Tuesday, 15 September 2026
Sitting date: 15 September 2026
Tuesday, 15 September 2026
The Speaker took the Chair at 2 p.m.
Start of Sitting Day
Karakia/Prayers
TEANAU TUIONO (Assistant Speaker) (14:00): E te Atua kaha rawa, ka tuku whakamoemiti atu mātou, mō ngā karakia kua waihotia mai ki runga i a mātou. Ka waiho i ō mātou pānga whaiaro katoa ki te taha. Ka mihi mātou ki te Kīngi, me te inoi atu mō te ārahitanga i roto i ō mātou whakaaroarohanga, kia mōhio ai, kia whakaiti ai tā mātou whakahaere i ngā take o te Whare nei, mō te oranga, te maungārongo, me te aroha o Aotearoa. Āmene.
[Almighty God, we give thanks for the blessings which have been bestowed on us. Laying aside all personal interests, we acknowledge the King and pray for guidance in our deliberations that we may conduct the affairs of this House with wisdom and humility, for the welfare, peace, and compassion of New Zealand. Amen.]
Obituaries
James Leonard Peters MNZM
SPEAKER: Members, I regret to inform the House of the death, today, of James Leonard Peters MNZM, who was an MP from 2002 to 2005 for the New Zealand First Party. I desire on behalf of this House to express our sense of loss and sympathy with the relatives of the late former member, including his brother, our fellow member, the Rt Hon Winston Peters. I now ask that members stand to observe with me a period of silence to mark, in respect, his memory.
Members stood as a mark of respect.
Presentation
Petitions
SPEAKER: Eight petitions have been delivered to the Clerk for presentation.
CLERK (14:02):
Petition of Alexander Ilin requesting that the House urge the Government to evaluate the replacement of proprietary software with free, open-source alternatives across all Government agencies
petition of Callum Entwistle requesting that the House ban the use of AI facial recognition in public areas
petition of Hair & Barber New Zealand requesting that the House urge the Government to provide a residence pathway for skilled hairdressers and barbers
petition of Jenny Bell-Johnson requesting that the House urge the Government to commission an independent, on-site audit of every public hospital emergency department
petition of John Clarkson requesting that the House urge the Government to develop and implement a secure, simplified digital pathway for low-risk property ownership transfers
petition of Neil Scott requesting that the House urge the Government to sever all relations with the state of Israel until Israel has observed the rights of Palestinians to return and to vote
petition of Ngāti Kahungunu Iwi Incorporated requesting that the House reject any proposals to remove, amend, or redefine references to Te Tiriti o Waitangi or its principles in legislation
petition of Simon Heath requesting that the House conduct an urgent inquiry into the operational practices of the Ombudsman and Auditor-General.
SPEAKER: Those petitions stand referred to the Petitions Committee.
Papers
SPEAKER: Ministers have delivered seven papers.
CLERK (14:03):
Financial Markets Authority, KiwiSaver Annual Report 2026
Minister of State-Owned Enterprise’s response to the petition of Joanne Klaui
Reserve Bank of New Zealand, Monetary Policy Statement, September 2026
Parliamentary Commissioner for the Environment, Managing the environmental risks of mining: a high-level overview of regulatory practice
public inquiry into the disappearance of the Phillips children
report of the Attorney-General on the amendments to the Summary Offences (Move-on Orders) Amendment Bill proposed by the Justice Committee and Amendment Paper No 804
report of the Attorney-General on amendments to the Corrections (Management of Prisoners and Prisoners’ Property) Amendment Bill proposed by the Justice Committee.
SPEAKER: Those papers are published under the authority of the House.
Select Committee Reports
SPEAKER: Twenty-one select committee reports have been delivered for presentation.
CLERK (14:04):
Report of the Environment Committee, second scrutiny activities report for the 54th Parliament
reports of the Foreign Affairs, Defence and Trade Committee on the:
second scrutiny activities report for the 54th Parliament
India Free Trade Agreement Legislation Amendment Bill
petition of Rasy Sao
reports of the Justice Committee on the:
briefing on Te Au Reka
report of the Controller and Auditor-General, Department of Corrections: Planning for stable housing outcomes
report of the Māori Affairs Committee on the second scrutiny activities report for the 54th Parliament
reports of the Petitions Committee on the petitions of:
Daniel Matthews
Danny Tahau Jobe
Pegasus Residents Group Incorporated
Southland Recreational Whitebaiters Association
Tanya Waikato
Tristyn Kristna
reports of the Primary Production Committee on the:
Hazardous Substances and New Organisms Amendment Bill and the Petition of GE Free NZ in Food and Environment
petition of Jade Steel
second scrutiny activities report for the 54th Parliament
reports of the Regulations Review Committee on the:
briefing on retrospectivity in secondary legislation
complaint about the Land Transport Rule: Setting of Speed Limits 2024
Secondary Legislation Confirmation Bill (No 4)
report of the Social Services and Community Committee on the second scrutiny activities report for the 54th Parliament
report of the Transport and Infrastructure Committee on the second scrutiny activities report for the 54th Parliament.
SPEAKER: The bills are set down for second reading. The activity report briefings and complaints and the report of the Controller and Auditor-General are set down for consideration.
Bills
Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill
References to Tiriti o Waitangi/Treaty of Waitangi (Standardisation) Amendment Bill
References to Tiriti o Waitangi/Treaty of Waitangi (Strength of Legislative Obligations) Amendment Bill
References to Tiriti o Waitangi/Treaty of Waitangi (Repeals) Amendment Bill
Introduction
SPEAKER: The Clerk has been informed of the introduction of four bills.
CLERK (14:06):
Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill, introduction
References to Tiriti o Waitangi/Treaty of Waitangi (Standardisation) Amendment Bill, introduction
References to Tiriti o Waitangi/Treaty of Waitangi (Strength of Legislative Obligations) Amendment Bill, introduction
References to Tiriti o Waitangi/Treaty of Waitangi (Repeals) Amendment Bill, introduction.
SPEAKER: Those bills are set down for first reading.
Oral Questions to Ministers
Prime Minister
Question No. 1
Hon CARMEL SEPULONI (Deputy Leader—Labour) (14:06) to the Prime Minister: Does he stand by all his Government’s statements and actions?
Rt Hon CHRISTOPHER LUXON (Prime Minister) (14:06): Yes, particularly our desire never to introduce a capital gains tax that taxes inflation.
Hon Carmel Sepuloni: Does he stand by the fact that after two years of his Government there are only 54 additional nurses across the country and does he accept that his cuts mean fewer nurses and a health system under immense pressure?
Rt Hon CHRISTOPHER LUXON: What I acknowledge, as I said last week, is that under this Government we have hired 2,100 extra nurses. We’re actually also recruiting 2,300 full-time nurses at this point in time as well.
Hon Carmel Sepuloni: Why won’t he guarantee a job for every nurse who graduates in New Zealand so that New Zealanders can get the healthcare they need and qualified nurses don’t need to move overseas for work?
Rt Hon CHRISTOPHER LUXON: Well, look, I appreciate the member might want to tell her version of the facts, but here on this side, we understand that immunisation rates for under-two-year-olds are up, wait times in emergency departments are getting better, elective surgeries are getting better, and we’ve set some clear targets. Unlike the last Government, we are putting money into this, we’re putting workforce into this, and we are very clear on the outcomes and improved outcomes we want to see for patients.
Hon Carmel Sepuloni: Does he stand by his Government’s decision to cancel or halt infrastructure and construction projects, which has cost at least 20,000 construction jobs across New Zealand?
Rt Hon CHRISTOPHER LUXON: Well, I disagree and refute the characterisation of that question, because, I’ll just say to the member, what caused a slow-down in our construction sector was the last administration, which cranked up Government spending 70 percent—a lot of it wasteful—which drove up inflation and drove up interest rates. No wonder developers don’t have certainty. The good news is that we’ve had a 35 percent growth in construction jobs on SEEK and we’re getting this show on the road.
Hon David Seymour: Has the Government considered, or would it consider, borrowing $50 million to design a bike bridge it doesn’t ultimately build in order to stimulate activity in the engineering consulting industry?
Rt Hon CHRISTOPHER LUXON: No, we wouldn’t, and we also wouldn’t spend $300 million on an Auckland Light Rail project—money spent on consultants over six years without a single metre of track being laid and a route even being agreed.
Hon Carmel Sepuloni: Why won’t he restore and extend Apprenticeship Boost and invest in Māori Trade Training so that young New Zealanders have the skills and qualifications they will need when the industry gets moving again?
Rt Hon CHRISTOPHER LUXON: Well, that’s exactly why I’m very proud of our decision to double the amount of trades academy spaces from 10,000 to 20,000, and another 1,000 Youth Guarantee places for young students that actually have nil or very poor quality qualifications.
Hon Carmel Sepuloni: How many New Zealanders have been affected by his Government’s failure to administer winter energy payments, benefits, and hardship grants, and will he admit that those issues were a direct result of his decision to cut public services?
Rt Hon CHRISTOPHER LUXON: No. We have a law change that required beneficiaries to confirm their circumstances annually. It’s entirely appropriate, because we’re interested in getting people off welfare and into work. We don’t believe in having a 3.2 percent unemployment rate and putting 60,000 additional Kiwis on jobseeker support as that member did in Government.
Hon Carmel Sepuloni: Why won’t he support a public good test before he cuts jobs across Government agencies, given that his cuts to the Public Service are exactly what left pensioners without the winter energy payments and sitting in the cold?
Rt Hon CHRISTOPHER LUXON: Because this is a Government that actually does a lot and makes sure that for taxpayers’ dollars, we’re extracting maximum value from it. We believe we can build a classroom for $600,000, not $1.2 million, and, as a result, we can build twice the number of classrooms than that member and that Government did.
Prime Minister
Question No. 2
Hon MARAMA DAVIDSON (Co-Leader—Green) (14:11) to the Prime Minister: E tautoko ana ia i ngā kōrero me ngā mahi katoa a tōna Kāwanatanga?
[Does he stand by all of his Government’s statements and actions?]
Rt Hon CHRISTOPHER LUXON (Prime Minister) (14:11): Yes, and in particular our desire never, ever to introduce a wealth tax, an inheritance tax, a gift tax, a death tax, or to lift income tax rates or corporate tax rates either.
Hon Marama Davidson: Does the Natural Environment Bill include any changes sought by agriculture lobbyists in a private meeting that was held while the bill was still being drafted?
Rt Hon CHRISTOPHER LUXON: I’m unsure—you’d need to direct that to the relevant Minister—but what I’d say is that we engage with industry groups, and we also engage with the environmental NGOs.
Hon Marama Davidson: Can he confirm that the requirement for a development to be considered “within environmental limits” has been removed from the Natural Environment Bill following a specific request from agriculture lobbyists in a private meeting?
Rt Hon CHRISTOPHER LUXON: Well, I make no bones about the fact we are powering up farmers in this country, because they are the backbone of this country. They are doing exceptionally well, and we are very proud of what we’re doing to make it easier for farmers to get on and farm and growers to get on and grow and builders to get on and build.
Hon Marama Davidson: Did Federated Farmers ask for the Natural Environment Bill to prevent decision makers from considering the negative impacts of greenhouse gas emissions, and can he confirm that the bill was subsequently amended to require that persons “must not … consider any adverse effect on climate change of any greenhouse gas emissions”?
Rt Hon CHRISTOPHER LUXON: Well, I’d just say to the member, on this side of the House, we take advice, and we consult with broad ranges of people from our officials right out to industry groups and also environmental NGOs, and that’s exactly what happened in this case.
Hon Chris Bishop: Can the Prime Minister confirm that in addition to so-called private, closed-door meetings with Federated Farmers, the Government also held private, closed-door briefings with the Environmental Defence Society, Greenpeace, Forest & Bird, and indeed Lan Pham and the Hon Julie Anne Genter?
Rt Hon CHRISTOPHER LUXON: Yes, I can, and that’s the point I was trying to make in my earlier answers—that we are a Government that consults and takes advice from lots of different people, then we weigh it all up, and then we make our own decision.
Hon David Seymour: Does the Prime Minister stand by the Government consulting affected people “while the bill was still being drafted”, and, if not, what better time is there?
Rt Hon CHRISTOPHER LUXON: Well, that’s exactly the point. We want to get the perspectives from lots of New Zealanders who have views on lots of different things, then we weigh it all up, and we make a decision on this side of the House.
Hon Marama Davidson: Does he agree that Te Tiriti provisions in legislation provide an essential safeguard against the exploitation of te taiao and public resources?
Rt Hon CHRISTOPHER LUXON: Well, again, what we’re doing is making sure that our Treaty clauses are crystal clear for everybody so that everyone understands the obligations they have to each other, and we get some consistency in it.
Hon Chris Bishop: Does he think the Government would be accused and criticised for not talking to groups like Federated Farmers, the Environmental Defence Society, and other interested stakeholders in the resource management and planning system if the Government had indeed not talked to them during the development of the bill’s progress?
Rt Hon CHRISTOPHER LUXON: Well, I mean, I think this is the fundamental difference between this side of the House and that side of the House, right? I mean, we don’t just take our officials’ advice and just box-tick our way through it; we actually take our officials’ advice, we talk to lots of other people, and then we make a decision to get good policy in place. [Interruption]
SPEAKER: We’ll just wait for a moment. I’ll call the Hon Marama Davidson.
Hon Marama Davidson: Why is he prioritising, in the final weeks of this Parliament, repealing Treaty clauses from legislation while New Zealanders are struggling to afford kai, heat their homes, and get a decent job?
Rt Hon CHRISTOPHER LUXON: Well, I’d just say to the member that the thing that actually doesn’t help the cost of living crisis for many New Zealanders is, actually, implementing more taxes, and that’s what the other side want to do. But I’d just say, look, I’ve said it very clearly; we’ve got all sorts of Treaty clauses in our different legislation. They create uncertainty, they create legal risk, and we want everyone to be crystal clear on their obligations.
Hon Shane Jones: Do you consider it unusual in te Wiki o te Reo Māori, Māori Language Week, that the Greens have asked the same well-rehearsed primary question in Māori, but they don’t put the same effort into asking their supplementaries, and would he like me to give a Māori translation of the word “sock-puppet”?
SPEAKER: No, no. Thanks.
Finance
Question No. 3
RYAN HAMILTON (National—Hamilton East) (14:15) to the Minister of Finance: What recent reports has she seen on the economy?
Hon NICOLA WILLIS (Minister of Finance) (14:16): The BNZ-Business New Zealand Performance of Manufacturing Index for August came out on Friday, followed on Monday by the Performance of Services Index. These surveys show that both the manufacturing and service sectors are expanding in New Zealand. Manufacturing and services together make up about 78 percent of our economy, so these results are a positive signal about economic growth in the September quarter of this year, which is almost at an end.
Ryan Hamilton: What could harm growth in the manufacturing sector?
Hon NICOLA WILLIS: Well, ongoing conflict in the Middle East and its impact on fuel and freight costs is obviously a concern. Another blow to the sector would be the scrapping of the Government’s Investment Boost policy. If that were to happen, manufacturing businesses could no longer immediately deduct 20 percent of the cost of a new asset and would pay more tax when they invest in machinery, plant, tools, equipment, buildings, and other capital assets. Business tax in New Zealand would go up by $1.6 billion a year, and the country would miss out on much-needed investment in productive assets that would have raised wages for New Zealand workers.
Ryan Hamilton: What else could impede business growth in New Zealand?
Hon NICOLA WILLIS: Well, new taxes would hurt business and hurt the economy. Consider, for example, a capital gains tax on property that businesses own. Businesses, large and small, across New Zealand own and use factories, sheds, workshops, warehouses, garages, office buildings, laboratories, shops, and the land they sit on. These are an intrinsic part of productive businesses that employ people and pay wages. A capital gains tax would impose a new tax on them. Ultimately, that tax would fall on the owners of the business and the workers they employ.
Ryan Hamilton: What would be the impact of a major increase in Government revenue?
Hon NICOLA WILLIS: Well, a major increase in Government revenue would have an impact on all Kiwis, not just on businesses. Core Crown revenue is currently expected to be 31.2 percent of GDP in four years’ time. If, for example, that proportion was deliberately raised to 33 percent, it would require taxes to increase by $10.4 billion a year. Now, obviously, $10.4 billion is a big increase and would likely require some sort of combination of raising GST, increasing personal income tax rates, putting up the company tax rate, and introducing a comprehensive capital gains tax that included all assets. Those measures would be a huge blow, both to the economy and to everyday Kiwis.
Finance
Question No. 4
Hon BARBARA EDMONDS (Labour—Mana) (14:19) to the Minister of Finance: E te rangatira o te Whare, mihi nui ki a koe. Does she stand by all her statements and actions?
Hon NICOLA WILLIS (Minister of Finance) (14:19): In context, yes. I particularly stand by the statement of the National Party finance spokesperson that there should be no new taxes.
Hon Barbara Edmonds: Weird. Has the Government received Treasury’s review of State assets, first announced in November, and have any papers been taken to Cabinet?
Hon NICOLA WILLIS: I can confirm that no papers have been taken to Cabinet.
Hon Barbara Edmonds: Has the Government received Treasury’s review of State assets, first announced in November?
Hon NICOLA WILLIS: Treasury has been conducting performance ownership - purpose analyses of each company that the Crown owns, and Ministers have received Treasury’s draft advice.
Hon Barbara Edmonds: Will she rule out any asset sales as long as she is the Minister of Finance?
Hon NICOLA WILLIS: Yes.
Hon Barbara Edmonds: Does she stand by her previous statements regarding asset sales: “I think we’ve got to be really open with New Zealanders if we’re planning to change anything.”, and why won’t she front up to Kiwis on her plans to sell the assets they’ve built up over generations?
Hon NICOLA WILLIS: I stand by my statements, and despite the member’s wish for fireworks, the only fireworks are popping in her caucus, that is busily designing new taxes.
Revenue
Question No. 5
CARL BATES (National—Whanganui) (14:20) to the Minister of Revenue: Is the Government considering introducing a capital gains tax that would apply to gains caused by inflation?
Hon SIMON WATTS (Minister of Revenue) (14:20): No. This Government will not introduce a capital gains tax. We do not think New Zealanders should be hit with a new tax. [Interruption]
Carl Bates: Supplementary—
SPEAKER: Just a moment: we’ll just wait for everyone to calm themselves down.
Carl Bates: Why is it important to distinguish between an increase in the dollar value of an asset, and a real capital gain?
Hon SIMON WATTS: Because a higher price on paper does not necessarily mean someone is actually better off. If inflation pushes up the value of a property, taxing that increase can mean taxing someone on money they have not actually received. That is not fair and it is not something this Government supports.
Carl Bates: Supplementary—
Hon Dr Deborah Russell: 25 properties.
Carl Bates: What could it mean—
SPEAKER: Just a minute. Who was speaking then, while the question was being asked?
Hon Dr Deborah Russell: That was me.
SPEAKER: Well, then please apologise to the person asking the question.
Hon Dr Deborah Russell: I withdraw and apologise.
Carl Bates: Supplementary. What could it mean—
Hon Ginny Andersen: 25 properties.
Carl Bates: —for a small—
SPEAKER: No, hang on. One more time.
Hon Ginny Andersen: Sorry, I thought he was finished.
SPEAKER: I’m sorry?
Hon Ginny Andersen: I apologise.
SPEAKER: Well, stand up and do it. I’m sick of this.
Hon Ginny Andersen: Withdraw and apologise.
Carl Bates: What could it mean for a small-business owner if their property increases in value because of inflation but they are taxed on the full nominal gain? [Interruption]
SPEAKER: The balance of this question will be heard in silence with no interjections whatsoever.
Hon SIMON WATTS: Thank you, Mr Speaker. In some cases, they could actually be worse off in real terms after getting a whopping tax bill from the Government. That is not how we should be treating people who are hard-working and build something up.
Carl Bates: What is the Government’s approach to New Zealanders who work hard, save, and invest to get ahead? [Interruption]
Question 5 interrupted.
Withdrawal from Chamber
Hon Ginny Andersen
SPEAKER: OK, I just gave a fairly clear instruction to the House.
Hon Ginny Andersen: Ha, ha!
SPEAKER: There were—well, the member in the front row there might like to leave the House now. That wasn’t funny at all. I wasn’t making a joke; I was taking it very seriously. Please leave the House.
Hon Ginny Andersen withdrew from the Chamber.
Oral Questions to Ministers
Revenue
Question No. 5
Question 5 resumed.
CARL BATES (National—Whanganui) (14:23): What is the Government’s approach to New Zealanders who work hard, save, and invest to get ahead?
Hon SIMON WATTS (Minister of Revenue) (14:23): On this side of the House, we back Kiwis and we back New Zealand. New Zealanders should be encouraged to save, invest, build businesses, and provide for their families. On this side of the House, we do not see hard-working New Zealanders as a convenient source of more revenue to fund more spending. Our approach is to reward aspiration, investment, and hard work, not punish it with more taxes.
Health
Question No. 6
Hon Dr AYESHA VERRALL (Labour) (14:23) to the Minister of Health: Is it correct that Health New Zealand’s latest Budget material recently released showed a significant structural funding gap for the 2026-27 year and that it could not cover the costs of its existing activity?
Hon SIMEON BROWN (Minister of Health) (14:24): As the Hon Casey Costello said on my behalf in the House, the Government has agreed to increase Health New Zealand’s projected deficit for 2026-27 to $475 million, as set out in media reports and Health New Zealand’s publicly available statement of performance expectations. That is a deliberate decision to deliver more healthcare for New Zealanders. I reject the premise of the second part of the member’s question that Health New Zealand cannot cover the costs of its existing activities; that is not how Government accounting works. The agreed deficit is precisely what allows Health New Zealand to keep delivering those activities and more. It is also important to note that in 2022-23, Health New Zealand overspent its budget by more than $1 billion and, by the member’s own reasoning, precisely the same question could be asked of her.
Hon Dr Ayesha Verrall: Why did he claim “record investment in health” in May this year, when only two months earlier he’d been advised that even with that funding, the health system couldn’t cover the cost of its existing services?
Hon SIMEON BROWN: I would encourage the member to read page 11 of the statement of performance expectations, which states, “As such Health NZ will be considering a longer path to break-even that is more sustainable and ensures we can continue to deliver more services to New Zealanders without placing unnecessary pressure on the organisation.”
Hon Dr Ayesha Verrall: What steps did the Government take to increase pre-committed health funding when advised of that structural deficit in March?
Hon Shane Jones: More than you did!
Hon SIMEON BROWN: We went through a process to ensure that Health New Zealand could continue to deliver more services. As stated in the Statement of Performance Expectations, they will be having a “longer path to break-even that is more sustainable and ensures we can continue to deliver more services [for] New Zealanders”.
Hon Dr Ayesha Verrall: What other proof of health system underfunding would he expect, other than a Treasury note that references a structural funding gap eight times?
Hon SIMEON BROWN: If the member wants to—as I said in my answer to the primary question—pose that same logic on herself, when in 2022/23—
Hon Carmel Sepuloni: No, you’re the Minister!
Hon SIMEON BROWN: —Health New Zealand over spent its Budget by more than $1 billion and ran a large deficit that was to ensure that services could be delivered. We’re continuing to ensure we deliver more services for New Zealanders.
Dr Vanessa Weenink: Can the Minister confirm that an extra $475 million in health spending is arithmetically an increase, rather than decrease?
Hon SIMEON BROWN: That is correct: a $475 million deficit means Health New Zealand will be allowed to spend $475 million more to allow more money to be spent on health. It is a deliberate decision to deliver more care for New Zealanders.
Hon Dr Ayesha Verrall: Why did he choose to allow Health New Zealand to remain in deficit longer, and services at continued risk of cuts, rather than funding the health system more?
Hon SIMEON BROWN: Firstly, I would encourage the member to read the statement of performance expectations, which says, “As such Health NZ will be considering a longer path to break-even that is more sustainable and ensures we can continue to deliver more services to New Zealanders without placing unnecessary pressure on the organisation.” This is on top of the additional funding. The Government is continuing to put record funding into healthcare, and most importantly, we are seeing year-on-year improvement against our health targets, which are making progress after years of decline.
Prime Minister
Question No. 7
RAWIRI WAITITI (Co-Leader—Te Pāti Māori) (14:28): to the Prime Minister: E tautoko ana ia i ngā kōrero me ngā mahi katoa a tōna Kāwanatanga?
[Does he stand by all of his Government’s statements and actions?]
Rt Hon CHRISTOPHER LUXON (Prime Minister) (14:28): Yes, and particularly our position of no new taxes.
Rawiri Waititi: Does he agree with the Māori Language Commissioner that his Governments policies have put te reo Māori at risk?
Rt Hon CHRISTOPHER LUXON: No, not at all. I think we are very proud to be celebrating te Wiki o Te Reo Māori for 50 years, it’s been really important, and we’ve put a huge investment into it.
Rawiri Waititi: How can he deny that his Government has put te reo Māori at risk when they have cut $30 million from te reo Māori teacher training; removed Māori words from children’s books; replaced Māori Government department names with English ones; directed the Public Service to stop communicating in te reo Māori; removed bilingual road signs; and wasted millions of dollars to make English an official language of this country, when English was under absolutely no threat?
Rt Hon CHRISTOPHER LUXON: Because we’ve actually invested more than $100 million for Māori education. We’ve put $14 million in to support 51,000 teachers, we’ve put $10 million into a virtual learning network connecting students to Māori-medium science, technology, engineering, and mathematics teaching, we’ve put $48 million into Māori broadcasting, we’ve put $49 million into Te Matatini, and $10 million into Te Māori Tū to showcase Māori culture to the world.
Rawiri Waititi: Why has this Government decided to erase or weaken Te Tiriti o Waitangi obligations across 19 pieces of legislation under urgency during te Wiki o Te Reo Māori, and does he accept that he is undermining Māori rights while the country is celebrating Māori culture?
Rt Hon CHRISTOPHER LUXON: No, not at all. Actually, we’ve had all sorts of generic Treaty clauses; from “honour” to “have regard to”, to “give effect to”, to “take into account”—all we’re doing is making sure we don’t have open-ended clauses that could create uncertainty and legal risk. Most importantly, we’re making sure that everyone’s clear about their obligations, because we’re getting maximum clarity and consistency.
Hon Paul Goldsmith: Can the Prime Minister confirm that the single biggest area of new expenditure in the arts and culture space has been the extra resources put into Te Matatini because of the great support there is for Māori performing arts?
Rt Hon CHRISTOPHER LUXON: Yes, and I want to commend this Minister and also Minister Tama Potaka for advocating very strongly for it in the Budget.
Hon Shane Jones: Does the Prime Minister agree with the esteemed leaders Māui Pōmare, Sir Apirana Ngata, Te Rangi Hīroa, and Timi Kara that the Treaty has three articles, not fabrications and contrivances of the 1980s otherwise dressed up as principles, and that this Treaty between two peoples ultimately brought us together: one people, one country—he iwi tahi tātou?
Rt Hon CHRISTOPHER LUXON: I also believe very strongly that the best way to meet our obligations under the Treaty is to focus on delivering better outcomes for Māori, and that’s what this Government has been doing.
Hon Shane Jones: Can the Prime Minister confirm that the bills referred to in terms of regularising references to the principles of the Treaty of Waitangi are actually rationing something that had become akin to cultural spaghetti spread throughout our legislation?
Rt Hon CHRISTOPHER LUXON: Well, the point that I’ve been making is that we’ve had a complete variation of actual Treaty clauses. It’s important that they are consistent and they give maximum clarity so that everyone understands their obligations.
Rawiri Waititi: Does he agree that the three references to Te Tiriti o Waitangi bills that his Government intends to pass will result in less accountability to Te Tiriti, and the only way to stop them is to vote this Government out?
Rt Hon CHRISTOPHER LUXON: No. I think, actually, that when you look at the results that we’ve had, we’re improving regular attendance for Māori students from 51.3 percent to 54.6 percent; when you think about the lower level of Māori youth offending, down 28 percent; there are 4,000 fewer Māori victims of violent crime; when you think about the amount of work that we’ve done around housing—and what about the Ngāi Tahu aquaculture projects, which are going to create lots of jobs for young Māori? So in this House, we actually get on and we deliver for Māori. We don’t just come here and do performative stuff.
Hon Shane Jones: Does he accept that the ultimate accountability to te iwi Māori is via the voting system, and some Māoris in this House are looking healthier than others?
SPEAKER: Well, that’s a point, not a question. Question No. 8—
Rawiri Waititi: Says a list MP.
SPEAKER: —Laura McClure, and no one else, Mr Waititi.
Regulation
Question No. 8
LAURA McCLURE: Thank you, Mr Speaker. To the Minister for Regulation, what recent announcements has he made about—
Rawiri Waititi: Put your name on the ballot.
SPEAKER: Hey, hey, listen—sorry. No one speaks when a question is being asked. One member has left the House today for breaching that after two warnings, and there will be others to go if we continue.
LAURA McCLURE (ACT) (14:32) to the Minister for Regulation: What recent announcements has he made about regulatory relief for the hospitality sector?
Hon DAVID SEYMOUR (Minister for Regulation) (14:33): Last week, alongside our Minister for Tourism and Hospitality, the Hon Louise Upston, I released the latest sector review from the Ministry for Regulation. It shows the usefulness of the ministry because it was able to listen to 13 different sector groups, 27 district licensing committees, 12 territorial authorities, and a further 21 hospitality businesses, alongside receiving 247 written submissions. These people have told the ministry that they have been bedevilled by excessive regulation, often having to provide the same information multiple times even to the same regulator; decisions take too long and they have little certainty; alcohol licensing and renewal processes are inefficient and disproportionate to risk and are ineffective; fees for licensing and registration are too high and not always transparent; food safety requirements are not always effective, efficient, or proportionate to risk; and the building consent and planning requirements create unnecessary costs and delays specific to the hospitality industry. We know this, and we now have 24 recommendations that the Government has already accepted and will implement in the next year—
Hon Carmel Sepuloni: It’s a very long answer.
Hon DAVID SEYMOUR: —because the ministry was able to get this information from the sector.
SPEAKER: It was indeed a long answer, and so concise answers should—
Laura McClure: What are the review’s recommendations?
SPEAKER: Hang on. Answers should—
Hon DAVID SEYMOUR: Mr Speaker—
SPEAKER: No, hang on, we haven’t had the question yet. However, if we could short-cut it without the question and just go straight to the answers, that might be—
Laura McClure: Oh look, I took your advice well on board. What are the review’s recommendations?
Hon DAVID SEYMOUR: Mr Speaker, I’m sure the tape will show that she had asked that question, and I would respectfully submit that I am—
SPEAKER: Well, just a minute.
Hon DAVID SEYMOUR: —being concise: we’ve just done a lot of good.
SPEAKER: Sorry, sit down. I hadn’t heard it and so we’ll just call the question to an end, and, in that case, we’ll go to question No. 9, the Hon Willow-Jean Prime.
Hon DAVID SEYMOUR: Mr Speaker, point of order. There is a right of a member to ask a question, and she does not deserve to lose that right because you don’t believe that I’m answering it correctly.
SPEAKER: Well, you need to read your Standing Orders, because all supplementaries are at the discretion of the Speaker. And you argued with me, which wasn’t the smart thing to do. It’s not progressing.
Hon DAVID SEYMOUR: The question is: are you using that discretion responsibly for the House?
Withdrawal from Chamber
Hon David Seymour
SPEAKER: The member will leave the House.
Hon David Seymour withdrew from the Chamber.
Oral Questions to Ministers
Social Development and Employment
Question No. 9
Hon WILLOW-JEAN PRIME (Labour) (14:35) to the Minister for Social Development and Employment: Does she stand by her statement that “I accept responsibility” for a series of mistakes related to payments from the Ministry of Social Development; if so, why did it take her more than three weeks to publicly accept responsibility?
Hon LOUISE UPSTON (Minister for Social Development and Employment) (14:36): To the first part of the question: yes. To the second part of the question: I reject the member’s assertion. As Minister for Social Development and Employment, I accept full responsibility for my portfolio, including when people are let down. As I’ve said previously, what happened was unacceptable, and I would again like to apologise to everyone who was impacted. My focus as Minister is on ensuring this does not happen again. The review that was released last week identified where things went wrong and what needs to change, and my expectation is that Ministry of Social Development (MSD) will implement the recommendations as soon as possible.
Hon Willow-Jean Prime: How many disabled people who missed out on payments they were entitled to fell behind on rent as a result?
Hon LOUISE UPSTON: The report that was released last week by MSD states the number of people who were affected. Some of those were on the Supported Living Payment; that number is 2,349.
Hon Willow-Jean Prime: How many pensioners who missed out on payments they were entitled to couldn’t afford food as a result?
Hon LOUISE UPSTON: I don’t have an answer to that. As I said, I recognise that the mistakes meant that payments were suspended that shouldn’t have been. The focus was on ensuring that payments were made at pace—MSD did do that—but I acknowledge that there will be people who suffered hardship as a result.
Hon Willow-Jean Prime: Were there other benefits, such as Jobseeker, affected by processing delays at MSD?
Hon LOUISE UPSTON: The Confirming Your Circumstances review related to predominantly those on the Supported Living Payment. There were a very small number on emergency benefits that were affected.
Hon Willow-Jean Prime: When will she admit that people had to go without food, medical appointments, or fell behind on rent, because of her changes under urgency and her cuts to staff at the ministry?
Hon LOUISE UPSTON: I reject the assertion of that question. I have said in this House, previously, that people had payments suspended that shouldn’t have. As soon as that was identified the payments for the winter energy payment were made within 48 hours. There has been a review—which the Ministry of Social Development delivered last Thursday—with recommendations, and I expect them to deliver those at pace.
Social Development and Employment
Question No. 10
RICARDO MENÉNDEZ MARCH (Green) (14:39) to the Minister for Social Development and Employment: How many suspensions and cancellations of main benefits occurred as a result of processing delays triggered by Confirming your Circumstances reviews, and how many of them were Supported Living Payment recipients?
Hon LOUISE UPSTON (Minister for Social Development and Employment) (14:39): The Ministry for Social Development (MSD) have advised me that 2,460 clients on a main benefit were affected by the processing delays; 2,349 clients were receiving the Supported Living Payment. MSD did not break this affected group down by cancellations or suspensions. MSD has acted quickly to clear the backlog and make sure that these clients have had their payments reinstated and any arrears paid.
Ricardo Menéndez March: Has she bothered to ask the Ministry for Social Development whether any of the sick, injured, or disabled New Zealanders who lost their main source of income went hungry, into debt, or became homeless?
Hon LOUISE UPSTON: It is clear from the review that was undertaken that people went without payments that shouldn’t have, and I have acknowledged—as has the chief executive of MSD—that that has created harm and hardship, for which we have both apologised.
Ricardo Menéndez March: Has she asked her ministry whether any of the sick, injured, or disabled New Zealanders who lost their main source of income went hungry, into debt, or became homeless?
Hon LOUISE UPSTON: I’ve answered that question and acknowledged that those who had payments suspended that shouldn’t have, have experienced harm and hardship. That will be in a range of ways, with a range of different circumstances.
Ricardo Menéndez March: Has she sought any briefings or advice on the impact on sick, injured, or disabled New Zealanders who lost their main source of income, and whether this led to people going hungry, into debt, or into homelessness?
Hon LOUISE UPSTON: Yes, because that is why a review was undertaken, on which MSD reported last week. As I said, it is clear that people had payments suspended that they shouldn’t have, and that had an impact on them.
Ricardo Menéndez March: If her answer to my previous question over whether she sought advice or briefings about whether people went hungry, into debt, or into homelessness was “Yes”, what did MSD have to say about the number of people who went hungry, into debt, or experienced homelessness?
Hon LOUISE UPSTON: I’ve answered the question in terms of the number of people who had a main benefit suspended when they shouldn’t have, and the review that was provided by MSD last week clearly goes into what happened and why, and how many were affected. As I’ve said in this House on multiple occasions, as soon as I was aware of the issue, my focus, and my request of MSD, was to ensure that payments were put in people’s bank accounts at haste, and they have been. There are recommendations now in terms of what has happened and why, and I expect MSD to action them with pace.
Ricardo Menéndez March: On what date did she first receive correspondence from welfare recipients or members of Parliament alerting her that people were experiencing cancellations and suspensions to their main benefits or supplementary assistance due to MSD processing delays, and this excludes the briefing she received on 13 August by her own ministry?
Hon LOUISE UPSTON: In terms of the question, the first identification that went to an MSD staff member about a suspension was at the end of April. As I said last week, it took far too long for MSD to draw the threads together when issues had been raised by multiple people. That was unacceptable, and that is where I expect the recommendations of this review to be delivered at pace.
Ricardo Menéndez March: Point of order, Mr Speaker. My question was specifically on correspondence that she received from welfare recipients or other members of Parliament. At no point did she address either of those groups; she talked about correspondence from MSD but did not address whether she received correspondence from welfare recipients.
SPEAKER: I’m not sure that that’s right. I think the question was certainly addressed.
Hon LOUISE UPSTON: I’m happy to answer it. I don’t have that detail in front of me. If the member wants to put a question down in written form, I will answer that for you.
Tourism and Hospitality
Question No. 11
NANCY LU (National) (14:43) to the Minister for Tourism and Hospitality: What recent reports has she seen on tourism in New Zealand?
Hon LOUISE UPSTON (Minister for Tourism and Hospitality) (14:44): Data released by Stats NZ yesterday shows New Zealand’s international visitor numbers continue to rise, with arrivals for July exceeding 2019 levels. Our first target for visitor numbers was to return to 2019 levels, so this result is great news: 256,600 international visitors arrived in New Zealand in July 2026—an increase of 8.5 percent on July 2025. We’ve also welcomed 3.69 million arrivals in the year to July—an increase of 9 percent on the year prior, which puts us at 95 percent of the 2019 levels for the year. Growing tourism is a key part of our Government’s plan to fix the basics and build the future, and this progress shows that our plan is working.
Nancy Lu: What markets have seen the strongest growth?
Hon LOUISE UPSTON: We are seeing continued growth from our largest visitor market, Australia, with a record number of our Aussie mates crossing the ditch in July. Visitor arrivals from Australia increased by 6 percent on July last year, reaching 194,900 visitors. There was also strong growth from other key tourism markets, including a 12 percent increase in visitors from the United States and a 25 percent increase in visitors from China. These results are another positive step towards our goal of doubling the value of tourism exports by 2034. With one in nine New Zealanders working in tourism and hospitality, growing visitor numbers means growing job opportunities.
Nancy Lu: What commentary has she seen on these reports?
Hon LOUISE UPSTON: ASB senior economists said global demand for New Zealand tourism has held up more than anticipated given recent global shocks. Rotorua mayor Tania Tapsell said, “The efforts that have gone in, both locally and from the Government, to these key markets is really starting to pay off. July is usually a quiet time, so the big win is the 70 percent jump in business and conference events that keep Rotorua afloat.” Dave Beeche, the CE of Queenstown-based tour operator RealNZ, has said that the visa pilot for Chinese visitors has been enormously successful and has made it a lot cheaper and easier for them to visit. Tourism is critical to our economy, and our investments will help deliver lasting benefits for communities and businesses across New Zealand.
Nancy Lu: What steps is the Government taking to support an increase in tourism growth?
Hon LOUISE UPSTON: We know domestic visitors generate nearly twice as many guest nights as international visitors and account for around two-thirds of all guest nights across New Zealand. We do not believe that New Zealanders booking a weekend away or travelling for a family funeral or sports event should face an additional tax on top of the costs they already pay when travelling domestically. We are working hard to attract more visitors to New Zealand because the more visitors we have to our cities and towns, the more money is being spent in local shops and cafes. It’s a key part of our plan to grow the economy so we can keep investing in front-line public services that Kiwis rely on, without having to reach for new taxes.
Commerce and Consumer Affairs
Question No. 12
ARENA WILLIAMS (Labour—Manurewa) (14:47) to the Minister of Commerce and Consumer Affairs: Tēnā koe e te Māngai o te Whare. Ngā mihi o Te Wiki o Te Reo Māori. Does he stand by his statement that the Government’s policy is for “sustainable food price increases”; and, if so, how much does he think prices will rise for things Kiwis cannot go without?
Hon CAMERON BREWER (Minister of Commerce and Consumer Affairs) (14:47): Yes, which is why annual food inflation is at 1.9 percent. In terms of prices and inflation more generally, I would note that Budget 2026 forecasts inflation for 2027 and 2028 within the Government’s target band of 1 to 3 percent. That is a significant improvement on the 7.3 percent inflation rate recorded in 2022.
Arena Williams: Does he stand by his statement “We acknowledge that, overall, Kiwis pay too much for their groceries.”; if so, what actions has he taken to reduce food prices for Kiwis?
Hon CAMERON BREWER: Yes, we do acknowledge that Kiwis pay too much for their groceries. That is why the Commerce Commission is continuing its compliance work against major supermarket operators, that is why we are supporting reforms to improve competition and lower barriers to entry in the grocery market, and that is why we are increasing penalties for fair-trading breaches.
Arena Williams: Was it a good use of time and resources to spend three years trying to attract a third supermarket entrant from overseas when, during that time, the duopoly has maintained an 80 percent market share and grocery prices continue to rise?
SPEAKER: Sorry, no one speaks while a question’s being asked. The member will ask the question again, with no one else adding any commentary.
Arena Williams: Was it a good use of time and resources to spend three years attracting a third supermarket entrant from overseas when, during that time, the duopoly has maintained an 80 percent market share and grocery prices have continued to rise?
Hon CAMERON BREWER: Yes, it was a good use of resource and the fact that food price inflation is down to 1.9 percent is an indicator. When one does nothing, and one fuels the economy and pours petrol on the fire, that is when you get food price inflation of 12.5 percent under the last Labour Government in an annual context. We are a lot different from that lot.
Arena Williams: Are New Zealanders paying higher prices for groceries, petrol, airfares, and banking, and have they been told, repeatedly, by this Government, that more competition is coming and that will help those prices?
Hon CAMERON BREWER: This Government continues its focus on reducing inflationary pressures, while supporting reforms to lower competition and lower barriers. A 1.9 percent annualised food inflation is a lot better than the 12.5 percent in the year to June 2023. In the year to June 2023, under a Labour Government, fruit and vegetables went up 22 percent.
Hon Nicola Willis: Can the Minister—[Interruption]
SPEAKER: Just wait for your own crew to calm themselves down.
Hon Nicola Willis: Can the Minister confirm that in the 12 months to July the price of eggs, in terms of food price inflation, went down 15.5 percent, which compares to a 77.9 percent increase in a 12-month period under Labour; and can he also confirm that the price of tomatoes dropped 29.3 percent compared to a 148 percent increase during a during a 12-month period under Labour?
Hon CAMERON BREWER: I can confirm both things and I can confirm in the three years to 2026, food inflation—[Interruption]
SPEAKER: Just a minute, sorry. The member’s asked a question and clearly wants answers, so it would be a good idea, I think, to listen and to hear those answers. Start the answer again.
Hon CAMERON BREWER: Yes, I can confirm both those numbers. I can also confirm that in the three years to 2026, under this administration, food inflation has been 6.8 percent. But I can also confirm that in the three years to 2023, under the last Labour Government, food inflation was 21.9 percent.
Arena Williams: Does he stand by his Government’s approach to competition and believe it has been sufficient to protect New Zealand consumers from the market power of big companies?
Hon CAMERON BREWER: Yes, we do, and we also stand by our decision to remove the Grocery Commissioner and put more powers into the ComCom, and it was a decision that was made by Dame Paula Rebstock, who made the recommendation to remove the individual Grocery Commissioner role, and if you looked at the select committee report, the Labour Party unanimously agreed to the Rebstock report.
Hon Nicola Willis: Can the Minister confirm that in the last 12 months, tinned spaghetti has dropped 6 percent in price compared to a 35 percent increase in a 12-month period under Labour; that the price of chicken has fallen 4 percent compared to a 23 percent increase in a 12-month period under Labour—
Hon Willow-Jean Prime: What’s the price of mince?
SPEAKER: Sorry, we’re just going to back it up a bit. The rule is, and everyone knows it Ms Prime, Willow-Jean, the Hon, that we don’t—[Interruption] Yeah, I said we’re backing it up. We don’t speak at all when the question’s being asked. The Hon Nicola Willis, ask the question again.
Hon Nicola Willis: Can the member confirm, in terms of food prices, that in the past 12 months, tinned spaghetti has fallen 6 percent in price, which compares with a 35 percent increase in price in one 12-month period under Labour; and that in the same 12 months the price of chicken fell 4 percent compared with a 23 percent increase in a 12-month period under Labour?
Hon CAMERON BREWER: I am delighted to confirm those decreases, particularly around tinned spaghetti. I received a delighted email, a very pleased email, from the Hon Bill English, who makes spaghetti and pineapple pizzas—he too is delighted.
Arena Williams: Is that what he says to the people who are paying 88 percent more for butter, 96 percent more for tomatoes, and 72 percent more for bread under his watch?
Hon CAMERON BREWER: What I would say to those people is that fruit and vegetable prices are lower than a year ago, down 1 percent, and that is a stark contrast to food prices being up 12.5 percent in the year to June 2023, including fruit and vegetables up 22 percent in the year to June 2023 under the last Labour Government.
Hon Nicola Willis: In light of that member’s question, would the member be surprised to learn that, in fact, in the 12 months to July this year, butter price inflation fell 1.9 percent, which, again, compares with a 13.5 percent increase during one 12-month period under Labour?
Hon CAMERON BREWER: Yes, I can confirm that, and also reiterate that, while fruit and veges went up 22 percent in the last year of the previous administration, fruit and vegetables in the last year of this administration have gone down 1 percent.
Hon Carmel Sepuloni: Can he confirm that he flippantly said to the general manager of Fair Food, the food rescue organisation, when she was sharing with him about the cost of living crisis and struggle with people purchasing food, “Don’t you think a little bit of hunger is just inevitable?”
Hon CAMERON BREWER: Anyone who knows me knows that I would never have said such a thing, so I dispute that. Just because that claim was made doesn’t make it true.
SPEAKER: That concludes oral questions.
Debates
Winter Energy Payments—Findings of Government Report
Urgent Debate Declined
SPEAKER: Members, I have received letters from Ricardo Menéndez March and the Hon Willow-Jean Prime to seek a debate under Standing Order 399 on the findings of the Government report Winter Energy Payments and Confirming your Circumstances: A Review. This is a particular case of recent occurrence for which there is ministerial responsibility. The House has already debated the circumstances that gave rise to the report. I do not think that the matter warrants further attention to the House today. The application is declined.
We come to take a 30 second break before I call on the next Government order. Members, there’s too much talk. If you are leaving for other business, do so quickly and quietly. I don’t want to single out members, but those at the bottom of the Parliament need to be quiet or leave.
Bills
Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill
Legislative Statement
Hon SIMON WATTS (Minister of Revenue) (14:58): I seek leave to present a legislative statement on the Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill.
SPEAKER: Leave has been sought for that purpose. Is there any objection? There is none.
That legislative statement is published under the authority of the House and can be found on the Parliament website.
First Reading
Hon SIMON WATTS (Minister of Revenue) (14:59): I move, That the Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider this bill.
This omnibus bill contains a broad range of measures all aimed at growing the economy and encouraging investment.
A consistent theme throughout is reducing compliance costs, simplifying rules, and increasing certainty for businesses and taxpayers. The prime example is the proposals related to fringe benefit tax—or FBT. FBT was originally intended to ensure non-cash employment benefits, such as work vehicles, are taxed consistently with salary and wages. Over time, the rules have become increasingly complex, resulting in misunderstanding and poor compliance. The bill proposes a much simpler approach.
Rather than requiring detailed record-keeping and log books to determine private use of work vehicles, employers would select a category reflecting the level of private use and apply a corresponding valuation rate. These changes are expected to significantly reduce compliance costs for Kiwi taxpayers. Valuation settings will also be updated, with different rates applying to standard, hybrid, and electric vehicles, to reflect the lower running costs of electric vehicles.
The next major component of the bill relates to our Foreign Investment Fund—or FIF—rules. We started reforming this regime last year, focusing it first on settings that were deterring skilled migrants from staying in New Zealand. This year, we are focusing on removing the pain points for New Zealanders. The FIF de minimis threshold would increase from $50,000 to $100,000. This means that more people with smaller investments will not have to apply these rules, and instead will pay tax on the dividends received.
The bill would extend availability of the revenue account method for unlisted foreign shares to all New Zealand residents. This removes a requirement to pay tax on unrealised earnings from liquid assets. Related changes to the financial arrangements rules will reduce compliance costs and cash-flow uncertainty for taxpayers who hold foreign currency denominated financial arrangements.
And lastly, we have made a change to the transitional residence regime that will benefit both migrants and New Zealanders returning after 10 years or more from overseas. Previously, it was possible for the transitional residence period to be triggered while a migrant was still tax resident in another country. The bill provides that the transitional residence period would only start once a person is tax resident in New Zealand under a double tax agreement.
The bill also improves the research and development tax incentive, one of the Government’s largest business support programmes. Eligible businesses will be able to receive in-year payments based on expected entitlements. Inland Revenue will also be able to accept late applications, or correct minor administrative errors so that businesses can retain access to the incentives where appropriate.
We are also proposing to reduce the cap on eligible internal software development expenditure from $25 million to $3 million per business, per year. These changes are all intended to make the tax incentive more accessible and cost-effective, maximising its productivity benefits.
To remain fit for purpose, the tax system needs to adapt to new technologies. The bill also includes measures related to the taxation of crypto assets. A new rule modelling on existing share-lending arrangements will mean that gains or losses are recognised only when the asset is ultimately disposed of. More New Zealanders are now exporting excess electricity back into our grid. The bill will also zero-rate GST on excess electricity supplied from residential premises.
The bill also implements several Budget 2026 initiatives for charities and not-for-profits. The bill confirms that membership subscriptions and levies received by not-for-profits would remain non-taxable. The bill will also increase the statutory deduction for smaller taxable not-for-profits from $1,000 to $10,000 and make it clear that tax returns are not required so long as the net income is and remains below this limit.
To encourage more charitable giving, eligible donors would be able to receive donation tax credit refunds during the year, rather than waiting until the end of the year, and they will be able to transfer those donation tax credits directly to the charities they wish to transfer them to. The tax treatment of volunteer honoraria would also be simplified by allowing such payments to be treated as salary and wages.
Finally, the bill grants overseas donee status to six New Zealand charities with overseas charitable purposes. Our Government’s focus is clear: growing the economy, improving productivity, and creating the conditions for businesses to invest, grow, and employ—simply, to fix the basics and build the future. Tax is not the only lever in that agenda, but it is a very important one. I commend this bill to the House.
Hon Dr DEBORAH RUSSELL (Labour) (15:06): This is quite a large tax bill for a tax bill. There’s a lot in it, and they’re largely sensible measures that the Labour Party agrees with. They’re pretty standard tax measures: tidying up aspects of our tax law that need to be tidied up, and changing some stuff because the world has changed, so the laws need to change. The Labour Party supports this bill through to first reading, though there are several issues we will want to dig into in the select committee stage.
The changes around the calculation of fringe benefit tax (FBT) on vehicles are very sensible. It is a complicated area in terms of record-keeping. These new changes mean that an employer can specify whether a car is mainly for private use or mainly for business use, and then the fringe benefit tax is calculated accordingly. That’s a sensible change. But there are some wrinkles in it. One is that if a vehicle is going to be claimed to be mostly for business use, then it has to be a branded vehicle—it has to have the company’s branding on it. There’s an exception for farm and agricultural vehicles there.
Intriguingly, in the commentary on the bill, there is a description of what might happen. It says, “The purpose of the branding requirement for vehicles is to discourage employees from using company vehicles outside their permitted private use. This is because employees are generally less likely to use a branded vehicle for private use because doing so could bring the employer into disrepute or make non-compliance with FBT requirements more visible”, and then it says, “(for example, a company ute seen towing a jet ski at a boat ramp).” That’s a very specific example, and it makes me suspect that perhaps officials at Inland Revenue had seen exactly that going on. In fact, we know that there has been a fair amount of non-compliance around some of the FBT rules—perhaps because they’re unclear—and a fair amount of private use that wasn’t being accounted for in the FBT rules. So these are all pretty sensible changes sitting in there around fringe benefit tax.
However, I do think we’ll need to ask at select committee how Inland Revenue intends to monitor the way that businesses are classifying vehicles in terms of their private use or business use, and we’ll see what plans they have around that. There is something that we do need to know a little bit more about there.
In terms of the rules around financial arrangements—again, there are some very sensible changes. People say, “Well, what’s a financial arrangement?” It’s basically any long-term financial agreement—a mortgage, a swap, an investment bond—and, ordinarily, once it’s over a certain value, the income and expenditure and that has to be calculated spread over the life of the debt instrument or of the financial instrument. It’s complicated maths, and you really need to know how to do those finance calculations in order to do it. There are some sensible changes here around the financial arrangements rules to make sure that it’s just a little bit easier for ordinary taxpayers. Now, businesses likely still have to do the calculations, but they’ve got the resources to do it.
Something that people often didn’t realise is that debt denominated in a foreign currency falls into the financial arrangement rules.
Now, that’s a problem for a New Zealander who perhaps owns a house overseas and there’s a mortgage on that house overseas denominated in a foreign currency. That technically is supposed to be accounted for under the financial arrangement rules. Lots of people don’t even know that. Back when these rules were first put in place, the world was much less connected, people travelled less, but these days not only do we have many more migrants coming to live in New Zealand, but actually it’s entirely possible to get financing from a foreign bank quite easily, and so be subject to these rules.
There’s a pretty sensible exception that this bill is going to introduce to the financial arrangements: mortgages on private houses don’t need to be accounted for as a financial arrangement. Now, by and large, that looks like a good measure, but it does leave a wee bit of a potential loophole in the Income Tax Act. Where there’s a loophole, someone will walk through it if they possibly can. So, again, I want to check with officials during the select committee process as to exactly how they intend to monitor that and how they intend to ensure that people really are complying with the law.
However, as I said in my opening remarks, by and large, pretty much this bill looks like a very sensible tax bill—a standard tax bill that obviously advances the Government’s agenda, but also addresses several issues within the Income Tax Act. We will support this bill to select committee.
Hon JULIE ANNE GENTER (Green—Rongotai) (15:11): Thank you, Mr Speaker. Let me start by talking about one of the tiny, good things in the bill, and then I’ll speak to the Green Party’s concerns about the rest of it.
Fringe benefit tax. I had a member’s bill which was sadly voted down by members of Government parties earlier this term that would have fixed up some of the loopholes around a perception that company provided vehicles weren’t subject to fringe benefit tax if it was a double-cab ute, even if it wasn’t being used for work purposes and it was being used for personal purposes. This bill in front of us starts to incorporate some of that, which I’m relieved to see. I think, overall, the simplification looks like a reasonable thing.
There is a tiny incentive for hybrids and electric vehicles (EVs) to combat the fact that they actually were slightly penalised by the fringe benefit tax policy approach previously. Even going back to when I was Associate Minister of Transport, trying to talk to the then Minister of Revenue, Stuart Nash, I was trying to get the Inland Revenue Department to deal with this, and they were pretty obstinate. I think now we’re providing a tiny little incentive for companies to provide electric vehicles or hybrid vehicles as opposed to more high consuming fossil fuel vehicles as company cars.
That’s important because, actually, the majority of brand new cars that come into the country are purchased by businesses or fleet vehicles. So fringe benefit tax policy towards motor vehicles is a huge lever the Government can pull to ensure that we’re getting better outcomes from our vehicle fleet. That means better fuel consumption in a time of a fuel crisis—seems pretty basic. Getting those brand new EVs into the country also reduces the cost for ordinary New Zealanders who usually acquire their vehicles through the second-hand vehicle market. So that’s one tiny thing.
I mean, they could have gone much further. Australia exempted EVs from fringe benefit tax for five years or something like that and it worked quite well. That’s what my bill proposed, which the Government voted down. But here at least we’re seeing them do something sensible on the treatment of motor vehicles so we aren’t unintentionally subsidising fuel inefficiency and higher cost of fuel use through our fringe benefit tax approach to motor vehicles.
The Green Party won’t be supporting the bill. By and large, overall, our income tax policy penalises low-income earners and means that high-income earners like members of Parliament don’t pay enough tax. The Green Party have proposed quite a different approach in our tax policy that would see 96 percent of New Zealanders paying less tax, while still raising more revenue to invest in services and infrastructure that are for public good, which we all benefit from. We usually don’t support these bills because the current coalition Government, despite all their rhetoric around being about productivity, actually, what they’re mainly doing is upholding a status quo that allows those on the highest incomes and those with the most wealth to continue enriching themselves, whilst starving the Government and the public the revenue they need to invest in public good infrastructure and services. That is a political choice that does not help the country become more prosperous—quite the opposite. If you think that we’ve had a productivity problem in New Zealand for a few decades, maybe continuing the same approach, with the tax system, isn’t the right way to address it.
They also have significant concerns about some of the other aspects of this: introducing wider automated decision-making powers for Inland Revenue that can be used for decisions that impact taxpayers. This is an issue that we have had concerns about in relation to the Ministry of Social Development and benefits. We also have the same concerns when it comes to IRD. And it makes it easier for overseas-based student loan borrowers to be arrested. I just don’t think that’s the right approach at all. I mean, this Government has chased hundreds of New Zealanders overseas a day—hundreds a day; a huge number since they came into office—by cutting investment in public services and infrastructure, meaning there are no jobs, just making everything much worse for younger people who are already burdened with huge debt in order to access tertiary education or any type of vocational education. We really disagree with this punitive approach and the Green Party will not be supporting this bill.
TODD STEPHENSON (ACT) (15:16): ACT will be supporting the Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill. As the Minister of Revenue has already set out, this is a bill which does some very important things, including setting the annual rates for 2026-27 for taxation. As many people know, ACT is the OG “no new taxes” party, but we are also into tax simplification. The fringe benefit simplifications contained in this bill, we’re very interested to discuss and see it go through.
We often get a lot of questions about foreign investment fund rules—FIF rules—and again, there are some really sensible changes in here, which I think will help those having to navigate that very complicated system. I commend this bill to the House.
Dr DAVID WILSON (NZ First) (15:17): Thank you, Mr Speaker. New Zealand First rises in favour of this Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill. Beyond setting annual rates, the bill aims to continuously maintain and modernise the tax system by updating settings across foreign investment funds, fringe benefit tax, research and development tax, incentives, goods and services tax, not-for-profit organisations, and tax administration. It seeks to reduce tax barriers to capital and skills, eliminate unnecessary administrative compliance costs for small businesses, and provide legislative and certainty for modern digital administrative tools while protecting the tax base.
We certainly support the new rules for the foreign investment fund, raising the tax deductions from $50,000 to $100,000, and removing income tax return filing requirements for small non-profits—a very sensible arrangement for those small non-profits who are doing good charitable work in our communities. It delivers in-year advanced payments for R & D tax credits, putting vital cash flow into innovative Kiwi companies when they need it most.
This is pragmatic centre-ground legislation that cuts red tape and supports our productive sectors. I commend this bill to the House.
RYAN HAMILTON (National—Hamilton East) (15:18): Thank you, Mr Speaker. Look, this is a pragmatic bill. One of the great highlights I enjoy out of it is the phrase “close enough is good enough” from the Minister of Revenue, as we’re simplifying the fringe benefit tax piece of legislation into six simple categories: mainly private use, mainly business, mainly business use on farmland, private use limited to home to work commuting, business vehicles for home to work travel only, and pool cars. So it really does help to simplify it. Mr Speaker, I commend the bill to the House.
Hon Dr DUNCAN WEBB (Labour—Christchurch Central) (15:19): Oh, thank you, Mr Speaker. A special treat to talk on a tax bill today. I was disappointed that the ACT member didn’t explain how tax on foreign investment funds works, because it is actually a pretty tricky area—I thought he was up to the job, but apparently not. In fact, this is something that constituents have approached me about: the difficulty where they—
Hon Matt Doocey: Ha, ha!
Hon Dr DUNCAN WEBB: Well, you might laugh, Mr Doocey, but I actually have constituents with wealth and they’re not all my uncle.
The fact of the matter is that if people come to New Zealand—particularly people who’ve been here for a while—they often have investments and pension funds in their home country. The foreign investment fund rules, as they currently sit, require a payment of 5 percent of the value per year—or that’s the deemed return on them, and so you’re taxed on that 5 percent whether the fund went up 5 percent or not.
Of course, the other problem with that is that you’ve got to actually find the cash, and if it’s a pension fund that’s over there, then you might not. In fact, the constituent I’m thinking of was on a modest salary in New Zealand—about $80,000—but did have a healthy retirement fund in the United States, and he had to find a sizeable chunk of cash to pay every year. He pointed out that there had been a carve-out for wealthy individuals coming to New Zealand whereby you could return the actual increase in the fund along with dividends and be taxed on that, which is essentially opting for an actual returns rule, as I understand it, rather than a kind of deemed return.
The whole idea of the 5 percent was to get around, essentially, the arduousness of valuing shares and dividends all the time. Here we have a situation where the indulgence that was extended to new immigrants essentially has been extended to everyone, and it makes really good sense that that’s the case. It is actually just enabling tax on real revenue, rather than on assumed revenue.
I must say, I giggled a little bit in terms of the fringe benefit tax and utes. I did mention to Deborah Russell, as she was speaking, that she needs to go to the Coronet ski field car park and see the number of branded utes up there. I do know that the IRD has been known to go to car parks at places like ski fields to see how many work vehicles are being used there. But this simplification of fringe benefit tax—I think there is always a balance between tax being accurate, being fair, and being workable. I think this fringe benefit reform kind of moves it towards the workability end; it’s not trying to get the tax perfect down to the last dollar.
The idea of lifting the categories of weight class is a good one because, obviously, you don’t want to be excluded from fringe benefit tax because you’ve got a double-cab ute that is over 3,000 kilograms. Moving that weight class up to 6,000 kilograms, so that we know that those vehicles clearly are light trucks and not everyday vehicles, is a really good thing.
Obviously, as we go through every year, we’ve got to update and confirm our tax rates. It’s a pretty fundamental part of the public finance framework. It’s a good bill, and obviously our members of the Finance and Expenditure Committee will be having a good old look at this bill at select committee, which is what should happen. In my experience, there are actually some useful tweaks around workability that happen in that forum. It’s one of those bills that because it’s a technical bill—and people do actually want the tax system to work effectively—there is some constructive feedback, and of course you get that independent advisor in who will also do much the same. So off to select committee it goes—not this Parliament, obviously, but the next one—and that’s all good stuff. Thank you.
DAN BIDOIS (National—Northcote) (15:24): This is a good bill. It’s particularly good for small businesses in its fringe benefit tax changes. I support it to the House.
Hon Dr MEGAN WOODS (Labour—Wigram) (15:24): Thank you, Mr Speaker. It is my pleasure to take a call on the Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill. This is a bill that Labour supports. It is a pretty standard tax bill—the kind of bill that comes to this House annually; it sets those annual rates, makes the changes that were included in the Budget, and various other tidy-up bits.
Now, there were some changes that were made at the Budget at the time that Labour said we were supportive of. For that reason, we are supporting this. One of those changes, actually, that I think is really important is the change to the foreign investment fund or FIF rules that were announced at the Budget. This is incredibly important in terms of how it is that we attract international investment to New Zealand. The way in which it did work was very much on an unrealised basis. Before we make these changes, the tax was charged on an unrealised amount. The investor was deemed to earn income equivalent to 5 percent of the opening value of their foreign shares each year, regardless of the actual income that they received.
Now, I think, across this House, we can see the benefit of attracting foreign investment to New Zealand—but not only foreign investment but attracting those individuals that want to come here and sometimes come home. I have met a number of New Zealanders who have gone overseas and done some remarkable things and want to come home, but they have got caught out by FIF rules. This is an important change. As New Zealand, increasingly we are punching above our weight in a number of industries. We have New Zealanders who do remarkably well, and they earn share options, often, in overseas companies, and when they come home, it can be incredibly complex. One of the changes that is made here, and one of the obvious changes that this bill is making, is that it moves that threshold from $50,000 to a new threshold of $100,000 for that.
There is also a new method for calculating FIF incomes on unlisted shares, which was introduced in the last tax bill, but it was only available to recent migrants. The new method, or the revenue account method, says that 70 percent of gains realised on the sale of shares during the year, plus any actual dividends received, are subject to the tax and the taxpayer’s marginal tax rate. This really shifts away from that idea of unrealised gain that happens in there.
The other change, and my colleague the Hon Dr Deborah Russell, who likes nothing more than the technicalities of a tax bill to go through in detail, and will be looking forward—well, this probably won’t be something that the current Finance and Expenditure Committee examines. But I know from other tax bills that she likes nothing more than going through in a very technical way, as both she and the Hon Barbara Edmonds are both technical tax specialists and like to pick the eyes out of such bills. My colleagues have talked about what’s happening in terms of the fringe benefit tax on motor vehicles, and that is a change that, I think, many see will need to be kind of kicked around a bit at select committee to have a look at whether it’s really doing what is intended and what we think is in the best interests around that.
The other change that is in this bill—and I’m interested to see what comes out of the select committee process about it—is the change around the research and development tax credit that is in here. The bill makes a good change to the Research and Development Tax Incentive. It enables businesses to claim credit quarterly, which improves their cash flow. This is especially useful for start-ups. It also expands the range of R & D expenditure that mining business can claim, and this is something I really want the select committee to have a very close look at in terms of what really is the research and development that’s happening within that industry, and what is it that is being given a tax break? We know that we have R & D tax incentives in New Zealand because we want to stimulate innovation—it’s the kind of economy we want to create—and we really need to have a look at whether that is fit for purpose.
Labour does support this bill. It is a bill we will happily pick up as a Government, because we know that this country cannot afford another three years of this National Government.
NANCY LU (National) (15:29): What this country can afford is a National Government that is focused on making sure that our tax settings are fair and just, and also a National Government that has already delivered tax relief to Kiwis for the first time in 14 years—and also another three years of a National Government that will continue to strengthen and ensure that our tax system is fair. Therefore, I commend this bill to the House.
KATIE NIMON (National—Napier) (15:29): Mr Speaker, thank you very much. Look, anything that reforms tax for small business is a wonderful thing, so with that, I commend the bill to the House.
A party vote was called for on the question, That the Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill be now read a first time.
Ayes 101
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11; New Zealand First 8.
Noes 21
Green Party of Aotearoa New Zealand 15; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Motion agreed to.
Bill read a first time.
Referral to Select Committee
SPEAKER (15:31): The question is, That the Taxation (Annual Rates for 2026-27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill be considered by the Finance and Expenditure Committee.
Motion agreed to.
Bill referred to the Finance and Expenditure Committee.
Sittings of the House
Urgency
Hon LOUISE UPSTON (Leader of the House) (15:31): I move, That urgency be accorded—
the remaining stages of:
the India Free Trade Agreement Legislation Amendment Bill,
the Local Government (System Improvements) Amendment Bill,
the Oranga Tamariki (Responding to Serious Youth Offending) Amendment Bill, and
the Summary Offences (Move-on Orders) Amendment Bill;
the first reading and referral to select committee of:
the References to Tiriti o Waitangi/Treaty of Waitangi (Repeals) Amendment Bill,
the References to Tiriti o Waitangi/Treaty of Waitangi (Standardisation) Amendment Bill, and
the References to Tiriti o Waitangi/Treaty of Waitangi (Strength of Legislative Obligations) Amendment Bill;
the second reading and committee stage of the Agricultural Compounds and Veterinary Medicines Amendment Bill;
the remaining stages of the Public Works Amendment Bill;
the committee stage of the Pae Ora (Healthy Futures) (3 Day Postnatal Stay) Amendment Bill; and
the remaining stages of:
the Building (Earthquake-prone Buildings) Amendment Bill,
the Policing Amendment Bill, the Corrections (Management of Prisoners, and Prisoners’ Property) Amendment Bill,
the Immigration (Enhanced Risk Management) Amendment Bill, the Land Transport (Revenue) Amendment Bill,
the Financial Markets Conduct Amendment Bill, and
the Commerce (Promoting Competition and Other Matters) Amendment Bill.
Today, we accord urgency, in the second to last week of the 54th Parliament. No bills are going through all stages this week or bypassing scrutiny. This is, once again, overtime. Our Government has had a significant legislative agenda, and it isn’t quite finished yet. Some of the bills are being sent to select committee today so that committees can open submissions before the Parliament dissolves. The rest, we aim to enact before the end of the term—all worthy bills which will have positive impacts on New Zealand and New Zealanders.
A party vote was called for on the question, That urgency be accorded.
Ayes 67
New Zealand National 48; ACT New Zealand 11; New Zealand First 8.
Noes 55
New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Motion agreed to.
Bills
India Free Trade Agreement Legislation Amendment Bill
Legislative Statement
Hon TODD McCLAY (Minister for Trade and Investment) (15:34): I present a legislative statement on the India Free Trade Agreement Legislation Amendment Bill.
SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.
Second Reading
Hon TODD McCLAY (Minister for Trade and Investment) (15:35): I move, That the India Free Trade Agreement Legislation Amendment Bill be now read a second time.
The Foreign Affairs, Defence and Trade Committee has carefully considered the bill, and I want to thank the members of the committee and officials for their work. The committee also took the time to carefully consider all submissions, and I commend them for that approach. I recognise that they worked incredibly hard to scrutinise the legislation in tight time frame, including when Parliament was in session, to make the necessary recommendations and to have the bill ready for the House today. The committee has also recommended technical amendments to the bill.
The committee has recommended amendments to Part 1 and Part 4 of the bill, and I welcome those amendments. Part 1 of the bill establishes a new quota for the export of milk albumin to India. It amends the Dairy Industry Restructuring Act (DIRA) 2001 to incorporate the albumin quota that we secured under the free-trade agreement (FTA) into New Zealand’s existing diary quota export licensing regime. Part 1 adds India as a designated market for albumin exports and provides for a regulation-making power to enable up to 10 percent of export licences to be reserved for smaller and new exporters.
The addition of clause 7A, inserting new section 26C, will provide flexibility if the FTA enters into force on a date other than 1 January. In that circumstance, quota must be allocated on a pro rata basis, to reflect the proportion of the quota year remaining. This allows New Zealand albumin exporters to benefit from improved access to the Indian market and provides certainty for exporters during a partial quota year. This is consistent with arrangements for other FTAs that have been given effect to under DIRA.
Part 4 of the bill establishes the framework for quota management systems for apples, kiwifruit, and mānuka honey. It enables regulations to set up systems to allocate quota return or transfer quota, issue export certificates, and provide information to Indian authorities. The amendments recommended by the select committee are largely technical and operational in nature, reflecting issues identified by officials during the development of the regulations and matters raised by submitters and the committee. Collectively, these amendments improve the clarity, transparency, and workability of the quota management system established under the bill.
The amendments strengthen the administration of quota arrangements. They improve quota manager requirements, transparency of quota allocations, audit arrangements, compliance and quota allocation, and management mechanisms. These amendments and the other minor technical changes are about striking the right balance, protecting the integrity of New Zealand’s quota management systems while ensuring enforcement powers are clear, proportionate, and consistent with those available under comparable regulatory regimes. No amendments were recommended for Part 2 or Part 3 of the bill.
The India FTA is one of the most significant trade agreements that New Zealand has secured in decades. Before I go on, I just want to recognise that, in the committee stage, the bill will be split in half, which is normal practice, so that the quota management is a separate piece of legislation. I do want to recognise, from discussions with the Hon Damien O’Connor, that whilst the committee might have been informed later in the stage—if there is any understanding around that that is different, I want to offer an apology for it—it is exactly the same as what happened with the UK FTA. It’s standard practice in the House.
The FTA opens the door to the world’s fastest-growing major economy, a country of 1.4 billion people and a middle class expected to reach 700 million consumers by 2030, and a GDP expected to reach $12 trillion in that same year. At a time of rising global uncertainty, New Zealand needs more customers, more markets, and more opportunities. As a small exporting nation, with one in four New Zealand jobs linked to exports, we depend on rules, relationships, and agreements to ensure our economic security and prosperity. FTAs, particularly with growing economies, allow our world-class exporters access to markets otherwise blocked. Growing exports means growing incomes, investment, and opportunities.
Once implemented, this agreement will create new opportunities and a level playing-field for most New Zealand exporters, relative to their competitors currently trading under their own agreements. Australia, the United Kingdom, and the European Union have all concluded FTAs with India, and we cannot afford to be left behind. In the first two years of the Australian FTA, with India, entering into force, its forestry exports to India surged 119 percent whilst ours fell 19 percent during the same period. Our share of sheep meat also dropped dramatically once Australia’s FTA with India entered into force. We used to provide 85 percent of India’s sheep meat imports, and this fell to 9 percent since Australia signed their FTA, with Australia now representing 91 percent of India’s sheep meat imports.
The agreement restores New Zealand’s competitiveness and puts our exporters back on a level playing field. The numbers speak for themselves. From day one of entering into force, 57 percent of our current exports will enter India duty free. This rises to 82 percent over 10 years when fully implemented. Another 13 percent will benefit from sharp tariff cuts. This means that tariffs on 95 percent of our current exports will be eliminated or sharply reduced. Tariff elimination on day one for a range of key products—including forestry, sheep meat, and wool—will ensure immediate benefits for exporters in those sectors. For goods like seafood, most industrial products—including iron and steel, bulk infant formula, cherries, and avocados—will see tariff elimination over periods of seven to 10 years. Other key exports like apples and kiwifruit have secured sizable duty-free quotas that offer commercially meaningful access into the market and additionally 50 percent out-of-quota tariff reduction for kiwifruit. Mānuka honey will benefit from a sharp reduction in tariffs over five years. On dairy, tariffs on bulk infant formula, other dairy-based preparations, and peptones will be phased out over seven years, while tariffs on albumins will be halved within a quota covering recent trade.
Beyond new market access, the deal offers more certainty for our services exporters, for investors, and for Kiwi businesses looking to increase their footprint in India. India has made commitments on almost 100 additional sectors above its World Trade Organization (WTO) commitments, including, crucially, a most favoured nation commitment for services. This means that any better access India offers future FTA partners in key services sectors will automatically flow through to New Zealand and that our agreement gets better over time. This is the case with the FTA concluded with the European Union and India. New Zealand will benefit more by passing this legislation and putting the agreement in force before the EU’s FTA.
This agreement strengthens more than our economy, and the New Zealand - India FTA will also assist the development of stronger trade, economic, cultural, and people to people links between our two countries. The legislation before the House is straight forward. New Zealand has secured this deal with India in record time—vital for our exporters and the Government’s goal of doubling the value of exports over 10 years. It will create opportunities for farmers, growers, manufacturers, innovators, service exporters, and small businesses across New Zealand. The India FTA stands to serve our economy, our exporters, and our future, and I commend the bill to the House.
ASSISTANT SPEAKER (Greg O'Connor): The question is the motion be agreed to.
Hon DAMIEN O'CONNOR (Labour) (15:43): Thank you, Mr Speaker. Labour rises to support this bill and this trade agreement. The Minister has said this is one of our most significant trade agreements. We do have to make a mountain from a molehill to achieve that agreement, I think. It is indeed a big step forward, but it is at a relatively low volume across many of the sectors—sheep meat, for example. Not to belittle the potential for this agreement, but I think it’s the start of a very long journey with a very big country for a very small country.
I want to acknowledge the Minister and the officials for the work they did. There has been, through previous Governments—including Labour—a lot of work put in. I want to take this opportunity in the House to acknowledge Jane Cunliffe, who had worked in my office, who had worked with the Minister previously, who has just left, and who had been a trade commissioner in India and been part of a team of people who lived in that country over many decades, building a positive relationship that allowed this trade agreement to move forward so quickly.
We were told of this agreement at the end of last year. We knew that there had been work going on and that the Government and the Ministers had put in a lot of effort, but it was at the very late stages of 2025 that the Labour Opposition was aware that this agreement had been signed. But, actually, before the end of the year, of course, we also found out that it wasn’t a done deal, because the coalition partner New Zealand First indicated it wasn’t going to support the deal.
There had been, at that point—of course, over the Christmas period—a lot of questions focused our way—is Labour going to support this? Unfortunately, the Government had chosen not to include the Opposition at any stage through the negotiation of this agreement, so we had to then set about investigating what was in the detail of the agreement, and the devil is often in the detail. And we had a coalition partner, led by the Rt Hon Winston Peters, saying that this was a terrible agreement and that he wasn’t going to commit to it and that was it. Then we had the ACT Party and the National Party—and I know the Minister and a lot of his colleagues have done a lot of work, including the Prime Minister, visiting India—saying this was the greatest thing since sliced bread. We only got a copy of the agreement at the end of January, and we committed to the Government, in confidence, to go through that agreement as best we could. We asked for background information. It was a little like getting blood from a stone to get some of that information, which made us a little wary of whether the deal was a good one or not. The headline issues were, raised by the Rt Hon Winston Peters, that we were going to be flooded by migrants and that we were going to have to commit $33 billion in investment from New Zealand, and the Government had guaranteed it. Well, those were the claims.
Look, we went through that agreement very, very carefully, as I say, in good faith with the Government, checking that in what had been a political commitment to this from Christopher Luxon to get this deal over the line—very ambitious, I’ll say that—we hadn’t cut corners or in fact, given too much away in what is always a very, very challenging situation. Negotiating trade agreements is not easy. We’re talking about the sovereign rights of one country, the sovereign rights of another, and reaching compromise, ultimately, to get a good deal for both, not the best or a perfect deal for either side but a compromise that satisfies the interests or the vast majority of interests in both countries, to move forward and ultimately to be in a better position after one or two or five or ultimately 20 years. We came back to the Government in April, and we said, “On balance, in spite of not having all the information, we believe that it is a good step forward.”, and we agreed to support that. Indeed, a few days later, of course, that agreement was signed, and I was in India with the Minister, and he invited me over, and I appreciate and acknowledge that because it does have to be bipartisan arrangement. It has to be New Zealand, not just political parties, committing to agreements like this, because they do affect both our opportunities and some of our obligations into the future.
The select committee then went through, and I’d like to acknowledge the members of the committee for looking at the treaty, for the treaty assessment process that we did, for looking at the deal, and for listening to people coming in and making submissions. I think that was a very thorough process. Now, we have in the House, of course, a piece of legislation that the committee has looked through. It’s come back to the House, and as the Minister said, we just had a last-minute amendment that actually splits the bill. Now, we can understand the technical side of it and the justification for it. However, the committee didn’t have an opportunity to just check whether splitting the bill would make any difference to the outcomes or the opportunities from this. None the less, we’ll take the Minister’s word there, and I’m sure there will be some scrutiny in the committee stages in the House here to ensure that splitting the bill does not move from what we heard in select committee and what the select committee understands will be the final outcome of the bill.
Indeed, the outcomes are opportunities. They are not huge steps forward in benefits for New Zealand. The tariffs are lowered, and the quotas are put in place and, over time, may be reduced, but it is ultimately up to the exporters to take up the opportunities offered by this agreement. They are reasonable, and they are significant, but it will take some time to run through that.
If I can just point to a couple of things, as I say, Labour has always supported moving forward with trade agreements for our country. We are a trading nation. We are totally dependent upon that, and the things that we have to trade off are few and far between. We’ve always been open. We have very few tariffs. In the areas of investment, which is one of the areas where we’ve always got to put on the table, we have normally moved up to $100 million of investment into our country with very little scrutiny. The threshold has been moved to $200 million where people can almost, as of right, with some exceptions, be able to invest in our economy. It’s normally positive, but not always, so we’ve got to keep an eye on that.
This agreement allows investment from India into our economy of up to $200 million, and with not much scrutiny. What is concerning, of course, and the Government has yet to answer this, is the commitment to promote investment from New Zealand into India of $33 billion within 15 years. That is an ambitious target. That is an ambitious target and the Minister for wool over there would probably rather turn his back on, actually, the most significant market for wool in India, and insult the Indians by saying, “Well, we shouldn’t try.”
The scrutiny that we passed over this piece of the bill and its detail was that it is to promote the investment into India, not the final figure itself. Now, Prime Minister Modi came here and he said it was certainly high on his agenda. He certainly wants to see investment in India, and we have to be mindful of that expectation. Governments over the next 15 years will have to keep an eye on the level of investment. I’ve spoken to some of the sectors; not a great deal of enthusiasm at the moment, but this is a market of 1.4 billion people and, indeed, we will have to have a commitment from exporters to invest in that market if they want to maintain the benefits negotiated in this agreement. It is nonetheless a risk, and we in Opposition have tabled that risk, which is why I go back to one of the most significant trade agreements. I’m not quite sure that I agree with the Minister for Trade and Investment on that, but it is certainly, potentially, significant.
On the issues of immigration—another thing raised by New Zealand First—the Labour Party has scrutinised this very, very carefully. It does offer opportunities for Indians to come into our country, but they are limited in number and limited in the associated benefits with that Temporary Employment Entry particular assigned—I don’t know what you call it. Anyway, it is a particular pathway for migrants that is unique to this agreement, and, indeed, the terms have been written into this agreement. We feel assured that, actually, that does protect us from rampant migration, and no doubt we’ll hear some counter views from New Zealand First.
The third area is innovation, and it will be through partnerships and innovation that we build our strongest partnerships with India. That was indeed the topic of many conversations that I had as trade Minister, and that my colleagues in Government had as Ministers when they visited India. This does offer huge opportunities into the future. The Labour Party supports this legislation through, but there are some risks that we have to acknowledge, and those risks go with the opportunities. Ultimately, it’s up to the exporters as to whether they take those up.
Dr LAWRENCE XU-NAN (Green) (15:53): Thank you, Mr Speaker. I rise on behalf of the Green Party of Aotearoa New Zealand to speak on the India Free Trade Agreement Legislation Amendment Bill. Now, the Green Party has opposed the agreement in the past, so it makes sense the Green Party will not be supporting the India Free Trade Agreement Legislation Amendment Bill.
Now, there are a couple of things, and I think both the Minister for Trade and Investment and also the Hon Damien O’Connor have mentioned the agreement that kind of underpins this particular bill, so it’s important for us to sort of address some of these areas as well. I think one of the fundamental challenges, and particularly for the Greens, when we’re looking at any sort of trade agreement is, firstly, we do have a level of scepticism when it comes to bilateral trade agreements in general. We have seen that bilateral trade agreements have been used more and more often now because of the challenges that the World Trade Organization is facing, despite the fact that, yes, it can still be said that most of the trade agreements internationally are still multilateral, or even plurilateral in some instances. Using the New Zealand - India free-trade agreement as an example, we do see India, that is traditionally hesitant when it comes to bilateral trade agreements, increasingly signing bilateral trade agreements, or at the same time, trying to uphold this international rules-based trade system as well, making deals with Aotearoa New Zealand, making deals with Australia, with the EU, and the like.
We’re seeing that even countries that are shying away, traditionally, from bilateral trade agreements are making some of these agreements. But fundamentally, one of the things that is still a continuous concern for the Greens is that the over-use of bilateral trade agreements, although works to a certain extent, does undermine the way that we look at that international rules-based trade system in general, because bear in mind that there are countries, India being a good example, that may not have the ability to negotiate strongly; or other countries that we see who are blatantly violating some of that international rules-based system, whether it is the increase in tariffs in the US or protectionism in other countries when it comes to resources.
When we’re looking at Part 1 to 4 of this bill, there are also other areas that are of concern as to how they have manifested through the agreement itself. Now, we have heard that we still haven’t received clarity around what that US$20 billion of intention to promote really means for our people and for our businesses here in Aotearoa New Zealand. That’s $33 billion over 15 years. Yes, we can say that it’s the intention to invest and all of those, but the problem is that the country that does make that kind of decision falls with India as opposed to their being part of a joint discussion. I think that continuously is a concern, like the Hon Damien O’Connor has said, that this is going to take future Governments, regardless of who is in power, nuance and a level of balance and also diplomacy to be able to get some of that right and to be able to work through what that potentially means. Also, fundamentally, it seems wild that we’re also expecting that the Government in some ways is having this level of commitment and requiring our businesses to be able to do that.
Now, of course, there are other levels of commitment in here, whether it is the impact this will have on our tariffs being a key thing. Because bear in mind, even though you look at Part 1, which talks about dairy tariffs and also, particularly, around things like albumin, which is a big part of this particular agreement—and my colleague Steve Abel will be speaking more around agriculture and dairy in general—but that is also a concern because, again, a lot of the tariffs of imports coming from India will be removed from day one, but a lot of the tariffs that we see for our export sector going into India will only decrease over time. If India, in this case, does find that we are violating some of the terms and conditions, particularly around the intention to invest, they’re able to remove some of the tariff reductions that we are supposed to be enjoying even as a part of this bill. That is something that is also a concern for us to think about. Of course, even when it comes to bilateral agreements, from a Green perspective, environmental protection and climate action and labour rights absolutely underpin what we consider to be a good bilateral agreement, which is why, out of a lot of the bilateral agreements we’re currently seeing, the New Zealand - EU free-trade agreement is the only one that we have supported thus far.
But there have been a lot of conversations. I’m noting that the bill that we do have, and we have lots of questions for the Minister during the committee stage as well, is a manifestation of that particular agreement, so the ability for us to even look at some of these things that we could change is quite limited, even though some of the changes we have seen during the select committee stage deviate from what we have seen in other comparable free-trade agreement bills or Acts in the past, or even comparable acts that are related to this, and I’ll mention a couple of examples. But through the committee of the whole House stage, I think one of the first things—you know, whether we’re looking at tariffs or we’re looking at other forms, the quota and how we look at quota managers, and the management of those quota continues to be a big focus in this piece of legislation.
One of the things I think is really interesting that we’ll kind of explore more fully during the consideration of this bill, as opposed to the consideration of the agreement, is what’s the genus, when we’re looking at—because, you know, as part of the agreement we’ve had the Apple Action Plan, the Kiwifruit Action Plan, the mānuka action plan. I would be keen to know, particularly when we’re looking at Part 4 of this bill—and we did have a little discussion during the select committee stage around what is captured by “kiwifruit” in the Kiwifruit Action Plan; noting some of the ongoing concerns we have with the loss of some of the cheaper varieties in China, as a result of some of those particular stocks being leaked is probably the best word that comes to mind immediately, but I’m sure there are other more appropriate words for that. For us, it’s really important to be able to prevent—
Hon Member: Stolen.
Dr LAWRENCE XU-NAN: “Stolen” is possibly a strong word. I guess it depends whether it was passed on, whether it was stolen by someone else. I think, you know, if we were looking at it from the context of criminal law—maybe we need to have a bigger discussion in the committee stage around mens rea and actus reus. I’m happy to have that conversation.
But it is interesting to see, in this agreement in particular, that mānuka honey—specifically mānuka—is locked in. I’ll be keen to know what that, potentially, means for other bilateral trade agreements, particularly when it comes to the Australia - India free-trade agreements.
Just finally, a couple of other things that we had considered during the select committee stage—it’s around search and surveillance, but particularly around investigation. I think this is something that we still do need to tease out. I know that this is something that my colleague Vanushi Walters and I did have a fair bit of conversation and discussion about as a part of the consideration of this bill—and also in terms of some of the aspects when it comes to secondary legislation about fee setting. I think it’s also important for us to consider this further during the committee of the whole House stage with the Minister for Trade and Investment.
One of the things I would like to point out, finally, and this is more of a broader concern that we do have—one of the things that the Green Party is is disappointed. This is, from a process perspective—like the Minister said, like the Hon Damien O’Connor said—an important treaty examination. But at the same time, the Government could not even adhere to its own Cabinet Manual, of refraining from taking any binding treaty action, in respect of a treaty that has been presented to the House, for 15 sitting days, but expected a select committee to move up the schedule for deliberation within that 15 sitting days. I believe we only had about nine sitting days to consider the agreement itself before the first reading of this bill was introduced. That simply is not good enough because when we saw the Trans-Pacific Partnership agreement, the Foreign Affairs, Defence and Trade Committee and the Government actually extended the time for consideration because it was important.
But again, it just highlights that this bill—we’re yet to see if this will genuinely be beneficial for the people of Aotearoa New Zealand, or if it is something that’s simply for political gain. So the Greens will not support it at this stage.
LAURA McCLURE (ACT) (16:03): Thank you, Mr Speaker. I rise on the second reading in support of the Indian Free Trade Agreement (FTA). Firstly, I just want to thank my other committee members for the work that we have done in scrutinising this legislation. This is the enabling legislation, but, as many members before me have started to speak quite a bit about the agreement itself, I will note that ACT did have some concerns, but we felt that they were well-traversed throughout the committee of the whole House stage, and we’ve landed in a relatively good position here.
The bill that is coming in to help with the legislation and getting it in place is really about setting out the framework, the quota management system, how it will work, and also around amending the Overseas Investment Act, for example. So that is really small technical stuff.
There has been heaps of commentary on the Indian FTA and I will agree that I think it is a really small step in the right direction. There was certainly not enough credit given to the likes of dairy, for example. Some of the quota amounts are quite small in some areas, and I think that we could have been far more ambitious. But you have to start somewhere. I think the Minister outlined, very succinctly, that India has the fastest growing middle class globally. New Zealand is not in a benign position; we are a tiny island nation at the bottom of the planet. We need to make sure that we are diversifying our trade options. For that reason, I’m going to commend this bill to the House.
Dr DAVID WILSON (NZ First) (16:05): I rise on behalf of New Zealand First to oppose this bill, the Indian free-trade agreement (FTA) bill, especially in the form that it is in.
Hon Damien O'Connor: What about the wool!
Dr DAVID WILSON: The wool is a product we’re selling. If you listen long enough, you’ll learn the difference.
New Zealand First has, in its manifesto—
ASSISTANT SPEAKER (Greg O'Connor): I’ve lived long enough, thank you, Mr Wilson.
Dr DAVID WILSON: —the aspiration to sign a FTA agreement with India, just not this version.
An FTA should deliver mutual benefits; this one advantages India over New Zealand. We need to get it right. Foreign affairs Minister, the Rt Hon Winston Peters, has visited India on many occasions to further New Zealand’s interests and facilitate a mutually beneficial agreement.
New Zealand First supports expanding New Zealand’s access to major global markets. As an export-driven nation, our prosperity depends on selling goods and services to the world and India, home to around 1.4 million people, represents a significant market. However, FTAs take time and should not be done in record time, as we heard earlier. With due care when negotiating an agreement and drafting legislation, we enter a legal arrangement that commits both parties under the World Trade Organization General Agreement on Trade in Services and General Agreement on Tariffs and Trades, and, on the other hand, our own domestic legislation.
The current Indian FTA bill has been too rushed and falls short in several areas and therefore should not proceed in its current form. The national interest test highlighted some concerning loose ends which, combined with various hooks in the agreement itself, does not put New Zealand on the same level as India in this agreement. New Zealand First would like to see some of these issues resolved. The trade imbalance: New Zealand is opening its market more fully and immediately than India, particularly in dairy and horticulture, while India retains significant protections, concessions, and exclusions. New Zealand has fully liberalised all tariffs on Indian imports from day one under this agreement, from a very low 2.2 percent tariff base, whereas India has 30 percent of its tariff lines remaining at high rates up to 33 percent with very gradual reductions.
The Indian economy sits around $4.1 trillion with a rising middle class compared to approximately US$240 billion for New Zealand. Our export impact on India’s economy is tiny, limited, and exclusionary. India’s potential impact on New Zealand’s economy, on the other hand, is vast and open. Why on earth—why on earth, then, are we investing New Zealand dollars—$32 billion—in their economy with no reciprocal agreement?
Immigration: this agreement goes beyond trade by embedding migration commitments that could limit future New Zealand Governments—aka us—control over immigration settings. It’s going to be in the agreement. There are uncapped and open-ended migration pathways that will impact New Zealand and New Zealanders. For example, uncapped student visas with 25 hours per week paid work allowable with a two-year post-study extension work visa, and after that, even, you can have a further extension if you wish.
The words that you were looking for, the Hon Damien O’Connor, were the uncapped intra-corporate transfer work programme—nice words—for work specialists, like yoga teachers—we need more yoga teachers, apparently! This allows for up to three years’ employment and access for partners and children who can also seek student or work visas whilst here, three-year work visas—take one of those—with an accredited employer. Oh, and a further work visa for another five years—post-study and post-work visas that can lead to residency applications with familial skilled migrant business and investment specialist work access. It goes on, and it goes on. New Zealand First has concerns about these things and argues that it will increase pressure on housing, infrastructure, services, job security, and social cohesion at a time when our youth and unemployed need jobs.
Investment: New Zealand First objects to the proposed commitment to facilitate US $20 billion of outward investment into India over 15 years, especially because India may be able to rebalance some of these concessions, the Hon Damien O’Connor, on tariffs, intellectual property, and quotas if it considered that New Zealand had not met its cooperation agreements. The commitments under these cooperation agreements are not benign.
Agricultural cooperation and quotas: New Zealand First is concerned that cooperation mechanisms and agreed action plans could compel New Zealand to share valuable agricultural expertise, cultivars, tacit knowledge, and intellectual property while exposing New Zealand to penalties if these commitments are not met.
Intellectual property (IP): a major risk in this agreement is that New Zealand plant varieties, seeds, technology, trade secrets, and industry know-how could be transferred or weakened under India’s IP framework, especially given India’s non-membership of the International Union for the protection of New Varieties of Plants. Come on, guys. We’re giving our stuff away; we’re selling our knowledge. Have we not learnt? Intellectual property within industry sectors is more than a legal definition of one innovation, strain, strand, or cultivar. IP, trade secrets, technology transfer, and sharing of expertise are evident in this FTA under those agreed action plans. Figure it out. New Zealand needs to be sure that there is no such repeat of, for example, SunGold Gold3 kiwifruit, mānuka honey in Australia, Envy apples in China, and the list goes on. We have not protected our stuff, and here we are doing it again. This is kind of crazy.
Domestic Indian legislation—have we really looked at this?—provides scant evidence for the protection of New Zealand’s IP and shared expertise—scant evidence. Why are we selling our trade secrets when we could be taking advantage of years and years of science, producer practices, and tacit knowledge and when we could be protecting our strongest competitive export advantages instead of giving them away?
Rules of origin and manufacturing: we haven’t come across that yet. Let me say what New Zealand First warns about—the specialist high-value dairy ingredients. We will be vulnerable to the rules of origin abuses by providing the opportunity for intermediary countries to exploit preferential trade agreements. The few concessions in the India free-trade agreement include tariff concessions on specialist dairy ingredients, such as albumins and peptones to be re-exported from India—in other words, New Zealand’s only dairy access—to support India’s manufacturing and value-added products. Why are we giving that expertise away?
Hon Mark Patterson: This is a terrible deal.
Dr DAVID WILSON: We’re getting there. How about the financial systems you’ve signed up to? Did you know about those? Come on. Those on the Finance and Expenditure Committee might know a little bit about this. There is concern in this agreement about the cooperation on digital payments, unified payments interface integration, fintechs, central bank digital currencies—CBDCs, right?—data governance, scams, privacy, and financial sovereignty. New Zealand First does not see how these clauses are fundamental to this agreement, given New Zealand itself is still concerned about, and still considering, all of these things. We’re not there yet with CBDCs. Come on. We’re signing a free-trade agreement, thinking that that’s going to solve it for us. Are you crazy?
The United Nations Declaration on the Rights of Indigenous Peoples and the Paris Agreement: these commitments should not be included in the trade agreement, because they could turn domestic policy choices into FTA obligations. We’re signing up to it with them; we have to live up to it. New Zealand First believes this free-trade agreement is not a good deal for New Zealand and New Zealanders. It is not too late to turn this into a free-trade agreement that benefits New Zealand and is in agreement on trade. Thank you, Mr Speaker.
ASSISTANT SPEAKER (Greg O'Connor): Steve Abel—five minutes.
STEVE ABEL (Green) (16:15): Thank you very much, Mr Speaker. We believe that trade, globally, should be focused on fairness, not simply on the removal of barriers to corporate exploitation of people. This bill has some real problems with it—this free-trade deal—and I want to outline some of the ones that the Green Party is concerned about. One common thing that we try and get better trade on, with other nations, is our dairy products. I think it was inappropriate for us to seek to flood or impact the local Indian dairy industry and market with New Zealand dairy products, because why would we as a nation that is, as is commonly expounded in this House, so dedicated to the dairy industry want to undermine the most ancient subsistence dairy culture in the world?
Cows have been farmed in India for 8,000 years. Do you know how many dairy farmers there are in India? About 80 million dairy farmers. Most of those dairy farmers own between two and three cows. Some only own one cow. Many of them are landless. They are subsistence farmers. They provide nutrition to their households and some small income from the dairy that they produce. I don’t believe it was ethical or appropriate for us to ever seek to undermine dairy farmers in India with our dairy product, here, from New Zealand.
Hon Andrew Hoggard: So if we all have one cow, then you’ll stop attacking the dairy industry in New Zealand?
STEVE ABEL: What did he say? I missed it. You’ll have to tell me that later, Mr Hoggard.
There’s another very glaring problem with this bill that has been outlined by our colleagues from New Zealand First. No, we’re not going to make a xenophobic attack on it, because we don’t believe in a race-baiting nationalism, which is the last refuge of the scoundrel; we believe in criticising it on economic grounds. It is the obligation that we shall promote foreign direct investment from New Zealand with the aim to increase foreign direct investment inflows to the value of United States $20 billion. That has been said before by my colleague Lawrence Xu-Nan—that’s $33 to $34 billion New Zealand dollars at current exchange rates. That has to be achieved within 15 years. Now, for context, there is nigh on zero possibility that we can achieve that, because New Zealand’s total foreign direct investment (FDI) outflow—abroad to all countries in the entire world—in 2025 was $1.46 billion. Just think about that figure. Less than $1.5 billion dollars is how much FDI New Zealand invested in every other country in the world, and we are signing up to an agreement whereby, in the next 15 years, we’re going to achieve a $34 billion investment in just one country. Where in the Lord’s name is that going to come from?
Foreign direct investment requires us to find the monies to invest in another country—i.e., not invest in our own country—and exporting such massive volumes of capital would be flying in the face of our current balance of payment position. We run a chronic current account deficit, and it’s largely driven by the outflow of profits to foreign investment in New Zealand—i.e., to Australian banks and to Australian companies that now own our meat industry in part. Additional financial outflows of direct investment to India would require either additional exports, fewer imports, or higher overseas debt to compensate. The New Zealand dollar would fall in value, making imports more expensive and overseas debt more expensive to service. This, in the name of doing good for our economy, is actually a total nightmare for our economy over the next 15 years, and that particular part of this agreement will come back to bite future Governments very hard.
TIM VAN DE MOLEN (National—Waikato) (16:20): Thank you, Mr Speaker. Look, we’ve traversed well the fine benefits of this free-trade agreement (FTA), and so I’ll focus my comments on the changes made through the select committee process. I do want to start by thanking submitters for their contributions through that process, and also fellow members of the Foreign Affairs, Defence and Trade Committee and the advisers. We did consider this in a very efficient time frame, and the aim of that was to make sure that we could get ahead of the EU FTA with India in order to enjoy that most favoured nation status with regard to wine, in particular.
Our focus was really around the nuts and bolts. We ensured that the Ministry for Primary Industries were considered accountable at the same level as other non-Crown quota managers. We put in a deadline to have a reasonable time frame for appeal processes around quota allocation. We got rid of the need to gazette those so that there’s less red tape, and we had some broader consultation on fee-setting, as well. Then, with regard to the search powers piece, we didn’t think it was appropriate to give warrantless search powers in this instance.
Those were a quick summary of the key changes we’ve made. This is a good piece of legislation, and I look forward to it progressing. Thank you.
VANUSHI WALTERS (Labour) (16:21): Thank you, Mr Speaker. Like my colleague the Hon Damien O’Connor, I rise to speak in favour of the India Free Trade Agreement Legislation Amendment Bill at this second reading and to commend the Minister for Trade and Investment for seeing the agreement through, but, as my colleague has said, really, the foundations of building the relationship happened before this term. I will speak in more detail to that at the third reading of the bill, but I did want to mention that in 2020, there was a five-year plan that the Labour Government put into place in terms of developing that relationship. Both the Hon Damien O’Connor and the Hon Nanaia Mahuta were very much responsible for driving forward that platform, on which this agreement proceeded.
As the Hon Damien O’Connor has said, this isn’t necessarily the agreement that we would have negotiated, but it is a start and it does present an opportunity for New Zealand, both for our larger exporters and also for our small and medium sized enterprises, as well. We heard from a number of submitters, including Business New Zealand, ExportNZ, Zespri, Seafood New Zealand, Beef + Lamb New Zealand, and others, about just how much they expect it to benefit their business in the coming decade-plus. As has been mentioned, export is directly connected to one out of four jobs in New Zealand, and so it certainly is a benefit, despite what others in the House have said.
Now, of course, this is an interesting piece of legislation because we first had the treaty examination process and received submissions on that. Can I commend the chair of the Foreign Affairs, Defence and Trade Committee, Tim van de Molen, for his work both on that part of the hearing as well as on this part, which was much more specific about a much thinner range of issues, but the submitters who made submissions in relation to this bill, regardless, submitted on the agreement itself in quite a broad way, and so I did want to speak to some of the issues that others have traversed, as well.
The first one is the investment commitment. As has been said, this isn’t a commitment in regard to the amount itself—so the $33 billion—but it is a commitment to promote. It is an effort clause in terms of how I like to see it, and it is one that we are obliged to work towards over the course of 15 years. But others in the House have used the word “clawback”, almost suggesting that once we get to 15 years, if India is not satisfied that that effort clause has been met, they can somehow retrospectively claw back some of the benefits to our exporters that they have already accrued, and that’s simply not the case. So, just to be clear on that, that is a clause that kicks in in 15 years’ time and, in the meantime, all those benefits are available to our exporters, and certainly I would expect the relationship to develop as such.
The second issue is the treatment of workers, which is always very central to our thinking as a Labour caucus. During the course of discussions and of reviewing the documents, that was a very significant part of what we took forward as a condition of our support. This conditionality is in two parts: one is to ensure that the labour inspectorate has sufficient capacity to be able to manage issues as they might come up, and the second was in relation to ensuring that the people impacted have access to legal advice at the very earliest of stages, and our proposal was that that could be done through Community Law. So we will absolutely be continuing to look at this to ensure that the Government is putting in place those measures.
Now, my Green Party colleague Steve Abel spoke about fairness and the issue of flooding the Indian market. In my view, that isn’t an issue in this scenario. He spoke about dairy, and that’s of course not going to be an issue in relation to the agreement as it is, but in terms of the other exported goods at play, there are clauses in the agreement which allow either party, due to a flooding-of-the-market issue, to suspend a quota amount because it’s having a direct impact on their local market, and so that isn’t an issue at all.
Then we had colleagues from New Zealand First speak about the immigration issues here. The immigration commitments are narrow. They’re not novel; they’re not something very new that we’re placing in our agreement with our Indian colleagues.
The commitments are largely consistent with or below the existing standards that we offer more generally. With the student visa work rights, for example, Indian student visa holders would get at least 20 hours of work rights per week, but the current settings are 25 hours, and so, in practice, the new commitment doesn’t expand on the status quo at all.
In terms of the uncapped flood of student visas that we’ve heard about from some members in this House, the no-cap commitment simply locks in a New Zealand approach more generally. It doesn’t create a new approach at all. The post-study work extension is narrowly targeted to PhD graduates. It’s not the general student population, and so it really does limit that cohort of entry, and, of course, the Government still retains policy levers to be able to control and manage the flow of immigration.
I just did want to say that I think it’s extremely irresponsible, some of the rhetoric that we’ve heard around immigration not only today but earlier in the House. I do think that members who continue down that path ought to take into account that it’s having broader ramifications in the public—what’s just being said in the House here.
The chair of the select committee has spoken to some of the changes that we made as a select committee in the House, and I just did want to acknowledge that some submitters—including, I believe, it was ExportNZ—urged us not to make any changes to the legislation so that it could proceed at pace. While I completely do understand that perspective, my view is that the changes that have been made are very technical but also extremely practical in terms of where we’ve landed. For example, the quota system that was created, essentially, at the initial drafting of the bill envisaged that the legislation would be passed at the start of a quota year, which isn’t necessarily the case. There are tweaks that we made to that which would help it make sense and would allow those quotas to be seen as a proportion, rather than applying from the get-go.
The other change that we made—which is a fascinating one—was in relation to search and seizure powers. As members have referenced, we removed one of two of the search power options. One was a warranted search, and the second was an unwarranted search to, essentially, allow inspection where there weren’t any grounds to secure a warrant in the first place. The committee’s decision was to completely exclude warrantless searches.
Now, interestingly, this is a point at which the committee disagreed with the legal advice that was provided by Crown Law. Crown Law’s view, on examining the initial search powers, was that both the warranted search powers and the non-warranted search powers were compliant with the New Zealand Bill of Rights Act and were lawful in that respect, and they counted as a reasonable search or seizure, but it was certainly the committee’s view that those unwarranted powers, with no suspicion whatsoever, were not. I do think that that’s a fair place for the committee to land.
My one concern in terms of where the committee has landed in regards to this free-trade agreement (FTA) is a question of whether the powers of search are consistent in relation to other powers that apply in the other FTAs—specifically in regards to the powers of inspection relating to dairy. The powers that relate to dairy reference Part 4 of the Search and Surveillance Act, which, in my view, were framed up as a power that is responsive to criminal offending. I do hope that in the long term, this House can look at whether we need a new search powers regime that is more fit for purpose for civil regimes and to allow the current search powers to only apply to criminal regimes. Having said that, I do think the committee did a fantastic job of scrutiny, and I commend the bill to the House.
TIM COSTLEY (National—Ōtaki) (16:31): It’s nice to see Lawrence Xu-Nan and Winston Peters agreeing on something, but I fear they’re on the wrong side of this one. In New Zealand, if we want more options for Kiwis, if we want more teachers or nurses or doctors—whatever we want, it takes money. New Zealand has always made its money by selling stuff to the world. India opens up 1.4 billion customers to New Zealanders. It is a great thing. I commend it to the House.
ASSISTANT SPEAKER (Greg O'Connor): This is a five-minute split call.
Hon PHIL TWYFORD (Labour—Te Atatū) (16:32): Thank you, Mr Speaker. It’s a pleasure to be able to contribute to this second reading of one of two bills that are implementing the India free-trade agreement (FTA).
Why does Labour support this FTA? For a number of reasons, and I’ll run through them. As the previous speaker, Tim Costley, was saying, this trade agreement really is a bridge to one of the fastest growing and largest economies in the world. There’s no doubt that in the years to come, India’s economic growth will make it one of probably three of the major great powers in the world, and over time it will probably surpass China in terms of the size of its economy. For New Zealand, I think the case is that—and for me this is what it all comes down to—in this increasingly uncertain world, it’s very important that New Zealand has the opportunity to deepen and build its bilateral relationship with India, given India’s geopolitical and economic significance.
The agreement itself is far from perfect, and I’m sure Damien O’Connor would have negotiated a much better one. No—didn’t get a rise of the Minister for Trade and Investment on that one. It’s not the agreement that Labour would have negotiated, but we have, after long and careful deliberation, taken the view that this agreement is in New Zealand’s national interest. There are very significant tariff reduction benefits to some of our most important primary sectors—kiwifruit, wine, honey, sheep meat, and forestry, among others. The opportunity to open up significant export relationships in services, tourism, and labour mobility is clearly, in our view, in our national interest.
I want to say something about the immigration aspects of the agreement. This agreement does not open the floodgates. In fact, it’s quite moderate. Labour mobility is extremely important to the Indian Government. Labour mobility provisions already exist in a number of the big trade agreements that have been negotiated internationally in recent years, including in several of ours. It’s not something to be afraid of, and the provisions in this agreement—specifically the 1,600 a year temporary work visas over three years; 5,000 at any one time; no pathway to residence; no right to bring family here—are commitments that will fit quite snugly within New Zealand’s existing immigration policy settings. Labour mobility was extremely important to the Indian Government, and I doubt we would have had this agreement if we hadn’t been willing to negotiate on those aspects.
I want to say something to colleagues in the Green Party about their approach to this in relation to ours. As I said, we acknowledge the bill’s not perfect, but Labour has always understood that New Zealand’s destiny and prosperity are very tightly tied to the ability of our firms to export and sell their goods and services on international markets. Without that, we wouldn’t survive. Agreements like this, and the China trade agreement before it, I think, are a pretty powerful illustration. Nevertheless, we also recognise that trade relations produce winners and losers, and it’s very important that at the national level, the distribution of benefits and costs are taken into account by Governments—our Governments—and we use the levers available to ensure that we recognise and address those.
We’re also committed to the Trade for All agenda, developed when David Parker was Minister for Trade and Export Growth, and a determined effort to take the community along with us. These processes should be transparent; we should engage the community and different interest groups and stakeholders—and particularly the very often sensitive labour and environmental standards that really go to the heart of the winners and losers in these agreements need to be considered and, wherever possible, negotiated in substance into these agreements.
CATHERINE WEDD (National—Tukituki) (16:37): I am really excited to support the India free-trade agreement. Coming from Hawke’s Bay, the fruit bowl of New Zealand, this opens up huge potential for our apples, cherries, kiwifruit, red meat, wool, wine, forestry—the list goes on. It’s going to be huge for our economy, huge for jobs and opportunities, so I commend this bill to the House.
Hon PRIYANCA RADHAKRISHNAN (Labour) (16:37): It is a pleasure for me as a New Zealand member of Parliament of Indian origin to stand and take a call supporting the India Free Trade Agreement Legislation Amendment Bill. I think for the entirety of my almost nine years in this House, this is something that Kiwi-Indian communities have been talking about and have been wanting to see Governments progress.
I, too, want to acknowledge the work of the previous Labour Government—particularly Nanaia Mahuta, David Parker, and Damien O’Connor—who had, as my colleague Vanushi Walters pointed out, a five-year plan to ensure that we stepped up the relationship between the two countries. There was a fair bit of effort that was put into that and a number of visits both ways that were symbolic, I guess, but also bore testament to the fact that that relationship was being strengthened and deepened. I do want to point to that and the fact that this is many, many years in the making.
It was a really good opportunity for me to be the only Opposition member as part of the PM’s delegation to India when the announcement was made around the negotiations restarting on this free-trade agreement (FTA). It allowed me to see the difference in narratives between how the FTA negotiations were being portrayed in India through the media and various industry organisations in India versus the narrative that was being shared by the current Government rampantly within Kiwi-Indian communities here. They were very different. What we heard here was that the Prime Minister had made a commitment on the campaign trail that if National was elected, there would be an NZ-India FTA negotiated and concluded in the first term, and all of that. And then the story that was sold was the power of this Government’s negotiation powers, I guess, or the strength of this Government’s negotiation powers, and how, in one year, they had done what no Government before them had managed to do, and they had deepened that relationship and got to a point of negotiating, or reopening negotiations, on this free-trade agreement. And yet, everything that we heard over in India—the way the story was being told back in India—was that things had changed. Geopolitical shifts were happening and India needed to secure supply chains; India needed to diversify their trade. It was very clear that India’s exports had been negatively impacted by the 25 percent tariff that the US had slapped on them, and so they needed to open up.
And so, in the last two years, India has been actively negotiating 10 free-trade agreements. Things have changed quite dramatically on the Indian Government side. And there’s no doubt that that was to our benefit, but it wasn’t due to the strength of this Government’s negotiation powers alone. I want to put that on the record, because that is the story that is being sold.
However, as colleagues on this side of the House have made very clear, this is not the gold star of free-trade agreements (FTAs) either. It’s not perfect, but we support it on this side because it goes some way towards improving things for us and for New Zealand exporters. We know that it gives New Zealand exporters more options in an uncertain international environment; that it positions New Zealand to benefit from India’s long-term economic transformation. We know that about 95 percent of New Zealand’s current exports will gain when it comes to tariff eliminations or substantial tariff reductions, particularly in sheep meat, in forestry, in kiwifruit, in apples, and wine. We also know, from significant commentary, that the gains may not be immediately realised, but the greatest value is likely to emerge over time. It gives New Zealand businesses a platform to develop new products, strengthens commercial relationships with India, and helps to build a sustained presence in a market of 1.4 billion people. All of that goes a significant way to benefiting New Zealand.
I understand that the Government has commissioned modelling that estimates that the FTA could lift New Zealand’s annual GDP by about $380 million, and exports to India by about $836 million by 2036. And so, for all these reasons, Labour supports this agreement and the legislation that will go towards enabling that. However, as we have pointed out, there are risks and there are two that I want to touch upon. One that is a significant risk, that Labour has pointed out, has highlighted, is the investment clause that others have spoken to, as well. It is a large sum of money that is meant to be invested in India. And as Vanushi Walters has pointed out—it’s US$20 billion, about NZ$33 billion in investment—it’s an investment promotion commitment. We need to show that we have done the work, put in the effort, over a 15-year period, for that investment to happen. But compare that with the 15-year period after the China - New Zealand FTA was signed, where outward investment to China was to the tune of about $1.5 to $1.8 billion over 15 years. So this US$20 billion commitment is significant, and the Government does need to reconcile Minister McClay’s aspirational, sort of, characterisation of this investment clause with what we’ve heard from the Indian Minister’s description of potential clawback measures, as well. The Government needs to be quite careful about that.
The other risk that the Government needs to provide some certainty around, or to correct the public record on, is whether future Governments can still manage international student numbers. We saw what happened under the John Key National-led Government, where there was a monetary target put on export education, which then led to a proliferation of private training establishments (PTEs). Of course, some PTEs have a legitimate role to play in our education sector, but the proliferation of PTEs that were providing substandard education—where many from India had sold land and houses to get the money to send their children to New Zealand, to get the substandard qualification, that then didn’t get them a job in New Zealand, and led to an increase in migrant worker exploitation. We saw that happen under the last National Government, and we want to make sure that there are protections—that we don’t stray into that territory. It’s bad for us and New Zealand’s reputation, but it’s also bad for the migrants and the students who come to New Zealand to study and to work here.
On the note of migrant worker exploitation, I do want to point out some of the wins that Labour has secured. We said we would—the process that the Government undertook to embark upon these negotiations was flawed. You don’t chuck out your foreign Minister—well, the foreign Minister exited the chat—negotiating it. Where the Government themselves didn’t have the numbers to pass ratification legislation in this House—knew that, embarked upon, and waded into it anyway—then came to Labour in the eleventh hour to get our support. We have provided conditional support as long as the Government expands the labour inspectorate to fund at least 14 additional staff focused on migrant worker exploitation, faster visa changes, and progressing the modern slavery legislation that we did a huge amount of work on in the last Government. All of those are things that the Government has agreed to as part of our conditional support for this legislation, but it will need to deliver on it and not just provide lip service and agree in principle to all of that.
I want to end with the narrative around immigration. We know this is not open-slather immigration. My colleagues on this side of the House have been very clear as to why, but I want to point to how dangerous it is when parties like New Zealand First use this to talk about and, I guess, scaremonger and spread misinformation around the nature of immigration as a result of this bill. It is false. It is dangerous. It has harmed Kiwi-Indian communities and made all of us feel much less safe. That is not the society that we want to be in. And so when David Wilson stands up and talks about social cohesion in this House, it is laughable, because it is their party that has led to a huge amount of hate towards our communities as a result of their irresponsible narrative on this bill.
Hon Dr SHANE RETI (National—Whangārei) (16:48): Thank you, Mr Speaker. I stand to support this bill. There are many important components, and I especially note the sectors on apples, kiwifruit, and honey. Ngāpuhi rangatira Sam Napia has affirmed to me that these are very important to the Māori economy. With that, I’m very pleased to commend this bill to the House.
A party vote was called for on the question, That the India Free Trade Agreement Legislation Amendment Bill be now read a second time.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.
Noes 29
Green Party of Aotearoa New Zealand 15; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Motion agreed to.
Bill read a second time.
ASSISTANT SPEAKER (Greg O'Connor): The India Free Trade Agreement Legislation Amendment Bill is set down for committee stage immediately.
I declare the House in committee for consideration of the India Free Trade Agreement Legislation Amendment Bill.
Committee of the whole House
Part 1 Amendments to Dairy Industry Restructuring Act 2001, and Schedules 1AA and 1.
CHAIRPERSON (Maureen Pugh): Members, the House is in committee on the India Free Trade Agreement Legislation Amendment Bill. We start with Part 1. This is the debate on clauses 3 to 13, “Amendments to Dairy Industry Restructuring Act 2001”, and Schedules 1AA and 1. The question is that Part 1 stand part.
Dr LAWRENCE XU-NAN (Green) (16:50): Thank you, Madam Chair, and thank you, Minister, for being available for the consideration of this bill. When we’re looking at Part 1, “Amendments to Dairy Industry Restructuring Act 2001”, I first have a series of questions specifically around the quota for albumin. I want to start with clause 4, “Section 5 amended (Interpretation)”.
I guess my first question, which might be an obvious question for the Minister for Trade and Investment, is about the reduction in tariffs. First of all, when it comes to “quota”, I’m assuming that part of the quota is to do with the reduction in tariffs, when we’re looking at albumin. We know there is an immediate 50 percent reduction, starting at 1,000 tonnes per annum and growing to 3,000 tonnes by year five. Can I check with the Minister: is that growth progressive, year on year? I’m seeing a nod. Good; that’s my first question.
Would that, then, potentially require any updates or changes in legislation, in terms of the way that that particular quota would be looked at? No? It does not.
Finally, when it comes to this particular one, would the Minister be able to, I guess, elucidate for the committee on how the quota would be allocated with existing dairy farmers, in the context of this particular bill? I’m looking at things like “albumin designated market”—or anything that’s related to clause 4(5) of this bill.
Hon DAMIEN O'CONNOR (Labour) (16:52): Thank you very much, Madam Chair. Indeed, going to Part 1, “Amendments to Dairy Industry Restructuring Act 2001”, this is arguably the most important and most contentious part, I guess, of the trade agreement. The Minister for Trade and Investment might have quite a bit of information to provide to us.
We export many, many products—and produce many, many products—from milk in this country, from a dairy industry that is arguably one of the most innovative in the world. The question to the Minister: why did we get only albumin? Why did we get only one product as of right into a market that is incredibly knowledgeable and appreciative of dairy products?
Maybe the Minister can answer or explain to us the process that left us with just one product, and then maybe he can explain the process of elimination that saw all of those other potential products knocked out of the agreement.
Hon TODD McCLAY (Minister for Trade and Investment) (16:54): Just if I might—because I want this to be as interactive as possible—to the Green member Dr Lawrence Xu-Nan, it is not farmers who will benefit from this part of the agreement and the issuing of quota; it is, of course, processors and exporters that do. Farmers supply them, and they go from there. Actually, the Dairy Industry Restructuring Act (DIRA) legislation that is already in force dictates how quotas are shared out. There is no change to that; the legislation merely adds India and this quota to the DIRA legislation. As with the EU agreement or the UK agreement, and many others, and so on, where we have quotas for dairy products, there is no change other than it being added.
To the Hon Damien O’Connor, the legislation that we have before us is very, very specific as to this quota only. I think probably the questions that he is raising are out of scope. I’m happy to talk to him afterwards. Of course, this is the legislation to meet obligations—in this case, to make sure tariff rates come down, and then, secondly, that New Zealanders can benefit from the quotas we have received. When we did the full treaty examination, previously, before this legislation was put in place, I think many of the issues he has just raised now, and that many others may wish to cover, were discussed in great detail by the House.
CHAIRPERSON (Maureen Pugh): Before I take another call, I’ll just remind members that we are not debating the free-trade agreement per se, just the legislation that sits alongside it. It is quite tight. I did give the Hon Damien O’Connor some latitude, hoping he would get to it, but it is out of scope.
VANUSHI WALTERS (Labour) (16:55): Thank you, Madam Chair. Like my colleague the Hon Damien O’Connor, I am on Part 1, clause 4(5). This is the definitions—two questions from me. The first one: obviously, we have the agreement, and then we have legislation that brings into force those parts of the agreement that require legislation to bring them into force. No doubt the same is true of India. Do the definitions sync, in terms of India’s legislation, and is that a conversation the Minister for Trade and Investment had with his counterparts to ensure that definitions like “albumin designated market” are consistent across both jurisdictions?
The second question: within that definition—“albumin designated market”—it says, at the end of that particular paragraph, “including any amendment or any successor to that annex”. That’s a reference to an annex of the free-trade agreement itself. I have a question about whether it is ordinary practice to allow for that flexibility, for part of a trade agreement to be renegotiated and then a piece of legislation to automatically apply to that new standard, or whether this is new. I would expect that, ordinarily, if there were changes, new annexes, changes to existing provisions, those changes would need to come back to the House in terms of changes made to legislation. I’m just wondering whether it’s ordinary practice, and also, whether the Minister is anticipating that there will be changes to what constitutes an albumin designated market?
Dr LAWRENCE XU-NAN (Green) (16:57): Thank you, Madam Chair. I know that we’re focusing, currently, primarily on clause 4(5), around some of the definitions. I think, while we’re discussing albumin in particular—albumin is in Part 1 of the bill because it is part of what we see in the New Zealand - India free-trade agreement as part of the tariff reduction. That is why we’re seeing it here. My question to the Minister is: if albumin being a big aspect of the tariff reduction is why we’re seeing it in Part 1 of this bill, I’m curious to know why there are, then, no clauses in Part 1, particularly under clause 4, around the fact that we also received a tariff reduction for bulk infant formula, and also dairy peptones.
One would at least assume that, in this clause, alongside “albumin”, dairy peptones would also have specific paragraphs. I mean, I’m looking at the fact that we’re getting an elimination of the 20 percent tariffs on peptones over seven years. Is it because it is not currently in effect? When it is in effect, are we expecting an amendment to this Act that will add additional definitions for dairy peptones—if the Minister for Trade and Investment wouldn’t mind clarifying that.
Hon DAMIEN O'CONNOR (Labour) (16:59): Thank you very much, Madam Chair, and taking your guidance, of course, of sticking to the more technical side of it, I will indeed attempt to do that.
The allocation of quota, and the definitions here under clause 4(5), “albumin designated market means the tariff quota for albumins of New Zealand origin”— one of the questions I have for the Minister—because we do have a number of core components, including albumin, coming into New Zealand from Europe for infant formula manufacture. I’m just asking the Minister about the “country of origin” definition—I know it’s included here—just to ensure that that doesn’t allow any crossover from some of the imported product.
Then, in terms of the allocation process for export quota, on the basis of the existing quota or the existing total volume, that’s reasonably small to my knowledge, so maybe the Minister can explain whether they considered the growth in this market and whether there had to be a new system of quota allocation from what we’ve traditionally done into markets like the UK, EU, or the US. So there are a couple of questions in there.
The other one is about the “eligible reserve albumin participant”, of course. If someone can apply for some of that reserve—which is 10 percent of the total volume, as I understand—why is it limited to 50 tonnes or less? It would be good if the Minister can answer those questions at the moment.
Dr DAVID WILSON (NZ First) (17:01): This is just a question for the Minister around the economic cooperation and technical assistance chapters or sector. Quota management remains quite tightly connected to these action plans under this agreement. We would really like to know how our action plans—which include cooperation for cultivar transfer, seeds, albumin, peptones, and so on—are going to be affected if there is any kind of situation where New Zealand has actually not performed its agreements or commitments under the cooperation that we have agreed to through the action plans.
Dr LAWRENCE XU-NAN (Green) (17:02): Thank you, Madam Chair. While I see that the Minister is seeking advice, I do acknowledge that because this is quite a technical bill, there might be chances where the Minister needs some very specific advice and guidance from the officials. Just following on from what my previous question is, now, the reason I asked the previous question is that, currently, the tariff reduction we get for albumin is 1,000 tonnes in the first year, which becomes 3,000 tonnes, as the Minister said, in five years’ time. According to the national interest analysis, the 3,000 tonnes is just slightly above the average of what we’re exporting right now, which means that although 1,000 tonnes in the first year will get that enjoyment of a tariff reduction, presumably the other 2,000 tonnes won’t. I want to check with the Minister—and maybe there’s a simple explanation for this—when we look at the definition of “albumin reserve portion”, how would a reserve work, and then what then would an eligible reserve albumin participant, in this case, need to do to be able to be a part of that reserve?
There are a few questions I want to ask the Minister regarding the definitions of “albumin reserve portion” and “eligible reserve albumin participant”, but I want to start with: it seems like only one-third of our current export amount will enjoy the tariff reduction, so which one-third will we, again, expect the reduction to be—unless I got it completely wrong?
Hon TODD McCLAY (Minister for Trade and Investment) (17:03): I’m very happy to answer some of those questions. The first one was around albumins and the definition in the legislation. Anything that countries trade across borders has a name, but it also has a tariff clarification, and it is a tariff code. That code starts small. It can go out, depending upon the greater amount of detail. In effect, “albumins” is the name that we use, but in as far as the agreement is concerned, if one goes to the back—and I recommend members do that; there are 500 pages of all these lines and so on, so I won’t tell you where in the 500 pages albumin is, but we’ll have a test later on to see if you got to it. I can tell you it’s either just before or just after page 250, possibly. But the point that I’m making here is that that is very clearly defined and, therefore, there is no misunderstanding. On the questions around whether India is lining up their understanding the same as ours, it comes to that tariff clarification. So that is the case.
Secondly, it is for each country to inform the other that they’re able to meet their obligations. When India says they’re able to do that, as we do, it is accepted on either side; it’s not for the lawyers to go and cross the i’s and dot the t’s or, in this case, dot the i’s and cross the t’s.
To Damien O’Connor—can product be imported for re-export as part of this quota, and will the rules of origin in the agreement cover that? They are very, very clear. Generally, the answer would be, no, it’s not the case. This is purely from New Zealand, but the rules of origin dictate what we’re able to export if there has been any transposition of value added. But, in this case, to answer your question, it would be no. The reason that it only talked about albumins and not infant formula and other things is that there is no quota required for infant formula exports; there is no quantitative restriction; there is only a reduction in tariff rate. The reduction in tariff rate for infant formula goes to zero, but it’s over a period of time of—seven years or 10 years?—seven or 10 years. We’ve got at least seven years to get an answer. But the point of that is: it doesn’t need to be in here, because there is no quota over it.
There is a reserve of 10 percent of the quota—whatever the quota may be in the first year. It’s 1,000 tonnes, it goes up to 3,000 tonnes over that period of time. There is a reserve of 10 percent of that so that any manufacturer or exporter who is not exporting at the moment and may want to in the future or who is not manufacturing now but may want to the future wants access to that market is able to do so. But it is the Dairy Industry Restructuring Act (DIRA) legislation that controls how that takes place, not this this piece of legislation.
Then, finally to the question of the quota with tariff reduction and how that applies, well, ultimately, DIRA decides that. Companies will make an application enabled through DIRA, set out through regulation, and they then will have the opportunity to receive some of that quota and export as part of that. This is no different to what happens in any other quota that we have going in many other parts of the world.
Damien O’Connor asked why, of the 10 percent, there was a 50-tonne maximum. That lines up with what we do with beef exports to other countries around the world. Ten percent is reserved. In the case of the first year, 1,000 tonnes would be 100 tonnes. Those who are bidding into the 10 percent reserve can get a maximum of 50 tonnes so that many others could have access to it. In the case that one company bid and got the 100 tonnes, as an example, then no one else would be able to get in there. In this case, for the 100 tonnes, at least there would be two. My expectation, though, is that those who want to bid in would be at the lower level to start with.
Hon PHIL TWYFORD (Labour—Te Atatū) (17:07): Thank you, Madam Chair. Further on the question of reserve albumin export licences, I wonder if the Minister can share with the committee what annual export value he expects that the access provided, or allowed for, under these provisions will generate. It would be interesting to have even a—
Hon Todd McClay: It depends upon the value of the protein by tonne that’s exported.
Hon PHIL TWYFORD: Would the Minister put a ballpark dollar figure per year that we’re talking about?
Hon Todd McClay: I have to stand up and answer, so I’ll wait till you’re finished.
Hon PHIL TWYFORD: OK, that would be interesting to know. Under new section 26AB, which allows for reserving 10 percent of the licences for small and emerging exporters, that option is discretionary, and I wonder if the Minister expects to activate that reserve in the first quota year. If not, what would smaller or emerging exporters have to demonstrate before he would activate it?
My colleague Damian O’Connor asked about the 10 percent reserve. I wonder whether or not the Minister or his officials have got an estimate of the number of New Zealand businesses currently expected to qualify as Eligible Reserve Albumen Participants.
New section 26AB also requires evidence that reserve participants will be able to use the licences. How will the Minister assess that without setting such a high evidential standard that genuine new entrants might be excluded? It also requires him to consult existing albumin licence holders about creating the reserve. I wonder how he expects that his department will ensure that the views of incumbents don’t outweigh the interests of potential entrants.
Hon DAMIEN O'CONNOR (Labour) (17:10): Thank you, Madam Chair. The question does go—given that we are talking about quota for albumins, and it’s a component of infant formula, and elsewhere in the agreement, the Minister and the officials have negotiated access for dairy products for re-export from India, I’m thinking that albumins would be part of that process. So the question is: why, indeed, do we have a quota and weren’t we given unlimited access for albumin, given that it could go into infant formula, huge volumes of which could be exported from India? So the question is: was it negotiated in that way so the quotas that we are talking about here and the reserves, of course, which will be 10 percent of that total quota, is that volume—why was it limited when, in fact, our understanding of the agreement is that anything for re-export was unlimited?
Hon TODD McCLAY (Minister for Trade and Investment) (17:11): Just going through this. As far as the reserve, it is my expectation that the reserve will be used in the first full year. Consultation on reserve has already taken place, and we’ve received feedback, and that was part of the reason to establish it. The way it will be governed is the same as with the EU and other agreements, and it’s governed by the Dairy Industry Restructuring Act, not by this bill. As far as value is concerned, it depends upon the value of the protein by tonne, but an early estimate as of today—plus or minus when fully enforced—is maybe up to a $6 million tariff saving on what is the full amount.
To Damien O’Connor, again, different issues, but ultimately there is albumin exports to India already. They are paying tariffs at the moment—this will be a reduction. I would assume that those who are exporting this product or in India importing it—wanting to buy it—would only pay the 11 percent tariff if they were going to keep it in India, as opposed to re-exporting it, because the member is correct that any dairy product imported to India for re-export is a zero tariff rate. So it wouldn’t make sense to use this for re-export when you can have a zero tariff rate available to you straight away without any quantitative restriction. As I understand it, this will be used for product that will remain in India, as opposed to being re-exported. This is a very high-value concentrate protein. It is sought after because of the high quality of what we have in New Zealand. So it is my expectation that the quota will be filled each year, as well as a significant amount of other product going to India for additional value being added for then re-export.
Hon DAMIEN O'CONNOR (Labour) (17:13): Thank you, Madam Chair. In regard to that process, can I ask the Minister who will be responsible for ensuring that albumin, if it goes in for re-export at zero tariff, won’t end up in the domestic market, and therefore put us at risk? So is that our obligation here? Or is it, indeed, that of the Indian Government to ensure that there’s no crossover? Indeed, it won’t be the Government’s intention, I know, but like everything in law or regulation, there does have to be some kind of policing arrangement to know that we don’t get caught out through such a deal.
Dr LAWRENCE XU-NAN (Green) (17:14): Thank you, Madam Chair. Thank you, Minister McClay, for your response before. I actually did just have a look at the agreement. Can I just check, because one of the questions I had before was around a progression from the 50 percent reduction in tariffs and the progression of the quota, which we’re covering for under this particular bid. I asked if the progression from 1,000 tonnes to 3,000 tonnes is progressive or 1,000 for year 1 and 5,000 in year 5. But it does look like there is a progression of a 500-tonne increase per year, based on the free-trade agreement. Which means that if we’re looking at a 10 percent reserve, potentially, each year, for the first year there will be a 100-tonne reserve up to a 300-tonne reserve in year 5 progressively. Would that be a correct interpretation of that?
Hon Todd McClay: 10 percent of whatever the quota is.
Dr LAWRENCE XU-NAN: Yep. Then, in that case, when we were looking at the eligible reserve albumin participant, this clause 4, amended section 5(1)(b)(ii), when we are looking at someone with equal to a volume of less than 50 tonnes of albumin for the quota year, if that’s in year 1 that the reserve is 10 percent, could we potentially then be looking at two or maybe even three eligible reserve albumin participants? Would that be, in that case, a possibility? In that case, what is the process to determine what those two or three eligible reserve albumin participants are going to be?
Now, the next thing is I did ask the Minister is regarding the definition of albumin. Going through the agreement, as well, we’re looking at people having to hold an albumin export licence. Can I just confirm with the Minister that an albumin export licence and the definition of albumin in this case according to the agreement, then, would also include albuminoidal substances, albuminates, and albumin derivatives, because those three are three different terms that have been used within the agreement. I just want to make sure that this bill captures all three potential interpretations.
Now, I did ask the Minister questions around the reserves. I do want to move on to clause 7, new section 26AB, in terms of the reserve albumin export licence. I do want to check, because the 10 percent reserve is secondary legislation. It will be done on the basis that subsection (3) of new section 26AB is going to be met. I guess my first question for this section, and I’ll leave it at that for this contribution, would be: how likely, then, would that secondary legislation be made? Because while we can talk about the albumin reserve, etc., my assumption is that that wouldn’t be a thing if that isn’t being given affect by secondary legislation. Can I just check with the Minister for new section 26AB(2), how likely is it, and has the Minister considered any time line of when, that secondary legislation will be commencing?
Dr DAVID WILSON (NZ First) (17:18): Thank you, Madam Chair. To the Minister, Hon Todd McClay, I noticed you were otherwise engaged from my last question, so it would be very nice if that was addressed. But related to that, the Joint Agriculture Productivity Council to oversee industry cooperation under the Agriculture Productivity Partnership I think is directly related to quotas and tariffs. In so far as these action plans around kiwifruit, apples, and honey outlined, the delivery of New Zealand’s performance obligation in relation to these action plans is directly linked to these things. India has made it clear its expectation that cooperation activities under these plans start prior to entry in force of the free trade agreement. Second question: have they started? First question: what affect may the Joint Agriculture Productivity Council or the Committee on Economic Cooperation and Technical Assistance have due to underperformance on our part and the penalising actions that may be taken by India in that regard if that were to happen, which are outlined?
Hon TODD McCLAY (Minister for Trade and Investment) (17:19): Quick questions around the process for different products being imported to India. Some will be in quota, some won’t have a quota, some will have a reduced tariff rate, others won’t. The case for export for a zero tariff rate, it is in the interest of both Governments to have a better understanding of this. This legislation deals with, in the case of albumins, the quota, and setting up the process linking it to other legislation so it can be issued, and therefore those exports under the quota, the certificates issued, will benefit from a tariff reduction.
It doesn’t deal with things that will go in where there isn’t a need for a quota. However—and I’m happy to help the member—in the case of import for re-export and whether there is a zero tariff rate, India has agreed to set up a single desk, or a special desk, and only New Zealand has this. It’s in the agreement through the free-trade agreement to manage the product that comes in so that we can ensure that it can reach those who want to import it for re-export. We also, of course, have received a commitment from India that goods that are perishable are to clear their customs within 24 hours. That is a significant benefit to our exporters. However, the bits I was speaking of don’t feature as part of this legislation. This legislation that we’re speaking about now is merely to set up the quota system for wherever there is a quota and the reduction of the tariff rate amongst that.
As far as the 10 percent quota is concerned, ultimately, what we’ve said is a maximum of 50 tonnes per exporter that wants access to the reserve quota. As to how many there will be, that will depend upon those that want to export. If 100 exporters in the first year, as the quota will be 100 tonnes, want to export one tonne each, I guess it could be 100 exporters; but there could not be only one with the full amount in that case because of the reserve. How that is governed is the same as other quotas we have when there’s a reserve. The European Union and UK legislation, remember, in beef, we’ve set that up as well so that anybody that is not currently exporting to that market but would like to has the ability to get some quota to get an establishment in that market at a lower cost. This isn’t new. It’s happened a lot of times before. It’s very fair and transparent, and the sector is aware of this.
As far as performance, this legislation doesn’t deal with the issues that the member raised. This is merely about how we govern the quota and share it fairly for export, but in the case of the question around, has the cooperation started already—the industries themselves are responsible for that and many of them have been up there—the answer is yes, it has.
CHAIRPERSON (Maureen Pugh): Before I take the next call, can I just please ask members to refer to the clause that’s being spoken to please?
STEVE ABEL (Green) (17:22): Thank you, Madam Chair. I’m referring to those clauses about albumin in Part 1, and we’ve been canvassing them quite extensively. I just want to get a direct answer, if the Minister for Trade and Investment is able to give it, on my colleague Phil Twyford’s question on the value of this albumin tariff reduction, because it’s clear from the national interest analysis that we’re currently exporting around 3,000 tonnes already to the country, and it’s envisaged that, by year five, all 3,000 of those tonnes will be without the tariff.
Hon Todd McClay: No, that’s—
STEVE ABEL: Yeah? If you can correct me on that, that’s great. But I wonder if you can give us clarity on what the value of that will be. The importance of this is in us understanding what the overall purported value of the free-trade agreement will be to us as against what the potential costs and risks will be.
CHAIRPERSON (Maureen Pugh): I explained before, this debate is not about the free-trade agreement; this is about the legislation that enables it.
Steve Abel: Sure. Madam Chair, can I just ask for clarification on that? So we can’t ask about—
Tim van de Molen: Is this a point of order or not?
STEVE ABEL (Green) (17:23): Yeah. Point of order. Can we not ask about the value that this bill brings into being through it making the free-trade agreement come into effect?
CHAIRPERSON (Maureen Pugh): No.
Dr LAWRENCE XU-NAN (Green) (17:24): Point of order. Thank you, Madam Chair. Can I just get a piece of clarification because, usually, when we do discuss other bills as well, there will be things like an accompanying regulatory impact statement that we can actually ask about when it comes to policy-related questions as well. Now, when it comes to international treaty examinations, or even free-trade agreements, we actually don’t have regulatory impact statements, but, in the same way, what we do have instead are things like national interest analyses, etc., so it probably is important, when we’re looking at how the overall package of this bill in relation to the agreement—
CHAIRPERSON (Maureen Pugh): So your point of order is?
Dr LAWRENCE XU-NAN: My point of order is that the agreement itself is actually integral to the analysis we’re able to do in some of the questions.
CHAIRPERSON (Maureen Pugh): I think I understand what you’re saying. The value was debated in the first reading, and so now we are debating the parts in the legislation that relate to the implementation. I don’t want this debate to drift into the value of the free-trade agreement because we are not debating that. We are debating this legislation.
Dr LAWRENCE XU-NAN: Speaking to that point of order. I completely understand where you are coming from. We’re not debating the value of the free-trade agreement; it’s the value of the tariff reduction that was the question because we didn’t get a chance in the first reading to actually ask Ministers questions around the values or specific aspects of what this bill would entail. But we will make sure to keep it quite concise and related to a particular clause.
Hon TODD McCLAY (Minister for Trade and Investment) (17:25): Madam Chair, in as far as the 10 percent quota is concerned, or the reserve or the full amount, it is not possible to answer the question directly. The reason for that is that it would depend upon the value of the commodity at the time. All I can say—
Steve Abel: You must know that.
Hon TODD McCLAY: Well, that’s because if it’s $10 compared to $1,000, the 11 percent would be different. But the point that I guess I’m making is that I did answer that fulsomely earlier. I mean, I don’t want to take any time of the Committee, but if the Greens are indicating that their support for the legislation depends upon this answer and they may finally support a free-trade agreement, then I’d be happy to go and have a coffee and talk about it later.
Hon SIMON WATTS (Minister for Building and Construction) (17:26): I move, That debate on this question now close.
CHAIRPERSON (Maureen Pugh): That’s very well read, Minister. I think there is probably a little bit of room if we are prepared to move on, but we have thrashed clause 4. I’m happy to take some new material but this is quite a restricted—OK, you got it?
Hon DAMIEN O'CONNOR (Labour) (17:27): Absolutely, Madam Chair, as always. As always. New section 26AB, inserted by clause 7, and it is on the allocation of reserve albumin export licences, and new subsection (2) says, “The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations that reserve 10% of albumin export licences…”—quite a critical area—and then we go down to new subsection (3)(a) where it says, “Before making a recommendation…the Minister must be satisfied that—(a) there is demand for reserve albumin export licences from eligible reserve albumin participants;”.
Look, there are some cynical people around this place that say we have the “Ministry for Fonterra and Trade”. It’s not. It’s the Ministry of Foreign Affairs and Trade. Can I get an assurance from the Minister for Trade and Investment that he won’t be subject to what will be—it may be a legitimate argument from Fonterra that we have to consolidate, not disaggregate the albumin allocations. And so, the Minister has to reassure us, and he can in the chair, that, in making a recommendation to the Governor-General that there is demand for it, he’s not subject to some legitimate pressure from some of the big players that eliminate some of the smaller and innovative exporters who may have found or may want to develop a market opportunity for this. The question comes down to: what is the ability for us to check on that and ensure that the allocation of, not the quota but the reserve quota, which is 10 percent of the total quota, that that is going to be allocated on a fair and innovative system?
VANUSHI WALTERS (Labour) (17:29): Thank you, Madam Chair. I’m on the same clause as my colleague. This is clause 7, inserting new section 26AB, and it’s a question about the Minister for Trade and Investment’s decision not to allow the transferring of export licences. New subsection (4) says that an eligible reserve albumin participant who is allocated reserve albumin export licences effectively cannot transfer them. Now, section 28A of the Dairy Industry Restructuring Act allows the Governor-General to essentially approve secondary legislation that allows the transfer of other licences, essentially for the purpose of ensuring or expediting exports.
The question is why that’s not allowed in this case and, if it’s intended not to be allowed more generally, why the Minister wouldn’t consider a more narrow allowance for the transfer of licences—for example, where someone had already held one of these reserve albumin export licences in the past, allowing just the transfer of an existing licence to those former licence holders, pursuant to section 28A of the Dairy Industry Restructuring Act. Thank you.
Hon TODD McCLAY (Minister for Trade and Investment) (17:30): I can help move us through this quite quickly. The approach is identical to that in the United Kingdom free-trade agreement we have, where I think a reserve quota was set up in a number of areas, including beef. It was a smaller one—it might have been about 3.5 percent. Therefore, it will be governed exactly the same.
Can I give an assurance that it will be done properly and fairly? Absolutely, we will. The reason a reserve quota is set up—we don’t have to; it’s not in the agreement—is to allow those who are not already exporting to that market to have the ability to establish themselves—to get a small foothold, should they want, with a reduced tariff rate to grow their business. Without that reserve, they could still export there, but they wouldn’t get a reduction of the tariff rate. In the case of some products—mānuka honey is an example: it is a significant reduction for high value mānuka honey—it would be hard for them to get into the market. This would allow some of them to have a foothold there.
In the case of albumins, look, it varies, but there is only one export of any significance from New Zealand. Do we want more to, should they choose to put effort into processing this product? The answer is yes; we do. They will have a small reserve that they can ask for if they meet the conditions, which are very similar fare to what we have for other quotas we share around the world. They would at least be able to start building a business export relationship in that market.
Hon DAMIEN O'CONNOR (Labour) (17:32): Thank you, Madam Chair. I thank the Minister for that explanation.
I just want to move to—still “clause 7” but—clause 7A. It was an insertion made in the Foreign Affairs, Defence and Trade Committee to deal with the issue of the commencement of the free-trade agreement. There’s some uncertainty, so my question to the Minister is: when does he foresee this being brought in? If this legislation is passed under urgency, then an Order in Council is required to bring the FTA into force. We’re wondering about that—that’s the first question for him.
Then: I guess the commitments here are to ensure that we have, basically, a pro rata system—depending on when the Minister decides, or the Government decides. If we, presumably, pass this legislation within the next week—or soon, I think, under urgency; it might be even today or tomorrow—then when does he see the Order in Council bringing this agreement into force, and what will that mean for new section 26C in clause 7A, the insertion here?
Has there been a calculation done—because I know he did this with the EU FTA—that bringing it in sooner will give tariff relief for some exporters? What’s the approximate value of us facilitating this, as we are—we’re trying to scrutinise but facilitate the passage of this legislation, and then there’s an Order in Council required. The question is: can that be done before Parliament lifts, and when might this FTA be brought into force?
Hon TODD McCLAY (Minister for Trade and Investment) (17:33): Parliament hasn’t voted on the legislation yet, so I don’t want to pre-empt the support of the House to see whether the bill enters into force. But I can assure the member that it is the Government’s intention for the FTA to enter into force. We will meet all of our obligations in both directions. The legislation allows us to pro rata, as was the case with the European Union free-trade agreement, and the amount of the pro rata—and, I suppose, value—will depend upon the amount of the quota which is left. It’s based upon a 12-month period. If there were two months left, it would be two-twelfths or one-sixth of the quota. But it is my expectation that before the free-trade agreement enters into force, the secondary legislation would be in force also.
Dr LAWRENCE XU-NAN (Green) (17:34): Thank you, Madam Chair. I note that my colleague is mixing up questions for clauses 7 and 7A, but I do want to move on to clause 13, which is Schedule 1.
Now, there are quite a few questions I have over here, but for the first one—this is an interesting schedule because it’s rules for allocation of export licences to multiple participants; I’m assuming this is still on the basis of the NZ-India Free Trade Agreement—I want to hone in specifically on clause 3 and when it comes to what we are defining in terms of eligible participant and submitting their export volume history.
I want to check with the Minister why it would then be relevant for an eligible participant in the New Zealand - India Free Trade Agreement, when it comes to dairy or, specifically in this case, albumin, to have to declare—this is clause 3—for the Japan prepared edible fat market and the European Union dairy processed agricultural products and high protein whey market. Would the Minister be able to just clarify why those two markets, and having the export market volume history declared, be relevant to be an eligible participant for the New Zealand - India Free Trade Agreement.
Hon PHIL TWYFORD (Labour—Te Atatū) (17:36): Thank you, Madam Chair. I want to speak to clauses 8 to 11, which extend the existing information, audit, and disclosure powers to albumin participants. I wondered if the Minister could say what guidance and compliance assistance MPI will give, particularly to the smaller exporters who will be covered by this.
Under section 29G, a participant or their employee or agent cannot refuse to answer a question merely because the answer may incriminate them, and I wonder what protections apply to information obtained through compelled answers in this context.
Also, how will commercially sensitive information supplied by applicants or obtained through such an audit be protected; and who may receive information disclosed under section 42, and are there any restrictions which apply to its subsequent use?
CHAIRPERSON (Maureen Pugh): I’m looking for new material. We’re starting to get down into the weeds.
Dr LAWRENCE XU-NAN (Green) (17:37): Thank you, Madam Chair. I’m still waiting for my questions around Schedule 1, but I do want to continue on with questions for the Minister on Schedule 1.
We did discuss a little bit when it comes to—I believe it’s called—the reserve portion, but I do want to check, because in clause 5 of replacement Schedule 5B in Schedule 1 it does talk about what happens in the event of an excess or shortfall in reserve export licence applications. I do want to check with the Minister—because the example that is given here is interesting—based on the existing exporters of albumin into the Indian market, how many licences would the Minister expect would be covered under the quota and in general? We did discuss a little bit about the reserve portion, but I think that is an important question again when it comes to excess or shortfall in reserve export licence application.
If the Minister has given the reserve export licences and then those licenced participants didn’t meet their expected quota within that, what then would happen? Would the reserve portion be then opened up again for tender? How would it be communicated with potential exporters that they can now bid any potential shortfall in that reserve export licence?
VANUSHI WALTERS (Labour) (17:39): Thank you, Madam Chair. I have a very brief question in regards to clause 9. This is the power to require information. I’m quite interested in the fact that it overrides section 60 of the Evidence Act, which is the portion of the Act that provides the non - self-incrimination provisions, both in terms of the criminal law but also in terms of the civil law. It’s an explicit decision to override that, which section 60 does allow.
My question is, really, how this compares to other comparable provisions in terms of the power to require information and whether like provisions also explicitly override section 60 or whether this is more of a novel provision that the Minister has decided on. Thank you.
CHAIRPERSON (Maureen Pugh): We’ve got five minutes.
Hon TODD McCLAY (Minister for Trade and Investment) (17:40): Madam Chair, thank you very much. I’ll try and move through these quite quickly.
The ability to compel to provide information is not unique. It is in other free-trade agreements, and indeed the last ones that the House passed have similar quota systems in them. The European Union, and, before that, under the previous Government, the UK agreement had similar abilities or powers in there. The reason for that is, as the House has decided on a number of occasions—the ability to export is easy; if you want to take advantage of a quota that you have been given as opposed to someone else having it, then you need to provide information, and should you not be meeting the requirements of that, we have the ability to get the information to ensure that we are meeting our obligation to the country we’re exporting to.
In as far as the 10 percent in the reserve is concerned and how it’s managed and all these other things, I think I’ve answered that on a number of occasions now in the House during this part of the discussion or debate, and that is that is the same as we have in other situations. The way it is governed and managed is to be fair and open and transparent. It is to allow new entrants to a market who might not be there already, but we will approach this in the same way we do with the EU free-trade agreement (FTA) and the UK FTA, and, in the case of acquisition, the access we have to a number of other countries, including Japan.
A party vote was called for on the question, That Part 1 be agreed to.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11;
Noes 29
Green Party of Aotearoa New Zealand 15; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Part 1 agreed to.
Committee of the whole House
Part 2 Amendments to Overseas Investment Act 2005 and Overseas Investment Regulations 2005, and Schedule 2
CHAIRPERSON (Maureen Pugh): We come now to Part 2. This is the debate on clauses 14 to 24, “Amendments to Overseas Investment Act 2005 and Overseas Investment Regulations 2005”, and Schedule 2. The question is that Part 2 stand part.
Hon DAMIEN O'CONNOR (Labour) (17:43): Thank you very much. This is a critical part of this agreement, and perhaps one of the areas where, I guess, the New Zealand negotiators had something to put on the table. My questions go to the Minister for Trade and Investment, and there are a number of technical regulations in here. Clause 18, regulation 85 is the definitions, and it says, “India branch means a branch of an enterprise if the branch is (a) located in the India territory; and (b) is carrying out business activities in the India territory”.
My question to the Minister is, how do we know and is he sure that we have negotiated sufficient protection to ensure that companies from other parts of the world are not going to access this trade agreement—and it’s effectively their right to invest up to $200 million in our country—and that we’re not opening the door to some other non-Indian companies. I’m sure the Minister has gone through this, and he’s probably got a reasonably solid explanation, but I’d like for him to put it on the floor of the House here, because I know, from New Zealand First’s perspective, it seems to be an area of grave concern. I think the House and Parliament deserves at least a clear explanation that this and the provisions in here will not be rorted or sidestepped for whatever reasons for companies from other than India to come into our country.
CHAIRPERSON (Maureen Pugh): Thank you. Unfortunately, there’s not time for the Minister to respond. The committee is suspended for a valedictory statement.
House resumed.
Valedictory Statements
Celia Wade-Brown
SPEAKER: Members, I’ll indicate now that at the conclusion of the valedictory statement by Celia Wade-Brown, the House will suspend for the dinner break. For now, I call on Celia Wade-Brown to make her valedictory statement.
CELIA WADE-BROWN (Green) (17:45): Tēnā koe e te Māngai o te Whare. E ngā hoa, e rau rangatira mā, e ngā iwi o ngā hau e whā, tēnā koutou, tēnā koutou, tēnā koutou katoa. Ngā mihi o te Wiki o te Reo Māori ki a koutou katoa.
[Authorised translation to be inserted by the Hansard Office.]
I have only been in this House for five minutes compared to many of you—though I haven’t been told to go back to my own country. Thank you, Aotearoa, for letting this immigrant become a councillor, mayor, and now an MP. I have been allowed to belong, but belonging is being made harder.
Let’s start with voting—with who’s included. We are truly proud of being the first country to achieve women’s suffrage. We should be equally proud that in 1975, this Parliament extended the right to vote to everyone who can live here indefinitely. Many countries are less generous than New Zealand about dual citizenship, so people genuinely committed to living here may not wish to relinquish their first passport. These are many of our nurses, our surgeons, our early childhood teachers. Shame on anyone who wants to narrow our democracy further by restricting who can vote. I started with the right to vote because today is the International Day of Democracy.
There are two more threads I want to draw on for both politics and my personal life. The first is Predator Free. For 20 years, I have been kayaking out to Taputeranga Marine Reserve, on Wellington’s south coast, to kill rats and protect the lizards and seabirds that live there. In the 1990s, I led a Wellington City Council working group that examined the feasibility of the then Karori Sanctuary. We gave it a big tick. Reserves have been planted, tracks created, and the birds have flown out of Zealandia to recolonise the city. My final signature as mayor was on the Predator Free agreement between two councils and the NEXT Foundation.
Since then, I served six years on the board of Predator Free Wellington. The professional and community effort has been extraordinary. That mahi is underfunded across the country—especially as Jobs for Nature was canned. As the Greens’ Predator Free spokesperson, I’ve taken time to meet groups working around the motu. My popular Cat Management Bill still languishes in the ballot tin. Several MPs have vowed to bring cat management forward next term—and maybe the existence of that bill encouraged the Minister of Conservation to put feral cats into the Predator Free 2050 Strategy. I will keep trapping and keep advocating for te taiao after I leave this building. Healthy nature is the foundation for all of us.
The second thread—you can probably guess this—is cycling. In 2008, this capital city agreed to a cycling plan, but there was zero budget. In 2009, I amended the budget to half a million dollars, and in 2010, advocates held a meeting called “Fix the Gap” to try to connect Petone and Ngauranga. That same year, I became mayor, and I cycled out to the airport to meet Hillary Clinton with my bike shorts hidden underneath my suit, which caused a bit of a furore. In 2013, the Rt Hon John Key opened the Remutaka cycleway and said it should really start in Wellington City—and I got into trouble with his comms staff because I let him ride my e-bike without a helmet. We now have the bones of a genuinely good network, and this year the marvellous Te Ara Tupua opened, with Julie Anne Genter, Minister Bishop, and me first across once the ribbon was cut. Walkers, runners, and cyclists are loving this part of the Great Harbour Way.
Affordable living isn’t just about rent and kai; it’s about whether your family can get to school or work or to the shops without always needing a car. The great rides are a wild success, with 50 percent walkers and 50 percent cyclists supporting regional tourism. But recently, the Prime Minister said he was nervous about crossing Molesworth Street. There are two lanes of motor traffic, two lanes of parked cars, a signalised crossing just up the road, and one very terrifying cycle lane. But given the lack of public sympathy for his plight, the tide may be turning in the cycling culture wars.
Talking of culture, it has been a huge honour to join official visits to Rātana, to Waitangi, and to Koroneihana. Those are occasions that showcase leadership for 500 years, not just for the next election. As a Green MP, I came into this House committed to Te Tiriti. I have watched settlements pass here with unanimous support, but I have also seen division. In my very first summer in Wellington—the 1983-84 summer—I visited Tapu-te-Ranga Marae. I wonder if more Pākehā took up the invitation to step onto a marae, they might understand this remarkable, unique mechanism for social cohesion. Empowering marae resilience is for all of us.
Leadership has never rested on a handful of individuals. Representative democracy should not be the only way we make decisions—I mean, the Westminster system doesn’t work that well in Westminster—and it must not be allowed to further privilege the wealthy and the powerful. There is a long tradition—certainly in the Māori world; also in the Celtic world—of deliberative decision-making: getting people to reason things through, not simply counting votes every three years.
Our economy has grown more than a hundredfold since 1960, yet the gap between our lowest decile and our wealthiest has grown wider. Waiting for economic growth to fix that is wilful blindness. Affordable living must be a deliberate choice a country makes, not a myth of trickle-down hopes.
Other things got worse since the 1960s: the state of our climate, our biodiversity, child poverty, addictions, homelessness. What has got better includes exactly what some parties long to wind back: we have reduced stigmatism towards rainbow, takatāpui, and disabled communities. That’s progress worth defending. I tremble a little for our mokopuna, and their mokopuna to come, as extreme rainfall, high winds, and warming oceans begin to trigger feedback loops. All of us bear some responsibility for those floods in Nepal, the heatwaves in Spain, and the wildfires in America. Individual action will never be enough, and neither will technology alone. We need systemic change in land use, transport, and science funding. This country has a far better future available for all of us if we cooperate, base decisions on evidence, and think seriously about consequences for future generations. Honest politics is just that: telling people the truth, unbiased by corporate donations, instead of promising them more while saying “no” to a fairer tax system.
I may have arrived here five minutes ago, but it wasn’t altogether an accidental journey. In 1996, I first put my name forward for Parliament—I don’t give up easily—on the Alliance list at a modest number 44, then I campaigned for the Greens in London in 1999—that was a Rod Donald idea. In 2002, I ran in a collegial contest in Rongotai with Glenda Hughes and Annette King—and we actually agreed on a remarkable amount. The 2020 and 2023 Wairarapa campaigns were also mutually respectful, with the Hons Butterick and McAnulty swapping places, but always focused on policy, not personal attacks. Thank you to campaign managers Chrissie and Annie for those years. I wish Lauren Craig and the Wairarapa Party Vote Green team all the best. And a shoutout to all the local body politicians who are living through some tough times.
I want to record my huge respect for Julie Anne Genter, having run in Rongotai myself—and I came third. She won in 2023 and I expect to win Wellington Bays again in November—and, of course, Tam in Wellington Central. But Julie Anne and I share an office that’s sort of a bicycle depot. You need some lycra, you need a pump, and I will really miss cycling off with Julie Anne, either at 10 p.m. or midnight.
Midnight urgency has been misused. Our communities, our iwi, our students—they’ve all got plenty of wisdom to draw on. If we let the select committees do that, I think we’d have better legislation. For example, the modest lifejackets bill improved immensely from the first reading to its passage because it wasn’t rushed. On the other hand, we’ve seen what happens when a contentious bill—or 30—is rushed through all stages. Winter energy payments, anyone?
My personal view is that a four-year term, with the Opposition chairing most select committees—not necessarily a majority; just chairing the select committees—would buy this House some breathing space. So would consulting—yes, consulting—on the Budget, the way local government already builds its long-term plans, and a higher threshold for urgency should be required. I look forward to a future Government that sees the four wellbeings as the point of central government and local government, and that honours Te Tiriti as a matter of course.
Now, to some thankyous. First, thank you to Alastair—who still refused to sit in the front row, but never mind—for standing by me through all these years, with coffee and hot water bottles as required. Thank you to our boys, who grew up in and around political campaigns and Green Party conferences. Ramsay and Jono can’t be here tonight, but I look forward to spending a lot more time with them, and with our grandson, Reid. Jono once asked me, “Mum, why do you always speak to people you don’t know?” That, my fellow MPs, is our superpower.
I thank Chlöe and Marama for their leadership, and my caucus colleagues for mutual support. Thank you to all our parliamentary staff: Kevin, Meg, Raewyn, Tom, Daniel, but all of you. Also, to our party staff and the volunteers around the country.
A huge thanks to Parliamentary Service, especially the outreach team and the library; our select committee clerks and advisers are awesome. Thank you to the House staff for keeping us always hydrated. Thanks to MPs and friends across the political spectrum, for the times we listened to each other. It’s really worthwhile.
Of course, there’s a lot of leadership outside this House, whether it’s Te Arikinui Kuini Nga wai hono i te po showing rangatahi what is possible; whether it’s Helmut Modlik reshaping democracy conversations; Max Rashbrooke, Catherine Knight, and Ganesh Ahirao helping us face inconvenient truths. But the important leadership comes from people who hold no title and no elected role. They’re the night shelter managers, the community leaders, the artists, the founders of new organisations working out how to reduce waste, to fix disease, and to make life better.
Why am I standing down, given my continuing passion for change? It isn’t my health—though I have to say an emergency appendectomy in May gave me a fright, but as the oldest woman in this House, I reckon I’m still reasonably fit. The reason is the calibre of our caucus, the calibre of our candidates: their energy, their commitment, and their willingness to be here at midnight. I am going to spend time with my friends and family in our regenerating forest, and on some exciting expeditions on foot, on bike, and in my kayak. I’m going to enjoy November’s Wairarapa Walking Festival—you’re all welcome to book a walk—and I’m going to be chasing some pūtea for completing the Wairarapa Five Towns Trail, so don’t expect me to retire quietly. To those who have gone before and those who will come after: tēnā koutou, tēnā koutou, tēnā koutou katoa.
Waiata—Purea Nei
Sitting suspended from 6.03 p.m. to 7.30 p.m.
Bills
India Free Trade Agreement Legislation Amendment Bill
Committee of the whole House
Debate resumed.
Part 2 Amendments to Overseas Investment Act 2005 and Overseas Investment Regulations 2005, and Schedule 2 (continued)
CHAIRPERSON (Teanau Tuiono): Members, the committee is resumed. Prior to the dinner leave, we were considering Part 2 of the India Free Trade Agreement Legislation Amendment Bill.
Hon DAMIEN O'CONNOR (Labour) (19:30): Thank you, Mr Chair. I know we put aside the committee for the valedictory; I think we all enjoyed that.
Just going back to this quite critical area of this piece of legislation that relates to amendments to the Overseas Investment Act and the investment regulations, I was asking the Minister in clause 18 around definitions of Indian companies and branches and individuals. The question was whether he is sure that the door is not left open for, I guess, individuals or companies or multinationals from other places around the world coming in through some kind of Indian re-export regime. I know that they have left a door open for us when it comes to dairy if we’re re-exporting. India has an interest in developing its own export capability; how do we know that the definitions in this piece of legislation, in clause 18, actually mean that we will have genuine investment from genuine Indian nationals? Maybe the Minister can take a call on that one.
Hon TODD McCLAY (Minister for Trade and Investment) (19:31): I’m very happy to. There are two differences here. The member maybe is confusing them—not purposely.
One is around export of products. The member is right—dairy products can be exported to India from New Zealand at a zero tariff rate and they can be re-exported with value added or something else, and therefore that’s why there’s a zero tariff rate. This is about investment into New Zealand, and I can give him the assurance that I am very sure that other nationalities will not be able to take advantage of this, because it is identical language to that in the New Zealand – European Union Free Trade Agreement and the New Zealand – United Kingdom Free Trade Agreement. All it actually is doing is applying a threshold of investment and different types of screening that will be required, lining up will all of our other free-trade agreements. All of our free-trade agreements, bar one, are at the same level as what this will be. The one that’s not is the Australia-New Zealand Closer Economic Relations Agreement, of course, a large amount of which is historically for very, very different reasons. So it doesn’t change anything around investment screening or anything else, other than saying that this is the investment threshold, and it lines it up with all other trade agreements.
Hon DAMIEN O'CONNOR (Labour) (19:33): I just want to carry on—I thank the Minister for that; I appreciate that India has a relationship with Russia, for example, and so I appreciate that it’s not the threshold, and that we’re moving from $100 million to $200 million. But the issue is: how do we know? Are we relying on the Indians to then ensure that the money has not come from Russia, through India, into New Zealand? I think most Kiwis would object to that backdoor way of inappropriate investment.
Hon TODD McCLAY (Minister for Trade and Investment) (19:33): In the very same way that this is dealt with under the New Zealand – European Union Free Trade Agreement and the New Zealand – United Kingdom Free Trade Agreement, both of which that member, at the time he was a Minister, was involved in negotiating. It doesn’t alter how New Zealand makes a decision around whether or not they get access under it; that is set out elsewhere. This is merely saying the threshold is moved to this level.
There is a concept called “denial of benefits”, though. In the case that somebody has tried to use it and they haven’t established themselves in such a way that they have a legal entitlement, New Zealand has the ability to deny those benefits. But it doesn’t alter the screening or ability or what needs to be done for a company or someone else from India. It is the same as all other previous agreements, and it really is merely only moving the threshold up to be equal to those.
And in every one of our free-trade agreements, it is the same threshold—it’s a $200 million threshold—except for the CER with Australia, which is higher. This is the same as China, the UK, the European Union, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership countries, the UAE—which this Parliament has signed off during this term of Parliament—and the EU one.
Dr LAWRENCE XU-NAN (Green) (19:34): Thank you, Mr Chair. Just on that, in terms of “India branch”, I understand that particularly for Part 2, we’re looking at the Overseas Investment Act and investment regulations, but this idea of what an India branch is as located in the India territory, and I feel like this is something that potentially will come up both in this part in terms of overseas investment into Aotearoa New Zealand but also later on, when we’re looking at Part 4.
I would be interested to know, for example, who then determines what is considered Indian territory. For example, there are a lot of contentions around where the boundary of India is, particularly in northern India, around the Kashmiri region. There are obviously a lot of—this is more, kind of, looking at international relations and international diplomacy. But, for example, if something that is within that particular region that is kind of very grey in terms of jurisdiction boundaries between India and Pakistan in Kashmir, what then determines what that would be? Who then determines what we consider Indian territory? I think that’s my question for this part, if the Minister wouldn’t mind giving a response to that.
Hon TODD McCLAY (Minister for Trade and Investment) (19:36): This is a trade agreement. It’s not foreign affairs. It’s not determining territories of countries. But I can give the member Dr Lawrence Xu-Nan an absolute assurance that this part of the bill is identical to that which was done in the European Union Free Trade Agreement Legislation Amendment Bill that that member’s party voted for. I accept you’re not supporting this, but it is the same. All it is doing is lining the threshold up, which is a commitment we’ve made, which in all of our free-trade agreements is the same amount. It doesn’t alter anything else other than that. Some of the things he’s talking about are dealt with in legislation or policy elsewhere, but they are not within the scope of this bill.
Dr LAWRENCE XU-NAN (Green) (19:36): Just following up on that. The difference is that there are, as far as I know—and please correct me if I’m wrong—no border disputes within the EU. For example, there is nothing between France and the UK that determines what is part of France and what is part of the UK—it doesn’t apply to things like Jersey, Guernsey, etc.—but when it comes to jurisdictions or regions like India, there is a very clear border dispute. My question, then, would be: are we going by what Aotearoa New Zealand would consider to be the boundary for this to be considered India territory? Are we going with the Indians’ interpretation of what is going to be the India territory? I just want to know which side we’re going with.
Hon TODD McCLAY (Minister for Trade and Investment) (19:37): Well, it’s an interesting debating point, but that’s a discussion that should have taken place during treaty examination. This legislation—any part of it, but to this part—doesn’t deal with that. What the member’s talking about is outside of scope. One is to do with the remit overall and how you might decide this. This is merely changing a threshold around investment.
Dr LAWRENCE XU-NAN (Green) (19:37): One final tiny question. All I’m asking for from the Minister is how the Minister would define paragraph (a) in clause 18(1) of this bill.
VANUSHI WALTERS (Labour) (19:38): Thank you, Mr Chair. I’m also on clause 18, but a slightly different question relating to the definition of “India individual”. I think the interesting thing about India is, of course, that it doesn’t allow dual citizenship but the Citizenship Act does have a term that is “overseas citizen of India”. It’s quite a unique category, because in many ways that individual has very similar rights as a citizen except they don’t get the right to vote and they aren’t entitled to hold particular positions of office either. But for all other effects and purposes—they can come into the country without needing a visa and there’s no notification that’s required in terms of advising police of one’s whereabouts or travel. And so it’s just a question as to whether those individuals would be covered within that definition.
Hon TODD McCLAY (Minister for Trade and Investment) (19:39): Well, the simple answer is that a definition of citizenship comes with a passport. If you think about, in New Zealand, you can have residents and permanent residents that have similar status to that of a citizen. They don’t have the passport; they’re not citizens. In this case, an Indian national citizen would have to have a passport. Anything else is an arrangement India has; it’s not to do with New Zealand.
Dr LAWRENCE XU-NAN (Green) (19:39): Thank you, Mr Chair. I’m going to move on to a new clause. I’m moving on to clause 20, “Regulation 88 amended”. Now, this specifically looks at the Overseas Investment Regulations 2005, and after regulation 88(2)(i), inserts paragraph (j), which is article 8.2.
Now, regulation 88(2) specifically refers to exclusions—I think the term is apply “subject to the exclusions contained in the following provisions”, and in this case, specifically reference article 8.2 of the India free-trade agreement (FTA). Now, looking at article 2 of the India FTA, some of these do, I guess, in some ways, make sense, when it says that the chapter, in terms of scope, should not apply to measures affecting Government procurement, etc. But what I don’t understand is, for example, how would paragraph 3(e) of article 8.2 in the agreement be excluded or is needing to be excluded in this particular regulation. So when it comes to air transport services affecting traffic rights, would the Minister just clarify on, in this case, it says just article 8.2, but rather than specifically certain parts of 8.2, is there any part in article 8.2 that, for example, should not be excluded as a part of the regulation?
Hon TODD McCLAY (Minister for Trade and Investment) (19:41): When agreements are negotiated, you can have a general clause around investment. If the member looks at some of the detail of what this does, it increases the threshold to $200 million, it provides transitional provisions for how this might work; but equally, at the same time, there’ll be areas that countries reserve. So increasing a threshold to allow $200 million to be invested, whereas some other countries that don’t have a trade agreement with New Zealand, it will be a much lower amount—for instance, World Trade Organization members that we don’t have a bilateral or collective agreement with have $10 million only. So this is a significant benefit to those that we have negotiated a free trade agreement with.
But there are always things that you will reserve and have different abilities too. An example in many trade agreements: the ability for us to create conditions around screening is the way that a previous Government has looked at how we might create some guardrails around who might invest in types of property in New Zealand. We reserve the right to do it and it’s for New Zealand to make those changes. The example the member’s just given around aviation: there are separate aviation agreements that give people rights to come and fly in and out of New Zealand—to have a right automatically to have access to New Zealand. I’m speaking hypothetically now. I know it would be a separate arrangement not covered by the free trade agreement.
So this clause merely lines up for an Indian group of New Zealand trading partners for which an increase of monetary threshold to $200 million applies to investments in New Zealand by non-Government investors in significant business assets for the purposes of providing services in New Zealand, but there are always a range of things that we have reserved or there is more conditionality around or other bits of legislation or policy will govern.
Hon DAMIEN O'CONNOR (Labour) (19:43): Look, thank you very much, Mr Chair. This is in clause 18 again, and it’s relating to “India territory means the territory of India as defined by Article 1.2(q)(i) of the India FTA”. Relating to the marine territorial areas of India, the Minister will be familiar with the World Trade Organization Agreement on Fisheries Subsidies, where India played quite a substantive, if not disruptive, part in blocking or assisting or disrupting the agreement.
So the question for the Minister is: if there are Indian fisheries companies working in India territory, and they may or may not be involved in illegal, unreported, and unregulated (IUU) fishing, then does the agreement allow us an ability to block or intervene or, indeed, take produce—as fish, it would be, or some kind of marine product—from the area, given the importance of this issue in trying to reduce fish subsidies around the world? The Minister himself—and I acknowledge that—has been involved in trying to progress this agreement.
The question for him is: would this agreement allow operators fishing in Indian territorial waters, who might or might not be conducting IUU fishing, to then be blocked from an investment into New Zealand? Because we have seen, as the Indian economy grows, the huge investments out of India into all sorts of industries, and into fishing would be a possible one that we might have down here. So I leave that question with the Minister as to whether there’s any ability to intervene.
Hon TODD McCLAY (Minister for Trade and Investment) (19:44): Thank you. Two separate issues again. One is the sale of product into New Zealand—in this case fish products, I suppose. That’s governed differently because this part is about investment in New Zealand, not where goods may come from; that’s governed elsewhere in the free trade agreement, including around the rules of origin. But in as far as the hypothetical example the member’s given—somebody’s ability to invest in New Zealand—there is a good conduct or good character test anyway that sits there, separate from this, not in this agreement, but we have reserved the right in all of our trade agreements for that to apply.
Dr LAWRENCE XU-NAN (Green) (19:45): Thank you, Mr Chair. I’m going to move ahead to the final clause of this part, which is clause 24, specifically looking at Schedule 2 of this bill. Now, this Schedule 2, New Part 15 inserted into Schedule 1AA of Overseas Investment Regulations 2005, regulation 33 makes sense in terms of duplication. Nothing in terms of acquisition of rights or interests in securities or of other properties will take effect until after commencement of this Act—that makes sense.
Regulation 34 in terms of no refund—I do remember seeing comparable clauses in other comparable bills, but I don’t remember asking it previously. I think, now, looking at things from a different lens, what has jumped out to me is that there’s been no refund of any fees on the grounds that the matter, for example, is no longer relevant—i.e. that the consent that has been applied for is no longer required. I want to check with the Minister: is that something that, for example, is retrospective, being my first question.
I think my second question is: if a consent is in the process of being granted or denied and this bill comes into effect and they no longer need the consent, it’s automatically granted, I get that. But what happens if, for example, a consent is still required and a person is in the process of doing that, but the bill changes the nature of the criteria of that consent? Would, then, a person be entitled to a refund of any fees during that period or will their consent application simply be judged under the new system?
Hon TODD McCLAY (Minister for Trade and Investment) (19:47): This is an easy one to deal with. If somebody has put in a fee before entry into force, they don’t get a refund; after entry into force, they don’t have to pay a fee.
Hon DAMIEN O'CONNOR (Labour) (19:47): Thank you, Mr Chair. Really it’s an opportunity for the Minister, Hon Todd McClay, to explain the difference between type 2, type 3, and type 5 investors, as explained in the bill here, because I think anyone reading this might be somewhat confused, as it makes reference to the UAE individual, an India individual or, indeed, as one here, to Hong Kong. While this is amending legislation, some who go through this bill here might be somewhat confused. I’d really be interested in having the Minister’s explanation of those different types of investors and the relationship with the UAE, as pointed out and referred to in this legislation.
Hon TODD McCLAY (Minister for Trade and Investment) (19:48): Well, again, this is really lining things up with elsewhere. The types are actually defined elsewhere in the Overseas Investment Act, and this is the same provision that is in those previous agreements. My understanding of advice is it’s the same as the UAE as well as the EU and the UK—the last three that we’ve done. The description of the definition sits outside of this somewhere else—it’s merely borrowing it. There are, from time to time, updates to line things up—not from the point of view of changing it, but if you think about that you’re going to extend something to India, rather than amendments that are hard to see, they will from time to time just reproduce with it put in there so that when someone else looks at it, they see it flows clearly, rather than an amendment to an Act somewhere else that you’ve got to find how it fits together. So it’s merely to be more functional.
ANDY FOSTER (NZ First) (19:49): Thank you. Look, my question is in respect of clause 15—so it’s the section 61A amended of the Overseas Investment Act. I look at section 61A, and it’s got a long list of various free trade agreements. What I wanted to know was just whether those free trade agreements are all lined up. This is about inward investment, as I understand it. We’re concerned about both outward and inward investment, but this is about inward investment, OK—I understand that. But if they’re all lined up in terms of the regimes which are there, because there’s a long, long list there of trade agreements: China, Hong Kong, etc., etc., all the way through to UAE and so on.
If the amounts of money which are allowed for in each of those free-trade agreements are more or less in line with each other, or if there are any which are distinctly—if this is outside of the parameters, they’re all the same, so we’re talking about $200 million, roughly speaking. If the Minister could just explain the regime which is there, in terms of what is allowed for in terms of inward investment, the nature of those kinds of investments, and if there are any restrictions on those at all. It would be most useful to understand that. Thank you.
Hon TODD McCLAY (Minister for Trade and Investment) (19:50): As far as this legislation is concerned, it merely lines it up to say that India also is at $200 million, as the others are. We’ve negotiated different amounts, so most of the investment agreements—free-trade agreements around investment—have a most favoured nation clause. As it’s gone up, it’s extended to others, we’ve put in the list, and it goes up to $200 million for all of them. As far as the list of what you can invest in, unless it is excluded, actually it is not dealt with in this legislation. It is separate, and it’s under the Overseas Investment Act. So it’s not directly in the scope of this.
Hon MARK PATTERSON (Minister for Rural Communities) (19:51): Just picking up on that point, the $200 million threshold, is there any obligation—I can’t see it in here, and I assume it’s here somewhere. Is there any obligation on the Indians to actually invest any money here? The most egregious part of what is a terrible deal is the US$20 billion, which as of today is nearly NZ$35 billion that we’re expected to send into the Indian economy. It’s unbelievable that we would sign up to that—I cannot believe it. I cannot see within these clauses the inward investment—any threshold or any obligation on the Indians to reciprocate what seems to be an unbelievably generous concession that we’ve made.
We in New Zealand First obviously want to see New Zealand businesses investing in New Zealand. I’m part of the wool industry, as you know, Minister, and we’ve got a 2.5, 2.75 percent reduction in our tariff. The amount of that goes up and down every week at the auction—I mean, it’s negligible; it’s nothing. We’re trading away, potentially, the ability to—our own manufacturing base. That’s what I’m really worried about here. I want to grow the New Zealand wool industry and the New Zealand manufacturing base, but here we’ve got an obligation in the deal itself to NZ$35 billion offshore, but I can’t see where it’s in here—and I hope the Minister can put me right on this—where there’s a corresponding obligation on the Indians to actually invest in productivity and growth in New Zealand.
Surely our negotiating team looked at those two equations and said something does not add up here. We’re expecting to send $35 billion offshore—that’s money we desperately need to double our exports here; the investment needed to add value to New Zealand. The concern here is that we’re actually going to incentivise more export of raw material into India so it can be processed over there, because that’s where our companies are investing, but, correspondingly, we’ve got no obligation, as I can see within this threshold of $200 million that’s referenced in Part 2, that they’re actually going to spend a red dime here.
There is nothing there, so can the Minister please explain what the reciprocal obligations on the Indian Government or the Indian economy to actually invest in New Zealand and to our productivity and our growth, because that’s exactly what this Parliament—and the Labour Party can hang their heads in shame here as well—is looking at, extraordinarily, sending off overseas. I would like to know what the reciprocal obligation is within Part 2 that we get our fair share in this deal.
Hon TODD McCLAY (Minister for Trade and Investment) (19:54): This bit of the legislation is merely about aligning a threshold for India, as that member’s party voted in favour of in the European Union free-trade agreement. They didn’t in the UK one, because they weren’t in Parliament then. They probably didn’t in the China agreement because, actually, they weren’t in favour of that. But it’s merely lining this up, so there’s no difference here to last time that member voted on a free-trade agreement in this Chamber. The clause is identical—exactly the same. The other things he’s raised are outside the scope of this.
We did canvass this very, very widely when we did the discussions around treaty examination, and that’s the time when we go into all parts of the legislation. This legislation, very, very narrowly, does a small number of things, including setting the quotas so New Zealanders can get product into India for the first time, in some cases where no one else in the world is able to, and then a few other minor changes not within scope.
I would just comment for a moment that it’s fair for members of the House to have views; they should not mislead, because that member knows good and well that any obligation the Government has taken on around investment is a commitment to promote, nothing more. I do note that when he went to India and put out a press release that he enjoyed the hospitality of Indians and he dined with them and he spoke positively about the relationship, he was very, very different than he is tonight in this Chamber. But I do like the woollen suit he’s wearing, that he bought when he was in India.
CHAIRPERSON (Teanau Tuiono): The Hon Mark Patterson—but just a reminder to the Minister to keep it within scope of the bill. There are issues, of course, within the agreement, but this is about the legislation, which is about amending the agreement.
Hon MARK PATTERSON (Minister for Rural Communities) (19:56): I am trying desperately to keep it within scope. The Minister referenced in his answer the European free-trade deal, which we absolutely did. I don’t recall a clause in that deal where there was an outward investment clause, so that would seem to be a disparity here that is unexplained. Could he explain that, since he’s raised this, not me.
Hon DAMIEN O'CONNOR (Labour) (19:56): Mr Chair, thank you very much, and I’ll go back to clause 18. It does define, as I say, Indian branch companies or individuals who might be able to invest in our country, so the question for the Minister: if there was to be an Indian company that might want to—given there seems to be some concern about the export of raw materials, if we were to have investment in New Zealand in, say, a wool processing plant or a wood processing plant, would the Minister think that that’s a positive move and that this clause 18 would enable, indeed, investment from India into New Zealand that might add value to our exports out around the world in wood or wool?
Hon TODD McCLAY (Minister for Trade and Investment) (19:57): This bit of the legislation doesn’t speak to whether things are good things or not; this merely sets the threshold when you come in. There’s a different Act of Parliament that makes those determinations and those decisions. That Act of Parliament is not being amended by this, other than there’s a $200 million threshold for investments in India, which does go back to being exactly the same. Although the name European Union versus India is different, the clause is virtually identical in this piece of legislation.
Dr VANESSA WEENINK (National—Banks Peninsula) (19:57): 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 59
New Zealand National 48; ACT New Zealand 11.
Noes 63
New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Motion not agreed to.
Dr LAWRENCE XU-NAN (Green) (19:59): Thank you, Mr Chair. Considering we’re still on Part 2, I think what the Hon Mark Patterson has raised—and, actually, the Hon Damien O’Connor raised—are both really important points. What we are not seeing in previous trade agreements are a comparable examples.
Just seeking your guidance as well, Mr Chair: while it is true that the agreement itself has received a treaty examination process not unlike a select committee, we have actually never had the opportunity to debate, even if it’s not the agreement itself—when we’re looking at the content of the bill, a comparable regulatory impact statement, which we do often debate, is in the form of the national interest analysis. Therefore, like we would do with a normal committee stage on a bill—putting policy intent, etc., from a regulatory impact statement—we should be able to also draw on the national interest analysis as a part of the debate on this bill. I think it is important, while we’re still debating Part 2, that we are able to pull on the content of the national interest analysis as well as consider the fact that we have not had a chance to debate the agreement as part of a committee of the whole House in this Chamber—that we should be able to draw on certain elements of that.
Tim Costley: But we’re not.
Dr LAWRENCE XU-NAN: You can, by all means, take a closure motion. I think, with that, we do just want to elaborate on the point that—this is quite interesting, because this must be what it feels like for a members’ day when we can actually expand the scope quite broadly. I think, in this case, we do need to discuss the fact that, within the policy intent that sits behind this, we understand that we are comparatively speaking a much smaller economy—we’ve got to admit, in terms of economies of scale—compared to India and there is this idea that there is an intention to promote the investment of US$20 billion, but surely there is also, through the Overseas Investment Act, a comparable expectation. I guess my question to the Minister for Trade and Investment then is: when we’re looking at overseas investment from India here to Aotearoa New Zealand, what modelling has been done to ensure that there is some level of comparable investment also to here. Now, it might not be locked into the agreement itself, but I am assuming this is something that the Ministry of Foreign Affairs and Trade has previously looked into or that the Minister would have looked into. I think we could have a little more conversation around that modelling.
Hon DAMIEN O'CONNOR (Labour) (20:02): Thank you, Mr Chair. I’ll go back to clause 14, which is in Part 2: “This subpart amends the Overseas Investment Act 2005.”, and then Subpart 2, of course, amends the Overseas Investment Regulations 2005. Those people who are listening, or who might be reading through or following on their iPhones, possibly, will be saying that that is quite an old piece of legislation and indeed, “Has it caught up?” One of the changes that the Government announced yesterday or the day before was changes to the charging regime and the time frames for overseas investors. My question to the Minister for Trade and Investment is: do the new provisions that were announced yesterday—and I am not quite sure of the detail; many of the things announced by the Government, you take with a pinch of salt. While they have said it will be cheaper and faster, my question is: how does that relate back to the 2005 regulations which we are amending here, and will it make it easier or cheaper for Indian investors to come into New Zealand? Indeed, the question is: why?
Dr LAWRENCE XU-NAN (Green) (20:03): Thank you, Mr Chair. We’re still waiting on quite a few responses, I think, from the Minister for Trade and Investment regarding our questions. When we are looking at, let’s say, clause 19—in terms of “ownership and control test”—I understand that when we are looking at Part 2, a large part of this, particularly when it comes to Subpart 2, is to do with the regulations themselves. Usually, when we’re looking at regulations, we are looking at a piece of secondary legislation. I want to check with the Minister for Trade and Investment: with the Overseas Investment Regulations 2005, surely it will require some form of Order in Council when we’re looking at this? We have asked the Minister previously. When the agreement comes into effect, what then is the timeline for the Order in Council to enact certain secondary legislation as a part of the requirements of this bill, particularly when we’re looking at overseas investment regulations?
Also, when we’re looking at “ownership and control test” in the definitions, or any other parts of this particular part of the bill—I think the Hon Damien O’Connor was asking questions about the different types of investors that we still haven’t got a clear response on from the Minister. When we’re looking at “ownership and control test”, how would this particular bill and this particular part look at the ownership and control test differently that what we have seen previously, if it does at all?
Also, when it comes to this part, is there, I guess, a comparable ownership and control test when we’re looking at India, the other party to this particular agreement? While we are enacting a particular bill in response to an agreement that has been signed between two parties, surely the Indian Government would need to do something comparable, which would then mean—or are they a monist system, in which case any agreement they sign is automatically a part of their domestic legislation? When we are looking at their comparable version of the Overseas Investment Act and overseas investment regulations, has there been any work that has been done by the Ministry of Foreign Affairs and Trade or any part of the national interest analysis that looks at that comparability between the two jurisdictions and the way that we look at overseas investment in general? Again, we’re looking at this from our side, and India will look at things from their side, but if we have fundamentally different interpretations of that, there might be mistakes or mishaps with the interpretation of that. I just want to check with the Minister how the Minister or the ministry would deal with differences in the interpretation and definition.
Hon TODD McCLAY (Minister for Trade and Investment) (20:07): Well, maybe I can read something here that will help members with this. Part 2 amends the Overseas Investment Act 2005 to add the India free-trade agreement to the list of free-trade agreements in section 61A of the Overseas Investment Act 2005. It doesn’t alter anything other than adding that name—and, of course, that brings the threshold up to the same as all the others. In as far as how India meets its obligations, this bit of legislation doesn’t deal with this; this legislation doesn’t alter or amend another Act other than adding the name “India” to it. It doesn’t change the definitions of the classes of types of investors: that is dealt with elsewhere. Should the Overseas Investment Act ever be amended, and those amendments would cover some of these things, it would flow through to all of our free-trade agreements, one supposes.
To answer all of the member’s questions, this legislation doesn’t do any of the things other than adding India to the list of countries we have a free-trade agreement with, number one; and then, number two, of course, is aligning the thresholds. I’ve said previously in the debate that it lines up the threshold of $200 million investment, which is the same in every free-trade agreement we have except with Australia’s closer economic relations, CER, which is higher for historical reasons.
CHAIRPERSON (Teanau Tuiono): Just before I take the next calls, just to sort of give us a way that we will approach all the parts, including this part: we are debating part by part. The scope has to be within that part as well. What will also be useful for the committee is if you refer to the clauses—that will also assist the committee. I appreciate the comments that people have made about scope, but the clauses and the parts will help to guide the scope. Vanushi Walters.
VANUSHI WALTERS (Labour) (20:09): Thank you, Mr Chair. I’m on clause 22, which is in Part 2—let’s see if there’s a subpart—it might be Subpart 2, from what I can see—
CHAIRPERSON (Teanau Tuiono): Yeah.
VANUSHI WALTERS: This is a clause that amends Regulation 94 to add the India free-trade agreement (FTA) effectively to that regulation in the definition of a “type 3 investor”. As the Minister for Trade and Investment has said, that lifts the threshold from $100 million to $200 million—I understand that. My question is about the types of investment the type 3 investor includes in relation to the India FTA compared to a type 3 investor under a different FTA. As far as I can see, under the China FTA, it is an investor who is investing to establish a commercial presence in New Zealand through which they’ll supply a service, or who is investing in a commercial presence they’ve already established in New Zealand through which they’re supplying or they will supply their service, but those services have to fall within a specific area for China that are either environmental services, construction or engineering, agriculture or forestry, pure engineering, integrated engineering, computer-related services, or tourism- and travel-related services.
My question is whether the categories of service are the same for the India FTA under that type 3 investor, as compared to the China FTA and the categories that I’ve just listed, or whether those are different, and if they’re different, then what binds that category together across different FTAs? Thank you.
ANDY FOSTER (NZ First) (20:11): Thank you, Mr Chair. I want to return to clause 15, which I asked a question about before. I just wanted to make sure that I understood the requirements we’ve got here, and I’d certainly like the Minister for Trade and Investment’s response on this.
I am assuming that if we were not to pass this piece of legislation, then the free-trade agreement (FTA) itself would be unimplementable, although—and I notice that he’s taking advice at the moment—obviously, the FTA itself has been signed. The FTA has been signed—and I turn to you now, with you having taken that advice, Minister—but we need to pass this to make that FTA implementable. Presumably, that is an indivisible document, because if there was any part of this that were to fail, then the FTA would itself be compromised. That’s what I’m looking for your advice on, because I think the advice you’ve given us it that the only time that this House has actually debated the FTA itself to any degree whatsoever was in the first reading, if at all, and, therefore, we’ve never had the opportunity to debate the content of the FTA itself, other than what is here—yes?
Dr Lawrence Xu-Nan: It wasn’t even called a debate; it was just a first reading speech.
ANDY FOSTER: Well, yeah, that’s what I thought. I think it’s very important that people understand that that’s exactly what is going on, because the kinds of concerns which we have about this piece of legislation which we’ve articulated, which are the issues about the investment externally—the requirement to put that sort of $20 billion into India—and I’ve looked at that also.
Hon Mark Patterson: US dollars.
ANDY FOSTER: US dollars—yes, as I say, it’s in US dollars. If the Indians decide—and it’s them that decide—whether we have put sufficient effort into doing that, then they can appropriately chastise us and take us to task, and, in fact, it says that they can impose “proportionate remedial measures” and rebalance tariff concessions. There’s a lot of important detail in that which this House has not had the ability to have a look at, and we are told that it’s outside of the scope of this conversation we’ve got here.
All we’ve got in front of us—and I just want to be really, really clear; well, to make sure that I’m clear—is that we have a small set of items in this bill, but those things are also required to be passed for the FTA to be passed. If they were not to be passed, then the FTA would be compromised. Now, that’s the assumption, and the question I’m asking the Minister is that if these were not to be passed, then the FTA, I assume, would be compromised.
I’d also be really interested in the process which the FTA itself went through to be approved, because that would seem to have been done by the executive, but the executive, clearly, on this free-trade agreement, was divided, and so it would be appreciated if the Minister could respond to those questions. Thank you.
Dr LAWRENCE XU-NAN (Green) (20:14): Thank you, Mr Chair. I think that it is an important point that has been raised by Andy Foster, but if we are looking at this, although the Minister for Trade and Investment has said that this particular part—if you are looking at clause 15—the changes to the Overseas Investment Act are something that is standard. Yes, I do believe that when we are looking at comparable agreements, whether it’s the New Zealand - UAE Comprehensive Economic Partnership Agreement or the New Zealand - European Union free-trade agreement, the New Zealand - United Kingdom free-trade agreement, or anything else, we do see comparables, and the Minister is absolutely right in terms of the $200 million threshold. That’s not been changed and that has not been adjusted. That’s true, but in none of the other agreements we have seen have we seen from the other side an expectation of, essentially, overseas investment, and I think that this is where the crux of this particular part is really important for us to unpack.
For example, if we’re looking at page 106 of the national interest analysis, it says “New Zealand is required to promote foreign direct investment from investors”, but I guess in this case, for example, when we’re looking at the definition of “Overseas Investment Act”, would the promotion of overseas investment under our Overseas Investment Act be considered overseas investment? If the promotion of overseas investment in our Overseas Investment Act is not considered overseas investment, I guess, in some ways, how then do we expect the other party to this agreement—particularly from the Indian Government’s side. When they are looking at updating their overseas investment Act, how then would they put it in their legislation—if they have to—to ensure that the word “promotion” is captured in their domestic legislation?
Again, if the Minister wouldn’t mind clarifying that promotion is not in our Overseas Investment Act—I think that that is an important part for us to tease out here. Again, none of the other agreements that we’ve seen previously contains a similar comparable clause such as chapter 9 of the New Zealand - India free-trade agreement. I do want to check that with the Minister, and my specific question then is around this: is promotion itself considered an overseas investment in the Overseas Investment Act 2005? That is specifically for when we’re looking at clauses 14 and 15 in Part 2.
Hon TODD McCLAY (Minister for Trade and Investment) (20:17): Well, I can help very quickly with this. This piece of the legislation—Part 2—deals with the Overseas Investment Act, and it merely adds India to the list of free-trade agreements (FTAs), lining it up with a threshold of $200 million. It makes no other legislative commitment by this House other than putting India in around that threshold of $200 million and adding them to that list of all other free-trade agreements, as I’ve said, except for one, which is the CER Agreement, which is a different amount.
As far as the different categories are concerned—which the member from the Opposition raised earlier—in effect, what this does is it lines up India with the EU and the UK free-trade agreements. Some others have a slightly different treatment when it comes to each of the five categories, but that is based upon something that was negotiated at the time in a limited most favoured nations provision. That means that in some areas, as an example, when the threshold increases, that is extended out, but in some cases where we may agree something—as an example—with the EU FTA, it wouldn’t automatically extend out to other countries, and so this is being treated the same as those last two agreements.
Hon MARK PATTERSON (Minister for Rural Communities) (20:18): I want to go back to this $200 million threshold and the national interest test levers that we would still have. That’s quite a high amount of money, and if I look at some of the examples in the bill in terms of where the tariffs are getting reduced, mānuka honey is one where tariffs are being reduced. I reckon $200 million would just about buy the whole New Zealand supply chain.
If I look at the wool industry, which is another one captured in here, we have one scourer, one company—well, we have two scourers, but they’re owned by one company. It’s a monopoly. Now, with that $200 million threshold and without the protection of a national interest test, we could lose control of a key piece of infrastructure where, essentially, if it wasn’t in New Zealand ownership, all the wool could be just sent offshore and our manufacturing base could be starved of scoured wool. We’d have to buy it back from overseas.
Actually, within the context of the New Zealand economy and some of our smaller primary sectors, that $200 million is quite high, and so I want to understand what levers we have. What’s our national interest test? With scouring, it would be devastating for the industry if we lost that scouring to foreign ownership. How would we intervene in that situation? Are we powerless under this $200 million threshold, or is there at least some—at least some—protection there for our industries so that we’re not just being prepared to wave some of them away for the sake of making a commitment that the Prime Minister made in a debate speech before the last election to get this through expediently before this election? Have we really taken the time to consider the consequences? As Dr Lawrence Xu-Nan pointed out, there are substantive parts of this bill that we’re not actually, really, getting the chance to debate. This is the only chance we’ve got to ask some of these more fundamental questions. Thank you.
Hon TODD McCLAY (Minister for Trade and Investment) (20:20): Where there’s an opportunity to ask questions about what is different and what is within scope, it’s for the chair to determine that. All I can really say is that the part of the discussion around the $200 million and whether that is a significant amount, an important amount, or not might well have been debated by that member when the UAE free-trade agreement went through that he voted in favour of, because it is the same amount, or the EU free-trade agreement during this term, because it is the same amount and that member’s party voted in favour of it. Outside of the scope of this bill is around thresholds, and it’s around regimes to consider investment and so on. That’s a different Act of Parliament. It’s not here. Whilst there have been changes during this term of Parliament around that under the Overseas Investment Act, that member’s party, in coalition, has supported those as well. What is unclear to me is whether this is a concern about a $200 million amount and what it might do or about the country the money is coming from.
Hon MARK PATTERSON (Minister for Rural Communities) (20:21): Point of order, Mr Chair. I take offence at that last comment.
CHAIRPERSON (Teanau Tuiono): What’s your point of order?
Hon MARK PATTERSON: I take offence to that last comment, which, essentially, said that it was because of the country, not the actual contents of the bill, which is absolutely wrong. We think this is a terrible deal. It’s nothing against India as a country. So I do take offence to that comment.
CHAIRPERSON (Teanau Tuiono): Yeah, sorry, that’s not actually a point of order. I take your point, but it’s not actually a point of order.
ANDY FOSTER (NZ First) (20:22): Mr Chair, thank you. I just wanted to note that the Minister hasn’t actually answered the questions that I asked earlier. The first of those questions was around the issue around the process that we’ve got to. You’re quite clearly hearing from certainly the parties here who are opposed to this bill—not the bill, but the free-trade agreement (FTA) itself. There hasn’t really been an opportunity to discuss that in this Chamber. Now, that said, I know that we need to focus on what is in front of us in terms of the bill. I take that. The question that I asked was: if this bill were not to pass, what would happen to the FTA itself? Is this legislation integral to the FTA? I’m assuming that it would be.
Now, the Minister has also said that there is nothing different between what we’re doing with the $200 million inward investment to any other—the UAE one, the EU one, and so on—so it’s exactly the same. I take that point. The question I would ask you is whether there is a corollary to this FTA in any of those arrangements that says that New Zealand has to show best endeavours to send $20 billion USD, or $35-odd billion New Zealand dollars, of investment to another country, to the UAE, or to the EU. Do we have to do that in any of those arrangements? That is the concern. It’s not the country that it is coming from, as the Minister said. That is the issue that we are concerned about. It’s our ability to do that. It’s also the one-sided bit at the end of that process, which is if India decides that it doesn’t think that we’ve given enough effort to do that and to demonstrate that we collectively, New Zealand Inc, have invested that $35 billion in India—and the wording is quite clear here—it allows them to impose “proportionate remedial measures” to rebalance tariff concessions and to continue to do so until they are satisfied that we have invested sufficiently in India. Now, if that is also reflected in the EU and UAE arrangements, fine; tell us that. That will be really useful, but if it’s not, that is the concern that we’ve got, not the country of origin.
CHAIRPERSON (Teanau Tuiono): Just before the Minister takes a call, we are constrained by the legislation that’s in front of us. This is a debate about Part 2, which includes those particular clauses. I have noticed that some members want to be able to talk around some of the issues around the agreement. The Government enters into agreements, but the legislation that’s in front of us is about implementing that agreement. It is possible to be able to talk about the issues that you clearly have some interest in, but I ask members to do that within the context of the clauses that are in front of us.
Dr LAWRENCE XU-NAN (Green) (20:25): Point of order. Thank you, Chair. Thank you for that clarification. I agree, but also, at the same time, we understand—when it comes to the agreement or the policy intent itself and when are we going to change the agreement or change the policy intent in this case—however, that having the ministerial intent and having the Minister’s intent in the Hansard in terms of clarifying certain aspects of the agreement that pertain to a particular part of the bill is quite important, and it is a fundamental purpose of the committee stage. Yes, I do agree with you, Mr Chair, and I think the questions we have seen so far are specifically referencing a particular clause and the impact that this clause will have in the context of this bill, which is only in front of this committee because of the agreement. I think it is important for us to have some of the Minister’s intent on record.
CHAIRPERSON (Teanau Tuiono): Just to respond to the point of order, that is entirely possible within the context of the different clauses. I know members are very skilled across the Chamber here and will be able to ask those questions within those particular clauses and within Part 2, which is what this debate is about.
Hon DAMIEN O'CONNOR (Labour) (20:26): Thank you very much, Mr Chairman. I refer to clause 15, which is “Regulations regarding alternative … thresholds for overseas investments in significant business assets”. It’s in relation to the points raised by New Zealand First here, I guess. They had some concerns, and we are moving from $100 million to $200 million—that’s what this change is doing. The question to the Minister, though, is around the safeguards, if you like. Most of these applications will still be scrutinised, I guess, by the Overseas Investment Office, and unless there’s exceptional reasons why not, it will probably give approval to them. But there may be some instances where the Overseas Investment Office might say no, because most of the agreements—and I’m guessing this one; and if I’m wrong, Minister, please clarify—retain the ability for our sovereign judgment over these investments to say no, for good reason. It has to have a good reason. What we’re doing is shifting the threshold from $100 to $200 million. It’s generally easier under $200 million, but there’s still an ability to intervene.
What we have said—and I guess it’s a question relating to New Zealand First—is if the Overseas Investment Office says no and the Ministers intervene and say yes, will the Indian Government be able to challenge that? Or if the Overseas Investment Office says yes and the Ministers say no, will it be the same thing? I guess the question is for officials and the Minister, because I understand that Ministers have overridden advice from the Overseas Investment Office and these sales have gone through, endorsed by New Zealand First in Government. So I’m wanting to check whether that will continue or whether these changes to the legislation will open the door for any litigation from India or from a potential investor.
Hon TODD McCLAY (Minister for Trade and Investment) (20:28): Mr Chair, thank you. That’s a good question. It was constructive. It doesn’t alter the definitions at all. They remain the same across free-trade agreements (FTAs) except where, in an FTA, it’s been negotiated differently. I gave an example earlier where, in some cases, a qualified most favoured nation provision for some areas could be liberalised in one agreement but it may not apply to another one. Sometimes they’re older; sometimes they’re newer. Equally, the safeguards are not altered by this clause of this legislation. In as far as the definitions of a “significant business” or the safeguards around an investment, those don’t change. They remain outside of the scope of this bill. They’re in the scope of the Overseas Investment Act. Where the Government has the ability to change that, they could do so. Again, I would refer the member to the previous groups I’ve talked about, because it is the same as those from the EU to the UK and some other ones. It doesn’t alter it at all; it’s merely adding the name “India” to it, the threshold goes to $200 million, and those safeguards and definitions around business and so on remain the same. That’s a different Act.
Dr LAWRENCE XU-NAN (Green) (20:30): I do want to pick up on what the Minister for Trade and Investment has been consistently saying, which is about the $200 million threshold. My recollection was that the threshold was increased from $100 to $200 million for the United Arab Emirates Comprehensive Economic Partnership Agreement Legislation Amendment Bill (CEPA)—now Act. That was where $100 was increased to $200 million, but I thought it was for the context of that agreement only, because in this agreement, as clause 15 stands, it’s drawing on section 61 of the Overseas Investment Act. Now, section 61 of the Overseas Investment Act is referencing section 13 of the Overseas Investment Act, and section 13 of the Overseas Investment Act, subsection (1)(a)(ii), still has the amount at $100 million. Would the Minister be able to clarify where the $200 million amount came from? It’s not added in this bill, but it’s also not in Overseas Investment Act, but it’s in the CEPA.
Hon TODD McCLAY (Minister for Trade and Investment) (20:31): Within the Overseas Investment Act, the threshold is $100 million. Free-trade agreements have lifted it up. I would need to be sure, but from recollection, I think, the Trans-Pacific Partnership (TPP) and then Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) agreement took the threshold to $200 million. There was then a most favoured nation (MFN) clause in some other agreements, including China, which increased their threshold to $200 million as well. The most favoured nations clause in the UK agreement was set at $200, in the EU, $200. Actually, as a result of subsequent agreements negotiated after CPTPP—whichever one it first was—and that most favoured nation clause, which looks backwards to increase it, they remain the same.
The member is correct that the Comprehensive Economic Partnership Agreement (CEPA) went to $200 million because, under the Overseas Investment Act, they already had access to a $100 million threshold, even though we didn’t have an agreement. That’s what the Overseas Investment Act says. This has increased it for them. The reason we do it in this way is that a benefit of additional investment is with a partner we have a trade agreement with. Any country we don’t have a trade agreement with doesn’t get the benefit of the higher amount. They would sit at the $100 million threshold.
Finally, any country outside of that—if we take, for example, World Trade Organization (WTO) countries, a commitment that New Zealand and others have made to the WTO is for $10 million. Over time, New Zealand has put that at a $100 million threshold through legislation. Free-trade agreements have put it up in the case that, with any of those agreements, we had gone higher than $200 million. Any trade we had a most favoured nation clause would have increased to that as well, just as was the case for China, as an example.
ANDY FOSTER (NZ First) (20:33): Thank you, Mr Chair. Look, I rise again—I didn’t really want to have to do this, but, Minister McClay, you’ve been on your feet at least twice since I asked three questions and you haven’t answered any of them. If I might, do you want me to remind you what the questions were?
Hon Todd McClay: No, no.
ANDY FOSTER: OK, thank you.
Hon TODD McCLAY (Minister for Trade and Investment) (20:33): Sorry, the reason I didn’t is that they’re all out of scope.
CHAIRPERSON (Teanau Tuiono): Steve Abel.
Andy Foster: No, one of them certainly was not so I’ll have another go.
STEVE ABEL (Green) (20:33): You have, Minister McClay, been talking a lot about this threshold—$100,000, $200,000—
Hon Todd McClay: Million.
STEVE ABEL: $200 million. A fifth of a billion dollars.
Tim Costley: Cheaper than a KiwiMart.
STEVE ABEL: That’s right, but perhaps much worse for the country. The question I have, Minister, in regards to that, and notwithstanding the point that my colleague Mark Patterson made about the importance of retaining the scourger in New Zealand—the two scourgers—the risk to us, as an economy, if we lose it. Is there some component to having a higher threshold, notwithstanding that it hasn’t got precedent in free-trade agreements elsewhere, to try and clawback some of the exported capital that we are obliged to send to India as part of this agreement, which runs counter to our chronic current account deficit because we can’t afford to be exporting that capital. Is this an attempt or a rationale for trying to get some investment back so that we are not punished by the loss of those domestic funds into India in the form of, currently, $35 billion?
My question, Minister, is, surely, in the process of making a decision about these clauses, 14 and 15 in this part, there was some advice sought on your part as to the probability of there being investments that either meet that threshold—
CHAIRPERSON (Teanau Tuiono): Don’t use “your”, you’ll bring the Chair into the debate.
STEVE ABEL: —or exceed it—pardon me, Mr Chair. Surely, the Minister undertook some advice as to what the probability or the volumes of investments that might meet that threshold or fall below that threshold were. And I wonder, if that’s the case, whether the Minister can give us some of the information and advice that he received.
Hon TODD McCLAY (Minister for Trade and Investment) (20:35): Well, there’s a range of advice that we receive when getting ready to bring a bill before the House to implement a free-trade agreement. The advice that’s given in this one around clause 2 is very much identical to that under the United Arab Emirates Comprehensive Economic Partnership Agreement, the EU, and, one assumes, the UK, because they’re very narrow in what it does; it increases the threshold for India, as it did with all these other countries, to $200 million.
The advice would also show that it doesn’t alter anything else in the Overseas Investment Act, which deals with all the other things that have been raised by members, other than inserting the name “India” into that so it fits within other free-trade agreement partners.
Dr LAWRENCE XU-NAN (Green) (20:36): Thank you, Mr Chair. Just while we’re on that threshold amount, did I just hear correctly that the amount is $200? Is the amount $200 million for this bill?
Hon Todd McClay: No.
Dr LAWRENCE XU-NAN: No? It’s $100?
Hon Todd McClay: There’s no amount in the bill.
Dr LAWRENCE XU-NAN: No amount in the bill—sorry, I didn’t quite catch the Minister for Trade and Investment’s first part of that response, which is the Minister kept on referring to a $200 million threshold, which is the standard, which is not in this bill but in the Overseas Investment Act. Can I just clarify whether the Minister did say $200 or $100?
Hon TODD McCLAY (Minister for Trade and Investment) (20:37): Well, I can be very clear: all of our free-trade agreements have a $200 million threshold, except for one agreement and that’s the CER with Australia, which is a higher amount. There is no amount in this bill because it is inserting the name “India Free Trade Agreement” into another Act that lines up with all other free-trade agreements.
ANDY FOSTER (NZ First) (20:37): Look, Minister McClay, you just kind of flippantly said that those three questions I asked were out of scope, but one of those questions was that if this bill were to fail—that clearly cannot be out of scope because it is about this bill—if this bill were to fail, what would it do to the free-trade agreement (FTA), which has not itself been in front of this committee, because this is the one chance that we get to debate this, in terms of what’s actually in there, and we only get to debate a small part of what’s in there. So the first question there is: if this bill were to fail, what would happen to the FTA?
Secondly, the other thing, Minister, you’ve said quite consistently is that this clause 15 is bringing the India FTA into line with all the others—and you’ve mentioned the $200 million amount—but again, I asked you that question and you said that you’ve talked about our New Zealand First position on the EU bill and the UAE bill and said that we were in favour of those, and we were, but it is not the inward side that was inconsistent there, because the inward side is the same—that’s what you’re saying to us—but it’s the outgoing side. And the question you had said—you might say it’s just out of scope and we’ll just have to take that as being read that there’s nothing there, but there is nothing that we’ve heard from you that gives us any confidence that this is not a unique outward situation in terms of the amount of investment that is required to be made by New Zealand in another country, and that that is not replicated in any other agreement. That’s our big concern.
CHAIRPERSON (Teanau Tuiono): Yeah, I was just trying to figure a way for the member to get his answers. I mean, look, we are talking about Part 2, so the question on whether parts of this might fail and how that would impact the agreement actually isn’t in scope with Part 2. But as I was thinking that, it is really a process question. So I’m just trying to figure out whether the clerks could answer your question. You go and have a chat with them to see whether you could get a satisfactory answer that way. That might be the best way to deal with it. But we might have a contribution here.
Hon TODD McCLAY (Minister for Trade and Investment) (20:39): On that, the member might use his phone and Google, and I’m sure that would help him with the last bit, but it’s not within the scope of this part as to what happens around enactment.
I have some recommended reading for the member. It is the Overseas Investment Act 2005 and Overseas Investment Regulations 2005. It will be very clear that is New Zealand governing investment into New Zealand—very, very clear. All that this Part 2 does—the only thing that Part 2 does—is changes a law, the Overseas Investment Act, to insert the India Free Trade Agreement along with all the other free-trade agreements so they have a similar treatment. It doesn’t do anything more than that; it doesn’t do anything less than that. But I think—I’m not entirely sure, but there may be a hint in the name of the Act that it’s amending the Overseas Investment Act.
Dr LAWRENCE XU-NAN (Green) (20:40): Thank you, Mr Chair, and thank you for that clarification, Minister. I did go back and have a look at it again in terms of the different types, and I did go back and check that the $200 million threshold was added as part of that UAE Comprehensive Economic Partnership Agreement (CEPA), which is a type 5 investment type. That does clarify things, so I do appreciate that.
Can I just check: when we did have the other bill, one of the arguments that was there was that type 5 investor was added as a part of the United Arab Emirates Comprehensive Economic Partnership Agreement Legislation Amendment Bill, and that was something that was deemed necessary for that one. So we have a precedent where, as a part of a new trade agreement, a new investment type has been created as a part of that.
I guess my question then is, for the Minister: has there been any consideration whether, in the context of this particular agreement, that a new investor type be included as a part of this part? So, for example, in the UAE comprehensive economic partnership agreement, clause 11 added new regulations 96A and 96B, which was the type 5 investor which we’re seeing over here in clause 23, regulations 96B amended. So I wondered whether there have been any conversations or discussions between the Minister and the ministry on whether in the context of the NZ-India FTA that a type 6 investor be included or be introduced as a part of this.
For example, we could very easily include a new amendment 23A, for example, that is, let’s say, new regulations 97A and 96—
Tim Costley: Speak to the bill!
Dr LAWRENCE XU-NAN: Well, we are referring to the Overseas Investment Regulations 2005, and I’m checking with the Minister on whether a new investor type has been considered, considering we’re seeing changes to type 2, 3, and 5. I think my colleague the Hon Damien O’Connor or Vanushi Walters has also asked previously—and I wondered—what happened to type 4. Maybe type 4 is no longer in existence. But, yeah, has a type 6 investor been considered with potentially a $300 million threshold or even a $500 million threshold in response to that?
That’s my first question. I think the other one is, when we’re looking at the rationale for those regulations and the different types of investors in the first place—and please correct me if, you know; this is not something, in terms of the Overseas Investment Act, that is my area of expertise. But a lot of that is to do with the kind of, I guess, checks and compliance or even background check requirements of the investors in those kind of instances. And there are obviously different thresholds based on the types of investors.
One of the questions I remembered—I’m possibly checking previously with the UAE CEPA—was around how someone would do a background check in overseas jurisdiction of the potential fraud or mismanagement, etc., of a particular investor in those countries. I do want to check with the Minister, when we’re looking at the scrutiny or looking at approving a certain type of investor, the way that we’re able to communicate with the Indian Government to ensure that there is good screening and background checks.
CHAIRPERSON (Teanau Tuiono): Just before the Minister takes a call, just to note that there was a question over there from Andy Foster around what happens if parts are not supported. The relevant part to have that debate is on clause 1 and 2, title and commencement. So if Andy Foster wants to take it up at that point, that would be the time and place to do it.
Hon TODD McCLAY (Minister for Trade and Investment) (20:45): Yes, Mr Chair. In as far as screening thresholds are concerned, that doesn’t change between agreement to agreement. It’s not dealt with under this Act; it’s the Overseas Investment Act. It remains the same.
For the UAE agreement, there was a new category created, which is why it was part of that bill. There is no new category created in this bill, which is why the member can’t find one. It doesn’t alter thresholds that go up, but that’s not the way that would be done. If a future agreement negotiated a threshold to increase, where there’s a most favoured nations clause in other free-trade agreements, it would naturally flow through, but, in this case, that is not the case.
FRANCISCO HERNANDEZ (Green) (20:46): Thank you, Mr Chair. I have a question around Part 2, clause 18(1). I’ve been following the debate in my office, so I’m pretty sure that this question hasn’t been asked. My question is around the definition around “permanent residence” around the definition of “India individual”. Is that the same threshold that we apply for reciprocal investment to India, and is that also the same investment that we apply, for example, for Hong Kong individuals and other countries that we have free-trade agreements with? Is that just permanent residence threshold sufficient, or is the requirement for the other nations to be nationals of their country for our other FTAs and for the reciprocal part of our investment into India?
Just wanting to ask that really quick question to the Minister. I think he’s looking to his officials for advice on that. I think he’s sought it now, so I’ll sit down.
Hon TODD McCLAY (Minister for Trade and Investment) (20:47): No, I was just checking. We treat nationalities—in that case, we treat it the same in New Zealand domestic legislation, yes.
A party vote was called for on the question, That Part 2 be agreed to.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.
Noes 28
Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Part 2 agreed to.
The result corrected after originally being announced as Ayes 101, Noes 20.
Committee of the whole House
Part 3 Amendments to Tariff Act 1988, Tariff, Customs and Excise Act 2018, and Customs and Excise Regulations 1996
CHAIRPERSON (Barbara Kuriger): We come now to Part 3. This is the debate on clauses 25 to 36, “Amendments to Tariff Act 1988, Tariff, Customs and Excise Act 2018, and Customs and Excise Regulations 1996”. The question is that Part 3 stand part.
Hon DAMIEN O'CONNOR (Labour) (20:49): Thank you, Madam Chair. I guess, to many people, this is probably at the heart of the trade agreement—that is, it deals with tariffs, or the reduction of them or the management of them. These are the barriers that cost us more if we export into the Indian market. We go through here, and it’s kind of bland if you look at the wording of what we’re doing in Part 3. Starting at clause 25, it amends the Tariff Act 1988, which is a wee way back. It does a number of things in here, and maybe the Minister for Trade and Investment can answer a few questions.
One is that there’s a transitional safeguard measure in this piece of the bill: that is that if New Zealand and India too—and I guess the reciprocity of this is something the Minister can explain—if we believe that there’s a large volume of products coming in that might be really upsetting one of our sectors. There may be large volumes of wool coming into New Zealand—highly unlikely, but maybe large volumes going into India where they think it’s upsetting a fragile market. The question is: I jest a little bit, but there are legitimate concerns for both goods and, to a lesser extent, services where—and the Minister can perhaps explain—the transitional safeguard measures, where they are in the legislation and how they can be applied to ensure that New Zealand industries are not decimated. Because there will be small fledgling manufacturing areas that may be concerned about this, given the scope and the size and the scale of manufacturing in India. That’s the first question I have: how will these transitional safeguard measures be implemented, and what’s the reciprocity of those in both countries?
VANUSHI WALTERS (Labour) (20:51): Thank you. Perhaps just a supplementary to add on to that question. My question is really about whether those measures—so the import surges criteria—are contained in the free-trade agreement (FTA) or whether they are in legislation. Because my understanding is that the different FTAs we have have potentially different import surge thresholds—shall we say—and so whether the Minister for Trade and Investment considered just applying or negotiating the same thresholds that are in existing legislation, so those could just be repeated.
The second question is in relation to clause 32, which is about concessions. This reference is number 66, which is a list of other FTAs where, when goods are repaired and then re-entered into a country, they’re not subject to an additional tariff because they have effectively already come through. I’m really just wondering about the policy that either does already or will sit behind that. I can’t see detail of whether there’s a proof element required. I know that when goods initially come into a country, you would have something like a certificate of origin, for example—that is your proof point. But if it were returned and then comes back in, it looks like that’s exempt, but I can’t point to anything in the legislation that requires an equivalent certificate. Could the Minister tell me whether there is such a provision in the legislation; or, if there’s not, if there is existing policy that none the less requires some sort of proof point to say that the goods have been repaired and that there hasn’t been a substantially transformed element of the goods post repair to deem it subject to a requirement for a new certificate of origin? Thank you.
Hon TODD McCLAY (Minister for Trade and Investment) (20:53): I might deal with these few as they go along so we don’t get too much of a backlog. In as far as transitional safeguard measures are concerned, this is merely stating in law that we are able to do this—it was negotiated is part of the free-trade agreement. It gives us the ability to, and of course a provisional or transitional safeguard is put in place while an investigation into harm is being done. It’s a different act of determination as to the condition around that and the thresholds and so on. It doesn’t alter that; it just means that, under the free-trade agreement, we’re able to.
The second question was around how this is done. Well, it’s different legislation. The Tariffs Act or the safeguard Act permits this. After a Tariff Act reduces—or, in this case, goes to zero—there’s a period of time by which you are still able to do these—either the safeguard Act or other measures to be put in place. Again, this is merely allowing that to happen.
For export, for repairs for reimport, Customs do that. It’s often certified before it goes away. There are proof points, of course. This legislation doesn’t alter that. It is standard practice for Customs. Just as, in some cases, where New Zealanders are leaving and they may have something of value with them—they’re taking with them for business or work, a camera—they can get a certificate on the way out to show that when they come back in it is being reimported, as opposed to having been purchased offshore.
Hon DAMIEN O'CONNOR (Labour) (20:55): Thank you. Just following on from that, I know, for example, there is a business in Wellington here that imports a lot of diamonds to process and then re-export. It’s been an issue with Customs as to how we set up a regime that doesn’t mean that they are effectively stripped of cash in what is a normal business transaction. I guess the question of whether there is some sort of reciprocity there as well, for us—and I can’t think off the top of my head of something like that. But Customs, rightfully, is pretty staunch and rigid in ensuring that, like repairs where we have online purchase—which is actually a new phenomenon, probably over the last 10 years where people can just go on and buy from anywhere in the world. You receive a product that’s faulty, you send it back, you’ve paid the duty on it once, it’s repaired, and then it comes back in. These are new provisions and new legislation—new trade agreements.
I’m just seeking an assurance that—and we’re told that this is covered in this part of the bill here, the repairs. But can I just check on that one around some flexibility around Customs for what may be a growing—and take, for example, diamonds, where they might be sourced from India into here to be processed and exported back out. I think we will build up more partnerships with Indian business, and we’ll need to be flexible. I’m just checking with the Minister for Trade and Investment on that.
Hon TODD McCLAY (Minister for Trade and Investment) (20:56): Well, there will be men and women all around the country watching tonight—single men and women—who are excited by that member’s great knowledge of the importation of diamonds to a shop in Wellington. But it is a separate piece of legislation. I actually have great sympathy for what he is saying. In the case somebody brings something to send out again, there may well be duty and GST and so on, which can be a burden, but that doesn’t alter any other Act; it doesn’t change that at all. There is not a commitment we have taken on with India around any special arrangements in that area.
Dr LAWRENCE XU-NAN (Green) (20:57): Thank you, Madam Chair. I want to check, in terms of Part 3, starting with Subpart 2, when it comes to tariffs. Now, we’ve just in Part 1 been discussing kind of tariffs on the other end in the form of quotas. Can I just check: is there a quota system from our end for tariffs? No, I’m seeing head shaking. That’s good.
I want to check with the Minister for Trade and Investment on clause 32, “Part II Concessions amended”. I guess this is something that both the Hon Damien O’Connor and maybe Vanushi Walters touched on. But I think if we’re able to pull it back even a bit further, if the Minister wouldn’t mind clarifying exactly what Concession Reference Number 66 is. Because it’s been mentioned here and I don’t know if that is standard knowledge or understanding.
I also want to check with the Minister whether this is a typo or something that is supposed to be structured like that. I’m assuming in here, after subsection (8), “(9) Goods re-entered after repair or alteration—(a) in the territory of India; and (b) in accordance with”—that is “free” in terms of concessions; is that what the “free” on the corner of that particular page is referring to? If the Minister wouldn’t mind, I just wanted to clarify what that “free” is in reference to.
Hon TODD McCLAY (Minister for Trade and Investment) (20:59): The term “concession” is the tariff rate—a concessionary tariff rate that applies and that brings it to zero. The India - New Zealand free-trade agreement means that on entry into force, goods exports from India to New Zealand fall to a concessionary rate of zero. That word “concession” is not something different; it just is lining it up, just as it lines the language up with the European Union free-trade agreement, where the same thing happened. It is a zero-tariff rate.
In as far as exports for goods sent out for repair—sent to New Zealand for repair and so on—of course, if they came from India, they would have a zero-tariff rate against them when they came in. That would be somewhere to India to know whether there was a tariff treatment. But in the case that New Zealanders send something out to India to be repaired and then brought back in, that concession means that if it’s sent out, if it’s certified and the same good comes back in, then there isn’t a duty or tariff to pay on it.
Hon DAMIEN O'CONNOR (Labour) (21:00): Thank you, Madam Chair. Look, under Part 3, there’s also a provision for the Minister for Trade and Investment to designate an authorised certification body to certify that goods originate in New Zealand, for the purposes of the India free-trade agreement. Can I just ask: what body will that be? Will it be a Government agency or will that be sent out to a private sector or is it a body within the particular industry? I know we have, not necessarily—FernMark might be one of them. I guess there’s provision for that, so an indication of whether it will be privatised, which is what the Government seems to want to do with everything else, or will it be closer to Government to ensure that, actually, what is deemed a product of New Zealand has a Government endorsement. Maybe the Minister can explain.
Hon TODD McCLAY (Minister for Trade and Investment) (21:01): So this is the Minister of Customs that does this, not the trade Minister, and the Minister of Customs gets to designate organisations in New Zealand that can certify that something is of New Zealand origin. There are a range of these things, but in many cases chambers of commerce have that ability in other agreements, and so on. I won’t get ahead of what the customs Minister may do, but the member will be interested to know it will be no different than other trade agreements.
Dr LAWRENCE XU-NAN (Green) (21:01): Thank you, Madam Chair. Just on that particular part, which is clause 26, in terms of regulations regarding the provisions relating to originating food; 51ZPP, originating goods. I understand that the Minister for Trade and Investment, in the chair, is not the Minister of Customs, but this falls under his purview as, I guess, the person who oversees the entire trade agreement. What would the process be for the agency or a private company or any organisation to be able to determine rules for originating goods in line with Chapter 3, Annex 3A, 3B and 3C of the India Free Trade Agreement? That would be my first question.
My second question is—
CHAIRPERSON (Barbara Kuriger): I’m just going to check to see if the Minister got the gist of the first question, because there was some administrative stuff going on here.
Hon Todd McClay: Most of it.
CHAIRPERSON (Barbara Kuriger): Most of it. OK, keep going.
Dr LAWRENCE XU-NAN: I’ll just finish with the second question, which is: if someone was told, for example, that it’s been determined that it’s not their origin or the rules of the origin, is there a dispute process for, in this case, an Indian exporter importing into Aotearoa New Zealand—is there a dispute mechanism for them to go to a particular New Zealand agency to be able to dispute on the rules of origin?
Hon TODD McCLAY (Minister for Trade and Investment) (21:03): In the case that something’s important to New Zealand and was outside of the definition of rules of origin, that’s a customs issue. There is a customs dispute panel that could look into this, but duty would be levied upon that import to the importer at that point in time, so it’s not a matter of us having to check something before it comes into the country. If it does come, and we find the origin is not correct as defined under the free-trade agreement, then customs deal with that—and it happens from time to time for a range of reasons—but there is a dedicated process for that to happen under customs.
A party vote was called for on the question, That Part 3 be agreed to.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.
Noes 28
Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Part 3 agreed to.
Vote Correction
India Free Trade Agreement Legislation Amendment Bill
JAMIE ARBUCKLE (Whip—NZ First) (21:05): Thank you, Madam Chair. Can I seek leave to correct a vote?
CHAIRPERSON (Barbara Kuriger): Leave is sought for that purpose. Is there any objection? There appears to be none.
JAMIE ARBUCKLE: To Part 2 of the committee stage of the bill: New Zealand First’s vote to be recorded as 8 opposed.
CHAIRPERSON (Barbara Kuriger): OK, thank you. We’ll change that and make sure it appears on the record.
Hon TODD McCLAY: They’re meant to be in favour for the final vote.
CHAIRPERSON (Barbara Kuriger): I think we’ll face that when we get to the final vote. You can debate that offline.
Bills
India Free Trade Agreement Legislation Amendment Bill
Committee of the whole House
Part 4 India export quotas (apples, kiwifruit, and mānuka honey), and Schedule 3
CHAIRPERSON (Barbara Kuriger): We now come to Part 4. This is the debate on clauses 37 to 73, ‘India export quotas (apples, kiwifruit, and mānuka honey)” and Schedule 3. The question is that Part 4 stand part.
Dr LAWRENCE XU-NAN (Green) (21:05): Thank you, Madam Chair. This is probably the most substantial part of this agreement, with a number of new clauses. I want to start with clause 38, with some of the interpretations. The first one, we didn’t actually get sufficient clarity within the committee stage.
CHAIRPERSON (Barbara Kuriger): Sorry, can you repeat which—
Dr LAWRENCE XU-NAN: Oh, sorry. Clause 38, “Interpretation”, specifically focused on the interpretation for mānuka honey. I want to check: my understanding—I think the Minister for Trade and Investment has mentioned this previously as well—is that there is a free-trade agreement that’s been signed between Australia and India. I know that the term mānuka honey is highly contested when it comes to who owns the intellectual property of mānuka between New Zealand and Australia. In here and also in the free-trade agreement, it does specifically state “mānuka honey”. I want to check: does that mean in the context of the Indian market that New Zealand has the branding of mānuka honey but Australia doesn’t? Can I get that clarification from the Minister, first?
Hon TODD McCLAY (Minister for Trade and Investment) (21:07): There is a difference. When New Zealand honey arrives in India, it will be called mānuka honey; when Australia—it’s manuka honey, because they’ll pronounce it very differently. Our one sounds better, so people will want it. No, it doesn’t mean that there is protection for the name mānuka honey in that market. However, quite significantly compared to Australia, we have a very large quota with a significant tariff reduction. We are the only country in the world to get preferential access to the Indian market for honey and all of our honey is better than Australia’s honey, but it’s also more competitive because it has a halving of the tariff rate whereas the Australian free-trade agreement does not include honey. As far as protections of the name are concerned, it is not an intellectual property component of this part of the agreement.
Hon DAMIEN O'CONNOR (Labour) (21:08): Thank you, Madam Chair. This is the part of the bill that we’re told will be separated out under a separate piece of legislation. I guess this is an area where there’s been a lot of excitement about the free-trade agreement—
CHAIRPERSON (Barbara Kuriger): Just for clarification, this bill will be split into two parts, but we’ll be debating those two parts together when we do the readings afterwards.
Hon DAMIEN O'CONNOR: Thank you. The purpose, of course, of Part 4 is to set up a quota management regime for apples, kiwifruit, and mānuka honey. The question to the Minister for Trade and Investment is: why not hops, pears, other honey, and avocados? It is a list of just three, which has been a huge disappointment to some other areas, so the question is a legitimate one. I’m not trying to relitigate the negotiations, but I think people need to know, given this is the opportunity in the House as to why we don’t have other areas, particularly around horticulture in this clause.
Hon TODD McCLAY (Minister for Trade and Investment) (21:09): Because there’s no quotas there, just as there is not a quota system being set up for lamb; because there is no quota required for lamb. There is no quantitative restriction under the free-trade agreement for those other products, but in as far as the three that we’re talking about in clause 4, there is a quota and that quota goes in. Kiwifruit, as an example, has a duty-free quota, a tariff-free quota for kiwifruit, an amount; the only country in the world to have received that. Outside of that quota, there is no quantitative restriction. Sell as many as we want and the tariff rate is halved; it’s not a zero-tariff rate.
Hon DAMIEN O'CONNOR (Labour) (21:10): Sorry—just a clarification. As I say, it’s a slightly wider explanation as to the pushback, and, indeed, I understand the Minister for Trade and Investment’s point about the quotas, but these are other valuable export crops that—is the Minister saying that there will be no tariffs on hops, pears, other honey, or avocados, or indeed, what was the point of contention in those areas?
Hon TODD McCLAY (Minister for Trade and Investment) (21:10): No, I’m saying that Part 4 deals with three things and sets up a quota regime for them, just as Part 1 dealt with some dairy products only, and so the scope of Part 4 is mānuka honey, it’s apples, and it is—
CHAIRPERSON (Barbara Kuriger): Kiwifruit.
Hon TODD McCLAY: Oh, how could I forget kiwifruit from Te Puke? I’ll say it three times—kiwifruit, kiwifruit, kiwifruit.
VANUSHI WALTERS (Labour) (21:11): Thank you, Madam Chair. A couple of quick questions from me. On clause 38, the interpretation section for this Part, I’m just curious about whether a quota holder could be someone to whom a quota is transferred— so not the original grantee but someone who it’s transferred to—and if that’s the case, whether they would be covered by that definition.
Then my second question is in relation to clause 43. This is the quota management system itself, and new subclause 2 has three powers: one is a directive power, so this is the power to specify the allocation methodology, and the other two—paragraphs (b) and (c)—are permissive. Paragraph (b) is “may require the quota manager to publicly notify [some] information:”, and it sets that information out; and then paragraph (c) is, “may specify any other technical and administrative requirements for operating the quota management system.”
I’m just curious why those two additional powers, paragraphs (b) and (c), aren’t also directive and whether there’s—I imagine, in relation to paragraph (b), there might perhaps be some privacy requirements that are in play, but I can’t work out why the directive power isn’t there in relation to paragraph (c). So if the Minister for Trade and Investment could …
Hon TODD McCLAY (Minister for Trade and Investment) (21:12): Madam Chair, thank you. The reason that we’re doing this, where the Ministry for Primary Industries (MPI) will set up and manage this quota management system, is because the debate earlier in the day around Part 1, under the Dairy Industry Restructuring Act (DIRA), is well established and has been functionally working for a period of time. In as far as these three products are concerned, we don’t have another piece of legislation as significant or as long running, and so MPI has already consulted with the sector about how we might do this and manage it, and this is now setting that up for them to manage.
My advice is that, on the questions the members have, it is lining up closely to the DIRA Act rather than recreating it, reinventing it, doing it anew, and moving it over so that we can ensure that those who want to export will get a quota cheap and fairly, are treated equally, and that the system can work well but very quickly. In as far as a transfer concerned, yes, it is possible to transfer it. If somebody receives a quota and they can’t use it for a reason, they can pass it to somebody else of course. They must notify the regulator—in this case MPI—but they don’t need permission to do that. That will be possible with apples, and it will be possible with mānuka honey, but, of course, it won’t be for kiwifruit because we have a single desk, and there is only one organisation that is able to export kiwifruit on behalf of kiwifruit growers.
Hon DAMIEN O'CONNOR (Labour) (21:14): Thank you, Madam Chair. Look, I’d just like to go to clause 38. It’s in the interpretation here, and it’s of “enforcement officer”. It was an area that the Foreign Affairs, Defence and Trade Committee spent quite a bit of time on, effectively changing from “inspection officer” to “enforcement officer”, and it relates to the Search and Surveillance Act 2012.
I guess I’m asking the Minister for Trade and Investment how we’ve got to this point of recommendations from the select committee to make the changes, but is the Minister happy with the changes as directed, and the fact that we have now an enforcement officer rather than an inspection officer and that they have the power to go in to find whatever information they need when it comes to enforcing the conditions of any quota? It is quite critical, and there were views that some of the proposals were overzealous and we’ve eased off on those. But the question to the Minister is: is he comfortable and can he explain how this will be rolled out?
Hon TODD McCLAY (Minister for Trade and Investment) (21:15): Madam Chair, yes, I am. “Enforcement officer” is an established term under the Search and Surveillance Act 2012, and, therefore, it is used and copied across from that. It’s already defined elsewhere rather than creating a new one, which would need a definition, and, therefore, it’s lining up legislative definitions.
Dr DAVID WILSON (NZ First) (21:15): Thank you, Madam Chair. Just referring to the “Interpretation” in clause 38, and we’ve got a list of these interpretations around “kiwifruit”, “kiwifruit vine”, “mānuka honey”, and so on. We’re just wondering here, from the Minister for Trade and Investment, whether or not, in terms of us being worried about incursions into the usage of our intellectual property, and I mean that in the wider sense in the sense, that we have a whole lot of tacit knowledge and knowledge built up within the industries about how we produce some of the best kiwifruit in the world, as one example. Another example is all the fantastic work that Plant and Food Research did in relation to Psa-V virus, which almost devastated our whole crop.
Now, this is all knowledge that we have that we now seem to be giving away. We now seem to be behind that whole idea, and we’ve got this narrow definition here around the genus, but we’re not taking account of everything else that has gone into decades of investment in this particular crop. I’d just like the Minister to assure us that New Zealand Inc. can preserve that knowledge, that tacit knowledge, and its understanding of what we’re doing here, because we are giving away cultivars, seeds, and the opportunity for a similar incursion such as SunGold (Gold3) in China.
Hon TODD McCLAY (Minister for Trade and Investment) (21:17): Well, Madam Chair, I think the member’s question is a genuine one, but it is very, very broad from the scope of this. I’ll try my best to stay within the scope to answer. This is a free-trade agreement; it’s not a give something away agreement, and so the definitions allow us, in this section, to set up the distribution of the quota for people to send kiwifruit to India at a zero-tariff rate, and thereafter, the tariff rate is higher. But I suppose, should the exporter want to buy the kiwifruit from a grower, put it through a pack-house, put it on a ship, pay to get it to India, and then give it away, then that would be their business. They’re not compelled to, but, generally, I find that our kiwifruit exporter does a very good job of record returns in New Zealand.
The member is absolutely wrong in one thing he said. He said that New Zealand kiwifruit is generally or often the best in the world. He’s wrong because it is the best in the world—it is called kiwifruit. It is not Chinese-fruit, and it’s not Chilean-fruit, and it’s not something else.
Steve Abel: I mean, I think it is Chinese-fruit. It used to be Chinese gooseberry.
CHAIRPERSON (Barbara Kuriger): It used to be, when I grew up.
Hon TODD McCLAY: That’s right. But interestingly, I went down to the supermarket in Rotorua the other day, and I spent a long time in a long queue waiting to buy Chinese gooseberries, and there weren’t any. I bought kiwifruit instead and paid well for it. The point that I’m making here is that New Zealand has exported kiwifruit all around the world, and they do it very, very well.
There have also been decisions on the part of the owners of the plant variety—it’s not the Government; it’s the owners of the plant variety—to export that to parts of the world where they grow themselves. That is a decision they have made; it’s not one the Government is in. Therefore, for that to happen, the owners, which are the kiwifruit growers themselves, need to vote and to vote in favour of doing that, and that is separate from the Government. But for that to happen, it is governed by legislation, which is the legislation that sets up the equivalent of the exporting body. Nothing is being given away. We’re not compelled to do those sorts of things, and so on.
But the intellectual property of New Zealand kiwifruit is guaranteed in New Zealand and in New Zealand legislation, as it is in other agreements around the world. In the case that somebody somehow gets hold of a New Zealand kiwifruit variety and cultivates it and they’re doing so outside of permission or a licence, then the owner of that variety has the ability and the right to go and enforce their rights in another country and to seek prosecution, and the New Zealand exporting body, Zespri, has done that to great effect. This does not give anybody the right to take something or send it away. It doesn’t alter that, and should kiwifruit growers in New Zealand want to cooperate in any country in the world, there is a dedicated function under legislation for them to be allowed to do so, but it is not automatic.
Dr LAWRENCE XU-NAN (Green) (21:20): Thank you, Madam Chair. I want to carry on with this particular line of questioning. I agree with the Minister for Trade and Investment that when we’re looking at the quota management system it’s different from the Kiwifruit Action Plan, the Apple Action Plan, and the honey action plan—is it the mānuka honey action plan? No, it’s not mānuka honey; it was the third action plan anyway. It doesn’t matter; it wasn’t what I was going to ask about anyway.
I do want to check—the question around the G3 variety is a really important one. I guess under this particular bill, if we introduce a quota management system, we’re going to be seeing more exports of kiwifruit, and, in the bill, kiwifruit is simply defined as the fruit of the kiwifruit vine. It doesn’t define “species” or even define “subgenus” in this case. So if anyone has a licence to it, they could potentially get to export it. Gold kiwifruit or red kiwifruit? No, they can’t export any of that; only green kiwifruit. So maybe this question first: is it just the green kiwifruit?
Hon TODD McCLAY (Minister for Trade and Investment) (21:21): To be allowed to grow kiwifruit in New Zealand, you must purchase a licence to do so. You don’t have the permission to export it. It goes back to, in this case, Zespri—they are the exporter. So if the member decides to grow G3 kiwifruit in his own home and he hasn’t got a licence, he is breaking the law—I know he wouldn’t do that. If he buys a licence and he wants to take himself overseas to sell it, he is not able to do so. The export body is Zespri in that case.
As far as a cultivar is concerned and the quota to export kiwifruit itself, it could well be G3, it could be green, or it could be something else. This doesn’t define it. It doesn’t say what kiwifruit should be exported for consumption. It is for the exporter to make that decision, as they do. As an example, they often export a lot more green kiwifruit to Japan because it is more desirable to Japanese consumers and they pay more for it than they may somewhere else.
CHAIRPERSON (Barbara Kuriger): Dr Lawrence Xu-Nan—is this a clarification?
Dr LAWRENCE XU-NAN (Green) (21:22): Yes. I think that is really helpful, but let’s say Zespri, the exporter, is able to export different varieties of kiwifruit—their choice; they go for a decision with their members. We know that the cheaper variety gets exported and gets cultivated. What mechanisms would there be for us to be able to challenge not just India but any country?
CHAIRPERSON (Barbara Kuriger): The Minister is actually just agreeing with what you’re saying, so maybe we could clarify that.
Hon TODD McCLAY (Minister for Trade and Investment) (21:23): I can clarify. If we move away from kiwifruit, for example—hypothetically; just an example—and think about grapes and wine, the wine is exported; the grape is not. In this case, it is the kiwifruit to eat that is exported; it is not the variety, it is not the right to grow it, it’s not the right to do anything else. It’s a little bit like if the member goes to a shop tomorrow morning and buys a can of Coca-Cola, he’s able to consume it but he does not own the Coca-Cola recipe or the ability to produce Coca-Cola. I would recommend he doesn’t drink Coca-Cola; I would recommend he eats kiwifruit because I come from Te Puke.
VANUSHI WALTERS (Labour) (21:24): Thank you, Madam Chair. I am on clause 44, “Review of quota allocation decisions”. This is a question about the scope of this clause and whether a broader scope was considered. Clause 44(1) allows for a review of a decision not to grant a quota allocation or to grant a specific amount. I’m wondering whether the Minister for Trade and Investment considered third-party challenges to grant a full amount or to grant a partial amount in terms of a quota allocated—so almost a challenge to that by a third party. Is that done, or is that done in relation to other free-trade agreements?
The second part of my question is in relation to clause 44(2), which restricts what an applicant may seek a review of in terms of a quota manager’s decision. So they can seek a review of the decision itself but they can’t seek a review of the allocation methodology, if you like. I just wondered if the Minister has considered a situation where the allocation methodology is substandard and why that individual would not be able to seek a review of the methodology itself, understanding that that individual could still bring a judicial review, potentially, but that’s at considerable cost and considerable time. So if there was something woven into this review mechanism, it would be much more accessible to an individual. And the way in which the Minister could have done that is through a high-bar threshold where it was about a significant flaw in the methodology itself as opposed to a small technical one allowing a complaint in that regard.
Hon TODD McCLAY (Minister for Trade and Investment) (21:26): An individual can seek a clarification and challenge an allocation they got—I think that’s right—but not the system overall. The member is right in that if somebody is worried about the system overall, there is an opportunity for a judicial review, and although that feels heavy-handed, it happens from time to time, but, as far as a review of the process for allocation is concerned, there is the ability for ministerial review.
However, before the regulation is put in place, there is consultation with the sector about what it should look like and how it would work and so on, and that feedback is taken on board when the quota allocation system is set up, and that system has to be followed fairly and properly. But this is not the first time this has happened. There are quotas across the board in a number of areas—and we’ve had the conversation about the Dairy Industry Restructuring Act, which is there to govern dairy production but also quota allocation. So, in essence, for kiwifruit and for apples and also for mānuka honey, the quota allocation system replicates or mirrors closely quota allocation systems used elsewhere in New Zealand, albeit that when we get industry feedback through consultation, there can be changes made.
Dr DAVID WILSON (NZ First) (21:27): The Minister for Trade and Investment will appreciate that I’m trying to establish that plant varieties that are bred and born in New Zealand will not be shared that easily through this legislation. However, it can be in their own intellectual property framework, which goes back to the Act in 2001, where a farmer shall be deemed to be entitled to save, sow, use, resow, exchange, share, or sell his farm produce, including seed varieties that are protected under that Act. Before that Act came into force, India had no plant variety protection. Also, we have the problem with the International Union for the Protection of New Varieties of Plants, which the Minister will be well accustomed to. You see where I’m going with this—article 14A3(5)(B) commits New Zealand to help India enhance India’s regulatory framework, particularly in areas of plant variety rights and intellectual property protection, to enable the introduction of high-value, globally developed intellectual property and protected plant varieties into India.
Can the Minister assure the committee that the operative purpose of that statement is not to share those protected plant varieties that we have developed here in New Zealand?
Hon TODD McCLAY (Minister for Trade and Investment) (21:29): There is nothing in this agreement or in this legislation that compels you to share in that way, and I can be very clear that the cooperation programmes the member has been talking about do not involve the transfer of any protected varieties or protected commercial know-how. It doesn’t involve any transfer. In the case of kiwifruit, the only plant material supplied from New Zealand will be open-source roots, plants that are not protected by plant breeders’ rights and can be bought by anybody around the world. In terms of the definition the member read out around the ability for farmers to sow and so on, in the case of kiwifruit it is different. It has its own Act of Parliament and there are plant variety rules and protections around that.
Should a plant variety owner, in this case Zespri, decide it wants to do something in Japan, Singapore, the United Kingdom, or India, they make that decision for themselves, and they would consider what protection there could be in the market they’re putting their product into. But there’s nothing in this agreement that compels them to do that, nothing that encourages them to, nothing that forces them to. It is a commercial decision that the owner of the plant variety, in this case Zespri, would make. And as I mentioned earlier in the discussion, for them to do so, the legislation is very, very clear about needing to get the agreement of the growers, who are also the owners of the cooperative.
Hon DAMIEN O'CONNOR (Labour) (21:30): Thank you, Madam Chair. Part 4 here is quite extensive, and deals with, as we’ve said before, quota management provisions. There are a number of clauses here, I’m not going to go through them all, but they cover everything from conflicts of interest, setting it up, review provisions when the quota is allocated and people don’t agree—all of that—and that’s all great. I asked questions around why some species were left out, but anyway, that was part of the negotiations.
I just want to raise an issue and a question for the Minister. Under the biosecurity provisions in this piece of legislation, there are no dispute settlement provisions, from recollection. So in allocating quota and the right of access, if India, or indeed New Zealand—and the reverse—was to say, “Sorry, we’re going to block the entry of these goods,” even though they might have been under quota, for biosecurity reasons. I would just asked the Minister: what does he see as a pathway through a dispute like that, that would affect all the goods covered under quota management? That has been, not under anything here, but it has been under logs, of course—
CHAIRPERSON (Barbara Kuriger): It would be good if you actually would bring it back to here.
Hon DAMIEN O'CONNOR: I mean, I can go clause by clause if you wish, but I’m just, I’m talking—
CHAIRPERSON (Barbara Kuriger): I think what you’re talking about is actually broader than the—
Hon DAMIEN O'CONNOR: It’s in Part 4, and it’s around quota—
CHAIRPERSON (Barbara Kuriger): Yeah, but if you can point us to the specific clause with the question, because it’s seems to be—
Hon DAMIEN O'CONNOR: “Quota manager may gather information”—Subpart (4), clause 53. I guess if the quota manager is looking at issues around biosecurity—I think the Minister probably understands what I’m getting at—it’s an explanation for the wider public around something that could make all of this redundant, because we could have an intervention that puts all this good work to waste.
Hon TODD McCLAY (Minister for Trade and Investment) (21:33): I can speak broadly, because there is a broad explanation, but it doesn’t affect the quota. Biosecurity is important to all nations, extremely important to New Zealand. As we know, we don’t import eggs into New Zealand from anywhere, because of a biosecurity risk. That doesn’t mean that the tariff rate for eggs doesn’t go to zero, but there is a separate consideration as to whether or not things can be imported.
If we take an example of mangoes, under this agreement the tariff rate for mangoes will fall to zero. But India or any other nation wouldn’t automatically have a right to send mangoes to New Zealand, unless we were sure there would not be a biosecurity risk to New Zealand as a result. There’s a separate regime that considers that away from trade, and so on.
In the case that New Zealand, hypothetically, had a quota system for the importation of chicken from, say, Australia—and we had that set-up and they were managing it as this legislation is setting up for kiwifruit in the other direction—and bird flu arrived in Australia, as it did a short while ago, we would still have the ability to stop products from coming into New Zealand because of a risk, irrespective of the quota.
Of course, that would mean the quota would not be filled for the period of time, perhaps of a year, that there was a restriction. And then, ultimately, whether Australia thinks that is a purposeful or not—or the right thing to do—is separate from the trade agreement, because it comes to biosecurity. It’s extremely important that New Zealand has that in place, as other countries do, but, of course, a decision around biosecurity has to be proportionate. As the member will remember, from probably his first day in Parliament, when we could not export apples to Australia, because they said there was a biosecurity risk, we challenged in other ways and eventually we won that case. And, of course, the day afterwards, when we were able to export apples from New Zealand to Australia, not only did the Australian apple industry not collapse; Australians, for once, had good apples.
Dr LAWRENCE XU-NAN (Green) (21:35): Thank you, Madam Chair. I want to start by just asking the Minister for Trade and Investment about clauses 44 and 49 regarding regulations. Has the Minister considered at what point those regulations would be determined or be approved as part of that process?
I do want to focus on clause 50 in terms of what the quota manager is able to do regarding export certificates. It does list the criteria of why they would cancel the export certificate, but I want to check in terms of the process. The process is either to suspend or cancel, and then, in clause 51, the person may seek a review of that decision. But during that review period, I’m guessing that the certificate that is issued is either suspended or cancelled—that being the first question.
The next question is whether there has been consideration of, rather than suspending or cancelling—has there been a warning system in other areas: you give a warning and say, “You need to do this, but we’re not going to suspend it or cancel it.” It just seems like we’ve kind of gone immediately to suspension and cancellation, and then giving them the ability to review. So I just want to check if that warning system has been considered.
Hon TODD McCLAY (Minister for Trade and Investment) (21:36): Well, it says “may”; it doesn’t say “must”. So the quota manager may cancel, suspend, or refuse, should they wish. It provides avenues for enforcement where there’s non-compliance by an exporter. Generally, the quota manager—in this case, the Ministry for Primary Industries—works very closely with exporters. It’s in New Zealand’s best interests to make sure that our exports are able to travel overseas. We don’t have a quota manager there saying, “I want to cancel this one without any warning because I don’t want apples to be exported.”
Of course, we’re setting the system up so we can export within the 45,000-tonne quota that we’ve received. The member will know and be very proud that New Zealand is the first country in the world to get a quota for apples, with the reduced tariff rate. No one else in the world had got that previously. I think now the EU might have, but, of course, not in competition to New Zealand, because they have a different season to us, so they won’t compete with us. They will compete with Indian apple producers because the season is the same, more or less, in India.
The point of this is that it is within our interests for the exports to happen—we want them to—and that’s why we negotiated a free-trade agreement. But where an exporter is not meeting their export certificate circumstances or requirements, then it provides us with the avenue to enforce.
CHAIRPERSON (Barbara Kuriger): I’m just going to take a couple more quick questions, because we have had a select committee here, and I just want to say to Dr Xu-Nan that your questions around the timing of regulations probably fits better with the commencement clause.
Dr Lawrence Xu-Nan: OK. Sure.
CHAIRPERSON (Barbara Kuriger): Yeah. But I’ll just take a call from Vanushi Walters.
VANUSHI WALTERS (Labour) (21:38): My question is on clause 45, so this is on the return of a quota allocation. Essentially, it allows a quota manager, where an allocation has been returned in part, to reduce the quota allocation for year 2. But it doesn’t explicitly point to a right of the quota holder to provide the circumstances of why they’re having to return that portion of the quota allocation. So subclause (3)(b)(iii) does allow the quota manager to use discretion not to reduce a quota allocation in year 2 if they’re satisfied that there are exceptional circumstances. But, again, I would expect that there would be a pre-emptive right to be able to present those circumstances so that it’s not after the case that someone has to make a complaint. So I was just wanting clarification on that.
Hon TODD McCLAY (Minister for Trade and Investment) (21:39): Madam Chair, thank you. The detail gets set out in regulation, rather than primary legislation, because, mainly, if you change it, it’s easier, therefore, to change. It would be more flexible or specific in regulation; this merely sets up the ability to do so.
It is important that when one thinks that where somebody has a right to a quota because of export history and they may not use it and they choose not to, they will still have the ability every second year to have a right to the quota again, based on previous history. It gives the regulator, the administrator, or quota manager the ability to say, “You haven’t used it. Therefore, is it fair or reasonable that we give it to you again if there wasn’t a good reason not to?”, and also the ability to say, “Well, there are exceptional circumstances where we would allow you to still have a new quota.” There may have been a weather event, for example, that meant that that grower or exporter didn’t have a crop to export that year, but the following year they would, and so it wasn’t purposeful, or something like that.
What we’re seeing in other areas is that often exporters may look to get quota and not use it so that there is not the competition in the market against other New Zealand exporters, and whilst I can understand that from a business point of view, it is not something that would be viewed as acceptable in as far as having negotiated access for New Zealand, where we want the export of the product to take place. So it allows there to be an ability for the quota manager to consider these sorts of things. If it gets set out in regulation, of course there has to be a process where if somebody is affected by this, they have the ability to seek appeal or a change.
Hon DAMIEN O'CONNOR (Labour) (21:41): Thank you, Madam Chair. I refer to clause 55, “Quota manager must manage conflicts of interest”, which is quite a critical area here. A recommendation came from the Foreign Affairs, Defence and Trade Committee to eliminate the ministry—well, eliminate from what?
It says, “This section applies to the following parties … a quota manager, other than the Ministry:”. The proposal put to the select committee was to not have the ministry subject to scrutiny over possible conflicts of interest, and I guess the question to the Minister is this. I know that there is the Public Service Act and there are other kinds of obligations on public servants, but this is a small country and I think the select committee decided that we should take out the exclusion for the ministry. So the question to the Minister is this: is he comfortable now that his ministry will be subject to the scrutiny over possible conflicts of interest?
When it comes to quota management in areas such as we are speaking of here, there are not thousands and thousands of people with the knowledge and experience, and it is possible that there may be conflicts of interest. So the question to the Minister is whether he is happy now that within his department, these things will be managed appropriately to ensure that there’s a fair and balanced allocation of the quota and then ongoing management—because they are two separate things.
Hon TODD McCLAY (Minister for Trade and Investment) (21:42): Yes, I am. The ministry has scrutiny through other parts of legislation. They have—as across all ministries—through the Public Service Act the ability to manage conflicts of interest internally with those who may be employed in a ministry, but the ministry has scrutiny upon it also through this House and through Parliament. I would expect that at the Foreign Affairs, Defence and Trade Committee and maybe the Primary Production Committee, at a given point in time in the future, this member and others will have the ability to question in detail the application and processes around the running of the quota system and the sharing or distribution of the quota.
There are many areas where there is scrutiny of our ministries and their roles. The individuals themselves get dealt with internally, but the ministries also take this seriously. I am comfortable with where we have landed with this part.
CHAIRPERSON (Barbara Kuriger): Dr Lawrence Xu-Nan—but you look a bit like you’ve just got a follow-up question here? OK, yeah.
Dr LAWRENCE XU-NAN (Green) (21:43): The Hon Damien O’Connor may have a follow-up question.
CHAIRPERSON (Barbara Kuriger): He’s ceding to you, if you want, the follow-up. Otherwise, I’m going to go to Dr Xu-Nan.
Hon DAMIEN O'CONNOR (Labour) (21:44): Yeah, I’ve got a follow-up, and it’s just off to the Minister for Trade and Investment—and thank you for his assurance on that. The other one is that the Minister has the ability to conduct an audit, and, basically, at the other end of the scale, we opened up the Minister’s discretion to intervene where he thinks he or she would think that there’s something wrong. So I guess a comment from the Minister on how that will be managed is probably something of interest, as well.
Hon TODD McCLAY (Minister for Trade and Investment) (21:44): Well, the ability to audit is an important one. If it’s not set in the legislation, it can’t happen, and if a Minister, for a range of reasons, may decide he wants to make sure that the quota system has been running well and properly as a result of the legislation setting it up, then I think that’s important.
I mean, it’s not quite the same, but if you think about some of the levy bodies, there is a process that they go through to set their levy and it’s very, very clear in legislation for that body, but, often, a Minister will have the ability to look at that and make determinations as to whether they agree or not that it has actually met the requirement in the legislation. In this case, a Minister’s ability to have an audit is, I think, a very, very good idea. The circumstances in which that may happen may well vary, but it will be a tool that future Ministers can consider.
CHAIRPERSON (Barbara Kuriger): Lawrence Xu-Nan is just going to round us off nicely now.
Dr LAWRENCE XU-NAN (Green) (21:45): Thank you, Madam Chair. I do have a few questions regarding clause 62, “Powers of search and seizure to investigate offence”. Again, this was something where, although it was discussed, the Foreign Affairs, Defence and Trade Committee didn’t have full agreement on it.
Now, Minister, you mentioned before in terms of, for example, non-compliance when it comes to export certificates and all of those things. One of the issues here is that there is no way for an issuing officer or enforcement officer to investigate for areas of non-compliance without getting a warrant, which then also means that there are some inconsistencies between this legislation and other comparable legislation around this. We did have a conversation around whether the wording before of a warrantless search was too severe and we said that something needs to be kind of softened, but I guess the first question to the Minister is: how then would an enforcement officer or an issuing officer investigate for non-compliance if the only way for them to do that is to have a warrant which requires there to be some suspicion that the person is non-compliant?
Hon TODD McCLAY (Minister for Trade and Investment) (21:46): This is only one tool. There are many ways that they engage and have the ability to do that, but where a search warrant may be required to search under the law—and this is under Part 4 of the Search and Surveillance Act 2012—it aligns with that power. It has the ability to do so, and it merely dictates what can happen. It allows for a search warrant in the circumstances of a search of a place in order to copy documents and seize computer systems or data storage devices, but there is often ongoing engagement with exporters before this, and this is just one of the powers.
There’s another part to this. It says that the search must be exercised with regard to the culture of any place the enforcement officer enters. If we take again, hypothetically, where a search warrant is issued to go to a church that has products in it, and so on, one may assume that at a time of worship, it may not be enforced, but at another time it may well could be.
TIM COSTLEY (National—Ōtaki) (21:47): I move, That debate on this question now close.
A party vote was called for on the question, That the motion be agreed to.
Ayes 67
New Zealand National 48; ACT New Zealand 11; New Zealand First 8.
Noes 54
New Zealand Labour 34; Green Party of Aotearoa New Zealand 14; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Motion agreed to.
A party vote was called for on the question, That Part 4 be agreed to.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.
Noes 28
Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Part 4 agreed to.
A party vote was called for on the question, That Schedule 1AA be agreed to.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.
Noes 28
Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Schedule 1AA agreed to.
A party vote was called for on the question, That Schedule 1 be agreed to.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.
Noes 28
Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Schedule 1 agreed to.
A party vote was called for on the question, That Schedule 2 be agreed to.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.
Noes 28
Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Schedule 2 agreed to.
A party vote was called for on the question, That Schedule 3 be agreed to.
Ayes 93
New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.
Noes 28
Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Schedule 3 agreed to.
Committee of the whole House
Clauses 1 and 2
CHAIRPERSON (Barbara Kuriger): Members, we come now to clauses 1 and 2, the debate on “Title” and “Commencement”. Lawrence Xu-Nan had a question about commencement.
Dr LAWRENCE XU-NAN (Green) (21:52): Thank you. I will start with the commencement. I do want to check, not so much when this—I’m assuming that the Order in Council date is going to be when the other remaining aspects of the agreement has been sorted. I do want to check: when this whole bill comes into effect, by Order in Council, does that also mean that the regulations I mentioned in other parts of this bill, overall, will also be—[Minister in the chair shakes head] No? OK, that’s fine. Thank you, Minister. That’s an easy question.
Then I guess I’ll move on to the title. I think it’s important to note that while this bill specifically, as the India Free Trade Agreement Legislation Amendment Bill, it has been something we’ve seen not only in the context of this free-trade agreement legislation but also other free-trade agreement legislation, where there is no effective way for this committee to be able to debate on the agreement itself in any effective manner. Yes, while we are here talking about how this is the bill and here is the national interest analysis, but it is a concern, and it’s not just in terms of this agreement; it’s in terms of, in general, how we look at international treaty examination—that a lot of the things that should be in scope, because, fundamentally, these sort of things, that the executive branch of our Government signed ourselves up to, does actually affect all of us. But we are not given a chance to be able to do that because the only opportunity for us to be able to examine an international treaty, whether it is a trade agreement or whether it’s any other forms of treaty, is through a select committee stage after the treaty has been signed by the relevant Minister. There is, effectively, no way that a select committee—
CHAIRPERSON (Barbara Kuriger): So the member said you were going to ask something about the title.
Dr LAWRENCE XU-NAN: I think that this title is inappropriate for this legislation because, although we are referring to the “India Free Trade Agreement”, there is no part of this debate where we are able to effectively debate on the India Free Trade Agreement. So I think a better title, if the Minister wouldn’t mind entertaining the committee, is that this bill is actually just the “India Free Trade Legislation” because there is no agreement to speak of, because we have not been given the chance to debate on the agreement.
That is part of the issue when it comes to our international treaty examination process, because when we had the international treaty examination through the select committee, and the Minister has mentioned during this entire committee of the whole House stage, on multiple occasions—and I do appreciate the Minister’s engagement, and the Minister has been very engaging in responding to questions around this bill. Everything that is to do with the agreement—to a certain degree, the Minister has been saying that this is outside the scope, despite the fact that it is part of the national interest analysis. At the same time, as I mentioned in my second reading, there was supposed to be a 15-sitting-day time frame for the Foreign Affairs, Defence and Trade Committee to consider the agreement and were only given nine sitting days because the Minister wanted to push this through before the end of this Parliament.
So the recommendation that I’m making to the Minister is simply remove the “Agreement” because we have not been able to have a robust discussion or debate on the agreement itself.
TIM VAN DE MOLEN (National—Waikato) (21:57): I move, That debate on this question now close.
A party vote was called for on the question, That the debate on this question now close.
Ayes 59
New Zealand National 48; ACT New Zealand 11.
Noes 62
New Zealand Labour 34; Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.
Motion not agreed to.
CHAIRPERSON (Barbara Kuriger): The time has come for me to leave the Chair. We will resume this committee again at 9 a.m.
Sitting suspended from 9.58 p.m. to 9 a.m. (Wednesday)
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