Thursday, 13 March 2025

THURSDAY, 13 MARCH 2025

THURSDAY, 13 MARCH 2025

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

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

Business Statement

Business Statement

Hon LOUISE UPSTON (Deputy Leader of the House): Today, the House will adjourn until Tuesday, 25 March. In that week, the House will consider the third reading of the Land Transport (Drug Driving) Amendment Bill, alongside other Government business.

TANGI UTIKERE (Labour—Palmerston North): To the Deputy Leader of the House: does the Government have any plans for any extended sittings or urgency over the next three-week sitting block, or has the Government finally got a plan to ensure its legislative schedule is sorted?

Hon LOUISE UPSTON (Deputy Leader of the House): I know the member is excited about a three-week sitting of the House when we return on 25 March; he will have to wait and see.

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

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

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

CLERK: Petition of Ian Sizer requesting that the House urge the Government to address the invasion of Madagascar Ragwort.

SPEAKER: That petition stands referred to the Petitions Committee. No papers have been delivered. Two select committee report has been presented.

CLERK:

Report of the Governance and Administration Committee on the 2023-24 annual reviews of the Department of the Prime Minister and Cabinet and the National Emergency Management Agency

report of the Social Services and Community Committee on 2023-24 annual review of Heritage New Zealand Pouhere Taonga.

SPEAKER: The Clerk has been informed of the introduction of a bill.

CLERK: Resource Management (Prohibition on Extraction of Freshwater for On-selling) Amendment Bill, introduction.

SPEAKER: That bill is set down for first reading.

Oral Questions

Questions to Ministers

Question No. 1—Economic Growth

1. TAKUTAI TARSH KEMP (Te Pāti Māori—Tāmaki Makaurau) to the Minister for Economic Growth: Will she ensure that her proposal to scrap the living wage requirement in Government contracts for cleaning, catering, and security guard services will not result in pay cuts for these workers?

Hon SIMON WATTS (Minister of Revenue) on behalf of the Minister for Economic Growth: Yes, I can assure that—it’s the law. Existing contracts have to be honoured.

Takutai Tarsh Kemp: What message does she have for the workers, like those in Parliament who clean her office and toilet and keep her safe, when she scraps the rules that ensure they are paid enough to live?

Hon SIMON WATTS: What I can say is that employers that are currently employing Kiwis—and hard-working Kiwis—across this country will still be bound by the terms of employment agreements negotiated with their staff and unions. And, as we step back from this issue, I think it is important to acknowledge that the consequences of these proposed changes remove complexity and duplication, and actually make it easier for New Zealand businesses to expand and to grow by winning Government contracts. That is good for New Zealand workers, and that is good for New Zealand.

Takutai Tarsh Kemp: What is the response to cleaner Liam Shaw, who said, “The Living Wage basically allows me to survive. Before the Living Wage came in I was really struggling to afford groceries, especially considering how high my rent was, and the Living Wage has allowed me to thrive in what would be seen as a very basic sense.”?

Hon SIMON WATTS: On behalf of the Minister, what I can say to that individual is that we have a Government that is relentlessly focused on economic growth and reducing the impact of the cost of living on those New Zealanders. We are working very hard for individuals—[Interruption]

SPEAKER: Hold on. Hold on! Stop! That has to stop. That’s ridiculous. Just yelling across the House is not an interjection; it’s just rabble-ous behaviour. Is there anything more that the Minister wants to add that might be useful for the House?

Hon SIMON WATTS: Growth.

SPEAKER: Good. I agree.

Takutai Tarsh Kemp: How does your Government expect workers to survive when you are systematically stripping away every safety net, cutting wages, reducing benefit, sanctioning the vulnerable, and making life harder for those already struggling; is this what is meant by reducing red tape, submitting those workers to the whip of the State?

Rt Hon Winston Peters: Point of order. This is meant to be question time. Questions that are framed with a question that end up with an answer all at the same time and then go on to the second and third question should not be allowed. That’s not what a supplementary question is about. I think these rudimentary things are getting worse and worse in this Parliament and we need to change that.

SPEAKER: Well, thank you for your advice. I certainly appreciate it. But can I also point out that questions that are—the Standing Orders for questions are mirrored by the Standing Orders for answers. So I’m happy to apply the same criteria in both directions. Ask the question again—in a way that brings it into line with Standing Order 390, I think it is.

Takutai Tarsh Kemp: How does the Government expect workers to survive when you are systematically stripping away every safety net, cutting wages—

SPEAKER: No, you can’t make a political statement like that, with all due respect. You can ask a question about the programme; you can’t speculate about the consequence of a programme. So have a think about how you might ask it a different way.

Takutai Tarsh Kemp: How does the Government expect workers to survive when you are stripping away—

SPEAKER: No. No, no, you can’t—I’m sorry.

Takutai Tarsh Kemp: How does your Government expect workers to survive?

Hon SIMON WATTS: On behalf of the Minister, what I can be clear about is that this is a Government that is focused on economic growth, which will benefit all New Zealand workers. That is the critical point. The changes which we are making here will remove duplication and complexity. It will make it easier for New Zealand businesses to get New Zealand Government contracts.

SPEAKER: OK.

Hon SIMON WATTS: That is good for New Zealand.

SPEAKER: Good. That’s enough.

Hon SIMON WATTS: That is good for—

SPEAKER: That is quite enough.

Hon SIMON WATTS: —New Zealand workers.

SPEAKER: That’s enough. Is there another supplementary question?

Question No. 2—Revenue

2. PAULO GARCIA (National—New Lynn) to the Minister of Revenue: What recent announcements has he made on the foreign investment fund rules?

Hon SIMON WATTS (Minister of Revenue): Well, New Zealand should be a place where talented people want to invest and grow businesses, but right now our tax rules are making that harder. Good news: we are fixing that. Yesterday, I announced the Government’s proposed changes to the foreign investment fund rules, including the addition of a new method to calculate a person’s taxable foreign investment fund income. This change will remove a tax barrier that is stopping highly skilled migrants and, importantly, returning Kiwis from investing here.

Paulo Garcia: Why is the change so critical to facilitating foreign investments into New Zealand?

Hon SIMON WATTS: Well, the current system hits new migrants and returning Kiwis unfairly, especially those in the tech and start-up sectors where still some migrants, particularly US citizens, risk double taxation. We want New Zealand to be an attractive place to live and work in and these changes will make that easier.

Paulo Garcia: What reaction has he seen to this announcement?

Hon SIMON WATTS: We are hosting the investment summit in Auckland this week and we have had extremely positive feedback from the tech and startup sectors. Graeme Muller, the chief executive from NZTech, said that “these improvements in tax rules are exactly what we need to make New Zealand more attractive for both investors and global talents.” Similarly, Robbie Paul, the CEO of Icehouse Ventures, has said “this is a stand-up example of Government engaging on a genuine issue so we can all create … brighter future[s] for New Zealand[ers].”

Paulo Garcia: What plans are there, if any, for existing residents?

Hon SIMON WATTS: Well, the Government is looking at broader foreign investment fund reforms, including how these rules affect residents, including whether the tax thresholds should be raised and how we can support investment visas. We want to unlock investment and growth, and I’m looking forward to having more to say on that later this year.

Question No. 3—Prime Minister

3. Hon CARMEL SEPULONI (Deputy Leader—Labour) to the Prime Minister: Does he stand by all his Government’s statements and actions?

Rt Hon WINSTON PETERS (Deputy Prime Minister) on behalf of the Prime Minister: Yes.

Hon Carmel Sepuloni: Does he agree with National MP Dr Vanessa Weenink, who, when voting against the Crimes (Theft by Employer) Amendment Bill, said, “When you make something a criminal offence, does it really deter people?”, or New Zealand First MP Mark Patterson, who, when voting for that bill, said, “There should be consequences for a crime. We fundamentally believe that, and this bill does provide that deterrence factor.”?

Rt Hon WINSTON PETERS: Well, the great thing about this side of the House is that we allow people to think for themselves. We don’t have the old rule 242, which says that the party’s conscience is your conscience, and, therefore, I tend to agree with both members.

Hon Carmel Sepuloni: Does he agree with New Zealand First that people should be held accountable for their crimes or is he satisfied leading a National Party that is soft on white-collar crime?

SPEAKER: Just a point there. Have a go at asking the question. I won’t take one off you, but that is not a question the Prime Minister can possibly be responsible for.

Hon Carmel Sepuloni: Does he agree with New Zealand First that people should be held accountable for their crimes, or is he satisfied leading a Government that is soft on white-collar crime?

SPEAKER: Well, strictly speaking, you can’t make that last statement either. Given that I’ve been pretty hard on the Māori Party—

Rt Hon WINSTON PETERS: I can handle it.

SPEAKER: I know the willingness of the member to answer any question that’s ever asked of him, but I think, just playing by the rules—once again, just ask the question without the last bit.

Hon Carmel Sepuloni: Does he agree with New Zealand First that people should be held accountable for their crimes, or is it just some people?

Rt Hon WINSTON PETERS: We have always agreed, on this side of the House, that people should be held accountable for their crimes. Otherwise, you’d get a thing called anarchy and the utter destruction of democracy and freedom and liberty. And, on the other side of the thing on the question of white-collar crime, look at the person who took on the wine-box inquiry, who, against all odds, won.

Hon Carmel Sepuloni: Should security guards and cleaners employed at Parliament continue to be guaranteed a living wage?

Rt Hon WINSTON PETERS: Well, the reality is that they’re on a contract which does just that. The contract cannot be changed.

Hon Carmel Sepuloni: If security guards and cleaners in Parliament are to receive a living wage, shouldn’t all Government contracted security guards and cleaners be provided the same assurance?

Rt Hon WINSTON PETERS: The reality is that the people we’re talking about have all got representation. They’ve got agencies that work for them, and someone that worked and was a delegate for the most lowly union in this country, the Labourers Union. We know something about that, and we’ve got a record, of course, having gone for the minimum wage at a higher level than any other party. Now, my point is, what we want to do is make sure that the conflated mess that is this matter is tidied up so that people can get on getting employed and getting paid properly. And they will be.

Hon Carmel Sepuloni: Is it appropriate that those security guards should now be paid minimum wage at the same time they have been asked to perform the Police’s job with enhanced powers to perform citizens arrests, therefore putting them in harm’s way?

Rt Hon WINSTON PETERS: Well, if the member begins with the premise that is false, then she’ll get the false conclusion that she has just arrived at. That is not the case at all.

Hon Carmel Sepuloni: Why is this Government focused on reducing incomes for security guards and cleaners and defending employers who steal money from their workers at a time when Kiwis are struggling to put food on their tables?

Rt Hon WINSTON PETERS: We’ll begin with—the Government is not allowing employers to steal from their workers. That’s clear, if the member did the numbers, where things are going on that matter. So that’s number one put right. And the other matter is to do with their present, existing contracts, which will be maintained. So why this alarmism? We do not understand.

Question No. 4—Oceans and Fisheries

4. TEANAU TUIONO (Green) to the Minister for Oceans and Fisheries: What steps, if any, has he taken to guard against regulatory capture of the Ministry for Primary Industries by New Zealand’s commercial fishing sector?

Rt Hon WINSTON PETERS (Deputy Prime Minister) on behalf of the Minister for Oceans and Fisheries: Regrettably, we have to reject the premise of the member’s question. The inference that the Director-General of the Ministry for Primary Industries (MPI) and the deputy director-general responsible for fisheries are anything other than public servants of the highest integrity is deeply insulting and just plain wrong. However, the Minister has set a clear expectation that MPI engages with a wide range of stakeholders in formulating its advice and managing fisheries, and that takes appropriate compliance action when and where justified.

Teanau Tuiono: Can the Minister explain why, after a New Zealand bottom trawler owned by Westfleet dredged up protected coral triggering a fisheries closure, Fisheries New Zealand refused to release coordinates of the incident to environmental organisations, despite providing it to industry, only for the Australian Government to provide the information?

Rt Hon WINSTON PETERS: Again, the member misspeaks and is mistaken. The coordinates in terms of the total area were given. Of course, what they were seeking was the exact area where it happened, but that’s not the request that they made. So if the Australians were being helpful, fine, but the reality is that the original request was met and accepting they were expecting the ministry to somehow do all the work whilst they went there—Greenpeace—and showed off.

Teanau Tuiono: Will he commit to working with Australia on the creation of a marine protected area to allow the region to recover if it’s found by a Greenpeace survey of the region that areas critical for marine life have been decimated by New Zealand bottom trawlers?

Rt Hon WINSTON PETERS: Well, clearly, we will not be relying upon the Greenpeace survey; we’ll do our survey ourselves. At the moment, that area is isolated, not being used, not being fished for that very reason.

Teanau Tuiono: Will the Minister or his officials attend the Australian Government and WWF research symposium which aims to create a high-seas marine protected area in the location where the coral bycatch took place, and, if not, why not?

Rt Hon WINSTON PETERS: Well, I suppose the first thing that one would expect to answer that question was that we got an invitation. So we’ll check it out and see what the answer is when we get an invitation. We don’t just bluff our way in and front up and bust through the doors like some political parties that I know.

Teanau Tuiono: Given New Zealand is the last nation on earth bottom trawling the South Pacific, what’s more important: the ability of the industry to harvest the last remaining orange roughy in the region or the integrity of vulnerable marine ecosystems?

Rt Hon WINSTON PETERS: The reality is that it is almost four decades since this country set a standard with respect to fishing quotas and fishing bycatch, and all of the areas around the world that have a fishing interest have always been in admiration of this country’s position. Nothing has changed, but we will not start at shadows; we are measuring the stock and allowing the appropriate ratio of fishing to take place.

Question No. 5—Workplace Relations and Safety

5. Hon GINNY ANDERSEN (Labour) to the Minister for Workplace Relations and Safety: Does she agree with Brooke van Velden’s statement, “I think a lot of people in New Zealand do live on minimum wage and we have to allow people to make ends meet”; if so, how many Government contractors are currently paid the minimum wage?

Hon BROOKE VAN VELDEN (Minister for Workplace Relations and Safety): Yes, in the context in which it was made, which was an RNZ interview titled “ACT: need more jobs rather than raising min wage”. If the member had listened to the full context of the interview, she would note that I’m not in favour of large increases to the minimum wage but policies that support an economy where people have jobs to go to rather than people shutting up shop. I want to make it easier for business owners to actually take a chance on someone and give them a job. In response to the second part of your question, this is not my ministerial responsibility.

Hon Ginny Andersen: How does removing the requirement for cleaners, caterers, and security guards to be paid the living wage help to increase the incomes of some of our hardest-working New Zealanders?

Hon BROOKE VAN VELDEN: It is not my responsibility to be talking about procurement contracts of this Government.

Hon Ginny Andersen: Does she support New Zealand First MP Andy Foster’s public commitment to maintaining the living wage; if not, why not?

Hon BROOKE VAN VELDEN: Like my colleague Winston Peters has articulated quite nicely in the House, members on this side of the Government are entitled to their individual opinions.

Hon Ginny Andersen: What impact will cutting workers’ wages by over $370 a fortnight, during a cost of living crisis, have on child poverty, homelessness, and demand for food banks, and has she received any advice on this?

Hon BROOKE VAN VELDEN: I thank the member for her question. In regards to things like the minimum wage as a floor for employee rights in New Zealand, I’ve had advice that the minimum wage is not a good redistribution tool for poverty reduction. This Government, alongside other previous Governments, have used more targeted responses to reduce poverty—things like the accommodation supplement, things like Working for Families, FamilyBoost. Having the minimum wage standard is not a poverty reduction tool; it is simply a floor for wages in this country.

Hon Ginny Andersen: Does she believe that employers intentionally withholding wages from workers constitutes theft?

Hon BROOKE VAN VELDEN: What I do believe is that we already have civil law in New Zealand that allows for people to be paid correctly by their employer. The Labour Party’s member’s bill is not necessary for people to be paid correctly. But what I’d also say is perhaps the member would like to have some conversations with people that I’ve been speaking to recently—for example, one cafe owner that I met, just in this last week, who sold her car and her husband’s bike to keep her own employees employed. There aren’t just good and bad people; there are people trying to make ends meet who are workers and business owners.

Teanau Tuiono: Is the minimum wage enough for workers to make ends meet, and, if not, why not?

Hon BROOKE VAN VELDEN: I can’t talk about any particular individual circumstance that any particular person may have in this country. People’s lives are far too complex to try and make that simple. But what I can say is that it’s very widely understood that the minimum wage is not a poverty reduction tool. We have policies across this Government that even previous Governments used, like Working for Families, like the targeted accommodation supplement. We should be there to help people in desperate need, but not to have across-the-board policies where we can target people who genuinely need it.

SPEAKER: I’ll just make the point that the Government should not be interjecting on their own Ministers who are answering questions.

Hon Ginny Andersen: Does her Government’s Going For Growth strategy just apply for unemployment queues and lines for the food bank?

Hon BROOKE VAN VELDEN: I’m not responsible for the Going For Growth strategy. That question is best responded to by the Minister for Economic Growth.

Rt Hon Winston Peters: Can I ask the Minister as to whether she shares the view that anyone who goes to a worksite and puts it in a fair day’s work, five days a week or longer, is a worker, not just one group of people?

Hon BROOKE VAN VELDEN: I do agree. I have huge respect for people who get up every day and provide for themselves and provide for their families. There are a lot of very, very hard-working Kiwis in this country, and I respect all of them.

Question No. 6—Health

6. KATIE NIMON (National—Napier) to the Associate Minister of Health: What recent announcements has he made on refreshing New Zealand’s eating disorders strategy?

Hon MATT DOOCEY (Associate Minister of Health): As part of Eating Disorders Awareness Week, I recently announced that the Government would be refreshing New Zealand’s eating disorders strategy. The refreshed strategy will have clear and prioritised actions for implementation. Other focuses will include identifying where further efforts across eating disorder services are required and improving our understanding of eating disorder data. It will also include opportunities to grow and utilise the peer support workforce more. We know we can do a lot better in supporting individuals and their families who are struggling to get support.

Katie Nimon: Why does the eating disorders strategy need to be refreshed?

Hon MATT DOOCEY: Around 2,000 people access support for an eating disorder every year, and approximately 1,500, or three-quarters, of these will be young people under the age of 25, but we know there will be more need. New Zealand’s strategy has not been refreshed in 16 years, with the last strategy published in 2008. It is long overdue for an update. A 2021 review by the ministry showed that demand for eating disorder services has risen significantly since the strategy was first published over a decade ago.

Katie Nimon: What feedback has the Minister seen from eating disorder groups?

Hon MATT DOOCEY: Sarah Rowland, co-chair of the Eating Disorders Carer Support New Zealand, said, “The strategy will be a significant step towards improving prevention, early intervention, treatment accessibility, and long-term recovery support.”, while Rebecca Toms from WithLoveED said, “I just wanted to say thank you for paying attention to the critical issue of eating disorders in New Zealand. You know it means a lot to families like mine to see this issue finally receiving the recognition at a national level.”

Katie Nimon: What other feedback has the Minister seen?

Hon MATT DOOCEY: I have a message by Bex, the mother of a child with an eating disorder. She said, “This makes me so happy. As a parent who almost lost her 16-year-old son to an eating disorder, the fight I had against the system almost broke me. I’m happy for families and people in the future who will get the support earlier.” Lisa from Christchurch messaged me and said, “This is so overdue. So very glad this is happening. There are way too many families struggling to care for loved ones with this disorder.” And Joseph messaged me, saying, “More people suffer from eating disorders than we realise. A lot of men as well. This is good news.”

Question No. 7—Agriculture

7. STEVE ABEL (Green) to the Minister of Agriculture: Does he agree that trade access to overseas markets is a key component of protecting the export performance of New Zealand’s agricultural sector?

Hon NICOLA GRIGG (Associate Minister of Agriculture) on behalf of the Minister of Agriculture: Yes.

Steve Abel: Does he agree with advice from the Ministry of Foreign Affairs and Trade on the Gene Technology Bill that “The regulator should be required to consider trade and market access risks in assessing organisms for environmental release. This is due to the complex assurance processes for gene technology in key export markets, and the unpredictable nature of the international trading environment where gene technology has been historically controversial.”?

Hon NICOLA GRIGG: Like any of the other 26,000 submissions on this bill, I do expect the select committee to assess robustly all of the points that have been made by various submitters, and I look forward to the report back from that committee.

Steve Abel: What specific actions will the Minister take to address concerns from the Dairy Companies Association of New Zealand: “In addition to variety of country requirements, there are significant customer requirements for demonstrating that products and/or supply chains are non-GMO. These requirements vary greatly. None the less, New Zealand dairy exporters at present easily meet these requirements by reference to the fact that the New Zealand environment is, effectively, non-GMO.”?

Hon NICOLA GRIGG: I’m advised that, actually, there is no evidence that the liberalisation of gene tech rules will affect New Zealand’s trade, given that many countries that we trade with are already trading in GE products, including, of course, Australia. I’d also note for the House that the co-existence of organic and GM crops will need to be managed, and the question that the select committee will need to consider, one would assume, is as to whether that is managed through the proposed gene technology Act or by other mechanisms such as industry self-regulation.

Steve Abel: What specific actions will the Minister take to address Fonterra’s recommendation that risks to trade and market access should be included in the bill’s architecture, given the potential for the significant impacts gene technologies may have on New Zealand’s business and their ability to access international markets with their products?

Hon NICOLA GRIGG: On behalf of the Minister, as has already been canvassed, the bill is currently being examined by the Health Committee, so I would expect that any specific actions taken by the Minister would come about as a result of the committee’s report and, indeed, its recommendations.

Steve Abel: How concerned is the Minister at the New Zealand Institute of Economic Research finding that the environmental release of GMOs in New Zealand could reduce exports from the primary sector by up to $10 billion to $20 billion annually?

Hon NICOLA GRIGG: I am aware of that report, but, as I have already canvassed in the House, the co-existence of organic and GM crops already exists and, indeed, will need to be managed. Again, we do look forward to the committee’s consideration of the submissions, and we look forward to their report and recommendations.

Steve Abel: How seriously is the Minister taking the calls from the primary production sector—including the dairy industry, Federated Farmers, Horticulture New Zealand, Beef + Lamb, the lobster and pāua industries, Seafood New Zealand, New Zealand Winegrowers, and the seed and grain companies—for trade and market risks of GMOs to be addressed in the bill?

Hon NICOLA GRIGG: Of course we take very seriously feedback from the industry, which I think is why the industry has demonstrated such confidence in this Government as opposed to the previous Government, but what I would also note for the House is that the value of New Zealand’s agricultural products is based on more than just gene technology. We have an incredibly high reputation for high-quality, safe, sustainable food and fibre, and I would also note that, on this side of the House, we place a lot of faith in the commercial decisions made by companies. Those that might choose to develop and market a product using gene technology will be doing so because there is a demonstrated commercial return.

Question No. 8—Small Business and Manufacturing

8. DAVID MacLEOD (National—New Plymouth) to the Minister for Small Business and Manufacturing: What is the Government doing to support small businesses and manufacturers?

Hon CHRIS PENK (Minister for Small Business and Manufacturing): This Government is working hard to grow the economy, particularly for small businesses and manufacturers. This includes the promotion of e-invoicing. The productivity gains, the efficiency gains, and the protection against fraud are all key reasons that we are doing so. Recently, a key milestone of 50,000 businesses across New Zealand was reached for the uptake of e-invoicing, and we are asking—requiring, in fact—Government agencies to play a leadership role in adopting that technology, as well.

David MacLeod: Is finding skilled workers a challenge for small businesses, and what is the Government doing about it?

Hon CHRIS PENK: It can indeed be a challenge, and we know that access to talent is a key enabler of small business and manufacturing growth. Our key three pillars of ensuring that they have opportunities in this space include reform of the education system, with a strong emphasis on numeracy and literacy; in the vocational education space, improving and rationalising that sector for much more efficient outcomes; and, where needed, targeted specific gaps can be filled with skilled immigration. So I acknowledge and thank colleagues Stanford, Simmonds, and Stanford, respectively, for their work in that space.

David MacLeod: What impact will the recent proposed changes to procurement rules have on New Zealand manufacturers?

Hon CHRIS PENK: The proposed new rules for Government procurement could be a game-changer for small businesses and manufacturing, with some $50 billion worth of Government contracts annually having an easier path to comply with the procurement rules. For example, removing some 24 specific hoops to jump through and replacing them with a more general economic benefit will be huge. The manufacturing sector accounts for 8.4 percent of GDP in this country and employs around 10 percent of our workforce.

David MacLeod: How will the investment summit benefit small businesses and manufacturers?

Hon CHRIS PENK: There are a couple of key ways that it will help to increase economic growth in this country—which, as you know, is this Government’s—

Hon Judith Collins: Space.

Hon CHRIS PENK: —watchword. One is to unlock opportunities for that extra capital to invest in plant and equipment and, in turn, be able to grow and export back out to the world, and, second, by investing in infrastructure, we’ll make it easier and quicker, as well as safer, for firms, farms, and families to be connected with those goods and services. And, for bonus point number three, I’m reminded by my colleague and friend Judith Collins—

Hon Judith Collins: Space.

Hon CHRIS PENK: —space.

Question No. 9—Rail

9. TANGI UTIKERE (Labour—Palmerston North) to the Minister for Rail: Has the Government received any alternative proposals for the procurement of new Cook Strait ferries from the private sector; if so, how many?

Rt Hon WINSTON PETERS (Minister for Rail): Yes, we have had strong interest from the private sector, and we thank them for that—for their contributions, equities, and ideas. As for any details, the House will need to wait until Cabinet has been briefed, but let me remind the member that we have a task to do to tidy the issues of a $3.1 billion project that started with a Government contribution of $400.1 million, and then Treasury began warning the Government, the past Government, in 2023, that this project was going to blow out to over $4 billion. So we’re working on it and very soon, in a few weeks, we’ll give the member the answer he wants.

Tangi Utikere: Will he seriously consider alternative options from the private sector for the procurement of ferry services, or does he still consider private sector involvement “just ridiculous”?

Rt Hon WINSTON PETERS: The reality is we’re looking at every option all around the world, from, dare I say it, China, Korea, all the way to Scandinavia.

Tangi Utikere: Will the Government’s Cook Strait ferry service be privatised under his watch?

Rt Hon WINSTON PETERS: I think I can give you a firm promise: under my watch, no.

Tangi Utikere: Will his Government pay for the required portside infrastructure upgrades that will be needed for any new ferries?

Rt Hon WINSTON PETERS: Well, the reality is, that’s a fascinating question and I’m so pleased that very sensible member asked it, because that’s what the problem was with the last contract: for every $1 we were going to spend on the ferry, $4 was going to the infrastructure, and that was impossible. So what we’re doing here is looking at the infrastructure of the future, and he will know that Port Marlborough has got a certain contribution to make, the Wellington port has got a certain contribution to make, and we’re looking at how we best can make this work, reusing as much as we possibly can, which our forefathers had in mind when they were insightful runners of this Parliament.

Tangi Utikere: What communications, if any, has he had with Hyundai since his meeting with them on 28 February 2025, and, if so, what were those communications about?

Rt Hon WINSTON PETERS: I wrote a letter thanking them for their gracious respect in giving us their time and their expertise for a very, very meaningful discussion, which adds to the quality of information we have in making a decision as a Cabinet going forward.

Tangi Utikere: Does the Minister agree with David Seymour that “Private investment will bring private market discipline which will lead to a better and more cost-effective service in years to come.”, or will the privatisation of the ferry service be another disaster, this time with him at the helm?

Rt Hon WINSTON PETERS: It is not the history of somebody that’s at the helm ever being in charge of a disaster—quite the consequence; pointing out disasters, yes, but not starting them. In respect of Mr Seymour’s comment, that is a view, but then if you have a look at the Singaporean Temasek model, where they’ve used the best of business expertise in the interests of the nation and their savings programme, it has been a brilliant success and I do think that there are members on this side of the House who believe we need it here in our country.

Question No. 10—Health

10. JENNY MARCROFT (NZ First) to the Associate Minister of Health: What recent announcements has she made regarding upgrades to New Zealand’s air ambulance fleet?

Hon CASEY COSTELLO (Associate Minister of Health): Yesterday, I had the pleasure, with the Minister for ACC, Scott Simpson, to announce that a brand new air ambulance helicopter is now in service for the people across the Waikato, Coromandel, and King Country. This is great news for the region and the hard-working local MPs who have so strongly advocated for an upgraded helicopter. This new helicopter offers improved safety, a more reliable service, better capacity to respond in bad weather conditions, reduced maintenance cost, greater fuel efficiency, and better operational performance. Mr Speaker, if you’d indulge me, I would also like to acknowledge the unwavering commitment of Central Air Ambulance Rescue Ltd and the trusts, organisations, and individuals who collaborate so effectively to deliver these critical services.

SPEAKER: That’s fine; I’m sure answers will be concise from here.

Jenny Marcroft: Why are upgrades to the air ambulance fleet needed?

Hon CASEY COSTELLO: The helicopter fleet is currently the oldest in the developed world. This creates sustainability and reliability risks and means that our excellent paramedics, doctors, and nurses providing treatment to patients have had to do so in constraints of the existing fleet. In addition to our ageing fleet, emergency air ambulance helicopter services have come under increasing demand, which has grown more than 20 percent over the last five years. In the last calendar year alone, the emergency air ambulance fleet flew 13,309 hours, an average of more than 36 flight hours each day. Meeting this growing demand and ensuring patients can receive the best care in their time of need is essential and requires a fleet that can spend more time in the air.

Jenny Marcroft: When can New Zealanders expect more upgrades to the air ambulance fleet?

Hon CASEY COSTELLO: This Government has allocated an additional $14.7 million to be invested in this to enable air ambulance service providers to replace nine ageing helicopters with newer ones. On top of the brand new helicopter announced yesterday and one that’s been operational in Tauranga from mid - last year, at this stage, we are looking at a near-new helicopter to be operational in Auckland from mid-April, and three more helicopters are expected to arrive in New Zealand by the end of May. Announcements about these upgrades and further ones will be made in due course.

Question No. 11—Hunting and Fishing

11. MILES ANDERSON (National—Waitaki) to the Minister for Hunting and Fishing: What work has the Government done to support the hunting and fishing community?

Hon JAMES MEAGER (Minister for Hunting and Fishing): As a Government, we are strongly committed to supporting the hunting and fishing community and maximising the value of hunting and fishing as a cultural and economic resource for New Zealand. As an example, at the start of this month, the Government approved three new commercial upland game preserves. These are Mangakahia in Whangārei, Lagoon Hill in southern Wairarapa, and Grange Hill in the mighty South Canterbury. Game preserves currently constitute a $7 million per year industry, and this announcement will provide economic growth and a further boost to the sector. This is just a small part of this Government’s ambitious hunting and fishing work programme.

Miles Anderson: How else is this Government supporting the hunting and fishing community?

Hon JAMES MEAGER: Since becoming the new Minister for Hunting and Fishing, I have met with all 12 Fish & Game regional councils around the country as well as Fish & Game New Zealand, the Game Animal Council, New Zealand Deerstalkers Association, and many other passionate hunters. Their views reinforce the importance of progressing work on things like herds of special interest, recognising valued introduced species as a resource rather than a pest, improving access to public land through the Access Charter for Recreational Hunting and Fishing, investing in huts of recreational importance by supporting the community hut programme, and supporting and modernising Fish & Game New Zealand.

Miles Anderson: What are the Minister’s priorities in his portfolio?

Hon JAMES MEAGER: As Minister for Hunting and Fishing, my number one priority is to make it as easy as possible for New Zealanders to go hunting and fishing. Our hunters and anglers are one of our biggest conservation resources, which is why we have invested significant funds in partnering with hunters to undertake animal management programmes throughout New Zealand, particularly in the South Island. We will never be able to manage our conservation land and improve our biodiversity without the work and support of hunters and fishers. I am proud to be the Minister for Hunting and Fishing. I am looking forward to working with Opposition spokesperson for hunting and fishing Scott Willis on how we can further support the great work of hunters and anglers.

Cameron Luxton: Supplementary.

SPEAKER: Hang on—hang on. Sorry, just a minute. The primary question gets three supplementaries and then we go to everyone else. I’ve held that rule right from the start.

Miles Anderson: How can people get involved in hunting and fishing?

Hon JAMES MEAGER: From today, game bird licences go on sale across the country and the duck shooting season starts on 3 May. I know that the member, alongside myself, will be keen to get out on the maimai. Also starting this month is the roar, with the opening of the red deer hunting season. I wish all hunters a successful season and I also encourage everyone to stay safe and follow the seven rules of firearms safety.

Cameron Luxton: Assuming the Minister is acknowledging the vital role that hunters play in conservation, does he agree that granting them greater involvement in decision making would lead to better conservation outcomes?

Hon JAMES MEAGER: Absolutely. The contribution that our hunting community makes to conservation is invaluable, alongside the contribution by our anglers, who also undertake wetland restoration and fisheries maintenance across the country. I want hunters at the table, and I am very keen to explore how we can ensure that hunters and anglers have a say in managing our valuable conservation land. [Interruption]

SPEAKER: I don’t know what the excitement is, but the Minister is doing quite well without that assistance.

Hon Damien O’Connor: Oh, I don’t know about that!

SPEAKER: I do.

Hon Ginny Andersen: Does he support New Zealand Police retaining the Firearms Safety Authority?

SPEAKER: No, I’m sorry, that’s not a question for—

Hon Ginny Andersen: He has responsibility for firearms safety. The question is about supporting the firearms community. That’s a clear question that’s in line.

SPEAKER: This is a question to the Minister for Hunting and Fishing.

Hon Ginny Andersen: They use guns.

SPEAKER: Now, you might like to talk about other aspects of his portfolio, but I’m not sure that that is one of them.

Hon Ginny Andersen: It’s a key question the hunting community wants to know.

SPEAKER: Yes, I know a lot of people use guns for hunting—thanks very much. It doesn’t make him responsible for something that another Minister has portfolio responsibility for. Question 12. [Interruption] When we’re ready.

Question No. 12—Commerce and Consumer Affairs

12. ARENA WILLIAMS (Labour—Manurewa) to the Minister of Commerce and Consumer Affairs: How will the Government back up its promise to ensure fair prices for Kiwi consumers?

Hon SCOTT SIMPSON (Minister of Commerce and Consumer Affairs): Increasing competition is a key pillar of this Government’s going for growth plan. Having better competition means that we can bring down the cost of living for Kiwis and lift living standards. That’s why I’m progressing an ambitious review of New Zealand’s competition settings, which includes, amongst other things, the first major review of the Commerce Act in more than two decades. Getting these core settings right is important as greater competition will lead to more innovation and fairer prices for all Kiwis.

Arena Williams: Will this Government take action on the big banks charging Kiwis more right now, after 18 months of posturing and as a defiant ANZ, recording its most profitable quarter ever, is making $10 million a day from New Zealanders?

Hon SCOTT SIMPSON: As the member will well know, the Finance and Expenditure Committee is currently conducting an inquiry into banking, and the member will need to just wait and see what recommendations come from that committee. But she can be well assured that this Government is keeping a very careful eye on banks.

Arena Williams: When will Kiwis see their power prices coming down, given that they are going up next month?

Hon SCOTT SIMPSON: Power prices are crucial to New Zealanders and, as that member will well know, we have an infrastructure shortage in terms of power generation. So this Government is intending to make it easier for new generation to occur, particularly renewable generation. So the key to this question is in fact getting electricity supply right and the value right for all New Zealanders.

Arena Williams: Is there anything in the Government’s plan for commerce and consumers that will make a trolley of groceries cheaper?

Hon SCOTT SIMPSON: Well, this is interesting because the member also will be well aware that my predecessor had the supermarket duopoly firmly in his sights. But the member will also be very clear that I have proactively, in accordance with the Cabinet Manual, recused myself because of a conflict to be involved in any matters relating to supermarkets or groceries. Those matters will be handled by none other than the Hon Nicola Willis, and I can think of no better Minister to do that.

Arena Williams: Has Air New Zealand hiked fares for some routes by up to 300 percent in five years, and, if so, why have Government MPs blocked Labour’s select committee inquiry into airlines? [Interruption]

SPEAKER: Sorry, just a minute.

Hon SCOTT SIMPSON: Well, airline prices—

SPEAKER: Hold on. It’s not part of your responsibility. Do you want to ask the question in a different way?

Arena Williams: Has Air New Zealand hiked fares for some routes by up to 300 percent in five years, and, if so, would he support an inquiry at select committee into airlines?

Hon SCOTT SIMPSON: The pricing mechanism that Air New Zealand uses is, of course, a matter entirely for Air New Zealand. That said, like all New Zealanders, I’m looking forward to greater competition on our airways and the opportunities that that will provide for lowering airfares and making better value air flights for all New Zealanders.

Arena Williams: Why is he sitting back while New Zealanders are charged more by the banks, they pay more for their power, and they can’t get around the country?

Hon SCOTT SIMPSON: Well, it’s very difficult to take a lecture from a member of that party on issues relating to that sort. They had six long years to attend to these matters. They saw inflation out of control, they saw costs out of control, and the net result was that New Zealanders had a crisis of confidence in that Government. Our Government is standing up for all New Zealanders. We’re getting the economy going, we’re going for growth, and we’re back on track. [Interruption]

SPEAKER: I’m sure everyone’s feeling a lot better for that little blowout. I’ve asked members on a daily basis that when we come to the end of questions, those who have to go off to other activities around the place to do so quickly, quietly, and without conversations. I’ll invite you to do it now, and I mean without conversations on the way out.

I declare the House in committee for further consideration of the Taxation (Annual Rates for 2024—25, Emergency Response, and Remedial Measures) Bill.

Bills

Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Bill

In Committee

Debate resumed from 12 March.

Part 2 Amendments to Income Tax Act 2007 (continued)

Hon Dr DEBORAH RUSSELL (Labour): Mr Chair, thank you. It’s a pleasure to be back talking about tax again. Now, as I recall—just a quick reminder—we were debating this last Wednesday. We got a little bit of a way through Part 2 of this bill on last Wednesday night. We spent just a very short time on it yesterday—just half an hour. We are going very systematically, clause by clause. And, in the latest discussion, I think, on last Wednesday night, Barbara Edmonds was discussing clause 16B. Yesterday afternoon, Megan Woods was discussing clause 20, and I was discussing clause 21.

Now, I do want to return to clause 21 because we had only just started on the debate on clause 21. If I just get my handy copy of the bill out, it turns out that in clause 21 we’re dealing with employee share schemes. These are the schemes—for those people who have only just tuned in—where a company can allocate shares to its employees. It’s a form of remuneration, but it’s also a form of ensuring that employees have a stake in the company. It contributes to, I suppose, employee motivation in some ways. It could do that. It’s particularly important in start-ups and the like. There’s a whole lot of reasons for using it, and I asked the Minister whether this was one of the measures for growth in this bill, and he said, “Yes, it was.” That was a handy thing to learn. I think I suggested that we would be wanting to know, in particular, whether the Minister of Revenue had quantified the impact on growth or whether there was any quantification of the expected positive impact on the economy. I’d hope that the Minister has had time overnight to, perhaps, get some information from his officials about that.

Moving on from that, I want to ask another question about clause 21. It’s a different question, and it’s looking at the actual amounts in clause 21. Now, it says that in section CW 26C(2) of the Income Tax Act, amended by clause 21(1), in paragraph (b), $5,000 is going to be replaced with $7,500, and, in paragraph (c), $2,000 is going to be replaced with $3,000. So there are two—well, there are four numbers floating through these changes, but they relate to two items. I would like the Minister to clarify a couple of things here. The first is what the two items there are. As far as I can see, one relates to maximum value, and one relates to maximum benefits. So I do want to understand how that gets picked apart and what the concepts are floating in behind that.

The other thing I want to understand there is, actually, why the increase from $5,000 to $7,500 and why the increase from $2,000 to $3,000. Now, if we look at those, they’re both a 50 percent increase—7,500 minus 5,000 is 2,500. That’s 50 percent more than the previous amount. And 3,000 minus 2,000 is a difference of 1,000—an increase of 50 percent. But the thing is that the explanation that was given is that this increase was taking account of inflation. Now, that seems odd, right? It just seems odd because, as we know, inflation doesn’t come out in nice round numbers. There must be some calculation in behind this as to what the appropriate amount was to lift the thresholds to, and if it is an adjustment for inflation, there must have been some sort of looking-back at what inflation was since this clause first went into place and, therefore, at what the amount was going to be. But I can guarantee that without even looking at what the inflation might have been over the period this was in place, it wasn’t going to be an exact 50 percent.

I’d like to understand just how that 50 percent increase was arrived at and its relationship to inflation. I’m going to guess, given the diligence of the officials at Inland Revenue, that it was not just a matter of someone sticking their finger in the air and that there is some relationship to the inflation change over time. But I would like to have a little bit of an explanation as to what that relationship is and how those particular figures—those nice, neat, tidy, round figures—were arrived at in order to ensure that we got that kind of outcome. So if the Minister could address that, that would be very helpful.

CHAIRPERSON (Teanau Tuiono): Before I take the next call, I forgot to say some of the magic words, so I will. Members, the House is in committee on the Taxation (Annual Rates for 2024—25, Emergency Response, and Remedial Measures) Bill. When we were last debating this bill, we were debating Part 2—for the benefit of those tuning in at home. Part 2 is the debate on clauses 4 to 115, “Amendments to Income Tax Act 2007”. The question again is that Part 2 stand part.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair. For all those sitting at home watching, we’re now 5½ hours into this committee stage of this bill, one which had a full select committee process, and they’re going clause by clause. But clause 21 has a question, so I’ll answer that. This Government is focused on economic growth. No surprise there. Employee share schemes support people that are doing business start-ups in the tech sector—that’s good for New Zealand; that’s good for that sector. We’re making it a little bit easier for them to do that. We’re increasing the threshold in which they get tax-free income. We’ve applied a process to get to that number and we have come up with the numbers which we’ve got, and which industry are heavily supportive of and anyone working in the tech sector are very supportive of. This is common-sense, practical policy and we’re very proud that it is part of this.

Hon RACHEL BROOKING (Labour—Dunedin): Thank you, Mr Chair. I will have a short contribution, and I am very pleased that the Minister of Revenue is answering the questions, as he noted, going through clause by clause.

Now, in the last session when we were debating this bill, my colleague the Hon Dr Megan Woods was asking some questions on emergency events. I’m going to jump forward to clause 30, which inserts new cross-heading “Emergency events” and new section DB 69, “Deduction for interruption expenditure due to emergency event”. As my colleague the Hon Doctor Megan Woods said in the last session, it’s good to have these provisions about emergency events. What I’m interested in—and I couldn’t find anything in the commentary, and there doesn’t appear to be any changes in the Amendment Paper 247 from the Government either—is how this clause works, how the mechanisms work around it. So a person is allowed a deduction for expenditure incurred while their income-earning activity is interrupted by an emergency event if they meet various criteria.

I’m really looking for the nexus here. If the person can’t earn an income because of the emergency, what expenditures will they be incurring linked to that income that they are now going to be allowed a deduction for? So I’m just wondering—it could be quite a circular, chicken before the egg type of argument—if there’s an explanation for that, or if it is in fact this chicken and egg situation. So are there different expenditures that can be deducted even though the person isn’t able to make any income because of this emergency event? Thank you.

Hon SIMON WATTS (Minister of Revenue): Well, I’m not going to get into circular egg conversations, but what I can say in regards to this is that there’s a range of expenditures that individuals will incur as a result of dealing with emergency events. What we’ve been very simplistic about around this provision is to say that there’s a threshold in regards to the $5,000 that will be applying to those individuals. They’ll have the discretion to think about that. But these are emergency events. We can’t be dictating all the time in terms of exact—we’re giving a little bit of practicality on the reality of the challenges that individuals face in these very difficult circumstances, and we’re putting it in place so that we don’t need to go through a full legislative process every time one of these emergency events occur. That is ridiculous; it wastes so much time and we want to make sure that these benefit and we can move quickly to get the support to where it’s needed, and that’s to the people that are on the front line dealing with these natural events and that’s a major stress point for them and their communities.

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Mr Chairman, and I thank the Minister of Revenue for that contribution. I believe my colleague Dr Deborah Russell will come back to that—that that wasn’t addressing the questions around the clause that the Hon Rachel Brooking had put.

We’ve made clear in previous contributions that we think that, actually, it is sensible to make amendments to our taxation legislation to make sure that we are set up with a framework where we can have a more off-the-shelf set of solutions for taxation, in that regard. But my colleague the Hon Deborah Russell, in a subsequent contribution, will come back and remind the Minister exactly what questions were being asked. I think it is important that we scrutinise this, because it is such an important set of provisions around what our framework for having the tax system set up to provide that relief would be. I remind the Minister before I go on to the next clause that I’m going to talk to that I still have the drafting question that I put to him yesterday around whether or not the $5,000 is a cap—how that figure was reached, what was the thinking behind that, and why that is the number. That is in clause 20.

I am going to skip ahead a little bit, and we’ll probably come back to some of the other clauses in subsequent questions, and they are the clauses that are around the platform economy, which are in this part of the legislation, particularly clauses 14 and 23. So this is making sure that people who operate within the platform economy—e.g., Airbnb—pay GST. In some cases, those people get GST credits, that are treated as income, and that is what this part of the legislation is looking to address. So, ordinarily, GST is entirely backed out of the income tax system, so you don’t claim the GST received as income and you don’t claim GST paid as expenses. And that’s well covered in the commentary on this bill.

The question is: for clause 14, what is the flat-rate credit in section 2(1) of the Goods and Services Tax Act working off? And why are we mixing up income tax and goods and services tax? What is the thinking, and the policy thinking, that led to that being in the clauses of this bill? In clause 23, why are we changing section CX 1B—first of all, saying that the flat-rate credits are excluded income, per CX 1B, as it is now—and then after this bill is passed, saying they are not excluded income. Which is it and why is there this confusion? Is this something that we need to be looking at the Minister bringing some amendments on to clear up those ambiguities and those confusions that could arise? I would be interested to hear from the Minister, particularly in relation to clauses 4 and 14 and 23, around exactly why they are drafted as they are. So those are my questions for the Minister on these particular clauses; we’ll have more to come.

Hon Dr DEBORAH RUSSELL (Labour): Point of order. Thank you, Mr Chair. There’s just something that the Minister of Revenue said, and I’d like you to clarify this for us because the Minister said that we’d spent 4½ hours on this debate, but my understanding is that in committee stages the issue is not so much the time that is spent on a debate but whether people were raising new points or not. So the fact that we might spend a lot of time moving through it doesn’t really matter; what actually matters is whether the points that are being raised are new points or not, and whether we’re engaging in repetition. Now, we’ve been very, very careful not to engage in repetition. We’ve actually worked this. So I just wondered if I could have some clarification from you on whether it’s time versus repetition.

Hon SIMON WATTS (Minister of Revenue): Just speaking to the point of order. I actually didn’t say 4½; I said five hours and 15 minutes.

CHAIRPERSON (Teanau Tuiono): I will take some advice on this and continue to think on this. But we do need to have new material and to cut out repetitions. It’s also possible that the Minister might be giving some answers, and then some sequent questions could be brought up as well. But if those questions have already been answered in previous questions, then that could also count towards repetition. But I will take a bit more advice on that.

Hon Dr MEGAN WOODS (Labour—Wigram): Speaking to the point of order. Thank you, Mr Chairman. I’m just seeking some clarification. I absolutely understand what you’re saying about whether there’s repetition in the questions and that in some of the subsequent questions there may be repetitions. But I’m just asking for some advice on what happens with questions that we are putting that are not being answered by the Minister, because there is a large and growing number of questions that are still outstanding that the Minister has not either addressed or answered.

CHAIRPERSON (Teanau Tuiono): I will come back to that.

Hon Dr DEBORAH RUSSELL (Labour): Speaking to that, as well, just a further point in there. If the Minister has, in fact, answered incorrectly, I presume it’s still quite possible to come back and say, “Actually, mate, I get it, but you’ve got it wrong.”

CHAIRPERSON (Teanau Tuiono): I can acknowledge that there are going to be different perspectives in the committee. The Minister can address those questions as he feels appropriate. The point is that he addresses those questions. I will give you an update where we get with this. But we’ll continue.

Dr LAWRENCE XU-NAN (Green): Thank you, Mr Chair. I’ll just acknowledge what the Hon Dr Deborah Russell and also the Hon Megan Woods have also mentioned before that—this is quite a substantial bill. But I’m also seeing that the Government parties are very excited to take a call on this, particularly members of the Finance and Expenditure Committee, so I look forward to their contribution to this bill as well.

My question to the Minister of Revenue is around actually the Minister’s Amendment Paper, specifically the Amendment Paper 247. We’re looking at, since we’re still on roughly around clause 21—I’m actually looking at the new clause 21BA that’s being introduced, and just to note that, again, this Amendment Paper was introduced to the House post - select committee process and also post - second reading, so it’ll be really good for us to kind of get some understanding on some of the policy intent of this Amendment Paper as well.

So my question to the Minister, when he comes to the newly introduced clause 21BA, inserting new section CW 39B, is around the Auckland Future Fund. Now, granted that we have heard the bill coming through first reading and is currently sitting at select committee on the Auckland Future Fund, I’m curious as to know, because the Auckland Future Fund bill that’s been introduced is looking at the governance and management structure of that particular fund, why then this Amendment Paper introduces a fund where some of that governance and management structure hasn’t even been set in stone yet and is still currently going through select committee. So is that kind of a cart before the horse sort of scenario? I just want to kind of get a clarification from the Minister on that particular intent with the introduction here. Is it anticipating that that bill will go through the House with no issues?

I’m also curious in terms of the type of exemptions that are being done here, because, again, the Minister, being the Minister of Revenue but also an Auckland-based electoral MP, would have a vested interest in this. It says that the exempt income does not apply to things by a trustee of the Auckland Future Fund from a council-controlled organisation (CCO) or an organisation linked by ownership or control to Auckland Council, its port company, etc. So, if these are not included, what does then fall under subsection (1) as a certain amount from commercial undertakings? Are we looking at the exempted income being the fund itself as opposed to the other things that are associated to the fund? I just wanted to get some clarification on what the Minister means by commercial undertakings.

I think the last part around this is sort of in terms of as we’re looking at this, again, because this is a bill that’s still going through select committee, what sort of consultation has the Minister received or sort of advice has the Minister received around the nuance between that exempted income of the Auckland Future Fund? So those are my three questions. What is the relationship between the introduction of this Amendment Paper and the bill that’s currently going through select committee? What is considered an exempt income if CCOs and other sort of organisations linked by ownership or control of Auckland Council like port company, etc., is not part of the exempted income? And what consultation or advice has the Minister received regarding the need for having that exempted income in the first place?

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair, and I thank the member for the questions. So in regards to the questions by the member in regards to new clause 21BA, inserted by Amendment Paper 247, on the Auckland Future Fund, he’s right to note that there is a bill currently working its way through the House. What we do know is that the Auckland Future Fund is part of Auckland Council, which is tax exempt. So common sense prevails that this entity will also have that same tax exemption, hence why we’re putting it through this bill to make sure that when it’s operational then it can get on and do what it needs to do. The member asked about consultation. We did a lot of consultation with Auckland Council and that would be expected in that regard.

Clause 20 was a question as well, raised by a member previously around whether it was a cap or not. Yes, it is a cap. I said that when I raised it. I actually said that twice when I got asked the same question in prior sessions on the same point. But, again, it is a cap of $5,000, and that is that.

Also, a question in regards to clauses 14, 23, and 29 by Hon Dr Megan Woods in regards to flat-rate credits and the platform economy. What we’re doing here is actually a number of changes to ensure that the treatment in regards to these aspects of income—there’s a number of complexities and we’re moving and making improvements to that, to make complying with the income tax obligations more straightforward. What that means for those watching at home is we’re removing unnecessary bureaucracy and compliance to make the costs on taxpayers less. And, by the way, that’s a good thing and that’s very much cognitive and representative of this Government.

CHAIRPERSON (Teanau Tuiono): Before I take the next call, I just want to address the point of order that came up earlier. I’d like to direct members to Speakers’ rulings 68/1 and 68/2. Speaker’s ruling 68/1 states, “Closure motions are more likely to be accepted in a shorter time period if Ministers have engaged in a positive manner to non-political technical questions.”, and Speaker’s ruling 68/2 states, “The acceptance of a closure motion is about the content of the part, the content of the speeches, and the way that the committee conducts itself.”

So it’s engagement by the Minister on the one hand, and the conduct of the committee on the other, and the judge of relevancy is myself.

TODD STEPHENSON (ACT): I move, That debate on this question now close.

Hon Dr DEBORAH RUSSELL (Labour): I’m pretty relieved to have gotten this call—thank you, Mr Chair—because, with all due respect to the Minister of Revenue, frankly, he was wrong in an explanation he gave before. I appreciate tax law is complicated. There’s a lot to get through and a lot to understand, but I also understand that the Minister, in his previous life, like me, was an accountant, so I do expect that he has a better understanding than most laypeople of tax law.

I want to go back to the discussion that my colleague Rachel Brooking raised. She asked the Minister to direct his attention to clause 30 of the bill, and it is to do with allowing a deduction for expenses incurred during an emergency event. Rachel Brooking wanted to know about allowing this deduction for expenses when no income is being earned. Now, the Minister replied, and he replied talking about the new emergency provisions in general, and why we were having them in place. He said, “That’s why we have this clause 30.” But, actually, that’s kind of a very big, broad, and general answer to what was a very specific question. The very specific question was this: it was to do with the nexus with income.

Now, as people who are familiar with the Income Tax Act know, Part D of the Income Tax Act concerns itself with expenses that people may deduct from their income. Section DA1 gives a general permission, and the general permission is that when you incur expenses, you may deduct them. All right, but you’ve got to earn income. In order to deduct an expense, it has to be incurred either in the conduct of a business or because it’s an earning income. And there’s a problem: if your business has been interrupted by an emergency event, you’re not earning income, right? That’s the point of a business interruption—you can no longer earn income. So, if you’re no longer earning income, you can’t deduct expenses. You’ve got to have that nexus with income, and those are the actual words in the Income Tax Act.

The interesting thing was that I spent quite a bit of time with the bill commentary—I spent quite a bit of time working through this—and I couldn’t find a discussion of this particular clause in the bill commentary; and yet it’s introducing something quite normal and interesting, that in these emergency events, even though you are not earning income, you can get deductions for expenditure. So you can see why I’m quite concerned. I’m concerned on two grounds: one is that the Minister—and fair enough; the tax bills are long and complicated—didn’t quite get the right spot of the question. But the other one is that it is quite novel, really, to be able to claim expenditure when there’s no income. I get why we would do this, I get why it’s important, but it gets even more important than that—the fact that the nexus with income puts a bit of a limit on the sort of expenses that can be claimed.

What I want to know from the Minister is whether—I can see, I think, why that nexus needs to be set aside, but I’d like the Minister’s explanation on that. I also want to know whether there’s going to be a limit to the kind of expenses that can be claimed in this space. Perhaps, you know, if there’s no nexus with income, what other expenses might a person claim just because they can? The nexus with income imposes a kind of control over it. There is a limit to what can be claimed. But, as soon as we do away with the nexus with income, fair enough in this circumstance, we also do away with that limit. So what limit is going to be placed on the types of expenses that can be claimed in this context?

I’m trusting that the Minister has got the point of the question now, and I know he will understand it, because I appreciate it that, when you hear it the first time, perhaps you don’t quite get the question that’s being asked. I’m sure the Minister has got the point of that question now, and I’m looking forward to hearing his answer.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Chair, and I thank the member for the question. I do also acknowledge that this point was discussed during the select committee phase and I know that the member was part of that. But irrespective of that, we’ll cover off the detail for the purpose of those watching at home. It is important to note that this new section DB 69 inserted by clause 30, in regards to deduction, supplements the general provision which the member has noted. The purpose of this new section is to prove that there is a nexus between the income and expenditure, acknowledging that that would have been disrupted by the event.

There’s a point going further in terms of how far does that deduction go: well, the deduction has to be relevant to the income-earning activity of the specific example, and so within that, that provides the bounds of what is reasonable or not. Obviously, the IRD are very accustomed in terms of dealing with that. But it is important to note that in an emergency event, what would normally be the case in terms of that nexus in effect can be broken and the outcome of that would be detrimental; hence what the Finance and Expenditure Committee have done through their consideration of this bill. This new section reflects that and ensures that there is a nexus between income and expenditure.

HELEN WHITE (Labour—Mt Albert): Thank you, Mr Chair. I want to ask about clauses 31 and 32, which are about the transparency rule for partnerships. So my understanding is we’re moving from a situation where we’ve had transparency to one where we’re looking at an assumption of opaque partnerships. That’s with regard to the payment of pensions to former partners and the payment of working partners in various other areas. I have looked at the commentary, but it doesn’t really tell me why. My understanding is that’s not the usual rule; we’re moving away here from the Income Tax Act. So I’d like to know: what’s the justification for doing that? What’s the advantage of doing it? And specifically, perhaps with regard to some of the clauses that we have looked at here—the sections are listed in the commentary for the benefit of it. But what is it that it’s achieving in those sections? I appreciate you’re unlikely to want to look at all of them, but can you give me an example of where that is doing a good thing?

I appreciate that I’m not on the Finance and Expenditure Committee any more; I’m not an accountant, but I think it’s really important that people out there understand a change like this in ordinary terms.

CHAIRPERSON (Teanau Tuiono): Can you tell us which clauses you’re talking about?

HELEN WHITE: I’m talking, sir, about clauses 31 and 32. And if you look at the Inland Revenue’s commentary, you can see on page 141 there’s just a sentence on it and it actually provides all the sections that it affects. So there are a whole range of them.

Hon Dr Deborah Russell: It’s 31 and 32.

HELEN WHITE: Yeah, it’s clauses 31 and 32, and then the sections that it proposes to affect are listed. Thank you very much. I’d be very grateful for an answer.

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Mr Chairman. I have some further questions for the Minister of Revenue around clause 30, the “Deduction for … expenditure due to emergency event”. This is something, despite the discussion at the Finance and Expenditure Committee and some of the discussions that occurred in this House, that I am still unsure whether it will be covered. It’s not a theoretical situation. One of the things that the bill makes clear is that it’s drawing on what some of the responses to the Canterbury earthquake sequences were and on the tax relief that was put in place there. So I’d be interested to hear from the Minister about his understanding of a business that was operating out of a building that was not red stickered or was not damaged or deemed to be uninhabitable, and that, none the less, had its business interrupted, not because of its own building but because there was a demolition of buildings that had been red stickered or deemed uninhabitable very close by and because the entry and pathway to the building was blocked off in order to facilitate the demolition of other buildings in close proximity.

We had the real question, through the Canterbury earthquake sequence, of whether or not interruption insurance would apply under these circumstances. So have we fixed that in terms of the tax situation and in terms of the new definitions? I know it’s certainly the intent of the Government, and the intent of this legislation, to really bring all these things together and tidy things up, but I’m still unclear. I think it’s quite clear, if there was a building that was red stickered or deemed uninhabitable, what the situation would be there. But I want to know what it is when there’s a building that is, essentially, collateral damage from the fate of a building that is in close proximity, and whether or not it is the Minister’s understanding that the definitions that we have in this legislation, particularly around clause 30, are broad enough to do that.

RACHEL BOYACK (Labour—Nelson): Thank you, Mr Chair. I just want to ask some questions of the Minister of Revenue relating to a separate clause in Part 2, which is clause 29. I do want to acknowledge that the Minister has been really helpful in terms of answering questions. This one is a wee bit complicated and so I’d really appreciate it if he was able to help me understand.

Clause 29 amends section DB 2, related to GST. It replaces “listed services” with a new provision that says, “listed services. However, this subsection does not apply if the underlying supplier has received a flat-rate credit, as defined in section 2(1) of that Act, in an income year and has chosen as described in section CH 5B (Adjustments for certain flat-rate credits under platform economy rules) to include the amount of the credit in their income for the income year.”

It makes my head want to explode, and I just want to note that our tax expert Deborah Russell may have some more questions on the specific clause because she is the expert amongst our team—I’m not going to claim to be that person. But my understanding of this particular clause is that it relates to platform economy rules, which means you can get a deduction for expenses. But what this would mean, according to the commentary on the bill—Inland Revenue’s commentary, dated August 2024; just to help the Minister, and I realise I’m referring to lots of different parts of the bill and the commentary—is that you can’t, as I understand it, get a deduction for GST, but if you’re not GST registered, then you can get a deduction. But then the deduction is removed for people who are using the platform economy rule. But what this amendment does is it puts it back in again in some circumstances.

So I’d like to know what those circumstances are and why. This feels really complicated—to basically not be registered and then you get the deduction, then the deduction’s removed, then you put it back in again. I think this is quite a complex matter. It is making my head explode. It is messy, and I’d be really appreciative if the Minister could help untangle this wee mess. I’m sure that if I haven’t quite got my interpretation of my reading of this correct, my colleague Deborah Russell will at some point be able to further flesh out the questions that the Opposition has about this. But, in the meantime, I’d be really interested in hearing from the Minister.

Hon SIMON WATTS (Minister of Revenue): Thanks very much to the members for those questions. I’ll work my way through them, starting with the Hon Dr Megan Woods’ point around clause 30 inserting new section DB 69. As I heard it, I think the question was: is the definition broad enough to cover an interruption? The example of Christchurch was used in that example. There is no limit in terms of the amount of the deduction that can be are taken in, in regards to the emergency event, and the emergency event is defined at which—I can’t speak for the specific—the Christchurch earthquake would seem like a threshold of that. But the deduction is not limited only to the extent that it is relevant to the income production or income purposes of that business operation. And that would be where the constraint of the deduction would be placed through. So I am comfortable the definition is broad enough in that context.

There were other questions raised in regards to clauses 31 and 32 by the Hon Dr Deborah Russell, in regards to partnerships. In effect, this is a remedial—

Hon Dr Deborah Russell: It was Helen White.

Hon SIMON WATTS: Helen White—apologies to the member Helen White. But I do know that this was in regards to partnerships. This is primarily a remedial change. The purpose of these changes—going to the question of why we are doing it—is to clarify that in certain circumstances, a limited partnership should be treated as an entity. That ensures that the other sections of the bill work as intended. So that’s the purpose of that remedial change, and it is making sure that the context in terms of the way in which those entities are treated is transparent in the context of which they need to know.

CHAIRPERSON (Teanau Tuiono): Just before I take the next call, I have gone back through the tracking sheet and last night people did talk about clause 30. So just to note that if we are focusing on questions around clause 30, that has been covered quite a lot. So I’m looking for brand new fresh material in that regard, without repetition.

REUBEN DAVIDSON (Labour—Christchurch East): Thank you, Mr Chair. It’s good to be able to take a call on this and to ask some questions specifically around—not clause 30, you’ll be pleased to know—clauses 14, 23, and 29. Now, this really comes from a question both around speed and also around the ability for tax law and tax legislation to keep pace with the speed at which the tech sector and platforms move, because we know that platform developments, platform shifts and changes, often happen at incredible speeds. We can wake up in New Zealand and, overnight—it hasn’t been night-time somewhere else in the world—a platform can have changed ownership or changed function. That can have quite serious impacts on how we capture the revenue spent or invested into, or generated, even, on that platform.

So in the summary here of the proposed amendments, it says that it would provide certain underlying suppliers who make supplies of listed services through an electronic market place the option to include the flat-rate credit as assessable income in their tax returns. It goes on to say that this would allow them to deduct their expenditure for income tax purposes on a GST-inclusive basis without the need for apportionment.

To come back to the point of the speed of platforms, in the previous experience that I’ve had of creating content for an audience—and I’m using that as an analogy for capturing or measuring correct apportionments of taxes on platforms—it is that you do have to move incredibly quickly to adapt and keep up with those audiences. Digital market places are exactly the same.

So the questions, really, are: what steps are in place to ensure that the tax and tax capture keeps up and it’s not left behind but also that it doesn’t get ahead of the movement and actions of those platforms? That really comes down to the identification of those certain underlying suppliers, who and how often are those assessed and updated, and at whose discretion is that work taking place. How can the Minister of Revenue be confident that the speed at which tax regulation, tax law, works is going to keep pace not just over the next six months and the next 12 months but, really, over the next five- or 10-year horizon, when we can expect to see huge advancements in the way that these platforms operate and the speeds at which they operate—particularly in the context of artificial intelligence and all of the opportunities and advances that that operates to this platform sector?

So it’s really, I guess, a question around a David and Goliath battle. Even though, currently, the Goliath is the tax document sitting in front of me, really what we’re looking at in the platform context is that the Goliath becomes the ability of these platforms and the larger companies behind them to move at extreme speeds that, potentially, can always stay just ahead of taxation and taxation’s ability to capture. So their constant evolution and shift presents a real challenge for legislation and for the Minister. So I’m really interested to hear your answers, Minister, to these questions specifically around the ability to keep pace with the speed at which technological advancements across platforms will continue to evolve not just around the world but specifically here in New Zealand, which, obviously, this legislation is relevant to. Thank you.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair. The question relates to clauses 14, 23, and 29, consistent with a question answered more, but I’ll provide a little bit more context for the member’s purpose. First and foremost, this is an optional area for a taxpayer. It is primarily looking at hosts, drivers, and deliverers, and this is a result of the platform economy GST rules that came into force on 1 April 2024.

It basically provides the mechanism for those individuals to treat their flat-rate credit that they get from an online market place as assessable income instead of excluded income. And because they can choose it to be assessable income, that means that they can then deduct GST. And so as a result of that, the quid pro quo of being able to treat assessable income and therefore being able to claim GST means that complying with their tax obligations, as I noted before, is made more straightforward. So that’s the purpose of that. The Finance and Expenditure Committee did consider this. They didn’t make any recommended changes to this clause; they thought it was about right and I’ll leave it with that.

Hon Dr DEBORAH RUSSELL (Labour): I’m actually very, very grateful to get the call on this because I want to move on to clause 35. There’s a particular reason why I wanted to be the one to ask the questions around this. It’s to do with livestock valuation. My dad, in a retirement village, watches Parliament, and my dad happened to be a primary sector tax expert, and he knows the livestock valuation rules inside out. So I’m just going to say, “Dad, I’m asking this question for you.”

Dan Bidois: Is he a National voter?

Hon Dr DEBORAH RUSSELL: He supports Labour, just for the record. Now, it’s all about livestock valuation. Those rules are complicated because some livestock is held as a herd, as a capital asset, and some livestock is held as a trading asset, right? So buying and selling. The buying and selling of livestock might be growing a crop of lambs each year—

Jenny Marcroft: A crop?

Hon Dr DEBORAH RUSSELL: A “crop” will do. In about July or August, we’ll see them starting to look nice and fat in time for Christmas. So that’s, obviously, that trading, buying and selling—well, breeding, buying, and selling. But, of course, the flock of ewes which have the lambs in the first place are the capital asset. So there are some quite complicated rules around livestock valuation, and the clever accountants—like my dad, of course—know how to apply them and get those sorts of rules correct.

So this is an interesting little amendment to section EC 1, because what it does is it takes out a little bit of the rules. Now, the idea in EC 1 is that it’s all about livestock valuation. But, as it stands, in the way the EC 1 is written at the moment—EC 1(1), sorry—in the Income Tax Act, it implies, just the way it’s written, that if a farmer holds livestock for purposes other than purchase and sale, then it’s not covered by the livestock valuation rules. Now, it’s only an implication, just the way it’s written, but it’s quite an interesting one. The change is, actually, to clarify those rules. It takes out a set of words, and it says, if “a person … owns or carries on a farming business, other than a livestock … business, holds livestock for the purposes of farming that livestock in the ordinary course of carrying on the farming business:” So that’s the new wording.

The old wording implied that a farmer had to hold livestock for the purpose of farming. There was a dealing implication in it. So that’s a bit of a change of the language here. It’s only, I guess, remedial. It’s only a small change. But it would be interesting to know if there was any harm actually being caused by the previous version of the words. So this is a tidy up of the language. We’re spending the committee’s time on it, we’ve spent select committee time on it, and officials have spent time in the Inland Revenue (IR) policy unit working on this. Presumably, IR staffers out in the field have been dealing with farmers on this. But what I want to know is whether there were any actual tax cases—whether they were any pretty low-level tax case or whether there was any actual harm being caused. So what justifies the committee spending time on this particular matter if no harm was being caused by it in the first place?

Now, I get why we do want to try to tidy up the tax law. We do want the words to be precise because, in tax law, words really, really, really do matter. But I guess, just the step-on from that: was there actually any harm being caused by the previous standing of the words? My feeling is that those words have been in there for quite a long time, because it refers to subsection (2), the new stuff that’s coming in. It applies to the 2008-9 income years. That’s quite a long time back, so it implies that the slightly vague wording has been in there since the 2008-9 year. So, obviously, we’ve gotten by for about 15 years with having these slightly inaccurate words in there. So what’s been happening in those 15 years and why does it justify us spending our time and energy, right now, trying to update this clause?

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair. I acknowledge and appreciate that the Finance and Expenditure Committee didn’t horse around in regards to this clause.

Jenny Marcroft: Neigh!

Hon SIMON WATTS: They did consider it very seriously.

Hon Chris Penk: The neighs have it!

CHAIRPERSON (Teanau Tuiono): Well done.

Hon SIMON WATTS: Well done. Ha, ha! As the member has highlighted, this is a remedial matter. The definition as it stands excludes livestock held for any other income-generating purpose. As a Government that is listening to taxpayers, particularly those in the primary sector, they’ve said to us that the inaccurate wording can cause confusion and potentially could result in some businesses valuing their livestock incorrectly or simply not valuing them at all. Hence it was prudent by Government to correct this through this remedial change. As a result, that will ensure that we don’t have an inaccurate assessment of income related to livestock on farms in New Zealand.

CHAIRPERSON (Teanau Tuiono): If I can carry forward that analogy, I would appreciate if members galloped to fresher fields and if we had no repetition and relevancy, the committee would appreciate that.

Dr LAWRENCE XU-NAN (Green): For many members, there is the appetite to move on to the crux of this particular part around emergency management. But before we get there, I just have one last question around an upcoming section, which is clause 35B, around valuation of excepted financial arrangements.

Just checking—and I also understand the Minister in the chair is also the Minister for Climate Change—I do have a question around this particular section around the forest land emissions unit transfer, just to get some clarity around this. My understanding, when it comes to this particular section, or even the preceding section ED 1(7B)(a) is around other parts of the Climate Change Response Amendment Act. But I think in this particular case, one of the things I was interested in is what is considered under section 64 of the Climate Change Response Act, because we know that section ED 1(7B)(a) is empowered by Part 4, Subpart 2, of the Climate Change Response Act 2002. But with this particular section, in terms of the no-payment of a price and also the accepted financial arrangement, how is the forest land emissions unit actually going to work in tangent to that, and whether the Minister knows of any other instance, other than forest land emissions units, where other types of unit may not be included as part of this? Again, section 64 of the Act gives the opening for other types of potential unit.

So I guess my two main questions are: one, how would this work in tangent to ED 1(7B)(a); and two, have there been other forms of emissions unit other than the forest land unit that will be considered as part of the accepted financial arrangement?

DAN BIDOIS (National—Northcote): I move, That debate on this question now close.

FRANCISCO HERNANDEZ (Green): Thank you, Mr Chair. There are still substantial portions of the emergency management bits that have yet to be traversed, so I think we’ll start exploring that now.

I wanted to ask the question, though—you know, this is the Taxation (Annual Rates for 2024—25, Emergency Response, and Remedial Measures) Bill, so I’m looking at the regulatory impact statement, “Generic response to emergency events”. Now, the officials proposed five different options in that regulatory impact statement. Option one is the status quo. That’s self-explanatory; it’s what we’re doing now. Option two is the step-down approach, which they say would use tax measures as the basis for the generic measures. Option three is the step-down approach with information sharing, similar to the second one, except with information sharing. Option four is extended information-sharing to other emergencies. Option five is emergency—definition of “emergency” when depreciation income arises as a result of the emergency.

So my question to the Minister of Revenue is: which of these options was the one that was implemented in this legislation—noting that the preferred option of the officials was option three. Was that the option that was used or was it some hybrid mixture of the other options? Just curious on what option ended up being preferred, because I’ve tried to read through this legislation. It’s very long, it’s very complex, so I don’t necessarily understand which option we ended up going with. So I’m keen for an explanation from the Minister.

I now turn to new clause 53B, inserting new section FP 3, I believe. That one has a section around definitions of various things. My question is related to the definition of the “emergency event period”, particularly in paragraph (b)(i)—so that’s new clause 53B, inserting the new Subpart FP, new section FP3, the definition section, under paragraph (b)(i), which is “the last day of the income year that is 5 income years after the income year referred to in paragraph (a);”. Now, I am just curious why—with five income years, is that the sort of standard thing in the legislation? Has that been defined somewhere else? Like, I’m curious why it’s five income years. That seems like a long time, but it could be a short time. I don’t really have much in the way of context and am curious to know from the Minister why exactly five years was picked for that period.

Another question that I had when going through this legislation—again, noting that unlike my colleagues I’m not a tax lawyer. I struggled to process and understand a lot of this, so I’m asking a lot of definitional questions. New section FP 14 is “When property uneconomic to repair”. I just want the Minister to, I guess, define that in layman’s terms. What does “uneconomic to repair” actually mean? It goes on to say it applies “when … (c) the person reasonably assesses that the item is uneconomic to repair;”. Are there other judgments or thresholds that go into that, or is it purely, you know, up to the whim of the individual to decide when things are uneconomic to appear?

I’ll just reiterate my questions because I’ve kind of traversed a lot of ground. My first question to the Minister was: which option is the one that’s being implemented in this legislation? Is it option one? Is it option two, option three, option four, option five, or some kind of new bespoke option? And my second question was around new clause 53B inserting new section FP 3, which is around the concept of five years—why five years? Is it independent legislation? I’m curious to see. And my final question was around new section FP 14—looking for, I guess, a layperson’s definition of uneconomic to repair. Thank you.

Hon SIMON WATTS (Minister of Revenue): Thank you very much to the member Francisco Hernandez for those questions. In regards to the option that we selected, we went for option 3, which is a step-down approach. There’s a table in the back that outlines the five different options that were considered.

In regards to clause 53B, in terms of the five-year term, five years is a standard and pragmatic period of time, which is generally utilised for circumstances such as this.

The question in regards to clause 35B—the value of forestry land emissions—the context here is that the legislation as it stands correctly specifies the value of the units at the end of the income year; however, the acquisition value of these emission units is not stated in the legislation. Hence, it’s a technical oversight in the legislation, and we’ve made a fix to that, which makes sure that that is the case.

The other question that the member asked in regards to the other aspects of the Climate Change Response Act: obviously, that’s not in the scope of this bill. We just looked at this specific fix, in regards to forestry.

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Mr Chair. I am going to really gallop forward, but I note that colleagues have some questions further back in the bill. But mine is around subclauses 105(14) and (18). These are the provisions that relate to energy consumer trust exclusions. The proposed amendment would ensure that trusts that no longer hold shares in electricity distribution companies but continue to have the same class of beneficiaries for which the trust was established, also qualify as energy consumer trusts. And trusts that meet the current definition would not be affected by the amendment that’s before us.

So the background, in terms of the bill commentary—and I have looked at the bill commentary, but what I’m interested to understand some more from the Minister of Revenue is around the “why” for this, what the purpose of this is, and the number of entities that we’re talking about that would be affected by this amendment in clause 105(18).

By way of explanation, where I’m still not entirely sure and it’s not clear to me—and it may just be me, I’m not a tax expert—is why this change is being made. Lines trusts or energy consumer trusts that hold shares in electricity distribution companies, going through the definition—I won’t bother reading the whole thing out—energy consumer trusts “are excluded from the 39 percent trustee tax rate … and are [instead] subject to the 33 percent tax rate” on their taxable income. This is because they face an increased risk of over-taxation.

So, really, what is the policy push behind this amendment that we’re seeing in this clause? What is it that we’re trying to rectify? But, more importantly, how many of these entities are there? How big and how broad is the scope in terms of the impact of what this amendment will be?

So the proposed amendment to the lines trust definition in section YA 1 would ensure that it includes the trust that previously held the specified shares and continues to have the same class of beneficiaries. So, really just looking for some more detail from the Minister on that clause.

Hon Dr DEBORAH RUSSELL (Labour): Mr Chair, thank you for the call. I’m grateful to my colleagues for having opened up the debate on what I actually think is perhaps one of the most significant parts of this bill, and we can tell that because it’s the Taxation (Annual Rates for 2024—25, Emergency Response, and Remedial Measures) Bill.

This new Subpart FP is very, very new tax law.

CHAIRPERSON (Teanau Tuiono): Which section are you talking about?

Hon Dr DEBORAH RUSSELL: It’s Subpart FP—oh, I’m sorry, it’s clause 53b. Clause 53B inserts new Subpart FP, and Subpart FP has got, I think—how many new sections of tax law? It’s got something like 27 new sections of tax law. It goes from section FP 1 to section FP 27 in this copy of the bill. It’s 20 pages of new tax law, so we do need to have a really serious look at this. It’s not just remedial. It’s not just tidying up. It’s not just fixing a small matter. It’s introducing a very significant new part of the income tax law. So we do want to work through it quite carefully; there are some issues I do want to go through. I’m grateful to my colleague Mr Hernandez for opening up the discussion on this, and there were some pretty good questions about some of the matters in the bill.

I want to go to a slightly more general discussion first. Look, the reason is, if we look at new section FP 1 in the bill, it itself sits there with an outline of the part. So it introduces this new subpart of the Act, and the very first new section, FP 1, starts with an outline of what the subpart does. So it invites, right from the start, questions about the general policy around this—why we’re doing it; how it sets up the particular rules, the sorts of rules that are sitting in there or are not sitting in there. So that’s actually quite an important and distinctive thing to be doing. Having said all that, here we’ve got Subpart FP; it’s “Tax relief for emergencies”, and we’ve got the outline of the subpart.

Now, as we all know, in the last few years there have been quite a number of black swan events—events which created real trouble in New Zealand. From COVID-19 to earthquakes—the Kaikōura earthquakes. Something that I know there will be dear to the Hon Chris Penk’s heart—not dear; it was pretty sad, wasn’t it, Mr Penk?—the Auckland Anniversary floods, followed by Cyclone Gabrielle. So there were some black swan events, and of course businesses were affected every time. And every time, the Minister of Finance and the Minister of Revenue—then Labour Ministers—rolled out some emergency measures for businesses. Eventually, in terms of those emergency measures, people started saying, “Hey, we actually just need an off the shelf set of measures that can be rolled out as needed pretty quickly so they don’t have to be legislated every time.” It’s a set of measures that can be triggered by the Minister, or by the Governor-General actually.

There are some big policy questions that we need to answer. So I have some questions that I would like to understand from the Minister of Revenue. First of all—I do pretty much understand the justification of this, but how many times have these particular rules, these rules which are now codified into a set of rules, been tested in practice? The Minister has chosen particular rules to go into this suite of rules that can be rolled out as needed, but it implies that they have been used before, so it’d be good to get some feedback from the Minister as to how often have they been used and how effective they have been in providing the sort of relief that businesses actually need during times of emergency. So that’s one of the really big questions to answer around this.

The second thing is: I know I said that people were approaching us—and of course they were approaching us as the Government—it’d be good to know from the Minister whether the same people also approached him once he became the Minister of Revenue and stressed that these rules were important. And I think they are important. I think there’s bipartisan agreement on these rules. But it’d be good to know which types of organisation, which types of people actually came to the Minister and said, “Please get this off the shelf set of rules available.” So if I could have some response on that.

I suppose there’s a further set of questions around that. There are a number of rules sitting in this. So if we look at it, there’s a rollover relief for particular property, there’s relief for when income earning activities are interrupted—

CHAIRPERSON (Teanau Tuiono): The member’s time has expired.

Dr CARLOS CHEUNG (National—Mt Roskill): I move, That debate on this question now close.

Hon Dr DEBORAH RUSSELL (Labour): There are rules around—

CHAIRPERSON (Teanau Tuiono): Can I just ask you to get to the questions?

Hon Dr DEBORAH RUSSELL: OK—the timing of depreciable property for employment-related relief; there are spreading rules for when livestock is destroyed. What I want to know from the Minister of Revenue is how he chose which rules were going to go into this particular piece of this brand new subpart of the Act.

So three questions are there for the Minister and I think they are all quite important questions: one is how often have rules like these been deployed and what effect did they give to the—how much did they help the businesses? Two, the people who approached us, were they the same people that approached the Minister? Who were the people who were asking for these rules to be implemented? And the third one is why this particular set of rules? So some have been included, but there might have been other emergency relief measures that were deployed from time to time. Why weren’t they in these rules? So why this particular set of rules?

Hon SIMON WATTS (Minister of Revenue): Thank you, Mr Chair, and I thank members for their questions. I’ll work my way through those. One of the questions related to Subpart FP. I think it’s important to recognise that this is not new tax law. It’s actually a combination of measures used in past events, and those past events include the Canterbury earthquake, the Kaikōura earthquake, and the North Island flooding events. There were number of those and we’ve put them all together in that section of Subpart FP. So it’s not new.

The other question was in regards to clause 105(18) and (40), in regards to energy consumer trusts. Basically, the question was how many. We’re actually aware that there is one trust that did not qualify due to historical restructuring, but should have. Basically, what this clause is doing is ensuring that trusts that are substantially energy consumer trusts receive the correct tax treatment. So, again, you’d expect that that would be pretty common sense.

There have been a number of questions around how often these tax rules are used. While I do know quite a lot of things, I can’t know every time a tax rule is used by any taxpayer in New Zealand, and I think it’s a reasonable question, but I simply can’t answer that aspect.

The other question was why we chose these rules. The Inland Revenue maintain a list of remedial items which have been identified by taxpayers over many years, including tax experts. There are about 700 or so items on that list, and one of the things I did when I became the Minister of Revenue was to say, “Review that list. Identify the aspects that will genuinely create value, remove taxpayer compliance costs on taxpayers, and let’s make sure that we implement those changes to streamline the Tax Act and make life easier for taxpayers. So that’s the process that we go through, and a wide range of people feed into that process.

CHAIRPERSON (Teanau Tuiono): Before I take the next call, if I could ask members in the committee to be clearer with their questions. I appreciate the context because tax law is complicated, but having those clear questions will help the Minister to engage, and Speakers’ rulings do guide us towards engagement.

FRANCISCO HERNANDEZ (Green): Thank you, Mr Chair. I had a couple more questions going through this legislation. My questions are around clause 53B, new Subparts FP 20, FP 21, and also FP 23. So I’ll just go through them. FP 20, my question is around—and look, as I think a lot of people involved in this debate are not tax lawyers, so I will repeat that I’m not a tax lawyer. My question on FP 20(c), “the period of 8 weeks starting on the date the emergency event begins”. Now, I just wanted to clarify my understanding of that. Does that mean that if an emergency event goes on for longer than eight weeks, the section doesn’t apply? Or is it just the eight-week period that does apply, or just the event going over eight weeks invalidates the whole period? So that’s my first question around that.

My second question around new Subpart FP 20 is: is the eight-week period—oh, well, I’ve answered my own question by reading it. It’s the one that’s already been defined by legislation. So I’ll move on to new Subpart FP 21. My question is around FP 21(2), and that’s the section which starts by saying, “Benefits satisfying subsection (1) that would, in the absence of this section, be fringe benefits”. So my question is: why has that threshold been chosen—the $5,000 threshold? Is that the one that’s already in the parent legislation, or is that the one that the Minister of Revenue has had advice on that that’s the appropriate measure? I’m just curious. I’ve never engaged with the fringe benefit tax system in any way, so curious for an answer for why it’s specifically $5,000 that’s been chosen as the threshold.

My third question is around new Subpart FP 23: “Livestock destroyed because of emergency events”. Now, my question is new Subpart FP 23(1)(c) around the issue of mixed-age female breeding animals that the person expects to have had at the end of the income year. Why is it 75 percent—the threshold that has been chosen? I mean I’m not an agriculture person either, so I’m curious why it’s 75 percent. Is that what the standard should be for if you’re trying to breed mixed-age animals? Is that the minimum ratio of female animals you need to have?

So just reiterating my questions. The first was new Subpart FP 20, which was around the eight weeks. The first question was what are the implications of going over the eight-week period? Does that mean that the relief might be invalidated or does it just go up to the eight weeks? The second question around new Subpart FP 21 was why was $5,000 the one that was chosen? And my last question was around new Subpart FP 23 around livestock destruction and the question of mixed-age female breeding animals—why was it 75 percent? Thank you.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair. The $5,000 threshold was the amount that the Finance and Expenditure Committee and also officials thought was the appropriate number for that circumstance. The eight-week question is in regards to new section FP 20, and, obviously, my response there was for FP 21(2). Eight weeks is a cap. It can go beyond that, but the eight weeks is a period of exempt income.

I’m not necessarily sure on the question in regards to the gender issues between bulls and cows.

TOM RUTHERFORD (National—Bay of Plenty): I move, That debate on this question now close.

Hon Dr DEBORAH RUSSELL (Labour): There is a really important question which is going begging in this, and that is: what is the definition of an emergency event? Obviously, we need to know what an emergency event is. Typically, in terms of getting a definition of a term, it’s Part Y of the Act, but often, in subparts, the subpart of an Act will have its own definitions within it. So new section FP 3, inserted by clause 53B, has got a series of definitions: affected class, affected depreciable property, and so on. It doesn’t have a definition of an emergency event in there.

I went to Part Y of the Act and looked for it there, and it’s not in Part Y of the Act. But the curious thing is that if we look at FP 1—in fact, lots of the new sections—it has a little line beneath it. I’m just going to take people—and I really do want people to look at this—to FP 1(3). It says, “Section FP 3 contains the definitions relevant for the subpart.”, and then, immediately underneath it, there’s a line that says, “Defined in this Act: affected property, depreciable property, emergency event, exempt income, fringe benefit, land” Now, when it says, “this Act”, it’s referring to the Income Tax Act. But when I went to the Income Tax Act, I could find no definition of emergency event. So I looked through this bill and I looked for where a definition of an emergency event was going to be inserted in the Act somewhere.

Now, perhaps, I’ve missed it—perhaps there’s something sitting in section Y 3. I’m asking the Minister to perhaps point me to where it is sitting in section Y. It might be YA that it would go into. I did then trek on the way through, and it turns out that we’re going to insert, in appropriate order, in the Tax Administration Act, the “emergency event”, all right? So that’s going to be an emergency event as defined in section 4 of the Civil Defence Emergency Management Act—that’s declared as a state emergency under the Act and so on. So there are some good rules there. These are sitting on page 131, as to how we actually do define the emergency event.

I just want to know whether that definition does or will actually sit within the Income Tax Act. In which case, we’re going to need to take that out of that little—it’s not part of the law per se; it’s just the way that it’s written up. It’s got to be taken out of there. So, if the Minister could just clarify that, around the definition of an emergency event.

Hon SIMON WATTS (Minister of Revenue): Just for the member’s interest—and, of course, all those watching at home—about where the definition sits, it’s actually defined in section 4 of the Civil Defence Emergency Management Act 2002. It’s a Government-wide definition, and that is where the definition of an emergency event resides.

Dr LAWRENCE XU-NAN (Green): Thank you, Mr Chair. I actually just have two short questions for the Minister of Revenue on this part, on clause 53B. I think one of the ones is we have seen sort of consistently throughout this particular part—new section FP 5(1), to give you an example. I wanted to check with the Minister if it’s the standard definition of a person in this case. Are we referring to a legal person? Even if you’re looking at it, often it is phrased as “a person or persons”. So what happens when you have, like, for example, “owns affected revenue property”, but that particular property is owned by more than one person? Does a person, either as a legal entity or as an individual person, cover the idea of a couple, but also in terms of a trust or a trustee? I’m not seeing any other—and potentially it’s in the principal Act, which I haven’t checked yet. So that’s my first question; it’s on the definition of a person where it goes beyond an individual and covers others.

The second part: I also just want to pick up on new section FP 21, inserted by clause 53B. Thank you so much, Minister, for responding to the eight weeks question by my colleague Francisco Hernandez. But I also wanted to check—these new sections from FP 20 to FP 22 are very much around employment-related relief, but what I’m not seeing in this particular section is beneficiary-related relief. I want to check with the Minister whether there are also going to be other forms of relief for beneficiaries, and if it is already covered in existing provisions, whether it is around receiving benefits that would be considered fringe tax in the absence of an emergency event, etc.

So those are my two questions: the definition of a person, which we see throughout this entire section, and is there a particular section or consideration for beneficiary-related relief?

Rachel Boyack: Mr Chair.

CHAIRPERSON (Teanau Tuiono): Rachel Brooking.

RACHEL BOYACK (Labour—Nelson): Mr Chair, thank you. I just want to reflect on the question from—

CHAIRPERSON (Teanau Tuiono): I’m sorry—Rachel Boyack. Sorry.

RACHEL BOYACK: Oh, I thought I might have heard “Brooking”, the other “South Island Rachel B” from the Labour caucus. I’m just responding to the Minister’s response to the questions from my colleague Deborah Russell, and do just want your indulgence here for about 20 seconds on some context about why this is so important and why I’m asking it as the MP for Nelson. It is around that definition of emergency event. In Nelson, we’ve had a significant number of emergency declarations, but they have been at a local level, and I really want to get to the heart of the matter for me, which is the difference between a national emergency and a local emergency.

Bear with me, but I’m going to start with clause 117(6), on page 131 of the bill, where we do have this definition of an “emergency event”, and it “means an emergency as defined in section 4 of the Civil Defence Emergency Management Act 2002 that is—(i) declared as a state of emergency under that Act:”, and then there are two further paragraphs related to the Biosecurity Act, which I’ll just ignore for now. If I look at section 4, which the Minister referenced in his response to the Civil Defence Emergency Management Act, I’ve just had a quick search, but I couldn’t actually find a definition in that section. If I look at the commentary from the IRD from August 2024, it says here that “For the purposes of the Civil Defence Emergency Management Act, an emergency declaration is either:”—and this is quite critical to my question—“a state of national emergency under section 66 of that Act, or a state of local emergency under section 68 of that Act.”

My concern is that when I’m reading through the bill, I can’t actually get a clarity of definition about whether it includes—I’m going to assume it does include—the nationwide emergency, because it would be bizarre if it didn’t, given that that is the most serious level of emergency we can have. But as the Nelson MP, we’ve had the Pigeon Valley fires, and we’ve had the Nelson floods. They were significant local emergencies. We missed out on the bespoke legislation that went through the House a number of times, like Kaikōura, like the Auckland floods. Some of that legislation came to the select committee I was on, the Governance and Administration Committee, and there was representation from councils where we had had those local emergencies that actually had a similar impact to what occurred, for example, in Cyclone Gabrielle, but it was just on a local level.

So you can understand, in that context, why it’s such an important question for me as a local MP. I want to be able to go back to my constituents in Nelson and say that, yes, this bill applies to them or, no, it doesn’t, if we have those similar scenarios. I’ve been trying to look through the various parts of the bill and the Minister’s response, and I can’t find it, so I really would appreciate a response from the Minister. Thank you.

NANCY LU (National): I move, That debate on this question now close.

Hon Dr MEGAN WOODS (Labour—Wigram): Thank you, Mr Chairman. I have a question for the Minister of Revenue relating to, I think, what is one of the most often asked questions of Government in the case of an emergency situation in terms of the taxation system, and that is the use of money interest question. Now, this bill, and the emergency provisions, does make changes through an amendment to section 183ABA of the Tax Administration Act, and that allows the commissioner to remit the use of money into interest following the declaration of an emergency event. This is a change in process only, according to the bill commentary, because, currently, the commissioner can choose not to charge interest on late payments. But this is something that obviously causes people a great deal of anxiety in the wake of a natural disaster, and that is usually done by an Order in Council. But the Order in Council power is going to be retained under the amendment which is in this bill, because it’s saying there could be situations where it is not declared as an emergency under the Civil Defence Emergency Management Act of 2002. So I think that’s a prudent backstop, to have that Order in Council backstop for the commissioner to be able to do that, in that rare event.

What I would like to know is whether there are other provisions within these emergency measures where there’s been policy advice or policy discussions that the Minister has had around where we may need to retain some of those backstop ways of putting in support in case the emergency event isn’t declared in accordance within the definition that the Minister has spoken about when he has addressed other aspects of it. So in terms of that very important aspect of use of money interest, it’s laid clear, but I just want to know whether that applies—and it may well be in here and I’ve missed it, but the Minister will be able to point us to it—and whether those backstop provisions for using Orders in Council are retained in regard to other Inland Revenue supports that may be put in place in the wake of an emergency.

Hon Julie Anne Genter: Mr Chair.

CHAIRPERSON (Teanau Tuiono): Julie Anne Genter—no, the Hon Simon Watts.

Hon SIMON WATTS (Minister of Revenue): Sorry to the member the Hon Julie Anne Genter, but I’ll just answer the question in regards to the emergency event point that was raised before. I think it was in regards to Rachel Boyack’s point in the context of a specific example in her electorate. The clause states that it is a declared event. That can include national and local events. It will depend on the specific circumstances, but one would expect if it is of significant scale that triggers what is considered a local emergency, then, on that basis, it would be captured. But again, it’s case by case.

The question asked by the Hon Dr Megan Woods in the context of use of money interest around section 183 under the Tax Administration Act, the late payments portion—I think the question was: did officials consider more broadly the application of that or whether that is included in the broader bill. The purpose of this bill fundamentally is to deal with emergency response and the related implications of that event, and that is what the officials have targeted in this case, and that’s what the Finance and Expenditure Committee supported.

Hon JULIE ANNE GENTER (Green—Rongotai): Kia orana, Mr Chair. This is my first contribution and questions today in this debate. I just wanted to bring up the changes to the FamilyBoost tax credit which are in clause 91C, replacing section MH 3. This is really important to a number of constituents in my electorate, but just more broadly across the country, because access to support for early childhood education is so important for working families and the cost of childcare is incredibly high in New Zealand. Arguably, it’s one of the single most effective things we could do to improve productivity and livelihoods for families is to make it universal, free, part of the public system, and more easily accessible. The Government’s FamilyBoost tax credit, as I understand it, has actually not been claimed by the majority of people who are eligible for it.

So what I’m interested in is whether these changes are estimated to make it easier for people to claim that credit. Has the IRD done any modelling? Are they keeping data on how many people are eligible? What work is the Government doing to ensure that people know that they are eligible, and will this simplify the process of accessing that support or will it make it more difficult?

I notice it’s great that the Finance and Expenditure Committee made some changes to allow late filers to access the FamilyBoost tax credit. However, there are other changes that I’m really not clear on whether it’s going to make it more difficult or more easy or no change whatsoever in terms of families’ ability to access that support.

Hon SIMON WATTS (Minister of Revenue): Thanks to the member the Hon Julie Anne Genter for the question. I acknowledge that the question was going more broadly in terms of the policy intent. But when the policy was brought in, there was an estimate by officials around 100,000 families that would be eligible in that context. Obviously, you’d appreciate that the estimation of that is reliant on how many children that families have and all that, which is a moving feast, obviously.

In the context of the registrations: to date, it’s sitting at around 70,000 of that. So that’s a good way there—it’s more than a majority in that context. The IRD are working actively through their operational matters to increase that number, and it’s something we’re monitoring very closely. But the purpose of this clause is just to deal with some of the more remedial matters that were identified as part of that legislation to make sure it works appropriately.

Hon Dr DEBORAH RUSSELL (Labour): I want to ask another livestock-related question. It’s part of the emergency relief measures and it’s new Subpart FP 23 as part of Subpart FP. This one is to do with income spreading for forced livestock sales. Now, it’s interesting because, of course, there are already provisions within the Income Tax Act for primary producers—

CHAIRPERSON (Teanau Tuiono): What section is this again?

Hon Dr DEBORAH RUSSELL: What’s this? Oh, sorry, it’s clause 53B that introduces all the emergency provisions, but it’s new Subpart FP 23 within that. And it’s on page 84 of the bill if you’re looking.

So there are already existing provisions that allow farmers and some other primary producers—I’d have to go and look it up to know exactly what—to spread their income over a number of years. And that income-spreading provision is in there for a very good reason. It’s because farming, by its nature, can be afflicted by real ups and downs due to the climate and to things like droughts and so on. So farmers already have the ability to spread their income over a number of years. So why, then, was it thought necessary to add some extra provisions in new Subpart FP 23 to allow another sort of spreading of income over years? Why weren’t the existing provisions good enough? What needed to be done to make sure that this better reflected what needed to happen in an emergency situation?

Now, I appreciate it means that they’ll still return all the income over a number of years and so on. That’s not going to change the amount of income they return, but it will change the amount of tax they pay—that’s the point of the income-spreading provisions. But as a policy-type question, I guess, but also a technical one: why weren’t the existing provisions good enough? Why did we have to add in these extra provisions to cope with that situation for farmers?

Dr LAWRENCE XU-NAN (Green): Thank you, Mr Chair. I have two quick questions for the Minister of Revenue, and I wanted also to thank the Minister for responding to our questions in a concise manner as well.

The first question is on clause 53B, so still on emergency management, on new section FP 16, and both questions are relating to the presumption of duration or period. Now, with FP 16, I just want to get clarification from the Minister on paragraph (a). When we’re looking at depreciation of property and value, it says that “the item was used or available for use immediately before the restriction was imposed;”. So let’s say that there is a property or a chattel, or anything that is currently being restricted due to an emergency event—you can’t use it. The thing is that it mentions “current year”. So let’s say if you were using the property at the beginning of the financial year on 1 April and then you were using it for a month, then in May, suddenly, you have an emergency event, you can’t use that particular property from May onwards until, let’s say, February or March the next year—so, in fact, you haven’t been able to use that for the majority of that financial year. Reading this, does that mean that just because you were able to use that property immediately before the event happened, the depreciated value was still applied despite the fact that you couldn’t use it for most of the time? So I just want to get that clarification.

The second part sort of in relation to what my colleague the Hon Julie Anne Genter mentioned, in terms of the FamilyBoost tax credit in clause 91C—I’m looking at 91C, the newly introduced new section MH 3, subsection (7), which is to do with “Separated persons”. Again, it’s the same thing that I’m looking at in terms of the use of the phrase “at the end of that quarter”. So if we have, let’s say, a couple who separated at the beginning of that quarter and for most of that quarter the two parents are operating individually, therefore, they should technically be able to access the FamilyBoost credit. But if at the end of that quarter one of them or both of them has found another relationship partner, it means that, as read, one or both of them, if they have a relationship partner at the end of that quarter, even though they did not have one for most of that quarter, would no longer be eligible for a FamilyBoost tax credit.

So I am just checking both of those questions—one on depreciation, the value of property with restricted items during an emergency event, and the other one is to do with the definition of kind of, I guess, relationship partner status for separated persons, because that does affect potentially a lot of parents.

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Mr Chair. I’ll come back on the response to the question around livestock income spreading, which I know the members are eagerly anticipating!

So the purpose here is that the current way that the legislation is drafted is that it doesn’t deal with the case of a large cull of livestock—I appreciate that is what it is—but the existing scheme isn’t adequate for that scenario. Obviously, in the context of biosecurity and Mycoplasma bovis, a scenario or an event such as that, then the mechanism needs to be in place to deal with that scenario, and hence why we’ve made the change.

NANCY LU (National): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 49

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15.

Motion agreed to.

CHAIRPERSON (Teanau Tuiono): The question is, That the Minister’s amendments to Part 2 set out on Amendment Paper 247 be agreed to.

Amendments agreed to.

A party vote was called for on the question, That Part 2 as amended be agreed to.

Ayes 102

New Zealand National 49; New Zealand Labour 34; ACT New Zealand 11; New Zealand First 8.

Noes 15

Green Party of Aotearoa New Zealand 15.

Part 2 as amended agreed to.

Part 3 Amendments to Tax Administration Act 1994

CHAIRPERSON (Teanau Tuiono): Members, we now come to Part 3. This is a debate on clauses 116 to 153, “Amendments to Tax Administration Act 1994”. The question is that Part 3 stand part.

Hon SIMON WATTS (Minister of Revenue): Well, thank you very much, Mr Chair. So Part 3, as noted, deals with amendments to the Tax Administration Act 1994. Obviously, the purposes of the Tax Administration Act is to outline how taxes will be applied. Thus, many of the amendments in Part 3 give effect to the discussions that we’ve just had in regards to Part 2 and make other remedial changes. The main policy item that was not already covered in Part 2 is in regards to the crypto-asset reporting framework. We’ve also got an Amendment Paper which amends part of the bill to introduce the administrative provisions that will support the introduction of the Government’s final year fees-free policy, the substantive provisions of which are included in the amendments to Part 5 of the bill.

Hon Dr DEBORAH RUSSELL (Labour): I want to start off with the crypto-asset reporting framework, and if you thought tax law was cryptic, well, then you try crypto-assets, because they’re pretty tricky. There’s some really interesting policy questions sitting around the crypto-asset reporting framework and it’s around the automatic exchange of information, all right. So part of what these rules do is try to set up common reporting across jurisdictions about crypto-assets. Tax administrations worldwide are trying to retain visibility over income and investment earning opportunities, trying to understand where assets are flowing around the world.

Ordinarily, I perhaps might have been able to thrash this out in select committee, except it’s an issue that can’t quite be thrashed out in select committee, and that’s to do with the concern about information from New Zealand taxpayers with respect to crypto-assets flowing around the world. But we’ve just had some pretty interesting developments in the United States of America with the new regime there and the extent to which the information that they are receiving gets shared to entities who ought not to have it.

Now, look, in New Zealand, our staffers at Inland Revenue—the people who work for us—are bound by some pretty tight rules around what records they may or may not look at. Information that Inland Revenue holds should not escape from the bounds of Inland Revenue and, actually, mostly it simply just doesn’t. It stays put there. Our tax officials are highly trustworthy. But we do know that, unfortunately—well, however we might see it. But in the United States of America, which is part of this crypto-asset reporting framework, that information that goes to the US tax authority—the name has escaped me. It’s so late on a Thursday—

Hon Simon Watts: The IRS.

Hon Dr DEBORAH RUSSELL: The IRS—thank you.

Cameron Brewer: Oh, even Deborah’s weary.

Hon Dr DEBORAH RUSSELL: I am tired—I am tired. It’s the IRS. We know that’s being shared now, or has been threatened to be shared with entities outside of the framework of the American Government, and, in particular, with entities and people who may not have been bound by the same restrictions around privacy and the like. I just wondered to what extent the Minister of Revenue has done any work around this or consulted his officials around it, given that we are now entering into this crypto-asset reporting framework, and, of course, we have other information-sharing schemes, as well. So I’d welcome a comment on that from the Minister.

Hon SIMON WATTS (Minister of Revenue): Yes, well, thank you very much to the member, and for those tuning in, we’re on Part 3 of the income tax bill. We’re into our seventh hour just in terms of the clock there. So buckle in, we’re on to crypto-asset service providers, which is a great area.

The member the Hon Dr Deborah Russell asked some questions in regards to consideration around what information and what consideration was given to other jurisdictions in regards to this policy. IRD does have a team that focuses solely on international tax and keeping an eye on what other countries are doing to make sure that we’re fit for purpose. They did take on board feedback from a wide range of sources in order to make sure that the legislative changes for reporting of crypto-assets in the New Zealand legislation was best in class. I’m very confident as Minister in the IRD ensuring that they’ve done due diligence and due process. And, of course, the very competent Finance and Expenditure Committee led by Cameron Brewer also reviewed this bill. Actually, it might have been other members before that, of course, but they went through and I believe that they were very comfortable with this section as well.

Hon Dr DEBORAH RUSSELL (Labour): I want to continue on with talking around the crypto-asset reporting framework, and so I thank the Minister of Revenue for that answer. I too have a very high regard for our officials in Inland Revenue and their standards of integrity and probity.

I want to go to clause 117 of the bill—so we’re now in Part 3, so clause 117. It starts on page 129, but I actually want to look at clause 117(3), which amends section 3, and we’re inserting in there the “CARF document” and saying what the “CARF document” means. It’s the “International Standards for Automatic Exchange of Information in Tax Matters:”—yada, yada, yada. But it’s not a very—I don’t want to get too specific about this. But it gets amended from time to time, and it gets amended by the OECD and the Group of Twenty countries and is adopted by the OECD.

What, in effect, we’re doing is we’re outsourcing some of our tax law to the OECD. Now, we’ve done that before and, again, I think it’s probably appropriate to do it again. What is concerning here is that the CARF document is amended from time to time, so how is Inland Revenue going to be advising people who are affected by this that in fact the OECD document has been amended? There’s a pretty good system at Inland Revenue for advising when there’s new rules coming out, new interpretations, new policy statements, new case law, all coming out. But when we’re waiting on an entity from overseas to adjust something, what is going to be the system for ensuring that people who are affected by this get to know that there has been a change in the underlying OECD document?

Hon SIMON WATTS (Minister of Revenue): The clause that’s being referred to here is clause 117(3), amending section 3 of the principal Act, the definition of “CARF”—now, of course, just for those who have been watching, we’ve been talking about livestock. We’re not talking about that calf; we’re talking about the crypto-asset reporting framework definition for the OECD—just for some member’s family that are watching at home, that might be getting excited at this point.

Look, as the member knows, there’s a lot of information sharing that goes on between jurisdictions. This is a very routine piece of legislation around the format in which that information is shared. There is a lot of robust consideration around releasing any of that information, of course, but these things get updated regularly, as do a lot of these clauses, and this is simply reflecting those changes.

CHAIRPERSON (Barbara Kuriger): Carl Bates, is this a question? We’re still having questions. We’ve just started Part 3. Take your call.

CARL BATES (National—Whanganui): I move, That debate on this question now close.

Dr LAWRENCE XU-NAN (Green): Thank you so much, Madam Chair. I was excited when I thought that Mr Carl Bates was actually going to take a call on Part 3.

I have a question for the Minister of Revenue—I have, actually, a number of questions for the Minister on the Minister’s Amendment Paper 247, specifically the new clause 118BA, “New section 7AAAA inserted”, on the final-year fees-free scheme. To start with, just going through the supplementary analysis report (SAR)—we have seen that in the SAR there are a number of limitations to this particular bill. I think the one that I’m most interested in—I mean, we understand there’s a whole bunch of coalition agreements that have to be fulfilled, etc.—is the constraint by the limited stakeholder engagement. My first question to the Minister is: what student bodies—and particularly when we’re looking at student bodies from disadvantaged communities like Māori and Pasifika student organisations—has the Minister or officials consulted with this particular policy? That is, I guess, if you want to relate it, new section 7AAAA(1), on the administration of the final-year fees-free scheme.

Now, going through the SAR, there are also a number of concerns, and I think two of the things that are quite concerning were the complete change of focus in terms of this particular policy, changing from encouraging participation in tertiary education to incentivising learners to finish their studies or training. Understandably, both are important, but by shifting this focus—and the primary consideration of this is due to the overwhelming barrier for Māori and Pasifika students in terms of access to tertiary education. Has the Minister considered how we are going to be able to encourage participation in tertiary education as a result of these particular altered changes that we’re making to this particular fees-free scheme?

I think the next question is whether Te Tiriti o Waitangi analysis as well as the Waitangi Tribunal report on this precise point of the fees-free scheme shifting from a first-year fees-free scheme to the final fees-free scheme has been genuinely taken on board by the Ministers and by the Government when deciding this particular shift. In that same regard, then, what evidence, as part of the coalition agreement, when we’re changing this, was used to determine that having the final-year fees-free scheme genuinely will have the kind of cost saving that the Government is looking for but also at the same time benefiting the students? So that’s a lot of questions around the policy part.

I do have a question on the specific section 7AAAA(2) around this, which is “If a person who receives an entitlement under the scheme … does not qualify for the entitlement under the eligibility requirements of the scheme, the person must immediately repay to the Commissioner”. I want to focus on the phrase “eligibility requirements”. Now, one of the things we did also see in the SAR is the fact that it’s going to be actually quite a high risk, considering the TEC—and that’s the Tertiary Education Commission—will need a complete change of system when we’re looking at administering this final-year free scheme, because it is not such a simple eligibility test. There are other tests as well that are required, particularly around the fact that it is not simply just people enrolling in the final-fee scheme; it is actually upon the completion of the learner’s qualification.

So, in that regard, what sort of evidence and advice has the Minister received that students are able to pay for that first year—third year, I guess—up front, or does the eligibility requirement mean that the students, like the current scheme, will still be able to get it up front but, should they not pass it, they need to then refund that to the commissioner—which is how I’m reading subsection (2) here? So those are quite a lot of questions there for the Minister to respond to in terms of the final-year fees-free scheme.

Hon SIMON WATTS (Minister of Revenue): Thank you to the member Dr Lawrence Xu-Nan for those questions. The member will appreciate that we are reviewing the Taxation (Annual Rates for 2024—25, Emergency Response, and Remedial Measures) Bill, and the policy decisions in regards to fees-free are interesting but not necessarily the role of Inland Revenue and, hence, the taxation bill to implement. This is about the implementation of those components that the IRD has responsibility for. The member asked me whether I have confidence in my department in the context of ensuring that the cost benefits and the way in which they do so is appropriate. Well, of course I do. They’re one of the most effective entities operating in this space.

The other question was around the submissions and whether there were any submissions from those within the tertiary sector or students. Well, as the member will know, there were 28 written submissions. I think the Finance and Expenditure Committee saw 16 of those in person. There was a wide range of input from a wide range of sectors, including experts, and we are comfortable that the views of those that are impacted in regards to the implementation of these tax rules have been appropriately captured through the work that’s been done by both the select committee and the Government.

Hon Dr DEBORAH RUSSELL (Labour): Thank you, Madam Chair. I’ve got some more questions on the crypto-asset reporting framework. I want to go to clause 150 of the bill; it’s on page 146—as we’re trying to keep track of where we’re all going on this! It’s the clause that when it goes into the Tax Administration Act, will put the actual requirement for reporting on people who hold crypto-assets. Of course, it does also say that a crypto-asset user must report stuff to the relevant authorities and so on.

But the question is, I suppose, a fairly straightforward one. We have a self-assessment system in New Zealand. We rely on people who are supposed to be taxed actually reporting their income themselves and taking the steps to report, themselves. Most of us get caught—I shouldn’t say “caught”—in a tax net. It’s a traditional phrase because we’re earning salaries and wages and in it goes. But, in this case, we’re looking at crypto-assets, which by their nature are cryptic and hard to track down. So I’m just going to ask a little bit about how the Minister of Revenue anticipates that these particular reporting requirements will actually be policed and the extent to which Inland Revenue will be able to track down and require this reporting of people who actually do hold crypto-assets, whether he anticipates that, in fact, people will come forward and report on their own crypto-assets, or that Inland Revenue will have to employ various measures to try and track them down. If the Minister could just comment on that.

Hon SIMON WATTS (Minister of Revenue): Yeah, well, the member the Hon Dr Deborah Russell will be aware that IRD have a big and significant focus on compliance and integrity matters. They received additional funding by this Government to increase the amount of work—that obviously includes the components around the crypto-assets framework. It’d be fair to say that many taxpayers—actually over 95 percent—generally will comply without any problem, and that’s because that is the appropriate mechanism. There is always a small or very few number of people that need a little bit of support to comply with their obligations. And for those that are blatantly avoiding or evading their tax, then IRD have the full weight of powers to be able to deal with those individuals and organisations.

Hon Dr DEBORAH RUSSELL (Labour): My final question on the crypto-asset reporting framework—it’s just one last thing I think that the committee ought to work through. I’m going just a few pages back to clause 144—it’s on page 143—and it’s inserting new sections 142L and 142M into the Tax Administration Act. What’s sitting in here are the penalties for non-compliance with the rules. There are various amounts sitting in here as to if they don’t take reasonable care to comply with the requirements: $20,000 for the first time they do it, $40,000 for the second time they do it, and so on. Then up to a maximum of $100,000 a year for those particular penalties and so on. What I want to know from the Minister of Revenue is just how those particular penalties compare to other penalties in the Tax Administration Act. I can see that they’re scaled in particular ways here, but usually we anticipate that people who are investing in crypto-assets are perhaps playing around with significant amounts of money, so I want to know how proportionate those penalties are, especially in relation to other penalties within the Tax Administration Act.

Hon SIMON WATTS (Minister of Revenue): I thank the member the Hon Dr Deborah Russell for the question. The member’s right: the area of crypto-assets and the financial flows that relate to that are significant. There was in the region around US$1.4 billion of potential fraud and hacking of this currency at a global level, so there’s a lot of money flowing through there. IRD do see this as an area of risk and hence have applied what they believe is proportionate penalties to deal with the scale of potential risk that they deal with, and they do that across all tax types.

CARL BATES (National—Whanganui): I move, That debate on this question now close.

CHAIRPERSON (Barbara Kuriger): I’m going to allow one more really specific question. Make sure it’s specific. I’m going to take one from Lawrence Xu-Nan, and we’ll see how it goes. We’ve actually spent quite a long time on this piece of legislation, albeit we haven’t been on this part for so long. I will take a second one—

Hon Dr Deborah Russell: Point of order, Madam Chair. We did clarify with the earlier Chair that the amount of time was not the issue; what mattered was whether the Minister was engaging, which of course the Minister is, and whether there was novel material being presented.

CHAIRPERSON (Barbara Kuriger): That’s exactly what I just said. I said I’m going to gauge the questions to see how far we might go.

Hon Dr Deborah Russell: But the time is irrelevant. The amount of time spent is irrelevant.

CHAIRPERSON (Barbara Kuriger): What I’ve just said is that we haven’t had a lot of time on this part, so I’ll be gauging the questions to see how we go. Thank you.

Dr LAWRENCE XU-NAN (Green): Thank you so much, Madam Chair. I understand that I asked the Minister of Revenue a lot of questions before, but there was one that I was really hoping to get clarification on. That is Amendment Paper 247, new clause 118BA, inserting new section 7AAAA(2). That is around whether the expectation is for students to pay up front and, if they don’t finish their course, they’re going to get refunded; or, if they don’t finish the course, they have to pay the money back, or they need to complete the course first and then get a reimbursement. So that was my question.

My question is actually one of curiosity, and this is mainly to do with the new clause 150B of Amendment Paper 247. New clause 150B is talking about “Power to extend time for doing anything under Act”. In terms of comparing this Act to the principal Act—the Tax Administration Act 1994—I’m curious to know from the Minister: why was there the removal of the part “within a fixed time cannot be so or is not so done,”. So the updated phrasing is, “If anything is required by or under this Act, the Income Tax Act 2007 …”—etc., etc.—“to be done by a taxpayer by a specified date or … within a fixed time,”. But then there is a changing of wording from the existing one. I want to check with the Minister why the wording was changed, and what is the intent of this change of wording? That also applies to subsection (2) as well, in terms of the change of wording.

Finally, considering that this is a replacement of section 226(1) and 226(2), and not specifying subsection (3), I just want to get reassurance from the Minister that anything that is done here by Order in Council is to consider secondary legislation.

Hon Dr DEBORAH RUSSELL (Labour): Madam Chair, I want to touch on a matter that’s associated with the new emergency provisions, the emergency response provisions, but it’s a matter that’s canvassed in the Tax Administration Act, not in the Income Tax Act. So it’s very properly within Part 3 and we haven’t touched on this previously.

It’s clause 151B and it inserts a couple of new sections in the Tax Administration Act—sorry, 151B on page 147. What this is to do with is when a person who is attempting to use these emergency relief provisions, when they must notify the commissioner by having actually used those emergency, or wanting to use those emergency, relief provisions. As people who’ve been here all along—my colleague Megan Woods talked about the use of money measures and so on. Obviously, if Inland Revenue doesn’t receive money that it’s expecting to receive, like provisional tax, it wants to know why, so it needs to be notified why that’s happening and so on. So there’s a variety of deadlines in there and they all look really appropriate.

But if I could direct the Minister of Revenue’s attention to new section 226H, subsection (5) there, it says that “The Commissioner may allow the person to file a notice under this section at a later time if the Commissioner considers there are exceptional circumstances.” I wonder if the Minister could just give us a little bit of an insight into what he would regard as being exceptional circumstances, given that these measures already allow a lot of relief for people who are caught up in emergencies. Now, obviously we try to look after people in those circumstances; there’s already a lot of lenience in these provisions. What becomes “exceptional circumstances” even in the context of an emergency?

Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Just answering the two questions that we’ve had—actually, I’ll start with the last one in regards to new section 226H(5), inserted by clause 151B. One would appreciate that emergency events are fast moving, they are complex, and they are not always the same. What we are simply acknowledging in this case is that sometimes the circumstances do mean that the Commissioner of IRD, who is highly competent and experienced in dealing with this, has the ability to be able to make a call in regards to a scenario to allow decisions to be made quickly. I think that is the purpose of that clause, and that allows that commissioner to do so.

In regards to the questions by the member Dr Lawrence Xu-Nan in regards to students, just to clarify, students must complete the course, and once they’ve completed their course, then they can apply for reimbursement.

DAN BIDOIS (National—Northcote): I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 55

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 6.

Motion agreed to.

CHAIRPERSON (Barbara Kuriger): The question is that the Minister’s amendments to Part 3 set out on Amendment Paper 247 be agreed to.

Amendments agreed to.

A party vote was called for on the question, That Part 3 as amended be agreed to.

Ayes 102

New Zealand National 49; New Zealand Labour 34; ACT New Zealand 11; New Zealand First 8.

Noes 21

Green Party of Aotearoa New Zealand 15; Te Pāti Māori 6.

Part 3 as amended agreed to.

CHAIRPERSON (Barbara Kuriger): The time has come for me to report progress.

Progress to be reported.

House resumed.

CHAIRPERSON (Barbara Kuriger): Madam Speaker, the committee has further considered the Taxation (Annual Rates for 2024—25, Emergency Response, and Remedial Measures) Bill and reports that it has made progress on the bill. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Special Debates

Inquiry into Climate Adaptation—Report of the Finance and Expenditure Committee

CAMERON BREWER (Chairperson of the Finance and Expenditure Committee): I move, That the House take note of the report of the Finance and Expenditure Committee on the Inquiry into climate adaptation.

The Finance and Expenditure Committee’s report on the inquiry into climate adaptation presents an extensive set of recommendations designed to comprehensively guide New Zealand’s strategic response to climate adaptation. When a notice of motion was moved in this House with cross-party support in May 2024, climate change Minister, the Hon Simon Watts, said, “an enduring and long-term approach is needed to provide New Zealanders and the economy with certainty as the climate continues to change.” Here in New Zealand, we are feeling the impacts of climate change and we are seeing more frequent and severe, damaging natural events such as flooding, storms, and landslips.

In the Upper Harbour electorate, which I represent, memories of Auckland’s anniversary floods on 27 January 2023 remain raw. Houses remain unoccupied with liabilities yet to be settled; worse, we lost lives in Wairau Valley on Auckland’s North Shore. Natural disasters are costly and we need to take steps to safeguard against loss and insure the things we value most: our communities, jobs, industries, and homes. We need to be prepared to withstand the impacts of climate change.

The adaptation framework will set out the Government’s approach to sharing the costs of preparing New Zealand for the impacts of climate change. It will help communities and businesses understand what investment is planned in their area—for example, where the council will build flood protection infrastructure—and what support will be available to help with recovery from events like slips or floods. It will also seek to improve the way we share information so everyone can make informed decisions about how they manage risks. The framework will guide decisions before a severe weather event happens and responses afterwards, meaning we won’t have to start from scratch every time.

Just on that, work by this coalition Government is already under way. One example is the centrepiece of the, dare I say, Taxation (Annual Rates for 2024—25, Emergency Response, and Remedial Measures) Bill, which has been going through the committee of the whole House stage, as viewers will know. The pending change in this bill will create a generic set of response measures that can be activated by Order in Council to provide tax relief to people affected in emergency events such as earthquakes, cyclones, and flooding. That will give greater certainty and relief sooner than legislative tax changes having to be put through the House post event. The bill also allows Inland Revenue to share information with other agencies, upon request, to help them carry out their roles in providing emergency assistance, such as the Ministry of Health.

The inquiry into climate adaptation was referred to the Finance and Expenditure Committee with the No. 1 term of reference stating, “(1) The purpose of the inquiry is to develop and recommend high-level objectives and principles for the design of a climate change adaptation model for New Zealand, to support the development of policy and legislation to address climate adaptation.” That was the No. 1 term of reference.

The committee, in its report back, recommends a climate adaptation framework that minimises long-term fiscal and societal costs, ensures predictable and fair responses for property owners, and improves access to quality climate-risk information. Key in the report back from the Finance and Expenditure Committee’s inquiry is that it included recommending to the Government that the climate adaptation framework should have the following objectives: minimising expected long-term costs; ensuring that responses and funding support to property owners, if any, are predictable, principled, fair, and rules based wherever possible; improving information flows about climate risks and responses; addressing market failures and supporting market efficiency; achieving a balance between central government leadership and community-led approaches.

Another recommendation was ensuring that people have the incentive and the ability to manage risk, reducing hardship, supporting an equitable approach, and, of course, upholding the Treaty of Waitangi. These are all explicitly explained and extrapolated in the report that’s available on the parliamentary website.

The committee strongly believes that the principles guiding the framework must include fairness and equity, national consistency, local flexibility, and accountability. It should also promote transparency, minimise moral hazard, and support evidence-based decision-making.

The report back by the Finance and Expenditure Committee calls for addressing market failures, balancing central government leadership with community-led approaches—something that’s been talked about a lot in the last two or three years—and ensuring individuals and financial institutions are incentivised to manage risks. Again, the report back stresses the importance of balancing centralised government leadership with decentralised community-led actions, promoting local empowerment, and responsiveness to unique regional and local conditions, with the committee’s report calling for explicit legislative clarity to delineate the responsibilities between local government and central government.

As an aside, the Government’s emergency response legislation this term, which will be shepherded through—

Tim Costley: I’ll be working hard on that.

CAMERON BREWER: And the deputy chair of the Governance and Administration Committee, Tim Costley, knows all about this. The Government’s pending legislation on emergency response that we will see this term will address ongoing issues as well as to where the accountability and responsibility lies and how Government, iwi, and local government can work more cohesively and effectively.

The committee believes it has fulfilled the inquiry’s purpose to develop and recommend guiding objectives and principles for the design of the climate adaptation framework. We now look forward to the introduction of the legislation required to support that framework. As the climate change Minister, the Hon Simon Watts, said back in May 2024, 10 months ago, “An enduring and long-term approach is needed to provide New Zealanders and the economy with certainty as the climate continues to change.”, and here in New Zealand we continue to see the impacts of climate change, with more frequent and severe damaging natural events such as flooding, storms, and landslips. The timing of this is perfect, it’s important, it’s critical for the Shaky Isles. So we now look forward to the introduction of the legislation required to support the framework that the select committee has recommended in its inquiry.

It’s with great pleasure, on behalf of the Finance and Expenditure Committee’s past and present members, that I commend the committee’s report to the House. Thank you.

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

Hon Dr DEBORAH RUSSELL (Labour): I recall quite clearly the Friday evening—and I’m sure that many of my colleagues in this House do—of Auckland Anniversary Weekend a couple of years ago, when the skies just opened and the water flooded down. I sat looking at our deck and it was just like a tap had opened. It wasn’t rain. I’m sure that was a common experience for many people here. My neighbours’ houses slipped away, quite literally, just a few properties down from ours in Titirangi. Roads were destroyed. Horribly, lives were lost. What we know is that those Auckland Anniversary Weekend floods were because of a huge stream of water coming in tropics, and it is highly, highly probable that it was strongly affected by climate change. Then, just mere weeks later, Cyclone Gabrielle hanging for days, it seemed, over Hawke’s Bay and East Cape, and those winds and rains just pummelling the region. Of course, that was on top of Cyclone Hale just a few weeks earlier. The loss of life was tragic. The devastation was incredible. Climate change is here, it is real, it is affecting us now, and we need to take action—action to reduce the gases that are causing climate change, and action to adapt to climate change. That is what this report is about.

What we have tried to do in the Finance and Expenditure Committee is to provide some high-level guidance as to how we should go about adapting to climate change; some principles. One critical principle—which, contrary to the previous speaker, Cameron Brewer, is not mentioned in the Government’s response to our report—one critical feature is: ensuring that the Treaty is honoured, that we take notice and that we use mātauranga Māori and that we actually contemplate the particular issues for Māori that are caused by climate change. Mātauranga Māori will tell us about the climate, the knowledge of 1,000 years here. It tells us where the flood plains are, where the weak points are. Mātauranga Māori has that knowledge that we can use. The particular issues concern Māori land, some of it more fragile than land that is held by those of us who’ve come to this country later. It concerns urupā. It concerns Māori communities that need to be moved. We must take explicit mention of Māori in our response.

Despite the Government saying that we have to have a commitment to, I guess, fairness in terms of the costs that are paid, in the Government’s response, we need to see more of an analysis based on a word that is hardly ever used in New Zealand: class. Poor people are already hit harder by climate change. Poor people already live in areas where housing is cheaper, housing that is cheaper because it is on flood plains or in areas that are swampy that are already affected. To try to run a response to climate change that does not take notice of the fact that some people are affected worse than others because the property they hold can’t be sold—that is critical. If we think about South Dunedin, a poor community that people buy in to because that’s where they can afford housing, because they can’t afford to go up on to the hills, then they are already impoverished by our social systems and will be impoverished further by climate change. We must take notice of social equity in our response to climate change.

Above all, we must enable people to take action. That’s why those data flows are important. The simple actions that people can take every day so that they feel empowered, and the big action assessing the risks for the future.

So that’s what we need to see: attention to Māori, attention to class, and attention to information. That’s what I’m looking for from this Government.

FRANCISCO HERNANDEZ (Green): Thank you, Madam Speaker. Yeah, I think it’s appropriate that we’re discussing this today, given that it’s been two years and one month since the anniversary of the North Island severe weather event—as the previous speaker, the Hon Dr Deborah Russell, already articulated—the Auckland floods, and then that was followed by Cyclone Gabrielle. Look, we need to acknowledge the importance of the emergency management response throughout these events, and not only the emergency management response themselves but also the clean-up crews that came to clean up the incredible damage that occurred.

It’s in this context that we discuss the concept of adaptation, because adaptation is important to stop these emergency events getting even worse. Adaptation is important to make sure that we actually plan for events. We know that some communities out there are already leading and doing great mahi on the ground. I want to acknowledge the great work that the South Dunedin Future people are doing, and also local councils and regional councils, like the Otago Regional Council’s climate change risk assessment.

We know that every dollar spent on climate adaptation saves $5 to $20 in later costs. But we also know that mitigation is still the most effective form of adaptation. Every additional degree that we go beyond 1.5 degrees Celsius means increases in the intensity and frequency of temperature extremes, exacerbating droughts, and reaching critical climate tipping points, which may become irreversible.

I’m really proud of the way that the Finance and Expenditure Committee worked together on this. I was not the permanent representative on the committee—my co-leader Chlöe Swarbrick was—but I was occasionally subbed in and I saw the committee members, of all parties and of all stripes, working together because this is an issue that we need cross-party consensus on. We’ve got an amazing template to base this on, which is the Climate Change Response (Zero Carbon) Act. That is the template to make sure that we pass an enduring cross-party law that can actually stand the test of time and endure different changes in Government. So we’re really encouraged to hear the speech of Cameron Brewer, and we’re encouraged to hear that the Government is trying to face the issue of climate adaptation. This is something that successive Governments haven’t quite gotten right yet, and it’s still not quite there yet, but we’re here to help in the spirit of constructive engagement.

What would the Greens like to see in the zero carbon legislation, etc., in the context of climate adaptation? Well, first and foremost, we would like to see Māori centred as Treaty partners. Māori are already leading the way in many parts of New Zealand, and whenever an emergency management situation occurs, we always see Māori generously open up the marae and helping. We need to resource them and make sure that partnerships are being established to support the great work that’s already happening, whether it’s in the emergency response itself or it’s in the research base that mātauranga science can give us.

We want to see local government resourced with strong incentives, and expectations as well, to do land-use and adaptation planning. Individual risk management isn’t an appropriate way forward when we can do land-use and adaptation planning, and equity and community-led approaches must be at the heart of this. Where appropriate, of course, the market will have a role, but there are holistic and moral judgments that markets cannot consider, and inequities that a purely market individualised-risk approach would exacerbate. Equitable and community-led approaches would also avoid the problem that centring a solution based on minimising long-term financial costs would create. We need to incorporate social and environmental costs rather than just relying fundamentally on bottom-line issues.

As one of the famous lines in New Zealand goes: show me the money. Now who will pay for this? We need to make sure that it is the people most responsible for climate change who pay. A model where the exacerbator pays is more appropriate with a course of adaptation, as is managed retreat rather than trying to move to a beneficiary-pays model, which doesn’t actually account for historical inequities and—as the previous speaker articulated—class inequities that might have occurred.

So, in summing up, we’re encouraged that the process has gotten this far. We’re encouraged that the Government is extending the olive branch, and we really want to work with the Government and work with all parties on one of New Zealand’s most critical climate issues. Kia ora.

MARK CAMERON (ACT): Thank you, Madam Speaker. I wanted to acknowledge Cameron Brewer for bringing this document to the House today. I think it’s a wonderful document. I haven’t had the luxury of the time to read it all, but I do acknowledge Cameron Brewer and his team. Madam Speaker, as you’d acknowledge, I’m not a member of the Finance and Expenditure Committee, but periodically, as the previous speaker, Francisco Hernandez, just mentioned, I sit in on the process and I’m cognisant of the very many issues that the member Cameron Brewer opened up on in his 10-minute speech in terms of climate adaptation.

A couple of notable points, if I can: I think we all agree, in the world of equanimity being the rule of the universe, we have two opposing forces. There’s going to be an outcome, and sometimes it’s the coastline of New Zealand. And New Zealand is a wonderful little country but it is subject to all manner of geological forces, including climate change. Out of interest, I thought I would learn a little bit on the hop, as you do, and try to ascertain what the length of the coastline was and the areas that are subject to coastal erosion, which comes up all the time, especially in this report. It’s 15,000 kilometres in length. It’s one-third the length of Australia, so there you are, for those that like numbers. Just to add a little bit more context, there is nearly 270,000 square kilometres of a little wee country that has all manner of coastal erosion to be dealt with. We have earthquakes, plate tectonics, and obviously volcanism. That’s our story in New Zealand.

The real questions are—as I rightly point out, I’m not a member of this committee, but I’m cognisant of the issues that have been brought to the House today—how do we pay for it all? How do we, equally, protect the property rights of those most affected? And that is the reconciliation that I think Cameron Brewer and his team are grappling with—no easy challenge, no easy feat, but I am sure, with people of a like mind in that committee, they will work through what climate adaptation looks like.

Now, I think we agree on a couple of things. Climate adaptation and how we ameliorate the things to do with climate change happen in two sort of fashions. You know, climate change, by virtue, is either a gradual thing, depending on the geography and the area that you are surrounded by, or, in the case of coastal erosion, inundation can happen very, very quickly. So the real issue is: how do we put the protective mechanisms in place, the right regulatory barriers, the right investment strategies—and it could involve private sector - public partnerships—that help people that have a reluctance to move to invest in seawall technology or who could invest in levies for drainage and irrigation? All of that is something that we have to reconcile.

A couple of notable points that my colleague Simon Court, who would normally be talking on such things, did sort of elucidate and offer to me: we can’t have extreme examples as being the template of how we work through this. Periodically, we do have extreme weather events, and we can’t afford, as a Parliament, to overly politicise them. More importantly, as Simon Court rightly pointed out to me in discussion, it’s how we deal with the continuation of climate change—it’s been going on a long time—and, evidently, as populations move into areas which are more heavily affected by it. We as a Parliament and the people that we represent have to balance those realities. So I’ll tie off there—it was an absolute privilege, again, to share a few thoughts, and I thank Mr Brewer and his very capable team—

Hon Member: Cameron Brewer?

MARK CAMERON: —Cameron Brewer—for bringing this very important document to the House.

JAMIE ARBUCKLE (NZ First): Thank you, Madam Speaker. I rise on behalf of New Zealand First to speak on the Inquiry into climate adaptation. It was a very complex thing to be a part of. There are many views out there on the climate. There are long-term and short-term implications, but the exact nature and magnitude are uncertain, and what I would like to say today in this House is that some of the modelling that is used around the country—we have this ridiculous representative concentration pathway 8.5, worst-case scenario model that is being used that is, basically, crippling the country. Using modelling like that will not get us forward here in New Zealand.

This legislation—what’s going to be formed later in 2025—is something this report will inform, so we’re really happy that the recommendations and the guiding principles and objectives that have been put forward will help that piece of legislation.

But, again, we in this country will not change the climate profile. We’ve got to be thinking about practical solutions. New Zealand First, as a party, are against pollution. We do not want to see our waterways wrecked; we don’t want to see our air or soil destroyed. We want to look after those things, but we’ve got to be practical about what we actually do. When you think about some of the issues that are happening around New Zealand at the moment, and if you go back in the decades around river control and getting a digger in and actually digging out and getting gravel extraction, we’re actually creating problems for ourselves by not allowing simple, practical things to be delivered.

I’m proud to be part of New Zealand First. Through the Provincial Growth Fund and the Regional Infrastructure Fund, we have put money into practical projects like river protection. Through the Parliamentary Library, I did a bit of research, and there have been over a hundred projects that those funds have actually gone into. Even if I think about where I’m from in Marlborough, it’s just simple projects in Spring Creek, for instance, where protection is needed, which will save a colossal amount of damage if the work isn’t done. So New Zealand First is about those practical responses.

Also, water storage: we know that some areas of New Zealand are getting drier and some places are getting wetter, and, again, it’s using common sense in water storage and getting that into the right areas and investing into those right areas. So this response will form a framework and, again, what I want to emphasise is it’s about risk and actually getting that balance right.

Through the submissions, we did hear about South Dunedin and also the West Coast, and with the Hon Mark Patterson, who is next to me, we actually travelled to the West Coast and talked to their council, and the planning that they need to do in certain areas to move infrastructure is something that the Government also needs to be well aware of and a part of that conversation. Through the inquiry, we heard about who should pay, whether it should be Government, local government, or individuals’ insurance—so it’s getting that balance right.

Also, one of the most important things is accessing information and who holds that data. That’s going to be critical, and it’s got to be information that’s easily accessible to everybody. We’ve had the experience, again, where I live in the Marlborough Sounds, of seeing the climate change, and the roading and the infrastructure that got destroyed there. But, again, it’s about the practical solutions and working on ways to resilience in doing a better way forward.

We heard also through here from the submitters, and I’ll just thank them. We had nearly 350 unique submitters, and nearly a thousand in total, but the one thing I want to do in my final 20 seconds is to go to the Ombudsman’s information for us. He actually talked about a playbook and he talked about setting high levels of rules that were understood by everyone, including central government and local government, and, to me, that is what we all need. We want certainty and we want to know what actually happens when a disaster hits.

DEBBIE NGAREWA-PACKER (Co-Leader—Te Pāti Māori): Tēnā koe e te Pīka. First of all, I’d like to also commend the Finance and Expenditure Committee for the work that they’ve done and to Cameron Brewer and, I think, Stuart Smith prior. This is the second time that we’ve had the privilege of hearing the Government recognise the upholding of Te Tiriti o Waitangi, and so I want to give real accolades to that acknowledgment. A critical part of us being able to look after each other in a crisis is actually just accepting who we are and the strengths that we have.

I really acknowledge that there was the movement towards community-led solutions. Part of the problem when we’ve seen crises—and I’ve been to many of them—has been the bureaucracy and the devolvement of funds in real time. I think that going down a pathway where the inquiry has acknowledged that finance needs to be released and it needs to be community-led, locally led, is really great.

I think the framework has merit if it follows the recommendations of the climate change adaptation technical working group because I think it was really practical and they had some really great advisers. Some of the things that I’d like to go into are investment. I agree, actually, with the previous speaker, Jamie Arbuckle, that everyone is looking—and I can’t believe this is Thursday afternoon—for certainty and clarity at our worst time. I agree with the Greens that we’re at a period where we are normalising adaptation speak and mitigation isn’t a deal. It worries me that we’re giving up the mitigation speak, because there are fossil fuel implications on climate, and I just want to put that there.

But one of the things that we must do in order to reduce exposure to the at-risk communities, who are often hit the worst and take the longest to recover, is the responsibility and accountability to the regulators, those that are allowing the pollution in different aspects going on, and where the liability sits. I come from a decommissioning region where I’ve seen it done really bad and really good, so I think those are aspects that need to be considered.

I want to talk about the Provincial Growth Fund. Actually, I was on the board that that initially came from, He Kai Kei Aku Ringa. It was a Regional Development Fund economic. What would be really great is to also seek consideration for those who cannot futureproof for insurance—the businesses, the communities—and be able to look at how regional development can be done in a way that looks at adaptation, not just from a business economic sense but a social economic sense. I think the regional commissioning agency models that we see in Whānau Ora would work really well in adaptation models as well.

Some of the things that really plague Māori from being able to recover quick and rebuild things, such as papa kāinga, are the financial mechanisms. The fact that we can’t release capital for collectively owned land or for collectively owned businesses is problematic. And I think that helps economic recovery.

Government procurement processes also—and, again, I know that this is, just thinking and looking ahead, problematic; in fact, it’s damn right cumbersome, and, often, they are a wall versus a door. So I think some of these things need to be factored in when we’re looking at reducing and addressing equity. I think, also, that some of the aspects that we’ve heard and seen in some of the regional discussions post-crisis is the aspect of—and why I talk about Government procurement are these public-private iwi partnerships. And it’s been mentioned, all the way here, how iwi belong in the future planning, and I really love that mātauranga Māori has been captured by the committee. The fact that it’s ancient knowledge—and they will say things such as “Don’t change the mauri of the awa.” Now, that gets all sort of, “Oh my gosh! Culture.” Actually, what it means is, because there’s context here, we had designers from the Northern Hemisphere trying to put designs into the Southern Hemisphere. You move it too much, and there’s flooding. Those are some of the things we’ve got. So it’s lovely to hear that that’s been agreed on.

But the financial capacity to adapt long term needs to be the big aspect here. We’re making decisions today for all of our grandchildren tomorrow, so I would hope that some of those aspects are, again, captured in the framework. I’m aware that policy making is going on now, but the critical part of us being able to adapt and be able to prepare is that we loosen it up for all communities who are there firsthand and first of all, and that is a critical part of where we’ve seen that the resourcing hasn’t worked for a lot of our communities. Anyway, I appreciate all the work done. Thank you.

NANCY LU (National): It is a privilege to speak today as a Government member on the Finance and Expenditure Committee on our inquiry into climate adaptation. Now, I have to, firstly, say a huge thankyou to all the members on the select committee, including our former chair, Stuart Smith, and all the former members on the select committee who worked many hours on the inquiry into climate adaptation, including Catherine Wedd, who’s always there, talking about the impact of the devastating disaster in her electorate in Tukituki. But also, too, the huge amount of work that the current members on the Finance and Expenditure Committee have been powering through.

Here I must also say a huge thankyou to the Minister of Climate Change, the Hon Simon Watts, because what he did—and this is a little story within our inquiry, where he moved a motion to refer the inquiry of the climate adaptation from the Environment Committee to the Finance and Expenditure Committee for one reason: because the Finance and Expenditure Committee includes all members from all parties in this House. This is him and our Government trying to make sure that all opinions, all voices, from all parties representing all New Zealanders have a chance to raise their opinions and have their voices heard in the inquiry for the climate adaptation. So thank you, Minister of Climate Change, the Hon Simon Watts.

Now, key findings of this inquiry: I summarised it into a few things, which were also already mentioned by the many speakers before me. Number one: the scale of the challenge for New Zealanders is enormous. Number two: there is confusion between the roles and responsibilities between central and local government, between private sector insurance, between individuals. Number three: who is paying for the challenge that we have in front of us? Number four: what about the managed retreat and also the at-risk properties? Number five: the role of Māori, and Māori communities. Number six: better data and transparency.

So what is the Government doing? From the inquiry on climate adaptation, the Government is demonstrating our commitment to ensuring that New Zealand has a comprehensive and a fair climate adaptation framework leading into the future. So in response to this inquiry, the Government is developing a 30-year national climate adaptation plan that provides a long-term direction for our country, establishing a lead agency to coordinate climate adaptation efforts. Number three: exploring new funding mechanisms, including public-private partnerships to invest in resilient infrastructure. Number four: reforming the RMA—the Resource Management Act—to ensure that future development does not occur in high-risk areas. Number five: reviewing options for a national property retreat strategy. Number six: investing in better climate data to help the many stakeholders that we have therefore mentioned.

Now, this is all the big things that we have talked about during the inquiry about what the Government is doing, but what does it really mean for New Zealanders? Because I think most people who have tuned in on TV are just interested to know, “What does it really mean for me?” So, for many Kiwis, climate adaptation may seem very far and very huge, unless it’s a disaster that hits you right on your doorstep or in your backyard or in your neighbour’s, for that perspective. But it means the impact on homeowners who need clear policies on insurance risk and retreat. It means councils need funding certainty and legal clarity so they can plan for their infrastructure. It means farmers’ land and water security have been under a lot of pressure and challenge due to climate shifts. It also means businesses need to know how to manage and plan for their supply chain disruptions and workforce stability. But it also means business, builders, and developers need certainty about where and how they can build in New Zealand.

So adaptation that we’ve been talking about is not just about responding to disasters; it is about making smarter investments today so that future generations in New Zealand can be more resilient, sustainable, and economically secure. So very, very lastly, if we do this well, across the parties across this House, we will minimise future costs and hardship, we will build stronger and safer communities, we will make decisions based on sound data and expert advice, and we will ensure that no community is left behind. So, therefore, I am very proud to be part of the team who completed this inquiry into climate adaptation. Thank you.

GLEN BENNETT (Labour): Kia ora, Madam Speaker. I’m glad that we can be in this House this afternoon to have this debate. Firstly, I really want to say thank you to the whole of the Parliament that we actually acknowledge that climate change is an issue, because we have to, of course, first admit there is a problem before we can do anything about it. So the fact we actually admit there is a problem—those who have been through Alcoholics Anonymous (AA) will know about this—we have to actually acknowledge it before we can find solutions and work together across the floor.

Stuart Smith: It’s not AA—it’s CC!

GLEN BENNETT: Yeah! In Labour, we very much want to discuss and talk about the fact around how do we work across the floor. How do we reach out across the aisle? How do we have cross-party collaboration? Because we are too small, as a nation, to fight over this. We’re too small, as a nation, to be able to afford this. And the climate is in too much of a crisis already: we haven’t got time to continue the debate and continue to be in the partisan space. We need to work together to find solutions when it comes to climate adaptation.

As I’ve read through the report and spent a couple of sessions sitting on the committee and listening to submitters, very much what I picked up was the urgency—the urgency that we must take action but also the acknowledgment that we are actually looking at how we do work together on this. Because we need to consider our children, we need to consider our young people, who are the ones who will inherit the decisions that we make today, the decisions that we make this year, the decisions that we make in this election cycle—around what the future will hold for our climate but also, of course, for our bank balance and the purse strings of the Government on the Treasury benches. How do we have the right finances in place to be able to deal with some of the huge challenges that are upon us?

I was looking through and saw that Statistics New Zealand has information about the challenge for properties—for homes—that sit close to rivers, that sit close to waterways. They predict that there are about 750,000 people and about 500,000 buildings, worth more than $145 billion, that are near rivers and on coastal areas that are exposed to extreme flooding. Now, that is a number that is mind-boggling, and that is a number that we cannot face on our own. We need to be looking at how we can work together to ensure that we find solutions. We must invest; we must make bold decisions today when it comes to mitigation but also, of course, when it comes to our carbon emissions into the atmosphere. How do we bring that down?

We live in the most beautiful part of the world. We live in this beautiful and amazing part of planet Earth, but we are so vulnerable here. We are so vulnerable as a small nation, as an island at the bottom of the Pacific. As I look at this piece of work, I’m grateful for the work that’s been done. But also, we need to consider our neighbours in this. We need to consider our Pacific whānau, because they are at risk, if not more than us, in terms of this. So it’s not only about us considering ourselves and what we do around climate adaptation; it’s also how do we be good neighbours in all of this? That’s veering off the report, I know, but it’s just a challenge to myself and to this House: how do we actually look beyond ourselves to ensure that our neighbours—that our whānau in the Pacific—are finding solutions as well?

So what is our response? This report has some thoughtful and some challenging things to say. And then what is our response? It’s around money. It’s around ensuring that we make bold decisions. It’s around the structures of councils and Governments. But one thing we need to consider is our responsibility as citizens of Aotearoa and as citizens of the world. What are we going to do in terms of looking at climate adaptation? What are we going to do today for our children and for our young people that is bold, so that tomorrow, when they step into this building, when they step in to the Treasury benches, when they look at our farms and look at our communities, that they say thank you to us as a Parliament for being bold and for doing the right thing?

DAN BIDOIS (National—Northcote): It’s a pleasure to make a contribution in this unique debate today. I wish to start out by saying that climate change is here. It’s real. Businesses know it, farmers know it, our export markets know it, our Pacific neighbours know it, and our communities know it. It is a significant issue already, as we’ve heard today, and I want to acknowledge the anniversary floods caused by Cyclone Gabrielle just over two years ago.

My electorate knows it too. The Northcote electorate was one of the most impacted areas in Auckland in terms of the number of businesses and the number of homes impacted by the floods, and there were, in fact, as my colleague Cameron Brewer pointed out, two lives that were lost in the Wairau Valley area. So this an important issue for New Zealand to face.

There are, in my view, two paths forward. The first is transitioning to net zero, and this Government has, as have previous Governments, committed to the net zero target in 2050. Our Minister of Climate Change has just released our targets and our aspirations to 2035.

But the second part of this is what brings us here today, and that is mitigation and adaptation. This is the focus of the inquiry. I would like to commend the Finance and Expenditure Committee, under the current leadership of Cameron Brewer and the past leadership of Stuart Smith, for shepherding this inquiry through the House.

This inquiry really is about developing a set of recommendations for climate adaptation. It’s a model that’s a bit of a framework. It’s not the solution, but it provides us a good starting point for the future. It is about quantifying the problems for New Zealand—who is responsible for what, how to fund, understanding the risk and the allocation of risk, and the information that needs to be shared.

I myself am a practical environmentalist. I believe in pragmatic solutions to help address our environmental challenges, as do most of my colleagues, dare I say, on this side of the House. This inquiry made some really good practical recommendations around areas such as information sharing and making sure we’ve got adequate information that’s shared both locally and also at central government level. Ensuring that assets are priced according to the associated risk—really what we’re talking about here is physical assets; homes and businesses—and if I look at my electorate of Northcote, there are areas where the insurance premiums are going to go up. They’ve already gone up but they will go up to such a high rate that it makes them uninsurable. Because—guess what! A lot of our councils approved, many years ago, the building of homes where we shouldn’t have actually built them.

A third area is around incentives to reduce risk, and that is an important aspect to take as well. A fourth area is in responses and funding those responses, making sure that they are fair, predictable, rules based, and transparent. Again, I bring it back to my electorate of Northcote and the hundreds and hundreds of people who have been impacted and, to this day, suffer from mental distress because of the process they’ve had to go through. I know our Minister for civil emergencies, Mark Mitchell, has done some reports into the best way to respond to civil emergencies, to provide clarity for those who are impacted, and this report touches on that as well. Finally, it talks about the roles and responsibilities of local communities, local government, the private sector, but also the Government as well.

So, in closing, I say that this is a tool in the tool box. We don’t need more reports; we actually need action. So I’m really proud of the work this Government is doing to ensure that we thrive. I commend this inquiry to the House.

Hon DAVID PARKER (Labour): Thank you, Madam Speaker. I begin by thanking the Finance and Expenditure Committee and, in particular, Stuart Smith. I know that Mr Smith has had a long-term interest in climate mitigation and adaptation and has been part of the cross-party groups like the GlobE Network, and he is respected for his role in that.

Can I begin by just recalling it’s not so long ago that we had these rivers of rain—absolutely phenomenal rain events. I can recall, in Auckland during one of those events, I was amazed to walk just down the bottom of my street, which has got quite a slope on it, to find that there were houses flooded at the bottom where Grey Lynn Park filled up with water. The river that was on the roads was absolutely phenomenal. About seven to 10 houses have been removed just from the bottom of my street. I was one of the first that was—in fact, I think I was the first MP to go into Wairoa following the terrible events there. We flew up the Esk Valley. There’s no way the Esk Valley can be protected by flood banks, because there’s not enough room for flood banks as well as the other activities there. The tragedy in that area, and Ms Wedd’s now-electorate—you know, I remember Anna Lorck taking us around the Tukituki areas where the slash and the phenomenal waterflows had ruined so much there.

We really know enough now to know that we’ve got to follow the recommendations that are outlined in this report, which are, essentially, to protect, avoid, retreat, and accommodate. Now, in respect of the avoid, we really must be at the point where we’re going to have some pretty strict rules about new risk being placed in areas where we know there is climate risk from flooding or landslips, and we must, I think, in this House, take responsibility to make it easier for councils to make those difficult decisions. Property information memoranda ought to be able to be readily changed by a council without them facing litigation risk from people who are dissatisfied that that impediment showing up on their property record somehow affects the value of their property. We’ve got to inform the next purchaser of that land so that they can avoid risk.

In respect of accommodation and retreat, I think we need to move on from theoretical constructs and actually have some practical examples. There are some councils around the country doing some fantastic work. In particular, the one that I’m aware of—because I’m originally from there and I’ve followed it through the years—is the Dunedin City Council, with the Otago Regional Council. It is a very capable council through the decades, who have been grappling with these issues for South Dunedin. Some members of this House may not know that until the Hobson Street apartments and the like were built in Auckland, the most densely populated area in New Zealand was South Dunedin. Tiny little section sites, some of which were originally camping sites upon which houses were plonked, essentially, at ground level—ground level being within a metre of sea level. Even when I was a child, before we had the sea-level rise issues, there have always been problems with digging drains in winter in South Dunedin, because the water table is so high.

Now, the council there has done some fantastic preparatory work. They’ve already got their risk zone shown on maps, they’ve already got rules that say that if you’re going to build another building in those areas, another residential lot, it’s got to be movable. It’s got to be on piles that can be jacked up and taken away—a very practical step. They’ve now moved to identify the areas which are lowest that need to move first, and they’ve identified that they’ve got sports grounds in the area which are higher—a metre or two higher—and they’re suggesting that the lowest areas should move to the sports grounds and the sports grounds should go to the low areas. It is very, very practical work that needs a bit of help from central government—not a lot, but a little bit of help from central government—to make it happen.

In addition to that, they’ve purchased Forbury Park. Forbury Park was the lowest area. It’s a former racing area that has been closed down—an enormous area—to act as a reservoir of water in big rain events. But also, in terms of the diagram that’s shown on one of the pages here about how you accommodate climate change—and they’ve got some very interesting plans for low-cost housing on stilts so that it’s more than the flood range away. You have your car downstairs and the house is on stilts, and when you do have a big event, it’s not at risk of being flooded. That is a very practical example.

There’s another one in Westport that needs to be carried forward—the relocation of the town—and I think we have to experiment by doing now. Rather than writing more plans as to what we might do, we actually need to crack on and do it.

CATHERINE WEDD (National—Tukituki): Look, coming from the region which was absolutely devastated by Cyclone Gabrielle, Hawke’s Bay, I was a strong supporter of this climate adaptation inquiry and I was really pleased to be part of the Finance and Expenditure Committee (FEC), which has directed some of the recommendations in this inquiry. I’d just like to acknowledge Stuart Smith, who is the former chair of the FEC, who led the committee through this work, and that must be commended, and of course Cameron Brewer, now the chair, who has brought it to the House today for us to highlight how important it is to mitigate climate change.

It is really pleasing to see the Minister of Climate Change, Simon Watts, looking at this inquiry to ensure that he directs some legislation to put in place a framework to ensure that we are prepared for climate change. It’s also great to see the cross-party support across the House on this very, very important issue. I think we all agree that it can’t come soon enough. I’d also like to acknowledge in the House that it is important that we are being smarter, because I think we all see that we cannot continue to build houses on flood plains.

I just want to take this moment to reflect on 14 February 2023, when Cyclone Gabrielle devastated the East Coast—11 lives were lost; thousands of lives were changed forever—destroying livelihoods, homes, and properties across our region. I remember flying in a helicopter across Hawke’s Bay days after the devastation, and it was harrowing, harrowing scenes. It was really, really emotional. I must say, there’s an image that has always stuck with me: it was looking down at a home and the roof of a house, and there was a hole in the roof of the house. That family had struggled to get out of that house and they’d had to push a hole into the roof and get out on the roof. They were rescued by Cameron Taylor, an incredible hero in our community, who rescued dozens of people that day.

It could have been a lot worse, Cyclone Gabrielle, but it certainly wreaked a lot of havoc across the region—some people estimate up to $14 billion worth of damage. The insurance claims alone were $1.79 billion, and the Government forked out billions and billions: roads; bridges; infrastructure; managed retreat category 3 buy-outs; silt removal and clean-up costs; flood protection; businesses, farmers, and financial assistance; and civil defence emergency pay-outs. And then there were the huge individual and private costs that are hard to quantify: the farmer clean-ups, the tracks, the diggers, the fences, and replanting crops. And then, of course, there were the uninsured properties, which of course, again, was really devastating. I was out recently with some homeowners who were uninsured, and they are still going through a lot. But the list goes on when we quantify the cost of these natural disasters.

Much of the flood protection work in Hawke’s Bay is still not complete. In fact, some of it hasn’t even started—hundreds of people in communities like Pakowhai are still waiting in limbo, because many of them are in the 2C category and work still needs to be done on the flood protection for them to be able to move on with their lives. Of course, then there’s some of those families that are still going through the category 3 buy-outs. This is incredibly stressful. That’s why it’s really, really important that we have a framework in place to mitigate the risk of climate change.

Through this inquiry, we talked about various areas; we looked into many areas. But one area—and something that we recommend in the inquiry—is looking at central government involvement versus locally led. This is something I think we need to draw on and learn from in terms of Christchurch and what happened there with a very much Government-led approach, to then Hawke’s Bay with the locally led approach. We need to take learnings from that and find a balance in between. But I’m really looking forward to this framework and the legislation that will be brought by Minister Simon Watts. Thank you.

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

Motion agreed to.

Report noted.

DEPUTY SPEAKER: The House stands adjourned until 2 p.m. on 25 March.

The House adjourned at 5.57 p.m.