PANSY WONG (National) : Kia ora, Mr Chairperson. New section 169, to be inserted in the Injury Prevention, Rehabilitation, and Compensation Act by Part 1 of this Injury Prevention, Rehabilitation, and Compensation Amendment Bill, talks about the level of levies. The levies for both the existing employers’ levy account and the self-employed levy account come from three sources, as is correctly stated in the bill. First of all, new section 169(1) provides that the levy is paid by an employer to the employer’s employee for that period, or is collected from private domestic workers, etc., and then it depends on the level of earnings deemed by regulation to be derived by a self-employed person. But new section 169(2) of the bill makes it very clear that the extent of the funds to be collected from the levies should be calculated “so that the cost of all claims under the Work Account is fully funded.” That account would be a merger between the employer levy and the self-employed levy.

But a strange situation is happening here. Members will remember that the legislation states that all these levies should be calculated so that the cost of all claims under the combined work account would be fully funded. But right now, before the merger, the employers’ account is showing a surplus of $688 million, which means that the liability is more than covered by the existing levy account. In the self-employed work account, there is a $60 million surplus. So the question I would ask the Minister in the chair, Ruth Dyson, is that, if both of those accounts have a surplus over those estimated liabilities, why should the Accident Compensation Corporation (ACC) continue to hold on to these surpluses? The estimated liabilities are already fully funded in both of those accounts.

It gets even more ridiculous. I will use the specific example from the Meat Industry Association. I would like the other parties—including New Zealand First and the Greens—to listen to this carefully, because I know that they are trying to look after the self-employed, and those parties will have a problem with that. By passing this legislation, they will punish those self-employed people. Let me demonstrate why. The Meat Industry Association has listed the following figures for its members. At the moment, the ACC levy rate for 2006-07 is $8.30. If there is no merger of those accounts, next year the levy will be $6.57 per $100, but if the merger goes ahead, those members will pay $8.83. It simply does not make sense to punish the self-employed by making them pay more under the merger situation. I would like the Minister to take a call on that issue and tell the Committee why that should happen.

The reason is that the ACC looks at the surplus situation in the employers’ levy account and sees that there is a margin of 63 percent, and it looks at the self-employed account and sees that there is a margin of 20 percent. The corporation adds the two together and arrives at a margin of 53 percent. So in the process it says it will rebate $100 million, because bringing the employers’ account down from a 63 percent margin to a 53 percent margin will mean the employers are entitled to a rebate of $100 million. The problem is that we are being told that the self-employed account, which sits on a 20 percent margin, has to go up to 53 percent. This means that the self-employed will have to come up with $100 million extra for the next 2 years.

It does not make sense, because the ACC states that it needs to work with a surplus of only 11 percent just in case the liability exceeds the funds, but it does not need to work with a margin of 53 percent. So the ACC has a policy of reducing those margins to 11 percent by 2010, but in the meantime, for the next 2 years, it wants the self-employed to pay $100 million extra.

So I would like the Minister in the chair to take a call on that issue. She needs to answer this question. She cannot say that she has not been asked about it, because the Meat Industry Association has written to her and asked her to please explain why she would want the self-employed members of the Meat Industry Association to pay $360,000 collectively to cover a claim cost of around $25,000.

This is all to do with the ACC being very conservative. It is concerned that it might get the calculation wrong. So even though the corporation thought it needed to work with a margin of 53 percent, I would say that no private enterprise, nobody who runs a business, can have the luxury of saying: “Well, I really want to cover my bases. A 10 percent profit is not enough. I want 53 percent.” Private industry does not have those luxuries. But the ACC, today, through Parliament, is seeking political parties’ support to increase a margin that it thinks is sufficient at 11 percent, to 53 percent.

I challenge parties like New Zealand First and the Greens to rethink their position of punishing the self-employed. I can assure them that for the next 2 years their offices will be flooded with letters of complaint from the self-employed, as soon as those notices hit the letterboxes. But I think, for a start, that if the Minister is so confident about this bill, then she should take a call to explain to the public why the ACC should want a margin of 53 percent, when its stated official policy is 11 percent. Why should the Minister not agree to be fair to the employers and rebate them, and also to not punish the self-employed? The ACC should work within the existing margin of the self-employed work account, which is 20 percent. Therefore, the self-employed would not have to face a hefty bill, up to the tune of $100 million, for the next 2 years. It might mean that in 3 years’ time, down the line, they would get a rebate.

Nobody has the luxury of asking people to pay money in advance, and not even pay interest on it. If people have overpaid their tax to the Inland Revenue Department, even the department would give them some interest because it has had the use of their money. I would say that the ACC is a monopoly organisation, and it is an outrage that it will charge the self-employed $100 million extra for the next 2 years. Members should think about it. How can we expect the self-employed to accept a position whereby they would have been levied at $6.57 per $100 if the merger did not go ahead, otherwise they will have to pay $8.83? I think that New Zealand First and the Greens will have to look at their position, because for the next 2 years they will have a lot of explaining to do if they do not support my amendment, which will come under Part 2, “Transitional provisions”.

But in Part 1 there is an issue of principle outlined, whereby the legislation shows that liabilities should be fully funded—but we want answers as to why a 53 percent margin over the fully funded position is supported in this Parliament by the Greens and by New Zealand First. I think that those parties have a lot of answering to do. For a start, the Minister might be able to help out those members if she would just take a call and explain why the ACC is demanding a 53 percent margin on the merged work account.

Hon RUTH DYSON (Minister for ACC) : The purpose of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill was not obvious from the contribution of the member who spoke previously, so I would like to outline it.

The bill aims to do two things. The first is to amalgamate the two accounts that cover injuries incurred during a person’s work—the current self-employed work account and the employers’ account—and to rename the combined account the work account. It covers all injuries that occur at work. It may sound quite obvious that we have one account to cover all injuries that occur at work, and certainly some people have asked me over the last few months why we have two separate accounts. The reason is very clear, and it should be obvious to members who were in the House in the 1990s. That excludes the members who are currently interjecting; they may not know. In 1998, when the then National-led Government privatised accident compensation, its funding mates, the insurance industry of New Zealand, did not want to take on liability and responsibility for the self-employed, because there were too many of them to deal with in one go. So in order to have a compulsory privatisation of the employers’ account, National had to separate the self-employed work account and the employers’ account. That is why they were separated. It was for no principled reason but solely for the purpose of privatisation. The insurance industry did not want to cover the self-employed, because there are so many of them and it involves a lot of administration.

But would a self-employed plumber who is doing his or her job every day, on looking down the road and seeing a person who is employed as a plumber, reflect to himself or herself that the two people may be paying the same levies because they are exposed to the same risk? In fact, they may be doing literally the same job on the same site, but have a different business structure. The answer is overwhelmingly yes. This is a very basic issue of fairness. If two people are doing exactly the same job and are exposed to exactly the same amount of risk, why would they be insurance risked on the basis of their business structure rather than their literal exposure to risk? The answer is that they should not be, and this bill fixes that. We are calling it a work account because that is what it is. It would be very cumbersome to call it the employers’ and the self-employed work injury account, so we are calling it the work account. That is the first thing that this bill does.

The second thing is that the bill replaces the old term “medical misadventure” with “treatment injury”. I want to acknowledge the concerns raised by New Zealand First during the consideration of this bill. We have moved away from a system that in the past, under previous accident compensation legislation, required people who were injured at the hands of a health provider—at the doctor’s, at the chiropractor’s, at the physiotherapist’s, or in the surgery—either to show fault from the health provider or to demonstrate that their injury was both rare and severe. We changed that in the last amendment bill, but we did not change the name of the account. The name of the account, which is still the medical misadventure account, does not reflect the actual practice, which is to treat all injuries, regardless of where they occur, as injuries and to investigate their circumstances separately.

The concerns that New Zealand First raised, through Peter Brown, were that we must not, through this change of name in this amendment bill, lose the focus of the quality assurance contribution to the health system that the old medical misadventure system provided, and that the new treatment injury system is designed to ensure, as well. So I give the whole Committee, but particularly New Zealand First, my commitment that the change in clause 12 will not in any way undermine the quality assurance contribution that we need to make through being able to investigate the causes of injury at the hands of a health provider.

There are two amendments in the name of Dr Paul Hutchison to this part, and I would like to make a brief contribution in reference to them. Dr Hutchison is a very considerate and considering member, despite the fact that he represents the National Party. I have given what I consider to be serious consideration to his amendments. I regret to advise, upfront, that although I will not be recommending support of them, I do believe in the principle in them—he will persist in using the word “premiums” when the word is “levies”—and I have taken them very seriously.

Dr Hutchison’s first amendment proposes to insert in clause 11 a new section 175A, “Independent auditing of proposed premiums”. Independent auditing already occurs; it is available under the Official Information Act. It is my view that people should not have to go through that process, and that to have the very information the member is seeking made public would be a very valuable contribution. But I am not convinced, because the member did not discuss it with me—and that would have been a good and thoughtful move—that that needs to be provided for by an amendment to the legislation. A handwritten amendment with no consideration has still had good consideration from me. I give the member a commitment that that information will be available on the Accident Compensation Corporation website, and that he will not require his legislative change in order for that to be done. It is a thoughtful contribution, and I think it will help businesses—both the self-employed and people in different business structures—to assess how their levies were determined, and to look at their business planning. I am very keen on that.

In the same way, in relation to the member’s other recommended amendment to clause 11 to insert new section 175B, “Provision of forecast statement of financial performance”, I say that that information is currently provided to me, and I would like to consider some way in which we can better have a quality debate in the public arena, so that people do understand the basis on which their levies have been set. They might not wake up in the morning and say: “Yippee! I am very pleased that I have to pay this contribution for potential injuries.” But they will have a very in-depth understanding of the analysis that has gone on behind the setting of their levy and, hopefully, an understanding also of the main driver of this legislation, which is to lower their levies by lowering their injury rates. If they better understand the link between the injuries that are incurred and costs, then perhaps we will have a little more commitment to injury prevention.

On that basis, I regret that I will be recommending to my colleagues that Dr Hutcheson’s amendments are not supported. But he can take credit for the consideration behind them, and be assured that their intention will be implemented.

David Bennett: Hollow words.

Hon RUTH DYSON: I raise a point of order, Madam Chairperson. I deeply resent the implication in David Bennett’s interjection. I take offence at it, and I ask that you ask him to withdraw and apologise.

The CHAIRPERSON (Ann Hartley): The Minister has taken offence at the member’s words. I ask the member to withdraw them.

David Bennett: I withdraw and apologise.

Dr PAUL HUTCHISON (National—Port Waikato) : I am pleased to have the opportunity to speak on this very unfortunate Injury Prevention, Rehabilitation, and Compensation Amendment Bill—unfortunate, because it is a blatant robbery of funds that employers have in good faith paid since 1999 to fully fund their account. It is a blatant grab by the Labour Government, which is purely ramming through the ideology it has in terms of so-called social insurance, and is disobeying the basic principles of insurance, whereby those who are at higher risks should indeed have higher premiums. Merging the accounts undoubtedly acts in a directly opposite way to basic insurance principles, and it is very regrettable that the Labour Government has just failed to see that unless we apply basic insurance principles to accident compensation, it will never ever be efficient. That is of great worry.

Here we have two accounts. The first is the employers’ account, into which employers since 1999 have in good faith paid their premiums and accrued a substantial surplus, yet the Labour Government has said that it wants that money to go to a merged account that will cross-subsidise the self-employed, who, unfortunately, have higher risks and higher injury rates. It is sending exactly the wrong message from that which it should be sending.

One of the things I am very concerned about is that in New Zealand we have had an increase in the incidence of moderate and severe accidents. Despite 6 years of this Labour Government—

Darren Hughes: Seven.

Dr PAUL HUTCHISON: Seven? Sadly 7, but it will not be much longer. Despite 7 long years of this Labour Government, the incidence of moderate and serious accidents has gone up. But in this legislation the Government is trying to put in provisions that will give exactly the opposite message to the community out there in terms of accident prevention, and of inputting safety measures within their organisations.

The facts are that injury rates are lower, on average, in the employers’ account, and that is by virtue of the fact that employers are better organised, have better infrastructure in place, and have worked very hard since National so appropriately privatised the account back in 1998. We saw a decrease in accidents, a dramatic increase in safety procedures in the workplace, and decreased premiums. That is the fact of what matters, but in this bill we are seeing a blatant manipulation of the levies by the Labour Government. That has been brought about by the fact that substantial money is being transferred from the employers’ account to the residual account, and the Labour Government is artificially putting down the levies.

It thinks it can fool the public by this mechanism. But we should know that if a car driver out there has many accidents and they are his own fault, he should pay a higher premium. That is a simple rule of basic insurance philosophy. Yet this Labour Government wants to go in a totally opposite way to that. It says that it wants to reward those in the self-employed group, who have higher injury rates and higher risks. The Government is going to bring down their levies, and give them some money, to boot. That is the total lack of logic of this Labour Government.

I do take seriously the fact that the Minister has said that she would support—only in principle—the two amendments I have brought in. I am deeply saddened she will not support them, and I hope that the rest of the Committee will look at those amendments. They are thoughtful, as the Minister said, and I think they will contribute to the transparency we really need in this accident compensation debate.

Firstly, in relation to Part 1, clause 11, I propose that the following section, section 175A, is substituted: “Independent auditing of proposed premiums”. One of the major problems we have in this country is that the general public does not understand the levy setting in this country, and in this amendment is a mechanism whereby “proposed premiums and the rationale for such premiums must be audited by independent third party actuaries yearly,”. The Minister says that that happens, but the difficulty is that we cannot get to them because of the Official Information Act. [Interruption] Well, that is what the Minister told us just a few minutes ago.

Hon Ruth Dyson: I said that you can get to them because of the Official Information Act.

Dr PAUL HUTCHISON: We can get to them, but they are not open to the public. The Minister is saying that, in good faith, she will ensure that they are available to the public. If the Minister thinks that is a good idea, why does she not support the amendment? I call on the Greens, the Māori Party, New Zealand First, United Future, and all the other parties in Parliament to support an amendment that the Minister herself has said is a highly sensible and thoughtful amendment. The same goes for—

Darren Hughes: Huh!

Dr PAUL HUTCHISON: Now we hear “Huh!” from Darren Hughes, the member, by a very, very thin margin, for Otaki. He should be adding a sensible contribution to this debate, not by saying “Huh!” but by persuading his Minister that this is a very sensible amendment.

Let us go on to clause 11, where I propose that a new section 175B is also substituted: “Provision of forecast statement of financial performance—ACC must provide yearly, a forecast statement of financial performance for the next five years to allow levy funders to analyse current premium setting performance against projected outcomes.” Again, the purpose of this amendment is to make the levy setting mechanisms as transparent as possible, and hopefully as understandable as possible, to all those who are involved. I am delighted to see that the Minister is nodding her head, and I would appeal to her not only to say that she supports this idea without supporting the amendment but to formally support the amendment, because I do believe that it is a serious contribution to this debate. We can see the National Government-in-waiting is ready to do all sorts of useful things to accident compensation, and I am glad that the Minister is recognising them.

Finally, I want to speak on the amendment put up by my colleague Pansy Wong. That is in the next part but let me foreshadow it. Again, it is another very sensible amendment and it comes to the nub of the philosophy behind this unfortunate Labour Government bill. One would hope that in accident compensation and accident prevention good faith is demonstrated by whoever the Government is. The Government certainly, in good faith, required collection of levies from the employers and they have done that for the last 5 years. The employers, in good faith, have paid expecting that fund to be fully funded. Here, clearly, a surplus has accrued and, sadly, the Labour Government wants to grab it. This absolutely defies the principles of good faith, as does its insistence against the idea of rating, which it is so determined to object to.

I think we will find in this debate that the Labour Government is in denial about the idea of relative risk rating. It will cite some very obscure literature from Europe and maybe North America that is irrelevant to the fact that people out there actually respond to financial signals. I agree that robust safety management practices have to be put in place within all businesses, whether they are large or small—I absolutely agree with that. But clear financial incentives also should be in place and one of the major problems that this bill encompasses is that of merging the two accounts. It is directly opposite to all the basic principles. The Labour Government is saying it wants to reward those who take risks and who are not helping the New Zealand safety record. That is wrong.

SUE MORONEY (Labour) : It is my pleasure to speak to the Committee stage of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill—a very sensible bill that has come before this House. The last speaker, Dr Paul Hutchison, took some time to rewrite history and I want to make some comments on how we have come to consider this bill here today. The only thing that was increased by the National Government when it was in power and privatised the accident compensation system was donations to the National Party. That was the only thing National was able to increase by its privatisation agenda. Donations to the National Party did not do anyone who actually had an injury that needed treatment in this country any good, but those donations were all that it was able to increase. So I want to set the record right on that, to start off with.

It is time the member who just finished speaking, and his party, caught up with the rest of the world in applauding the accident compensation system we have. The no-fault system and the levy system we have in place are the envy of other countries. That is because Governments like the Labour one have stood up and said we are going to have a no-fault system, we are going to stick with a system that is fair and a system that is simple, and we are not going to sell out our policies to the highest bidder.

This bill sets right an artificial barrier that was brought in by the last National Government. It is some time ago since we had a National Government, and it is now time we put this artificial barrier right. In fact, these accounts were not separated to start off with, but during the 1990s they were separated for the purposes of privatisation by the National Government. It is quite an artificial barrier: the self-employed, working in exactly the same industry and doing the same occupations, have ended up in a separate account from the employed.

It was very well demonstrated when members of the Seafood Industry Council came before the Transport and Industrial Relations Committee that I sit on as a member. They made a very thoughtful submission and put the matter very clearly. They talked about coming forward with a submission where they could not necessarily support or oppose the bill in its entirety, because the members of their council fell into both of those groups. They worked in exactly the same industry, did exactly the same work, faced exactly the same risks, but ended up paying quite different levies and paid into different accounts and they could not see the logic of that.

They brought forward to us the very practical scenario of two people working on the back of a fishing boat, one being self-employed and contracting his or her services to the fishing company, and the other working directly for that fishing company. As they were hauling the nets in, those people faced exactly the same risks but they were on a completely different payment regime. The only reason for that was an artificial barrier based on the business structure that they were involved in. The reason behind that, of course, as I have already outlined, was an artificial barrier put in place by the last National Government to ensure that the insurance industry could pluck off the profitable bits of the Accident Compensation Corporation and leave the rest of it behind.

In my previous role before I came to Parliament I was actively involved in the issue of health and safety—training health and safety representatives in the workplace. Certainly my knowledge of working with people in the workplace, doing the work, and looking after workers’ interests in health and safety, is that they clearly understand that the risks faced by working people in the workplace are the same whether they are self-employed or directly employed by the company. People who are heavily involved in this work in the real world—in the workplace—understand the good sense of this bill that is before the House at the moment.

I want to take the opportunity to make a comment about probably the most worrying submission that came before the select committee when we were considering this bill.

Darren Hughes: Who was that from?

SUE MORONEY: The submissions I am concerned about came from those representing employers. They talked about the fact that the levies under this new regime would come down to such a low level that it would not be desirable for employers to go into the scheme set up by this Government. The new regime, with lower levies, actually gives employers an incentive to have certain health and safety systems in place. I felt that that was a very strange position to come from those purporting to represent employers. They were essentially telling us that even though they knew those very good programmes brought down the injury rate in their workplaces, and improved morale and attendance and productivity in their workplaces, because this bill brought in great stability and lower levels of levies they might choose to go off those programmes, even though they knew those programmes had a very positive spin-off for their workers and their workplace.

I think it is important we keep an accident compensation scheme in place. It is a fair scheme, it is a simple scheme, and it ensures that there is a clear link between injury prevention and the levies that are paid. This bill ensures that it makes a lot more sense. Irrespective of whether people are self-employed, or employed by others, the risks they face—because of the industry they are associated with—will be reflected in their levies.

The last thing I want to say in speaking in the Committee stage on this bill is this. In the select committee we got a lot of information from the officials on exactly how the legislation would work—there were pages, and pages, and pages. It was very interesting to note. What we got before us was exactly what industry would end up on what levy and how long it would take for the transition to go through. I was interested that all that the National Party members, particularly the one opposite who is interjecting a lot at the moment—David Bennett—really wanted to do was to go straight to the page that indicated the businesses they personally owned and to have a look at what the levies were for their personal businesses. They asked questions of the officials, based on the industry that they owned businesses in. They very quickly went fairly quiet, because they realised that this is good for them and that their own businesses will benefit from the reduction in levies that will happen under this bill. I finish on the note that the Labour members certainly took into account the effect this bill will have on all New Zealand workplaces, all employers, and all self-employed people. I commend this bill.

DAVID BENNETT (National—Hamilton East) : I say in relation to the speech from that last member, whose implications were most dishonest and untrue, that this legislation is a scam for New Zealand business, a scam for employers, and a scam for the self-employed. Let us look at the average rates. The average rate for employers is about 86c; the average rate for self-employed people is $2.03. Those are the average rates. There is a difference between the rates for employers and the self-employed. There is a big difference; it a real difference.

The Government has put this bill together for one reason: so that it can hoodwink employers during the next election campaign. It is using this bill as a bribe, so that it can go into the next campaign saying that it has reduced Accident Compensation Corporation (ACC) levy payments for employers and, in some cases, for the self-employed, as well. That is all the Government is up to. This bill has nothing to do with being good for business and it is not about reforming the ACC; it is here so that the Government can go into the election saying that it has done this for business and for self-employed people. Should we expect that from this Government? Yes. It has stolen from us once in order to win an election; it will steal from the levy reserves of employers and the self-employed in order to try to win another. But it will not work this time. Labour can steal, but it will not win the election.

This is another such case, and the Minister for ACC, Ruth Dyson, has admitted to that in relation to the reserves. The Minister said in the second reading debate that if, as some had requested, all the excess reserves in the employers’ account were refunded to levy payers in 1 year, then employers would experience significant increases in levy rates in years to come, which would defeat the object of levy stability. The objective of levy stability is to get this Government through these 2 years—through another election campaign. Then it will rack up those rates. That is what the Minister was saying. She admitted that is what the Government intends to do. If people do not agree that is the case, they should look at the numbers.

Let us look at the numbers that have been presented. For example, the levy in relation to shearing will go from $3.79 before the merger to $4.18 after the merger has gone through and all the rebates have been given out. That means that in 2 years’ time, once all the rebates have been given out, shearing employers will have to pay $4.18, when they pay $3.79 now. That is an increase. Let us look at the rate for ocean and coastal fishing, which will go from $2.43 to $4.31. It will increase under this Government in 2 years’ time. After the election, employers will have to pay the real rate that this Government wants them to pay. Here is another one: the rate in relation to timber dressing and wholesaling will increase from $1.13 to $2.74. That is a huge increase—more than double in 2 years—just so this Government can win an election. Let us keep going. Here is another one: the rate in relation to non-metallic minerals will rise from $1.58 to $1.74. Those increases in cost will all occur under this legislation.

There is a provision in the legislation that states that levies cannot increase by more than 25 percent for a business in 1 year. Well, that sounds all right, but what kind of business would want to experience a 25 percent increase anyway, year on year? None. The Government says that 8 percent of employers will have a levy increase of between 5 and 45 percent. A levy increase of 45 percent is huge, and it is not being done in the best interests of New Zealand business. All of this is so that Labour can go into an election campaign saying that it has kept the levies down for employers—and then a year later it will whack them up again. At that point the reserves will be exhausted, and employers will have to face the huge levy increases that this Government proposes. It is not only employers but some self-employed people as well who will have big levy increases, with 17 to 20 percent increases in some cases. This is unfair legislation. It will increase the employer rates and the self-employed rates in some cases. For example, the sports levy will increase by 17 percent, the equestrian rate will go from $4.83 to $5.65, and the rugby league rate will go from 75c to $1.01.

What, then, can we do about this legislation? New Zealand First correctly stated that after privatisation there was a 6-month trial period for the new legislation that National tried. New Zealand First said that legislation had worked better than anyone had expected and it did not want to change it. It wanted that trial to continue. Rodney Hide said that this Government has failed because it has stayed with its ideological position. It has not actually looked at what is good for the ACC or for employers or the self-employed. It has looked just at establishing what is a State-run monopoly for Labour and its supporters, the unions. That is all this legislation is. It is a payback for the unions, and it is another bribe, going into an election year, from this Government.

This legislation was put through in an unusually short period of time. The reason is that when Labour goes into the next election campaign, this legislation will be all up and running. The timing has nothing to do with consultation. This legislation is being passed so that next year Labour will go into the election campaign saying that it has reduced levies. This cynical Government is trying to use people’s own money for its own purposes; it has been proven to do that. It is a Government that once again is proving what it wants to use the ACC levy for. The ACC is just another cash cow for this Government to use to try to win an election. Shame on this Government!

DARIEN FENTON (Labour) : It is a great pleasure to rise in the Committee stage of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. The part we are discussing, Part 1, is the core of the bill, really. It is all about making Accident Compensation Corporation (ACC) levy rates fairer for the self-employed and the employed. I did notice in the last member’s speech that there was no mention of the people who actually do the work. He did talk an awful lot about employers and business, but there was no mention of the workers.

I think it is very interesting, actually, because I noticed in one of the many hysterical press releases put out by Paul Hutchison, the former National Party spokesperson on ACC, one particular quote that David Bennett has just repeated: “It is unfortunate that under Labour, people in New Zealand do not have a choice of insurer when it comes to cover for personal injury. Instead the Labour Government and their union mates heavily influence a monopoly model that attempts to socialise insurance rather than apply basic principles.” Do members know what is interesting? The National leader, John Key, is meeting with the Council of Trade Unions next week. What will he be saying? He is seeking to be mates with the unions, as well! I think that is just hilarious. Will he own up to them that the plan of the National Party is to re-privatise accident compensation?

Getting back to the bill, we see that it enables the merger of the ACC’s self-employed work account and its employers’ account, which makes practical sense and creates a fair and sustainable accident compensation scheme that emphasises injury prevention while at the same time minimises the social and personal impact of injuries. As others have said, the only reason the accounts were separated originally was privatisation. The self-employed work account was established to support the creation of the private insurance market for employer and self-employed workplace injury cover in 1999.

I saw firsthand that failed experiment. As everybody knows, I was a workers’ representative, and I am very proud of that. There is nothing about the work I have done and the path I have chosen in the past that I am not proud of. I saw firsthand the impact on workers of that failed experiment. That is why it concerns me that the Opposition never ever talks about the workers in this situation. The National Government created a shambles, and it created a situation whereby the only driver of the insurance scheme was profit for the private sector. It is no wonder, really. Of course, when Labour came into power it had to pick up the pieces. This Government has ensured that privatisation is not on the agenda any more, and I thank this House for it.

The privatisation of accident compensation did not work. It did not mean a better service. It did not work for workers and it did not work for employers. This bill builds on the changes the Government has made since it was elected in 1999. We have returned accident compensation to a full social insurance scheme—and we are proud to say those words, “social insurance scheme”. [Interruption] David Bennett should learn to spell them. We are rejecting the costly private insurance model introduced by National.

We have kept ACC levies down, built a robust financial scheme, and reintroduced lump-sum payments for permanent impairment. This Government has improved rehabilitation and launched partnership programmes with approved employers. It has rewarded employers with levy discounts for good injury-prevention practices and improved access to compensation for seasonal and casual workers and for people on paid parental leave.

It is fascinating to me that in this debate the National members are showing so much concern for workplace injuries. When they had a chance to do something about workplace injuries they abolished workplace health and safety representatives and they changed the whole health and safety system so that the number of injuries went through the roof. Yes, they are concerned today, but what would they do? Everybody knows that if National ever got the chance, it would privatise accident compensation, throw health and safety to the market, and throw workers to the wolves.

Evidence now shows—and it is the reason for this bill—that self-employment as a business structure in and of itself does not have a significant bearing on risk when one compares like with like, for example, self-employed farmers with employee farmers. However, I must say that I have never ever heard of a self-employed All Black or rugby player, as a member referred to formerly. Self-employed injury claims tend to be similar to that of small and medium-sized enterprises. Under the current system, levy payers are allocated to the work accounts on the basis of business structure, which may result in differing levy rates for businesses carrying out similar activities that entail similar risks.

Small businesses have often cited levy instability as creating problems in their business cost planning. The Labour-led Government has acknowledged this unfairness and the bill removes this inequity. Merging the accounts will ensure that ACC levies paid by businesses are fairer as they are based on injury risk associated with the activity undertaken rather than the business structure. It will remove the arbitrary distinction and corresponding levy differentials between self-employed people and employees in the levy risk group level. Merger will also allow greater focus on reducing the risk of injury, based on industry and occupational type rather than on the business structure. It will provide a much clearer focus across industries and enterprises for injury prevention and health protection.

This bill is consistent with the principles of fairness. It provides a more equitable system and a better focus on injury minimisation. Merging the accounts will also improve levy stability, particularly for self-employed people, as the cost of injuries will be spread over a larger and more stable earnings pool. This is a good bill, and as a member of the Transport and Industrial Relations Committee I am proud it has come back to the House.

Dr JONATHAN COLEMAN (National—Northcote) : We have heard the Labour members talk a lot about fairness today, and in that spirit I know they would like to acknowledge the landmark, historic policy announced by John Key today whereby the 5 percent cap on charitable donations by private businesses is going to be lifted, enabling companies to get in and do something about the underclass in this country. The Minister in the chair, the Hon Ruth Dyson, is a fair Minister and I know that she would want to acknowledge that. I would say that the Labour members opposite are probably a little bit disappointed that this policy has not been put forward by their somewhat tired Government. It is ironic that on the same day as this policy is announced the Government is trying to force through a bill that will punish the very businesses that employ people who, under this policy, will be in a position to give a higher level of donation to the charitable sector. That is the irony of what is happening here today.

The irony too is that we have heard four or so speakers from the Labour side of the Chamber who have been very concerned about the rights of self-employed people, but not one of those members has ever been self-employed.

Darien Fenton: That’s not true.

Dr JONATHAN COLEMAN: I am sorry, Darien has been. We have a couple of freelance unionists on the other side! Getting back to the issue of fairness, I point out that fundamentally this bill will punish employers. Employers will have the risk premium amounts they have paid in over the years cross-subsidising the pool of self-employed people. The Minister spoke about fairness. How can we say that is a fair situation? It flies in the face of actuarial common sense because actuarial sense tells us that insurance premiums are directly related to risk—the higher the risk the higher the premium. The Labour Government is telling us that self-employed people carry a higher risk than the employed as they tend to cluster in high-risk occupations. Frankly, that shows just how out of touch the Labour Government is with the reality of self-employment in New Zealand today. The self-employed workforce is, in the main, made up of white-collar professionals—people in areas like information technology, people who are behind desks, people in the service industry—

Hon Harry Duynhoven: General practitioners!

Dr JONATHAN COLEMAN: General practitioners—not people who are in high-risk professions. This is antiquated, out-of-touch thinking.

At the core of the Labour Government’s pushing of this bill is that it wants to super-reinforce the Accident Compensation Corporation against any threat of competition in the future. I ask Government members what is so wrong about competition in accident compensation. Despite what Darien Fenton, the list member and unionist, said, when National was in Government and accident compensation was privatised, accident rates went down and premiums were lower. Competition was good for business; competition was good for everybody.

Under this bill, as David Bennett said, we are in effect seeing an election bribe. One has only to look through the table to see that premiums will be kept down for about 18 months to 2 years—just until about the time of the next election—then they will soar up again. So the Government is trying to politically neutralise this as an issue.

As Paul Hutchison said earlier, the legislation provides for a blatant grab from the employers’ account. The Government should be paying back that $500 million to the employers. The employers are the people who are helping the workers; they are providing jobs and keeping the economy going. Why would we want to constantly punish employers through philosophy and the practical implications of policies such as this?

The other thing this bill will do is make the Accredited Employers Programme extremely unattractive. We know there is a philosophical motive for that. We know that the Government knows—and it is what it wants to happen—that employers will opt out of the Accredited Employers Programme, which will add more cost to the new merged accounts and even greater cost and liability to the residual account.

So there we have it. In the interests of fairness, the Minister did say that she was very impressed with Dr Hutchison’s amendments. Basically, what is wrong with an amendment that asks for greater transparency in the audit programme? How could one possibly object to that? Employers and the self-employed have a right to know how their levies are set. We oppose this bill. It is bad and unfair legislation.

Dr PAUL HUTCHISON (National—Port Waikato) : Thank you, Mr Chairperson, for the opportunity to speak again on this very unfortunate Injury Prevention, Rehabilitation, and Compensation Amendment Bill brought up by the Labour Government.

I want to point out a few things I was concerned about when I heard the list member Sue Moroney trying to put the record straight. Unfortunately, she distorted the record. After all, the situation is that in 1998 the employer and self-employed accounts were separated and the separate accounts came into being. What happened at that time was that injury rates went down. Workplace safety management increased dramatically, early rehabilitation was cemented in as an absolutely vital part of the accident prevention system in New Zealand, and premiums went down.

I see the Minister in the chair, the Hon Ruth Dyson, is looking quite astounded. She should take note, because these changes were the catalyst to make accident compensation much more efficient, and it has worked. It has worked only because of the experience of 1998. It is now starting to deteriorate as, under the Labour Government, the Accident Compensation Corporation (ACC) monopoly gets fatter and lazier, as one would utterly predict. It is very, very important that Sue Moroney’s somewhat distorted history is exposed. It was the changes in 1998 that reversed some of the problems under the Accident Compensation Corporation into a virtuous cycle of change that has improved accident compensation over the last 5 to 6 years.

It is now, indeed, time to resist a bill such as this. My colleague Dr Jonathan Coleman was absolutely correct in pointing out the dangers of the erosion to the affiliated providers or partnership programme. This is one of the most successful aspects of the accident compensation scheme in New Zealand, and it is one aspect that does not happen to be about the monopoly. In this partnership programme businesses manage themselves, and, as I say, it has been highly successful.

However, a deplorable aspect of this bill is that it manipulates the account so that the attractiveness of the partnership programme has been diluted. Substantial funds are being transferred across and the residual levies will go up, punishing and penalising those who have gone into the most efficient aspect of accident compensation in New Zealand as we know it today.

As well as that, the Government has decided to increase the stop-loss margins from about 150 percent to 200 and 300 percent—another reason why the partnership programme is being eroded. Why is it being eroded? I believe it is because the Minister does not like the concept that individual businesses can manage their accidents better than the ACC monopoly.

I would like the Minister to get up and explain to me why it is that third party administrators tell us that they are able to achieve much greater efficiencies than ACC. For instance, one of them said it managed 1,350 entitlement claims for a range of accredited employers with an average life cost of $5,200. This compares with ACC’s average cost of $13,700. Under this third party administrator the average time off work is about 4 to 5 days; under ACC the average time off work is over 30 days.

Another third party administrator claims an even better record than that in the order of about $3,500 compared with $30,000 for the corporation, and, similarly, much, much less time off work than under the current ACC regime.

It is regrettable that under this merger legislation the partnership programme is being eroded. This is happening because the Labour Government cannot bear the success of the private sector.

Hon MARK GOSCHE (Labour—Maungakiekie) : After listening to that speech it is no wonder that the insurance industry fought so hard to get a new spokesperson for accident compensation. After all the money it paid, and after writing National’s policy, that is what the industry got—Dr Paul Hutchison. Now the industry will be thinking twice about that move, and having said: “Oh, he’s so hopeless that we have to get a new one.”, because it now has Pansy Wong.

The poor old insurance industry wrote all the National Party’s policy, and it is a pretty simple policy—“Just privatise the lot, give us all the cream and you keep the rubbish.” Anything that costs a lot of money, the industry wants the State to look after, and anything it can make a big profit out of it will have. One would have thought that Dr Paul Hutchison would at least be able to get up and espouse that sort of policy on behalf of the industry and do it with some sort of panache, but no, even the industry could see that it had an idiot on its hands. So the industry said: “Please,” to whoever the leadership of the National Party was that day, “give us another one.” And look what it got—it got Pansy Wong!

So the poor old private insurance industry listening to this debate must be in despair at the quality of that sort of performance from the other side. Those members do not bother to read even the bill, let alone any explanatory notes that are given to them. They do not bother to try to understand that it was their woeful attempts to privatise that set this account up in the first place.

Dr Paul Hutchison has yet to explain why that professional rugby league player he was talking about in his speech should get a different premium when he runs on to the field, dependent on whether he happens to be self-employed, or a business person who set himself up as a company—an individual. Players are not tackled any less hard because they wear a jersey that reads: “I’m self-employed; please don’t tackle me hard.” They do not go on to the field with any less risk. Dr Paul Hutchison thinks that that is OK for those players on that field, or in the case of people on the back of a fishing boat, or a plumber, or any other people—just because they happen to have a different business structure. Just because they decide to do it this way rather than the other, the National Party says: “We don’t care about you, you’re self-employed, you pay more than people who’ve gone to the trouble of setting themselves up as a company.”

Where is the logic in that? No wonder the private insurance industry is in despair! Those members cannot get through their thick heads that the risk is exactly the same for that rugby league player running out for the Warriors. It does not matter whether he is self-employed or a company in terms of the way in which he structures his affairs; he will still be tackled as hard, and he is still going to get a broken leg if he happens to be tackled in the wrong way. So I ask Dr Hutchison, who went to university for many years, and obviously was an educated man once, why that self-employed rugby league player should pay a higher premium than his mate playing next to him who passed him the ball, if he happens to have set himself up with a company structure.

Where is the logic in that? Where is the logic in that for the National Party? It is just plain ideological nonsense. It is just plain ideological nonsense that saw National privatise accident compensation in the first place. It said to the private insurance companies that were paying them to do this: “Oh, OK, that’s too much risk for you guys. We’ll take it off your hands, and we’ll insure it for you as the State.” That is the truth of why this was set up. The National Party members can sit there and make all the silly speeches they like, but they do not like to be reminded of their past and what they would do again in the future if they were ever let loose again on this side of the Chamber as a Government.

They would do it again, because they are saying so, over and over again. They can come down and make speeches about having charity—I am not sure what 5 percent charity has got to do with accident compensation; maybe they are going to make all those self-employed people a charity as well, as they did last time when they said to the insurance industry: “Take the profitable end of the business and we’ll look after this.”

If those members had read the explanatory note before going to the select committee and coming to this Chamber, they would see that the reason for the high injury rates was the jobs that people were doing—jobs such as forestry, fisheries, and farming—not because of the nature of the way in which they set themselves up, as a private person on a self-employed basis rather than as a company. It was the job that one was doing. It was the risks people were confronting in those jobs. So poor old Dr Hutchison, who was sacked from his job—and no wonder—has not figured that out yet. And there have been many, many spokesperson’s roles along the way.

PANSY WONG (National) : The only reason I am taking this call is to raise some alarm about the chairperson of the Transport and Industrial Relations Committee, who chaired the passage of this bill through that committee. It is no wonder that every other party, apart from National, has been hoodwinked by that person. Firstly, he is lazy. Every time he stood up we got the same speech, apart from the names. That is laziness. Secondly, I want that member—the chairperson of the select committee—to take another call to explain whether he cares about the self-employed. How is he going to explain to the self-employed members of the Meat Industry Association that if the merger does not go ahead next year, they will pay $6.50 to $7 per $100 but that if it does go ahead, they will pay $8.83? But the situation gets even better. When the merger of the two accounts goes ahead—and we should remember this—the self-employed are to pay $8.83, but I ask members to guess how much the employer will pay. [Interruption] I thought the member had read all the papers. The employer will pay $4.69. So the self-employed will pay almost double the amount that employers will pay.

The lazy chairman of the select committee is trying to tell us that we did not study the papers. We studied the papers from top to bottom. It is no wonder that he and the Minister hoodwinked the whole Labour caucus; its members are so lazy that they never read a word of the papers. I would like that member to explain to the poor self-employed people why, after the merger, they will pay $130 million extra in total. If the merger goes ahead without a rebate, employers will pay only $80 million. So for the next 2 years, the poor self-employed people have to pay an extra $100 million.

The National Party, under the leadership of John Key, is charitable. We need only to look at what our leader announced today about lifting the cap on donations. We are going to encourage people who are charitable. We will support them—unlike the Labour members on the other side of the Chamber. They will punish the hard-working self-employed people, who in the next 2 years will pay $100 million extra in their levies—and the chairperson of the select committee got up and said that Labour looks after hard-working, self-employed people! I would hate to think what would happen if it stopped looking after them; it would probably charge them an additional $500 million.

So the challenge in terms of Part 1 is for New Zealand First and the Green Party to explain to their supporters why they should support the Labour Government’s move to impose a surcharge of $100 million on the self-employed for the next 2 years, so that they can pay higher levies when compared with employers. I think it will be extremely interesting to see what this socialist Government will actually do to those vulnerable self-employed people for the next 2 years—$100 million. I think Labour members had better be prepared to front up and be answerable to all those irate self-employed people if this bill goes through. National will make sure for the next 2 years that they know who has punished them for being hard-working, self-employed businesses.

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

PANSY WONG (National) : In Part 1 we established that the law sets out very clearly that the Accident Compensation Corporation (ACC) would impose a levy to make sure that the employers’ account and the self-employed work account are fully funded. But the history of the employers’ levy account is that ever since 2003 the surplus in that account, which started with $108 million, increased. In 2004 it was $300 million, in 2005 it went up to $500 million, and in 2006 it was $757 million. I think that is a clear demonstration that the ACC has always played a conservative role in terms of the rate at which the levy was set at a point, just in case it made a mistake in setting it. That was why my good, hard-working, intelligent colleague Dr Paul Hutchison asked for transparency and openness by getting an independent person to look at how the ACC set those levies.

This part, Part 2, is about the merging of the two accounts and combining the surpluses—estimated to be about $600 million in the employers’ account and about $60 million in the self-employed work account. Any person who thinks logically about ACC policy would eventually say that ACC will be quite comfortable to have a surplus margin of about 11 percent. But with the merging of these two accounts—one of which carries 63 percent surplus and the other 20 percent surplus—it says it would quite like a combined margin of 53 percent.

The problem of simply adding those two together and arriving at this average would mean that for the next 2 years those who are self-employed will be penalised. They will have to come up with $100 million extra to bring the 20 percent margin up to 53 percent. Then the employers will also be penalised because they have a margin of 63 percent, and the ACC refuses to bring it down to 11 percent. But the irony is stated in the official paper. By the year 2010 it would like to bring down the surplus to 11 percent. It would quite like the surplus sitting at a high amount, just in case something happens in between and they might call on this high surplus.

Firstly, I encourage ACC management and officials to be confident of their ability. They have shown in the past 4 years that the surplus amount has kept growing. They should stop holding on to other people’s money and compounding the problem with a surcharge of $100 million for the self-employed for the next 2 years. Self-employed people—for example, people in the meat industry—are saying that they will suddenly face a hefty bill in the next 2 years. As a small pool of people they have to front up with an extra $100 million, while the ACC has every intention of reducing that surplus margin in about 4 years’ time.

This legalised stealing simply does not make any sense. That is the practice I describe—legalised stealing of money that was paid in by the employer on behalf of their workers’ earnings or by the self-employed. So I have moved a very simple amendment that states that before the merger, the surplus margin of the employer’s account should be adjusted down to 20 percent. The impact of this amendment would be that the self-employed would not be penalised by having to pay a surcharge of $100 million. Then—rightly so—the employers who have contributed on behalf of their workers’ earnings in the past—

Hon RUTH DYSON (Minister for ACC) : I speak to Part 2—as I believe we are required to, Mr Chairperson, by your instruction to the Committee of the whole House—unlike the member who just resumed her seat, Pansy Wong. She might have been talking about something entirely different.

Part 2 has just three clauses, which cover the transitional provisions. There are two amendments to clauses 14 and 15 proposed by the current Opposition spokesperson on ACC, Pansy Wong, on her Supplementary Order Paper. If one were to go back to the primary purpose of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, one would understand the transitional provisions. The purpose of this bill is to ensure that people in the paid workforce have their risk assessment based on their exposure to risk rather than on the company structure or business arrangements they happen to be set into. To ensure that the merger of the accounts that is required to achieve that fairness—so that two people doing exactly the same job have their levy assessed on the basis of their exposure to risk rather than on their company structure—is a smooth amalgamation we have the transition periods outlined in clauses 14, 15, and 16. So unless one believes that people should be assessed for risk on the basis of their company structure—which is what I presume Pansy Wong might be trying to say, although it was not really clear—then I think people should support these three clauses unamended.

I just want to refer briefly to the comment that Pansy Wong made in her final contribution in her last speech, which was in reference to Paul Hutchison’s amendments. Frankly, if information is available under the Official Information Act, then I would recommend to the current and former—recently dumped—Opposition spokespersons on ACC that they should use its provisions. When I held that spokesmanship in Opposition I used Official Information Act provisions a lot, and they were very worthwhile. I do not think I will give them as much pleasure as Murray McCully gave me, but I would recommend they use the provisions of the Official Information Act. That information is available.

My final point is in response to Pansy Wong’s Supplementary Order Paper containing the two proposed amendments to these clauses. Firstly, she should recognise that the volatility of levies is something the entire House should be anxious about. Business people—whatever their company structure—like to have some certainty. That is why I think the information about the levy setting is important, and it was a valuable contribution to the debate. But if we have no smoothing policy at all, then we will get back to the good old bad days when people had no idea from one year to another what their levy was likely to be. That is a totally unsatisfactory situation.

Mention has been made of the Accredited Employers Programme. I challenge the National Party to front up before the end of this debate in the Committee stage to what its actual policy is on the Accredited Employers Programme. In my view, it is a good programme. We put it into the 2000 legislation because we believed it was a good programme. It gives opportunities for employers and unions to work together in genuine partnership, as outlined in the legislation, to reduce injury incidents within the workplace and to work together to improve safety in the workplace. Paul Hutchison said it was the best thing since sliced bread. I do not think it is as good as that, actually, but I think it is very good, despite the concerns I have.

David Bennett—I think he is a list member from the Waikato—said the Accredited Employers Programme was a sham. That is an outrage. If accredited employers do not know that that was what he said—although it is on the record now that David Bennett from Waikato said the Accredited Employers Programme was a sham—then I will make sure they understand that that is his view.

David Bennett: I raise a point of order, Mr Chairperson. The member is misrepresenting what I said.

The CHAIRPERSON (H V Ross Robertson): I would like the member to have a look at Speakers’ ruling 36/5. When it comes to misrepresentation, you do not raise points of order now. You raise them at the end of the speech.

Hon RUTH DYSON: So with those concluding comments, I thank the members for their contribution over the next little while on these three single clauses. I urge members to vote against Pansy Wong’s Supplementary Order Paper.

PANSY WONG (National) : That is a real concern, is it not? I gave the Minister plenty of notice when we were debating Part 1 of my specific concern about the reserve margin and of an amendment to adjust it. I will give her the benefit of the doubt and assume that she actually understands what the issue is all about but refuses to debate it. It would be worse if she was hoodwinked by the officials and did not even attempt to address it. The Minister had no answer and then resorted to personal attacks on my hard-working colleague from Hamilton—the hard-working, diligent David Bennett—who won the seat and is absolutely loved by the people of Hamilton. Good on him! We are very proud of him.

The Minister resorted to personal attacks, but that will not deter me from asking her to look at her own official’s paper, which stated categorically that the 150 percent margin of the work account as at 1 April 2007 would be progressively reduced in 2008, 2009, and 2010 towards the target of 111 percent. That is the stated position of her officials. Yet, at the same time, the Minister is asking all the other parties to support her in imposing a surcharge on self-employed people that will increase their margin from 20 percent to 53 percent. It simply does not make sense for the Government to impose a surcharge of an additional $100 million and then, in a few years’ time, to bring the rate down again. That defies logic.

First of all, let me acknowledge United Future’s support for my amendment. It is a sensible party that can exercise its own independent thoughts, and it is on the side of the self-employed. I will make sure the self-employed are aware of United Future’s support for the amendment. New Zealand First and the Green Party will just have to face up to self-employed people, who will be irate when they receive their bills in the next 2 years.

Second, I propose the amendment because we feel outrage, particularly at this point, about the legislation the Government wants to pass to do away with consultation. Actually, that is telling. The Minister says that if anybody wants information, he or she can make a request under the Official Information Act. But why should anybody have to make a request under the Act? Why can the Minister not simply make the information available as public information? I thought the Labour Party believed in open government and consultation. What is happening is that the Government is legislating to do away with consultation. It does not want to hear from self-employed people, because it knows what would happen. Labour members know that those people will be outraged when they are asked to pay a surcharge of an additional $100 million. Labour members do not seem to understand that hard work produces the incomes of those people. They think nothing about penalising people to pay that money to a monopoly organisation, “just in case something happens”. We have bad news for the Labour Government: self-employed people understand what the Government is trying to do to them. They know it will penalise them in the next 2 years for $100 million, without consultation. That will add insult to injury.

Once again, I acknowledge that United Future is the only party, so far, that has indicated it will exercise its own independent thinking and support my amendments. It believes it is a party that stands up for the self-employed, and it does not think the Government should penalise those people with a surcharge amounting to $100 million for the next 2 years, just so that a monopoly organisation can feel good. We want the self-employed, hard workers, and employers to feel good about themselves, not a monopoly organisation.

GORDON COPELAND (United Future) : I rise to take a call on the amendment in the name of Pansy Wong to clause 14. I do so with some experience of risk management ratios from my business background. The facts of this matter are fairly straightforward. The Accident Compensation Corporation (ACC) has set itself a risk management ratio of 111 percent. In other words, its assets at any given point in time will exceed its liabilities by 111 percent. However, the present situation, according to figures supplied by ACC, is that the employers’ account presently has a cover of 163 percent. In doing the sums quickly in our mind we find that this is 52 percent higher than the risk ratio established by the corporation. Pansy Wong’s amendment very reasonably suggests that 163 percent ratio figure could be reduced, by way of a refund, to a ratio of 120 percent, which is still 9 percent higher than the self-imposed risk ratio that the board of ACC itself adopted.

When this matter was brought to my attention by the member Pansy Wong, I was quite staggered. I have done the sums. The reduction that Pansy Wong is seeking amounts to $468 million. The plain fact is that employers have been already overcharged that amount and more. I find that absolutely outrageous. The employers of this country have been overcharged levies by an amount way over $500 million. That money should never have been collected in the first place, because the risk management ratio was already satisfied and this figure is well in excess. Therefore, the only just thing to do in those circumstances is to give the money back. The money does not belong to the ACC; it belongs to the ACC only if it comes within the corporation’s own defined policy of risk management.

I heard briefly the statement made by the Minister in the chair, Ruth Dyson, about ebbs and flows and I can understand that. But I say to the Minister that it is more than an ebb and flow when the ratio goes from 111 percent to 163 percent, and when the corporation is collecting more than $500 million extra. That is not an ebb and flow. That, in my opinion, amounts to a deliberate, concerted campaign of overcharging employers over an extended period of time. It is wrong. It should stop. The money should be given back. It does not morally belong to the Government in the first place. It belongs back in the pockets of those employers.

Therefore, as a caucus we had little hesitation in agreeing to support Pansy Wong’s amendment, because it is the right thing to do.

Dr PAUL HUTCHISON (National—Port Waikato) : It is indeed salutary to hear Gordon Copeland, from a party that supplies confidence to the Government, point out that the Government should give this substantial amount of money back, based on principle. He points out that the Accident Compensation Corporation (ACC) has recommended a risk margin of 111 percent and that at present it is 163 percent. My colleague Pansy Wong has an eminently sensible amendment, in that she suggests a risk margin of 120 percent, which is above that recommended by ACC. Gordon Copeland quite rightly suggests that the Labour Government should give this money back to the employers. The employers have paid it in good faith. They have paid it thinking that the employers’ account would be fully funded, but it has gone well over that level.

It is unfortunate that this particular phrase “give the money back” has such a familiar ring when it is applied to the Labour Government. I will not go back to the credit card again, but let us just say, for the record, here again we have this mischievous Labour Government taking money from employers in the private sector and using it for the Government’s own purposes and for its own ideology.

It is absolutely appropriate that we speak about the principles of this particular issue. We heard the Hon Mark Gosche talking about a rugby team and how one person should not have a premium different from another person’s. I absolutely agree with that. Premiums should be risk rated individually. This Government wants to pool the lot of them, defying basic principles of insurance. It is unfortunate we cannot get it into the thick skulls of this Labour Government, including the chairman of the select committee. This is the chairman who insisted that submissions to the select committee close after 2 weeks. He is the man who might talk about democracy, but, no, he wanted to rush the submissions through quickly. In fact, the time for submissions might have been even less than 2 weeks. There is absolutely no question that a lot of employers out there very much wanted to submit on this bill, but Mark Gosche, the chairman of the Transport and Industrial Relations Committee, prevented them from doing so by instructing that submissions would close so fast.

One other principle is extremely worrying about this bill, and that is the transitional provisions. They are ominous and unprecedented. In the Labour Government’s hurry to get this legislation through, the levy consultations for 2007 and 2008 will be bypassed. The Labour Government says: “To hell with the levy consultations! Forget about democracy, and forget about listening to the employers and the self-employed. We will just bypass the levy consultation process for the convenience of merging these two accounts.” Talk about principles!

I say to the Hon Mark Gosche, the chairman of the Transport and Industrial Relations Committee, that he has certainly not displayed principles in terms of allowing time for submissions to be heard in a democratic way through this process. Certainly, when we come to the levy consultation process we see that he has bypassed normal precedent.

Hon RUTH DYSON (Minister for ACC) : I will take just a brief call in response to some of the comments made by Gordon Copeland, who, without exception, makes well-considered contributions to debates. In my view he has omitted quite a major consideration in his deliberation of, and support for, Pansy Wong’s Supplementary Order Paper 91. In any one of the accounts there will be a considerable investment opportunity, because the amount of money that is required to be collected in levies each year is not just to cover the cost of a claim for that year; it is to cover the cost of a claim for the life of the claim. We know that with some serious injuries, tragically, the life of that claim could be 30 or 40 years. So more money is collected in levies in the accounts in any 1 year than is required to fund the cost of the injuries in that year, and that money is invested.

So what should the money that has been acquired from sensible—or, indeed, wise—investment be used for? Should that money go back to the levy payers in that account? Or would it be better used for future investment in order to reduce the overall levy in that account because of the return from the investment? Or, indeed, should it be used for increased investment generally, so as to give advantages to the scheme in areas such as injury prevention?

Although the member’s comments were cute, and might be quite good in a debate about a number of other areas that we have debated in this Chamber, I believe that the member is doing the debate, his party, and this Committee a disservice by saying that it is an outrage that the employers’ account should not have that money paid back, without his giving in the debate any consideration of or recognition to the amount that has been accrued to that account and all the other accounts from wise investment. In my view, first of all, to take away a large percentage of that money from employers’ liability now for the possible increased cost of claims that have already been incurred by the scheme and, secondly, to reduce the investment opportunity would be to do the entire scheme a disservice.

The other implication of the amendment from Pansy Wong’s Supplementary Order Paper would be the lack of parity between the Accredited Employers Programme and the employers’ account, and that should be a major concern to every member in the Chamber. If the levies for employers were artificially dropped because of a combination of overfunding from the amount that has been accrued and the returns from investment, and the employers’ account became very attractive to accredited employers because there was no disadvantage financially to them, they could join the employers’ scheme, which would mean we had an increased number of employees being covered by the employers’ account without any contribution being made by accredited employers to that account, at all. So not only are the potential advantages to the scheme of the investment money that would accrue from that amount being left in being ignored but an opportunity is also being provided for the current accredited employers, who have made no contribution to the employers’ account, to benefit from a one-off windfall. In my view that is not a fully considered position, and I say that with the greatest of respect to the member, whom I believe has given Pansy Wong’s Supplementary Order Paper some consideration—but, in my view, not full consideration. It would do a disservice to the overall levy stability, it would do a disservice to future employers and employees because of the lack of opportunity for investment returns, and it would give a windfall opportunity to accredited employers who, frankly, on this occasion, do not deserve it.

• The question was put that the amendment set out on Supplementary Order Paper 91 in the name of Pansy Wong to clause 14 be agreed to.

DAVID BENNETT (National—Hamilton East) : Today we have heard a series of statements made by the Minister in the chair, the Hon Ruth Dyson, in which she indicated a complete faith in the comments made by individuals—Paul Hutchison and Gordon Copeland—and in which, at the same time, she rejected their concerns. That has also been the situation with the legislation we are debating today. The Government has gone about saying how this is good for New Zealand, how it is about equality and treating employed and self-employed people together, and how employers have nothing to fear from this legislation. But the reality is that this legislation will have a dramatic effect on many employers and some self-employed people. It will increase many of their costs of doing business, through the increase in the levy amounts. It is part of a plan that this Government has had all the way of treating everything as being equal. It thinks that there is no difference between business entities—there is no difference in the reasons why people go into self-employment or into employment relationships. We are seeing that through other parts of the employment law legislation as well, with the intention to treat contractors the same as employees.

That is all part of the mentality of this Government. It talks of removing the employers’ account and the self-employed work account and inserting a definition of a work account by omitting all references to the employers’ account and the self-employed work account and replacing them with references to a work account. We see that all through Part 2, “Transitional provisions”. That shows an intention by this Government to try to make everything the same—its kind of level playing field. The Government believes that everything is the same in this world. The reality is that it is not all the same. There are different business interests and there are different ways of structuring one’s business, because people take different actions and have different responsibilities.

Some of the implications of what the Government is doing in this grand vision of equality will have a major effect on many businesses. Businesses have paid a large sum of money into these accounts over a number of years. The employers’ account has reserves of over $500 million, and in the self-employed work account there are reserves of over $115 million. These people have paid money into these accounts under the genuine understanding that this money would be used for the purposes for which they paid it. Employers did not pay that $500 million on the basis that it would be put together at some place and point in time as part of some grand plan for equality thought up by a Government that believes it knows best. Employers paid that money in over time because they were doing what they thought was the right thing under their legislative requirements. They expect that a Government would also repay that money if, over time, it was needed. This Government has not shown the good faith that the employers have shown. Instead, it has used that money for its own ulterior motives. It has taken away the element of good faith that is essential for business to grow and prosper.

This Government has no intention of looking after the self-employed or the employed. When the business community, whether self-employed or employed, has made submissions to this Government they have been pretty well ignored and dressed up. The Government has said: “Oh, we’ll look at them as part of some review at some point in the future.” This is one of those kinds of reviews, and it has been shoved under the radar in a very short period of time. The Government has not given people the time to adjust, to make submissions, and to see what the Government is doing in this case. All it is doing is pushing this through in a very short period of time, with the intention of taking away the hard-earned money that employers have put into that account over a number of years.

That will hurt employers. It will also hurt the self-employed. Some large self-employed revenue rate increases that we have seen in the documents provided to the select committee include increases for the police. If their 2006-07 rate of $1.03 were separate it would be 73c for 2007-08, but under the merged ratio, they are paying $1.08 in 2007-08. That is a percentage change of 48 percent from having a separate account to having a merged account. The police are going through a pretty tough time at the moment with this Government, which will not resource them. It is a Government that will not stand by the police in time of need, and a Government that blames them for any driving infractions that may happen if travelling from Timaru to a game of rugby in Christchurch. But, at the same time, the Government is willing to shaft the police by putting up their levies.

PANSY WONG (National) : I am proposing a very sensible amendment to this part of the debate. It is to defer the implementation of this bill until 1 April 2009. It is the only sensible thing to do. Judging from what some of the political parties sitting in this House—the Greens, the Māori Party, and New Zealand First—have said, I do not think they have had an opportunity to understand the implications of the passage of this bill on the supporters whom they claim to represent, the self-employed. I want to look after these party political colleagues. I do not want them or their electorate offices to be facing outraged self-employed people in the next 2 years. So I am seeking their support to make sure that this bill is deferred for 2 years so they can have time to think about the implications.

• Sitting suspended from 6 p.m. to 7.30 p.m.

PANSY WONG: I am seeking for the sensible parties in this Parliament to support a very sensible amendment—to delay the commencement of this bill to 1 April 2009, for a very good reason. National will then be in Government, and when I become the Minister for ACC I will not be an apologist for the Accident Compensation Corporation (ACC). I will not put myself up there and tell the self-employed that they have to front up with $100 million extra. I will not confiscate the $500 million in the employers’ account so that ACC can feel good, smooth the levy, and not forego the opportunity to invest. According to the Minister in the chair, the Hon Ruth Dyson, she is the apologist for ACC.

It is typical of a Labour Government that it will not trust the self-employed to invest their own money. It will not trust employers and workers to know how better to spend their own money. But the contempt of this Minister towards employers was evident when she said that the employers did not deserve their rebate. She blatantly said that they did not deserve it; I am not too sure what they have done to upset the Minister. We will be very clear, when we become the Government, that ACC will serve the people it is set up for. ACC will not turn around and use its monopolistic position to basically tax people, keep the surplus of $600 million, just so that it can feel secure if it makes any calculation of premiums incorrectly. When we think of it, we remember that last week in the House we were told by the Minister that that monopoly agency, ACC, was spending $5.1 million just to market itself in a branding exercise. Yet it is a monopolistic agency; people have no choice of going somewhere else, or through various sources, to pay their premiums.

So I am seeking the support of the other parties in Parliament, because after the previous debate—or lack of debate—it seems they might not be clear that the passage of this bill will actually impose $100 million worth of surcharge in the next 2 years for self-employed people. So when all those self-employed people come knocking on the doors of New Zealand First, the Green Party, and the Māori Party, I hope those parties will be able to tell them some good reasons why they supported a bill that has imposed $100 million extra on those self-employed in order to bring the surplus on the reserve to a margin of 53 percent, although ACC has indicated all the time that an 11 percent margin would have been sufficient. The law stated very clearly that all the account had to achieve was to be self-funding. At the moment the reserve accounts are showing surpluses of 20 percent and 63 percent, yet this Labour Government is trying to push through a bill, without consultation, to impose $100 million extra on self-employed people. Members should try to explain to some of the people in the meat industry why they should pay for that.

Dr PAUL HUTCHISON (National—Port Waikato) : I am pleased to have the opportunity to speak on the “Title”, “Commencement”, and “Principal Act amended” clauses of this Injury Prevention, Rehabilitation, and Compensation Amendment Bill.

R Doug Woolerton: This man should be the Opposition spokesperson on health—wonderful man.

Dr PAUL HUTCHISON: Despite the excellent remark from my colleague over there from Hamilton, I believe that the title of the bill is clearly quite inept. I have a few suggested alternative titles that would be appropriate—for instance, “The Labour Government Defies Common Sense by Rewarding Those at High Risk and Penalising Those at Low Risk Bill”. Then we might go to the Minister herself for “The Hon Ruth Dyson and”—we will add in—“the Hon Mark Gosche Denial of Basic Insurance Principles Bill”. We have heard those members tonight absolutely denying the concept of risk rating. But they love the idea of merging things and pooling them together, of socialising, and of taking all the common-sense incentives—the time-honoured principles—that belong to insurance away from that industry. Or perhaps we could call this bill “The Labour Government’s Let’s Break Faith with Employers and Take a Few Hundred Million Dollars for Redistribution Bill”, because that is exactly what the Government has done.

I think it was very salutary to hear Gordon Copeland from United Future, the party that is partly responsible for keeping this Government in power, say that what the Government was doing was daft, and to hear the Minister first praise Gordon Copeland for his insight and intelligence but then say she was not going to follow his common sense. Mr Copeland said that the risk margin at present is 163 percent but that the Accident Compensation Corporation (ACC) itself suggested a risk margin of only 111 percent. Even if that margin were increased to 120 percent, as Gordon Copeland suggested, $468 million would still be stolen from employers—$468 million that should be given back.

What else could the title most aptly be? Well, let us call the bill “The Hon Ruth Dyson Let’s Erode the Accredited Employers’ Scheme Because it is Working Too Well Bill”, because that is the fact of the matter. I outlined earlier in the debate just how well the partnership programme is working—how there is a situation whereby 25 percent of employers are not under direct control of the Government monopoly, and how they do very well. In fact, they do so well that their costs are about one-third of those of the ACC, and, on average, they get employees back to work in about one-quarter of the time taken by the ACC. I believe that it is because of that that the Government is systematically trying to erode the programme by changing money over to the residual account so that the levies of that account will go up. It is manipulating the employers’ and self-employed workers’ levies and is artificially keeping them down so that most people out there—who do not really understand this—will think: “Aha! They have kept them down.” But the Government is only fooling itself; it will be found out sooner or later.

Perhaps the other suggestion for this title could be “The Labour Government’s Let Fiddle the Levies Bill”, because, indeed, that is what the Government is doing. It is a great shame that the Minister was firstly prepared to say that the amendments I suggested to clause 11 were useful and it was helpful to have transparency, but then said—having gone through all the amendments I wanted to make to Part 1 and suggested that it would be helpful for people to understand how the levy process worked and to make it transparent—she was sorry but she was not prepared to vote for it. She did, however, say she was prepared to ensure that this information would be available—and I very much hope she does keep to her word in that respect. I was delighted that she did see some intelligence and insightfulness in the speaker’s amendment, and I too recognise her for her insightfulness in that respect.

I guess that the other title for this bill could be “The Labour Government’s Let’s Fiddle the Residual Account Bill”. I just want to finish off the six alternative titles that would aptly replace the title we have now. Indeed, the title “The Labour Government’s Let’s Fiddle The Residual Account Bill” is quite appropriate. We know that, by legislation, the ACC should be fully funded by, I think, 2014, yet, under this Labour Government, there has been no improvement in the position over the last 4 to 5 years. That is hugely, hugely concerning.

Finally, I reiterate my colleague Pansy Wong’s plea that it would be very helpful if her amendment to delete the commencement date of 1 April 2007 and replace it with 1 April 2009 was supported. By that time there will be a National Government in place and we will bring sense to New Zealand’s accident compensation scheme.

SHANE ARDERN (National—Taranaki-King Country) : I rise on behalf of the National Party to support the Customs and Excise Amendment Bill (No 2) in the Committee stage. Basically the National Party is in full agreement with the proposal put forward in this legislation. The purpose of the bill is to strengthen New Zealand’s border security by clarifying the Customs Service border-management role and improving its ability to work cooperatively with other agencies at our border. The bill amends the Customs and Excise Act 1996 to ensure that individuals and items arriving in, or departing from, New Zealand are unable to slip through border processes without proper scrutiny.

I do so with some reservations. The reservations are in the area of whether this Government—a Labour Government that is, I have to say, typical of most socialist Governments around the world—has missed an opportunity.

Tonight in the Committee stage I particularly want to highlight new section 175C, “Seizure and detention of goods suspected to be certain risk goods or evidence of commission of certain offences”, inserted by clause 15. It states: “(1) A Customs officer may seize and detain goods or documents that are presented or located in the course of exercising any power of inspection, search, or examination under this Act, if he or she has cause to suspect on reasonable grounds that the goods—(a) are risk goods (within the meaning of the Biosecurity Act 1993) for which no biosecurity clearance has been given under that Act;”. It is that point that I think this Government could have taken full advantage of, but once again it has failed to do so.

There is a lot of anecdotal evidence. People regularly come to me, as an Opposition spokesman, from within these organisations and state that there is a massive advance in technology around the world, particularly—but not just—in the US as a result of attempts to not only stop drug trafficking but also eliminate terrorist acts. The opportunity provided by that technology is being missed. There are pieces of equipment that have the ability to detect biomass down to the size of a matchstick. The reason why New Zealand does not have that is not because of cost and not because the equipment is expensive but because we do not have the personnel to then inspect that biomass once it has been detected. Given that we have had 229 new biosecurity incursions in the last 5 years, clearly there is an opportunity here for more synergy between the Customs Service and Biosecurity New Zealand in that regard.

In the second reading of this bill the very honourable member Dianne Yates—who is sitting in the House tonight, and I welcome her back here—said that there were no extra taxes in this bill and that I should read it. Well, when I made the comments that triggered her response, I had. If the member believes that that is the case, I suspect that she has not seen in the index of rates and excise duty on alcohol and tobacco the ability now to inflation-proof that tax based on the consumer price index adjustment every year, and that she has not seen the provision, which I think was very good work on the part of the Foreign Affairs, Defence and Trade Committee, where the increase in taxation has been harmonised with the excise duty.

I say to the member that she should go back to some of her constituents—good Labour-voting people who enjoy having the odd tipple or the odd dram here and there, or the odd wee drink—and ask them whether they think that is fair. I bet they do not know that tonight we are passing legislation without any reference back to Parliament that will automatically increase the tax on the little bit of enjoyment left in their lives. So I ask her to look at that.

I also bring to the Committee’s attention the ability under this legislation to increase surveillance in the area of importation of drugs or of the components that make up methamphetamine and other such P drugs, which have become almost an epidemic in this country. The increase in that area has been, my notes tell me, sixteenfold in recent times, and that is an indictment also on this Government.

KEITH LOCKE (Green) : On behalf of the Green Party I will deal with a different provision in the bill. It is to do with the export of strategic goods—goods that could be used for a military purpose. It is good that the bill elaborates further on these exports compared with the previous legislation, because we do not want to be in the business of exporting components of nuclear weapons, biological or chemical weapons, or weaponry that may be used by people who, in terms of the Ministry of Foreign Affairs and Trade’s criteria, are in violation of international humanitarian law or who may use the arms to contribute to regional conflict. That is another aspect of the regulations that are separate from this bill.

This bill lays down a set of criteria that exporters have to go through. There are huge volumes on bits and pieces of equipment that one is not allowed to export. As I indicated, one has to take into account the country that something is going to, as well as the nature of the export. There has been quite a debate over the export by Rakon of oscillators that could be nuclear-hardened or shock-hardened specifically for military purposes. That activity was funded by Rockwell Collins, which is a military corporation.

That debate took place about a year ago, but even before that there was another good illustration. Oscmar International, based in Auckland, was producing a particular harness called the Manworn Laser Detection Harness. The firm was exporting that around the world. One of its contracts was with the Israeli Defence Force. In answer to a written question from myself to the then Minister of Foreign Affairs and Trade, it was admitted that the ministry turned down the export licence for Oscmar International to export the harness to Israel. It was turned down in March 2004, and the declining of the application was confirmed in June 2004.

Where this bill is a bit relevant to that is that it appears from reports that once the application was turned down and the company could not export the laser harness itself, it then, through computer technology, emails, and putting things on disks and whatnot, transferred that technology to San Diego and Mexico, where other affiliates of the company existed. I presume that the harness was then done up and exported from there to Israel, because, as everyone knows, America is the main supplier of military weaponry to Israel. This bill refers a lot to electronic goods as well, so under this bill it would be an offence for Oscmar to do that. So the bill is helping in that respect.

There is another problem in this export area. It has come up also in the discussions the Green Party has had, led by our co-leader Russel Norman, on whether the Superannuation Fund should be put into firms that produce cluster bombs or bits of nuclear weapons. One reply when we brought that up was that big companies like Boeing produce all types of equipment, some for civilian purposes, some for military purposes, and that we should not knock them for doing the military stuff.

I think that that was part of the debate over Rakon, too. Rakon was saying that it was producing oscillators for civilian purposes as well, but the counter-argument, which I think would be covered by this bill, was that the oscillators were being specifically produced to military specifications—and Rakon was producing equipment to military specifications and being funded in the tens of thousands of dollars to do so by Rockwell Collins. Hopefully, the bill covers that situation, and the export would be prevented.

There is also another question that is always very debatable when we talk about the destination of equipment, and that is whether the country concerned is violating international humanitarian law in terms of what the Government calls the criteria for assessment of export applications. I would say—and it relates to the debate we have been having over the last day in Parliament—that the United States is violating international humanitarian law and that we should be very cautious about what military equipment we export to it.

TIM GROSER (National) : I will take a brief call on Part 1 and essentially address the same issue that Mr Locke has just addressed. It is a fairly technical point, of course, but it relates to an issue of great concern on the part of all political parties, I am sure, in this Parliament and in most countries in the world. That is the issue of the misuse of dual-use technology for weapons of mass destruction or for military purposes that probably no New Zealander would want to see associated with us. We have had prohibited export regimes for a number of years, and I think the Foreign Affairs, Defence and Trade Committee, in looking at this bill, was trying just to fine-tune that regime in line with modern realities.

Various international agreements are in place: the Wassenaar arrangement covers conventional arms and duel-use technology, there are the Nuclear Suppliers Group and the Missile Technology Control Regime, and no doubt there are several others that I cannot think of off the top of my head at this point. So there is a fairly elaborated international regime. The fact that we are very small I do not think obviates the need for New Zealand to play its part in that, because, quite assuredly, although probably no companies in this country are capable of producing the finished article, there are certainly companies in our country that, whether or not they intend it, produce the componentry of commodities used in the production of these devices.

We have had as the centrepiece of this for a number of years the Strategic Goods List. We have had procedures that have worked tolerably well, I suppose, up until now but that obviously need to be updated in the light of current requirements. The standard procedure, if I understand it correctly, is that these goods are prohibited unless otherwise permitted. So it is a “prohibition with exceptions” approach to ensure that people with legitimate trading interests, as often will be the case with dual-use technology exports, are not prevented from building up their own export industries and providing jobs and employment for New Zealanders.

The general feeling in the select committee hearings was that the procedures lacked a certain flexibility. The select committee looked at the proposals and came to a consensus, I think, that made some sense for us. Obviously, this is a shifting target. What is deemed to be an undesirable good today can change very rapidly tomorrow. To bring it down to the retail level, for example, we have seen that in respect of the types of devices that people can bring on to aircraft. So this has to be a procedure that is flexible, that takes account of modern intelligence, and that can respond very quickly to a change in international circumstances. As a previous speaker pointed out, the criteria are generally the end use, the destination, and the taking into account of all these factors rather than technical characteristics of the good per se. Obviously, a certain subjective element must inevitably come into this, but I think the legislation before the Committee is a reasonable compromise in trying to balance the needs of legitimate exporters with the very important broader political and strategic objectives for which this legislation is designed.

Some of the submitters were concerned, quite reasonably, about the transparency of the rules and about ensuring that exporters of dual-use technology were not caught out. What we have here in terms of an Order in Council gives the authorities—in this case it will be exercised formally by the Governor-General acting on the recommendation of the Secretary of Foreign Affairs and Trade—a sensible and efficient way through this. The prohibition will, of course, come into effect when the determination is made by the authorities, but we have concentrated on some improved notification procedures to ensure that legitimate exporters are aware of the arrangements and that their interests can be accommodated.

To sum up, I have focused on one aspect of Part 1. It is a very technical point, but it has become of increasing concern to the international community, in which we try to play our part. I think we have arrived at a fair and balanced solution.

JOHN HAYES (National—Wairarapa) : I rise to support this bill because it will provide more effective and integrated border management for our country. In rising, I commend the head of the Customs Service, Martyn Dunne, for his leadership in this exercise and, generally, for the outstanding results he delivers from his department. It is a particularly important department and it has direct relevance to the people in my electorate in the Wairarapa.

The work of the department impacts on trade flows and the movement of people. Having been associated with issues around the illegal movement of people, I would just like to comment on a couple of elements of the bill. One of the changes introduced through the bill will require that people arriving in or departing from New Zealand are not allowed to use any sort of electronic communication equipment in a customs area. That means that people will not be able to get on the phone or use computers, BlackBerries, or other things to coordinate excuses for activities that customs people might want to ask about.

The other issue is that under this bill people will now be able to be detained by customs officers for up to 4 hours when either departing from or arriving in New Zealand. That is particularly important. People may come in and the person at the border may say: “I think you have got an infectious disease.”, and that provision gives time for a doctor to be brought in to check people out. It also gives the border control people an opportunity to check police records to determine whether warrants are out on a person who is at the border. It also enables checks to be made on whether people have been endangering, or threatening to endanger, the life, health, or safety of a person or group of persons. We can think about the relevance of this when we think of some French travellers who may have been detained for rather longer at our border in relation to the Rainbow Warrior affair. Giving this extra power to customs officers is, I think, a very good lesson that has come from that process.

Just to comment quickly on other elements of this new bill, I think it is really important that we have clarified the opportunity for the Customs Service to interdict vessels that are between 12 and 24 miles offshore. At the moment the law is unclear. I think it is particularly important that we do clarify that. If a boatload of illegal immigrants is coming into this country, the further from our border we can deal with them, the better. I wholly support that provision being included under section 32C, inserted by clause 6.

Search warrants may now be exercised by a customs officer to immediately detain and search a person for dangerous items. That is particularly important in cases where people have things hidden from view. I also think it is important too for the Customs Service to be able to retain or seize unlawful travel documents and goods. People test our borders every day, and it is in the interests of the whole community that we keep people under decent control and at a distance—so that, in the case of some people, we can recover documents that may have been flushed down toilets on aeroplanes when people arrive at our border and demand to be treated as refugees.

I come back to another issue. The department is engaged in the collection of a tax, which is a quite normal thing on the part of a Labour Government. In this case it is an excise tax. Although I personally would like us to be rid of this arrangement, which handicaps people like winegrowers in my electorate, it is inevitable that we at least have to do the best we can by the department. From the point of view of this bill, we are now going to shift the collection date from March to July. That means the Customs Service has a bit more time to get its paperwork in place. When this tax is levied on hard-working people in this country, it is levied automatically on the basis of inflation-rate adjustments, so we are giving the department more time to process cost of living orders and exchange rates in relation to the excise tax that is collected upfront from our winegrowers. I think that is a useful development, even if we are unable to get rid of the tax completely.

I now come back to the issue of export regulations, which my colleague Mr Locke has raised this evening. A balance has to be drawn. Mr Locke’s comments take me back to a period when I recall having to write to one MaireLeadbetter on behalf of our Ministers. She assailed the Government, and wound up its process over many years, trying to prohibit the export of a New Zealand - made product called the Mere Mortar Calculator. This was an entire exercise in trying to be obstructive from the point of view of a company earning foreign exchange. More important, the calculator enabled one to lob a mortar shell far more precisely than by any other mechanism. If one was trying to protect human life in a difficult situation, one could use the Mere Mortar Calculator to target buildings or other pieces of capital infrastructure and avoid hitting populations indiscriminately. I personally felt that this was a very good product that needed to be protected, and I can assure Mr Locke that the product was marketed and that New Zealand earned foreign exchange as a result of it.

Finally, I confirm that National fully supports this bill. I think that the Customs Service, amongst most of those agencies that report to the Foreign Affairs, Defence and Trade Committee, gives better value per dollar of taxpayer money spent than any of the other agencies with which we engage. It is a $100 million department; it sticks within its budget; it does not ask for outrageous increases; and it is constantly innovative. It works very closely with the World Customs Organization, which has 169 or 170 members. The department is really well led, good legislation is promoted, and it is a pleasure to deal with. I reiterate our support on that basis.

• The question was put that the amendments set out on Supplementary Order Paper 90 in the name of the Hon Nanaia Mahuta to Part 1 be agreed to.

• Amendments agreed to.

• Part 1 as amended agreed to.

Hon DAVID CUNLIFFE (Minister of Communications) : I move, That the Unsolicited Electronic Messages Bill be now read a third time. This bill is an important part of the Government’s Digital Strategy. The aim of the Digital Strategy is to ensure that New Zealand is a world leader in using information and technology to realise our economic, environmental, social, and cultural goals. Ensuring that users have trust and confidence in the use of these technologies is central to achieving this goal. Unsolicited electronic messages, more commonly known as spam, now comprise about 80 percent of all email traffic worldwide. Spam clogs up networks, reduces productivity, and is often used for scams and malicious cyber-attacks. Always, spam is a nuisance. Sometimes it can be critical both for systems and personal security.

Spam continues to grow in volume worldwide and is often a channel for viruses, scams, and attacks on computer networks and systems. It has been estimated to reduce the productivity of office employees by several percent and to provide a drain on productivity that this country can ill afford. It runs the risk, further, if unchecked in New Zealand, of giving us the reputation of being soft on cyber-crime—a reputation we would wish to avoid.

Accordingly, this bill aims to prevent New Zealand becoming a haven for spammers, to promote good e-marketing practice, and to provide a basis for further international cooperation on combating spam. With this legislation, New Zealand now joins many other countries that have also enacted anti-spam legislation. The legislation enables us to join the global fight against spam. International cooperation to identify, shut down, or block the sources of spam is an important part of New Zealand’s anti-spam strategy. It also complements a number of other initiatives being undertaken by other agencies to improve Internet security and safety, working in partnership with the community sector. Here, in particular, I recognise the work of the Internet Safety Group.

The key requirements of the bill are that persons must not send unsolicited commercial electronic messages that have a New Zealand link, and that commercial electronic messages must have accurate sender information and contain a functional unsubscribe facility. Persons must not use address-harvesting software or a harvested address list in connection with the sending of unsolicited commercial electronic messages. The legislation applies to all emails, text, and instant messages that market or promote goods, services, or schemes of a commercial nature. A sender must have the prior consent of the recipient. This consent can be expressed, inferred, or deemed, but this is clearly an opt-in approach, consistent with good e-marketing practice as recommended by the New Zealand Marketing Association, and an opt-in scheme, as adopted by many partner Governments, including the European Union Governments and the Government of Australia.

Electronic communication offers many benefits and the bill seeks to support its use for legitimate marketing purposes where the interests of the recipient are duly respected. There is a 6-month transition period before the bill comes into effect. This gives organisations a reasonable period of time within which to ensure that their e-mail practices and databases are in compliance with the Act. It is important to underscore that this bill alone will not solve New Zealand’s spam problem, which is growing rapidly. Rather, it sits with improved technical interdiction measures, the primary locus of which will continue to be within Internet service providers themselves and major commercial networks, and with enhanced user education, so that all New Zealanders understand how to protect themselves from cyber-attack and the nuisance of spam. This bill will play an important part in providing that third leg of the Internet security treble—a sufficient and appropriate legal sanction against spammers with a New Zealand link. The New Zealand link, modelled on the Australian legislation, includes not only people within our territorial boundaries but people who attack New Zealanders and who are from countries whose Governments we are able to negotiate enforcement agreements with. The ability for us to negotiate such agreements will be an important part of implementing this agreement on a bilateral and, I hope also, multilateral basis in years to come.

In conclusion, the Unsolicited Electronic Messages Bill is important legislation that reflects the significant role that information and communications technologies play in our lives now and will play in the future. The bill has received widespread support within the House, the business and information and communications technology sectors, and the general community. Every person who uses a computer connected to the Internet can relate to the nuisance of receiving spam. The bill promotes good e-marketing practice and provides a basis for international cooperation to combat spam. We know that it will not in and of itself stop spam. However, it will send a clear message to would-be spammers that New Zealand is no longer a haven for spamming and it will be an important building block in the broader effort to combat this phenomenon. As such, I commend the bill to the House.

CHRIS AUCHINVOLE (National) : An aspirational bill is how I would describe the Unsolicited Electronic Messages Bill—it is an aspirational bill. This is very much in keeping with the present Government’s approach towards all legislation at the moment; it is aspirational. What, one wonders, is the effect of an aspirational bill? Well, it works something like this. There are three main points. There is public concern over an issue and a mounting public demand for action on the part of the Government. Legislation is introduced that has appropriate titles and ambitious objectives, and that is presented in a way that will give the impression of having a serious intention to deal with the issue, placate the public clamour for action, and even enthuse people towards participating in it. The third step is when the policy, or the bill, is carefully examined and it is found it will not actually work in the way the public thought it would. Then it is termed “aspirational”.

We have endured an amount of things being classed as aspirational in recent months. From memory, we had aspirational ideas over the waterfront and other stadia. We have aspirational policies for climate change, and so it goes on. I guess the recent proposal to alter probation controls will be termed aspirational when they do not come into fruition. The access to farms policy will now be aspirational, given that it has changed completely from what was promised initially.

In this Government bill, which was subtitled the “anti-spam legislation”, the clear thrust was to reduce the amount of spam received—at least, that was the perception amongst many of the people who are aware of the legislation.. But, no, it actually cannot do that. The reason is that most, if not all, of the spam received in New Zealand is generated overseas, and, in spite of the current discussion over how we conduct foreign affairs, be it through government or personal opinion, our legislation is unlikely to affect spam producers in Eastern Europe. So the legislation will not stop spam from coming into New Zealand from overseas. Will it prevent people from sending it within New Zealand? It will certainly apply penalties for doing so, but at present that is not happening to any extent. And so, again, we are at the aspirational stage—if anybody were to send or transmit spam within New Zealand, we would get them.

This therefore is not just an aspirational bill; it is a virtual bill. It is more virtual than real. In reality it does virtually nothing, as the Minister knows. It is legislation imported from the USA via Australia, and it has been reasonably shaped in the Commerce Committee to suit New Zealand commercial circumstances. As part of an international system of safeguards, National is prepared to support the bill as an integral part of an international strategy to reduce geographic locations that spammers might operate from, but National will not pretend that it will reduce the amount of spam received in the short, medium, or even long term on computer screens in New Zealand.

The bill, though, did raise some interesting debate. It was a good debate to have in the select committee, and I trust, Mr Assistant Speaker, you will permit me to provide a few illustrations that emerged in terms of defining and describing unsolicited information. First of all, is it unsolicited or simply unwanted? That was quite a good question to discuss. I am put in mind of question time, during which the Minister who has just spoken seems to view any questions about the matter of Taito Phillip Field as unsolicited, unwarranted, and unwanted.

In the second reading of this bill, I remember the Hon Paul Swain speaking at length about electronic mail and the subsequent release of information that was otherwise regarded as private. From my memory of that, Mr Swain seemed to support the release of private information. If only Mr Swain would be forthcoming over his activities in Samoa when he was over there enjoying the considerable and extensive hospitality provided for him and the honourable Mr Goff! Having visited Samoa frequently over a period of a decade, I can vouch for the quality of that hospitality. Previously—

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

CHRIS AUCHINVOLE: Thank you, Mr Assistant Speaker. However, I come back to unsolicited information. My conclusion is that this is a virtual bill from a Government increasingly perceived as being a virtual Government. The New Zealand electorate requires more reality in its legislation.

MARYAN STREET (Labour) : It is my pleasure to rise and speak to the Unsolicited Electronic Messages Bill. The member who has just resumed his seat used the word “aspirational” and seemed to imply, by the way he used it, that there was something somehow wrong with that. One could wish for a little more aspiration to be evident in the policies, speeches, and contributions to this House from the Opposition, but we will have to continue to wait for something of that order.

This bill is an important start. As the Minister the Hon David Cunliffe said in his speech introducing the third reading, it is not the last word on getting rid of spam entirely, but it is a start. I make reference in particular to his comment about looking to enhance, or provoke, or produce international agreements. In the event that we cannot legislate outside of our own jurisdiction, we can at the very least make sure that New Zealand is not a spam haven.

I enjoyed working on this bill in the Commerce Committee, and I thought that the member who resumed his seat quite enjoyed working on it as well, although the support evident in the select committee was not evident in his speech just now. However, I will proceed.

There are a couple of points I would like to make about this bill. One of the things that struck me as most interesting when this bill was before the select committee was a submission we received from the Direct Marketing Association—that is, the representative group of commercial retail outlets that direct-market to people in their homes. One could characterise the people in this association as being the producers of the junk mail that comes through our letterboxes. The association did a survey of its own. My entire expectation when I went to read its submission was that it would oppose the bill and that, of course, direct-marketing through personal computers into people’s homes had to be an even more efficient way of marketing than junk mail in letterboxes.

So I expected the association to be vociferous in its opposition to this bill, but, in fact, the opposite was true. Even those that, by any normal expectation, one would imagine opposing this bill were very much in favour of it. It was because the association had done its own research. Much as people hate getting junk mail in their letterboxes, they hate getting commercial spam even more. So the association, from its own research, determined that it was completely counter-productive on its part to insist that commercial spam be regulated on an opt-out rather than an opt-in basis. I was most interested in the fact that that association thought it would be completely self-defeating and counter-productive to allow retailers to send commercial spam out across the countryside on the basis of any list they were able to harvest from anywhere.

This bill does exactly what most people want, which is to put in place an opt-in regime, not an opt-out regime. In other words, under this law people cannot receive even one commercial email seeking their custom. They cannot receive even one. If people want to receive commercial-marketing emails on their personal computers, they have to tell retailers that they wish to be on their emailing list. So people cannot get one and then unsubscribe; they have to actively opt-in to receive those emails. That was an excellent protection and gets rid of a lot of the unsolicited electronic messages that have been besieging people’s PCs up and down the country.

So having dealt with the commercial aspects of unsolicited electronic messages, the committee then went on to consider further how this regime would be policed and enforced. Members will see there is a provision in the legislation for an enforcement department to be set up within the Ministry of Economic Development that would keep an eye on this. It will be a place that is not a complaints desk. It will not be a fix-it agency, but it will be a monitoring agency that will allow, through its monitoring, this legislation to be enforced.

There are a number of constructive and creative aspects to the bill. There are also some slight amendments to it that the select committee chose to make and that, from my recollection, were agreed to by the select committee unanimously, contrary to what might have been inferred from the previous speaker’s contribution to the debate.

The other thing the select committee went on to do was to look at messages that could be considered offensive. They were not commercial in nature, but could be used for sexual exploitation purposes and for what is commonly called grooming purposes. Grooming is to be particularly noted as a practice that is used to inveigle young people into Internet and email conversations that are undesirable and that, if the young people understood their full import, would certainly be unsolicited. So it has begun to move down that path as well, in order to regulate this whole electronic environment.

Of course, it is notoriously difficult environment to regulate, but this bill is a very practical and good way of doing it. It has the support of Internet providers up and down the country. They themselves are not responsible for the things their clients do, although they do extract required behaviours in return for providing Internet services to customers. They can enforce those contracts and withdraw their services. The bill does regulate the provision and circulation, in the first instance, of commercial spam. But it goes beyond that as well. It is constructive, excellent legislation that will help the efficiency of our economy and will aid in the protection of people from unsolicited electronic messages. Thank you, Mr Speaker.

BARBARA STEWART (NZ First) : On behalf of New Zealand First I rise to support the third reading of the Unsolicited Electronic Messages Bill. We do support this bill. We believe we need to see some action on spam, as it is an increasing problem on our computers. [Interruption] I think everybody in this House—even Sandra Goudie—would agree here. The spammers need to be stopped. Even here in Parliament it is a huge problem, and I would have thought that if these messages could have been stopped, the parliamentary information technology team would have stopped them. However, the spammers can now bypass any filter and the junk emails block up our whole email system.

This bill takes an opt-in approach, which I hope the Internet service providers can use when they take some action. When I looked at the most recent figures I saw that in June 2006, worldwide, 55 billion spam emails were generated on a daily basis, which is a huge amount. Of course, 80 to 90 percent of the email traffic is spam. The bottom line is we are very tired of all the articles and deals for products we read about on our emails. Very few people would even bother to buy them off the Net. The same messages seem to come from heaps of different sources. They are totally unsolicited and unwanted and they block up all the genuine mail that is sent to everybody. They are totally impossible to block from our computers. Even if one uses the unsubscribe option it does not seem to even vaguely work, which is a real problem.

We believe that here in New Zealand we are absolutely drowning in spam and that it is becoming a totally impossible thing to try to manage. The problem does need a worldwide strategy and worldwide action because it is a challenge right throughout the world. By itself, New Zealand can do absolutely nothing. It is very unfortunate that this legislation can apply only to messages generated within New Zealand. We know it cannot apply to all emails sent to a New Zealand email address from an overseas location, which obviously we cannot control.

Sandra Goudie: Invest in Nigeria.

BARBARA STEWART: As it stands, smart operators can easily migrate to Nigeria, as the member said, to arrange for their messages to be sent from an overseas address and be totally above this law we are passing here today. However, the legislation does make it very plain that New Zealand is not a safe haven for spammers, while at the same time it also provides a basis for international cooperation on combating spam. We need to do that. This is an important bill and one that New Zealand First wants to see have its provisions implemented as far as it is possible to do so. We definitely support this bill.

Dr PITA SHARPLES (Co-Leader—Māori Party) : Last Thursday the House witnessed a most unprecedented event. Two bills were each rushed through a stage in unseemly haste, with absolutely no debate whatsoever on their contents. The first was the Unsolicited Electronic Messages Bill; the other was the second reading on the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill. Neither of those bills is what one would call straightforward, yet the speed at which the business of the House was conducted saw the House rising at 5.02 p.m.

In reviewing the Hansard we see that apart from the Minister of Customs speaking to her bill, and a mere four sentences from the Minister for Courts about the Judicial Retirement Age Bill, the Government was curiously silent about the matters of State before the House. One has to wonder what the state of affairs is if in only the second week of business for this parliamentary sitting programme the Government is unable to speak to the policy programme it is promoting.

The ASSISTANT SPEAKER (H V Ross Robertson): The member needs to address the bill.

Dr PITA SHARPLES: When we look at the Hansard record of the Unsolicited Electronic Messages Bill we see that the Committee-stage proceedings record only that Parts 1, 2, 3, and 4 were agreed to, the schedule was agreed to, clauses 1 and 2 were agreed to, and the bill was reported without amendment.

I am not someone who knows a lot about distribution lists or a great deal about the workings of Internet service providers. In that light, and with the recommendations from the Commerce Committee, I am relieved to support measures to do away with the dual regime distinguishing between promotional and commercial messages, and to instead refer to electronic messages per se. Anything that can reduce confusion and avoid uncertainty has to be good.

But even a novice like me in the use of information and communications technology cannot help but notice the unwanted invasion of junk mail offering stock-price tips, cheap loans, healthcare, miracle diets, hair restorers etc. According to a BBC report, spam now accounts for almost 70 percent of emails worldwide. That figure is expected to reach 80 percent by the middle of the year.

The Māori Party is therefore happy to support a bill that takes as its primary purpose the intention to protect New Zealanders who are accessing the Internet from any untrustworthy and unsolicited messages. We support the intention of the bill to require all commercial and promotional spam to include accurate identification and contact details of the sender; to include a functional unsubscribe facility; and to ensure that the prior consent and proof of identification are taken into account in preventing vexatious messages being sent and clogging up the system.

However, although there is no doubt we urgently need anti-spam legislation, the downside for smaller businesses may be uncertainty and higher marketing costs. In thinking about this issue, we inevitably think about the 8,397 people of Māori descent who described themselves in the 2001 census as “employers”, and the 15,975 people of Māori descent who are “self-employed, with or without employees”. We think also about the employment-related compliance costs, the Occupational Safety and Health Service paperwork, and the inordinate amount of administration that business is already taxed with. We wonder what sort of impact the recommendations of the Commerce Committee will have in the context of compliance-cost priorities particularly for small business activity.

The latest annual survey of business compliance costs conducted in 2006 by Business New Zealand—KPMG surveyed some 1,400 businesses and concluded that compliance problems and costs were still disproportionately high. The survey confirmed the trend of the last three surveys—that compliance costs fall more heavily on small businesses than on large businesses. It was reported that small businesses with fewer than 10 employees face compliance costs averaging around $3,000 per employee, whereas larger companies with over 50 employees have compliance costs of less than $1,000 per employee.

The Government has acknowledged that businesses most likely to be caught by this legislation before the House today are small and medium enterprises. Larger businesses tend to follow e-marketing best practice and as such it is likely they will suffer little impact to their regulatory routine. But for small businesses—which, after all, constitute the vast majority of New Zealand businesses—the regulatory impact will be far more severe. The Government estimates the cost of compliance for small and medium enterprises could constitute at least an extra $1,000 to $2,000, including changing address lists to develop an opt-in system, ensuring all marketing and promotional messages contain correct sender information and how to unsubscribe, setting up systems to update electronic addresses held for marketing purposes, and separating commercial and promotional materials.

The Māori Party recognises the enormous impact that such changes can have on business productivity, and acknowledges also that many businesses may not have sufficient lead time to comply. We also acknowledge that the bill will place unfair costs on Internet service providers, because even though they usually cannot do anything specific about spam, they will still have to pay for the complaints process.

I have some knowledge of the commitment and effort put forward by the Māori Internet Society, Te WhānauIpurangi, which promotes a strong Māori presence on the Internet and registers domain names such as “maori.nz”. I acknowledge for the record the initiative of Ross Himona and KameraRaharaha who have led the way in establishing an authentic Māori presence on the Internet since 1997.

But in a frantic cyber-world the hassle involved in constructing a process to deal with complaints about spam is simply not feasible. As a result, the recommendation from the Commerce Committee that further work be undertaken by the industry to combat spam as part of a multi-pronged approach is to be endorsed. Based on current estimates, if users are being confronted by some 350 million messages per month, then solutions must be considered on many different levels. The report of the committee referred to the current work being undertaken on developing an anti-spam code of practice for email services. The Māori Party supports such an approach, as well as the associated procedures for dealing with complaints and constructing appropriate software programmes and technical remedies to filter spam.

Finally, I refer to the advice of the NgātiPorou and Te Aitanga-a-Māhaki writer Sally Pewhairangi in her work Internet Safety and Maori, in which she said: “The internet has a lot to offer Maori, but there are concerns of intellectual and cultural property rights, control, language, accuracy and authority, and access.” We must now add to that list, the need to abide by compliance requirements to prevent the use of unsolicited electronic messages.

The Māori Party supports the moves to create a safe and secure information highway within Aotearoa, and we will vote accordingly. But we simply remind the House again that yet another compliance cost is being placed on New Zealanders, that an administrative burden is being sanctioned by this legislation, and, as such, we have a concern that the financial burden, in our view, will fall heavily on those least able to afford it—the little people, the small-business enterprises.

NANDOR TANCZOS (Green) : One really has to wonder why spammers do it and what they are up to. I look at the stuff coming through my desktop computer and I have to ask myself whether these people really think that I am going to see a title with an inflated promise and actually open that and buy something. It is highly unlikely. Of course, we now have spam filters, so every day I have to go through this big pile of things that have been filtered out by my spam filter to make sure that something I really need has not been filtered out. Now spammers have invented ways of circumventing spam filters by giving spam new subject names, like “Within my wrath of thee” or “Mark 27/2 Bryan Adams”—that is a really enticing title! That is going to get me interested. There is stuff in Cyrillic lettering. Do spammers really think that people will respond to this stuff? Clearly, they do. We need legislation like this because people do respond. People actually open this stuff and buy items or send money.

If we think of the Nigerian scams, we wonder who on earth would believe an email from someone in Nigeria claiming to be the great-nephew of some hideous tyrant who looted his or her country of $30 billion worth of emeralds, and who has just selected the recipient at random and wants to put $10 million in the recipient’s bank account to help launder it. Well, I would not! It seems extraordinary that anyone falls for that stuff, but people do. We read in the newspapers that apparently intelligent people think they are going to make money by giving their bank account details to some strangers in Africa who claim to have looted their country. People do that stuff, and it means that this House cannot legislate to stop stupidity. We have spam because the economics of it is that only one pick-up in, say, 100,000 is needed for it to be worth carrying on. It just annoys the hell out of the rest of us, decreases productivity, and uses up huge amounts of resources. I think the Minister said that 80 percent of Internet traffic is spam. That is the economics of the situation, I guess.

So we come to this bill, which certainly will not solve the problem on its own. Our ability to solve the spam problem in this Chamber is pretty limited. Nevertheless, it is important that we pass this legislation. Three things about it make it worthwhile. The first is simply a point of principle: international solidarity. In order to address spam, given the international nature of Internet traffic, an international regime that all countries will stand with has to be developed. This bill is our attempt to be part of that. That is important, because it is difficult for us to put pressure on other countries to clamp down on that kind of traffic if we are not doing something at home. The other side of that, of course, is that the bill pre-empts a move by spammers to relocate to this country as other nations start to tidy up, if such a thing should ever happen. So the bill is important in that international dimension.

Secondly, there is a small amount of New Zealand - derived spam. The fact that transitional provisions are in the bill indicates that that must be the case, so the bill is useful in that regard.

The third thing that is useful is some of the stuff in clause 25, where there is some useful monitoring and information-gathering functions so that we can start to understand better what is going on. If we are going to come up with the kinds of technical solutions that Mr Sharples and the Minister have endorsed, then we have to understand better what is coming through.

I am not sure that I agree with Dr Sharples’ comments about compliance costs in relation to Internet service providers. Internet service providers will acquire those costs in any case because it just has to be part of their business practice to deal with spam and complaints about spam. I am not sure that the bill will inflate those costs. The other side of that is the cost to us all that comes from non-compliance. So I am not sure about how strong those arguments are.

The other thing I make reference to is Barbara Stewart’s points about the unsubscribe functions in the bill. One of the difficulties with spam is that we are always told not to hit the “unsubscribe” button because we just encourage spammers by letting them know that someone is on the other end of the email address. It is a kind of weird, contradictory thing. But, again, there has to be some kind of provision. To find a viable alternative is beyond us at this time, so that is the way we will have to go.

All in all, the bill is saying that we have to do something about spam. I offer my congratulations to David Cunliffe, who has been an energetic Minister in the information technology portfolio, with movements around unbundling the local loop, the operational separation of Telecom, and those kinds of things. This is just one other example of useful movements in the information technology portfolio.

I will end on what I think is probably the single biggest disadvantage of this bill as it goes through its third reading. It specifically excludes dealing with voice traffic, including—it quite specifically says—voice traffic over Internet protocols, including Skype and all those kinds of technologies. I have mentioned it before, but with the voice spam that was pumped out of the ACT party campaign offices during the last election, I say that Parliament may well live to regret that omission.

RODNEY HIDE (Leader—ACT) : It is very good to follow my colleagues Pita Sharples and Nandor Tanczos. I am interested in Mr Tanczos’ comment that we cannot legislate against stupidity. That is certainly true. But our job is to not legislate stupidly, and I am afraid, having heard the speeches, that in respect of the Unsolicited Electronic Messages Bill we are in danger of legislating stupidly. That is why the ACT party will be voting against it.

I pick up on Dr Sharples’ speech. Dr Sharples, in speaking in support of the bill, spoke all the way through about its intentions. Its intention is to stop spam, and he said that is a good thing. Of course it is a good thing, but just legislating intentions does not actually produce a result. We can legislate all the good intentions that we like. We can have policies filled with good intentions, but that does not mean those good intentions will be fulfilled. Then, when Dr Pita Sharples talked about the practicalities of the bill, he was not talking about it in the sense of how it would stop spam; he said we had to be a bit careful because it would have costs. Of course this bill will have costs. Dr Sharples said the official advice was that the cost was something like, on average, $1,000 or so for a small business.

So we have to say to ourselves that this is interesting: here we are in Parliament passing legislation that intends well but has a cost of maybe $1,000 per small business, which is no mean amount. Dr Pita Sharples, in particular, drew attention to Māori small businesses, and so he should, but there are other small businesses. Let us take the example of a small Māori business that is struggling away and suddenly has to come up with $1,000 to cover the costs of our Parliament’s intention to stop spam. I am sure we all feel good standing up in this Parliament saying we are against spam. Well, the cost does not fall on us; the cost of it falls on the very small businesses that Dr Sharples represents here in this House.

Then we have to ask ourselves whether the cost we are imposing is worth the candle. I see nothing in this bill to justify that cost, other than politicians in this Parliament and this Government standing up and saying that they care about spam.

Maryan Street: Then read some of the submissions.

RODNEY HIDE: I love Maryan Street. Here is Labour. I know that half of its members would not turn on their computers. The thing I like about Mr Tanczos is that he knows how to turn a computer on. He uses it, and, indeed, he is like me in that he prefers to use Linux and open-source software rather than propriety software. I can tell members that I prefer to do so too. Particularly after updating to Windows Vista, Linux is a good option.

I know that Mr Tanczos knows that this bill will not actually change spam at all. It will be passed into law. I know that Maryan Street might have a great intention that legislation will somehow change people’s behaviour, but this bill will do nothing to change people’s behaviour.

Maryan Street: Grow up, Mr Hide!

RODNEY HIDE: I love Labour’s response for me to grow up. I quite like being young. I would hate to be old and miserable like members of the Labour Party are, so I am quite happy to be the Peter Pan in this Parliament. So I, as the Peter Pan of this Parliament, will tell members the problem with the legislation. How on earth does passing this bill change what a Nigerian spammer will do tomorrow? I have to say that Nigerian spammers are not sitting there with their crystal sets, listening to Maryan Street telling Rodney Hide to grow up and saying that they had better not send any more spam to Maryan Street of the Labour Government, because it passed a law against spam. No siree! Spam from Nigeria, China, and, indeed, from the United States of America will continue. Let me say that the United States of America passed exactly this legislation. [Interruption] I ask David Cunliffe, who shakes his head and says it was slightly different, whether the legislation stopped spam in the US. No, it did not.

The bill refers to people who are—I love this bit; it shows legislation in this Parliament coming up against cyberspace—physically present in New Zealand. That is interesting, is it not? How does one, upon receiving spam, work out where on earth the person sending it is physically present? It is not easy, because the spammers live in cyberspace, and the same idea of—[Interruption] David Cunliffe knows so much. His answer to every problem is more legislation, and how about we pinch property rights and impose more costs on small business? To hang about the result! I am interested in what it is costing New Zealanders and whether it will achieve the required result. I have to say that Mr Cunliffe has been an abysmal failure in achieving results in the cyber-world of New Zealand.

The best argument we have come up with for this bill is that we will—I love this bit—“send a signal”. Mr Tanczos is quite right: spammers send out millions and millions of pieces of spam. I tell members that I do not get spam; the only place I get it is on my parliamentary server. I have a home email that is far more public than my parliamentary email, and on my home email I do not get spam. Why? It is because I take precautions to eliminate it. I get more spam on my parliamentary server than anywhere. I say to Nandor that we know how to stop spam, do we not? Sure, some spam gets through, but that is two-fifths of next to nothing.

So we are passing this law to send a signal. I can imagine that the spammers in Nigeria, China, and the US—and, indeed, wherever, because we do not know where they might be—are all shaking in their boots because a signal has been sent. The signal was received that Maryan Street and Labour—and, indeed, 119 MPs in this House—voted to intend to stop spam and say it was banned. It will not make one bit of difference. In fact, all around the world they say that what we will have is a multilevel approach to dealing with spam—sort of like a UN in cyberspace. As more and more countries pass more and more anti-spam legislation, has anyone noticed what is happening with spam? It is going up. So the legislation ain’t working. The answer is not more knee-jerk legislation. The answer is to follow the ACT party, get oneself up to speed or employ someone who is up to speed, and engage in some anti-spam software, which in my experience certainly works in New Zealand. That works far better to send a signal than any legislation that this Parliament can pass. This legislation will just mean more red tape for business, Internet service providers, and people in New Zealand.

In a way it demonstrates why we need a regulatory responsibility bill. What we need in this process is some openness, some transparency, and some accountability for the laws that we are passing. Quite frankly, I am shocked that in this day and age this Parliament is standing up and passing legislation simply because of good intentions. I know that the National Party can see through that. I look forward to those members joining the ACT party and voting down this bill. Thank you very much, Mr Speaker, for your time.

Hon DAVID CUNLIFFE (Minister for Information Technology) : I raise a point of order, Mr Speaker. I seek clarification of a potential point of misrepresentation in the member’s speech. He may wish to clarify it. My sense is that he was opposing the “anti-scam bill”, not the “anti-spam bill”. Would the member be able to clarify that?

Mr DEPUTY SPEAKER: That should not have been raised by the Minister.

RODNEY HIDE (Leader—ACT) : I raise a point of order, Mr Speaker. [Interruption] Chris Carter can interrupt all he likes.

Mr DEPUTY SPEAKER: This is a point of order only. There will be no chit-chat.

RODNEY HIDE: I just want to respond to David Cunliffe’s vicious attack in his point of order, and to ask whether we could have 5 minutes silence while I recover.

Mr DEPUTY SPEAKER: That is tit for tat.

RUSSELL FAIRBROTHER (Labour) : I always thought that members had to stand while they were giving their speeches. I was looking as hard as I could at the previous speaker, Rodney Hide, but I did not see him standing once. However, maybe he will grow into the role. My attention was particularly drawn by his comment about the Minister David Cunliffe, whom he had just praised as being an abysmal failure. When a leader of a party takes six members of Parliament into an election and comes out with two, one has to wonder what definition of success that might be. Then, when those two—

Rodney Hide: I raise a point of order, Mr Speaker. If we look through all the Speakers’ rulings and the Standing Orders, there surely has to be something there about a member who won his seat being lectured about failure by a member who lost his seat.

RUSSELL FAIRBROTHER: But it is worse than that—[Interruption]

Mr DEPUTY SPEAKER: When the member raises a point of order he will please wait for the Speaker to acknowledge him before going into it. And it was not a point of order.

RUSSELL FAIRBROTHER: The member was, in fact, standing, so perhaps that should have been acknowledged a bit earlier. It is sometime difficult to see with that speaker.

This spam bill, as the member mentions, would keep the activities of electronic messages relevant in this country—unlike that speaker, who returned to this Parliament with two MPs. Those MPs spent most of last year either learning to dance or training to be soldiers. Of course, I guess those are some of the great tragedies of the ACT party.

But I want to speak on the third reading of the Unsolicited Electronic Messages Bill. [Interruption] Go on. Keep them coming. The member is not prepared to speak on the bill. Why is that? It is because the enforcement procedures in this bill are designed for the member’s party. This bill could have been written after the drafter read a book that was published before the last election, a book that harks back to T S Eliot, and a book that everyone in this Parliament read with some eagerness: a book called The Hollow Men. The point about that book is that it would have been described as a civil event, as described in the enforcement provisions of the bill.

Let us see what a civil event is, as found in clause 11. This clause would apply entirely to the emails from an exclusive religious sect that offered the National Party $1 million to help it win the last election. Despite the gift of $1 million the National Party just could not manage it—even with that $1 million bonus. This bill would have helped John Key to recognise spam email, about which he said: “I might have opened it, but I didn’t smoke it.” Of course, an email offering John Key $1 million would be chicken feed. He would not be bothered by such a small amount as $1 million. But if he had bothered to read the email from a sect that does not vote, with its offer to win National an election with $1 million, and to get the troops out in the electorates—[Interruption] I tell Mr Finlayson to raise his point of order at the end of the matter. He should read the Standing Orders.

Christopher Finlayson: I raise a point of order, Mr Speaker. Speaker’s ruling 112/8 states: “Members must confine themselves to the main purposes and contents of the bill; they must not deal at length with matters not provided for in the bill.” The drivel the member is speaking clearly does not come within third reading parameters.

Rodney Hide: I raise a point of order, Mr Speaker.

Mr DEPUTY SPEAKER: No, I do not need any assistance, thank you, Mr Hide. [Interruption] No, I am not. The key to the matter is probably the phrase “at length”, and that is a judgment I would make. The member is using references by way of example, but always referring to the bill.

Rodney Hide: I raise a point of order, Mr Speaker.

Mr DEPUTY SPEAKER: Is this a new point of order, Rodney Hide?

Rodney Hide: Indeed it is. I think the point to be made here is that we should allow Mr Fairbrother to continue his speech without interruption—that is why I was wanting to get in on the point—because it is a really great exposition as to why one should not have a drink over dinner.

Mr DEPUTY SPEAKER: That is a reflection that should not be made, but, then again, nor should Mr Fairbrother have reflected on Mr Hide’s height.

RUSSELL FAIRBROTHER: He is a man of considerable stature, from some angles. But if Mr Hide is worried because he had a drink over dinner and cannot make sense of this speech, that is his problem.

Under clause 11 a recipient of an email offering $1 million on a promise to win an election would understand immediately who had sent the email. There are four prerequisites. First of all, the message must clearly and accurately identify the person who authorised the sending of the message. Well, who in this country would offer $1 million, over and above election spending, to help to win an election if he or she were not readily identifiable? Of course, when that email says “We are working with you to win the campaign.”, then clearly the provision of clause 11(a) is satisfied: “the message clearly and accurately identifies the person who authorised the sending of the message;”. So National members would welcome this bill, because it would help them to identify unsolicited electronic messages. But clause 11(b) does more than that; it states that the message must include “accurate information about how the recipient can readily contact that person;”.

Let us look at those emails in The Hollow Men, and at the information that was included therein. First of all, they included the names of certain individuals. That fact would help to identify them. Secondly, one email said that the Exclusive Brethren wanted to overthrow the Labour Government, and National was the only option it had in order to do so—pathetic though it was. It would do that, in working with National, by advancing the party or by giving it $1 million over and above its election spending cap. So it was quite clear that the message accurately identified how the recipient could contact that person. Though we may read an email, or open it but claim not to have read it, we would know, if we had read it, how to contact that person. So clause 11 would have helped the National Party to identify the spam emails it received before the last election, which are a subject of that book, The Hollow Men.

The third provision in clause 11, at paragraph (c), states: “the information referred to … complies with any conditions specified in the regulations;”. Well, there we have a bit of bother because we do not quite know what that is, the regulations not yet having been passed. But paragraph (d) states that “the information referred to … is reasonably likely to be valid for at least 30 days after the message is sent.” We can just take ourselves back to page 83, or thereabouts, of The Hollow Men. The particular email that referred to $1 million for the next election was sent, as I recall it, within the 30-day period.

So we have a bill now that the National Party has been mute upon during the third reading. National members have been mute, because they know that this bill is being passed to handle their unread correspondence by email. We also know that they could then send off somebody to a District Court to get a search warrant. In relation to a search warrant, clause 48(1) states: “An enforcement officer may apply for a search warrant to search a place or thing.” The enforcement officer must have made reasonable inquiries. We all know from the common law that that officer, under clause 48(1A), does not personally have to make reasonable inquiries; it is sufficient for another colleague, or for someone whom he or she has sufficient reason to trust, to have made those reasonable inquiries. So the body set up to enforce the provisions, which were so scoffed at by Mr Hide, gets real teeth under clause 48, because its personnel, working collectively, can make those reasonable inquiries described in clause 48(1A).

Once the application is made, the District Court has the discretion to issue a search warrant, if there is reasonable grounds for it to believe that a civil liability event has been or is being committed. Of course, that takes us back entirely to the book The Hollow Men and to clause 11, because we know that the people in the National Party who claim to have opened the email but not read it would take some protection in saying they did not know who it came from. That is despite the fact that the sender was offering them $1 million within about 30 days, in order to try to buy an election.

This bill is very, very important, because it sets a benchmark for proper behaviour on the Internet, and with electronic messages—emails. No longer will members of the party opposite be able to stand in this House, or appear in the press, and say they did not know where something came from. If they were to say that, then they would be duty-bound to lay a complaint and to have the matter followed through. Did they want to lay the complaint? Did they want the matter to be followed through? Did they want to reveal that they knew all the time who had sent the email offering $1 million? Did they want to know who the campaign manager in Napier was dealing with in the Exclusive Brethren to get the troops out, in order to grab votes that would not have been there for the National Party otherwise? Did they want to know who was organising the telephone banks, and who was ringing up and passing off messages of unreliability? A “brother” of unsolicited electronic messages is a telephone call from the telephone banks of those people, who claim to be Christians but who hide behind anonymity, and the emails that this bill is designed to put an end to.

This is a very important piece of legislation. It will put an end to such rubbish as bedevilled the last election. And the election in 2008 will see Labour returned with a victory, because the emperor on the other side will be found to have no clothes.

RODNEY HIDE (Leader—ACT) : I raise a point of order, Mr Speaker. Through you, Mr Deputy Speaker—and I am sure I have the support of the House—may I invite Mr Russell Fairbrother, if he is up to it, to seek leave to speak for a further 5 minutes? We heard from him, in relation to the ACT party, that I had learnt to dance and Heather Roy had learnt to be a soldier and defend the country. What we did not hear was what he had achieved—

Mr DEPUTY SPEAKER: Mr Hide—

RODNEY HIDE:—other than to lose his safe Labour seat—

Mr DEPUTY SPEAKER: Order !

RODNEY HIDE: I think he should stand up in the House and say what he has been doing for 2 years. [Interruption] Oh, he does not want to. He has got nothing to say.

Mr DEPUTY SPEAKER: That was not a point of order, and by following what you were saying you were actually interjecting on your own point of order. But I will not do anything about it.

Rodney Hide: That’s why we love you.

Mr DEPUTY SPEAKER: Thank you.

Dr PAUL HUTCHISON (National—Port Waikato) : Thank you for the opportunity to speak on this very important Disabled Persons Employment Promotion (Repeal and Related Matters) Bill. There is no doubt that this is a very important bill to the disabled community, and also to Ruth Dyson personally. I acknowledge that both the Disabled Persons Assembly and the disabled community have put considerable thought and effort into the bill—as, for that matter, has the Minister herself.

This bill is important not only to the disabled community but to their relatives, to their friends, and, of course, to the wider community. It is based on the philosophies behind the New Zealand Disability Strategy and Pathways to Inclusion, and National supports those philosophies. Where we are concerned is that this bill is being pushed through when inadequate preparation has been made for its practical application. That is of great, great concern.

The Workforce Auckland submission to the Social Services Committee stated: “Workforce Auckland has consistently supported the repeal of the DPEP Act to the extent that some opponents of the repeal have accused us of trying to rush through the repeal.” It went on to state what is absolutely important about this bill, which is the reason why National is opposing it at this stage: “We are concerned about the failure to work through the practical arrangements to replace the DPEP Act and the lack of consultation.” I understand there has been some considerable consultation since, but there certainly have not been adequate, practical arrangements to ensure the smooth transition of this bill.

In fact, I had a call from the chief executive officer of Workforce Auckland, Joy Ottaway, only tonight. She said the Department of Labour came on site yesterday and said there was a change in the policy guidelines coming up but it did not know when the change was coming up. Clearly, that is of huge concern for New Zealand’s largest sheltered workshop, where 170 disabled people are very gainfully employed. In fact, I might say that, having visited Workforce Auckland, one can be nothing but inspired by the tremendous activity that goes on there and by the satisfaction the disabled people get through having the choice of being employed there.

Workforce Auckland also asked whether it would get any extra support to see in the practical application of this bill. Apparently, the ministry said Gordon Pryde had asked Mrs Dyson for more money but that it would not hear about it until April. How can a large organisation like Workforce Auckland, which has 170 disabled people working there, plan ahead when it does not know about the policy guidelines just a few months before the bill is due to be enacted, let alone whether it will be adequately compensated? Apparently, someone asked about the single core benefit that has been promised for the last few years by this Labour Government. The ministry did not know about that. That is yet another reason, a practical reason, why it will be so difficult to implement the transition clauses to this bill.

Apparently, someone else asked the ministry whether it could guarantee that disabled people would be no worse off, and the ministry said it could not guarantee that. That is of great concern. It is for that reason that I have put in a Supplementary Order Paper. The very sincere amendment will ensure that there will be a much smoother transition when the time is right. Basically, this amendment requires the enactment of the bill to be extended from 30 June 2007 until 2009. But it gives the Government a chance. It states: “… 30 June 2009, or the time by which the Government has defined the taxation/benefit arrangements so that no disabled workers are adversely affected fiscally from their current status, nor are employers fiscally disadvantaged, whichever is the sooner.” I put it to members that only yesterday we had first-hand information from the largest sheltered workshop that clearly the ministry has not put in place a practical transition for this bill. That is why this amendment is so important.

I had very much hoped that the Māori Party and United Future would support this amendment. I understand that New Zealand First is supporting it, and I am delighted that it is. It was New Zealand First, United Future, and ACT members who expressed reservations around compliance costs and the practical implementation of this bill. Hopefully, we will get from the Minister in the chair, Ruth Dyson, some explanation as to why the ministry and the Minister are so inadequately prepared. The Government has not sorted out or defined the taxation and benefit arrangements or employer support measures; it just has not done that at this stage.

As I say, the implications for disabled people are extremely serious. Many of the sheltered workshops are saying that their viability will be seriously threatened once the exemption from minimum wages is removed. Some disabled employees may lose their jobs and some may be worse off due to the attrition of their benefits through high effective marginal tax rates. In my view, it is negligent that the Labour Government and the Minister have not sorted this out. National remains opposed to this bill in its present form and regards the amendment that I have put out as essential to the interests of both disabled people and employers. Obviously, it would be ideal for all people with disabilities to be able to gain work in open employment, where practical, but sheltered workshops provide an atmosphere that many people with disabilities and their families value enormously. That choice is very, very important, and it is very, very important that when this bill is eventually implemented there is a smooth transition that does not adversely affect disabled employees who so much enjoy their jobs.

There is no doubt that the choice available to disabled people through sheltered workshops is one of huge import. As Peter Fraher from the Abilities Group on the North Shore said, disabled people go there by choice. They go early for work. They often stay late for work. Some of them even go in the weekends. After the holiday period, some were actually lining up very early in the morning because they were so looking forward to going back. This Government is prematurely making it extremely difficult for workshops such as Abilities Group on the North Shore to be able to operate. In fact, the workshop is saying it may have to close unless sensible, practical provisions are made by this Labour Government.

So I ask the Minister to take a call and hopefully detail some of the things she is putting in place. I understand that $4 million was allotted in 2002 to help the transition, but that almost entirely went on the community participation scheme. One of the disabled people from the North Shore said about the community participation scheme replacing work: “It’s a waste of money.” I would not agree with that entirely because it has been a mixed experience.

Hon RUTH DYSON (Minister for Disability Issues) : I thank the member who has just resumed his seat, Dr Paul Hutchison, for his contribution. It has been an interesting debate over the last 5½ years. I am very interested to address, first of all, the member’s Supplementary Order Paper. He is requesting that members support a move to delay the implementation of the repeal of the Disabled Persons Employment Promotion Act.

I want to contrast him with his “cheer man”—that is what he has been doing this evening—Simon Power. He spoke in this very same debate on 26 May 2004; we could hardly be accused of ramming this legislation through without adequate consideration. Simon Power said on 26 May 2004: “It lacks conviction because … [it has] a long-drawn-out period before coming into full force, so indeed does this bill create a transition period until 2007.” The member went on to accuse me of lacking conviction in implementing a move towards an inclusive society, despite his supporting the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill. He said: “she should crack on and get this legislation with a commencement date that reflects the courage of that conviction.” Well, good on Simon Power. That was a very commendable speech, and it is a shame that Dr Hutchison did not read his colleague’s comments before he moved his Supplementary Order Paper.

I do not think that any legislation before this Committee for which I have been responsible as Minister has been subject to more misinformation and scaremongering. I exclude the member who has just resumed his seat from that because I do not believe he has been part of it, in the main, but some of his colleagues and members who, fortunately, have left Parliament since then were. Some of the scaremongering has been genuine and political—an attempt at point-scoring at the expense of people who I consider worthy of better treatment—and some of it has been based on a lack of information. I hope that, through the Committee stage, we can place some of those facts on the record and give the reassurance that people in sheltered workshops, their families, and providers are seeking.

First, I will talk about the number of people who are currently in sheltered workshops and the current legislative regime under which the workshops operate. About 3,000 people are currently in the many, many sheltered workshops around our country. About two-thirds of those people will not be affected by this legislation because they are not classified as being in work—they are not working in any sense of employment or in an employment relationship. They are doing either what is now called, as the member who resumed his seat referred to, community participation—what we used to call day activities—or some sort of training. So about 1,000 people are categorised as being in what we would call employment. Currently, those 1,000 people, because they are in a sheltered workshop, have no right to any minimum wage, sick leave, holiday pay, or basic employment rights at all, regardless of the quality and quantity of work they do. That is—and no other word is appropriate—wrong.

It is just wrong to have a blanket exemption without any regard for the work a person does. It is not acceptable. It was not acceptable in 2001, when I announced this policy—on the day the World Trade Center in New York was hit —it was not appropriate in 2004, and it is no more appropriate now. Instead of saying that, therefore, the blanket exemption would be removed entirely and that we hoped the market would just work it out, I said that that was not an appropriate response to what was clearly a changing labour market and to what was, for many people who have been in sheltered workshops for a long time, a significant change. I said we would not remove the blanket exemption and have no exemptions, although that has been actively proposed by many, including some in this Chamber. I said that people would now have an individual assessment of their capacity to work, and that on that basis they would be entitled to apply for an exemption to the minimum wage. In my view, that is a fair and pragmatic way of moving the sector forward—and it certainly has moved forward.

Ten years ago, when I started working with the vocational services sector on this policy, the sector was, frankly, very fragile. It was very poorly funded, quite poorly managed, and, in many instances, quite poorly governed. People worked in substandard environments and there were no resources for training or for advancing their capability. We have put very good money into the sector, and we can see the results. We can see the results of support for infrastructure. Some workshops are in new buildings, some have had their buildings altered to make them more appropriate, and some have moved into new facilities. I have been recently to two workshops in Canterbury that have moved premises, and they are now very impressive. Nearly all workshops have had staff training, including management training, and a large number have had governance support and assistance.

So ensuring that the sector itself is robust and strong has been an important part of this. The sector has received additional funding for its direct contracts and for its workshops, as well. Many have seen the face of the future, looked at the aspirations and ambitions of their clients, and said that they need to change, not just to take account of the changing aspirations but to take account of the changing labour market. Many people have moved from what were quite repetitious, not very stimulating day activities into either community participation or supported employment. We now have three times the number of disabled people in supported employment than we had 5 years ago, and that is a very significant move forward.

So in my view this is not just a fair approach but a pragmatic one to dealing with the changing aspirations, and therefore with the changing responsibility of central government to support disabled people in our workplace. If people are doing a job, the very minimum this Parliament should offer them is minimum wages and conditions protections. We have taken the pragmatic approach to individual exemptions in this case, and many people will still be entitled to continue.

The final point I make in this part of the debate is to correct the factual inaccuracies that I am sure were unintentionally demonstrated by Dr Hutchison in his contribution. He said that people in sheltered workshops who received minimum wages would be worse off financially than they would have been. That is not correct. At the conclusion of the debate on this part, I will seek leave to table a graph that shows hours of work, rate of pay, net wage, net benefit, and the comparable income for people earning wages. People would be better off financially under any regime than they currently are by being on a benefit. Thank you, Mr Chairman.

SANDRA GOUDIE (National—Coromandel) : I really think that the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill could probably at this stage be called the “Disabled Persons Unemployment Promotion (Repeal and Related Matters) Bill”. I say that because that is likely to be one of the outcomes when this bill is passed. The Minister, Ruth Dyson, constantly refuses to recognise that there was no adequate consultation over this bill and that nothing was done to really ascertain how this bill will affect the people it applies to and to protect them so that they have a job to go to.

A number of work providers have said quite clearly that they will not be able to employ all of the people they are currently looking after within their working environments. Those working environments are not just businesses—they are much, much more than that. They care for those people. They help them with their budgets, with their medications, and with anything they need in terms of their health, personal care, accommodation, and contact with family and friends. They provide a friendly, caring environment. They provide social interaction with people, and provide social activities, as well. Some of those people will be denied that because those work providers will not be able to afford to employ them. So this will be the “Disabled Persons (Unemployment Promotion) Bill”. Let us make no mistake about it; that will happen.

The reason the Green Party supports this bill is that it believes that people with disabilities should have the same employment and work conditions as other employees. The problem is that those people have to have a job in the first place. Right now they are on a benefit, yes, but that benefit is supplemented because they go to a work environment where they feel valued. They feel that they are working and contributing. Now there is every likelihood that a number of those people will have that opportunity taken away from them. All of the other services, which are not paid for by this Government—the services that people in our voluntary sector and in the workplaces that assist people with disabilities provided free of charge—are provided because the work providers care about those people and they want to do that.

What will happen? “Stan the man” will go along to somewhere like Workforce Industries or the Abilities Group in Auckland, and he will be told the organisation is sorry, but the bill has gone through, so it has to pay all of the people minimum wages, but it cannot afford to do that. So those providers will have to say to people like Stan: “I am sorry, Stan, you can’t come on Monday. Sorry mate.” They will have difficulty even explaining that to him. He will ask: “Why can’t I come on Monday? What is it that’s stopping me coming on Monday?”, and the provider will have to say: “Well, I’m sorry, but we just can’t afford to pay the minimum wage.” He will say: “But why can’t you? I’ve been coming all these years; why can’t I keep coming?”. How will people like Stan understand what this is all about? Where will they get the care they have been experiencing? What about the relationships they have built up and the support they have been getting with their budgets, with their health, and with everything else—even personal care? Those providers will not be able to afford to provide those extra services along with trying to maintain a business while having to pay the minimum wage to employees in their workforce.

That issue is at the heart of our opposition to this bill. If we thought that everybody would be looked after and would continue to have a quality of life and feel valued, then that would be fine. But that will not happen, because the consultation has not been undertaken that should have been. Workforce Industries supports the repeal of the legislation. It is a great employer, as my most excellent colleague Dr Paul Hutchison said. It looks after 170 people in its workforce environment. It supports this bill, but it has also clearly said that the issues have not been worked through and the people and their families who will be directly affected have not been adequately consulted. They have not been given the assurances or the outcomes they have sought from the Minister in the chair, the Hon Ruth Dyson. The Minister has failed to provide those assurances to a huge number of the 3,000 people who she purports to be in this sector.

STEVE CHADWICK (Labour—Rotorua) : What a strange perspective we have heard from the Opposition. I believe that we are both coming to this bill trying to make things better for people with a disability, but I suppose Labour’s policy was worked up during the 1990s when we saw such an oppressive and paternalistic approach to people with a disability. We went out with a document called Pathways to Inclusion in which people with a disability themselves stated they wanted services that helped them to get into real work. That is why we are proudly in this Chamber with a Minister for Disability Issues presenting this bill in the Committee stage today. It has hardly been rushed through; it has hardly been imposed on the sector, as the member opposite said.

One has to wonder at the Supplementary Order Paper from Dr Hutchison. He does have a genuine heart in relation to this sector, but his Supplementary Order Paper is patronising. National members say that they do not want any people with a disability to be adversely affected fiscally from their current status. But I believe that National members are really concerned about employers being fiscally disadvantaged by having to comply with the minimum wage and annual leave requirements, and all the other requirements and protections that the Employment Relations Act will give these people, too. These people are not helpless and unable to see and have a heart and a hope for their own future. They spoke up loudly in Pathways to Inclusion, which was about consultation, and they said: “We have the right to”—

Sandra Goudie: That’s up there. Get down here. Get real!

STEVE CHADWICK: No, they have the right to a decent wage, to a minimum wage, and I am pleased that this bill repeals the provisions they work under in the sheltered workshop environment. Those are the old ages. I am never going to criticise those fantastic providers. There are 45 providers, and 4,060 people will be affected by this bill. I think the member Sandra Goudie is slightly muddled because she is actually talking about the people the Minister has already said will not be affected by this bill because they are involved in community activities. They are the 1,000 people who do need some help but do not do a real job.

I think it is really sad to see someone who I respect, Dr Paul Hutchison, saying that we should put this bill out to June 2009, after the 2008 election, which could make one feel slightly cynical. The days of paternalism to this sector are over. The Disabled Persons Assembly and the IHC are putting out their press release tonight saying that they hope the bill proceeds through the Committee and the third reading stage so people with intellectual disabilities soon have equal rights in the work places. So that is great. The society says that the provisions under the current Act are discriminatory, and contravene New Zealand human rights and international rules and conventions. For goodness sake! It is time to bring this sector up into the 20th century and not treat it like another underclass, which is the paternalistic and patronising attitude of the Opposition.

PETER BROWN (Deputy Leader—NZ First) : Let me make it quite clear from the onset that when this bill had it first reading in May 2004 New Zealand First supported it to select committee. I have here the actual Hansard of that debate, and I represented New Zealand First at that time. Let me read a little bit of it, because I want to explain our position as fully as I may. “Let me say from the onset that New Zealand First will be supporting this bill. I like the way the Hon Ruth Dyson outlined it: we believe that it is better to pay people according to the work they do rather than their place of employment.”—I think those members over there are in agreement with that, thus far, from listening to them.—“I like that phrase, and I thought it summarised the situation exceedingly well.”

Now we are debating Part 1 of this bill, and let me just remind the Committee and anyone who might be listening tonight, about the purpose clause, which states: “The purpose of this Act is to—(a) repeal the Disabled Persons Employment Promotion Act 1960; and (b) provide for matters arising from the repeal of the Act until the expiry of the transitional period on 30 June 2007; and (c) make related amendments to the Minimum Wage Act 1983.” We had a member on the Social Services Committee last term who is no longer a member of Parliament. Unfortunately we cannot get hold of him to get some clarification, but we notice from the select committee report back the following: “Concerns were raised that the financial implications of the repeal of the Disabled Persons Employment Promotion Act will force sheltered workshops to close or move to providing other vocational services.”

All the correspondence we had—certainly all I had—on this bill told New Zealand First not to support it. However, we have a conscience, and we are trying our best to work through this as honestly as we can. We read in the explanatory note of the bill the following: “Most people in sheltered workshops receive an average of $17 pay per week.” That is not good enough by anybody’s standard. The question we are asking ourselves in New Zealand First—

Sandra Goudie: They are on benefits.

PETER BROWN: I understand that, but that is what they are being paid. The question we are asking ourselves is: can we improve the lot for those people, and keep the workshops open, and give them a more satisfying life? Right now I have to say that I do not think this bill does it. But having said that, I can tell members that we had a mini-caucus tonight to discuss this because a lot of things have come up. We are going to vote against this bill at this point of time, see what comes out of this Committee stage, and we reserve the right to support the bill if we like the framework afterwards.

Sandra Goudie: Ha, ha!

PETER BROWN: We are entitled to do this. We have a heavy heart here. We are not prepared to knock these people for six, it is just against our beliefs, but at the same time we are not convinced at this point in time that this bill will do it. So tonight we are going to vote against it because that was our instincts as we came into this Chamber tonight. But I know that something has pricked at least my conscience, and that of my colleagues here. I will be consulting with my caucus and we will be asking the Minister for further information. Whether we stick to that position is yet to be clarified.

I have to say that we do not think the bill as it is written and as it has come back from the Social Services Committee is doing the job. However, we are determined to address this issue positively for the people it affects. A few moments ago we listened with a lot of interest to the Minister and to Steve Chadwick. We also listened to the National Party. I know that Dr Paul Hutchison is very sincere in his beliefs on the way to address this issue. Indeed, Supplementary Order Paper 71 in his name sits comfortably with us at this point in time.

R Doug Woolerton: He should be the Minister of Health.

PETER BROWN: Well, he knows a little bit about it, we have to agree on that.

R Doug Woolerton: The spokesperson.

PETER BROWN: Yes, he should be the spokesperson on health; he is not quite on this side of the Chamber yet, I remind my colleague. This might sound as though New Zealand First is in a state of flux. In all truth, we probably are, and we will address that issue as best we can. Thank you.

CHESTER BORROWS (National—Whanganui) : I rise to speak against the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill as it is at the moment. It is no surprise to me to find that this bill is promoted by the Labour Party. Labour members pat everyone on the head and they tell us that we are the patronising ones—the paternalistic ones. Yet they are the ones who are deciding what is best for people who are currently working within the sheltered workshops system. They will decide what is best for us and they will make that decision, no matter what we say. They will not bother consulting with anybody. They will not bother talking to parents or to the people who are involved in working away day to day with their loved ones, their children, who attend these workshops. They will not bother to listen even to them, but they will make a decision in any event.

The people who administer the schemes are worried sick about how this legislation will affect them. One of the things they have to do is to assess what part of a full unit the particular person they are assessing is, from a productivity point of view. For instance, if a person is assessed as being one-tenth of a full unit, then he or she will get one-tenth of the minimum wage. Some of these people will get somewhere between $1.25 and $2.50 an hour.

It is interesting to read an extract from the New Zealand Herald on 10 February, where Mr Jones, the Chief Executive Officer of IHC New Zealand, as I understand it, obviously believes he is selling his soul on this one. When he was held to account by a Mrs Armstrong from Nelson, who was worried about the situation in respect of her family, his response was: “Has the IHC become too PC in some areas? Yes, by being a service provider we have bought into the government expectation, standards and policies. The $140 million”—those are the 2005 figures that the Government was funding to IHC—“comes with a cost.” And the cost is that one has to swallow a rat.

Well, the people around this place have been swallowing a few rats lately, and will continue to do so, especially as we look forward to the consideration of the anti-smacking bill. But they have looked for some sort of help from the Minister as to how things would go—some sort of assurance that things were going to go really well. The Minister is quoted as saying: “If I wanted the sheltered workshops closed I would’ve closed them. But I don’t. We’ve put substantially more money into them.” That is what she is saying, but let us see the proof of it.

She goes on to say that workshops must absorb the cost of at least the first round of payments, and that the workshops cannot be funded for salary increases. And then she is quoted as saying: “I can see their problem … But I don’t think it is going to be a problem. I can offer no more assurance than that.” Well, whoop-de-doo! The people working in the sector are saying: “You’re not here day by day.”

Chris Auchinvole: “We know how you feel!”

CHESTER BORROWS: “Yeah, we empathise with you greatly.” Whoopie! Ironically, while the workshops will be paying significantly more, most workers will be marginally better off at best, and the paper shifting involved could quadruple. A Mr Freyer, who is working in one of these enterprise workshops, has found that the Department of Labour inspector who was going to come along, do all the assessments, and work out just how much of a full labour unit these people were going to be worth in the eyes of the Labour Government, has managed to do six assessments. He has to do them with a representative of the family there and with someone else to audit. It has to be done over time and then it has to be signed off.

• Progress reported.

• Report adopted.