s view that vehicles should pay road-user charges based on the weight and the distance that they use the road, rather than based on the type of fuel that they use.

So this Government will be progressing further changes in regards to moving all vehicles to a road-user charge based on distance travelled and vehicle weight. We’re currently receiving advice on that, and we’ll be moving at pace and doing that as quickly as possible, and I note that the select committee also made that particular point in their report back to the House.

The final point is that there will be a two-month transition from 1 April. So there are over 100,000 vehicles which will be impacted by this change. We note that that is a significant number of vehicles to bring into the road-user charge system. The New Zealand Transport Agency is communicating with all of those owners of those vehicles, and there will be two months which, by the end of that two-month period—by the end of May—all those vehicles will have had to have purchased their first road-user charge licence. So we’ve tried to provide maximum flexibility in order to smoothen that transition and also to ensure that the agency is able to have time, people are able to have time, before they have to have purchased their first road-user charge licence.

So this Government supports the intent of this bill. We’re pleased with the progress it’s made. We are making the change around the plug-in hybrid rates but we’re also, as I said, outlining our intent to continue to progress work for all vehicles to be paying a road-user charge based on distance and vehicle weight. I commend the bill to the House.

Hon DAMIEN O’CONNOR (Labour): Mr Speaker, thank you very much. It’s an honour to speak on this important piece of legislation. Transport across our big country for everyone—individuals or commerce—is vitally important. I wasn’t on the select committee, but I want to thank my colleagues, who arguably have saved the day, actually, particularly for plug-in hybrid vehicles.

Can I just go back a couple of steps? I’ll confess that as someone who drives probably 60,000 to 70,000 kilometres a year, owns a truck that probably creates the potholes, rides a motorbike that suffers when you hit the potholes, and has a car somewhere in the middle there, our roading system is in a dire situation, in large part because we bought heavier trucks—the last National Government put heavier trucks on the road—and then froze the funding for maintenance and improvements. So, when we came into Government, we had a big challenge of increasing substantially the funding for roading, and indeed we did do that.

As was pointed out before by the Minister: in 2009, the National Government saw the need for electric vehicles and so brought in some—well, what they thought were exemptions, of course, for electric vehicles. The idea was that we’d have a transition through to more electric vehicles in our fleet—in fact, the target being 2 percent. In fact, that only started to occur when the Labour Government brought in incentives—or the Labour coalition Government, when New Zealand First had some sense—when we brought in the Clean Car Discount that did provide a direct incentive for people to buy Teslas. Indeed, the Prime Minister took up that opportunity—and because, as we know, there’s market failure through our economy and if we’re wanting to transition forward, then we have to provide the incentives. This piece of legislation indeed moves that forward. It was going to park the incentives, because at a 30 percent discount for plug-in hybrid vehicles, they would have been paying more than the equivalent petrol vehicle. That anomaly, which would have discouraged people from the transition, was addressed by my colleague who brought in an amendment which the Minister in his wisdom is going to carry through. So thank you very much to members on the committee.

If I go back to Labour in Government, we did see this anomaly and this challenge of how we would get vehicles that, clearly, are using the road, to contribute to road maintenance. So Waka Kotahi, who I think, in my personal experience, is not the best Government organisation—I’ve seen over many, many years, them in their different forms, come to Government with advice, much of it flawed, in my view. They have changed systems. We have a road system that’s not safe, a road system that is not maintained, and a road system in which consecutive Ministers have taken advice from Waka Kotahi. I hope this current Minister is going to shake them up because I don’t believe they’ve provided the right advice on driver licensing and, as I say, on road safety and many other things. And I’m not sure that their advice on road-user charges (RUC) is the fairest way, across the board, to provide direct contribution to road maintenance, or is the right way forward.

As a truck owner, you can go online, and you can pay road-user charges and you’ll get a ticket in the mail and then you put it on your windscreen. It’s all OK and many diesel vehicle owners would know that system. But if we’re going to apply that across the whole fleet, it is going to be, in my view, a bit of an administrative challenge. That’s one of the things that is being looked at—and I’m sure the Minister might come to it—so I’m just putting on the record that what we’re doing here, in making adjustments for the right reasons and finally having the incentives in place for a decarbonised lower-emissions fleet, which we all agree is necessary—I hope that we’re not going to bring in an administrative system that becomes another challenge for the average Kiwi.

If you run a fleet of trucks, you’ll have a sound administrative system. Even if you run a couple of trucks or you run one truck, you kind of put up with the road-user charges application system. It’s not that complex but it is none the less an administrative requirement. For the average Kiwi to transition from a petrol vehicle, where every time you fill up, you pay your excise, into one of having to actively apply for road-user charges, then I think there may be some challenges. Now there’s an electronic alternative. And the question I’d ask of the Minister or of Waka Kotahi as we move forward is: what’s the cost of that system relative to the benefits, and is there an alternative? Because I think that the Minister of Transport will come back to this House, in this Government, and propose that road-user charges go up. They’ve said there will be no extra taxes or charges. Well, I don’t believe them. I’ve seen too many false statements on that area, so the issue of not only the charges for RUC but then the system of rolling that through the whole fleet is one that we in Labour, in Opposition, will challenge the Government as they move forward.

Can I acknowledge the areas in the bill where there have been exemptions made, particularly for rural vehicles. I think that’s important, particularly for rural vehicles. I think that’s important, and I’m sure that those people moving out in areas—and, obviously, there’s the evolution, in spite of what farmers might have denied, of electric vehicles on farm which will be more efficient and more effective as well, in many ways, to get around the farm. That is an evolution that I think we must also welcome.

Can I just say that the other thing that this bill will do is put the Government and our country in a better position to honour its commitments in the EU-New Zealand free-trade agreement which we will be debating after this. Because if the changes hadn’t been made by my Labour colleagues to provide a 50 percent discount for RUC for plug-in vehicles, and they had left it at 30 percent, then in fact we would have been stepping back from what has been in place: an incentive to move to a decarbonised passenger fleet.

The EU trade agreement says—and it might be discussed later—that we, as two parties to agreement, must continue to do our best to reduce emissions across our economies and contribute positively to the Paris accord goals. So, they are noble and, in fact, legal obligations, and the adjustments made in this bill mean that we will continue on that track, hopefully with people who buy plug-in electric vehicles who now will at least have the same benefit, if not a greater benefit, than remaining with an electric vehicle.

The reality is that human nature likes incentives. We heard it from a couple of the Ministers there that the farmers want incentives, they don’t want to be driven by regulation. Some would call it subsidies, I guess, and subsidies and incentives are part of human nature. What we’re doing in this piece of legislation here is shifting the obligation to pay for your use on the roads and arguably, your impact on the roads, although in my view that still has to be properly assessed. But electric vehicles and plug-in hybrid vehicles do clearly contribute to some impact on the roads, and they do have to pay through RUC, but the plug-in hybrid vehicles will pay at the appropriate level, with still a little incentive to move in that direction.

This is an important piece of legislation. It’s one step down the track to a fairer system of paying for our highway network. But if this coalition Government did as its previous National Government did—that is, move to a philosophy of sweat the assets and minimise the investment in road maintenance, safety upgrades, and road improvements—then we’ll be left when they exit office with the same dilemma we faced in 2017 when we came in, and that is the need to significantly increase the funding for our roading networks and for alternative methods of transport, including rail, cycling, walking, and just getting around our country. We did a good job. We moved us forward.

This issue of RUC or the issue of electric vehicles and plug-in hybrids and how they contribute is now being addressed through this legislation, improved dramatically by the simple rebalance of the discount rate for plug-in hybrid vehicles. So thank you to my colleagues, thank you to the Labour Party and their commitment on the select committee. We, in Labour, support this bill through the House. Kia ora.

Hon JULIE ANNE GENTER (Green—Rongotai): Tēnā koe, Mr Speaker. Tēnā koutou e te Whare. Climate change is the single biggest issue facing us right now as a country, as a people, and as a planet, and the reality is that we need to work together and cooperate on a level we never have before in order to address this challenge. It’s going to affect farmers, it’s going to affect tradies, and it’s going to affect our infrastructure if we don’t take action now.

If I told you that there was a way we could take action on climate change that not only didn’t cost us money but it saved us money and it made a more productive and efficient transport system and a more productive and efficient way of living and doing business in New Zealand, I would think that Government parties would support that, because here’s an opportunity to do something that’s not just good for the climate but it actually, in the short term, saves us money, and in transport, it’s precisely that. Everything we can and need to do for a more sustainable transport system that’s going to be better for the climate saves New Zealanders money and it creates a more productive and efficient transport system and better cities, and yet the Government is doing the opposite, in almost every area of transport, of what is good for the climate and good for New Zealand. That’s unfortunate, and this bill—this is the second reading of this bill—is a proposal that in the short term really goes in the opposite direction of what we need to do in terms of supporting more electric and low-emissions vehicles into New Zealand.

Low-emissions and electric vehicles are really a huge opportunity for New Zealand because so much of our electricity is renewable already. We’re spending so much money on imported fossil fuels to run our vehicles, and we have such a vehicle-intensive transport system—a private vehicle - intensive transport system. We’re spending all this money on vehicles, plus the fuel to run them, and the fuel to run them is mostly generating energy-related carbon emissions, which is bad for the climate. So here’s this win-win opportunity, but, unfortunately, what the Government is doing is simply taking away any incentive to switch to electric vehicles right at the time when we most need Government support and incentives in order to get that transition.

The reason the bill does this—and we heard it through the submissions. The other downside to this whole process has been that it’s been incredibly short. It’s been rushed. The select committee was given only nine days to announce submissions on the bill, to hear submissions, and to report back. The normal Parliament process is six months. Even four weeks would have allowed a better process, but we only got nine days, and in the very short time that the public had to submit on the bill, we got over 500 submissions. Now, I think we had like 36 hours for submissions.

We got over 500 submissions, and in the departmental report from the Ministry of Transport, it says that the main focus of submissions was advocating for battery electric vehicles being charged a lower road-user charge rate than what is proposed by the Government and that plug-in hybrids should be charged a lower rate. All of these submissions, the majority of these submissions—if you look on page 14 of the departmental report, it says, “the majority of these submissions agree that [electric vehicles] should contribute towards the cost of the transport system”. However, the appropriate road-user charge rate for battery electric and plug-in hybrids “should reflect their important role in reducing greenhouse gas emissions and addressing climate change concerns.”

Now, what we’re interested in here more than anything else is outcomes: what will the outcome of the policy be? When you combine the outcome of this policy with the outcome of removing the Clean Car Discount—which was having a transformational impact on the vehicles coming into the country—then the reality is we’re going to import fewer electric vehicles in the next few years. That means that every extra higher-emissions, fossil-fuelled vehicle that we get in the country locks in 20 years of emissions, and not just 20 years of emissions but 20 more years of New Zealanders paying for overseas fossil fuels, rather than using cheaper, cleaner, renewable vehicles using electricity generated right here in New Zealand, which is good for our economy and good for consumers.

So the reality is that the majority of the submissions were opposed to the proposal, even though they support road-user charges being applied to battery electric and plug-in hybrids. They support it, and there was a particularly strong submission from an industry group. We had, basically, the whole industry: the Automobile Association, the Motor Trade Association, the motor vehicle importers’ association, the vehicle importers—that’s the second-hand vehicle and the new vehicle industry groups—Drive Electric, and others. They had a big, joint submission that said, “We believe that the current planned [road-user charge] rates that will apply from 1 April [this year] on [battery electric vehicles and plug-in hybrids], creates a significant distortion between [road-user charges] and [fuel excise duty]. Reducing these RUC rates [was] requested”—so the rates in this bill were requested, and the Green Party supported their proposal that we reduce our battery electric rate to $60, and for plug-in hybrids, we advocated for $38.

Now, as it happened during this rushed process, if you read the select committee report, you would think that the Government was not going to amend the bill as introduced, and yet attached to the bill, it is amended, and it is amended to have a lower rate for plug-in hybrid vehicles, which is great. So, look, if one thing can be taken away from this, because the Government embraced this change of the lower rate of $38 rather than $52, which it was going to be—

Tom Rutherford: $53.

Hon JULIE ANNE GENTER: $53. Sorry, it’s $53. So here, in clause 15(2), the amendment was made, even though the Government members of the committee said that they weren’t supporting that change. They did vote unanimously to support it, and now the Minister of Transport is saying, “Hey, actually, I did want that. I did want the committee to consider options.”

So, please, let that be a lesson to Government members of the select committee that they have a really important role to play in improving the legislation from the executive. You all—Mr Speaker, I’m not referring to you, but you all, in the Government—didn’t come here to rubber-stamp what the executive is doing. You’re hearing from the public, you’re hearing from industry, and you can make an informed call if that could help improve the executive’s lawmaking, which happened in this case. So I really encourage members to take seriously the role of select committees in improving the legislation handed down by Ministers. You’re not here at the beck and call of Ministers; you’re here to hear from the public and make that law better, and, in this case, it has happened.

The Greens supported the amendment at the select committee, and all kudos to my Labour colleagues, who ensured that that amendment was in the version of the bill that was voted on by the select committee. So here we have a reduced rate now for plug-in hybrids, which is good, but the Greens still cannot support the bill, because we don’t have the reduced rate for the battery electric vehicles.

You know, everyone can talk about fairness until we’re blue in the face, but the reality is—this is very clear from the submitters—that people who own electric vehicles are going to be paying almost twice as much as a comparable petrol car. To me, that’s not fair, and that’s what the majority of the submitters said. A reduced rate for battery electric vehicles would actually be fairer, and not only that. It does help, but like the—

Grant McCallum: You’ve got to fix the roads somehow.

Chlöe Swarbrick: Take the freight off.

Hon JULIE ANNE GENTER: There are ways to ensure—

Tom Rutherford: And put it where?

Hon JULIE ANNE GENTER: —that they’re—

Chlöe Swarbrick: Put it on trains.

Hon JULIE ANNE GENTER: Sorry, I’m getting a little bit derailed here by the debate next to me, which is that—

Tom Rutherford: “Derailed”—well done. I see that—I see that.

Hon JULIE ANNE GENTER: Members opposite should consider whether or not we have a transport system that is user-pays, because, at the moment, it’s not, and this was also clear. I’d call the attention of the Government members to this lovely flow chart on page 2 of the departmental report, which makes it very clear that road-user charges and fuel excise duty—petrol tax—do not pay for the total cost of the roads. There’s both massive taxpayer money going into highways and there’s ratepayer money going into local roads, and so it’s not a user-pays system, firstly.

Secondly, the more important thing is: are we going to get the transition to the electric vehicles that we desperately need, because every year that we don’t, it’s going to cost New Zealand more. It costs New Zealand at every stage. All of our dairy exports do not cover the cost of our vehicle and our fuel imports annually. Everything we can do to reduce that fuel bill now means more money in the pockets of New Zealanders, more money in New Zealand, and, at that same time, it’s really essential and necessary for the climate.

What we need to do here—everyone—is think past the debate of the last century and the last few decades, and start thinking about the present and the future: how we can actually get outcomes-focused policy that’s going to be effective. If there’s one thing that members opposite cannot deny, it’s that the Clean Car Discount got outcomes for New Zealand, and all this rhetoric and slang about tradies and farmers—it’s rubbish. The vast majority of the fees were paid by high-income people, paid by businesses, and paid by people in urban areas. So if farmers need the urban places to pull their weight, that’s what the Clean Car Discount did.

CAMERON LUXTON (ACT): Thank you, Mr Speaker. I endorse a few of the things—to the surprise of this House, potentially—of the previous speaker, the Hon Julie Anne Genter. I do agree that our road budget is not being a user pays and is too highly subsidised, hence why I was quite glad to be in the Transport and Infrastructure Committee hearing about a discount that reflects real use and costs contributing to the national road transport fund, based on what the actual damage of a car, vehicle, truck, type of vehicle, type of fuel is.

Now, the thing is we’ve heard that it was a rushed select committee, and it was a decent hearing of the evidence, I thought. We heard from over 500 submitters and, as the previous speaker has said, a few industry organisations as well. I must say I heard a lot of support for paying our way. Many people who submitted said that they feel that it is time; that this has been a well-signalled transition; that we are going to have two months, which is long enough for people to get their head around it; and that 2 percent has been well matched. Out of the 50 cars on the road, 49 also feel like it is time to have the last one in 50 pay their way.

The 50 percent discount, people should know, is based on the road-user charge (RUC) of $76 per 1,000 kilometres. Now, a 30 percent discount was seen by some submitters as not fair, but that is because, in my understanding of the evidence, they were measuring that against the fuel excise duty paid by petrol vehicles. Now, we could have a discussion, but I don’t think we will right today, about whether everybody is paying their fair share for the road, and if there is a concern about polluters paying their way, perhaps the Green member who spoke before would like to address that everybody using the road pays their way. I think freight transport has been paying a fair share. The damage that they cause means that they are paying a higher rate for their RUC, unlike under-3.5 tonne vehicles, which pay between $1 and $3 out of their road-user contribution towards roads damage.

Hon Damien O’Connor: Rubbish.

CAMERON LUXTON: Well, I hear “rubbish” from the member Damien O’Connor, but I must say that wasn’t the information, despite his misgivings of the officials, that the select committee heard.

Now, I also think, Damien O’Connor, you did have a good point in your speech before: the admin fee needs to be looked at. There are many ways in which we could do this, and going forward, I hope that the Government makes steps towards having a broad-based and fair coverage for every road user through a RUC scheme. Because the way it is being measured currently, off the fuel excise duty, although it was good for its time, is well past its use by date and it needs to be reviewed. As a resident of the great city of Tauranga—

Tom Rutherford: Great place.

CAMERON LUXTON: It is a great place, Tom Rutherford. We have two of the three toll roads in New Zealand.

Tom Rutherford: Toll-ranga!

CAMERON LUXTON: Tauranga—yeah. I understand that many people around the country haven’t had the experience of using a toll road in their driving life. Well, I can confirm, as a resident who uses one or two regularly, that it is a seamless experience, on a beautiful road, especially the Eastern Link, and when it comes to paying for our use of that road, we get an automatic bill. If you sign up, as most residents do, to the tolling portal on the internet, you get an invoice at the end of the month and it’s paid very seamlessly. I realise that a large part of the cost that comes about through the tolling scheme is through recouping from people who have missed their payment, but I think the bulk of New Zealand, as the bulk of the people of Tauranga are currently registered, will understand how easy it is to actually pay a user-pays fee.

I commend this bill to the House despite the need for having more money from the users of a service paying for it. I think that it is about time that every user of the road pays their fair way. I thank you, Mr Speaker.

ANDY FOSTER (NZ First): I’m pleased to rise to support this Road User Charges (Light Electric RUC Vehicles) Amendment Bill. Actually, I would note that this is the first bill to come from the 54th Parliament and be reported back to the 54th Parliament, so I’m quite pleased to have been involved in that process.

It’s about road-user charge (RUC)—what is RUC? RUC, effectively, is a charge for the access to and the use of the roading system. What it is not is a charge for carbon emissions, and we’ve seen the sort of interplay between them. That is dealt with in another way, through the emissions trading scheme (ETS) cost that is applied to fuels.

Light electric vehicles (EVs) and plug-in hybrid vehicles (PHVs) were always liable for RUC. What has been happened, though, is they haven’t been paying RUC because there’s been a specific exemption. Why was that exemption there? That exemption was there to incentivise the uptake of those vehicles until they got to about 2 percent, and that’s where we’ve got to. We’re at 2 percent now, so now that is coming off. This has been signalled for a long time. It has been signalled that it was going to drop off at the end of next week—31 March, that the charge would start to apply and the exemption would end. So if this bill were not introduced, what would happen is that EVs and PHVs—light EVs, light PHVs—would all be paying the full RUC right from the beginning, so we had to do something about that if we weren’t going to apply that.

Look, it was done at pace, and we’ve heard from the member opposite, from the Hon Julie Anne Genter, that it was done at pace, and maybe we should have taken six months. Well, I don’t think either side can really beat each other up too much about that. You could say that the last Government should have done something about it, because if you’re going to do it in six months, if I count back six months, it would have been September, which, by my calculation, is before the election. That wasn’t done.

You could say, “Well, this side of the House could have done it quicker.”, but, by crikey, we’ve been doing all kinds of different pieces of work, and it’s been a very, very busy schedule. So, look, we were left in this situation where this had to be done at pace, and it was. Since the first reading on Tuesday a fortnight ago—so a fortnight ago today—it was reported back to the House on Thursday last week.

You will note the dissenting views from Labour and the Greens around that timing issue, but, look, that’s the reality of it. We were put with the work we had to do and we did it. The timetable was tight. We heard from submitters Friday before last. We dealt with the officials’ feedback, drafting, and final decisions by Zoom, because the House wasn’t sitting. That did cause us to make one slight whoopsie there, but that’s OK; we’ve ended up in the right place, I think.

Look, I want to thank everybody for the work done in a tight timetable. It involved some late hours. I want to thank the members and the alternate members from both sides of the House for their participation. I want to thank the Office of the Clerk who worked very, very hard on this, and the parliamentary drafting office and also the Ministry of Transport and the New Zealand Transport Agency (NZTA), who provided us with some great information and worked very, very hard.

Hon Mark Patterson: Well chaired, too.

ANDY FOSTER: Oh, thank you very much. Thank you very much, Mark Patterson. Look, I especially want to thank the 518 people and organisations that made submissions in a very short period of time. They had less than 48 hours to make submissions, but they did it. I was really, really impressed they did it, and they were quality submissions too. We had 19 who appeared the following day on that Friday.

Submitters were almost entirely owners of electric vehicles, PHVs, or industry organisations, so it wasn’t like the people who own petrol vehicles were making submissions. It was the owners of PHVs and EVs who were making submissions, and, almost without exception—certainly those that we heard—they all said, “We should be paying a share. We should be paying towards the use and maintenance of the roads.” The only argument was about how much.

The EVs—I’ll deal with that one first. Several submitters noted that the RUC per distance travelled—and you’ve heard that again from across the House there—would actually be, while it’s the same as the light diesel vehicle, it’s actually higher than the average light petrol vehicle. The reason for that is that since the RUC level was set, petrol vehicles have got more efficient. So that’s a good thing, but what it does mean is that the petrol vehicle is actually going to be paying slightly less on average than the RUC. And if the RUC is applied to EVs, they’re paying slightly more than that for the moment, for the same distance travelled.

So you could consider that to be a good thing, because it means we’ve got less emissions, less petrol being used by our petrol fleet, which, of course, is the bulk of the fleet. We did consider this. The advice we got from officials was that this would have been within the legislative scope but not within the policy scope of what we were presented with. Despite the Greens, in particular, here—the alternative view that they’ve put in the report back—when we talked about whether we would actually advance this idea within the Transport and Infrastructure Committee deliberations, nobody wanted to do so—nobody wanted to do so. So the opportunity was there to raise it—probably not to win it, but the opportunity was there and it was not taken, not by the red party, not by the Green Party. So I think that is important that you know that.

So moving on to PHVs: we’re talking here about a very small proportion of the vehicle fleet—about 30,000 to 40,000 vehicles out of 4.5 million vehicles in the fleet. That’s about two-thirds of 1 percent of the entire vehicle fleet. The rate that we applied to them—the discount rate that we applied to them—was a specific issue that the Minister asked us to consider, and we’ve had pointed out to us across the House that we should have considered it and we did. We thought very carefully about it.

The issue is that PHVs, of course, use both petrol, so they pay the fuel excise duty, and they will pay RUC through the battery use. The question we’ve got there is we didn’t—and this is the important part of the bill—want them to be ending up, essentially, being double-taxed, paying for both at the full rate for the full distance that they travelled. That would have been unfair to PHV vehicles.

So the question, then, is: what is the discount rate? We heard lots of submitters, and they were all arguing for all kinds of different ways of administering it, because every single vehicle is going to be different and used in a different way. There’ll be vehicles which are used in urban environments, which are largely using battery. There’ll be vehicles which are older, so their batteries have lower capacity, so they’re more likely to be using petrol more often.

So how do you end up with a fair system? Some people argue for doing it on the basis of the age of the vehicle. Some people went even further and said you should do it by the individual circumstances of the vehicle, but you’ve got to make it administratively efficient; you can’t do it in any other way. So, really, what it came down to is what is a fair, balanced approach in terms of the discount rate that we chose. Well, that was, I think, well reflected in our select committee commentary, although the select committee commentary—and, as we’ve heard, the actual rate that was applied is slightly different because we didn’t get everything 100 percent right there, but never mind.

Labour started consulting a couple of years ago on a 20 percent discount. The bill, as introduced, said a 30 percent discount, and that really was saying that we think it’s 20, but because of the variation of the fleet, maybe we’ll be conservative; we’ll make it 30. We kind of reported back somewhat accidentally at 50 percent, and that is what Cabinet has agreed at 50 percent, and I think it’s a very, very good outcome. I think you could argue for anything between 30 percent and 50 percent. But the really interesting bit that we found when we asked officials about this, they found a European study, and that European study of 9,000 PHVs indicated an average of 4.1 to 4.4 litres of petrol per 100 kilometres, and that’s equivalent to a 50 percent discount, so that doesn’t seem an unfair outcome.

So I think the other point to make in terms of RUC is that whatever you do, it’s going to be unfair to somebody, and we need to make sure that we move to something which is fairer, and that is a RUC system right across the board.

I want to finish by addressing a couple of other issues which arose in the bill or during submissions and consideration. First of all, you’ve already heard from the Minister that there’s a two-month transition period. That is going to be quite challenging, because a lot of people—EV owners, PHV owners—are not going to be familiar with the RUC system; I acknowledge I’ve not ever been involved directly in the RUC system, and I’d imagine most of those vehicle owners won’t have been, and they’re going to need to be educated to get involved in that system and to know what they’re supposed to do.

The next point to make is that the bill exempts light EVs under 1,000 kilograms. If you look at the vehicles that are around, virtually there is no car that I can see that’s a proper-looking car that actually is under 1,000 kilograms, so you’re talking about motorbikes and light vehicles of that nature. It also makes clear that light all-terrain vehicles are also going to be exempt, because they’re generally used off road.

We’ve heard from some of the submitters that the RUC level might disincentivise the uptake of EVs, and, in the short term, that may be true, but if we move to RUC relatively quickly, it’s not going to be a big issue. The issue is much more the rate that you apply through the ETS for the ETS charge on fuel, petrol, or diesel. Also, there are other more significant issues there, not only the ETS running costs, environmental outcomes, and, of course, the cost of buying the vehicle in the first place.

We had a bit of discussion about weight, but it’s very clear that under 3.5 tonnes, the impact of weight on the road is not particularly significant, and that only 1 percent of the cost of fuel actually relates to weight. The rest is all about access and about the use of the roads and so on.

The final point I want to make, in the last few seconds that I’ve got available, is those issues which the Hon Damien O’Connor raised around RUC administrative costs—those are really important ones, and that is something which we think is really, really important that NZTA and the Government pays a lot of attention to dealing with. Those costs are too high, especially if you buy your RUC in small parcels. They’re going to be likely to be regressive. They’re largely made up of bank charges and NZTA overheads, and so they do need to be addressed and got down.

Again, I want to thank everybody who’s been involved in bringing the bill to this point and to commend the bill to the House.

ASSISTANT SPEAKER (Teanau Tuiono): The next call is a split call, I understand—Scott Willis.

SCOTT WILLIS (Green): Thank you, Mr Speaker. To be clear, the Minister and his merry hand of free-market preachers and adherents to the prosperity gospel seem to want to drive to the Rapture in their SUVs, because the Minister can’t abide electric vehicles (EVs), and God forbid travelling on public transport. There’s nothing like a thirst for fossil fuels to power the end times, is there? Is it because the Minister is awaiting the Rapture that he can’t be bothered with earthly details like good legislation, like climate initiatives, like a livable planet?

This Government cancelled the Inter-island Resilient Connection with no plan B for safe ferry travel across Cook Strait. The Government’s killed off light rail for Tāmaki-makau-rau, stopped Wellington moving, and supported road speed increases which will increase fatalities on our roads, so, no, they haven’t started. They want to get started on increasing fatalities on our roads—

Andy Foster: Point of order, Mr Speaker. As much as we’re enjoying the speech, I haven’t yet heard one reference to the bill at all.

ASSISTANT SPEAKER (Teanau Tuiono): Just to note that relevance is the role of the Speaker—that’s me. The member may continue.

SCOTT WILLIS: Thank you, Mr Speaker. We do need road-user charges and fuel excise duty to help pay for the upkeep of New Zealand roads—that’s true. But the Road User Charges (Light Electric RUC Vehicles) Amendment Bill, driven through urgency, has shown us the danger of speed.

Chlöe Swarbrick: It’s off track.

SCOTT WILLIS: Ha, ha! Speed in this legislative space makes for mistakes—mistakes that the member opposite has admitted—and poor policy. Mistakes that have fallen well this time, but it’s a blitzkrieg of destruction which only really serves the fossil fuel sector.

I read in National’s electrifying New Zealand policy that “National wants a future where buses and trains are powered by clean electricity, where we go on holiday in cars powered by clean electricity,” and yet what we see is far from the rhetoric. Forget buses and trains, forget ferries, all National has done is work to disincentivise EVs and ignore the rest.

The Better New Zealand Trust submission stated: “To have any chance of meeting our climate goals the Govt must reduce … fossil fuels by all means possible.” And we’ve heard submitters’ extensive concerns about this bill through the select committee process—the foreshortened select committee process. The Motor Industry Association talked about the timing for the removal of the road-user charges exemption for light vehicles on 1 April so soon after the repeal of the Clean Car Discount. And their second concern was about the equity of road tax, regardless of vehicle engine type or motor power and the tax system used. They argued that “Motorists deserve to contribute equitably [for] their fair share for roading costs.”

So, yesterday, the rewiring New Zealand report on Electric Homes: The energy, economic, and economic opportunity of electrifying New Zealand’s homes and cars was released. I just had a meeting with Mike Casey and co. It tells us what we already know. In a petrol vehicle, only about 16 percent to 25 percent of the energy in petrol is turned into motion. Most of this energy is lost as waste. In an electric vehicle, 87 to 91 percent of the electricity it receives is converted into motion at the wheels.

This Government is simply pulling the RUC on electrifying land transport. There’s worse. This is simply bad for our rural communities. This is so bad for our rural communities. We know that rural people drive three times further than urban people and drive on the worst roads. I know where Mark lives. We could do so much better.

ASSISTANT SPEAKER (Teanau Tuiono): And could the member come back to the bill and not worry about that.

SCOTT WILLIS: Think about the Finnish example, where RUCs are based on the roads you drive on. Poor quality roads cost less in road-user charges than urban highways with overbridges. All our rural people who drive EVs are now being doubly punished—punished for driving an EV and subsidising diesel fossil fuel vehicles, punished for paying for the privilege of driving on the worst roads in Aotearoa, and subsidising the motorways. This bill is a disaster that comes from speed. We can do so much better.

Chlöe Swarbrick: Let’s get back on track.

SCOTT WILLIS: Let’s get back on track, not back on baccy.

TĀKUTA FERRIS (Te Pāti Māori—Te Tai Tonga): Tēnā koe, e te Pīka, otirā ki tō tātou Whare tēnā rā tātou. E tū ana au ki te waha i ā te Pāti Māori anga mō tēnei o ngā pire, e mea nei te turaki i ngā ōhāki i puta i te Kāwanatanga ō mua kia whakaheke iho te putanga atu o ngā paihana patu nei i te taiao me te whakamāmā ake i ngā huarahi e pai ai te tiki atu i te electric vehicles.

[Greetings, Mr Speaker, and everyone here in the House today, salutations to you all. I stand to present Te Pāti Māori’s aspirations for this bill, to demolish the oath set down by the previous Government to decrease the dissemination of pollution on the environment and to ease the way in which we can retrieve electric vehicles.]

Te Pāti Māori have challenged the direction and vision of this Government, of course. And, you know, the real question is: what is the vision? The vision, the direction that the Government is intending for us. It’s clear that the direction of this Government is towards profit and capitalism. So, whilst their vision is fine, we must now ask ourselves: profit, capitalism—but at what cost, and to what expense?

He mārakerake te kite atu ko te taiao me te whenua te utu—so, right now, it is evident to see that it is te taiao, our environment and the land, that will bear the brunt of the cost. The amendment to this bill is reflective of a Government that prioritises profit over the environment. Since the beginning of this Government’s term in Parliament, we have seen the prioritisation of profit across various bills, including the repeal of the regional fuel tax and the current Resource Management Act amendment bill.

I now stand to discuss the road-user charges amendments. Let me remind the House, and, in particular, tēnei taha—and particularly the members opposite us—that the bill was introduced as an incentive—an incentive—not a disincentive; an incentive for our communities to transition from vehicles reliant on fossil fuels to electric vehicles instead. By making it cheaper for an electric vehicle user to use our roads, it was made more accessible and, in essence, a legitimate option for our people to consider—something that would most likely have missed the consideration of our colleagues across the room.

By introducing road-user charges, we make it less appealing and less realistic for people when faced with the choice between vehicles that run on unsustainable fuel sources and vehicles that run from a renewable energy source. This is a conversation that for us, for Māori, we often don’t get the chance to engage with. Conversations around electric vehicles or renewable energy, and the chance to have our own electric vehicles, is often exclusive of our communities—our communities that live rurally, on their whenua, by their marae, or urban communities that often survive and disconnect from their whenua, their marae, and their iwi and hapū bases. We, as Māori, are left out, yet again, or, indeed, cut out. So I stand here to enter into the conversation to prove to our people that we have every right to be here, and that while these kaupapa seem far away from our te ao Māori, our reality, all of these bills in fact do impact us, do impact our people. They work as ways to segregate us from the rest.

So when we consider the amendment to this bill in the context of climate change, which we must do—we must consider our climate and the impact we as a nation have on our whenua—it is clear that previous efforts made to support the reduction in emissions, to create accessibility to clean technology, and create sustainable public and private transport, are not prioritised by the current Government. Inā kē te wero. [That indeed is the challenge.]

I question those sitting on the other side of the House: how will the emissions reduction plan, the national adaptation plan, the carbon-neutral Government programme, the Climate Emergency Response Fund, be impacted by this change? Again, another vision, another amendment to another bill where profit is prioritised at the expense of te taiao and the whenua.

When we actually look to the so-called profit and ineffective planning and management from the current Government, it has forced them into a position where a $24 million pothole in their Budget has meant that those who use electric vehicles will have to foot the bill. I’m sure that over the short time the Government has been in term, they’ve struggled to deliver their promises, when they realise that repealing and amending all of these bills and promising tax cuts to the people has only meant that the money lost from that particular revenue stream will now have to be sourced elsewhere. Nā ka taka te utu ki te marea, ā ko te ao Māori ka pani ki waho. [And so the cost will fall on the people, and the Māori culture will be cast out.]

GRANT McCALLUM (National—Northland): I rise to proudly support this bill because we’re actually a Government that was faced with a problem and we had to fix it. The previous Government hadn’t gotten around to actually solving the problem of what was going to happen when the electric vehicle (EV) subsidies finished and, suddenly, they were going to go to 76c. That’s where they were going to sit. According to the other side, that seemed, obviously, to be the solution: leave them at 76c. So we inherited this problem, and we have solved it. We’ve put a bill together, which is a transition bill, to allow for plug-in electric hybrids to receive a discounted rate because they use two sources of power, and also for EVs to contribute something to the roads that they drive on.

It was interesting, the submitters we received—and thank you to the submitters. Yes, they didn’t have much time, but the reason there was not much time is that we had to get a solution so this could be enacted by the 1 April, and that’s what we did. This is why we’re in this position. They also said, “We’re happy to contribute towards maintaining the roads.” Well, that’s great. I applaud them for that, particularly as somebody who’s had to drive around the roads of Northland, which have suffered through lack of maintenance from the previous Government, and had to put up with extra potholes, and the member opposite—Damien—would have had to dodge them on his motorbike. Because of that, it’s great to suddenly have an opportunity to have more income to actually help fix the roads, because people using the roads should help pay for it.

The reason that this is only a transition is because we’re going to be moving to a fairer system, as more and more people buy EVs—and they will, because the price of EVs, surprise, surprise, is coming down. So there’s no need for us to actually subsidise people who can afford to buy them themselves, right? So we’ve got to transition to a system whereby you don’t fund the roading maintenance and building of new roads—you don’t fund it through the energy source; you fund it through weight and distance travelled, which is a fair system. That is what we’ve got to move towards—

Hon Damien O’Connor: Where’s the incentive to be more efficient?

GRANT McCALLUM: —and that is the direction. The incentive is there, because, actually, with an electric vehicle, it is cheaper to run—they’re actually cheaper to run than a petrol vehicle and a diesel vehicle. Believe me, I know—I drive a diesel vehicle and pay plenty for the road-user charges going around. So I commend the Government for actually acting on this and getting a solution.

So I’d like to say, finally, that the people of Northland will really be very happy to finally have a bit more money spent on the roads so that we can have better roads to drive on, and the other rural people in New Zealand the same, right. That’s really, really important. So I commend this bill to the House.

ARENA WILLIAMS (Labour—Manurewa): Mr Speaker, if you’ll bear with me, I am going to explain some of the changes that have occurred in this bill. Because there were a number of changes which Government members are very keen on in this reading that they weren’t so keen on in the select committee room—

Tom Rutherford: Oh, well we voted for them.

ARENA WILLIAMS: The member opposite—Tom Rutherford—

Hon Member: He’s from Hamilton.

ARENA WILLIAMS: —he says “We voted for them”. He’s not from Hamilton, and he says “We voted for them”. Actually, that wasn’t the case and I will explain that for the House’s record, if you’ll bear with me. But, Mr Speaker, what I first want to do is to tell you why the amendment that the Transport and Infrastructure Committee made is important and to explain it for the record so there is no confusion about it.

This was inserted at the select committee stage. The select committee instructed the Parliamentary Counsel Office (PCO) to develop an amendment to the bill as proposed by the Minister—that was supported by a bare majority of members—that changed the discount rate for PHEVs, or for plug-in hybrid electric vehicles. That was because a 2022 study of 9,000 plug-in hybrid EVs in Europe suggested an average fuel consumption of 4 to 4.4 litres of petrol per 100 kilometres. That’s relevant because the average fuel consumption of light petrol vehicles in New Zealand is around 8.1 litres per 100 kilometres, and those rates are the rates that the select committee heard from officials from Waka Kotahi should be taken into account when designing the discounts for plug-in hybrid vehicles.

When the select committee heard evidence from the 518 interested groups and individuals who submitted on the bill, it was clear—and in further advice from Waka Kotahi—that the evidence for what the discount rate should be was limited. But that European study supported a 50 percent discount instead of a 30 percent discount, and that’s why PCO was asked to draft an amendment.

At the time the committee came to vote on the report, the report is drafted as if the 30 percent discount was the one that would come back to the House at committee stage. But that is not the bill that we are debating now. So the select committee’s report does not record the majority—well, the unanimous—vote that then occurred to support the 50 percent discount. So anyone looking through the records will see that the select committee’s report treats it as if it was a 30 percent discount, whereas the Labour amendment that was put up and drafted by PCO for 50 percent discount was the one that is supported and now the Minister has confirmed will be supported at committee stage. So it is Labour’s position that we consider that a 50 percent discount in the road-user charge rate would be better reflective of the relative efficiency of plug-in hybrid EVs compared to petrol vehicles, and we recommended amending the clause because of that.

So that is how, procedurally, we have got here. I think it is a good change and I’m glad that the Minister has accepted the change from the select committee. He asked the select committee to consider that particular point, and we did have some really good cross-partisan discussion about how to make this rate an effective thing for PHEV drivers. Because drivers and users have already invested in their cars. This is not a decision that only affects future purchases and incentives on users; this is actually a decision which makes someone’s investment in their personal car—or their investment in their business if they are someone like a taxi driver or an Uber—significantly different about the way that the costs will fall out for that person. So we heard from a number of submitters who drove PHEVs themselves that they would need to do things like hang up the keys on their PHEV because they wouldn’t be able to operate that as a taxi, or to change the way that they were using their car and they would use it less if that rate was applied. So I’m glad that we have made that change.

This should be viewed alongside the removal of the Clean Car Discount. That was something that the committee heard evidence on being a very effective tool of incentivising the uptake of plug-in hybrid vehicles, but that that went along with the policy for plug-in hybrid vehicles not to pay user charges. Those two things together would have otherwise been removed, and so there would have been a sort of double change for PHEV users that we didn’t think was appropriate, and that’s why we proposed the amendment.

So I want to thank my fellow committee members, despite it being a very short submission period, that was, I think, an example of committees being able to work together well. That committee was chaired by Andy Foster in a way that allowed discussion around this particular point and on the point of how much subsidy should be applied to EVs. These are technical pieces of legislation; we needed a lot of advice from the officials from Waka Kotahi and the transport ministry, and I thank those officials who engaged with us in what was a very, very quick time frame for them to need to turn around reports.

That said, it was very difficult for the committee to consider what the policy change was in the context of dumping the Clean Car Discount and the Government’s priorities on emissions, and, further, this idea that all cars would be moving towards road-user charges and the effect of this interim change on that broader change when we had no time frame for that. Those are things that should have been, and could have been, worked through by what was, essentially, a very good cross-partisan committee that was engaging in the policy detail; it was engaging with the technical advice that we were receiving and was asking good questions of submitters.

It is there that this House should be able to get into the detail of legislation and it is a casualty of the urgency process when committees are not able to do that fully, and engaging with something which has been called a “transitional process”. This will not be a transitional process that will be resolved quickly.

A transitional process—for the benefit of the Government members who have made these submissions today—would have been to extend this legislation, because this legislation had been extended several times. That should have been the policy that we examined it against: extending the exemption for EVs and PHEVs, as has been Government previously—the appropriate thing to compare this change to. Instead, we were being asked to compare it as if it would not continue at all, and that was not the right policy equivalent to be making at the select committee time. But we were doing that because we were under time pressure.

Just speaking a little bit to the thanks to the submitters. I, too, joined with my other fellow committee members in thanking the submitters who made submissions in what was, essentially, a day to put together those submissions—518 of them took the time to do that and they were technical submissions. They included a breakdown of the numbers and their projections about how not only this policy decision that the Government is taking would affect users now but users in the future. I believe that the numbers that the submitters provided us with also influenced and helped the advice that we were receiving from officials who were working under a very short time frame.

That goes, again, to the need to prioritise these pieces of technical legislation through select committee stages. It is useful for this House to have those submissions, it is useful for the officials to be able to engage with it, and it is useful for parliamentarians to appreciate what policy choices we’re being asked to make.

Because, not to bang on about this process, but it is not right that we are in this position of using a nine-day select committee process because the previous Government delayed it. We are in this process because this Government did not prioritise this on their legislative agenda. If this had been ready for first reading earlier in the process, the select committee would have been able to undertake a four-week select committee inquiry or they would have been able to extend this legislation while we were making these decisions. Using the length of the select committee process could have been an ordinary one, and that would have helped this House make reasonable and rational and cross-partisan decisions about this.

It’s important that we acknowledge what we’re doing here. We are supporting this bill because we do need to make sure that people are paying their fair share on our roads. But what “fair” is—

Grant McCallum: Cover up your own inaction.

ARENA WILLIAMS: —when we’re—I hear from the other side “to cover up our own inaction”. I’ve just explained that it is, in fact, the Government’s prerogative to use urgency, but I can help the new member with understanding Government processes around urgency a little bit later on. He can meet me down in the select committee room and I can school him again on the use of Standing Orders, as I did last week. But, you know, I’ll help him along then.

But for this reading, we do support this bill. There is change needed, but the policy we should have been considering is how to appropriately take into account emissions and the environmental considerations that go alongside those considerations like the Clean Car Discount which have been removed. If a Labour Government had been making these kinds of changes, we would have done that alongside the Clean Car Discount. We would have been protecting people’s ability to choose better options for the environment, and that’s why we need to be able to really get into the detail in the select committee discussions and understand what’s being chosen between.

Grant McCallum: Had your chance.

ARENA WILLIAMS: I hear from the other side that we had our chance. I did have my chance in the committee and I used it.

TOM RUTHERFORD (National—Bay of Plenty): Thank you very much, Mr Speaker. I just want to commend the previous member, Arena Williams, for her contribution both in the House and on the Transport and Infrastructure Committee, amongst all the members that contributed on the select committee process that we have been on over the last couple of weeks. It was an interesting process, no doubt. There were some decisions made and some challenges that we faced on the select committee, but, ultimately, what we are reporting back to the House is a pragmatic approach: those that use it should pay for it.

Now, what we’re talking about, here, are the contributions that people should make to the upkeep and maintenance of our roads in New Zealand. In the electorate that I’m fortunate enough to represent, the Bay of Plenty, without a doubt—without a doubt—putting the cost of living to the side for a moment, the biggest issue facing the Bay of Plenty is transport. It’s transport, without a doubt. Let’s have a look at it: two main State highways, in our community, that are fundamentally way behind where they should be in 2024. Start with State Highway 2, the Takitimu North Link. Stage 1 is currently being progressed. State Highway 2, Takitimu northern link—it’s currently being progressed. That programme and that State highway was consented and ready to go in 2017. Cancelled, delayed, pared back by the previous Government—now being delivered by National. The second, stage 2, will be as well—all the way through to Ōmokoroa, servicing the community of the wider Bay of Plenty.

The second is State Highway 29, over the Kaimai Ranges, a really vital network that connects the city of Tauranga with the golden triangle of Waikato and Auckland. The reason I bring up those two key State highway networks in relation to this bill is that it is only fair that those people that use the roading network in New Zealand pay their fair share towards its upkeep and its maintenance. That’s what this bill proposes to do. The Road User Charges (Light Electric RUC Vehicles) Amendment Bill amends the road-user charges (RUC) regulations to add a new vehicle type, PHEVs—plug-in hybrid electric vehicles—and amends the road-user charges rates regulations to apply a reduced rate of $38 per 1,000 kilometres for plug-in hybrids. Had we done nothing, come next week, every single vehicle on the road would have paid the $76 dollars—$76 per 1,000 kilometres. Simply kicking the can down the road on this issue wasn’t feasible for us to do. On this side of the House, rather than just talking about it, we’re actually going to action and deliver it.

I would note some comments made, both by the Minister of Transport and some of my colleagues, around action that the previous Government took. In 2022, they looked into proposed options for the Government to look into what may be an equitable system to move forward with. They proposed, at that time, that plug-in hybrids pay a reduced RUC rate of 20 percent less than EVs. Yet, after going out, proposing that, talking about it, two years down the track, nothing happened—nothing happened. They went out with a proposal of 20 percent reduced and then nothing. Radio silence. Absolute silence on the issue. And now they have the fortitude to front up and complain and say, “You’re rushing us.” Well, let’s just say, you had two years where you proposed and talked about it and delivered absolutely zilch. Absolutely nothing.

Sam Uffindell: It’s trade mark.

TOM RUTHERFORD: It’s trade mark. It is trade mark, Sam, in the sense that talking about it is really good, but the actual delivery is rubbish.

So, on this side, we listened to the submissions that came through the select committee. It was great to do it with my colleagues across the House, where we had some really robust and engaging discussions around the submissions we received. Now, in that process, we received 518 submissions from a variety of individuals, organisations, and different groups. And the vast majority of the submitters expressed a really clear sentiment that both EVs and plug-in hybrids should pay their fair share to the upkeep and maintenance of our roads. Submitters expressed support for several parts of the bill, including the exclusion of light EVs, a two-month transition period so people can get their vehicles up to scratch, and the expanded definition of all-terrain vehicles (ATVs).

I want to highlight that part in particular, because we haven’t actually talked about that bit from any of our speakers so far. And what I’m getting at is, firstly, we’re excluding light EVs, so anything weighing 1 tonne or less, which includes vehicles like electric motorcycles. The bill also includes an automatic exemption for all-terrain electric vehicles weighing 1 tonne or less. This acknowledges that electric ATVs weighing 3.5 tonnes or less are currently entitled to an exemption on application if they are used almost exclusively off road. Let’s look at that differentiation there: off road versus on road and what’s fair around the maintenance and upkeep and what they contribute. That’s why we’ve talked about removing them and providing them the exemption.

The bill also amends the definition of “ATVs” to include electric ATVs. Heavy EVs weighing more than 3.5 tonnes are exempt from RUCs until 31 December 2025. The reason I bring that up is it comes back to the crux of why we’ve proposed this bill, and why the Minister’s brought it to the House, why we opened for the select committee process, and why we’re here now debating it at its second reading. And it simply is: if you use the roads, you should pay your fair share to contribute to the upkeep and the maintenance of it.

And the change that has been talked about by members opposite, where we initially are consulted on $53 to 1,000 kilometres, and now we’re back at $38 per 1,000 kilometres, is to seek the balance for the need for these vehicles to pay for their fair use of the road. And noting that plug-in hybrids have a reduced rate in a sense because they also pay the petrol excise, and finding an equitable outcome is the only fair approach to take. The reduced RUC is also a temporary measure. We will be coming back in the future, as highlighted by the Minister of Transport, proposing the move for all vehicles to move to RUCs and moving them away from having excise tax on petrol to create an even more equitable system where we believe, actually, you use the road, you should pay your fair share.

Increased fuel efficiency of vehicles and the rise of electric vehicles has created variances in what motorists currently pay for the use of the road. This has meant that less fuel-efficient vehicles, often owned by low-income households, end up paying more in fuel excise duty than owners of later model, more fuel-efficient vehicles. I see my colleague Minister Goldsmith, who I know is eager to eat his dinner—eager to get out of his seat—

Hon Chris Penk: He’d rather eat someone else’s!

TOM RUTHERFORD: Ha, ha! I couldn’t possibly repeat what was just said. But I just want to reiterate to the House that this has been a pragmatic outcome reached by the select committee and taken by the Minister, that it is only fair that those who own plug-in hybrids pay a reduced rate of $38 per 1,000 kilometres. And if you use the road, then you should be paying for its upkeep and its maintenance. I commend the bill to the House.

ASSISTANT SPEAKER (Teanau Tuiono): Well, it’s kai time. The House is suspended for dinner, and it will resume at 7.30.

Sitting suspended from 6.01 p.m. to 7.30 p.m.

ASSISTANT SPEAKER (Maureen Pugh): Members, we are debating the second reading of the Road User Charges (Light Electric RUC Vehicles) Amendment Bill.

HELEN WHITE (Labour—Mt Albert): Thank you, Madam Speaker. I just want to talk briefly on this bill. I was on the Transport and Infrastructure Committee last term, and I returned for a very brief appearance in the committee when it was discussing quite a critical part of this bill, which was the issue of what discount should be given to people who had plug-in hybrids. It was really lovely to see my colleagues taking such an active role, and I was there when Arena Williams put up the possibility of an amendment, which has turned out to be something that’s been adopted by the Government in the new form of the bill.

So for people out there who are wondering what on earth this is all about, this is a bill which brings back a charge to people who have electric vehicles for their use of the roads. The reason that that was exempted for quite some time was because we really, really need to encourage vehicles that are not using fossil fuels, and so we had in the last Government a plan as to how to do that and we incentivised it. We had a carrot for people buying new vehicles, and that was the discount, the Clean Car Discount. We had some sticks, which were really those measures that said you can’t bring in really dirty vehicles into the country. So we had those kinds of measures in place, and we had taken away for quite some time the payment that electric vehicles would make to our roads, because we collect the money for road maintenance every time somebody fills up their tank for petrol, or, if you’ve got diesel, then we’re collecting it from you in a different way but it’s basically the same thing. So that’s how we were doing it. We had this incentive.

Now, everybody knew that it couldn’t really last for ever in terms of having a discount that was so entire on the use of electric vehicles on our roads. So we could see that that was going to have to come to an end at some point. The Clean Car Discount was extremely successful, probably more successful than the transport Minister at the time thought it would be. The uptake was huge, and I’m sad to see that go, because I really sincerely think that when I was in that committee and we went through that work, I went from the point of being someone who was sceptical about it to somebody who was totally convinced by the end of that process, and then I saw it work and I saw a huge uptick in the amount of vehicles. Now, that piece of work means that there’s a whole lot of vehicles out there that are electric and that will now move into the second-hand market and will mean that a whole lot of families that would never be able to buy a car that was new electric will be getting one.

And there’s a whole lot of families who bought these plug-in hybrid cars as well, and they were in a situation, when we were looking at this law, where it looked like they would be in trouble, because the plug-in hybrids were not—they were going to pay at the pump every time they filled up, and they were going to basically have a double charge, because they were going to be charged, as electric cars, like a diesel car is affected. So it was going to be a sort of double whammy for them. So there’s been an amendment here where there’s a 50 percent reduction in what they pay so that there is an accounting for the fact—and it’s rough, it’s rough. Some people will be winners and some people will be losers, but, basically, there’s an accounting for that in the percentage that has been found here of discount on what they’ll pay.

So I’m really pleased to see this happen. I think this is an area we’re going to have to be creative, we’re going to have to be nimble in the way we work, and there’ll be a lot of unknowns. It was great to see the select committee—and I was there when this happened—work on this, talk about it, and I saw that working. So I have absolute respect for the people on the committee, who had a very real, genuine discussion about this problem and how to fix it, and I commend particularly Arena Williams for coming up with the advocacy for this position. I commend the bill to the House.

Dr HAMISH CAMPBELL (National—Ilam): I rise in support of this bill. Let’s be very clear, this bill is about road-user charges. Let’s be really clear what that means: roads are long, hard surfaces that are built for vehicles to travel along; a user is a vehicle of the said road; and the charge is a fee for that said user to use said road. Now, cars use roads regardless of their fuel source, whether it’s electric, it could be hydrogen, or it could even be ammonia, which Toyota is actually working on. And so this is all about transitioning to a fair and equitable system so that all road users are contributing to the upkeep and maintenance of roads, irrespective of the type of vehicle that they use.

We’re discussing this bill now because, of course, there’s a bit of urgency, because there’s an exemption currently in place which is going to expire. The previous National Government, they put that exemption in place to encourage EV uptake, which, of course, it did, and it was successful. But it always was designed to end, and, in the long run, all vehicles need to be part of a road-user charge system so we can have suitable upkeep of our roads. I haven’t been on the Transport and Infrastructure Committee, but, reading the report, there has been over—

Hon Member: It’s their loss.

Dr HAMISH CAMPBELL: —yeah, it is their loss—over 500 submissions, and most of them pretty much all agreed that vehicles, EVs and the like, should pay a road-user charge and pay for road maintenance. Now, there’s been a lot of debate about how much that should be, and, of course, we have a road-user charge currently, but, of course, plug-in hybrids have a mix of fuel and electricity, so there has been a technical modelling and a lot of debate about what it should be. I will just point out that the Labour Government, in 2022, put out a figure of the 20 percent discount. That went nowhere, but, luckily, we have settled, through the select committee process, on a figure which is 15 percent, which I think is a fair amount. I appreciate there’s going to be winners and losers, but we do need to kind of remember the fact that this is a transition and, eventually, all vehicles will need to be in some sort of system to pay for the use of the roads.

Looking forward, we don’t want just to limit ourselves to vehicles that are electrical or petrol or diesel. There are other fuels coming along the pipeline, and I think we really need to be mindful of that. Just on Friday, I was in the mighty Ilam electorate and visited a company that helps repair roads, and you look at the effort they put in—we need to make sure we can support them to make sure we have safe roads. So, therefore, I commend this bill to the House.

RACHEL BOYACK (Labour—Nelson): Thank you, Madam Speaker. It is a pleasure to take a short call on the Road User Charges (Light Electric RUC Vehicles) Amendment Bill.

I just want to pick up on a couple of comments that the previous speaker, Hamish Campbell, made, because, you might be surprised to hear, I agree with some of it, about the fact that it is critical we, as a Parliament, are always considering how we fund our transport projects. It is a challenging area to fund. Way back in the day, when nearly all vehicles would have been funded through levies, there were some changes made by the Minister of Transport Annette King to ensure that the levies that were collected all went into transport projects, because they used to actually go into the general taxation pot. I think it points to the fact that we have a growing infrastructure deficit in this country. We have to fund our roads, and the Government opposite us is going to have a massive challenge around how they fund the very many projects that they’ve promised, especially when they add back in the one they’ve taken away from Nelson. I look forward to that happening.

But it’s a genuine issue. We have a transition occurring in our transport fleet, which means we have a growing number of road users who are not paying for the upkeep of our roads. I think that New Zealanders are about fairness, and as much as we need to continue incentivising the switch in the type of vehicle that we are using, there is an inherent sense of fairness there around the fact that all of us who use the roads need to be making our contribution to the cost of the upkeep as well as transport projects, particularly new pieces of infrastructure that we will be building.

So I wanted to just point to some of the things that the bill specifically does, just drawing particularly on the needs of those who drive hybrid vehicles. Most of us in this House will use taxis from time to time. Having spoken to a few taxi drivers, they’re pretty grumpy about what the Government was planning on doing, particularly around plug-in hybrids. Now, if you compare original hybrids, which mostly fuel on a combustion engine and then use the electric vehicle to top them up, as opposed to plug-in hybrids that are primarily electric vehicles, what we saw in the original drafting of this bill from the Government was an inherent unfairness, where you would have those drivers paying the levies on the petrol that they put into the vehicle, as well as paying the RUC—the road-user charge. There would have been a double whammy applied to those road users. At the time when the bill came through its first reading, that was pointed out. It was pointed out through questions in the House to the Minister that there was going to be extra cost added on to people using plug-in hybrids, and more so than other types of vehicles. So it’s something that our colleagues—and I’m really pleased that Arena Williams and Tangi Utikere were able to bring this into the select committee, and the select committee agreed.

Madam Speaker, in my area of Nelson, and I know I shouldn’t bring you into the debate, but in your electorate as well, we have a lot of people who actually choose hybrids instead of a full electric vehicle (EV). The reason that they do that is because of things like range anxiety. So it is actually the perfect solution to be able to have a vehicle that can draw on a combustion engine when it needs to, when you don’t have enough charging stations, when we’re driving through our rural areas, like Nelson to Motueka, Nelson across the hill to Blenheim. These are real issues for drivers wanting to do the right thing. So, in my electorate, there was a lot of push back when people heard that there was going to be a double whammy approach to plug-in hybrid vehicles in particular. I’m really pleased that Tangi Utikere and Arena Williams were able to put in this amendment. I’m really pleased that the committee agreed to the amendment, and that the Minister of Transport, the Hon Simeon Brown, has subsequently indicated his agreement.

I seem to have lost sound, that’s OK. I’ll use my singing voice for a moment. That’s OK, I can do that. And so—

Hon Member: Sing—sing.

RACHEL BOYACK: Oh, I could, you know, I could—

Camilla Belich: A very good singer.

RACHEL BOYACK: Don’t tempt me. I think where we’ve got to is a really good position here around that fairness, for fair treatment of different types of vehicles. The last thing I did want to just mention was around the process. The fact that we had a group of vehicle users that did feel that sense of unfairness, where, actually, on reflection, the Minister did go and change his view, shows the flaw in the process that the Government has applied in terms of the short period of time that we had at select committee in order to put this bill through. So there is a lesson here, that, actually, bills like this, which are so fundamental to how we ultimately collect the revenue we need to fund our critical transport infrastructure projects—it just goes to show that we actually do need to allow the committee to have the time that they need to be able to give proper consideration to a bill of this kind. I’m sure that will come up throughout the committee stage.

So Labour is pleased to be able to support this bill. I look forward to the Government—as the Opposition, I think we should always be talking across the House in a constructive way around how we do fund transport projects. I look at the—as a former member of the committee—the members before I joined did do a very good study into congestion charging in Auckland. You know, it’s an issue that is challenging for motorists to have to respond to, but these are the conversations that we need to have so that we know we’re actually getting the right incentives around the types of vehicles that people are using, but also making sure that we are collecting the revenue that we need. Auckland is going to now be facing a real challenge.

So, on that note, I really look forward to the Minister hearing the views of the Nelson electorate, and giving us our Rocks Road project back. This is an excellent bill, and I commend it to the House.

RYAN HAMILTON (National—Hamilton East): Thank you, Madam Speaker. It’s a pleasure to rise, and I want to tautoko the previous speaker, Rachel Boyack, and also acknowledge Tangi and Arena. We actually thought we might have to push them to get to our point of view and our resolution. In the end, when we listened to the submitters, we thought, “Actually, we want to go big with this discount. We want to listen to the submitters.” But, in the end, they were on board. So it was just fantastic, and I want to thank them.

I also want to acknowledge that I love travelling on our great expressways, particularly ones that are 110 kilometres per hour. As I’ve mentioned, the Waikato Expressway is just fantastic. The great thing about travelling at that speed is you actually feel safer, you can go faster, and, of course, we know it’s such a great result for more productivity throughout New Zealand. And, actually, it’s more fun too, especially if you’re playing just the right music at the right time. So I look forward to more of those roads as we now build in the maintenance, repairs, and the funding mechanisms that will enable us to do that.

Also, the Hon Damien O’Connor made some good mentions earlier about road maintenance, and I might be paraphrasing, but I’m pretty sure that road maintenance hasn’t been too great in the last six years. And the great thing about this—

Hon Damien O’Connor: It’s a hell of a lot better than it was.

RYAN HAMILTON: —the great thing—

Tom Rutherford: 62,000 potholes.

RYAN HAMILTON: 62,000 potholes, I hear. I didn’t realise it was that much. Thank you, MP for Tauranga—fantastic. Imagine if we’d been collecting road maintenance—no, no, we have been collecting road maintenance. Imagine if we used road maintenance for road maintenance purposes! Wouldn’t that just be amazing? But here is a tangible measure where we can get the funding stream. And here’s a great word I want to use—because the left always talks about “equitable” and “equitable outcomes”. Well, the good thing about this road-user charge (RUC) is it’ll be equitable; it’ll be agnostic to the type of fuel, but it’ll be equitable in that it measures the amount of return we get based on weight and distance travelled. How wonderful.

And isn’t it good that this Government listens? It was interesting that, actually, National, showing leadership way back in 2009, as visionaries for the environment, thought, “Let’s subsidise the use of EV and electronic vehicles. Let’s encourage that form of transport.” And I’m pleased to report back that, 15 years later, we’ve hit success. We set a 2 percent target, and we’ve achieved it—we’ve achieved it—and now we need to refine the policy, because it’s achieved what we set out to do. And, in collaboration with our partners from ACT and New Zealand First, we’re now going to make a fit for purpose RUC.

Hon Phil Twyford: A policy of low expectations.

Hon Member: Oh you’d know! 100,000 homes.

RYAN HAMILTON: You set them very low. Thank you for that comment. We’re going to increase it.

Hon Phil Twyford: Congratulations—2 percent.

RYAN HAMILTON: Yes, the member did set those expectations very low.

ASSISTANT SPEAKER (Maureen Pugh): Order! If you want to have this conversation, please take it outside. I apologise to the member.

RYAN HAMILTON: The Hon Julie Anne Genter also mentioned before about incentives. Well, this was an incentive, and it worked, and again I must emphasise it achieved its purpose and we can now create a much more equitable outcome. In fact, I don’t know if the member for Maungakiekie is here, but he said this is actually a win-win: we can save money and the environment. And he’s quite keen to go and buy his second electric vehicle.

The other good thing is that, when we came into Government, on the back of the previous Government’s 2022 consultation—they went out at 20 percent reduction—we proposed a 30 percent reduction, and I’m so pleased that today we’re all in agreeance on a 50 percent reduction. And though we’ve been criticised for moving in urgency and moving in a very truncated select committee process, it shows that we’re an open-minded, nimble, pragmatic Government, and this is a case in point. So this is really quite incredible.

I must remind everyone in the House, too, that the primary purpose of the road-user charge is not carbon tax; the primary purpose of the Road User Charges Act 2012 is for this charge to be proportionate to the cost that the vehicle generates, and that’s, today, why we’re talking about weight and distance rather than the use of fuel.

Cameron Luxton also talked earlier about administration, and obviously the opportunity and, I guess, the challenge now is the administration of that toll tax. But it was elucidating, through the select committee process, to see that actually 80 percent of our tolling money goes into administration, and that’s far too much. But the opportunity is, of course, also to reduce that, to increase the amount that we can toll or generate through different roading mechanisms, but also to get more efficient, because we’re keen to get more efficient so that we can use that money not for bureaucracy and Government bloat but actually for delivering outcomes for our road users.

I’m also keen to see the registration stickers. I think it’s always really good when you see fresh stickers on the windscreen and they’re aligned and fresh, and it’s always good to have new registration stickers. And so that fee will go proportionately back to the renewal of those registration stickers, which I think is really key.

I think I’m just about at the conclusion of my delivery here, but I thought I’d just emphasise that—

Hon Scott Simpson: Start again.

RYAN HAMILTON: Start again? Maybe I’ll just reemphasise the point that we didn’t hear a 20 percent consultation discount on the proposed road-user charge for plug-in hybrids. We went out on consultation with a 30 percent. Yes, it was a truncated select committee process, but the submitters came, we listened, and we’re now proposing a 50 percent reduction on that plug-in hybrid rate. And so that’s very pragmatic. And I’m also very pleased to see that.

Madam Speaker, you would have heard about the phrase “Bring back Buck”. Well, Madam Speaker, we’re going to bring back RUC!

Plug-in hybrids will pay their way;

no more free rides, OK?

Funds for maintenance and repair

helping get us out of disrepair.

No more potholes and speed bumps,

but more productivity and pineapple lumps.

Madam Speaker, may I commend this bill

so that we can get our fill

to build and maintain a more productive New Zealand and get us all back on track.

CHAIRPERSON (Maureen Pugh): The question is that the motion be agreed to.

Motion agreed to.

Bill read a second time.

Bills

European Union Free Trade Agreement Legislation Amendment Bill

Second Reading

Hon TODD McCLAY (Minister for Trade): I present a legislative statement on the European Union Free Trade Agreement Legislation Amendment Bill.

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

Hon TODD McCLAY: I move, That the European Union Free Trade Agreement Legislation Amendment Bill be now read a second time.

Motion agreed to.

Bill read a second time.

ASSISTANT SPEAKER (Maureen Pugh): In accordance with a determination of the Business Committee, this bill is set down for committee stage immediately. I declare the House in committee for consideration of the European Union Free Trade Agreement Legislation Amendment Bill.

In Committee

Parts 1 to 5, Schedules 1 to 3, and clauses 1 and 2

CHAIRPERSON (Barbara Kuriger): Members, the House is in committee on the European Union Free Trade Agreement Legislation Amendment Bill. Members, we start with the debate on Part 1.

Hon SCOTT SIMPSON (Senior Whip—National): Point of order, Madam Chair. I seek leave to debate the European Union Free Trade Agreement Legislation Amendment Bill as one question.

CHAIRPERSON (Barbara Kuriger): Leave has been sought for that purpose. Is there any objection? There is not. The question is that Parts 1 to 5, Schedules 1 to 3, and clauses 1 and 2 stand part.

Hon DAMIEN O’CONNOR (Labour): Thank you very much, Madam Chair. In the spirit of cooperation that is generally the way that we manage trade agreements in this House, I think all parties in the House have agreed to come together and to move this through as quickly as possible. It’s not because it’s insignificant or small in terms of the technical parts of the bill, but it’s one where there has been agreement reached, and I’d just like to acknowledge the Foreign Affairs, Defence and Trade Committee.

I’ll take the opportunity, and I know it’s a kind of a free-ranging speech, and we can go all over the place—of course while focusing on the bill—but I’ll acknowledge the Minister and his efforts to keep this thing moving as quickly as possible. There’s been much said about the timing of when it came into the House; the reality was that this is quite a complex piece of legislation. I don’t think we’re going to go and unpick it. The select committee had the opportunity to do that, and I’ll acknowledge the chair, who heard submissions, who managed this process properly.

It is technical. A trade agreement with 450 million people, negotiated with 5 million people, is quite an achievement. So in acknowledging the Minister’s movement and momentum, I want to go back to the officials, who have been a key part of this. Ten years ago, probably it would have been said that this was impossible. We’re a small player at the bottom of the Pacific; the European Union, arguably, one of the biggest single blocs of economic activity and commerce in the world, and 450 million highly discerning, high-value consumers—what would they want with us? The agreement is about values—value and values, but most particularly values, because we share many of the same aspirations as all 27 of the EU member States, and I think that’s quite an achievement.

I want to acknowledge Ministers Dombrovskis and Wojciechowski, who were the key leaders—one in agriculture and the other, Valdis Dombrovskis, is the trade commissioner from the EU. He drove this through some difficult times—one of them being, of course, the Ukraine war, which cut right across everything that the EU was doing. He kept focus on the New Zealand - EU free-trade agreement, and I want to thank him once again.

The pressure was on, I guess, us as a Government too. The previous Labour Government had signed a free-trade agreement with China. My colleague the Hon David Parker had signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and so I had to get on and try and do my little bit, and I know, as I’ve said before, it’s a non-partisan area. New Zealand is a trading nation and we need to open every door, every opportunity we can for trading nations.

What makes this agreement, I guess, more valuable is in the services area, and I know there has been some disappointment in some areas of agriculture that didn’t get the volumes that they wanted. None the less, the increased access—particularly for dairy and for beef—offers huge opportunities to add real value to the total export earnings of those sectors, but it’s in the services area where we’re not limited really, only by what’s between our ears, and New Zealanders are very, very good at this open government procurement into the EU. Services that are unlimited in terms of their volume and scope can now trade into the EU with virtually no barriers, and so thank you to the officials for the technical work that they did to keep us in the game. I have to say that it is a very valuable agreement.

I’ll maybe take the opportunity—and there’s a national interest analysis here, quite a substantive one. You can go to estimated impacts by sector: “Expanded export opportunities for the agriculture and food sector is an important driver of the overall economic benefits. Improved and preferential quota access and lower or no tariffs on products such as beef, cheese, butter, fruit, and wine would improve New Zealand competitiveness”. It opens the door to us being more competitive in these areas; but on top of that, the services sector is expected to make the largest contribution to economic gains in absolute terms, due to the significant role of services in the New Zealand economy, something that we don’t always appreciate but we are coming to realise more and more. So, you know, up to $2.1 billion of additional gain, the largest source of economic gains from the agreement from the services sector—nothing to scoff about at all.

So there were submissions made to the select committee on some technical areas, but one of, I guess, the areas of interest were geographical indicators. It’s quite a strange thing that the agreement does two things. It protects geographical indicators, and then it actually allows the EU, in almost an opposite approach, to say that anything produced in any member State can be called “from EU”. So while we might have had country of origin as a traditional way forward to identify which particular State we’ve said, “No; we’ll go back and accept anything from the EU because you’ll maintain the standards.” So at one end, geographical indicators; at the other end, opening up opportunities for all exporters from the EU into our country.

CHAIRPERSON (Maureen Pugh): The member’s time—

Hon Damien O’Connor: Madam Chair.

CHAIRPERSON (Maureen Pugh): The Hon Damien O’Connor.

Hon DAMIEN O’CONNOR (Labour): Thank you, Madam Chair, and I won’t take too long, other than to say that people might see a number of contradictions in a big player like the EU having an agreement with New Zealand, and why? As I say, I come back to the values one, and all the tricky areas that we work through, on geographical indicators really leaving the door open for most of our cheese and wine exporters or traders or producers, with a couple of exceptions that we couldn’t negotiate our way out of.

On geographical indicators, consultation by the Ministry of Foreign Affairs and Trade around New Zealand where we asked how we should manage geographical indicators, because there were some concerns, the question of, “Well, how many are we going to develop and protect?”—there was little or no interest from the New Zealand primary sectors. That is disappointing. So what I lay on the Table, with this agreement, is a challenge to the food and beverage sectors—and wine, of course, has a few geographical indicators, as we appreciate the value, but for the other sectors in the finest quality nutrition to the world, let’s develop some of our own and turn those into valuable, clearly identifiable, and unique products for us to sell to the world.

I’ll leave it at that, other than to say thank you once again to officials, to the Minister keeping this moving through. This is a high-quality, valuable agreement for New Zealand into the future. Kia ora.

TIM VAN DE MOLEN (National—Waikato): Thank you, Madam Chair. Look, it’s a pleasure to rise and take a call here in the committee stage of the European Union Free Trade Agreement Legislation Amendment Bill. Of course, noticing the brevity of the process we’ve gone through—a truncated second reading—and can I acknowledge and thank members across the Chamber for their willingness to support that.

I do really want to just touch a bit on the time frame because I think it is really important to note that this has been a collaborative effort and I really do want to acknowledge, particularly, the members that I’ve worked with on the Foreign Affairs, Defence and Trade Committee for their speedy, efficient, but detailed consideration of this piece of legislation, because it is very important for New Zealand exporters and it’s as simple as that.

I want to acknowledge and thank the Minister for Trade as well for bringing this before the House. It was the very first sitting week of the year we were debating this legislation and then given a report back of 4 April. Looking at that, though, we were able to determine that, actually, by just coming a week or so earlier, it would enable the agreement to come into force an entire month earlier, which would have a direct financial benefit for New Zealand exporters.

Members across the committee were very keen to support that endeavour and I really want to acknowledge their work. I also want to thank Damien O’Connor, particularly as a former Minister for Trade, for his work on this agreement as well. I think that’s one of the things that we are very—well, certainly as the chair of the Foreign Affairs, Defence and Trade Committee, I’m thankful for on our committee: that we have a relatively collegial approach to these aspects on the committee and, actually, that’s as it should be for something as important as this, because it is an important piece of legislation.

As I said, the time frame part of it is really interesting. When we heard from submitters through this process, but even prior to that, those industries that were going to be impacted or would have benefit from this, they made it clear that given the seasonal nature of some of those products—in horticulture, in particular—we’re in a window at the moment where products are being exported. By us being able to look at having enforcement on 1 May, which is what we’re working towards now with the prompt consideration that the committee is providing on this bill, that will actually provide a direct financial benefit to a number of those exporters in terms of the percentage of product they would otherwise be exporting through that month of May, in particular.

So I’m really pleased, again—and I do really just want to thank the members for that. Because it was something that we could easily have taken our full time allocation through till April on, which would have pushed it out until June or indeed even longer if the Minister hadn’t brought the legislation in and given us that shortened report-back date.

Because this is important, and I think it’s worth noting, actually, that the EU ratified at their end late last year, which was fantastic to see—late November they ratified it in their Parliament. So, of course, then it was just waiting on New Zealand’s end to carry out that work. So I’m very pleased to be able to bring that forward now and to have agreement across the House to bypass the second reading process, straight into committee stage now, and then on to the final reading in a couple of days’ time—assuming we progress with this committee stage tonight, which I’m confident that we will.

Now, look, I do just want to thank the submitters as well for their input through this process. There were a number of submitters that raised some really valid points within the consideration; some aspects that were slightly outside the scope of the bill in that they were more to do with the agreement itself. As Damien O’Connor had touched on, there’s a range of views around the level of access—whether that was sufficient or not—and we can constantly seek improvements in those things. I think whenever there is a trade agreement—or, in fact, any sort of negotiation—if both parties come out of it a little dissatisfied, you probably got the balance about right.

I guess it keeps that ambition there to strive for continued improvement over time. That’s certainly something that we are very keen to do on this side of the House. No trade deal is ever complete: there’s always an opportunity to enhance the relationship further, to continue to work on, to evolve, to develop, to deepen that relationship. That is really important for a trade-oriented nation such as New Zealand. Not just because of trade, though, but, actually, when you look at some of the increasing geopolitical tensions that we face around the globe at the moment, it makes it increasingly important to be clear with our position on the international rules-based order, our democratic values that underpin how we operate. Trade, of course, sits alongside that as well. So these are all important considerations that we were mindful of as we went through the consideration of this bill.

In terms of these submitters, I do just want to expand a little on that because there were some concerns raised around the enforcement regime, in particular, that’s put in place through this legislation that we are debating, and concerns around whether or not that was necessary. Ultimately, we got to a position where it was clear through the free-trade agreement itself that did require an administrative mechanism to be established to enable that enforcement to be carried out here in New Zealand alongside the judicial process that could occur. So having that additional function created to enable that administrative mechanism where there were concerns around breaches of geographic indicators was an important part of enacting this free-trade agreement as it was put forward.

So, ultimately, as I say, we can always debate whether or not there was the best outcome or the right outcome. But this legislation, I think, has landed in a good place. As I say again, this legislation is actually simply to enable the free-trade agreement that was agreed last year. It’s not to make any changes, and that was to some of the other aspects raised by submitters around whether we could have got or should have got a different level of access in their particular area of interest—red meat and dairy were two that came up, in particular.

But, ultimately, when you look at it from the perspective of “NZ Inc.”, there are wonderful benefits in here, there are some good aspects to the trade agreement, and I’m confident that it will provide value to New Zealanders. Again, the timeliness of that was the critical aspect here—bringing it into force; enabling that contribution to start a month earlier has a meaningful impact for exporters right now. Particularly when we’re seeing some challenging economic situations domestically, anything we can do in this House to help improve that situation is one of the rewarding things of being an MP, I think, to help those businesses succeed in their journey as exporters.

So, look, I’m happy to support this bill. Thank the Minister, again, for their consideration, and for members opposite for their support on this. Thank you.

Hon KIERAN McANULTY (Labour): Thank you very much, Madam Chair. I acknowledge the contributions from the two previous speakers. They’ve acknowledged the role of the officials and of the Minister for Trade for bringing this and encouraging it to go through so quickly, and, rightly so, acknowledging the working of the select committees, but I think it’s important to acknowledge the role that previous Ministers played, in particular that of the Hon Damien O’Connor. In my view, he is the hardest-working and most effective trade Minister that we’ve had, actually, and it has to be acknowledged.

I remember going on a delegation—an official delegation—alongside the Rt Hon David Carter, the Hon Paul Goldsmith, and the Hon Anne Tolley to commemorate Passchendaele. While we were there, we were asked to ensure that we met with key delegates from the European Union to push for this free-trade agreement, and whilst there was a lot of enthusiasm at an individual level, we didn’t leave with too much enthusiasm that anything would be done all that quickly. That was in 2020. Well, we know that in that period of time, there was COVID, there were massive disruptions, and so for the Hon Damien O’Connor to be able to work alongside officials and steer that home in the way that he did and get it signed, also in the backdrop of signing the UK free-trade agreement, which commenced and concluded in a single term of Government—I don’t think that’s happened before.

It’s important that at moments like this, with key pieces of legislation that will bring benefits to New Zealand exporters over generations to come, that those that play a part in that are given true recognition.

Hon PHIL TWYFORD (Labour—Te Atatū): Thank you, Madam Speaker. I can see the Minister was about to get on his feet, so I’ll try not to stand between the committee and the Minister’s contribution for too long, but I just wanted to add to the questions that I hope that the Minister might address. I would be interested to hear from him his thoughts about some aspects of this trade agreement which are unusual and ground-breaking.

Colleagues have commented on the geographical indicators issue, the questions of market access, but one of the distinctive features of this trade agreement which—the delegation of European parliamentarians who visited New Zealand before the EU entered the ratification phase were very keen to emphasise the importance of some of the provisions in here which they felt bound New Zealand and the EU in terms of shared values. It was their commitment to labour standards; the provisions in the agreement which provide that the parties can hold each other accountable to the commitments that we have made under the Committee on the Elimination of Discrimination against Women, the international instrument on gender equality; and our commitments, both the EU and New Zealand, to the Paris climate change commitments.

Hon Shane Jones: Oh, minor detail—minor detail.

Hon PHIL TWYFORD: I’m not surprised that that member would say this was a minor detail, given his stated intention in some of his portfolios. He might find his activities dragged up before a tribunal to determine whether or not they’re in breach of our country’s commitments under this agreement. That would be very interesting to see.

But I’d invite the Minister to comment about his thoughts on those provisions, which do make this quite a distinctive agreement. I’d be interested to hear what advice he’s got on how those provisions are operationalised. What are we going to do? We all know that even in the best of agreements, you can achieve a good result on paper, but it’s what happens after the ink dries in terms of exporters being able to take advantage of market access and reduction of tariff barriers and so on.

But what about these other provisions: labour standards, climate change commitments, gender equality? I would note in relation to labour standards that the Council of Trade Unions, New Zealand’s peak body for the labour movement, is raising questions at the International Labour Organization in Geneva about whether or not this Government’s recent moves in the area of employment relations risks putting New Zealand in breach of the commitments we made to the EU under this agreement. So I’d be keen to hear the Minister’s view on that.

Hon TODD McCLAY (Minister for Trade): Madam Chair, thank you. It gives me pleasure to take a call on the debate on this agreement. And I agree with other members about its importance not only to New Zealand but, actually, the huge opportunity it provides New Zealand exporters, particularly the primary sector, to do much more in a very large and wealthy market—the European Union.

Can I recognise the work of the committee and how quickly they went about their work. I’m mindful that everybody who submitted and wanted to come before the committee was afforded the opportunity to do so, and the committee took time to listen to all those who submitted, and I commend them for that. But can I also recognise that they worked when Parliament was in session, they worked on Mondays and Fridays and in recesses to go as hard as they could to do their job properly to scrutinise the legislation and suggest any changes that are needed as they are meant to, but to do so also so it could return to the House in an extremely timely fashion.

Indeed, I think from first reading, which was 31 January, until this Thursday, where third reading will take place, is a matter of some seven weeks, and I’m not sure that we have seen such commitment from this House on a free-trade agreement (FTA), particularly one of the magnitude of this one previously. So I’d like to recognise all the members of the House for the work that they have done. In particular, Damien O’Connor, who was the Minister at the time the agreement was negotiated and was signed, to recognise his commitment over a very long period of time and to reach agreement. He said, as others have said, in some areas it hasn’t met the expectation—I know particularly for dairy or beef farmers within New Zealand. Overall, it is a good result for New Zealand. It will help grow the economy and increase the wealth of New Zealand and give Governments more opportunity.

I’d also like to recognise the ACT Party and New Zealand First for agreeing for this process to go faster than it might overwise. In particular, for us to be able to do second reading today without debate, and then a wider ranging debate here in the committee stage, and then to have third reading in the same week. To the Green Party also, who I reached out to and who agreed to work as fast as they could, scrutinising the document properly, but also so that it could follow through to the House and enter into force. And to recognise the Māori Party, and whilst they may have a different view to me in first reading when it comes to trade, I do commit to them that, actually, this agreement will be good for all New Zealanders: Pākehā, Māori, Indian, Chinese, everybody that commits themselves to work hard in New Zealand and to export, and therefore I would hope that in their debates they will work with us to find ways to make agreements in the future better to deliver for all New Zealand.

Damien O’Connor and others have recognised the officials. They worked very, very hard. Ministers get to go meetings and occasionally stay up late at night talking about these things, but the officials are the ones that put the effort in day in and day out, day in and day out. To recognise the very large group of them that worked over this from the conception of the idea of having a free-trade agreement with the European Union to when it was launched, the negotiations, and the conclusion. Much of the thanks is owed to them. In fact, without their work we wouldn’t be here working as dutifully as we are.

I want to touch on a couple of parts of the agreement that have been raised, and I’ll do my best to answer the mischievous question from the Hon Phil Twyford. But at the same time, I don’t want to stand in the way of progress. The reason that I asked members of the committee of the whole House and the Business Committee to allow us to go faster than we would otherwise is because this agreement enters into force on the first day of the second month after New Zealand ratifies, and that’s because the European Union ratified last year through their processes.

The reason that’s important is because, on entry into force, there’s $100 million worth of tariff savings for New Zealand exporters on day one for the first year. That’s one of the highest levels of tariff saving on entering into force of any agreement we’ve ever concluded. But more importantly than that, there are at least two industries—the kiwifruit industry and the onion industry—who are seasonal and about to export or have already exported their products to the European market. In the case of kiwifruit, if we can get this work done this week, then the agreement will enter into force on 1 May, not 1 June or July or even 1 August, which was what some people thought it may take the time for the House to get through.

There’s a $43 million saving for New Zealand kiwifruit growers as a result of this because 90 percent of their crop going to the European Union will be covered under this agreement and the tariff rate will fall to zero. In as far as the onion growers of New Zealand are concerned, about a third of their crop—a saving of $3 million for onion growers that will go directly into their pocket. So that’s the reason that I think it’s worth recognising the committee is coming together because of the direct benefit on day one and over the coming months for so many New Zealanders.

So 91 percent of New Zealand’s current goods trade with the EU will enter duty free, increasing to 97 percent over seven years; and $1.3 billion of GDP will be boosted annually, increasing our exports to the EU by up to $1.8 million per year. That’s just jobs for New Zealanders and a better return for the hard work that they put in.

A number of issues have been raised, particularly around geographical indications (GIs). It’s not something that New Zealand often has been in favour of—indeed, this was an ask of the European Union, not something New Zealand went to the negotiating table with. However, it’s important to recognise that the EU has not concluded an agreement without GI recognition in it. But I want to recognise the work officials did to minimise the effect upon New Zealand producers when it comes to a number of products that could have been covered by the geographical indicator mechanism in the European Union, and that where there will have to be changes to the names of some products, the lead-in is a period of time where they’ll be able to adjust, it won’t be thrust upon them, and they’ll be able to come to terms with that.

Damien O’Connor mentioned that there wasn’t great interest from New Zealand exporters around GI protection here. I think we should continue to listen to them, but I support them in that, because there are a number of ways that New Zealand gets to protect its reputation, and that’s through continuing to have a very high-quality reputation. And that outside of the EU’s desire to enforce GIs with others around the world, I don’t know whether it’s in New Zealand’s best interest to try and go and enforce this type of protection elsewhere for New Zealand products, but where exporters have concerns, of course, we’ll be open to listening to that.

Phil Twyford asked a little bit about some of the other parts of the agreement, and there are many areas that is different than some of the traditional trade agreements; although, even the original Trans-Pacific Partnership that flowed on from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership had labour and environmental conditions, and so on, in it. Indeed, the agreement hasn’t entered into force, and therefore any change this Government’s made are not captured by it because it hasn’t entered into force. However, one of the most important principles of all free-trade agreements, including the European Union free-trade agreement, is the right of Governments on both sides to pass rules and regulations through their Parliament to affect the standards that they think are important.

When it comes to labour standards in the European Union and New Zealand, they’re similar. In some cases, I think New Zealand’s labour standards are higher. So I don’t see that there is likely to be any dispute between New Zealand and the European Union in these areas and either way. As far as environmental standards of New Zealand committed to meeting its climate change reduction obligations, we do have the ability here, as Europe does, to find a way that is best for New Zealand to do that, just as the European Union have very different to New Zealand, it’s the best intentions that are important here, and the Government is committed to meeting those.

There are two amendments that I will have introduced to this legislation in the committee stage, and they are minor by design, technical amendments that officials have found. The first is the clause 84, new section 59 of the Geographical Indications (Wine and Spirits) Registration Act 2006. This relates to the date of protection of amended GIs. In effect, it means that as the EU may change a GI, there is not additional costs or implication for New Zealand, and that we are mirroring some of the effects of those.

The second amendment is a consequential amendment to section 20(1) of the Trade Marks Act 2002, and this relates to the prohibition on registering conflicting trade marks. The FTA prohibits the registration of trade marks that incorporates an EU GI, subject to certain conditions. To meet the requirement, the bill amends the Trade Marks Act to prevent the registration of trade marks that incorporates an EU GI, including any new GIs. However, in relation to a proposed EU GI, rather than only impacting those trade marks that incorporate a proposed EU GI, the current drafting of the bill prevents the registration of any trade marks from the time that any new EU GI proposals are published until those proposals are dealt with. To enact that draft would potentially impact many thousands of legitimate trade mark applications, therefore officials have suggested, and I have tabled, recommended Schedule 2 of the bill changes which set out the amendments to section 20(1) of the Trade Marks Act that amends to ensure that only relevant trade mark applications are impacted and not those that are meant to be excluded. With that in mind, I thank the House for its work and I commend it in committee stage to the House.

Hon DAMIEN O’CONNOR (Labour): Thank you, Madam Chair. I’ll take the opportunity just to briefly comment on the two amendments, which we support—I understand they’re technical amendments—and, basically, once again just reaffirm our commitment as a country to geographical indications (GIs) and not to have trademarks to try and override what are legitimate GIs, certainly recognised in the EU but now by us as well.

The Minister for Trade mentioned, of course, the areas of labour; small, medium enterprises; and environment. Animal welfare was one of the discussions that was had, and we do run different systems of farming, and so, as with the UK, what we agreed to do was not to direct or make judgment on animal welfare standards or indeed labour standards or environment, but to commit to uphold the highest standards that we possibly can and to not lower those standards for any trade advantage. I think that’s the critical thing, and I think this Government and future Governments will have to be mindful of that. That’s why the values that we share for a better world mean that we have to aspire to have higher standards in all those areas. These are areas that are sensitive to our consumers, sensitive to the people in our own countries, and I think it’s a good commitment.

The one unique area which followed on from the UK trade agreement was to have a Māori trade and economic cooperation chapter. When we started discussion in this area, it wasn’t enthusiastically embraced by the EU and, they thought, perhaps their member States, because it was a—I guess it’s a new concept, to go back and recognise, respect, and then enhance the opportunities for our indigenous people. But all credit, once again, to negotiators and, I guess, the fairly staunch way that I and others tabled the need for this: this is the way that we’re moving, we have a growing Māori economy, we have Māori people right through our communities who are looking for expectations and benefits from trade, which is why we have a trade-for-all agenda, to ensure that everyone can benefit from this. So we negotiated in an economic cooperation chapter, and that just, basically, says that we’ll aspire to try and generate benefits. Actually, you know, what is good for Māori here, what’s good for farmers, or good for service providers, is good for all of New Zealand. So I think that was a really positive step forward.

I’m not going to carry on for too long, but just say a couple of people—and he was tormented, I have to say. Vangelis Vitalis was tormented through this negotiation, because one of the things that the Europeans held out for—and the Greeks in particular—was feta, a cheese. Passionate cheese, close to the heart of all Greeks and the ancestors of all Greeks. I have to say, Vangelis was really torn here between trying to respect the rights of the Greek people and their enthusiasm to retain the rights to feta, and then, of course, the opportunities to New Zealand. But thank you to him and to all the others. We got through that. That is something that we are going to have to phase out after a transition period: we won’t be able to use that term. But it’s just one of the realities.

Can I thank Carl and Diana Reaich, who were the ambassadors in Brussels through this time. They worked very, very hard through COVID, through really difficult times, the Ukraine war as well. They went out, they contacted people, all through Brussels—all those people who might have had an influence. It’s not easy to get the support of 27 member States. Thank you to them and their officials and all the others. We did it. So, look—

Rachel Boyack: EU friendship group.

Hon DAMIEN O’CONNOR: EU friendship group, yeah, well, absolutely, and, as I say, the Hon Kieran McAnulty raised the fact that anyone who went anywhere near Europe had to bang on the door, knock on the door, and do the charm offensive. So this was a collective effort. We’ve got there. I won’t hold it up any longer and I’ll sit down. Kia ora.

Hon TODD McCLAY (Minister for Trade): So soon after dinner, I have to rise and take the floor to talk about a Greek feta. And Damien O’Connor’s right: it can be a very challenging thing. Interestingly, many years ago, I had lived in Europe for a very long period of time and, upon returning to New Zealand, went to buy feta in New Zealand that said it was to the traditional Danish recipe, which I think to many Greek people would confuse them.

But the important point here around geographical indications (GIs), whilst it’s not something that New Zealand itself would want to do or do much more of, or indeed a lot more of, it wasn’t asked of the European Union. The way the EU works is it’s not a collective decision; each member State has to say yes when it comes to a trade agreement, either because of the vote in the European Parliament or sitting around the table in the Council of Ministers, which is Ministers from all the States.

In a previous Government, as trade Minister, I visited Greece to talk to them about why we wanted a free-trade agreement, as we visited many countries in Europe to persuade them of the importance of a high-quality set of rules that businesses can rely upon and can invest and grow relationships with. Upon visiting Greece, the first, second, and third thing that they raised was the importance of Greek feta—and the name and GI. So, as tortured as Vangelis Vitalis is, without the recognition of feta as a European GI, we would all be tortured, because I don’t think we would have got a free-trade agreement with the EU.

That in mind, it doesn’t mean we should continue to accept these things, because, actually, you know, New Zealand producers produce very high-quality food, and I would argue that New Zealand feta—as it’s named today—is of an equivalent quality and food safety as it is traditionally produced in Greece. It’s just that, over the next few years, we’ll have to come to another name. But, rest assured, it will still be able to be purchased, sold, just with a slightly different name, and it will still be enjoyed in Greek salads.

CHAIRPERSON (Maureen Pugh): Before I take the next call, can I just remind members that this is the committee stage and that it is our opportunity, or your opportunity, to interrogate the detail of the bill with the Minister for Trade. I call the Hon Phil Twyford.

Hon PHIL TWYFORD (Labour—Te Atatū): Thank you, Madam Chair. I have a detailed question for the Minister about the animal welfare provisions in the agreement. I’m interested to know the Minister’s view about whether a move to reinstate the live animal trade, which has been subject to much criticism over the years because of the standards, or lack of them, in relation to animal welfare, would risk being in breach of the provisions in the agreement which say that neither party will lower standards or trade benefit.

Hon TODD McCLAY (Minister for Trade): The answer to that is: no. Governments on both sides have reserved the writing of the agreement to legislate in the interests of, and in desiring to have, the highest standards. It doesn’t mean that, actually, we must do the same as what others do; it just means that any decisions this Government makes around animal welfare issues, or anything else, has to be the equivalent. The Government’s very mindful of its obligations, the responsibilities, when it comes to all the agreements that are signed, including trade agreements. So the answer to your question is: no, I don’t believe it will put it in jeopardy.

CHAIRPERSON (Maureen Pugh): The question is, That the Minister’s amendments set out on Amendment Paper 21 be agreed to.

Amendments agreed to.

Parts 1 to 5, Schedules 1 to 3, and clauses 1 and 2 as amended agreed to.

Bill to be reported with amendment.

House resumed.

CHAIRPERSON (Maureen Pugh): The committee has considered the European Union Free Trade Agreement Legislation Bill and reports it with amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Bills

Misuse of Drugs (Pseudoephedrine) Amendment Bill

Second Reading

Hon DAVID SEYMOUR (Associate Minister of Health (Pharmac)): I present a legislative statement on the Misuse of Drugs (Pseudoephedrine) Amendment Bill.

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

Hon DAVID SEYMOUR: I move, That the Misuse of Drugs (Pseudoephedrine) Amendment Bill be now read a second time.

It gives me great pride to stand in support of the Misuse of Drugs (Pseudoephedrine) Amendment Bill 2024. I’d like to start by thanking those members of the Health Committee, chaired by Sam Uffindell, but also Drs Hamish Campbell and Carlos Cheung, Ingrid Leary, Cameron Luxton, Hūhana Lyndon, Jenny Marcroft, Debbie Ngarewa-Packer, and Dr Ayesha Verrall. These guys, I think, have done tremendous work. There have been a total of 169 people who have submitted in the very compressed time frame available of four weeks to hear from the public. In addition to those people, nine organisations made a submission, and they report that most organisations, including pharmaceutical industry bodies and drug harm prevention groups, indicated support for the bill in their submissions.

The select committee says it’s not recommending any amendments to the bill as introduced, and that is in a way expected, because it is an extremely simple bill. In fact, here it is; it’s really just 1½ pages, and two pieces of paper is the whole thing. And all it really does is move the drug pseudoephedrine from one schedule of the Misuse of Drugs Act, where it’s a class B drug, to another schedule, where it’s made a class C2 drug. So it’s not surprising that the select committee didn’t decide to make great changes. However, they did hear from many members of the public, who gave some feedback that I think we found very helpful, and I certainly appreciated reading their report.

They pointed out that pseudoephedrine is a precursor drug; it can be used to make methamphetamine. And yet, since 2011, when pseudoephedrine was banned, the price of pseudoephedrine has gone down; the quantity consumed, unfortunately, has gone up; and according to the availability index, it’s become more available. They point out, according to one submitter, that to make a kilogram of pure meth, you would need 27.8 kilograms of pseudoephedrine medication. At that point, you could probably just cure a lifetime of colds and coughs! In contrast, only 1.75 kilograms of higher-efficiency precursor is needed for the same yield—2,430 packets of pseudoephedrine cough medicine to make 1,000 grams of P, and you start to understand why it is that the people who supply these drugs have started bringing it in in more pure forms from overseas rather than going round pharmacies trying to buy up pills that they can cook down into meth.

None the less, they acknowledge the possibility that some people may try that. And it’s a concern, because methamphetamine is probably—in fact, almost certainly—the worst drug available in New Zealand and doing more social harm than any other drug. That is something that we should be concerned about. And what the—

Ricardo Menéndez March: Apply that analysis to cannabis.

Hon DAVID SEYMOUR: And there’s a man here who says, “Apply that analysis to cannabis.” But that member has been doing his own trials for far too long!

DEPUTY SPEAKER: I don’t think that comment is necessary. Thank you.

Hon DAVID SEYMOUR: It’s not necessary. But some of the best things in life, Madam Speaker, aren’t necessary. We just do them anyway.

Ricardo Menéndez March: Like you in Parliament.

Hon DAVID SEYMOUR: He’s still trying to heckle, but I can’t hear clearly what he’s trying to say.

There were serious concerns raised about crime and the safety of pharmacists, and one suggestion that was made was that perhaps there should be a register kept, on a nationwide basis, of everybody who buys pseudoephedrine products. That certainly would appear, at face value, to be helpful. At the moment, there is a system that exists called the New Zealand ePrescription Service, and increasingly, pharmacists are adopting electronic dispensing, so it may well be that, due to advances in technology, we’re not far off the time when people can actually get a record of every purchase of pharmaceuticals and track patterns of people who are strategically shopping to stockpile pseudoephedrine drugs so they can manufacture methamphetamine. And that might be a very useful thing to have.

On the other hand, there’s strong indications that because, as I was saying earlier, it’s no longer economically viable to make meth out of pseudoephedrine tablets, it’s most likely that that regulation won’t make a great deal of difference. And yet the technology may make it possible soon in any event. Regardless, as the Labour Party, and the majority of the committee as well, have noted the comments I made to the committee, it would seem sensible to give New Zealanders the clear benefits of the convenience of pseudoephedrine cough and cold medicine as soon as possible, while monitoring the situation with a view to more enforcement measures if they turn out to be necessary. And that’s the thing: they may not turn out to be necessary; in which case, over-regulating and overspending on things that aren’t necessary can sometimes be as bad, if not a worse mistake, than testing whether there is truly a problem to be solved, particularly when there’s every reason to believe that there is not a problem anymore with people cooking pseudoephedrine.

I hope that all parties will support this legislation. I think it’s a symbol of a few things. Too often, it feels like New Zealand is a place where people are trying to make life harder, where you have to obey rules that don’t make sense, just because that’s the way it is. We want to be a happy and successful country where, if Government makes a mistake and there’s an opportunity to improve people’s lives by admitting that and reversing the mistake, then—you know what?—we do it. And people actually can be free to make the most of their time on earth on their terms, so long as they’re not harming others. And so, when the Government realised that banning pseudoephedrine, banning the good cough medicine, didn’t stop the bad people making P, the right thing to do is to reverse the policy and let people have the medicine that makes them feel better again. It’s just the simple, straightforward thing that anybody in this circumstance would do.

And it also shows that we have a Government that is committed to making rules and regulations based on good evidence of what works. In this particular instance, we’ve actually done a 13-year trial, if you like, and what we’ve discovered is that the regulation didn’t work. We didn’t get the benefits of stopping P; we just paid the cost of having to use, frankly, rubbish cough and cold medicine. Well, actually, if something doesn’t work, we just stop doing it, and I think being prepared to be responsible regulators, I hope as the Minister for Regulation at least, will be another hallmark of this Government—that we define the problems we are trying to solve and use proper cost-benefit analysis. I think that, across a whole range of activities, everything from farming to finance to teaching to trying to get decent pharmaceuticals, that’s really going to do a lot for New Zealanders’ ability to make a difference in their own lives and those they care about, to provide for themselves and their families, without being restrained by unnecessary rules and regulations. That seems like the thing that a country that wants people to have long, happy, and healthy lives would do, and that’s what a responsible Government would do in response.

So, in conclusion, I’m very pleased that this bill has come through the select committee. I’m grateful to the 169 people and nine organisations who took the time to make a submission to help inform the committee, even in the compressed time frame that they had. And I’m grateful for those members of the select committee who took the time to hear those members of the public and make their recommendations and suggestions so that this bill could benefit from the best of our representative democracy and the parliamentary process in order that we can make better laws. I now look forward—

Hon Rachel Brooking: It’s not the best process.

Hon DAVID SEYMOUR: And someone said it’s not the best. Well, actually, I think listening to the public and making your views known and deciding where to go—I think that is the best of our democratic process. What is wrong with the Labour Party? Why are they so down this week, is what I want to know. What has gone wrong over there? Maybe they are ill and need some pseudoephedrine! Well, I’ve got good news there too. And what we’re going to see increasingly is a piece of law that is going to make it better for New Zealanders when they feel ill, and with that, I commend this bill to the House. Thank you, Madam Speaker.

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

Hon Dr AYESHA VERRALL (Labour): Well, taking that offer of some pseudoephedrine for the Labour Party and saying, “No, thank you; we’re all quite healthy over here.”, but also saying, “Well, hasn’t this been parliamentary process on speed with this bill?”

Now, we’re happy to support this bill because we agree that over-the-counter pseudoephedrine will be helpful to many people suffering from coughs and colds, but this bill is rushed, and while we are grateful for the people who did take the time to speak to the Health Committee, we noticed many of them complained about the truncated process that they had to go through, and, no doubt, there are many important voices that we did not get to hear from during that process.

We also heard about a number of concerns that I’ll elaborate on in my remarks this evening, that we didn’t have the opportunity to explore fully, or it is clear that officials advising the committee and the Associate Minister of Health (Pharmac) didn’t have the opportunity to explore fully. We want to canvass that, because it is important to realise that, in doing so, as the Minister has acknowledged, we are making more available a drug that has tremendous social impacts in New Zealand because of the tremendous amount of harm if it is converted to meth, and we need to step into that decision responsibly.

I want to acknowledge the chair of the Health Committee, Mr Sam Uffindell, for making sure that within the constraints that Parliament had set, that he extended submissions to the committee to make sure as many people as possible were able to be heard, given the short time line set by the Minister. I also want to acknowledge the collaborative way in which the committee was able to gather evidence together, and it has been one of the highlights of being in Opposition, is the enjoyable experience we get to have on the Health Committee.

I also want to acknowledge those who submitted. We heard stories, many of which did, indeed, support the bill, but we also heard from people whose lives have been impacted by methamphetamine and who had concerns. I think those concerns are not so easily brushed aside. I understand that the rational actor theory would suggest that, when it is cheaper to get meth imported already produced from overseas, there is no rational reason why someone would steal pseudoephedrine to produce it themselves less efficiently from a pharmacy.

Addiction isn’t rational, and that is the problem that we have, as acknowledged by some of the people with experience working in addictions who submitted to the select committee. There will be people experiencing addiction, moments of desperation, who will think that stealing or purchasing large amounts of pseudoephedrine would be an appropriate way to make meth. I think where I’d like to focus my contribution is on how we mitigate those risks, because those risks are real, and to say that we have a theory that pretends that those risks are not real is reckless lawmaking. We should take them seriously.

Those mitigations are, firstly, the need for pseudoephedrine to be stored securely. The option to do that is available in regulations under the Misuse of Drugs Act, but we are not taking that option in this bill. The select committee heard that the Ministry of Health sought a very limited number of views on this matter. In fact, they told us that they heard from fewer than 10 people on this when they did their consultation on advice that later informed the design of this law, and only a handful of them were people with experience of pharmacy and they were some peak body representatives in pharmacies.

So the bill currently does not require pseudoephedrine to be restricted, to be stored under lock and key when it’s in a pharmacy. In fact, the advice that the select committee received from the ministry was that their view was that there would be too much sold in order to enable it to be stored under lock and key, as many other controlled drugs are.

You see the problem this presents. It means that we’re storing larger quantities of a drug that has a street value, of a drug that could be abused, in a less secure space. I believe that that is very concerning and that is a mitigation that has not been taken in this bill. The risk is break-ins to pharmacies and ram raids.

Now, our committee did discuss these issues, and the view of some was that we trust pharmacists to take that risk. My point would be that the harm of these types of crimes is not just faced by pharmacists or pharmacy owners; it is faced by the community; it is faced by the workers in those stores as well. We have an opportunity to do better on that matter.

The Minister has already addressed the second mitigation, and that is the issue of registers for monitoring the sale and purchase of pseudoephedrine. This allows two things: it allows us to trace back when there’s an investigation going on, to find out if a network is purchasing a lot of pseudoephedrine in order to make meth. It also might allow real-time detection of that, and that is the case of similar registers used in Queensland.

Now, the Minister suggests that there is a possibility that the evolving nature of pharmacy IT systems may mean that sort of work is possible in the future, but my view is that this is already a worthy option to pursue. That is the view of many pharmacists who submitted, and I do not accept the assurances of Te Whatu Ora that having some work that might allow this one day is sufficient assurance to say that we are already there. The fact is that there is a risk of abuse with pseudoephedrine being changed into meth, and we are not taking action to enable an important mitigation to find out when that is happening.

The third mitigation that’s really important is the need to make sure that there are appropriate treatment services for those impacted by addiction. There are now widespread community-level services for addiction through the Access and Choice programme, but some of the needs of people with meth addiction would be above what is able to be handled by that primary care - level programme, and so we need to make sure that more specialised meth services continue to be rolled out, because why would we step down this path where, potentially, we risk increasing access to meth in the community without also having a strong offer of treatment services?

Another related issue that was raised, which was news to me, by the Drug Foundation, was a large number of people with addiction who, in fact, have ADHD, and sometimes in their use of meth—this was not the Drug Foundation’s view, but one could imagine there is some type of self-medication going on there with use of drugs like meth, when Ritalin is so hard to access through legitimate channels in New Zealand. So I think there are two important treatment options we need to strengthen, one being addiction services, the other being access to ADHD treatments.

I would like to just go back to the process, because I think we did have an opportunity with this bill to do better than we will by rushing it. It is not just that members of the public in the four-week period only had just over one week to submit—members of the public and organisations—but also that the Ministry of Health’s ability to reach in to solve these practical problems and resolve them when they heard from pharmacists was limited. As I said, they only heard from fewer than 10 representatives when they did their targeted consultation to inform the bill. Also, other options like the possibility of binders—compounds that are added to pseudoephedrine tablets so as to make it harder, to inhibit the production of meth from them—we heard about this possibility from submitters, but the advisers were unable to help us resolve it because they hadn’t had time to really go into the evidence.

So, while we support the appropriateness of people having access to pseudoephedrine for coughs and colds, there are a large number of needs for mitigations that fall outside the scope of this bill that we really need the Government to explore. Thank you, Madam Speaker.

Hon JULIE ANNE GENTER (Green—Rongotai): Tēnā koe, Madam Speaker. Tēnā koutou e te Whare. The Green Party is supporting this bill, although we are highly critical of the shortened process. My main question to the ACT members of the Government is: why stop at pseudoephedrine? Why stop at pseudoephedrine?

We all know the Misuse of Drugs Act isn’t working, that banning substances isn’t the right way to deal with addiction, and also there is even worse science supporting some of the other potentially very therapeutic substances that are currently class A on the schedule under the Misuse of Drugs Act that could be transformational and helpful to people who are suffering from different mental health and addictions here in New Zealand. The sooner the ACT Party and Government do something to properly review the Misuse of Drugs Act, the better, from my point of view.

As other speakers in this debate have already raised, it was a very shortened select committee process. Despite that, nearly 200 people submitted—well, 169 individuals and nine organisations—and they didn’t have sufficient time to properly consider potentially wider changes to the Misuse of Drugs Act which would have been really helpful. But I, personally—and I think I can speak on behalf of our Green Party colleagues—am pleased that at least it’s being recognised that it is worth tackling changes to the Misuse of Drugs Act when it’s not working and when it’s preventing New Zealanders from getting the treatment that they need, whether that’s treatment for colds—and I am a big fan of pseudoephedrine: when I have a really bad cold, that stuff’s great; it’s a great medical option to have available.

But, as we well know and as the Green Party has consistently raised in this House, there are many issues with the Misuse of Drugs Act and it is time for us to review it much more widely and to take a science- and harm minimisation - based approach to how we regulate drugs in this country. Of course, there is some harm caused by methamphetamine and other substances, but I think the key recognition is that just banning it and trying to ban the precursors doesn’t solve the problem. We’ve seen that with meth: that meth, with the precursor not being widely available, still became cheaper and more available during that period of time despite being banned.

So, on the one hand, we were taking away a reasonable option that many New Zealanders would have, no doubt, taken up when they are suffering from colds and flu; yet, on the other hand, we didn’t do enough to help those who were truly suffering from meth addiction. I think there’s a couple of factors that were, of course, reported to the select committee. One is that the key way to address addiction is to treat it as a health issue rather than a criminal issue, firstly. But, secondly, that people are much more susceptible to addiction when they aren’t getting other needs met in their life. So addressing poverty and inequality, will do—

Hon Member: Childhood trauma.

Hon JULIE ANNE GENTER: —and childhood trauma—a lot to support people who are suffering from addiction. Ironically, some of the substances that are banned currently—class A substances that are now available in places like Australia for prescription—are some of the most effective treatments for childhood trauma, PTSD, and addiction.

So, yeah, I’m really looking to the Government to say you don’t need to rush it through so fast, but there’s a lot more good work that can be done in this space. So we’d love to see a priority of reviewing the Misuse of Drugs Act, treating addiction as a harm minimisation and a health issue rather than as a criminal issue, and making available therapeutic substances that have for too long and with insufficient evidence been denied to New Zealanders. Those are things that really could be potentially beneficial and transformational for New Zealanders. So we support the bill, not the short process.

SAM UFFINDELL (National—Tauranga): Thank you, Madam Speaker. I rise to speak in support of the Misuse of Drugs (Pseudoephedrine) Amendment Bill at its second reading, which is a bill in the name of the Associate Minister of Health the Hon David Seymour. This is a relatively simple bill. It amends the classification of pseudoephedrine from a class B2 to a class C3 controlled drug under the Misuse of Drugs Act 1975.

It removes the ban that was put in place in 2011, and I want to take a moment to thank the Health Committee and the members on it for the pretty collegial and supportive atmosphere. We’ve got along well. We’ve been able to talk through the issues. The Hon Dr Ayesha Verrall from the Opposition has been a good person to work with on this, as have all the other members. We have a number of members of the committee here, or ones that have subbed in, and I just want to recognise all the work that you have done in getting this through promptly.

There are a lot of benefits to this bill. As everyone in Wellington will know, we’ve come down here—I came down from beautiful Tauranga yesterday, where it was a warm, sunny day. I came down to Wellington and it’s considerably colder, and I know that a lot of people will be getting into that winter cold and flu season pretty soon. The good news for them is that in the not too distant future, there will be pseudoephedrine available from pharmacies, so they can take that and then recover their health and wellbeing and get back to work and continue living their lives in a lot more peaceful and enjoyable manner.

As we know, our patients currently can’t get over-the-counter pseudoephedrine. A prescription was needed, but there were issues with the importation of that. It wasn’t being made available because there wasn’t a big enough market for it and, as a result, the ability of people to get that from a prescription in New Zealand faded away. There has been a bit of talk about alternative medicines that could be used and that have come to market to try and treat people with cold and flu symptoms, but the reality is that they’re just not nearly as effective as pseudoephedrine.

There have been some concerns raised during the select committee process. Obviously, people know that pseudoephedrine is used as a precursor to methamphetamine production, and that was primarily the reason why it was reclassified back in 2011. The result of that wasn’t what was wanted or anticipated, which would have been a reduction in methamphetamine availability, but the criminal organisations and the gangs found alternative routes to either manufacture or—more likely—import pseudoephedrine from international criminal syndicates into New Zealand. But we haven’t seen a decrease in use; we have possibly seen the opposite. Recent stats have shown that we have seen an increase in use recently, and we have also seen a reasonably considerable drop in the price of methamphetamine.

The intention of what happened in 2011 hasn’t really led to the outcomes that were intended. What was done back then hasn’t really fitted with what we wanted to see, so bringing this back in, as the Minister is doing at the moment—we don’t believe it’s going to lead to an explosion in methamphetamine consumption. It is recognised that there may be some very small personal manufacture. But the reality is that there’s already those networks available for people to obtain methamphetamine through existing drug channels out there, and this isn’t likely to lead to a dramatic increase in supply, as noted, but only for small-scale personal use. I think the Minister noted quite well, as well, that it would take 2,430 packets of pseudoephedrine to make 1,000 grams of P, and there are much more effective ways that that can be done now, with more intensive forms and much smaller quantities required to produce the ultimate outcome which they’re intending, which is to produce or cook P.

We did note that there were a few mitigants, which were discussed. There will still be suppliers who will still need a licence to import. We are looking, in the future, to amend the Medicines Regulations 1984, which will require people to purchase pseudoephedrine face to face. Pharmacists must record information. The committee did also ask that there be a look forward to see whether we could have a system like they have in Australia—where they have a real-time, online registry of everyone who has purchased pseudoephedrine—so that we can be aware of where someone is going around a bunch of pharmacies, purchasing in bulk, and that that can be picked up and mitigated. I will also note that when we look at other comparable countries, the United States, the United Kingdom, Canada, and Australia all allow for what this bill is intending to achieve, which is the purchase of pseudoephedrine for cold and flu relief.

So we are highly supportive of this, and as this went through a select committee, I will note—and the Opposition have certainly noted—that it was a short process. I took note of that. I did extend that period for several days so that we could have more written submissions come in. We did hear from a number of submitters. We had written submissions and in-person submissions, and also several online submissions, as well. We note that there were no recommended changes to the bill through the select committee period. It was supported unanimously, and it comes back to the House now in that form. We had 169 individual submissions and we had nine from organisations. Most of the organisations were in favour, and that includes industry bodies and harm prevention groups.

It was noted around the use of binders by Dr Verrall, which would help to reduce the ability of people to take pseudoephedrine and then cut it or cook it and then develop P from that. But there were a couple of instances where it had been looked at and, ultimately, the results from that were inconclusive, so that hasn’t been something that has been brought into this.

I’d like to note what Dr Verrall also said around ADHD and people with ADHD having a higher usage of methamphetamine. I think that that does point to us needing to look further into ways to identify people with that and to then make sure that those services such as Ritalin are available, or more readily available, so that they aren’t looking for P to help relieve those symptoms there.

Ricardo Menéndez March: What about housing and incomes, as well?

SAM UFFINDELL: I missed that. But—I’m probably summing up now, Madam Speaker—look, it’s clear that New Zealanders are going to gain benefits from this. I remember that, before 2011, when you could get pseudoephedrine, I had colds and flus, and I did go and purchase pseudoephedrine. I found it remarkably helpful in treating those symptoms and in allowing me to get back to my life, and I know that a lot of New Zealanders are going to appreciate having the ability for them to do that.

This provides New Zealanders with choice. It also provides pharmacists with choice too, and I must note that pharmacists can choose. Pharmacies can choose whether or not they want to stock pseudoephedrine. If they determine in their capacity that there is an increased risk or a risk that they are not willing to tolerate from stocking pseudoephedrine, that’s fine. They don’t have to stock it, and I think that that is one of the good things about this bill. It does give people choice, it gives pharmacists choice, it gives people and consumers choice, and I think that is a good thing.

I note that the Minister said that this is good legislation and that it allows people to get on with their lives without unnecessary rules and regulations. We will monitor this as it is rolled out and we will see whether more enforcement or regulation is needed, and we can assess that in time. But this is a good, practical bill, and I do hope that it enjoys unanimous support in the House. I commend this bill.

Hon CASEY COSTELLO (Minister of Customs): I rise to speak in support of Misuse of Drugs (Pseudoephedrine) Amendment Bill. I would reiterate the fact that this is a common-sense, practical approach, particularly as I have a cold, and we’re heading into winter. Pseudoephedrine would be incredibly helpful right about now.

I suppose I’d go back to putting this into a process of reality check. I was a uniformed sergeant when methamphetamine first made its appearance in South Auckland. The reality was that it was an incredible scourge on our society, and it ran away. The complexity of the environment we dealt with, at the time, to create meth labs, to cook, the process of obtaining pseudoephedrine—it was a complex and really difficult environment. The labs themselves were highly volatile, and the cooks were highly sought after and traded commodity to produce the methamphetamine. It wasn’t an easy process. Quickly, methamphetamine took hold. It was logical that we did everything we could do to restrict the ability to create that supply. It was damaging so many lives and so many societies. So, at the time, pseudoephedrine was reclassified. It was logical, it was practical, and it was a process that needed to be followed to achieve some kind of impact in the industry.

But as has been pointed out, drug addicts have incredible difficulties to deal with. They get manipulated, and the market quickly pivoted to create a level of supply that enabled methamphetamine to become the most prevalent drug in New Zealand. We’re now talking about an environment, where, just in January, we had a seizure of 4.8 tonnes that was heading to Australia and New Zealand. We’re now dealing with completed product in the tonnage that is heading to New Zealand. This is something we could never have thought of creating under a pseudoephedrine lab in New Zealand. The fact is it’s cheaper, it is more efficient, and it is easier to supply. I’ll comment on the fact that, you know, yes, we know that when you’re addicted, your drive to achieve what you need is such that you will do desperate things. But I would suggest that purchasing, stealing, obtaining pseudoephedrine in order to set up a lab to cook, when just about everyone will know where meth can be supplied in their communities, and obtaining cash is far simpler than obtaining pseudoephedrine. So, yes, we need to do a lot of work. We need to do a lot of work to control methamphetamine’s impact it has on New Zealand society.

But that is not going to change with pseudoephedrine being available as a suitable, practical, medical solution for colds and flus. It’s a good medicine. We’ve all endorsed that it is a good medicine, and bringing it back to ready availability is just a common-sense solution. That’s really what this legislation is about. It’s a common-sense solution, because the motivation for making it or classifying it differently has shifted. This doesn’t mean we take the eye off the ball and don’t continue to look at the methods around which we can remove methamphetamine, control it, and reduce its harm on societies, but the prevalence is such that we need different initiatives. I think that the discussion that we’ve had around the risk that pseudoephedrine presents to the creation of methamphetamine—I think that that environment has passed us, and we now have much bigger issues to deal with.

As Minister of Customs, I see daily the reports coming through around the systems and processes that are in place to deliver methamphetamine to New Zealand. That’s not in the form of pseudoephedrine. This is just about fixing what was done. We did it for the right motivations at the time it was done, but now New Zealand has moved on, and the environment has moved on. We need to ensure that we continue to make good medicines available. I acknowledge that there is a range of medicines that, you know, we need to ensure a supply to the market.

But pseudoephedrine—this is a simple piece of legislation that is being noted. It is encouraging that all parties recognise the importance and the dangers of the drugs that are prevalent in society, and that they support the benefits of pseudoephedrine in recognising that it is suitable to be re-introduced back to New Zealand. The risk it poses in this crime environment is minimal, I would suggest. I think that we are smarter and more intelligent, and we need to be able to pivot quickly and effectively to ensure that we are responding to what New Zealanders need, and heading into winter in this environment—I think it is really important that we work together to change things that are no longer relevant to what is occurring in New Zealand. For that reason, I recommend this bill to the House.

DEPUTY SPEAKER: The next call is a split call. I call Debbie Ngarewa-Packer.

DEBBIE NGAREWA-PACKER (Co-Leader—Te Pāti Māori): Tēnā koe e te Pīka. I think it’s really commendable that the House is debating solutions for vulnerable people, particularly elderly who will do well by having access to better cold and flu medicines. But what I do want to do is take another step in this debate.

I come from communities where the average income for many is around about $29,000 a year. There is an assumption that those addicts and those people in those desperate situations are following a common-sense approach to their addictions and to their drugs. I come from communities where we see the kids that have fried themselves on synthetics that they’ve mucked around with because Governments—and, actually, the same Government that got rid of this bill in 2011—allowed synthetics to be sold and to come into our communities. There’s an assumption that there is a common-sense approach to how it is that they are going to get into drugs: in any way that they can.

So when we had this discussion about not harming others, where I come from, in the debates and discussions and the decisions that guide us, is that the potential harm outweighs the common sense to medicinal needs for communities who are obviously living different lives to some of the lives in the communities that we represent. I wish—I wish—that it was as simple. The reality is, we have a massive addiction issue and there hasn’t been the investment into the support in the communities that are the most vulnerable, to address that. So, when we talk about things like this, I can’t help but see those kids and see those families that are doing anything they can to get their hits.

Changing the classification of class B to class C—again, I totally get it, I hear the discussion, and, in fact, went back and looked at the submissions to the Health Committee. This is a Government that prides itself in removing bureaucracy, but what we’re going to have now is pharmacists who are going to have to do face-to-face transactions, process records of information, and highlight advice, including counselling and any trends with patients that shouldn’t be taking things. We haven’t really heard what and how the register’s going to be managed—I’m assuming that that will be coming. We have heard, I guess, some versions of what that may look like: customs and police still have powers to control, like it is an illicit drug-use, and they have the licence to import and export. Nothing in there says that there’s any less bureaucracy; in fact, it says that we’re piling back more.

Again, I just want to put on the side that we still haven’t addressed the massive addiction issue, predominantly in our vulnerable communities, and for us, as Māori. Yes, again, it’s pragmatic, it makes perfect sense, but this is a drug that is a drug of abuse, and it’s used to produce meth. That is the “but”.

We will be the only party in the House not supporting it, and it’s on the basis of the “but”. I guess, as the smallest party, we’ve always got to have that one party that says, “But this is what our community looks like, and this is what we’re concerned about.” Meth hasn’t gone away.

One of the important things, when we go and we ask the kaumātua and we’re talking, is asking, “What would you prefer, that we have access to a really good medicine for you, or we could bring this drug back into your communities?” And we’ve been getting a resounding, “We don’t want it back.”

We supported National—what they did in 2011. In fact, the Prime Minister at the time, John Key, was adamant—in fact, I think, he got robbed by somebody who was looking to get money for P. That’s how bad it is. It hasn’t gone away. The sophistication of the access to it may have gone away for some of your communities, but it certainly hasn’t gone away from ours. It’s good to hear that National sort of admit that, hey, it hasn’t worked.

But what I do want to do is say that we have seen submissions where recovering P addicts had pleaded, “Please don’t make it accessible for vulnerable communities.” So, when we look at this, I want to highlight the risks. I want to highlight the risk of organised crimes, even though we’ve been assured that it won’t be to the scale and the sophistication that we’ve previously seen. I want to highlight the increase in bureaucracy, although we’ve been told that that’s not going to be a big deal. I want to highlight the pressure on pharmacists, and communities attached to those pharmacists. I want to also highlight the “back on track” to risks to communities that are vulnerable and don’t have any other way of getting over some of the pain that they feel economically. But, most importantly, we don’t have enough addiction support in vulnerable communities. I do want to leave that with this House to think about. We won’t be supporting this Bill. Kia ora rā.

RICARDO MENÉNDEZ MARCH (Green): Thank you, Madam Speaker. It’s a pleasure and privilege to speak to the Misuse of Drugs (Pseudoephedrine) Amendment Bill, and this is a bill that we’re supporting. I want to reflect that I by no means am the only person with a close family history of having loved ones who have abused meth, but I’m certainly one of those people who has really, really close experience with family members having been addicted to meth, and I’ve seen firsthand the harm and the destruction of life that this substance can cause. Because of that, it’s incredibly clear to me how the criminalisation of substances hasn’t worked to actually support people, neither to stop getting them addicted nor as part of the recovery journey. Growing up in Tijuana in, basically, the heart of the war on drugs, I’ve seen firsthand how the war on drugs, and the war on meth more specifically, has failed.

So this bill presents an opportunity to actually change the debate to one that centres our conversation on issues around public health, on how we can actually take an evidence-based approach to support people so that they’re not ravaged by the harm that substances like meth can cause in our communities. This bill alone won’t actually end that harm, but what it will do is prevent people from actually being further criminalised and being put into a cycle where they’re left at risk of poor outcomes because of the harms that incarceration causes.

Yet I think where the gap lies—and I want to acknowledge submitters who raised issues of this nature—is around ensuring that we have adequate addiction support services, making sure that we actually address some of the social determinants of health that continue being completely not addressed, such as good incomes, good housing, connected communities. Those are the things that actually create protective factors for people to not face the harms that substances can cause. And it is not to say that if you’ve got good incomes and good housing, you’re completely immune to, say, for example, being harmed by meth, but those things actually go a long way to preventing people from having their lives destroyed because of substances. Also, when you don’t have good incomes and good housing, you’re way more at risk of meth actually ruining your life. So this bill will at least prevent a degree of criminalisation that would’ve caused more harm.

I think, to the point around some of the speakers who’ve talked about how pharmacists will be at the front lines of the change in how pseudoephedrine is accessed, I think it’s really important to recognise the role of pharmacies as front-line health services who are actually sometimes the first and, often, the only point of call for our communities—particularly those on low incomes, formerly incarcerated people, gang-affiliated communities—to deal with health services. Yes, pharmacists will be the ones who will be at the front lines supporting our communities through this change, and, therefore, we need a Government that backs pharmacists to actually be resourced to then deliver these substances to the community and to deliver health services to the community in a way that remains safe. We know, as it is, pharmacies and the pharmacists that run them are under increased pressure yet have the potential to actually take the pressure off other parts of our health system.

I want to end by reflecting that the approach that has been taken on pseudoephedrine, and particularly in its relationship to meth, is one that I think the Government should look at with other substances. We should take a consistent, evidence- and health-based approach to drugs. We shouldn’t just cherry-pick the one that has a populist tone to it, and actually make sure that we look at the same evidence that we use for this bill and translate it to the other substances that are wreaking havoc in our community because we’ve chosen to criminalise it. To some of the Government members who spoke about, for example, the importing of substances due to cartel activity, there are opportunities to curb some of that by ensuring we take a health approach to substances. So my ask of this Government, by having a bill that many of us in the House can get behind, is to follow suit and actually look at all the other substances that we criminalised and put a health lens to them so that we can support our communities and stop people becoming incarcerated and their lives being ruined because of an outdated approach to drugs.

Dr HAMISH CAMPBELL (National—Ilam): I rise in support of the Misuse of Drugs (Pseudoephedrine) Amendment Bill. It’s great to hear support from around the House. I do note that doesn’t include Te Pāti Māori.

We all know what it’s like to have a cold. Typically, we probably will experience two or four colds a year, and that probably equates to about 14 to 40 days of feeling like absolute rubbish, each year. Prior to 2004, you could actually buy some great medication here in New Zealand, which had an active ingredient known as pseudoephedrine that would actually make you feel at least a little bit alive during those times. But, of course, I will just point out, these medications are still available in Australia, the UK, the US, and most of Europe. We’ve heard a lot about its role as a precursor for meth, but it’s also important to acknowledge the valuable role that pseudoephedrine plays in relieving nasal congestion—whether that’s been due to a cold or a sinus infection, it’s one of the most uncomfortable symptoms you can experience during a cold. Therefore, I think this is one of the more highly effective decongestants, and it helps relieve that symptom of pain and pressure.

I know a lot of people are going to claim that we’re only dealing with the symptoms, but I think you just need to be a young parent battling a cold when your toddler also has a cold to know that this is kind of magical medication, because you need to function not only for your own good but also for the good of your family. Additionally, a number of other medications we take, without batting an eyelid, also just treat our symptoms and not really cure the underlying causes. I think this is probably something we need to remember next time we take some Panadol.

I am a member of the Health Committee, and I do just want to acknowledge all the submitters that took the time to make submissions to the Health Committee. We heard from a whole range of people, including some industry bodies, including from pharmacists—and they really do care about their patients and they want to have the most effective medications they can distribute to their patients. And that is the reason why a lot of pharmacists want to stock it. I will just also note that pharmacists could choose not to stock it, if they felt it was a security threat.

We have heard, in opposition to this bill, that it would create a lot of bureaucracy, but I will just point out this is like any controlled medication that a pharmacist needs to distribute: they need to have that face-to-face contact, and there’s paperwork and prescriptions to go along with it. This would not require a prescription and it would allow people just to walk into the pharmacy and be able to procure it once they’ve had consultation.

Now, we’ve heard a whole range of issues. One of them, of course, is the supply and the availability of methamphetamine. We have already heard that since a ban of this, precursive, that we still have a problem with meth and it actually has increased. I think one of the members already has alluded to a shipment of in the vicinity of 400 tonnes was intercepted before coming to Australia and New Zealand. I will just once again point out that it takes 2,430 packets of pseudoephedrine medication to make 1 kilogram of meth. I think we can probably do the maths there, and you’d need an awful lot of medication. But, of course, that level of supply coming into the country has meant the price of meth has dropped a lot, so any supply from pseudoephedrine would be at a fairly low level. But, of course, it is important to note that there will be some people that may try and make meth from the pseudoephedrine, and we do need to make sure we can do all we can in our powers to prevent that, because meth is a scourge on our country and a number of people do take it. So, with that, I think this is a great medication for people who have colds, we all know what it’s like, and I therefore will commend this bill to the House.

INGRID LEARY (Labour—Taieri): Prior to coming to Parliament some years ago, I had a broadcasting business—a television production company—and a really good, strong partnership in that with my business partner, who very sadly got into meth and, within six months, had committed suicide. So I bring that to the debate this evening as the context from which I speak and also as someone who, like the Green Party member has had, has seen the impacts of methamphetamine within my own family situation.

So this is a balance and a consideration that I take very seriously about whether allowing this bill to go through is, on balance, going to be more beneficial than harmful. I have to say that, on reflection, I think it does produce good public interest with no great risk of harm—but with some caveats around that, as my colleague Dr Ayesha Verrall has said.

So the benefits are obviously the mitigation of the cold and flu symptoms that people feel. There’s also the access to treatment—because on this side of the House, we’re mindful that GP visits cost money; that can be a barrier to getting treatment and even getting prescriptions can be a barrier. So, in that regard, we see having access to this medication is a really good thing. But we do have issues with the process. In my view, there has been a bit of an executive overreach, once again, just through the truncated process that’s occurred. But more sinister, perhaps, is that I think the National Government has shown quite a casual and cavalier attitude to the methamphetamine issue generally through the way they have approached this process—and I’ll speak to that soon.

For a start, around process, it is unusual for a Minister to make these kinds of decisions that Medsafe, a group of experts, would normally make: to declassify or reclassify a medication. The Associate Minister of Health (Pharmac) did appear before the Health Committee and we asked him questions on this quite closely, and he, basically, admitted that it was a political decision to reclassify. He also said that the original decision to classify it as prescription-only was political as well.

What concerned me—and it was interesting that the Minister quoted our dissenting opinion in the select committee report as being what he took to be flattery—the reason that we extended the commentary on his contribution was because he said to us it was better to focus on evidence that was available rather than to try and get more evidence about impacted communities. I think that’s a really worrying attitude towards the meth problem. I think it does bring to bear some of the concerns raised by Te Pāti Māori about the most marginalised; the most vulnerable communities, some of whom did have time to put in submissions—very thoughtful submissions and very clearly set out submissions—about the devastating impact on their communities to their own lives from some of them. Also, the fact that drug addicts are not rational, that addiction is not a rational thing, and we are only hazarding a guess when we apply a kind of rational cost-benefit analysis to whether meth is cheaper from the border or whether people will produce it.

The other element to this was that we included comments where the Minister had said that shopping around did not work—the shopping-around registers that were used in Australia didn’t work—but he was going to keep an eye on this over this winter. Well, I’m not sure how the Minister can keep an eye on whether organised crime is shopping around for pseudoephedrine if the registers are not there—it simply cannot be done. So I’m not sure what other intel he has on that, but I’d be really interested to see what process he is going to use to keep an eye on the shopping-around question.

As has been mentioned, the select committee process was truncated. The health policy development process appeared to be truncated, and that concerns me because we have the appearance of a democratic kind of process—whether it’s gone to select committee—but submitters only had a week or so to submit. The questions that we asked were probably deeper, I think, than the officials had expected us to ask; they had to go away and come back. When we asked them closely about the numbers of pharmacists they had consulted, we were told it was fewer than 10. Again, further questioning made us aware that the particular focus group—they couldn’t even say how many fewer than 10 people there were in that group, so it could have been only one or two pharmacists where the consultation was relying on that as being the voice of pharmacy. To me, that is just inadequate, and it shows the kind of time pressures that they were under from their Minister.

I really did appreciate the thoughtful submissions from submitters, particularly the New Zealand Drug Foundation, who do such an excellent job to provide evidence-based and very clearly set out rationale for their thinking. They did support this bill, which has helped to sway my opinion in favour of supporting it, but, equally, we did hear from people who had experienced meth in their lives as well, and they did have an impact on us.

So the mitigations they suggested around Te Ara Oranga, the rehabilitation programmes being extended, are really important. We heard from the Drug Foundation that close to 50 percent of those who are incarcerated on meth-related charges have an ADHD diagnosis. I would add to the calls from my colleague the Hon Dr Ayesha Verrall that not only do we need to make treatment easier for ADHD, we certainly need to make diagnosis cheaper and more easily available. It’s currently only through a psychiatrist—very expensive—or long waiting times in the public health system. So we don’t know what the true figure is of those incarcerations and the role that ADHD plays, not only in meth use and purchase but also in crime generally.

I think there are issues around the IT that we’re being told is being developed that will help us to monitor some of the risks around this. We have no timing on that, and that is why we, as a select committee, have said that we plan to follow up with the Ministry of Health and Te Whatu Ora on this. We expect to receive an update on how they’re progressing with the implementation of a monitoring system by the end of this year. I’d just really like that recorded in the Hansard, because I, for one, will be making sure that we do get some information from them.

But I think the real issue here is seeing the truncated process and the quite casual way that the concerns of impacted communities have been dealt with by the Minister and some members opposite, that we’re not really looking at the real issue of what is this National Government doing to address meth. It’s interesting that the Minister of Customs has just spoken to address her real concerns, and yet her ministry right now is going through voluntary redundancies. There are 1,200 Customs staff throughout New Zealand, and the New Zealand Public Service Association has said that this redundancy process, these cuts to that public service are hamstringing Customs’ ability to keep harmful drugs out of New Zealand. So what are they doing about that? In an environment of 6.5 percent cuts, and the same to policing, what are they doing?

I would just follow that up with some words that were read in this House in 2009 where a member of this House said, “‘P’ is a seriously addictive, viciously destructive drug. It’s hugely damaging to those who take it and the people who share their lives. It comes hand in hand with violence. It allows gangs and organized crime to flourish. It entices young people into criminal careers. P hurts not just users and their families but also law-abiding New Zealanders who suffer from the crime it creates.” Those words were from the Rt Hon John Key, the then Prime Minister.

We’ve heard from the Minister of Customs tonight that that problem has ballooned. We have heard that this Government wants to make cold and drug medication available. That’s great; we support that, but our question to this National-led Government is: what are you doing about the real issue of meth so that it isn’t coming in cheaper, so that young people aren’t getting into meth, so that it isn’t affecting all of our communities, including my own down in Taieri, and so that parties, like the Māori Party, are concerned to even allow the pseudoephedrine change to go through? We are not seeing leadership on the meth issue, we are not seeing leadership on drugs, we are not seeing the changes that we need to make sure that the gangs are disempowered. That is the real question before this House tonight, but, having said that, I will support this bill.

Dr CARLOS CHEUNG (National—Mt Roskill): Before I start my speech, I would like to acknowledge all the members of the Health Committee for their time and effort on this bill and also for their constructive feedback as well. This is a perfect example of members of Parliament working together to achieve the best outcome for all New Zealanders. Let’s go back to this bill.

This bill reclassifies pseudoephedrine from a class B2 to a class C3 drug, controlled drugs, under the Misuse of Drugs Act 1975 so that the cold and flu products containing pseudoephedrine can be sold in pharmacies without a prescription. This allows New Zealanders access to one of the most effective cold and flu medicines and will help to improve people’s welfare when they are unwell.

So, during the select committee process, we received submissions from 169 individuals and nine organisations. Most organisations, including pharmaceutical industry boards and drug harm prevention groups, indicated support for this bill in their submissions. As an elected MP, I also go the extra mile to gather more information and feedback from my local pharmacies and pharmacists. The overall feedback is very positive and they are supportive of this bill. I also need to acknowledge there’s some concern raised by the pharmacists and pharmacy owners as well.

So one of the major concerns may be the production of meth using pseudoephedrine. So, actually, during the select committee process, we have been informed that there is little value to people interested in commercially supplying meth, and there are now cheaper and easier ways to manufacture it. This means that making pseudoephedrine products more available will have little effect on the New Zealand drug market. This position is also supported by advice we received from the Ministry of Health, which consulted with the New Zealand Police, the New Zealand Customs Service, and the National Drug Intelligence Bureau.

Also, another concern is about the safety of pharmacists, of it being misused. But let me remind everyone here, pseudoephedrine will remain a controlled drug and can only be prescribed by an authorised pharmacist prescriber who has undergone the required training and education. This will equip pharmacists with tools to identify and refuse service to anyone showing the intent to improper use of pseudoephedrine. Furthermore, according to this bill, the importation of pseudoephedrine by mail and online shipping will also rightly remain unlawful.

Also, we got a lot of concern on how to assess the safety for pharmacists as well. So we’ve been informed that pharmacists are not required to stock pseudoephedrine products, and we support pharmacists’ rights to make this choice. We trust pharmacists to make judgments about what is best for them and their customers.

Also, we were talking about monitoring the sales of pseudoephedrine products. We are pleased to learn that the Ministry of Health is working with Health New Zealand to explore options for improving the uptake and standardisation of a nationwide electronic dispensing system. This allows us to monitor the sales of pseudoephedrine products in real time, and that can minimise the improper use of the drugs.

Therefore, I think this bill actually strikes the right balance between accessing and protecting the public against improper use. Therefore, I’m here to support this bill. Thank you.

Dr TRACEY McLELLAN (Labour): I was just commenting that all this talk about colds made me feel like my nose was running, so excuse me if I feel like some pseudoephedrine. We’ve heard a robust debate tonight about various aspects of a bill that most people are supporting, and I think that if we sum that up somehow, the three themes are that the bill will be supported; however, the process, to date, has been truncated, and it’s a real missed opportunity to have not had a more robust process so that some of the potential risks that have been identified could have been mitigated or that the committee and this House could have had the benefit of hearing from people, hearing from experts, having some more information from agencies and departments into how they may have put together some sort of support around those potential risks. And the third theme, I think, which has come through quite clearly even more recently is that within a culture of cuts, how can we be sure that when these agencies and these departments are facing pressure, they don’t drop the ball with some of those assumptions that are being made tonight?

As we’ve said, Labour will be supporting this bill. It’s in line with our history, as has been demonstrated in the previous Parliament, of being a fan of flexible regulation in relation to medicines. Also, it’s congruent with our previous moves towards encouraging pharmacies to do more in their space and to take on more treatments, as demonstrated by both the Therapeutic Products Act and the minor ailments scheme of the last Government.

But, as previous colleagues have said, I think those three main risks—and I won’t go over them in great detail, but how will we ensure that pseudoephedrine is safely stored? We’ve heard the fact that it’s going to be in such quantities that it’s not even viable or practical to put it under lock and key as we do with many other controlled drugs. I think the issue around tracking it and the issue around having that online, real-time register, as they do in Queensland, is a real missed opportunity for this Parliament not to have sought more information about that. You know, that’s an innovation that could have been used in various different ways, and I think that’s a real shame that we didn’t take that on.

Also, we’ve heard particularly from the Māori Party and the Green Party about the need to never lose sight of the fact that we are here to look at the drivers of addiction, and what are the plans for treating those underlying addictions?

There’s also been a lot of talk about common sense, that there’s a common-sense approach, and whilst that might sound good, common sense has never been a huge leader in terms of things always turning out well, hence the fact that it is our job to not assume that people are rational actors, to not assume that when we’re talking about addiction and when we’re talking about comorbidities, with people with ADHD being the largest consumers of meth, for instance, there’s this linear assumption that a rational decision-making process will take place. So I think that that is a shame. However, we will support this bill, because, at the end of the day, you know, it is important that people are able to get the medications that they need.

My final reservation is the fact that we’ve talked about pseudoephedrine as being a decongestant, which it is. It’s also got that stimulatory side effect which just peps us up and helps us feel better without necessarily addressing the underlying cold. Hopefully, people don’t go back to the good old days where they just went to work and spread their germs around everywhere. Thank you, Madam Speaker.

NANCY LU (National): I stand in front of you today to support the second reading of this amendment bill, for three reasons. One, I support this bill because it addresses the current challenges faced by New Zealanders who really just needed to get some effective and easy and fast-acting medicine so that they can manage their general health and wellbeing. Secondly, I also support this bill because it’s actually very straightforward: it’s just restoring the settings, and matches a range of other countries—such as the UK, US, Canada, and Australia. It’s very straightforward because, ultimately, it is still the pharmacies who have the ultimate choice to stock or not to stock this product. They decide, whether it’s based on economical, welfare, safety, business, or operational reasons, whether they will stock it. And my third reason to support this bill is there is evidence that we’ve seen that it has limited scale of risk, even if the products are made available over the counter. So, with those three reasons, I support this legislation to the House.

REUBEN DAVIDSON (Labour—Christchurch East): Thank you, Madam Speaker. I’d like to speak to the Misuse of Drugs (Pseudoephedrine) Amendment Bill. Twenty-five years since methamphetamine burst on to the scene in New Zealand, I think you’d be hard-pushed to find someone who hasn’t seen the devastation that it delivers. I was living in Auckland at the time and I saw it firsthand: the horrible toll it took and the horrible toll it continues to take to this day. It’s doing huge damage to individuals, to families, and to communities—and it’s damage that is irreversible in many cases. So we need to be certain that decisions we make don’t exacerbate that, and that requires really good political process and due diligence at select committee. We need to be careful about speeding things up.

I’ve got an article here that I’ve been reading from the New Zealand Herald that talks about some of the risks associated with bringing pseudoephedrine products back into pharmacies. It says here, and I quote, “Luxon said [that] the risk of pharmacies being targeted had been a matter discussed by Seymour and Police Minister Mark Mitchell to ensure the issue was monitored. Luxon’s comments appeared to surprise Mitchell, who said he and Seymour hadn’t had any conversations about it but assumed the Prime Minister was referring to communication between Mitchell’s office and Seymour’s office. The Herald has confirmed no such communication occurred between the two offices and the only correspondence Luxon could be referring to was conversations held in Cabinet. Nevertheless, Mitchell said he had received no advice from police expressing concern about the ban reversal and its potential to lead to a crime spike against pharmacies.”—no advice—“He said pharmacies wouldn’t receive financial aid for security once the ban had gone, but accepted that could be revised if a problem arose.”

Hon Shane Jones: Irrelevant.

REUBEN DAVIDSON: So I think it’s critical to the conversation, as opposed to irrelevant. I think our local pharmacies need to be looked after and protected, and I think that taking this action without having the conversations with the appropriate representative agencies and organisations places them at greater risk.

One of the members earlier said that some pharmacists can choose not to stock pseudoephedrine. Sure, that’s true. But do people find that out when they pop in to purchase some pseudoephedrine, or do they find that out halfway through a ram raid when they’ve already done the damage to the store, they’ve already smashed in the window, and they do even more damage looking for the product that they’re there to get? So these are just some of the risks—some of the risks.

So, in recognition of those, I think it is crucial that the select committee process should have been able to examine the issues and hear from submitters. What we’ve heard instead is that it was a very rushed process. They missed the chance to hear valuable evidence and there was a very small number of pharmacy representatives involved in that conversation.

The Government evidence about no increase in meth-related crime doesn’t seem that enough investigation was carried out there. I think what we’re looking at there is the provision for safe storage of pseudoephedrine within pharmacies and whether small businesses—and we know the importance of those small businesses like chemists and pharmacists in our communities, and we saw through the pandemic how crucial those businesses became to the health and protection of our communities. So it’s fine to say that those businesses don’t get support, but if they don’t get support, then they place themselves at greater risk by not being able to have pseudoephedrine in safe storage inside their premises. I think that’s an unfair risk to place our small businesses in.

I think there’s also unanswered questions around how regulation will work under the Medicines Act, and I think there’s a missed opportunity of a register for pharmacists. The bigger question is what this Government has planned to address meth addiction in our communities. So my plea would be: take the time to get it right, to ensure the benefits outweigh the potential harm, make sure there are some constructive policies in the pipeline that actually address the very real concerns of pseudoephedrine and meth addiction. So, whilst I support this bill, I reiterate the need to support individuals, families, and communities affected by P.

Dr VANESSA WEENINK (National—Banks Peninsula): I rise in support of this Misuse of Drugs (Pseudoephedrine) Amendment Bill. I’m delighted to be able to support it, given that I remember, as a doctor, how incredibly frustrating it was when my patients could no longer access this medication. Also, I was very concerned, when the effective ban came in, that there would be no access to the only really scientifically validated treatment to prevent barotrauma to the tympanic membrane for those who are flying frequently, like pilots. Some of my patients had to end up sourcing pseudoephedrine from overseas to be able to protect their ears when they were constantly going up and down and getting different pressure changes in their ears. So this is the only medication that has ever been shown to be effective in adults at reducing that risk, and the thing that prevents complete rupture of the tympanic membrane—that’s been shown on systematic review. So it is a very effective medication.

As a lot of people have noted around the House, there are potential problems, of course, and we have to look at the potential mitigations that we can go through for that. I note that the idea of the register is a very useful one. I also have been one of those people who’ve seen the effects of meth in family members, and it is a scourge on our society. That being said, this is a very sensible approach to something that hadn’t made any difference to that scourge, and I commend the bill to the House.

A party vote was called for on the question, That the Misuse of Drugs (Pseudoephedrine) Amendment Bill be now read a second time.

Ayes 117

New Zealand National 49; New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; ACT New Zealand 11; New Zealand First 8.

Noes 6

Te Pāti Māori 6.

Motion agreed to.

Bill read a second time.

DEPUTY SPEAKER: Members, the time has come for me to leave the Chair. The House will adjourn until 2 p.m. tomorrow.

The House adjourned at 9.57 p.m.