Hon Dr MICHAEL CULLEN (Minister of Finance) : I move, That the Taxation (Annual Rates and Urgent Measures) Bill be now read a second time. The bill delivers on three key election pledges that will benefit hundreds of thousands of people.

The first major focus of the bill is to boost income assistance for working families and to make the Working for Families package available to a greater number of working families from 1 April next year. Additional targeted tax assistance will be available to 160,000 working families, a figure that includes 60,000 new families who will become eligible for such assistance. That is achieved by raising the income level at which the abatement of family assistance begins from $27,500 per year to $35,000 per year. At the same time, the rate at which assistance abates for income counted as over the new threshold will be lowered from 30 percent to 20 percent. The average size of the extra assistance is expected to be about $50 per week. That adds to increases that are already scheduled to come into effect on 1 April next year, and makes a significant difference to family income—in many cases, by as much as an extra $100 per week.

The second major focus of the bill is the removal of interest from student loans for most borrowers, and the introduction of an amnesty on penalties for borrowers living overseas. The purpose of those changes is to make tertiary education more affordable for young people and to encourage them to remain in, or return to, New Zealand and invest their skills here. As such, these are forward-looking changes designed to achieve a long-term gain for the economy. Students and ex-students have welcomed the changes proposed in the bill, which in many cases will save them thousands of dollars and knock years off their repayment times. Over 440,000 people have student loans, so the impact of the changes is huge.

Later, in the Committee stage, I will be releasing a Supplementary Order Paper that will amend the bill to prevent borrowers from using the interest-free changes in a way that was not intended by the proposed legislation. I am referring to borrowers who, in the lead-up to the new interest-free system, may try to claim a refund of previously paid money in order to invest it in interest-bearing accounts. The changes introduced in the Supplementary Order Paper remove any financial incentive to claim refunds of overpayments of student loans. Refunds relating to the 2004-05 and 2005-06 tax years will be subject to interest unless the claims were lodged before 30 November. It will not be possible to claim refunds for 2003-04 and prior years. Furthermore, borrowers will not be able to apply for special deduction rates below the standard 10 percent rate for the balance of the current tax year. In cases of serious hardship, the Inland Revenue Department will have the discretion to exempt refunds from interest.

The Supplementary Order Paper will further ensure that there is no overlap in how time spent overseas is counted for loan purposes. It will also ensure that the objection provisions in the Student Loan Scheme Act apply to decisions made by the Inland Revenue Department in relation to the full interest write-off and amnesty. Those changes will fine-tune the proposed legislation to ensure that it works as intended.

The Finance and Expenditure Committee recommended the inclusion of a further transitional provision. It would allow a full interest write-off in some circumstances for borrowers who spend time outside New Zealand during the first 6 months of the operation of the new loan scheme, and I agree that such a transitional provision is desirable.

Supplementary Order Paper 1, which I referred to the committee last month—

John Key: Time’s up.

Hon Dr MICHAEL CULLEN:—no, I’m afraid it will not be up for some years yet—will give New Zealand wine producers who export to Australia access to that country’s wine equalisation tax rebate. I suspect it is one of the rare tax changes that will please everyone, and I thank all parties of the House for their agreement to include that matter in this bill. Otherwise it would have been very difficult to deliver it to New Zealand wine producers on time. The change is part of a joint trans-Tasman effort that will involve both countries in the administration of the rebate in relation to New Zealand producers. Australia will assess, pay, and duly administer the rebate, and we will assist in the registration and application processes. Australia is in the process of enacting the necessary legislation; the changes added to this bill represent our legislative contribution. They were originally to have been included in the taxation bill introduced in May, but have been moved to this bill to ensure their faster enactment.

Provisions fixing the rates of income tax for the 2005-06 tax year have also been moved from the main taxation bill to the present bill, in order to ensure their timely enactment. However, I assure the House that I hope the Finance and Expenditure Committee will make every effort to deal with the May bill so that we can pass that bill before the end of March, which will enable a number of its provisions to come into force on 1 April next year.

In closing, I thank the committee for its timely consideration of this very important bill, and I commend the committee’s report to the House.

JOHN KEY (National—Helensville) : Next week the House will be in urgency so that the Government, under the cover of darkness, can call on every part of its confidence and supply arrangements in order to pass this Taxation (Annual Rates and Urgent Measures) Bill. That is what will happen under urgency next week; we are debating the same legislation here today. It happens to be exactly the same legislation for which there were no public submissions—not one. Labour did not want to know what the public thought of this bill and it did not care about that, even if people wrote to the Government independently, anyway. So there were no public submissions. The second point is that a number of Government agencies looked at this bill and its side effects. Although their work has not been done yet, the preliminary work that Treasury, the Reserve Bank, and others have done indicates that there will be bad news for the Government. But that advice will not be on the Table next week, when this bill is passed under urgency.

Next week a bill will be brought back to the House and rammed through that just covers off the election bribes that the Labour Government had to roll out in order to get itself in power for a third term. The Labour members on the Finance and Expenditure Committee were worried about one thing only. They were not worried about the implications of the bill for borrowers, the impact on New Zealand society, or the messages the bill was sending to young New Zealanders, and they did not care that it reaffirms some of the highest tax rates internationally, which will lock New Zealand into an uncompetitive environment. All those things did not matter. Only one thing mattered to the Labour members on the committee when this bill was considered last week. It was this: there were no drafting errors in the bill. That is what those members were worried about—no drafting errors, so they would not be embarrassed. Paul Swain has had a couple of those errors come down to the House in the past. They were such absolute shockers that he had to have amendments made hours, days, or weeks afterwards. The bill is very nice, is it not? It looks great. That was the only thing that Paul Swain was worried about. So under the cover of darkness, that is what is to happen.

The really interesting thing about this bill is that it involves something this Government is extraordinarily good at. [Interruption] That is right; I do not normally heap praise on the Labour Government. However, the one thing it is really good at is spending, and it is exceptionally good at spending other people’s money. Clayton Cosgrove used to be a fiscal conservative when he was the chairman of the select committee, but now he is just another big-spending Minister with his hand in the air, passing out the dollars.

Something happened today that will really affect Christmas for New Zealanders who are out there, working hard and toiling away: interest rates went up. They went up for the ninth time since 2004—the ninth time. The Reserve Bank came out and said that we now have an official cash rate of 7.25 percent. Dr Cullen said, in answer to my question today, that our interest rates are the highest interest rates in the OECD, and the official cash rate is the highest it has been since it was brought in.

Dr Cullen came into office when interest rates were at 4.5 percent and we had a current account deficit of 2 percent of GDP, and he used to go up and down the country moaning about that. Today the same Dr Cullen had the audacity to tell me that I do not understand it when a Japanese housewife buys $20,000 worth of an Uridashi issue, which was sold to her on the basis that if it all turns to custard and the exchange rate goes down, she can just come to New Zealand and have a good holiday—that is, he told me that I did not understand the international bond markets. That is a really interesting statement to have come from the history professor, but we will not go there.

But that is what Michael Cullen thought of today’s ninth increase in interest rates, which comes on the back of the sort of legislation that is going through as the “Taxation (Annual Rates and Let Us Spend Up Large) Bill”, which the Government is debating today. Michael Cullen said that the increased interest rates were not his fault, and that he was actually offended that the Opposition spokesperson on finance cared enough about mortgages and the fact that exporters in this country were going to the wall to question him about that. He said it was a disgrace that the Opposition spokesperson on finance cared about the hundreds of thousands of New Zealanders who will have a rough Christmas. Their mortgage rates are going up because Michael Cullen does not care about that.

But then Michael Cullen does not think that many things are his fault, and he does not think that this bill will do much. We had to point out to Michael Cullen that when we offer an interest rate of zero percent, it becomes quite attractive. Then Michael Cullen, in another breath—and on the other TV channel, when he announced this policy, he was telling off New Zealand consumers for borrowing more when somehow interest rates were lower because the banks were in a price war—came out with the granddaddy of all low-interest loans: zero percent, forever. He said that that would not be a problem for him. He said there would be no behavioural changes, no one would react to that policy by borrowing more, and they would repay their loans at the same rate as previously.

Two weeks ago a young chap called Thomas Banfield worked out—

Ron Mark: Young Nat?

JOHN KEY: He was not a Young Nat—I said a young man. Ron Mark has a big future ahead of him because his current party leader is not doing very well. Mr Mark has a big future, so the member should worry about his future and I will worry about the young man Thomas Banfield. Mr Banfield worked out something that the Minister of Finance of this country does not understand. Thomas Banfield knows that if we get money and put it in the bank risk-fee, we will earn interest, and that it is more valuable to do that than to pay off a student loan where we would earn no interest. So Michael Cullen, as members heard in his speech just a few moments ago, said that he did not like that, and that next week the Government, under the cover of darkness, when it is ramming through this legislation—legislation that no one has been allowed to discuss or have any input into, at all, except to make sure there are no drafting errors from Paul Swain—will pass a Supplementary Order Paper. It will change the legislation, so that after next week Thomas Banfield will not be able to do what he did a week earlier.

The real kicker of this is, though, that Thomas Banfield represents the people who made voluntary loan repayments in the last 6 months, and when this Taxation (Annual Rates and Urgent Measures) Bill is passed, I have bad news for Michael Cullen. What will happen is that student loan holders will not make their voluntary payments. They will not need his adjustment to the legislation. They will not need to go and ask for their money back, saying: “ Please can I have my money back so that I can put it on deposit?”. They will cut out the middleman—Michael Cullen—and go straight to the bank themselves. Michael Cullen knows that, but if he did not believe that it was a problem—because nothing is going to change after we have passed this legislation—can someone, anyone, explain to me why he has to close the loophole down now?

I tell members this: Michael Cullen may be closing the stable doors next week for those people who have made voluntary payments in the last 6 months, but he is about to get a shotgun out and blow those doors off their hinges when he passes this legislation. But he does not care about that. Thomas Banfield knew more about interest rates than the Minister of Finance and, actually, for the record, he knew more about the law than Michael Cullen, who used to be the Attorney-General. That is the kind of leadership that the Labour Party is giving this country; it is completely and utterly wrong.

Michael Cullen mentioned that the Working for Families package will be extended. What he actually did was quite nifty, I suppose. By passing that measure, Michael Cullen will achieve his and the Labour Party’s lifelong ambition. They will allow every New Zealander to become a welfare beneficiary; every New Zealander will be on a welfare benefit.

Hon Clayton Cosgrove: Oh, you lost the election!

JOHN KEY: There is Clayton Cosgrove. I have a message for him, to take back to Waimakariri: he can become a Cabinet Minister, earn hundreds of thousands of dollars and, if he has enough children, he too can be on the Working for Families package. Even he can get something back. He should not worry about the fact that he pays the top personal taxation rate. He should not worry about the fact that in the Budget lock-up in 2004 Michael Cullen said that the No. 1 thing he was worried about was effective marginal tax rates. Now he is rolling out that package to people who earn over $60,000 a year. Well, this is the message from people who earn over $60,000 a year: “No, thanks very much! We don’t want your welfare payment; what we want is a lower tax rate. And then we’ll tell you what: we’ll go about our business and you, Labour, can go about yours.”

I cannot wait for the Committee stage on this bill next week; I just simply cannot wait for it.

Hon CLAYTON COSGROVE (Associate Minister of Finance) : For those who did not know, that was Mr Key, the so-called finance spokesperson for the National Party.

Dr the Hon Lockwood Smith: No point in speaking. Not like Mike Moore.

Hon CLAYTON COSGROVE: And there is Dr Lockwood Smith, who has trolled that line out every time; it does not get any smarter, any brighter, or any better, because he is incapable of some original thought.

The image makers have been out in the National Party. Mr Key, with an apricot tie like that, thinks he is on a winner. Someone, I think it was Mr Mark, asked whether Mr Key had a community services card. I tell Mr Mark that I do not think Mr Key could spell it, or maybe if he could, he could line it up with what he cites as one of the biggest achievements in his career—being the only man in New Zealand, so he told the Finance and Expenditure Committee, to get a black American Express card. Apparently it is better than a platinum one; the holder can go and buy a jumbo jet or something, so Mr Key told that committee.

That member said there were no public submissions on this package. Well, I say to that member that there was a major public submission on the package we are debating today. It was called a general election, where we put our policies—which included the Working for Families and the extended Working for Families packages, and our student loan package—up against National’s. The people spoke; we have a coalition. This bill is about keeping our promises. It is about a philosophical divide between that party and us.

National launched a tax policy that got rejected. It would have seen Mr Key add to his lofty estates and immense wealth, to the tune of 95 bucks a week. That is what he and every member, including his leader, would have got if National’s tax package had been passed. About two thirds of other New Zealanders—the people we are targeting, families with kids—would have got around $10 a week. John Key would have been very comfortable, I am sure, with the black American Express card. He would have wheeled it out and had a good go to spend his 95 bucks a week, when most other Kiwis would have got 10 bucks a week. So that is where this House divides.

We believe in backing 160,000 working families, and we believe in backing parents with kids, because we know—unlike Dr Smith, of course, when it comes to talking about kids—that it is expensive and tough to bring up a family. So we say that members of Parliament do not deserve 95 bucks a week. I do not deserve it, that member does not deserve it, and we do not need it. We in this Parliament are on good salaries, but I believe that parents with children, who are battling away to make good lives, deserve a break from the Government.

Our tax package delivers on our promises. I know that members of the National Party have a mental blockage when it comes to a Government delivering on its promises. I know that John Key, of course, who made his name as a junk bond dealer trading down the Kiwi dollar for many years—that is how he showed his loyalty to the country—would have no idea what it was like to be a battler out there, or that integrity is required for a Government to keep its promises. He represents a party that is short on policy, short on commitment, and seriously short on keeping any promises that it made during the election. That is why his party spent the last couple of weeks of the last sitting slowly backing away from the election commitments they had made, because they were not going to honour them. I think that was probably the reason.

The other measure—[Interruption] Oh, not likely, especially when we have dopey Opposition members like that member, who got sacked as the trade spokesperson. He need not tell me I am running out of speed; he got usurped. The other important measure in this bill is the student loans package. It is very apt that Dr Smith sits in this Chamber. After all, it was him who saddled every student in this country with a massive debt. That man says publicly that he is still proud of the student loan policy he put in place, which now sits on the Government’s books as a debt—or, as we call it technically, an asset—of about $3.8 billion. But, of course, he got his PhD in animal husbandry, I think it was. There may be another word for that—I do not know the technical terms. But when he got his PhD, the State paid for it. The State paid for the course. [] I am told Mr Woolerton is aptly qualified in that discipline as well, so he says. He got his PhD and the State paid for it.

Of course, Dr Smith does not give a damn about the students, the best and the brightest, whom we are trying to attract back to this country—and this policy will attract them. He does not give a damn about the best and the brightest students, whom we are trying to incentivise and retain in this country. Oh no! He is on the pig’s back—technically or figuratively, I do not know. But he got his PhD and the State paid for it—and that is neat, and that is wonderful, and good on him. Or was it his undergraduate degree? I do not know, but I know he got it under the old system. He should sit here and reflect on his legacy as an education Minister. He still sits there with pride, of course. I recall being at the Finance and Expenditure Committee during the first term we were in Government, when the students brought in a birthday cake to celebrate the anniversary of his student loan scheme, which saddles every student with a mortgage before he or she has a house.

We say no to that scheme; we will incentivise and back the best and the brightest in this country. We will do something about it. We will provide interest-free loans to those students so that they in turn will show a commitment to this country, stay here, and fill the major skills gaps. We will also provide an incentive for those of our best and brightest who are overseas to come home.

The reason those members over there are so grumpy is that they cannot compete with the truth, and they certainly cannot compete with a Government that actually keeps its promises. When I went on the stump during the election campaign, I did not meet one person, apart from the National candidate, who did not back this policy. I met parents. I met grandparents. Do members know what the biggest cry of grandparents was when this policy came out? [Interruption] Before this policy came out they would come to me and others, like Mr Woolerton, and say they were worried that their grandkids would not come home, that they would not see their grandchildren come back to our shores. The day we released the policy that we will pass in this bill today, that changed. They now say they will see their grandkids again because they will come home.

I wind up by saying—and I suggest the new members take a lesson from Dr Smith and do not make the same mistakes he made—I will stand by this policy, which completes an election promise. I will stand by the legacy of this Government, which has always honoured its election promises. I will stand up at the next election before those weather-beaten members over there, who could not meet a promise if they bumped into one, and debate with Dr Smith, and we will see who the country backs on this issue of student loans and the family assistance tax package.

Dr the Hon LOCKWOOD SMITH (National—Rodney) : Today the interest rates in New Zealand went up. Tomorrow the mortgage rates paid by people working up and down this country will go up. They will go up tomorrow, and do members know what the Reserve Bank says is one of the reasons for that? It is what this Government is spending. It is what Michael Cullen is spending.

The Reserve Bank report released today talks about the issues in the bill we debate this afternoon. The Reserve Bank specifically mentions the Working for Families package. What this Labour-led, this “Helen Clark - Winston Peters - led” Government, rams through this House today, thehard-working people of New Zealand will pay for tomorrow when their mortgage rates go up.

The Reserve Bank report also said that people’s house prices—their equity—will come down. The Reserve Bank report says that not only will mortgage rates go up but that people will also lose their equity, and that one of the reasons for it is this bill. This Labour Government, the “Clark-Peters Government”, just cannot help itself—it has to spend, spend, and spend hard-working New Zealanders’ money.

With regard to the member who just resumed his seat—Clayton Cosgrove, was it?—I do not think I have ever heard anything quite so arrogant. If I wrote it down correctly, he said that the public submissions on this bill were the submissions people made during the election campaign. He seemed to forget that 60 percent of New Zealanders did not vote for this policy. What arrogance to think that that constitutes public submissions on legislation! That arrogance is why Clayton Cosgrove will not go any further than he has gone already. His predecessor, the Rt Hon Mike Moore, was a much, much wiser member of Parliament than Clayton Cosgrove is.

National opposes this bill for several reasons. The first is that it confirms our current tax rates, which are unacceptably high. Again, massive numbers of New Zealanders voted to see a reduction in those tax rates.

Secondly, the bill puts in place this Labour Government’s massive election bribe—the interest-free student loan. Clayton Cosgrove tried to attack me over the original construction of the student loan scheme. I just remind Clayton Cosgrove and his colleagues that before the student loan scheme was put in place, when Labour left office in 1990, New Zealand’s participation rate in tertiary education was about the lowest in the OECD. It was a disaster for New Zealand’s future.

By the time I left the role of Minister of Education almost 6 years later, when the student loan scheme had been in place for about 4 years, we had gone to the top of the OECD. We did not have the squandering of taxpayers’ money at Te Wānanga o Aotearoa; we had a decent tertiary sector. We did not have COOL IT courses that were just squandering taxpayers’ money in the way that Labour has. We had decent tertiary courses and we went to the top of the OECD, and only the student loan scheme made that possible.

For the little twerp Clayton Cosgrove to stand in this House and say that it was a disaster—

Hon David Cunliffe: I raise a point of order, Madam Speaker. The member clearly has nothing of substance to say, but perhaps he could restrain himself from calling people names.

The ASSISTANT SPEAKER (Ann Hartley): That is not a point of order.

Dr the Hon LOCKWOOD SMITH: Let me come to the part of this bill that I think is the most destructive of hope. [Interruption] I ask David Cunliffe, who has been interjecting, what he thinks about this. This bill, once it has been implemented—and it will be rammed through this House—will increase from 1,000 to 4,600 the number of families in New Zealand who will lose more in tax for every extra dollar of income they earn. According to Inland Revenue Department figures given to the select committee, the number of families affected will increase from 1,000 to 4,600 once this measure is in place.

I see Doug Woolerton from New Zealand First—the former president of Winston Peters’ party—is sitting opposite. He will vote for this. I see Gordon Copeland from United Future is sitting behind him. I want Gordon Copeland to tell this Parliament why he thinks this bill is implementing good policy. The number of families that it will affect will increase from 1,000 to 4,600. When those families earn another $1 they will lose $1.02 in tax. Maybe if those families were all millionaires it would not be the end of the world. If they were high-income families earning $50 an hour or $100 an hour, which some people can, maybe it would not be the end of the world, because the income to which this tax rate applies is $10,000.

On that $10,000 these 4,600 families lose, for every extra $100, $100.20. It would not be so bad if these families were earning $100 an hour, but these are our lowest-income families who are independent of the benefit system. They are not families at the public trough on benefits.

I want Doug Woolerton to explain why he supports this bill. I want Gordon Copeland to explain why he will go into the lobbies and vote for this. I want David Cunliffe to explain to the House why it is good policy for our lowest-income families, in the range of annual income from $10,000 to $20,000, to face an effective marginal tax rate of 101.2 percent. This bill will increase the number of New Zealand families in that trap from 1,000 to 4,600—five times as many families. Where is the hope?

This bill means that, at $10 an hour, if the dads or mums in families who are not on a benefit want to earn an extra $1 for their family and they work an extra 10 hours a week to try to earn a bit more money, they do not get an extra cent in their pockets, they lose some. This bill affects people on our lowest wages of, say, $10 an hour, who are not on a benefit but who are trying to stand on their own feet. I would not mind betting that the Māori Party has something to say about that, because I know it does not want people trapped on benefits. It supports people standing on their own feet.

Yet, once this bill goes through, in order for people from those 4,600 families to get an extra dollar, they would have to work an extra 20 hours a week first. I acknowledge that this problem is not new, but this bill, which Doug Woolerton is going to vote for, and which Gordon Copeland is going to vote for—although I do not think he would if he thought about it more—will increase by five times the number of families trapped in this hopelessness.

I want David Cunliffe to tell me why he thinks some of our lowest-income families should face a marginal tax rate of 101.2 percent. I would like him to tell us why even families on higher incomes than that face the same thing. For those earning under $100,000 with three children, the only income range where they keep more than the Government takes from them is the brief income range from $25,000 to $35,000. Outside that range the Government, under this package, takes more from them than they can keep when they earn an extra dollar.

This is dopey policy. What makes anyone think that our hard-working families are better off when they lose more to the Government when they try to work a bit harder and earn a bit more money? This is a disgrace.

R DOUG WOOLERTON (NZ First) : I am pleased that that speech has finished and that it was only 10 minutes long. From the way Mr Lockwood Smith was getting worked up, I thought he would hurt himself, have a cardiac arrest, and Mr Tau Henare would have to give him mouth-to-mouth resuscitation, and I can assure members that I would not like to see that.

The Hon Dr Lockwood Smith made a technical argument, and in the narrow confines of that technical argument he was, of course, correct. But, in actual fact, these people will be better off. These people whom the Hon Dr Lockwood Smith talks about being locked in a poverty trap at the bottom of the heap, as he called it, were put there many years ago by a National Government. They were put there by the people whom he sits with and represents in Parliament now. They were put there by a National Government under a right-wing experiment of the day.

During the election campaign New Zealand First said that these people should have a pay rise, and we agree with the National Party to the degree that we think a pay rise would have been preferable to this family package assistance. But that was not to be. Labour won the election, and we support its Taxation (Annual Rates and Urgent Measures) Bill because we say those people trying to exist at the bottom of the heap need assistance. We would have preferred that assistance to be a pay increase, and we fought for that in our supply agreement, but, short of that, we will vote for this family package in order to give those people the relief they so badly need. That is why New Zealand First will vote for the bill, and that is why we believe we should support it.

It is true that the bill, which went to the Finance and Expenditure Committee, did not have submissions from the public, but we are prepared to support it in spite of that fact, because, as Mr Clayton Cosgrove said—although he did not use quite these terms—Labour’s bribes beat National’s bribes at the election. Both parties went to work on the student loan scheme, and they both set out to outbid each other. When National talks about the increases in interest rates that have been announced this morning, it is right again. But National does not tell us that if its student loan scheme had been put in place, and if its tax cuts had been put in place, we would have seen exactly the same rise in interest rates, because National’s promises, its bribes, were as unaffordable as the Labour ones—in fact, more so, in our view. I will just say that New Zealand First still believes that wage increases are the way to go on this issue.

One would never know it, but there are three parts to this bill. The first part sets the income tax rates. I am surprised, seeing as National made an election issue out of income tax rates, that it did not make an issue of that.

Hon David Cunliffe: Or stayin the Chamber. Where are they?

R DOUG WOOLERTON: That is right. National did not even mention the income tax rates. Its members were not interested; they are back in their offices talking to each other. So that is the first part of the bill, and National, which had made an issue of that matter, did not even mention it.

The second part is the family package, which I have covered, and the third, of course, is about student loans, where there was a bidding war that Labour won. It was Labour’s promise to get rid of interest on student loans that—in my humble opinion, based on many years of experience in politics—won Labour the election. I do not know what Labour’s view of that is, but I think that is, in fact, what happened. That having happened, that point of view having been accepted, I think it behoves Labour—and we are here to support it—to put that measure in place forthwith, before Christmas, and this bill does that.

There is no question that New Zealand First agrees with the things that Mr Clayton Cosgrove said. Student loans have kept many of our students away from the shores of this country. We want them to be educated. We want them to go to university. We do not deny them or begrudge them an overseas trip. We do not begrudge them that experience. We want them to have that experience. But we want students, after widening their experience and building on their education, to return home so that not only do we have the benefit of their expertise and experience but also the ones we love are back home with their families, where we believe they should be, and assisting our country on to greater wealth. So, to that degree, we agree with this student loan scheme interest write-off.

Another thing that is not mentioned by the National members, nor, indeed, by Labour, is that those loans, nationwide, are building up—they are worth billions and billions of dollars—and they are not being paid off, anyway. So one wonders how much of a gift to students this measure actually is.

National says, again and again, that students in this country will borrow money that is meant for their education, at nil interest, and will spend that money or, indeed, invest it in the bank. I think the National Party was quite proud that there has been one case where a person did that. I do not believe that that loophole has been fully covered off, but it has been covered off to a degree. But even if that were not so, I believe that young people in this country are more responsible than that. Some will do that; some will try to take advantage of the system. I, for one, do not admire people who take advantage of the system. There are people in this country who take advantage of every system that we have in this country, and we see that every day. However, we in New Zealand First do not laud those people. We do not hold them up as an example and say: “Look at these people. This is going to happen right across the country.” [Interruption] No, we do not give them knighthoods, I say to Mr Mark; we certainly do not. We believe that most people and most young people—students, in fact—will treat student loans honestly and make their best endeavours not only to use them as they were meant to be used but then to pay them back as quickly as possible.

NANDOR TANCZOS (Green) : I did not sit on the Finance and Expenditure Committee for the consideration of this bill. Nevertheless, I would like to take the opportunity to speak to it specifically because of the provisions it contains regarding student loans. Student loans and student debt were a key issue for the Green Party at the last election, and at the election before that. It is an issue we take very seriously. We do that because if members take a long-term view of student loans, they will have to conclude that student loan debt is unaffordable both for the individuals who hold it and for our country as a whole.

I have spoken many, many times in this House about the broader social and economic issues and the impact of student loan debt. No mechanism was put in place by the previous National Government, when it introduced the student loan scheme, to measure its impact, or to monitor or review it. Nevertheless, the evidence is growing that there is a significant impact on fertility rates—that people are not having children or are delaying having children as a result of their student loan debt. There is evidence of its effects on migration rates. There is evidence of its effects on urbanisation, particularly of professionals. We know that it affects people’s study and career choices and distorts people’s academic study, and we know that it has significant effects on people’s ability to buy housing. Of course, the interest rate has been a significant driver of all of those effects.

It seems to me that for young people—and old people—who have a student loan debt, the most debilitating thing must be to graduate from their courses of study and face a long future of debt, knowing that they can continue to make payments but that the impact of those payments on reducing their debt will be minimal. I am talking, in particular, not about the high-earning graduates that we hear so much about but about the people who go into socially good careers—our social workers, our nurses, our teachers—who require a tertiary education to practise, but who go into their careers in the knowledge that their rates of pay will be so low that they will make very little impact over a long period of time in reducing their student debt.

Sometimes I wonder why those people even go into those careers at all, given the enormous disincentives that current Government policy provides for them. Of course, they do it because of their conscience, because of their aroha, and because of their concern for the broader social good. That should inspire the members of this House, when we think about the social policy that we enact in this Chamber. For the sake of those people, I am very pleased to see this bill, which enacts parts of the agreement between the Government and the Greens, and of the agreements between the Government and other parties. We see it as moving in the direction of Green Party policy around tertiary education.

Some people have opposed this measure, and the National Party has made much of that because it thinks it will lead to students maxing out their student loans, so they can invest the money and make a profit. Fortunately, not everyone thinks like a National Party spokesperson on finance. Students take loans because they have no choice. They have to pay their fees, their court costs, their rent, their power bill—

Ron Mark: Court costs?

NANDOR TANCZOS: Sorry, I meant course costs. Excuse me! Students also have to eat. For students aged under 25 years there is no support for living costs, and they have to borrow just to pay for their living costs. In 1999, when the Government and the Greens passed legislation to make student loans interest-free for the period of study, the National Party said that all the students would rush to take out loans, so they could invest the money and make profits. Of course, the reality is that that just did not happen. The take-up rate barely moved. I think we can take that as a good indication.

Others oppose the bill because they say that it is unfair on those who have already paid off their loans in the past. My comment would be to say it was good on them for being able to afford to do that. I congratulate them on having done that—absolutely. But my concern is for those who cannot afford to pay off their loans: those who do not have the high-earning careers, and who are doing things like social work. I have been around the country—[Interruption] I do not know whether Ann Tolley has been around the country—and I have spoken to those people about the serious hardships that they face because they have chosen a career that is for the good of our country, not just for the good of their own bank account. It seems to me that it is not a valid argument to say that we should maintain an injustice because to remove it would be unfair to those who had suffered in the past. That cannot be an argument for maintaining the onerous interest rates on student loan debt.

Of course the bill, as well as removing interest on student loans while a person stays in Aotearoa, also raises the parental income thresholds for eligibility for student allowances for under-25-year-olds. The Green Party supports that. The Greens actually support a universal student living allowance. We believe full-time students should be paid a living allowance at the level of the unemployment benefit. We see no reason why people who enter into tertiary education should be the only people who are considered to be financially dependent on their parents until they are aged 25 years, despite the obvious evidence to the contrary for many of those students. However, although we support a universal student allowance, we recognise that this bill is a step in the right direction.

The eligibility for student allowances was the subject of much discussion between the Green Party and the Government after the election.

In fact, I remember when, at a New Zealand University Students Association conference, representatives of a number of parties signed a pledge to the association, stating that they would support an extended eligibility for the student allowance. It is good to see that Parliament is in the process of enacting that.

There is an argument that raising the parental income thresholds is not the right approach in terms of making steps towards a universal student allowance. Rather than increasing the parental income thresholds it would be better to lower the age limit, because, in principle, that addresses the age discrimination aspect. By raising the parental income thresholds, we are reinforcing the principle that the age of 25 is a valid and legitimate basis for discrimination, and we do not believe that. Nevertheless, although we think in principle that lowering the age limit might have been a better approach, we still support raising the parental income thresholds.

The Green Party remains absolutely committed to a free tertiary education system and to a universal student allowance, as I have said. We remain committed to capping and reducing tertiary education fees. Of course, that really raises questions about the levels of investment in tertiary education and the priorities around where that money is being spent. We also retain our commitment to a loan write-off scheme for historic debt. We say that if people stay in the country, we should be writing off their student debt year for year. If someone stays in the country and works—paid or unpaid—for every year that person stays we should write off the debt accumulated in a year of study. Nevertheless, we recognise that we are not the Government. We are abstaining on confidence and supply. We have an agreement with the Government on various areas, and this is one that we have discussed with it. This measure is a small step in the right direction, and one that we are pleased to support in its passage through the House.

Dr PITA SHARPLES (Co-Leader—Māori Party) : When my colleague Tariana Turia spoke at the first reading of this bill, she talked about a war that is being waged on the poor. We hoped that, in referring this bill to the Finance and Expenditure Committee, consideration would be given to the questions we raised about how to ensure the equitable distribution of wealth. We believe that it should not have to rely on a welfare benefit disguised as a family assistance package. It is what it is.

Although we are supportive of family incomes being supplemented in the Working for Families package, we would much prefer that the supplement be in take-home pay, rather than a welfare handout. We would rather see the smile on the face of a worker because it was take-home pay than that worker being seduced by a welfare payment. Which would the members of this House prefer?

If an individual with a gross salary of $32,000 who pays tax on that salary of $6,240 then receives $1,118 in family assistance, how much does it cost to get that $1,118 to that family? That is not a riddle, much as it may appear so to many economists and political commentators. Those are real questions that real families are asking us. Would it not be better for a family to pay a reduced amount of tax—in this case, $5,102 rather than $6,240? Given that bureaucracy is absent from the second scenario, what is the saving to this country? I am not an economist or an accountant, but it seems crazy to me that money is taken off people, then costs are incurred in order to give some of it back. It defies logic.

In our minds, pride in being fairly rewarded for work is more satisfying to people than a handout from a patronising, paternalistic State machine and the expectation that gratitude can be signalled when the next ballot box needs to be filled—because, believe you me, workers will be reminded at the next election of the hand that fed them. I need to remind the House that Māori have always questioned the handout mentality. I recollect a song of protest by one of my Ngāti Porou whanaunga, Tuini Ngāwai, who in the 1950s wrote a song of protest at the introduction of a universal benefit. She said at that time: “He patu tikanga, he patu mahara, he patu mauri.”—that the benefit would undermine our customs of self-help, our concern for each other, and the very essence of our life force.

Jill Pettis: But did she take it?

Dr PITA SHARPLES: No, she did not. When I look around at some of our people, I can see the wisdom of the words of Tuini Ngāwai. She warned against dependency, and she would turn in her grave if she knew that what she warned against has now happened. Let us not assign the coming generations to that which currently afflicts many of us. I know there needs to be a safety net, but it should not be a net that entangles the life essence of a people. We need to construct mechanisms and adopt philosophies that ensure that those in the net can see a way of getting out of it. This does not mean severing the net, as the Working for Families package does, or introducing punitive penalties, as some political commentators might suggest. The Working for Families package is targeted relief, which offers no poverty relief for benefit-dependent families. Core benefit levels have not changed since the 1991 benefit cuts, apart from inflationary adjustments.

A better distribution of taxation might be found that allows all low-income families to receive targeted tax relief without discrimination between those in paid work and those who are not. The Māori Party finds itself in an unenviable position. Although we would want to support this bill for working families, we also know that there are many other families who will not get the benefits of increased resourcing. We have applauded the bill for introducing additional targeted tax relief to 160,000 working families, yet we also know that it is an irony that the Working for Families package is in itself a dressed-up welfare payment. It has the potential to create a nation of welfare dependants.

I need to ask the Government what action it is taking, or planning, to introduce specifically to address the policy deficiencies of the Working for Families package, which discriminates against parents who are not in paid work. This House must not forget the 250,000 poorest children in Aotearoa. This House must also not forget the recent findings of the United Nations expert on human rights of indigenous peoples that there are in fact significant disparities between Māori and Pākehā, with particular concern for “the situation of Māori children in poverty and the problems facing sole parent households”. It is our obligation and responsibility as members of Parliament to look carefully at the results of the September 2005 household labour force survey, which reported a 9.1 percent unemployment rate for Māori, and to ask ourselves why the rate is so high—more than four times the Pākehā rate of 2.2 percent.

The Māori Party will continue raising this issue until it is addressed. We will not desert the poor. It is not they who have created poverty. Indeed, they do not have an investment in being poor. So if the poor do not have an investment in poverty, who does? The Working for Families package does not sufficiently address poverty or child poverty in Aotearoa. This package, along with the Government’s single, core benefit system, roll out the expectation that all beneficiaries should be in, or moving towards, paid work—often low-paid—regardless of being full-time parents or living in areas of job shortages. The Minister of Māori Affairs has for some years now spoken about his concern for the working poor. We look forward to working with him and the Government to address this issue, which is of concern to all of us. Nā reira Parekura Horomia tēnā koe, anei mātou hei āwhina i a koe. Mēnā kāore e taea e koe te kōrero, kai te pai mā mātou tērā.

[So greetings to you Parekura Horomia, we are here to help you. If you are not able to address it, that is fine, we will attend to it.]

Another of the key issues in the taxation bill that have concerned us is the implication around the student loan scheme of 1992. We are concerned about the disproportionately high levels of student debt incurred by Māori, and the limited capacity of Māori to repay their student loans—often a capacity outside their control, as I will relate. In September this year Te Mana Ākonga, the national Māori tertiary students association, reported that the percentage of debt belonging to Māori students showed that Māori student debt had skyrocketed above $1.5 billion. That figure of $1.5 billion is more than the fiscal envelope, the capped Treaty of Waitangi pūtea still existing today. Of those Māori students who studied in 1997, 18 percent have fully repaid their loans and a further 28 percent had repaid some of their loans by 2003. That compares with 30 percent and 32 percent respectively for non-Māori students. That may look as if Māori are reluctant to pay their debts—a deficit approach would blame the debtor.

A keener analysis shows that one reason for people making little or no progress with repayment is low income. The high level of non-repayment among Māori who studied for level 1 to 3 certificates, for example, is attributed to the notably lower earning capacity of those students. Average incomes for that group are just above the repayment threshold. How do we explain the fact that the average income for Māori with level 1 to 3 certificates is notably lower than that for non-Māori with the same level of qualification? What does one think Māori would be thinking when they discover this? Is there some systemic bias within the working environment? Is this one standard for all?

The Māori Party does not have any interest in attacking individuals whom others may think are responsible, or political parties that others may think are responsible. What the Māori Party is interested in is eliminating structural bias, which permeates our society. Let us as members of this House look at this together. Let us join together to ensure solutions that will fit for this nation. Whenever any of us here apply for a job we talk about a fair day’s pay for a fair day’s work. We talk about equity, we talk about a good deal, yet what I have referred to in those statistics from August 2005 demonstrates that that is not always the case for some of our citizens.

We are acutely aware that the Working for Families package is a flawed package, a programme to strengthen political dependency on the minority Labour Government. However, despite the dangers of dependency, we will be supporting this bill in the interests of the 160,000 working families and the students saddled with debt. We remind the Government, however, that we will not forsake the poor, and neither should it. We will continue to raise the issue of policy neglect, and to join with like minds to fight the injustice of poverty.

GORDON COPELAND (United Future) : I just want to make a few brief comments on four aspects of the Taxation (Annual Rates and Urgent Measures) Bill. Firstly, because I am continuing straight on from Dr Pita Sharples, let me just reiterate a couple of things about the 2004 Working for Families package—what we might call Mark I. That measure cuts in in 2005, in 2006, and then in 2007. I just remind the member that in both 2005 and 2007, beneficiary families will be the recipients of extra money under that package. It was the National Party that, in its policy in the election campaign said it would not give those families the extra $10 per week per child that is due to kick in on 1 April 2007. So in a very real sense it is probably just as well that National is not in a position to go ahead and implement that rather draconian measure.

The second thing I want to refer to, following on from the remarks made by Doug Woolerton, is the policy of not paying interest on student loans, announced as something of a surprise, a rabbit out of the hat, by the Labour Party during the election campaign. When I heard the policy announcement, my thoughts were as follows. Firstly, I thought it was a bad policy, surrounded by a huge moral hazard. Secondly, I thought it was devilishly cunning and would probably have a fantastic payback for the Labour Party in the election campaign. Thirdly, I thought it would bleed support amongst students, in respect of the Green Party, to Labour. I think Nandor Tanczos will bear out my point. I think the Greens, at that stage, had roughly a 12 percent share of the student vote in polls. I said to my wife that if she waited, she would see the student vote shift quickly from the Greens to Labour. That was borne out.

The ramifications of Labour’s policy announcement were quite profound. I think Doug Woolerton is probably right: it probably was the deciding factor that meant that Labour, by the narrowest of margins as Mike Williams said, having dodged the bullet, found itself back in this Parliament as the largest party. It also probably meant, in a funny kind of way, that Labour no longer had the numbers to form a coalition Government with the Greens. One might say it was a bit of a mixed blessing from that point of view.

The next thing I want to talk about briefly is the wine equalisation tax rebate. Clayton Cosgrove, who is in the House at the moment, was part of the Finance and Expenditure Committee delegation that went to Canberra last year, shortly after the Australian Government announced it was going to introduce a tax rebate for qualifying Australian winegrowers. We went across as a select committee, and said that was not fair. We asked whether Australia had heard of a thing called Closer Economic Relations, and of a commitment by both our Governments to the harmonisation of taxation matters, trans-Tasman. We said that Australia’s introduction of a rebate in favour of its winegrowers would hurt Kiwi winegrowers.

One of the amazing things about this bill is that that has been rectified in the most amazing way. This bill now provides that qualifying New Zealand winegrowers who meet exactly the same qualifications as their equivalents across the Tasman can go to our Inland Revenue Department, apply for the Australian winegrower tax rebate, and get the rebate paid to them in Australian dollars. So this is a kind of unique win-win situation. In our tax laws we are legislating today for the Australian Government to pay money across to New Zealand winegrowers. I think that is tremendously good news, particularly given the history of things like underarm bowling and the latest incident about the Rugby World Cup, when as we know, Australia failed to support our bid. Is it not amazing that the National Party intends to vote against New Zealand winegrowers receiving a cash payment from the Australian Government, as does the ACT party and the Māori Party? All these parties are against the Kiwi winegrower receiving a cheque from the Aussie Government. I find that to be quite amazing.

The last thing I want to mention is the family tax credit. There is a little paragraph inserted in the select committee’s report back to this Parliament. I will read it out, because I thought that Dr Lockwood Smith was somewhat uncharitable in his comments about me in relation to this matter when he spoke a few minutes ago. The select committee report states: “During our consideration of the bill, advice was sought from officials concerning the continuing high effective marginal tax rates which flow from the Family Tax Credit. Some of us therefore request that this matter be considered by the Government as part of its ongoing policy review.” I wrote those words personally, and they were included in the select committee’s report on my suggestion and by way of support for the very valid point that Dr Lockwood Smith made. I think he was somewhat uncharitable in then turning round and criticising me for voting for this bill, when I am the person who brought that matter to the attention of the Parliament. The reason I did that is that I have heard Dr Lockwood Smith banging on about the issue for some time. He is dead right—I agree with his point entirely.

The family tax credit was introduced into the tax laws of this country in 1986 by Roger Douglas and Trevor de Cleene. That is its point of origin. Although those guys did some good things—for example, introducing GST, which I think was a fantastic move for the country—they also got some things badly wrong, and this is one of them. It is patently ridiculous, as Dr Lockwood Smith pointed out to the Parliament, for very, very low-income working families to have a marginal tax rate, because of the way the family tax credit works, of more than 100 percent. That is crazy. Therefore, I want to draw the House’s attention, and particularly the attention of the Minister for Social Development and Employment and of the Minister of Revenue, the Hon Peter Dunne, to the committee’s recommendation that the Government reconsider its policy. As Dr Smith mentioned, 4,600 families are now the very, very dubious recipients of the family tax credit, given its perverse incentives. I would like to see that straightened out as a matter of priority. I would like, for example, to suggest to the Government that an adjustment to that be made in the 2006 Budget.

With those few words, I continue to signal that United Future will vote for this bill. To those who want to dispute whether we should or should not do that, I simply remind them that we have had an election and the people have spoken.

HEATHER ROY (Deputy Leader—ACT) : I rise to speak to the second reading of the Taxation (Annual Rates and Urgent Measures) Bill. I do so, very proudly, to oppose the bill because it is the right thing to do. I feel sorry for the previous speaker, Mr Gordon Copeland, because he knows that opposing this bill is the right thing to do, too. The only good reason he could find to support this bill is that the Australians have agreed to give us some money for our wine. On every other issue, he is supporting it because United Future members have sold their souls to support this Labour Government.

This bill is not really about the Australians giving us some money for our wine. It is about three very important issues. Firstly, this bill allows for enhancements to the Working for Families package; secondly, it allows for full interest write-off for student loan borrowers; and, thirdly, it sets the annual income tax rates for the 2005-06 tax year, which are the same as those for the current 2004-05 year. ACT is opposed to all of those measures, as is, I believe, the National Party. I think Gordon Copeland actually is opposed to all of them too, despite the fact that he will vote in favour of them. ACT is opposed to those measures. It is opposed to turning large numbers of New Zealand families into State beneficiaries. As Dr Pita Sharples put it so well, we are opposed to welfare in the guise of family assistance. ACT is opposed to writing off student loan interest, which will give some members of our society special treatment while other taxpayers foot the bill. The incentives are completely wrong. ACT is opposed to maintaining income tax rates at their present level when the Government has nearly an $8 billion surplus.

We should not forget that the people have spoken. Sixty percent of the people of New Zealand voted for parties that were promoting tax cuts of one sort or another. It is shameful that this bill made it through the Finance and Expenditure Committee in approximately 2 hours, with no public submissions. These issues are of great importance to the future of our country, and giving them such cursory examination shows the contempt that the Government and its supporters have for the value of what New Zealanders believe in.

Let us come first of all to the Working for Families package. Before the election, the introduction of the Working for Families package turned an extra 150,000 New Zealand families into State beneficiaries—people who are dependent on the Government for their income. Now, with the enhancement of the Working for Families package, an extra 300,000 New Zealand families will be dependent on the Government for part of their income. An extra 300,000 families are now State beneficiaries. Is that something to be proud of, as the Labour, New Zealand First, and United Future members promote? No. We want—as the Māori Party members articulated—New Zealanders to be able to stand on their own two feet. The way to do that is by taking some of that $8 billion surplus and giving New Zealand workers and families the tax cuts they deserve. If this Government really wanted to help families, that is exactly what it would have done. It would have taken this opportunity to cut the personal tax rates of New Zealand families.

Before the election, Michael Cullen was very vocal about tax cuts. He was particularly scathing about the National Party and ACT wanting to reduce the taxation rates—in particular, the personal taxation rates. He said: “Oh no, we can’t have tax cuts—they would be inflationary.” Well, let us look at the other things that cause inflation in this country. I ask Dr Cullen, who thinks he is always right, about Government expenditure. Let me tell members about the increase in Government expenditure. Over the last 6 years Government expenditure has increased by 34.5 percent—and Dr Cullen does not seem to think that is inflationary. Let us go back to the tax cuts. Tax cuts may well be inflationary, but only if that money is spent. If some of it is saved, that is not inflationary. He has looked at things from a very one-eyed, biased viewpoint.

Let us now look at the student loan scheme. The provisions in this bill will encourage students to take out bigger loans; will encourage more students to take out loans, including those students who would not have done so beforehand because they did not need a loan; and will mean that loans are repaid more slowly. To be honest, students who will not take advantage of the provisions are mad. Why would they not? Treasury had a lot to say about the issue of student loans. Dr Cullen said that they would cost us only $300 million. It is easy to spend somebody else’s money, is it not? With the flick of a hand, off it goes. Treasury said that we should look at the policy carefully, and that it was more likely to cost the country around $900 million. But Dr Cullen seems not to like Treasury very much. He talks about philosophical burps and ideological burps. He thinks that Treasury’s advice is not worth listening to. It was the same when he received the McLeod report in 2000: he threw it across the room and said that he had just paid $1 million for ACT’s tax policy. But he is not good at taking good advice. No, Dr Cullen knows best, and he just dismisses the experts with the flick of a hand.

Mr Woolerton of New Zealand First talked about encouraging New Zealanders to come home. The best way to encourage our young New Zealanders to come home is to give them reasons to come here, and tax cuts are those reasons. Why would people come back to New Zealand when they are earning good salaries overseas, where taxation rates are lower? If we want them to come back here, we cannot rely any longer on lifestyle alone to attract them back. It might have been enough in the past, when New Zealand was on a level playing field with the rest of the world, but that is no longer the case. This Government has made that situation much, much worse. The way to encourage our young New Zealanders home is with lower taxes.

I come to the third reason that this bill is before Parliament: the annual income tax rates for the 2005-06 year, which will remain unchanged. The Government has an $8 billion surplus. The country is awash with cash because Dr Cullen cannot balance his books. He has charged everybody far too much and we have a surplus. We should be giving back that money to the people it belonged to in the first place. We should be giving it back to the New Zealand families, the workers of New Zealand who earned it in the first place, and we should be doing that in the form of tax cuts. During the election campaign ACT campaigned hard on tax cuts. The country can afford them. We believe that top tax rates should come down to 25c in the dollar, with a second tax rate of 19c in the dollar for those earning under $38,000. That is fair, reasonable, and the way to help New Zealand families. We should be helping New Zealand families to help themselves, not turning them into State beneficiaries, and not writing off loan interest for students and giving them special treatment. I have a son going off to university next year and I do not think—[Interruption] I am not. He is off to university and he would be mad not to take advantage of this new system.

But, most important, 63 percent of New Zealanders voted for parties that promoted tax cuts. They have been denied that because of the way the Government has been put together, and that is shameful. ACT will be opposing this bill for the very reasons I have outlined.

GEORGINA BEYER (Labour) : The contribution from the member who has just resumed her seat really betrays the bitterness of that member, who finds herself the handmaiden to Rodney Hide—full of whingeing and talking down the very good reasons why this bill should be supported in its second reading. Frankly, this bill is about assisting New Zealanders in the best way. That was certainly evidenced by the result of the election—a result that that member most certainly did not benefit from as well as she might have thought she would. The party the member belongs to went from seven members down to two, and she now finds herself in a party of two.

The majority of New Zealanders overwhelmingly supported at least two of the key issues explained in this particular bill, one of which gives assistance to New Zealand families through the Working for Families package. As from 1 April next year the average size of the extra family assistance is expected to be about $50 a week. That amount, added to increases that were already scheduled to come into effect on 1 April next year, will make a significant difference to family income. It will be as much as $100 extra a week in some cases. If the National Party members had been on the Government benches at precisely that time next year—1 April—those members would have cut $10 a week from the lowest income earners in this country, by dealing with their annual increases. Potentially, that would have cut the income of many thousands of New Zealanders. That is quite contrary to what is in this bill, which is positive about New Zealand families.

It is just like the Government’s student loan interest repayment pledge to wipe off the interest, which will also be progressed in this bill. We have increased the participation rate in tertiary education in this country. Along with financial and human resources, we have now also addressed the legacy that the party that sits across the way in Opposition in this House had set in motion and that has since indebted many thousands of New Zealanders. Those young people are the future of our country, and since this Government has come into power it has always pledged to address the awful legacy of student loans that was left behind by the previous National Government. We will invest in our future New Zealanders. They will in turn reinvest, by their good will and loyalty to this country, by returning here to give of themselves in order to enhance New Zealand.

I certainly support this bill.

PANSY WONG (National) : It is quite sad, because I used to enjoy Georgina Beyer’s speeches; she was an outspoken MP who exercised her own independent mind, but now it is so sad to have to sit here and listen to her read out some prepared speech notes, which were no doubt dictated by the Hon Dr Michael Cullen.

In the House this week the Hon David Benson-Pope is not the only one who, by selectively leaking the police investigation results to the media, has been economical with the truth. This truth deficiency syndrome is now becoming a hallmark of the minority Labour Government. One week out from the election, the Hon Dr Michael Cullen had to be ordered by the Ombudsman to release the true costing detail of the interest-free student loan policy, which is the subject of this legislation. The abuse of the parliamentary process is equally breathtaking in this instance. This legislation in effect will commit more than $2 billion worth of taxpayers’ money. Can people guess how long the Finance and Expenditure Committee had to spend on examining this legislation, which will cost the country $2 billion? It had 2 hours—and the Government is not even inviting public submissions.

We were told by Labour MPs like Clayton Cosgrove, who was so confident, that these measures are popular with the public. But that begs the question of why the Government would not open up this legislation so all those supporters could swarm and crowd to the select committee to tell it how much they will support the Labour Government.

Hon Clayton Cosgrove: Read the bill.

PANSY WONG: Clayton Cosgrove is still in denial. I think the only reason that Labour members are trying to rush this legislation through is that they want to help the Hon Dr Michael Cullen to be Father Christmas to the tertiary students and the so-called working families, but he will be Scrooge to the rest of New Zealanders.

Well, it did not work, because we have very sensible and intelligent university students. The New Zealand University Students Association co-president Andrew Kirton said that the interest-free student loan policy will make it easier for students to borrow more, and that the Government has made it easier for institutions to charge more. So Clayton Cosgrove should listen: it is not just the National Party that is saying that students will be borrowing more; the co-president of the University Students Association concurs with that opinion. Mr Kirton reckoned that universities, in particular, appeared to be setting fees on the perceived ability of students to pay, not on the true cost of those courses. Mr Kirton went on to say that there was an element of sour grapes, because the policy was at the universities’ expense and there was retaliation by the universities in their fee setting.

His concern is very valid, because four out of the seven universities that have set fees have adopted the maximum increase allowed. In fact, Canterbury University set its fees and has now forecast a surplus of $11.4 million. Massey University, the New Zealand College of Education, in Christchurch, and the Dunedin College of Teachers Education have applied to the Tertiary Education Commission to increase their fees by up to 10 percent. So we can see the irony of this policy. On the one hand, it will initially cost taxpayers $2 billion, and then about $400 million a year will go towards the policy. On the other hand, it will drive up student fees so that students will borrow more, and then the taxpayer will front up further. The policy is simply an election bribe; there is no other way to describe it.

One of the biggest problems that the Labour Government refuses to address regarding student loans is the lowering of the means-testing threshold. The number of students receiving a student allowance is fast decreasing, and that is one of the reasons why students find it more necessary to borrow. So if Labour MPs are serious about helping those students, they should address the issue of the student allowance.

The second issue this legislation is trying to address is extending the benefit for working families, which, in effect, would drive up the marginal tax rate of those families to 60 percent. That is a real disincentive for people to earn more income. Labour is fast leading the country backwards, because in the 1970s New Zealand had the highest marginal tax rate of 66 percent and a two-digit mortgage interest rate. After the Reserve Bank’s increase in the cash rate today, we can see that Labour is fast leading New Zealand backwards to those “good old days” with double-digit mortgage interest rates and high marginal tax rates.

The last issue I want to address is about this legislation reconfirming the existing income tax rate, where the Government wants to punish 20 percent of New Zealand’s income earners with a tax rate of 39c in the dollar. We can think about where that tax money is going, and I will use just one Government department to illustrate that. This morning the Commerce Committee examined last year’s financial results of the Ministry of Economic Development. That is a Government department, together with New Zealand Trade and Enterprise, that would have been allocated over $100 million of taxpayers’ money. But a senior manager, who appeared in front of the committee this morning, admitted that there is little that the Government can do to actually transform New Zealand’s economy into the so-called high-value economy about which this Labour Government has been banging the drums for the last 6 years.

We were told in a report that came out from the New Zealand Institute that, sadly, New Zealand has not kept pace with transforming its economy into one of so-called high-value exports. Exports are relatively low tech, and while there has been rapid growth in some sectors, it has been from a low base, like information technology. Since 1990 New Zealand has lost market share in categories including meat, which makes up 57 percent of exports. Indeed, 42 percent of New Zealand’s exports are in slow-growing categories.

The solution is obvious. All members of the business community and all the thinkers of this nation know that cutting tax to encourage people, cutting red tape, and changing the attitude of envy are the way to go. I conclude by saying that this week, while we are celebrating Peter Jackson’s success, let us not forget he is not just an artist—he is an entrepreneur and a successful business person. So let us celebrate business success by giving businesses the tax cuts they so deserve.

SHANE JONES (Labour) : I rise to support this bill, with a few brief words. Unlike the speeches of the previous speakers, the relationship is not inverse. Firstly, this bill travelled through the Finance and Expenditure Committee. Secondly, it enjoyed its time there, because we did not need to take unnecessary submissions. We knew that the largest consultation process had been entered into, and it was called a general election. This policy achieved inordinately high levels of support. It is going to turn a corner. It is going to take an approach where this assistance turns into longstanding human capital, because we have chosen a visionary road where the benefits and the wealth-creating capacities of our students will be enhanced and where they will not be burdened with unnecessarily high levels of debt, as opposed to an approach based on short-term consumption, which is what would have happened had members on the other side—perish the thought—found themselves over on these benches. But, rest assured, that will not be so for a long time to come.

Not only that—while this policy supports the ambitions of students, it also expands the capacities of parents to bring more cash weekly into the household, to buy shoes, to make school trips, and to offer something that has a higher level of value within those people than would have been the case had the dear members from the Opposition supported their murky friends.

So there have been two great outcomes. The third thing, of course, is that it introduces an improvement to the scale in terms of the tax. We see tax gathering as an investment in civil society, in the key institutions and infrastructure that will cause the economy and society to remain not only cohesive but also upwardly mobile and very powerful. Long-winded speeches from the other side of the House do not escape the fact that they have a very short contribution, fortunately, for the nation.

ANNE TOLLEY (National—East Coast) : We are here today considering the Statutes Amendment Bill (No 5) and two Supplementary Order Papers. One of those Supplementary Order Papers splits the bill. I do not really have too much of a problem with that. The other, Supplementary Order Paper 3, addresses the Child Support Act 1991. When we look at the Bills Digest explanation of what this Supplementary Order Paper is all about—

The CHAIRPERSON (Hon Clem Simich): I am sorry to interrupt the member, but in this debate we must confine ourselves to the part we are dealing with and only to that part. Part 1 deals with animal welfare.

ANNE TOLLEY: I will continue, talking about animal welfare. Part 1 amends the Animal Welfare Act by substituting a new section that extends the time for the laying of an information in relation to offences against the Act from 1 year to 2 years, if the offence was committed on or after the date on which the new section, section 167, comes into force. We here on the National Party benches do not actually have a great deal of problem with that. The Ministry of Agriculture and Forestry has said it has difficulties in prosecuting under the Act because it is unable to lay the relevant information within the 1-year time period. Representing the East Coast, which is, of course, a rural area, I have had representations from people telling me of those difficulties and asking us to support this part of bill, and I do so on behalf of the National Party.

• Part 1 agreed to.

CHRIS AUCHINVOLE (National) : I stand to support the Statutes Amendment Bill (No 5), which provides for—as I read in the commentary on the bill—a number of non-controversial amendments to a number of existing Acts. The majority of the statutes that are amended will have only minor changes or drafting amendments made to them, but some statutes included in the main provisions of the bill will have significant amendments made to them. It is pleasing to be able to use this opportunity to address the Committee on a non-controversial issue. I am grateful to the whip for having such an opportunity. I have read Supplementary Order Papers 3 and 4 and the Bills Digest, and I have read the bill. I have no concerns about the changes proposed, from my study of them.

The fact that none of the items is controversial, however, does not mean they are of no significance. I am acutely conscious that the drafting and making of laws, statutes, and regulations are of great significance, particularly to those who have to live by them, live within them, or impose or enforce them. Many would say, and do say, that we already live in an over-regulated society, and that is a view I share.

Shane Jones: Oh!

CHRIS AUCHINVOLE: It is; it is. But from that point of view, I have searched the bill and have come away feeling comfortable that, as far as I can assess, it is a worthy bill that seeks to make sensible provision—for example, to change such things as the Animal Welfare Act, which the previous speaker mentioned, by allowing for an extension of time for the proper investigation of cases.

However, the fact that the bill does not contain controversy nevertheless leaves me with the very clear impression, having been a member since September, that controversy is often used in debate to cover what should be a clear explanation in answer to questions. I have often been surprised at the extent to which that has been carried out, particularly in question time, and I am delighted to be a member of a party that does not engage in such deceptive and desperate techniques.

I support the bill, and I am happy to support the changes it brings to the various Acts that it affects.

• Part 2 agreed to.

ANNE TOLLEY (National—East Coast) : I wish to speak on Supplementary Order Paper 3, which addresses the Child Support Act and the changes proposed. When I look at the proposed Supplementary Order Paper, I have to ask the Minister, the Hon Clayton Cosgrove, why we are dealing with this issue at this stage in a Supplementary Order Paper when an amendment to the Child Support Act was sent to a select committee just last week, with no time limit given, so we have the usual 6 months in which to deal with it. If these issues were so urgent, why were they not included in the bill sent to the select committee, with a time limit, in order for the normal processes to be observed?

When we look at the proposed changes, we see that the Minister is talking about clarifying and correcting. So on the one hand we have an incompetent Government not able to put through legislation that does not require clarifying or correcting, but also we have a lazy Government that is determined to avoid the normal democratic processes by bringing in a Supplementary Order Paper to make changes to a bill that is already going through the democratic process at the select committee, thereby avoiding public scrutiny and public input into those changes. The public expected more from this Government despite the fact that its members spent the whole election campaign debating National Party policies. They have been back-pedalling ever since, and we have had Minister after Minister, obviously not on top of his or her portfolio, answering questions about incompetence in those portfolios and blaming staff when things go wrong. Here we have the classic example of a lazy and incompetent Minister trying to shove through alterations that could have been dealt with, if he had just got his organisation in order, by putting in place a sensible alteration through the existing processes.

• New Part 3AA agreed to.

DAVID BENNETT (National—Hamilton East) : I thank my esteemed colleague the list MP from the West Coast for his very good introduction to this session this afternoon. He showed an articulate grasp of this legislation, and it is very good to follow in his great footsteps. We are looking at Part 7, and specifically at the Dairy Industry Restructuring Act, which is a very important piece of work for the Waikato and the major industry in New Zealand, the dairy industry.

Although Chris Auchinvole mentioned that we are in an environment where we are talking about legislation that does not have a major procedural impact, as a new member who has come into this Parliament I have seen that sometimes the most obvious parts of the session, such as question time, do not relate to major procedural elements. It is often a matter of being able to get one’s way out of questions and answers. That approach by the Government has been very disappointing when valid questions have been asked. We hope the Government will take a better interest in this country, its people, and the legislation that it can use to govern us, and we hope that it will respond to the questions that are asked in such a valid and conciliatory way by the Opposition. [Interruption]

Chris Auchinvole: Keep going, David. Don’t take any notice of them.

DAVID BENNETT: No, we will not take any notice of that. It was interesting, in the last debate, to hear Labour members talk about student loans. Labour actually destroyed the Green vote by taking on that policy.

Talking about green issues, I say the Ministry of Agriculture and Forestry officials actually initiated the amendment to the legislation that is in this part. Although the amendment is very technical in nature, it was designed to clear up a potential interpretation issue. Fonterra has no real concerns about the amendment, which should provide greater certainty as to whether Fonterra is able to issue redeemable preference shares. But there was the potential that section 104 of the Act, as initially worded, did not reflect the legislative intention and would require Fonterra to pay out for surrendered shares in cash, unless a single shareholding that was sought be surrendered exceeded 5 percent. So Fonterra, in dealing with the possibility that it could be incurring a payout of that extent, is quite happy with the proposed amendment.

The restructuring that resulted in the emergence of Fonterra was undertaken in response to the Dairy Industry Restructuring Act, and that was one of the major things that the Government did in relation to the dairy industry. Although in many cases the Act provided what farmers actually wanted, it did so in a very regulatory fashion. It is an example of how Governments, if they try to regulate too much, can over-regulate or miss certain opportunities. With regard to Fonterra one sees that in other ways, such as its requirement to sell off certain parts of production. Companies such as Open Country Cheese have taken advantage of those opportunities. Those examples show that a Government that makes too much legislation, or that gets it incorrect, can cause problems later on. It is important to have legislation that is flexible and not too difficult for companies to be able to interpret and use in a market economy.

We look forward to this amendment bill being passed, so that the company, the shareholders, and the hard-working people of New Zealand who pay so much tax to this Government will actually get representation and receive a dividend for their hard work and the money they pay to this Parliament.

• Part 7 agreed to.

RON MARK (NZ First) : I rise to support this part of the Statutes Amendment Bill (No 5), and draw the Committee’s attention specifically to clause 27, which includes new section 96A. This section relates to the Nelson Rifle Prize Fund, which is being abolished, with the Public Trust ceasing to administer the fund, and with all money being handed over to the cadet forces. The terms and conditions around which the cadet forces are permitted to administer those funds are clearly stated in new section 96A, and they relate to the promotion of firearm safety in the Nelson region, the provision of firearm training, and the provision of monetary or other prizes for national shooting competitions held in the Nelson region.

I take this opportunity to focus on why this is good and what it will do. I have never heard anyone in the House stand up and laud or applaud the work done by the parents and the community support teams that sit behind the New Zealand cadet forces. We go back to days that you will probably remember, Mr Chairperson, when the cadet forces were an integral part of our schools; indeed, many military people gained their first exposure to military service in the cadet forces at schools. Of course, that became politically incorrect, and I think it took a National Government to abolish them, to wind them down, and to see the cadet forces become a nonentity. But they still survive. In my area of Christchurch and Canterbury I have attended many parades as a member of Parliament. In fact, I attended one just last week; it was the end-of-year parade and prize-giving at which prizes were given out to the Christchurch unit of the cadet forces for, among other things, shooting competitions.

I take this opportunity to say that the cadet forces are valuable. From the cadet forces come potential recruits into our mainstream military; it does not matter whether they are Army, Navy, or Air Force—they go there. Many young people who experience the cadet forces go on to serve in the police force. We as a Parliament should note that we need to do more for the cadet forces. This section is good because it will help the Nelson cadet unit. I have already had discussions with the Minister of Defence, Phil Goff, who has also expressed his view that the cadet forces are valuable, and I have also had discussions with the Secretary of Defence and the Chief of Defence Force. I look forward to progressing over the next 3 years more support, through the Government, for the cadet forces.

I think it is good that young men and women are exposed, in a controlled manner, to firearms and firearms training. The more people who are exposed to good firearms training, the less we build up fears and unjust views of what firearms are and are not capable of. Enabling people to learn mountain safety and to hunt safely, in their private lives, and to compete both locally and nationally in military shooting events is all good stuff. It helps to promote greater self-discipline, and it helps to promote greater awareness. From that, those young men and women go out and teach those skills to other New Zealanders who are of the same age—some of them are simply family members, and others are members of the cadet forces themselves.

At the cadet prize-giving in Christchurch at the weekend a young lady, Staff Sergeant Nation, took away a whole bunch of prizes. She is a fine example. She is going forward, I think, into the Navy of all things. Much of what she has learnt—the discipline and the skills that she has been able to pass on to other cadet NCOs and other cadets—has been specifically focused around firearms safety and firearms use.

The cadet forces are a very good starting point for our young people. I just wish more young people had the opportunity to serve in the cadet forces. One thing I lament—and hope it will change—is that down in the South Island there are very few brown faces involved; not many Māori are participating. On the contrary, in the North Island there is a very large contingent of young Māori entering the cadet forces, as seen at a parade attended by Brigadier Whiting and shown on Te Karere last week. The cadet forces are a good place to acquire discipline, to acquire focus, to learn about goal setting, and to be exposed to good role models.

I must say again that I take my hat off to parents who sit behind their young people and do the fund-raising and the organising, arrange the transport, help organise the equipment and the resources, and work very closely with the military to ensure that these cadet forces continue to operate and that these young people get this exposure. This small change will help those cadet forces in the Nelson-Marlborough area and it is a good thing. It should be applauded. We should do more.

• Part 8 agreed to.

CHRIS AUCHINVOLE (National) : I would like to speak on Part 10, which refers largely to the amendment of the Royal New Zealand Returned and Services Association under the Flags, Emblems, and Names Protection Act 1981. There are few organisations where I have found a warmer reception from people around Anzac Day than the RSA.

Simon Power: Point well made!

CHRIS AUCHINVOLE: I thank the member. However, like so many organisations associated with a particular time in history, it does need to increase its membership. Therefore I notice its change of name from just Returned Services Association to Royal New Zealand Returned and Services Association. I know that the organisation is including additional people who have not necessarily had any association with the armed forces at all. It is all about community—community and belonging. The National Party is particularly proud to subscribe to those aspects. Small communities have their own beliefs and practices, and they can get on and celebrate what they represent.

One of the things I find fascinating, having been a member since September, is the total preoccupation of the present Government—and I include the utterances from members of the Government’s attendant parties—with the National Party. We seem to be all they ever talk about, and I wonder why. They clearly have a deep-seated anxiety problem about their own precarious political platform. I understand—and have been told—that this precarious political platform is something they have arrived at after a panic pandemic over not being able to quickly form a Government as easily as they thought they could. It has been suggested to me that this panic pandemic sweeping through their ranks is what led to the baubles, bangles, and beads being buckled together to try to buy beneficence from others.

It goes to show, though, that you get what you pay for. That is all you are going to get, but the rest of us have to live with it, too. In the case of the Royal New Zealand Returned and Services Association, it is seeking to amend its membership, it is seeking to increase its membership, and it is seeking to continue its role in the community—and I wish to support that.

• Part 10 agreed to.

DAVID BENNETT (National—Hamilton East) : I was not actually going to stand to speak on this part but, since Dr Michael Cullen is here, I think it is appropriate when we look at—[Interruption] The Bills Digest states that the definition of “housie” has changed and is now: “ ‘the numbers are selected randomly and announced to participants’, and ‘the participants mark or cover the numbers announced on their own cards’ ”. Now does that not sound like Labour Party policy when it is trying to work out student loans policy? That definition of Labour Party policy has now been incorporated through all legislation.

• Part 12 agreed to.

NATHAN GUY (National) : I rise to speak to Part 12A, “Government Superannuation Fund Act 1956”. Many in the Chamber will be aware that I reside in the electorate that has the highest population of elderly constituents in the whole of the country—that is, the Otaki electorate, which covers Kapiti and Horowhenua. It was once a Labour stronghold and now is the most marginal seat in the country. I rise to speak about superannuation and how it affects those hard-working New Zealanders in the Otaki electorate and right across the country—those who have paid taxes, and those who in the past may not have been fairly getting their correct married entitlement. It is great to see that a gentleman presented a petition to New Zealand First people who happened to be in my electorate prior to the campaign to try to sort out that anomaly. [Interruption] Exactly. It is great to see that being sorted out.

It is very, very important that members acknowledge the Superannuation Fund, particularly in times of hardship. The carbon tax is due to come in in 2007, which will actually see an increase in power prices and fuel prices, and will make it even tougher for our elderly people to survive in this country. So I support Part 12A, “Government Superannuation Fund Act 1956”.

• Part 12A agreed to.

Hon Dr MICHAEL CULLEN (Deputy Prime Minister) : I move, That the Subordinate Legislation (Confirmation and Validation) Bill be now read a second time. The bill confirms and validates 18 orders and one set of regulations. The bill must be passed before 31 December 2005. The bill was referred to the Regulations Review Committee on 16 November. The committee called for explanations from the seven departments administering the 18 orders and one set of regulations. The committee was satisfied with those explanations, and presented its report on 24 November recommending that the bill be passed without amendment. I thank the select committee for its expeditious consideration of the bill, and particularly Dr Richard Worth for his excellent chairing of the committee.

ANNE TOLLEY (National—East Coast) : I rise on behalf of the National Party to support the Subordinate Legislation (Confirmation and Validation) Bill. I also want to compliment my colleague Dr Richard Worth on his excellent chairing of the Regulations Review Committee, which considered this bill.

When Dr Cullen introduced this bill into the House not too long ago, he talked about the fact that it was confirming or validating one set of regulations and 18 Orders in Council under 11 Acts, and had to be passed by the end of the calendar year to avoid the lapsing of some of those orders. Two out of the 18 orders are movements in consumer pricing, five out of the 18 are orders under the Customs and Excise Act, four come under the Tariff Act 1988, and two are biosecurity levies. It is those levies that I particularly want to address today.

One of those levies is concerned with setting up a national pest management strategy for the varroa bee mite. I make the comment that this Government’s record on biosecurity is abysmal. I well remember when the varroa bee mite was discovered in New Zealand. There was a huge opportunity to stop the movement south, from the Auckland region, of the varroa bee mite. The Government sat on its hands and did nothing, and we have now seen that bee mite make its way right throughout the North Island. That has had huge consequences in regions like the one I represent. That bee mite has been responsible for almost the complete eradication of feral bees, which has enormous complications for horticulturalists, kiwifruit growers, and the growers on the Gisborne flats who rely on intensive pollination by bees to supply the produce that is the backbone of the economy—not only for regions such as mine but for this country.

So the Government’s record of dealing with biosecurity risks like the varroa bee mite is absolutely appalling. In this bill the Government is now setting up a pest management strategy. I have to say that the horse has bolted. We heard in the House earlier today about the didymo, which, again, the Government had done nothing about. It belatedly has come along and put controls and a strategy into place, when the biosecurity risk has long overtaken the country.

Other than that issue, the only part of this bill that I want to mention is clause 12, which prohibits trout imports. Again, in the area that I represent, the Bay of Plenty, trout fishing is a very important part of our tourism industry, and we are pleased to see that it will continue under this legislation.

• Bill read a second time.

Hon DAVID BENSON-POPE (Minister for the Environment) : I move, That the Hazardous Substances and New Organisms (Approvals and Enforcement) Amendment Bill be now read a second time. This debate marks another step in delivering the Government’s hazardous substances strategy to improve the workability of the hazardous substances provisions of the Hazardous Substances and New Organisms Act. The strategy does three things. First, it improves the way the provisions work for business; secondly, it improves the way they work for the Government; and, thirdly, it improves the way they work for the environment, and the health and safety of all of our people.

The strategy was designed to achieve these sometimes competing objectives. It is able to do so largely because of the way in which it came about. It was conceived, developed, and refined in partnership with industry. We shared our ideas and we had more ideas to bring together. It was the inclusiveness of the process that enabled the strategy to deliver on sometimes conflicting objectives. This bill is a key deliverable in that strategy. Its primary functions are to introduce a new approval mechanism, known as a group standard, to add regional councils as hazardous substances and new organisms enforcement agencies that may enforce the Act, to increase the ability to set practical exposure limits that protect people and the environment, and to improve the workability of rapid assessment and reassessment, and several other provisions including those for exempt laboratories.

Through these functions, this bill will reduce costs to both the Government and industry; most important, reduce barriers to innovation; and better protect the environment and the health and safety of people in our communities.

The new group standard mechanism is the major contributor to realising those benefits. Group standards will reduce costs by reducing the number of applications that businesses need to make to the Environmental Risk Management Authority, and by providing simpler prescriptive alternatives to the technical controls and regulations. Group standards will also reduce the Government cost to transfer approximately 110,000 notified toxic substances to the full hazardous substances and new organisms regime by 1 July 2006, the statutory end of the transition period.

Group standards will also be able to be made for wastes and manufactured articles that have hazardous properties that exceed hazardous substances and new organisms regime thresholds. Applying group standards to those wastes or articles will reduce risk to people and the environment associated with storage, transport, and through to disposal. Group standards have become an important tool for implementing the New Zealand waste strategy.

The bill was referred to the Education and Science Committee on 22 February this year. The committee received 26 submissions and thoroughly considered the bill. The committee has reported back to the House, recommending that the bill be passed with the amendments shown. I thank the chairman and the committee for their timely work on this bill.

Submitters generally expressed support for the measures in the bill. Strong support was given for the new group standard mechanism, for the involvement of regional councils in hazardous substances and new organisms regime enforcement, and for other measures that improve the workability of the legislation. The select committee has made a number of changes as a result of submissions received. I draw the attention of members to some of those changes.

The change to clause 6 ensures that the register of exposure limits is able to record the parts of a substance for which the exposure limits can be set. The change to clause 9 clarifies when the rapid assessment provision can apply—that is, to a substance with lesser hazardous properties than any substance already approved. The change to clause 10 adds reference to the storing of a substance to the provision for containment approval that is used for substances formulated, packaged, and labelled as for export only.

The change to clause 14 clarifies that a modified reassessment can only change an approval, not revoke an approval—to revoke an approval would require a full reassessment. Changes to clause 20 clarify the operation of the new group standard mechanism. The first change spells out each of the four situations in which a group standard can apply. The term “product” is defined to ensure that wastes and manufactured articles to be managed under group standards exceed the hazardous substance thresholds. Another change ensures that a proposed group standard will be notified and accessible to the public, that public input will be sought, and that full consultation will take place.

Changes to section 96F and section 96G, inserted by Part 2, clarify the effect and applicability of group standards—that a group standard creates an approval for the substances in the group, and that a group standard transfers substances out of the traditional provisions and into the main part of the hazardous substances and new organisms regime.

Other changes to the provisions regarding the group standards mechanism provide improved clarity, such as the re-evaluation of the controls applying to a substance that is already approved in the light of new data or information.

The amendments have tightened and improved the bill, and I commend the Education and Science Committee for its work. I will move further amendments when the House moves into Committee on this bill. The first of these amendments will remove a legal circularity that prevents New Zealand from meeting its obligations under the Stockholm Convention on Persistent Organic Pollutants, which includes polychlorinated biphenyl. I will also move amendments that further clarify the Environmental Risk Management Authority’s consultation obligations around group standards, and provide consistency around the Environmental Risk Management Authority’s powers to incorporate materials by reference in group standards and notices of transfer.

Some submitters argued the line that if it is good for business, it must be bad for the environment. This bill is not about environment versus economy. This bill is good for the environment and for the economy. It is very good for the people of this country. It represents a significant step in protecting the environment and improving the living standards of all New Zealanders. It will help us to reap the advantages of using hazardous substances without suffering their potentially adverse effects. It does that by managing the risks those substances present to us. This bill enables us to safely manage risks from a great many hazardous substances that have gone unmanaged before, and in a much more efficient and appropriate way. The bill significantly improves the workability of the Hazardous Substances and New Organisms Act. It is good for business, the Government, New Zealanders, and the environment. I am delighted to commend the bill to the House.

Dr PAUL HUTCHISON (National—Port Waikato) : Thank you very much, Mr Deputy Speaker, for the opportunity to speak on this Hazardous Substances and New Organisms (Approvals and Enforcement) Amendment Bill—a very technical bill but a very necessary one. I would like to congratulate the Hon David Benson-Pope on the very animated and lively way he spoke about this bill. Essentially, the bill is absolutely needed for the transference of 70,000 notified toxic substances on to the register under the Hazardous Substances and New Organisms Act to take place. If that did not happen, they would be out there, unregistered and of considerable worry. The registration must occur before June 2006.

I notice that the explanatory note of the first reading copy of the bill states that it offers to reduce costs to businesses and the Government, and to reduce barriers to innovation, whilst not compromising appropriate management of risks. It is very interesting to hear that come from the Labour Government, which is absolutely infamous for increasing the compliance costs of small business and New Zealanders generally. After all, have there not been 42 tax increases in the last 6 years? I am sure Mr Cosgrove could confirm that for us. There have been 42 increases in tax in the last 6 years, by this Labour Government. It is absolutely phenomenal. If we think of the Resource Management Act, we know that the added compliance costs and obstructions that this Labour Government has imposed on New Zealanders trying to get on with business is also absolutely phenomenal.

When we come to the Hazardous Substances and New Organisms Act, Federated Farmers were certainly very careful to present a well-formulated paper on the huge costs imposed on New Zealand farmers by this Act. They brought out a considerably well-researched paper called Compliance Costs of the HSNO Act in September last year. They say that the total set-up cost for compliance with the Hazardous Substances and New Organisms Act is calculated to be nearly $105 million. That averages $2,230 per farm in set-up costs, but it does not include any ongoing costs from 2007 onwards. Heaven knows what the costs will be from then on! They go on to say that the average set-up costs imposed on the arable sector are over $3,000 per farm. That is a huge amount of money, given that our farmers are competing with farmers in Europe, who are so heavily subsidised.

Some of the regulatory impositions that this Labour Government has imposed in relation to the new organisms part of this bill are sheer larceny in terms of the very important primary sector in New Zealand. I think particularly of the transgenic cow experiment that AgResearch tried to carry out at Ruakura. AgResearch had to spend $500,000 just to put in the consent application, and it was then challenged in the High Court. It is not only that; I think more recently of the Auckland medical school’s experiment with transgenic sheep to produce a potential cure for Huntington’s chorea. The medical school said it could not carry it out as it would cost too much and take too long, because of Labour’s regulations.

• Debate interrupted.