Hon SIMON POWER (Minister of Commerce) : I move, That the Trade (Safeguard Measures) Bill be now read a first time. At the appropriate time, I intend to move that the Trade (Safeguard Measures) Bill be referred to the Foreign Affairs, Defence and Trade Committee for consideration.

This bill significantly overhauls New Zealand’s regime for the imposition of safeguard measures on imported goods. Safeguards are emergency measures—with emphasis on the word “emergency”—applied at the border, usually in the form of a duty that may be taken to provide temporary protection to a domestic industry from injury caused by a surge in imported goods.

This bill is designed to ensure that New Zealand’s safeguard regime is consistent with World Trade Organization (WTO) rules—again, that is an important point to make—and to promote efficient, transparent, and objective investigative and decision-making processes. It is worth noting the contribution of the previous Government in the bringing of this bill to the Parliament, and I am happy to progress it in a timely manner—something that was previously not the case.

The current regime is subject to the Temporary Safeguard Authorities Act 1987, which has not been subject to a comprehensive review since its inception. As a consequence—

Hon Lianne Dalziel: It’s now outdated.

Hon SIMON POWER: —the Act is now outdated—that is quite right, I say to Ms Dalziel—and does not provide an adequate means for New Zealand to comply with its WTO obligations, should it be necessary to take safeguard action.

Despite the small number of safeguard investigations that have been undertaken, manufacturers must retain access to an effective safeguard mechanism at a time when industry is exposed to increasing import competition through unilateral tariff reductions, which are scheduled to continue until July 2009, and a continued growth in free-trade agreements. Further competition from imports may also occur if the WTO Doha round of negotiations is successfully completed and results in a multilateral liberalisation of trade.

This bill repeals the Temporary Safeguard Authorities Act 1987 and replaces it with a modern regime that takes these developments into account in order to avoid harm being caused to New Zealand industries from rapid increases in imports. Where a safeguard measure is warranted, the bill provides for the Minister of Commerce to impose a final and provisional safeguard duty, or to recommend that other measures be taken. The ability to impose a separate provisional and final safeguard duty will allow a quick and efficient means for taking safeguard action. To comply with WTO rules—and that compliance is a significant factor—the bill also provides for the extension, liberalisation, and termination of a safeguard duty.

Under the present regime, the imposition of a safeguard measure through an increase in the normal customs duty or by a quantitative restriction on import volumes is only possible if it is in the public interest to do so. The current legislation does not, however, contain any guidance on what constitutes the public interest, and the new provisions in this bill are designed to increase the certainty and transparency in the process of considering public interest issues.

The key components of investigations remain essentially unchanged, so no significant increase in the cost to participate is expected. The bill also shifts responsibility for undertaking safeguard investigations from temporary safeguard authorities to the Ministry of Economic Development. The ministry already undertakes other trade remedy investigations into the impact of dumped and subsidised imports on New Zealand industries, which means there is a substantial overlap with a safeguard investigation. This change will therefore allow the expertise of the ministry to be fully utilised, and avoid any potential problems with recruiting authority members as a result of the extension of the time frame for completing an investigation. In other words, the bill therefore creates a single Government point of contact for all trade remedy inquiries, and that is a plus for businesses.

The bill provides for the extension of the time frame for the completion of a safeguard investigation from the current 30 working days to 75 working days, or to 85 working days if provisional measures are requested. Decisions by the WTO Dispute Settlement Body have helped to clarify obligations that must be met before a safeguard measure can be imposed, which would be very difficult to meet within current time frames. The extension of the time frame will allow sufficient time to undertake a high-quality investigation, and reduce the risk of any safeguard measure taken by New Zealand being overturned through the WTO dispute settlement process. At the same time, the ability of the Minister of Commerce to impose a provisional measure will ensure that New Zealand industry is not disadvantaged by the additional time taken to complete an investigation.

Finally, the bill also includes a number of other technical matters aimed at improving the efficiency of application and investigation processes, and at ensuring conformity with WTO rules. The changes I have outlined will strengthen the safeguards regime, as well as strengthening access to that regime by domestic industry. Globalisation and increasing competition from imported products, at a time when domestic spending is constrained, make it even more important that New Zealand - based industries have the mechanism within the frameworks to adjust to these pressures. I commend this bill to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I rise to support the first reading of the Trade (Safeguard Measures) Bill, and I congratulate the Minister Simon Power on making a fine speech. I could not have read it better myself. [Interruption] I read along with him, actually, because I happen to have a copy of the speech with me.

It is unusual for a commerce bill to be referred to the Foreign Affairs, Defence and Trade Committee, and I think that is worthy of some comment. The fact that this bill is being referred to that select committee and not to the Commerce Committee really shows that the bill is as much about international trade and World Trade Organization (WTO) compliance as it is about protecting New Zealand’s commercial interests from dramatic increases in import competition.

John Hayes: Are you reading this, too?

Hon LIANNE DALZIEL: I have just jotted these notes down. I am happy to table them for the member if he likes.

Trade safeguards are very important, as it is vital that domestic manufacturers and producers are protected during a period of adjustment. Of course, that period of adjustment is, as the Minister has highlighted in his very learned contribution to this debate, exacerbated by increased trade and trade agreements. The bill replaces a 1987 Act, and although there are older statutes on our books, much has been occurring in the field of international trade that really requires us to refresh this law. So the bill is very timely indeed.

The process for bringing this bill to the House has been very robust, and I am disappointed that the Minister did not mention that fact. I guess that is because this bill, unlike many of the others that were introduced by National in its 100 days of action, has an excellent regulatory impact statement. I, of course, prided myself on bringing bills to this House that had excellent regulatory impact statements in them, because a good regulatory impact analysis, undertaken at the outset, can resolve a lot of issues before they become problems further down the track—after the legislation has been introduced into the House and subsequently passed. This bill has been preceded by a very in-depth consultation process, which has included the release of a discussion document to ensure that input was as broad as it could be.

I have heard a number of people in different fields express some abhorrence of the principles of free trade, but I hope they can feel comforted that this bill is actually a measure that they can support, as it supports fair trade as part of free trade.

This bill enables the Minister to act on his or her own initiative, as long as there are reasonable grounds for an investigation. The select committee will probably want to pay some attention to what are reasonable grounds for the Minister to initiate this particular investigation.

The work, as the Minister has highlighted, will in future be undertaken by the Ministry of Economic Development, rather than a temporary safeguard authority for each investigation being established. It has always struck me as being somewhat inefficient to have individual temporary safeguard authorities established in order to deal with each individual case as it comes to light. It is true that very few have been established, so in one respect it probably does not matter. However, it makes sense to me, and it certainly made sense to those who were providing advice in this regard, that the expertise of the trade remedies team within the Ministry of Economic Development could be brought to bear on what is a very parallel process. It already investigates allegations of dumping, and I myself had experience, as a former Minister of Commerce, of being in receipt of reports on more than one dumping investigation. I am sure that the current Minister still has something really good to look forward to in his role—that is, when the pile of papers comes to his office for him to read, in great detail!

Not only does that detailed analysis identify the true cost of production—in a country where sometimes the producers do not want to be as open as they should be over the actual cost of production, because, of course, they want to protect themselves against the claim of dumping in New Zealand—but also it has to show the damage to the New Zealand industry, which has to be both significant and widespread. So it is obviously quite an enormous task for the officials, which is why I support the idea of bringing that expertise into this consideration of trade safeguard measures. I think that is something that the Minister will have to grapple with when he gets to one of those, because they really do present quite a detailed analysis, and that does require some time to go through.

Then there is the decision as to the measure to be applied, so if dumping has been found to be the case—in this case, if a trade safeguard is required to be applied—then a countervailing duty may be the answer. When we think about it, we see that that is the same process, to all intents and purposes, that will be applied in relation to this bill.

I just reinforce the fact that this bill makes a sensible organisation of work in terms of transferring work from a temporary safeguard authority to the Ministry of Economic Development trade remedies team. When I was the Minister of Commerce I was concerned about the extent of work that had to be undertaken by the affected industry in bringing forward a complaint, and I would like to place on the record that concern this evening. I urge the New Zealand Manufacturers and Exporters Association—and I will probably send a copy of my Hansard to the association—to take the opportunity to make a submission to the select committee on this bill, because it covers many of the issues that the association had raised with the previous Government, and I am sure it is raising those issues with the current Government. This will ensure that those concerns are put before the committee.

There is an opportunity with this bill to look at whether we have, in our desire to be consistent with WTO rules, pushed the boundaries out as far as we legally can within those rules. It may be that those boundaries can be pushed a little further in respect of this measure being brought before the House. On that basis I support the first reading of the Trade (Safeguard Measures) Bill and its referral to the appropriate committee, which in this case is the Foreign Affairs, Defence and Trade Committee.

JOHN HAYES (National—Wairarapa) : That was a very helpful speech from our colleague Lianne Dalziel, the previous Minister of Commerce, whom I know understands this legislation backwards. I would like to pick up on her comment that some people in this House, and out in the community, are opposed to free trade. It is worth reflecting on that comment, because over the last few weeks in our local papers we have seen the Swazi Apparel industry in Levin calling for protection because of the threat it faces if its contract to supply clothing to the New Zealand Defence Force is shifted to China. The same situation applies in my electorate in respect of Whitehead Productions, which supplied equipment for our military.

I would like to look back about 300 years to Europe, to a port called Bruges. This city is located on the Zwijn estuary. It was a real entrepôt. People became very wealthy, because the port of Bruges was connected to the rest of the world. Over time the Zwijn estuary silted up and the entrepôt moved down the coast to a place called Antwerp, which is located on the Schelde River. Antwerp is still connected to the rest of the world because that river is still running, and when one goes there now one sees the signs of the great economic power that was Antwerp. Its wealth, built long ago, is still very, very visible today. Antwerp is still the diamond capital of the world, and its mighty port operates 24 hours a day, 7 days a week.

I bring to this House a message from that example—that is, if we want to be rich, it pays to stay connected and to forge strong links with other countries of the world. My colleague Tim Groser is not here today, because he is out doing that. He has already signed a free-trade agreement with Thailand. He is undertaking a precursor study to a free-trade agreement with Korea. He has signed us up to an ASEAN regional trade agreement. He is actively engaged in keeping New Zealand locked into the global economy.

If people want to do nothing and make no progress, as some parties in this House would like, then we should let our rivers silt up and our economy wither. That would be the outcome. If we think about our situation here in New Zealand, we find that the most visible sign of our linkages with the rest of the world is the array of products we find from all sorts of places available in our shops.

A while back an economist whose name was Ricardo developed a theory about comparative advantage and the importance of every country doing what it did best. If we go back to the example of Levin, we hear that Chinese wages are so low that we cannot compete with them. Therefore, it is argued that to protect our industry and the 30 workers in Masterton, or the 50 workers in Levin, we should impose taxes, or even ban shirts and other clothes from being brought in from China. My feeling about that goes like this. In 1936 there was another economist called Lerner. His theorem tells us, which he empirically proved, that if we put a tax on an import, then effectively we impose an identical tax on an export. So if we take his theory around the issue of bringing in manufactured clothing from China, or even Fiji, in order to protect industry in New Zealand, we would be putting an equivalent tax on jobs in, for example, the dairy industry or the meat industry.

We must, as a country, minimise taxes at our border. We must run as open an economy as we can. Sadly for workers in developing countries, very few of them compete with our workers, just on the issue of price, because they are lower paid. They are also, generally, much lower in productivity. We have to increase productivity in this country if we are to lift our collective standard of living. There is a very close relationship between low productivity and low wages. We have signed a free-trade agreement with China; the economies of both countries will be better off.

I think that we also need to acknowledge that free trade is not good for everybody. There are plenty of examples of that in New Zealand. My colleague Roger Douglas from the ACT Party will be only too well aware of the strife that occurred when we opened up our market to imported cars, tyres, clothing, and many other things back in the mid-1980s. Those changes hurt a lot of people, but is New Zealand today worse off as a result of that? Of course it is not. So there is a solution in a civilised and progressive society, which is not to restrict trade.

However, what we also need to do is to not ignore the plight of people who are put out of work by low-cost imports. We need to allow progress and to move forward while at the same time helping to support and retrain those who are hurt in this process. We cannot be callous. When someone loses his or her job it is a personal tragedy. But in a healthy economy jobs are lost all the time, just as new jobs are created all the time. That is why this bill is so important.

The Trade (Safeguard Measures) Bill will allow us to repeal the Temporary Safeguard Authorities Act 1987, which embodies New Zealand’s current safeguards regime, and to replace it with a new set of rules consistent with the World Trade Organization (WTO) rules. It will promote efficient, transparent, and investigative decision-making processes. I think that this bill is very, very important to all the people of New Zealand. It will carry a lot of benefits, and I am very glad that it is coming to the Foreign Affairs, Defence and Trade Committee, where my colleagues and I will have pleasure in processing it through the committee.

The bill’s purpose is, in particular, to allow New Zealand to apply safeguard measures at the border, in accordance with the WTO rules adopted in Marrakech back in April 1994. The bill states that such measures are intended to provide temporary protection to a domestic industry from serious injury caused by increased imports. Clearly, the free-trade agreement between New Zealand and China, or New Zealand and ASEAN, will see new exporters in those countries able to send their produce to our market. We are dealing with the reality that some of those goods may affect some of our domestic industries. The bill will help to facilitate the adjustment by New Zealand domestic industries to increased competition from increased imports. As I have said, two clear examples of this are the Swazi Apparel plant in Levin and Whitehead Productions in my own electorate.

The bill as drafted provides that public servants will be able to investigate such things as whether increased imports are causing serious injury, or pose a threat of serious injury; whether increased imports were due to unforeseen developments that we did not understand when the free-trade agreement was being signed; and whether a safeguard measurement is necessary to prevent or remedy serious injury. It will also facilitate adjustment by the New Zealand domestic industry to increased competition. It will investigate whether there is a particular public interest, and it will consider, for example, things like the effectiveness of a safeguard measure.

CLARE CURRAN (Labour—Dunedin South) : I rise to support the first reading of the Trade (Safeguard Measures) Bill. I agree with the member opposite that this bill is important. It should be noted that this bill was originally introduced by the Hon Lianne Dalziel in the last Parliament under the previous Labour Government—and a very fine bill it is, too. The bill is the result of a review initiated under the Labour-led Government of the existing Act, the Temporary Safeguard Authorities Act 1987. There was extensive public consultation, and the bill is the result of that work.

As members have heard, this legislation not only means compliance with the World Trade Organization rules but also streamlines the process of responding to allegations of dumped or subsidised goods being released on the New Zealand market. It will be welcomed by New Zealand’s manufacturers and producers, which is very important. It is also important to note that it is a cost-effective measure, in that it removes the requirement to establish temporary safeguard authorities and enables the existing expertise of the Ministry of Economic Development to be utilised instead. This bill, unlike National’s own bills, fully complies with the regulatory impact analysis regime. Members have heard that some of the changes proposed by this bill include an extension of the current time frame of 30 working days for the completion of a safeguard investigation to 75 working days, or 85 days if provisional safeguard duties are requested, and a provision that safeguard investigations are to be undertaken by the ministry rather than by independent temporary safeguard authorities.

I will talk just a little about what is in the bill. It implements a new safeguards regime for New Zealand. Safeguards, as a number of members have indicated tonight, are emergency measures applied at the border, usually in the form of a duty that may be taken in order to provide temporary protection to a domestic industry from injury caused by a surge in imported goods as a result of unforeseen developments. Safeguards are provided for under the General Agreement on Tariffs and Trade and by the World Trade Organization, and agreements on safeguards are intended to facilitate adjustment by a domestic industry to increased imports. So the bill’s purpose, really, is to enable New Zealand to apply safeguards measures at its border, as the member opposite has indicated, and to do so in accordance with the agreement adopted at Marrakech in 1994 that established the World Trade Organization.

The bill states that such measures are intended to provide temporary protection to a domestic industry from serious injury caused by increased imports, and to facilitate adjustment by a domestic industry to increased competition from increased imports. The bill provides that the Minister may, on application by any person or at the Minister’s discretion, initiate a safeguard investigation by the chief executive into increased imports, if the Minister is satisfied there are reasonable grounds for an investigation into whether the increased imports are causing serious injury or the threat of serious injury.

The matters that the chief executive must investigate in a safeguard investigation include the following: whether increased imports have caused serious injury or a threat of serious injury, and whether the increased imports have been due to unforeseen developments; whether a safeguard measure is necessary to prevent or remedy serious injury and to facilitate adjustment by the domestic industry to the increased competition from the increased imports; and, if a safeguard measure is necessary, which goods should be subject to a measure, which measure is appropriate, and the appropriate extent and duration of the measure. Then there is also the matter of the public interest, which may entail, amongst other matters, consideration of the likely effectiveness of a safeguard measure in assisting the domestic industry, and the alternatives to a safeguard measure. There is also the likely effect of a safeguard measure on the market—which includes the effect on consumers—and on New Zealand’s international relations and trade goals, and the strategic importance of the domestic industry.

The bill also provides that in investigating whether the increased imports have caused serious injury or a threat of serious injury, the chief executive must consider the impact of the increased imports on the domestic industry, including an actual or potential decline in output, sales, market share, productivity, employment, and utilisation of production capacity. The chief executive must consider the nature and extent of imports of the goods by the domestic industry, including their value, quantity, and frequency; the purpose of the imports; and factors other than the imports that have injured or are injuring the domestic industry. So there is a range of important issues there.

The bill also provides for the circumstances in which the Minister may impose a provisional safeguard duty. The Minister may impose that duty on imported goods if the Minister is satisfied there are reasonable grounds to believe that a delay in imposing a duty would cause damage that would be difficult to repair, and also that the increased imports are causing serious injury or, again, the threat of serious injury.

The bill provides for several different types of safeguard measure, any of which may be imposed on, or in relation to, imported goods. They include a safeguard duty; a duty or a variation of any rate or duty, or an exemption from any duty under the Tariff Act 1988; a restriction on importing the goods under the Customs And Excise Act 1996 or the Imports and Exports (Restrictions) Act 1988; and also any other action that the Minister considers to be appropriate.

The bill provides that after receiving the chief executive’s report about a safeguard investigation, the Minister may take one or more of those actions in relation to imported goods if the Minister is satisfied that increased imports have caused serious injury or a threat of serious injury, and that the increased imports were due to unforeseen developments. The Minister must be satisfied also that the safeguard measure is necessary to prevent or remedy serious injury and to facilitate adjustment by the domestic industry to the increased competition from the increased imports; that the safeguard measure relates to the appropriate goods, is the appropriate measure, and is of the appropriate extent and duration; and that the action is in the public interest. The particular safeguard measure must not be incompatible with New Zealand’s international obligations as a party to the World Trade Organization agreement or other agreements.

Finally, I will finish by saying this bill is about ensuring that New Zealand’s safeguards regime is consistent with World Trade Organization rules, provides an efficient, transparent, and objective investigative and decision-making process, and is responsible. The bill is timely, sensible law developed by the previous Labour Government; it strengthens the protections for our domestic industry at a time of increased globalisation and competition from imported products. I have great pleasure in supporting the bill.

Dr KENNEDY GRAHAM (Green) : The Green Party supports the adoption of the Trade (Safeguard Measures) Bill. It is not my intention to take up too much time of the House in explaining why, but a few quick points are, I believe, in order. This bill repeals the earlier 1987 Act, which embodies the current safeguards regime. That Act, of course, preceded the establishment of the World Trade Organization (WTO) in 1995, and the aim of the new bill is to make the 1987 regime consistent with WTO rules.

The underlying purpose, as described, is to improve the investigative and transparent processes of international trade. Our aspiration is to meet three standards, so stated: efficiency, transparency, and objectivity. No one opposes efficient, transparent, and objective processes, particularly in the area of international trade. It is a passing lament, perhaps, that the same standards were not met as stringently as the Green Party believes was appropriate in the cases of the recent bilateral and regional free-trade agreements this country has held over the past few years, and is holding currently. I note the comments made by my colleague Lianne Dalziel about some concerns over the nature of free and fair trade that are held by some parties; of course, we in the Green Party have harboured those concerns—and, I would add, in today’s world there is an equally deep concern about the imperative of green trade.

We have also heard from our colleague John Hayes, who was gracious enough to offer some insights into the merits of free trade, based on the theory of comparative advantage. He recalled for our edification Ricardo, while omitting, in some haste, the theories of Smith and Mill. To prove the point, Mr Hayes drew as an example the case of, as he put it, “Brug-es”, which he said gave way in the fullness of time to the rise of Antwerp: the river was silting up so people had to move from Bruges to Antwerp, and Antwerp became the great economic power supplanting Bruges—QED, the need for free trade. I thank the member. I have some passing acquaintance with Bruges, or Brugge. The town is Flemish, actually, so it is properly pronounced “Bruha”. I lived there from 2002 to 2005, and intermittently from 2005 until the end of last year. In fact, I had an apartment there until 2 weeks ago.

I know Bruges. I also know the theory of free trade as it underpinned, or did not underpin, Bruges, and its aspirations and its destiny. The point here is that Bruges did not collapse because it turned its back on free trade; it collapsed because of environmental concerns. Because of silting at Bruges, the coastline developed. Free trade and the shipping trade did not switch immediately to Antwerp; it went to Zeebrugge, which is now on the coast and is close to Bruges. The point of this passing exchange is that the theory of free trade has a partial truth—not a total, absolute truth.

The Green Party recognises the partial truth of free trade. That partial truth has to be calibrated with fair trade and with green trade. We are creating a hell on earth if we go headlong for free trade without due regard to the most basic notions of global equity and the imperative of global sustainability.

Let me return to the Green Party’s concerns. They are particularly to do with transparency when it comes to international trade. I recognise that diplomatic negotiations—whether on security, environment, or trade issues—cannot be conducted in the full glare of live broadcasting. But, in today’s world, neither should they be conceived in the cosy backrooms of Geneva or national capitals and then carefully incubated under the artificial warmth of a hermetically sealed confidentiality until they are judged ready to be hatched for public christening after the creature’s DNA is forever determined.

Today we live in a world that is effectively globalised and in which the public not only has a right to know but also has an ability to keep pace with events and make informed judgments. In such a world, a balance has to be struck, ensuring that the public input on issues that directly affect them—whether corporate, farming, or individual—is neither premature and thus unhelpful, nor belated and thus futile. That balance is not always easy to strike, but we do not think that the democratic and parliamentary process on our international trade negotiations has found it yet. We need to be more transparent with the public than we were with the New Zealand - China Free Trade Agreement. The Green Party looks forward to improvement with the Trans-Pacific Strategic Economic Partnership Agreement and with the Indian and ASEAN negotiations.

That is a general context for addressing this more specific bill before us. The aim is to reduce the risk of a successful WTO dispute settlement, or judicial review, should a safeguard measure be applied. That is an objective the Green Party supports. We do, however, have some concern about the specifics. First, the meaning of “public interest” is elaborated upon in the bill. Although non-exhaustive, the guidelines are the likely effectiveness in assisting the domestic industry; the alternatives available; the likely effect on the market, including on consumers; New Zealand’s international relations and trade goals; and the strategic importance of the domestic industry. We are concerned that the guidelines for taking into account the public interest are unduly limited. They could steer the outcome away from protecting a domestic industry that does not necessarily meet the Government’s current test of strategic importance, but, if and when oil prices rise again, it may prove to be something we might regret.

Secondly, moving the investigative power from an independent authority to the Ministry of Economic Development could result in investigations having a greater political input from the Government of the day—they could perhaps, or perhaps not, have greater professionalism, but quite possibly they could have greater political input. This will need attention. With due regard to these concerns, we support the bill and we will be supporting it going to the Foreign Affairs, Defence and Trade Committee.

Hon Sir ROGER DOUGLAS (ACT) : Without doubt, free trade is one of the seven factors in economic progress for any nation. I enjoyed the speech of the member for Wairarapa, John Hayes. He gave me a level of comfort about the Trade (Safeguard Measures) Bill that I probably did not have until I listened to him. However, ACT is very cautious about this bill. I guess we are instinctively suspicious, and it could be that at some point in its progress we may well oppose it.

The reason for our suspicion is the possibility that the bill might be used to hinder free trade in some way. Undoubtedly, under the bill the powers of the Minister are extensive. We recognise the need to meet the World Trade Organization’s rules, but we wonder whether the bill is the appropriate way of doing that. The problem with this type of legislation is that it can be used as an effective non-tariff barrier, and undoubtedly New Zealand has suffered in this regard in many cases. It is because of this possibility that we are cautious.

As the member for Wairarapa said, New Zealand can only gain by selling goods that it can produce at relatively low cost and using the proceeds to buy things that others produce cheaper than we do, or that we produce at high cost. The principles involved in international trade are basically the same as those involved in any voluntary exchange. Each partner produces and consumes more than it would otherwise have been able to achieve. There are three reasons why this is so. First, with international trade, the people of each nation will be able to use more resources to produce and sell things that they do well, and use the proceeds to purchase goods they can produce only at high cost. I guess the question is whether this bill actually fosters or helps us achieve that objective, or whether it hinders it.

Secondly, international trade allows both domestic producers and domestic consumers to gain from reductions in per unit costs that often accompany large-scale production, marketing, and distribution. I believe that this point is particularly important for small countries like New Zealand. We need to ask how this bill facilitates that principle, or whether it is likely to be used as an excuse for those overseas who want to impose, shall we say, some barriers on New Zealand trade.

Thirdly, international trade promotes competition in domestic markets and allows consumers to purchase a wide variety of goods at reasonable prices. Competition from abroad helps keep domestic producers on their toes. It forces them to improve the quality of their products and to keep those products at low cost.

I guess I would like the Minister to assure this House that this bill will not be used to restrict desirable trade, and surely that issue has had its day here. Measures such as those proposed in this bill undoubtedly increase transaction costs. Whatever we say, one of the impacts of this bill will be that it will increase transaction costs and thereby reduce the gains available from free trade. The question is whether this measure is actually worth the cost that it will undoubtedly impose, or whether it is yet another example of bureaucratic red tape and controls.

RAHUI KATENE (Māori Party—Te Tai Tonga) : I have always been amused by the concept of dumping. That is because when I was growing up in Nelson, “dumping” had a particular meaning. According to my uncles and aunties, when they were children it was the site at which the sweetest, juiciest fishbones would be found. But as I drill further into the concept in the Trade (Safeguard Measures) Bill, which we are looking at today, there is hardly a fishbone in sight. There are definitely some fish-hooks, but there is a sad lack of fishbones.

The dumping in question in this bill is to do with the situation where goods are exported at a price that is lower than the price charged in the home market of the exporter. The concern is that the dumping of imported products may create a threat to the growth and survival of an industry. Dumping has been registered as becoming of increasing concern across the globe, with the World Trade Organization secretariat recently reporting a sharp increase of 39 percent in the number of new anti-dumping investigations between 2007 and 2008. The products most frequently dumped are base metals, textiles, chemicals, steel, and plastics.

So today we have legislative amendments. They are intended to provide temporary protection to a domestic industry, as well as to support the industry to adjust to the threat of increased competition from increased imports. There are matters that must be considered when determining whether the application of a safeguard measure is in the public interest. It is in the public interest that the decision-making process is about enhancing certainty and transparency.

Currently, investigations will be initiated if there are reasonable grounds that increased imports will cause or threaten serious injury to a domestic industry. This bill deals with the processes around the safeguard investigations. It puts in place the means by which investigations can be undertaken by the Ministry of Economic Development, including the process of addressing delays in investigations. The bill provides for the Minister of Commerce to impose a provisional safeguard duty for up to 200 days. The bill also extends the time frame for completing safeguard investigations from 30 working days to 75 working days.

Up until this point it all sounds very good—the processes are clarified, the base for safeguards is established, and protections are in place. But this is where the fish-hooks start to show. We must care about the environment for trade and the position it leaves our New Zealand market in. Yet no matter how positive this new legislation is, the remnants of one too many free-trade agreements are there for all to see. The trade liberalisation agenda has been perpetuated in Aotearoa by the means of a whole stock of trade agreements, which has opened the door to the dumping of copious imports from overseas.

All existing bilateral trade agreements have some form of exemption. The New Zealand - China free-trade agreement stipulates that either party may exclude imports of goods from a global safeguard measure. There is a similar clause in the New Zealand - Thailand Closer Economic Partnership Agreement. In both the Agreement Between New Zealand and Singapore on a Closer Economic Partnership and the Australia and New Zealand Closer Economic Relations Trade Agreement, neither party can impose a global safeguard measure against goods from another party.

This is why this legislation is so bizarre. We have the introduction of safeguards designed to adjust to the impact of increased competition. We have initiatives to clarify ambiguities in the Temporary Safeguard Authorities Act 1987. But, at the same time, we have free-trade agreements that counter all of this progress. Under the free-trade agreement with China, although China is able to set a maximum volume of agricultural goods imported from New Zealand each year, New Zealand does not have the ability to set similar maximum volumes on goods—agricultural or otherwise—imported from China. If New Zealand did set a customs duty to try to prevent too much competition in a particular market, our Government would need to compensate China for doing so. It does not really seem to make much sense.

This issue concerns the Māori Party greatly. We believe that decisions should be based on a rigorous and thorough analysis of potential costs and benefits. Such an analysis should be subject to an independent and contestable process, and we should be ever mindful of the need for focusing on results, having an eye on the outcome, and making sure that those outcomes reflect the full range of social, cultural, physical, financial, and spiritual consequences of a particular course of trade.

The news today revealed that the terms of trade have dropped further. Statistics New Zealand has released information showing a 0.9 percent drop, with export prices dropping further than import prices. This is the economic bottom line that dominates our thinking when we look at trade agreements and safeguard measures, but we need to also consider the need for scrutiny and oversight of the total picture—the complexities that come with our increased import dependency.

We need to understand how the quest for corporate profit maximisation has affected workers. We need to be asking what happens to the New Zealand market when our trade agreements allow imports in without safeguard measures. How many people will be fired before we say there has been an injurious effect on an industry? If sales are reduced, we should ask what kinds of sales they are. These are just some of the issues that need to come into the broader discussion.

The Māori Party will support the referral of the Trade (Safeguard Measures) Bill to the select committee today as a matter of principle. We want to see what the critics, commentators, analysts, and advisors say about some of the issues we have raised, and we want to know their views on the virtues or otherwise of this bill. So we will not be dumping this bill just yet.

JACQUI DEAN (National—Waitaki) : I am speaking in the first reading of the Trade (Safeguard Measures) Bill, which I believe is a very timely bill to be considered by Parliament.

The purpose of this bill is to bring our temporary safeguard measures both up to date and in line with international rules of trade. This bill was introduced in September 2008 by the then Minister of Commerce, Lianne Dalziel; the changes to the bill were designed and introduced to the House by the current, most excellent Minister of Commerce, Simon Power. The changes are designed to promote efficient, transparent, and objective investigative and decision-making processes. The legislation, when passed, will provide protection where and when it is necessary to help New Zealand businesses stay competitive in what is proving to be a tough economic environment.

I said that this bill is timely. I reflect on the early 1990s, when, I understand—I was told—a complaint was made with regards to a large amount of men’s and boys’ underwear that was brought in from China. I do not know whether members will recall it—

Todd McClay: It’d be too small for Rotorua.

JACQUI DEAN: Yes, I thank the member for that. All jokes are accepted.

If we allowed mass importation of a product that is used by roughly half the population, as in men’s and boys’ underwear—if that product were brought into New Zealand in such large volumes—it would, indeed, have a bad effect on New Zealand industry and, probably more important, on New Zealand employment. At this time, with New Zealand’s economic situation, I do not think we can afford to leave that without protection. That is why I believe that this Trade (Safeguard Measures) Bill is, indeed, timely. I would hate to see the factories whose job it is to manufacture underwear—I think there is one in Palmerston North, there is one in Christchurch, and there may be one in Auckland—and their workers placed under pressure at the moment. I do not think that would be helpful for New Zealand.

The bill makes five main changes. The first change is that the Ministry of Economic Development will be responsible for safeguard investigations, rather than temporary safeguard authorities, which will be disestablished under the provisions of this bill. I understand that the temporary safeguard authorities undertook four investigations.

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

JACQUI DEAN: Before the dinner break I had begun to speak on the Trade (Safeguard Measures) Bill, which was introduced to the House in the latter part of 2008 by the then Minister of Commerce, Lianne Dalziel. Then our very good Minister of Commerce, Simon Power, introduced some changes earlier this afternoon that have been included in the bill.

Briefly, for the benefit of my colleague who asked how the speeches were going, I say that I had raised the spectre of the flooding of the New Zealand market in the early 1990s with men’s and boys’ underwear. This caused problems and was dealt with by way of the temporary safeguard authority process, which was the practice then. The purpose of this bill is to bring the process a good deal more in line with current jurisprudence and international law. I was reflecting—because I think it is worth reflecting—on the perils that would befall New Zealand manufacturing if something like that were to happen again. If a cheap product, mass-produced for a mass market—as underwear for men and boys was back in the 1990s—were to be introduced to the New Zealand market, what would the effect be on manufacturers and, more pertinently in these times, on workers in the factories? For that reason alone, I believe that the introduction of this bill is very timely.

By way of background, I will say a few words on what a safeguard is. It is a temporary duty or levy that can be imposed on imported goods. It is considered an emergency measure. It is applied at the border and is designed to protect domestic industry from injury caused by a surge in imported goods resulting from unforeseen developments. If that is not the case with New Zealand’s economic conditions today, then I cannot think of a better way to describe it.

The bill, as introduced, makes five main changes. The Ministry of Economic Development will be responsible for safeguard investigations, rather than the temporary safeguard authorities that I mentioned before in relation to the underwear from China. Those authorities will be disestablished under this bill. It is worth noting that, I believe, only four complaints were made to a temporary safeguard authority, so it would be more streamlined for the Ministry of Economic Development to have responsibility for safeguard investigations. Underlying that, the Ministry of Economic Development already has expertise in trade rules and resources, whereas it can be difficult to have the temporary safeguard authorities immediately available due to the low number of cases. The purpose of a safeguard is to provide immediate protection, so it makes sense to have a system that works in a timely and streamlined manner.

The second change relates to the time frame of a safeguard investigation, which will be extended from the current 30 days to 75 days, and in some cases may be extended even further out, to 85 working days. This extension of time brings New Zealand into line with the World Trade Organization’s requirements for an investigation. This reduces the risk of a World Trade Organization dispute settlement or, indeed, a review, which can be a costly and resource-intensive process. The third change is that the Minister of Commerce will have the authority to impose a provisional and then a final safeguard duty without taking it through a lengthier Cabinet process.

The fourth change is that the bill specifies, in clause 12(1)(e), the individual considerations to be taken into account when determining whether a safeguard duty is, in fact, in the public interest—and the public interest is a major consideration in a complaint. Some of these considerations might be “(i) the likely effectiveness of a safeguard measure in assisting the domestic industry: (ii) the alternatives to a safeguard measure: (iii) the likely effect of a safeguard measure on the market (including on consumers): (iv) New Zealand’s international relations and trade goals:”, which are particularly important to New Zealand in 2009 and going forward, and, finally, “(v) the strategic importance of the domestic industry.” I venture to say, going back to my earlier illustration, that the manufacture of garments could be argued to be a particularly important domestic industry.

Finally, and this is my last point, the bill repeals the Temporary Safeguard Authorities Act 1987 and replaces it with a regime that is consistent with World Trade Organization rules. This bill brings our temporary safeguard measures up to date and into line with international rules, and I commend it to the House.

Hon MARYAN STREET (Labour) : I rise to speak on the first reading of the Trade (Safeguard Measures) Bill. I will speak for a moment about the kinds of balancing acts that are required in the development of free trade around the world and about the role that this bill plays in that regard.

There is legislation that this bill modernises. Even since the 1987 passing of the Temporary Safeguard Authorities Act, the world has changed substantially. The need to balance a Sovereign nation’s requirement to protect itself and its people with the requirements of open, free, and fair trade obligations under the World Trade Organization (WTO) is a responsibility that should properly fall to Parliament, and it is doing so with the introduction and first reading of this bill.

There are balances to be struck between how a nation protects its domestic industries and, at the same time, manages bilateral and multilateral relationships on a trade basis in a progressive and ongoing way. That balancing act needs to be updated, and is updated somewhat by this bill. The most important thing this bill does is to bring our provisions for emergency measures into line with WTO requirements. That is imperative. We no longer live in a world where we can pull up the shutters and pretend other nations do not exist. Our very existence as an export-driven economy is dependent on the agreement of trade arrangements with other countries.

We have been particularly successful in that respect in the last 9 years. Helen Clark, Phil Goff, and, before that, the Hon Jim Sutton have worked hard to expand our bilateral trade agreements. They have been enormously successful. Perhaps the most successful manifestation of that work was last year’s signing of the free-trade agreement with China.

At every turn with these free-trade agreements, New Zealand seeks to put in labour and environment standards. They are an essential part of our integrity in ensuring that free-trade agreements meet with standards that are acceptable to New Zealanders. We have in the past, when New Zealand underwent huge economic reforms in the 1980s, seen domestic industries, particularly manufacturing, go to the wall because of rapid tariff reduction. We are one of the most open economies in the world, so there are very few protections in the way of tariff barriers remaining for our manufacturers. That caused a great deal of pain 20 years ago, but a more vibrant, more articulate manufacturing sector has emerged from that because of the need to find new markets, and niches within those markets, where New Zealand can produce and sell goods that are desirable overseas and that, preferably, have value added to them before they depart these shores.

With the kinds of free-trade agreements we have been entering into recently—and we have just recently seen a multilateral free-trade agreement signed between Australia, New Zealand, and the 10 ASEAN nations, which takes us into a different realm of free-trade agreements entirely—we need to be able to keep up with this kind of progress, and I believe firmly that it is progress, with suitable protection measures as and when required. They are temporary, they are urgent, and they are in the public interest, as is stated in the provisions outlined in this bill. But more than anything else, they are consistent with WTO requirements.

Our bilateral arrangements are one thing, and they are significant, but we need our bilateral arrangements to be able to move into multilateral arrangements. The Trans-Pacific Strategic Economic Partnership Agreement negotiations that are under way at the moment, which started off with Singapore, Brunei, Chile, and New Zealand as the first four signatories and have now had the United States and Viet Nam added, create a different kind of multilateral forum for us to market our goods.

Where protections are required for the public good in New Zealand, this bill provides for such safeguards. As I said, they are temporary, they are urgent, and they must be in the public good and consistent with WTO provisions. We are not talking here about protectionism, and it is important that members and the public understand the difference. This is not about protectionism; this is about temporary safeguards where an injury may be done to the public good or where a domestic industry needs some time to adjust to a tariff reduction. This is not about allowing dumping and it is not about importing lesser standards into our economy than we would tolerate for our own New Zealand workers; it is about engaging with countries on the international stage on a multilateral basis, in order to achieve the kind of free trade and the exchange of goods that is necessary for this country to maintain the standard of living it requires. This bill brings us up to date in that respect.

One other point I will make about the bill is about the work that went on prior to the Minister of Commerce bringing the bill to the House and prior to its introduction to the House by the previous Minister of Commerce, the Hon Lianne Dalziel—that is, the statement of consultation undertaken in order to enact these provisions. We must not ever overlook the stakeholder consultation that goes on in order to bring about this kind of progressive measure. There was consultation through a discussion paper with a range of New Zealand business groups and firms and also, importantly, with the Council of Trade Unions. Those consultative stakeholder representations give me the confidence we need in this Parliament to ensure that this measure enhances New Zealand’s standard of living and our progress in trade relationships on the international stage. Thank you, Mr Deputy Speaker.

Dr PAUL HUTCHISON (National—Hunua) : Thank you for the opportunity to support this Trade (Safeguard Measures) Bill, which was initially tabled by the Hon Lianne Dalziel back in September 2008, but which is now being debated under the name of that very excellent Minister, Simon Power. What a great team National has in this field, given that we have Tim Groser as our trade Minister. He is doing extraordinary and sterling work on New Zealand’s behalf, day in, day out.

This bill implements a new safeguards regime for New Zealand. It safeguards the emergency measures that are applied at our border, usually in the form of a duty that may be taken to provide temporary protection to a domestic industry from injury caused by a surge in the number of imported goods resulting from unforeseen developments.

Although I was not here for the earlier part of the debate, I did happen to just catch a glimpse of the speech by Dr Kennedy Graham, which was very erudite. He was talking about the concept of free trade being ideal, but that that is only a partial truth. He said that the Green Party espouses fair trade and green trade. He talked about what those are, exactly, and he talked about the importance of having global equity and global sustainability. These qualities may be very admirable, but they are almost impossible—if not actually impossible—to legislate for, because fair trade would be almost impossible to define, and trade being free and fair would require extraordinarily individual integrity in all the players. This bill, as its title suggests, is about safeguard measures, usually in the form of a duty that may be taken to provide those temporary protections we have talked about earlier.

I also happened to get a glimpse of Sir Roger Douglas’ speech, in which he talked about how vital and fundamental free trade is to increasing economic growth on a world basis. What a contribution he has made since the 1980s in terms of opening up New Zealand markets. Today, when my wife rang me to ask about opportunities in buying whiteware, I marvelled that it is extraordinary that in New Zealand we have hugely wide choice at very competitive prices, and we have had that choice for a long time. Goods at the best quality and at the best prices of anywhere in the world have probably been available to us through our pursuit of free trade over some period of years.

But I note that Sir Roger said he had some suspicions about the bill, including the question of whether it would be used to hinder free trade in some way, the need to meet World Trade Organization (WTO) rules—which I believe the bill is absolutely in alignment with—and the questions of whether it is the appropriate way to meet those WTO rules and whether it could be used as an effective non-tariff trade barrier. As I understand it, that last possibility is highly unlikely.

Sir Roger said that the principles involved in international trade should be basically the same as in any voluntary exchange. In international trade, firstly, the people of a particular nation can undoubtedly sell things that that nation produces well and effectively, and it can buy things that it does not produce well or easily. Secondly, it allows an individual country to concentrate on what it does best, and produce that product at the lowest cost per unit. Thirdly, it promotes competition in domestic markets and allows consumers to purchase goods at an internationally competitive best available price. That is very much like the example I was talking about earlier on, in terms of the availability and choice of a whole range of products in New Zealand.

I understand that my excellent colleague Jacqui Dean mentioned the flood into New Zealand markets of Chinese underpants. Again, around Christmas time my dear wife happened to give me a book by that excellent author Joe Bennett about his pursuit to find out exactly where those Chinese underpants came from. He traced them back to the very silk worms that had produced the cotton to enable that particular brand to be made. That pursuit took him many months, and went over a huge variety of different importers and people who put the product together. But again, at the end of the day, what consumers are interested in is quality and value for money. That, indeed, is one of the great values of free trade.

I note that the current bill has a regulatory impact statement, and that does give one comfort as to the fact that the degree of regulation being imposed by this bill is minimal. It should also give a degree of comfort to Sir Roger Douglas. I note that only four investigations have been carried out under the Temporary Safeguards Authority Act 1987, with one investigation resulting in a safeguard being applied. However, New Zealand is potentially exposed to a greater risk of World Trade Organization dispute settlements, and that is why it is so necessary to have this bill. It is to ensure that if there were a challenge through the courts, we have a mechanism to improve the efficiency and clarity of the safeguarding legislation. I note that there was a discussion of a non-regulatory option, but the view was that no non-regulatory measures exist that would be capable of achieving the specified objectives.

In the bill there are a variety of regulatory options, which have been taken up. There is also a statement of net benefit of proposal, including the total regulatory costs. The key benefit of the preferred option with regard to the Government is a significant reduction in the risk of a successful World Trade Organization dispute settlement or judicial review, should an investigation be concluded and a safeguard measure applied. In terms of business, there are not expected to be any significant additional costs to business, and in terms of societal effects, New Zealanders as a whole will benefit significantly from the reduction of trade barriers. This, indeed, is a very worthwhile bill, and it gives me great pleasure to support it in its first reading.

RAYMOND HUO (Labour) : I rise to support the Trade (Safeguard Measures) Bill at its first reading. I am very pleased to see that this bill, which was originally introduced by the Hon Lianne Dalziel under the previous Labour Government, has been reinstated as a Government bill. It is great to see that legislation introduced by the Labour-led Government is now proceeding through the House at reasonable pace.

In an age of globalisation, New Zealand, like any other developed or developing country, benefits significantly from the reduction of trade barriers. However, as a limited exception to free trade, an effective safeguard regime has the potential to promote support for future trade liberalisation among import-competing domestic manufacturers. This bill is about the safeguard regime as part of a coherent trade remedies regime, which could and would have positive effects on investment by providing a means to protect domestic industry from international supply shocks. The safeguard regime, which is temporary, targeted, and adjustment orientated, is not contrary to, but is complementary to, trade policies such as tariff reduction. To be specific, safeguards are emergency measures applied at the border, usually in the form of a duty, which may be taken to provide temporary protection to a domestic industry from injury caused by a surge in imported goods. Such regimes are provided for under the General Agreement on Tariffs and Trade and the World Trade Organization Agreement on Safeguards, which are intended to facilitate adjustment by a domestic industry to increased import competition. Safeguards of this nature are particularly relevant to New Zealand and, to some extent, they are vital for us to ensure that manufacturers retain access to an effective safeguards mechanism at a time when other domestic industry is exposed to increasing import competition.

The existing legislation, the Temporary Safeguard Authorities Act 1987, is outdated. It does not provide adequate means for New Zealand to comply with its World Trade Organization obligations should it be necessary to take safeguard action. The legislation was subject to a review under the Labour-led Government, and that review included wide public consultation. The bill before the House is the result of that good work. The bill repeals the current Act, and doing so will produce compliance with the World Trade Organization rules. It streamlines the process of responding to allegations of dumped or subsidised goods on the New Zealand market, something that will definitely be welcomed by New Zealand manufacturers and suppliers.

Under the leadership of the previous Minister of Commerce the Hon Lianne Dalziel, a comprehensive consultation was carried out. Treasury, the Ministry of Foreign Affairs and Trade, the New Zealand Customs Service, and other agencies were consulted on the discussion document. I note with interest that it was proposed that safeguard investigations be carried out by the Ministry of Economic Development—rather than by independent safeguard authorities—which would report to the Minister of Commerce and recommend whether safeguard measures should be imposed. There is a substantial overlap between different regimes and agencies. For instance, the current legislation does not provide for the imposition of a final safeguard measure where the measure involves an increase in the standard protection through an increase in the tariff. This must be done by Order in Council, under section 9 of the Tariff Act 1988. This can be a lengthy process that could potentially reduce the effectiveness of the safeguard remedy.

The current bill, which is the result of the review and wide consultation, promotes efficient, transparent, and objective investigative and decision-making processes. The changes implemented in the bill will strengthen New Zealand’s safeguards regime and provide better protection for New Zealand domestic industry.

TODD McCLAY (National—Rotorua) : I rise to speak in support of the Trade (Safeguard Measures) Bill. I recognise the contribution to the debate earlier tonight by the Hon Lianne Dalziel. I also recognise the wide consultation that took place before this bill was introduced in September last year.

Trade is vitally important to New Zealand, and I am a firm supporter of free and freer trade. I congratulate the Minister of Trade, Tim Groser, on his excellent work since coming to office and on agreeing to and signing a great number of free-trade agreements—a significant number of which have been signed this year. These free-trade agreements will offer great opportunity to New Zealand businesses and to New Zealand industry. The agreements the Minister has been working on so diligently will open up billions of dollars of trade opportunities to New Zealanders and will offer New Zealand industry important access to the growing markets in Asia. They are markets in which consumers are reaching higher levels of disposable income and developing appetites for many of the goods we produce right here in New Zealand.

Not everybody is as excited by trade negotiations as the members in the House tonight are. When I get home to Rotorua tomorrow I am not sure my family will be waiting to say to me “Can you please explain the Trade (Safeguard Measures) Bill 2008, and take your time. Don’t limit yourself to 10 minutes. Go and do it in full detail, because it is exciting stuff.” But trade is important, and trade negotiation is also important. The importance of this bill is that it will give certainty to New Zealand business and industry and provide protection to our industries where appropriate and where needed.

This bill does a number of things. Safeguards are provided for under GATT and under other World Trade Organization (WTO) agreements. Why are safeguards in trade important? They are important because they protect local industries in exceptional and difficult times from unfair competition.

The bill makes a number of changes. The Ministry of Economic Development will be responsible for safeguard investigations, rather than a temporary safeguard authority. The ministry already has expertise in trade rules and resources, so this bill is an important step in the evolution of our trade protection rules.

The safeguard will also provide immediate protection. It makes sense to have a system that works straight away, and it is important that Ministers are able to take fast and immediate action to protect New Zealand businesses. After all, there is no point in providing protection when businesses have been harmed or have gone out of business.

The time frames will also be looked at. The time frame for safeguard investigations will be increased from 30 to 75 working days, and in some cases to 85 working days. Other speakers have recognised that this is more in line with the WTO standard. This extension brings New Zealand into line with WTO requirements for any investigation.

It is not automatic that if a Minister has concerns about a particular matter, at the end of the investigation the measures will remain in place. However, investigation allows due diligence and an opportunity to look at the effects that imports and cheaper imports may have on New Zealand business, and I think this is a fair and appropriate measure. As I said earlier, the Minister of Commerce will have the authority to impose a provisional and then a final safeguard duty, taking it through to a lengthier Cabinet process.

This bill is also about public interest, and it is only where there is public interest that it would be enacted. The likely effects in considering the public interest could be the effectiveness of the safeguard measure in assisting the domestic industry. There is a need to demonstrate that there was reason for the safeguard measure and that there would be good effects as a result, and also to consider whether other provisions might be taken in its place; the likely effect of the safeguard measure on the market, including on consumers; New Zealand’s international relations and trade goals; and the strategic importance of the domestic industry concerned.

In line with that I will give an example to the House of where the measures might well be used. I am the member of Parliament for Rotorua, and all members in the House will know—I do not need to remind them—that Rotorua is the mountain bike capital of New Zealand. Rotorua has some of the best mountain bike tracks in New Zealand. There are hundreds of kilometres of tracks, and many thousands of people visit Rotorua every year to enjoy these tracks and to ride bikes. The local Rotorua economy gets more than $10 million a year from mountain biking, and this amount is growing year upon year. We have bike manufacturing in Rotorua. These are small companies such as Kiwibikes, which is in the centre of Rotorua and has been manufacturing its own bikes for some time. I know that my friend and colleague Steve Chadwick supports this company very well. The company’s position at 1128 Hinemoa Street puts it right in the centre of Rotorua.

We are very proud of bike manufacturing in Rotorua, and the thousands of people who come to Rotorua very much enjoy riding bikes that are manufactured and produced in Rotorua. I believe that our bike manufacturers, which are growing businesses, can compete with anybody, based upon quality and certainly upon enthusiasm. But there could be times when they could be forced to compete unfairly with overseas manufacturers that for a number of reasons and in a number of ways could flood our market with cheaper products. This could be because of a downturn in the economy or because the New Zealand dollar has strengthened in relation to the currencies of the countries producing bikes and exporting them to New Zealand. It could also be because overseas manufacturers wish to flood our market with their bikes, which would do harm to our market and to local manufacturing by forcing New Zealand businesses out of business, and in so doing getting rid of local competition. Once local competition has gone, those manufacturers can raise their prices and therefore their profits in our markets.

This bill before us today will provide the means for Ministers to provide important protection to New Zealand industry and businesses so that companies such as Kiwibikes in Rotorua are not unfairly affected by the practices of others. This is fitting—and I believe it is right—and WTO law allows when and where such measures are warranted. I am sure that Kiwibikes and other large and small manufacturers throughout New Zealand would want us to support such an important measure, and that Kiwibikes would want me to support this bill and in so doing support its business.

This bill will give certainty to small and large businesses alike; it will give certainty to those that invest in manufacturing and production in New Zealand and in our local economies, and, where necessary, it will give them protection. The bill prevents New Zealand from receiving a rapid influx of cheap imports. It allows time for New Zealand businesses to bring themselves up to the level of international competition required to stay afloat in the current economic climate. It provides for temporary measures whereby New Zealand consumers will continue to have the benefit of the free-trade principles that underpin New Zealand’s trading environment. The key components of an investigation into a temporary safeguard remain essentially unchanged, so no significant increase in the cost to participate is expected.

Earlier speakers in this debate spoke about their concern that the bill would harm free trade. This is a free-trade bill. It provides protections so that free trade can continue, and provides rules and a rules-based approach to trade whereby the WTO is able to stop fighting amongst us. I note, looking at its website, that from 1 January to 30 June 2008 there was a 39 percent increase compared with the previous year in anti-dumping or safeguard measures referred to the WTO. These came from a number of countries, both large and small, and developed or otherwise. In fact, the country that introduced the most measures in that time was Turkey. It is important to recognise this. Decisions taken in New Zealand are not taken in isolation, and there will be WTO oversight. I think the WTO is telling us that the number of measures that were brought into place last year from different parts of the world means that others are watching us, and I have great confidence both in the ministry and in the Minister to be aware of this.

I proudly support this bill as introduced to the House today. It is an important measure. It brings us into line with other countries of the world, and it is an important step towards a continuing trade environment that supports our manufacturers and our important businesses. Thank you.

• Bill read a first time.

• Bill referred to the Foreign Affairs, Defence and Trade Committee.

Hon Dr RICHARD WORTH (Minister of Internal Affairs) on behalf of the Minister of Health: I move, That the Alcohol Advisory Council Amendment Bill be now read a third time. The bill amends the Alcohol Advisory Council Act 1976 to address problems with the current levy-setting mechanisms. It is a technical amendment that introduces an updated and simple calculation system. It future-proofs the levy against new types of alcoholic products, and provides for regulations to be made by Order in Council to fix the rate of levy payable.

The bill introduces a system of alcohol classification bands, an approach that aligns it with the system the New Zealand Customs Service uses to collect alcohol excise duty and excise-equivalent duty. Under this system, a dollar amount per litre of beverage for the Alcohol Advisory Council (ALAC) levy will be set for each alcoholic beverage according to its deemed alcohol content or average alcohol content. This means that alcoholic beverages with a higher volume of alcohol will contribute a higher proportion to the levy. This Government, along with members from other parties, is keen to progress a bill that will improve the way in which the ALAC levy is set.

During the bill’s second reading members spoke on the importance of the work done by ALAC. The Government supports the role of ALAC, and it notes that this bill is a technical amendment to the way in which ALAC is funded, rather than legislation to reduce alcohol-related harm.

There are, in my view, four main reasons why this bill should be passed. First, the levy-setting mechanism is outdated, as it is based on only four classes of liquor. The emergence of ready-to-drink products with around 5 percent alcohol, and of an increasing number of standard spirits with less than 42 percent alcohol by volume, is not readily accommodated by the levy in the way it is currently struck. That highlights the need to future-proof the classification system by enabling the easier classification of emerging types of beverage. Second, the spirits category requires the calculation of what are called “proof litres”—a concept that is no longer in use. Since 1986 the New Zealand Customs Service has measured spirit volumes as litres of alcohol, and proof litres are no longer recorded. Third, the current levy-setting mechanism is unnecessarily complex when viewed alongside the way excise and excise-equivalent duty is set—that is, on the basis of alcohol content. Alcohol importers and producers have often noted that this procedure could be simplified. Fourth—and this is the final point—section 27 of the Alcohol Advisory Council Act 1976 allows the levy to be set by the Minister of Health by Gazette notice. There is no process for Cabinet to be involved in the levy-setting procedure. That is inconsistent, I would argue, with more robust approaches to setting levies such as the procedure for the problem gambling levy.

ALAC is funded by a levy on all alcoholic beverages manufactured in, and imported into, New Zealand. The total levy amount for ALAC during the 2007-08 financial year was $12.4 million. That is small compared with alcohol excise and excise-equivalent duty, which was $795 million in the year ended June 2008. The new system will not affect the total sum collected for the levy. Estimates from the 2006-07 levy round suggest that the beer industry will be affected most by the proposed change to the calculation of the levy, due to the high volume of imported and manufactured beer products in New Zealand. The spirits and wine sectors will both contribute a lower proportion of the levy under the proposed system. The change will have minimal impact on those who pay the levy, and industry groups are generally supportive of the bill.

After looking at the bill and considering submissions from six submitters, the Health Committee recommended that the bill proceed with two minor amendments. Mr Ryall, who was a member of the Health Committee when it considered the bill, was pleased to see the two amendments incorporated, because, clearly, they provided more clarity. I understand that at that time every committee member supported the changes.

The bill will provide an easier, more effective, and more robust process for levy setting in the future. I therefore recommend that the House pass this bill.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : It gives me great pleasure to rise and speak on the third reading of the Alcohol Advisory Council Amendment Bill, which is a non-controversial and common-sense bill.

It is largely a technical amendment bill. Nevertheless, it has attracted considerable and, at times, colourful debate. We have heard a few confessions, a fascinating story about Maurice Williamson’s travels behind the Iron Curtain, and multiple thorough examinations of some of the finer details and history of the bill. Its progress through the House has been quite an education for me as a new member of Parliament.

The purpose of this bill is, of course, to amend the Alcohol Advisory Council Act 1976 in order to create a simplified and more modern approach to the levy-setting mechanisms of the Alcohol Advisory Council (ALAC). The bill changes the method of calculation of the levy charged on each alcoholic beverage. ALAC is currently funded by a proportionate levy on four categories of alcohol—beer, wine, fortified wine, and spirits—according to their volumes consumed during the previous year. The total levy for ALAC during the 2005-06 year was close to $13 million. This is small in comparison with the total alcohol excise, which was $712 million for the year ended June 2006, which is, in turn, minute in comparison with the billions of dollars that alcohol harm is estimated to cost our economy.

The new method introduced by this bill is a levy per litre of alcohol content. The result is that drinks with higher alcohol percentages will contribute a higher proportion of the levy. The Health Committee has recommended that the rates of levy for particular classes of alcohol be made consistent with the rates of excise duty charged on those classes. This does seem infinitely sensible. It is worth noting that the effect on the price of alcoholic beverages at the point of sale will be negligible. The bill is future-proofed against the emergence of new types of beverages that would not easily fit into any liquor class in the current system. These include, for instance, some hybrid drinks that have a mixture of wine and spirits—not to my taste, to be sure—and the alcopops, or ready-to-drink beverages, that seem to be evolving at an ever-increasing rate.

ALAC’s prime objective is to promote responsible drinking and strategies that will minimise alcohol misuse. Although improvements in responsible drinking and the minimisation of harm associated with alcohol misuse and abuse are not the aims of this bill, it does support those aims by amending the Alcohol Advisory Council Act to simplify the current mechanisms for setting the ALAC levy. The amendment provides for a levy-setting regime that is fair, up to date, and simple to calculate, thus securing the future of ALAC.

ALAC’s work is as relevant today as it was in 1976. In fact, the council has done a superb job of moving with the times, and the range of initiatives undertaken by it today is truly impressive. Anamata is the annual national youth conference hosted by ALAC. The purpose of Anamata is to provide a forum where young people from around Aotearoa come together to discuss alcohol issues as they see them. In addition, Anamata provides an opportunity for young people to discuss and debate alcohol issues in culturally appropriate ways. It gives young New Zealanders the opportunity to take part in the wider discussion about the place alcohol should have in our communities now and in the future. That is of immense importance. It is all very well for us to debate the issue of harm reduction and to have a particular focus on issues relating to youth drinking, but without the input from our young people our deliberations—perhaps clouded by the number of years that have passed since most members could describe themselves as young—are likely to be wide of the mark.

ALAC runs a number of campaigns. The “It’s not the drinking. It’s how we’re drinking.” campaign holds up a mirror to New Zealand and our drinking culture. It forces us to question the belief that it is OK to deliberately plan to drink to excess. It forces us to face up to the dangers of alcohol misuse and abuse. ALAC’s television advertisements have become legendary. Yes, they are brutal, but they bring to our screens some of the very real repercussions suffered not only by those people who take their drinking to the extreme but also by their friends and families. ALAC does not take a prohibitive approach to alcohol consumption—far from it. Indeed, ALAC actively supports measured and responsible drinking. However, too many New Zealanders do not drink in a measured and responsible way. Too many New Zealanders bank up their drinking, then spend it all in one go, in one massive binge. That is when most harm occurs.

ALAC’s programmes are designed to change the acceptance and celebration of drunkenness and intoxication, and to reduce the amount of alcohol that we might drink in any one session. It is difficult for us as legislators to tackle something as deeply ingrained in our culture as binge drinking. Clearly, change has to come from within our communities and families. However, it is possible through legislation to set a regulatory environment that supports safer drinking, balances liberty and responsibility, and seeks to reduce the rates of crime, disease, and injury related to alcohol abuse.

The debate around how best to tackle the enormous costs associated with alcohol abuse must be an informed one. It is vital that we resist the temptation to base our decisions on our own bias or our own narrow range of experiences. We have to take an evidence-based approach, and make sure that any legislative change is done in the interests of genuine harm reduction. That is where ALAC comes in. The collection and dissemination of information about alcohol consumption support considered and knowledgable debate, both in the public arena and in this House.

This bill supports the continued existence of ALAC, and its continued ability to advocate, educate, and disseminate information. I wholeheartedly support this bill, and I congratulate the previous Labour Government on introducing and promoting it.

Dr PAUL HUTCHISON (National—Hunua) : It is indeed excellent that the Alcohol Advisory Council Amendment Bill is finally reaching its third reading in the House, and that everybody is supporting it. But where there is some degree of concern is about the fact that the bill was introduced on 11 December 2007. This is a bill to simplify outdated legislation, and one would have thought that if the previous Labour Government had been studious, it would have got on and passed it during its time in office. Instead, it was concentrating on absolutely undemocratic legislation that cluttered up the whole workings of Parliament—legislation like the Electoral Finance Bill. That is what Labour was concentrating on, instead of getting on with good, sensible legislation that would simplify and put into line a measure where the need for it was quite obvious.

I understand that the Health Committee worked extremely well together during the consideration of the bill. There were six submissions and there was unanimity of opinion as to the result.

This bill will address problems with the current method of setting the levy that funds the Alcohol Advisory Council. We recently heard a very good contribution from Iain Lees-Galloway pointing out the extraordinary contribution made by the Alcohol Advisory Council. The work that it does in research, dissemination of information, educational programmes, and innovative treatment programmes is absolutely vital. It does all that work on a budget of about $12.4 million. I believe that the council’s task is undoubtedly an enormous one, and the council does it with extraordinary commitment and dedication. The speaker before Iain Lees-Galloway, the Hon Dr Richard Worth, gave an excellent contribution and pointed out just how much the total levies are. They are in the order of three-quarters of a billion dollars. So it is a very small amount that goes to the Alcohol Advisory Council.

But it is important to note that this bill is not intended to contribute to reducing alcohol-related harm; instead it aims to simplify the calculation of the levy that funds the council. It, of course, has a very significant role to play in reducing the burden of alcohol-related harm.

Hon Member: They’re a bit loose.

Dr PAUL HUTCHISON: He is right; my glasses are a bit loose. I must say it makes me think that there must be a huge number of combinations and permutations of riveting new information that one could contribute to this debate, so I do not want to be deflected by the fact that my glasses are, indeed, a bit loose. I will get them fixed.

The Government is very concerned about alcohol-related harm in New Zealand. However, a technical amendment to simplify the funding of a Crown entity is not the place to debate ways to reduce alcohol-related harm. The good news is that the excellent new National Government is introducing a whole raft of measures to help combat both violence and alcohol-related harm. Only last evening in the House there was a vigorous debate along those lines.

The key point of this bill is to bring the levy-setting regime into line with the excise-setting regime. In 2004 a Ministry of Health review of the levy-setting mechanisms of the Alcohol Advisory Council Act 1976 found four major problems, which are dealt with by the new bill and which were described so eloquently by my colleague the Hon Dr Richard Worth. Firstly, the levy-setting mechanism is outdated. Secondly, it is based on only four classes of liquor. For example, ready-to-drink beverages, commonly known as the “RTDs”, did not exist at the time the Act was passed into law. Proof litres have not been used to measure spirits since 1986. The New Zealand Customs Service measures the volume of spirits as litres of alcohol.

Thirdly, the current levy-setting mechanism is unnecessarily complex when compared with the method of setting excise and excise-equivalent duty based on alcohol content. That bears out the very fact that the lazy previous Labour Government did not get on and pass this bill.

Shane Ardern: It had 9 long years.

Dr PAUL HUTCHISON: As my excellent colleague Shane Ardern points out, the previous Government had 9 long years to pass the bill. But with alacrity the excellent new National Government is expeditiously passing the bill, within our fourth month. The fourth area is that although the current Act allows the levy to be set by the Minister of Health by Gazette notice, there is no process for Cabinet to be involved, and that is inconsistent with other levy-setting approaches.

The bill repeals the four current definitions of “wine” and replaces them with a single definition. [Interruption] One has to think of innovative ways to go over the same subject matter time and time again. My glasses have done me well! The Act currently defines the term “wine” as “all products that, if imported, would be admissible for the time being” under a variety of headings. The term “fortified wine” means “any product that, if imported, would be admissible for the time being” under those same headings, “and that exceeds in strength 14 percent alcohol by volume”. The definition “fruit wine” means “wine manufactured in New Zealand from any product other than grapes”.

The bill repeals all those definitions and replaces them with one definition: that of wine. The Concise Oxford Dictionary describes wine, in noun form, as “an alcoholic drink made from fermented grape juice”, or “a fermented alcoholic drink made from other fruit or plants.” The bill is, indeed, very much in alignment with The Concise Oxford Dictionary in its new definition. It states: “wine means the product of the complete or partial fermentation of any fruit (including grapes), vegetable, or honey, and—(a) includes—(i) cider, perry”—pear wine—“and mead; and (ii) fortified wines such as sherry, port, and fruit or vegetable-based liquors; but (b) does not include—(i) beer or spirits; or (ii) any liquor containing no more than 1.15% volume of alcohol.”

Undoubtedly this bill does some very, very useful things. The proposed regime is up to date and simple to calculate. The new regime is flexible enough to allow for the emergence of new types of beverages, which keep on being changed from month to month by somewhat innovative brewers. There is minimal impact on those who pay the levy, and the price changes will be very small. Finally, the new schedule addresses the concerns raised by New Zealand winegrowers about the need to clarify which rates will be applicable to particular products. It is with great pleasure that I support the third reading of this bill.

KELVIN DAVIS (Labour) : I rise in support of the Alcohol Advisory Council Amendment Bill. As the previous speaker, Dr Paul Hutchison, told us in great detail, this is a technical amendment bill that provides for a levy-setting regime that is fair, up to date, and simple to calculate, and that removes historical anomalies. Previous speakers have touched on those issues, so I will add a personal touch.

I want to talk about some of the social issues surrounding the use of alcohol. I am sure all members have their own stories from their electorates and home towns that they can recount regarding the problems that arise from the consumption of alcohol, and I will add my own tales. I need to add, though, that this bill is not designed to remedy the social ills that alcohol presents, as members have touched on. Even so, we need to take every opportunity we can to highlight the problems that alcohol causes and the harm associated with it.

Only about a week after my candidacy was announced I received a letter from a gentleman in Rotorua who warned me of the perils of alcohol, and particularly the harm it caused to Māori. Although I found the tone of the letter a little condescending towards Māori, I could not help but agree with much of what the gentleman had to say. I assumed from his tone that he was not Māori himself, and I winced at some of the Māori stereotypes he reinforced, such as our not being genetically wired to handle alcohol. However, I felt that there was an underlying concern about us as a people and about the fact that many of us as Māori find ourselves in trouble because of the frequency and volume of alcohol consumed.

I grew up in Leonard Street, Kawakawa, which I can assure members was not a neck of the woods that was affected by skyrocketing real estate prices a few years back. In fact, I doubt whether property values have moved much at all in that particular part of town. Leonard Street is a cul-de-sac that one can get to only by driving down Whiteman Road. I doubt whether there is a road in New Zealand less aptly named, because it is a road full of brown faces. Let me tell the House now that those people are some of the greatest I know. Even though my family moved out of Leonard Street when I was aged 13 and moved a full mile and a half to the other side of town, the friendships I made with kids on that street endure to this day.

But some of my earliest memories are of some of the folk in that street regularly having parties that seemed to last all weekend. None of us living in that street had money, but there always seemed to be money for alcohol. I do not know what was sacrificed so that the weekly party could be had, but I have memories of guitars and singing, cars ripping up and down the street, and often more people sitting on the boot, bonnet, or roof of the car than there were people on the inside being driven. There were 14 families living on that street, and close to 100 kids, excluding the mokos, the whāngai, the nieces, the nephews, and the hangers-on. Of those 100 kids only three, to my knowledge, gained a university degree. Some went on to the police or owned businesses, but many succumbed to the system and did not achieve their potential. I cannot help but wonder about the part that alcohol had to play in that underachievement, given that alcohol and parties seemed to have a higher priority than education.

To change tack slightly, I recall a wānanga held at my marae in Kāretu about 10 years ago where, for part of the time, we spoke about some of our elders who had passed on and what sort of people they were. I was quite astounded that most of our men were described in two ways: firstly, they could swear, and, secondly, they could drink. At the time we laughed because the stories were anecdotes and reminiscences of people we loved, but it dawned on me that the men we held up as role models and examples in our community were actually hardened drinkers—it was OK to drink.

I wonder how our women felt back in those days about having their men come home from work drunk most nights. When the freezing works opened in Moerewa and most men went there to work, many of them rode bicycles to and from work. This was a journey of some 14 or 15 kilometres. On many occasions they would stop at the Star Hotel in Kawakawa on their way back from work and buy a keg—would members believe—and carry it home on their bicycles, drinking as they went. There is a hill and a flat about 4 kilometres from home that carry the beautiful name of Waitemaringi. This hill is where these elders would stop to drink the last of their keg before getting home. Unfortunately, the quantities of alcohol consumed on the way would necessitate a comfort stop. Such was the regularity of this that the name Waitemaringi is basically lost and this hill and flat are now known as Mimi Hill and Mimi Flat respectively. Not only can we conclude that alcohol is partly responsible for the loss of some of my hapū’s beautiful traditional place names, and therefore another part of our culture, but also that my elders set a poor example for our youth, not by drinking and driving but, rather, by drinking and cycling.

This bill arose as a result of a review of the Alcohol Advisory Council Act 1976 conducted by the Ministry of Health in 2004. Problems were found in the way levies were calculated and apportioned. The Alcohol Advisory Council—or ALAC, as it is known—received a total levy amount of $12.4 million in the 2007-08 financial year, which is small in comparison with the $795 million collected as excise payable on alcohol manufactured in New Zealand, and excise-equivalent duty payable on alcohol imported into New Zealand, in the year ended June 2008. Given the amount of damage that alcohol causes, I would like to put in a plug for ALAC to receive a greater share so that it is better able to fulfil its functions, which include research, dissemination of information, educational programmes, and innovative treatment programmes.

Under the system proposed by the bill, the dollar amount per litre of beverage for the ALAC levy can be set for each alcoholic beverage according to its deemed alcohol content or average alcohol content. This means that alcoholic beverages with a higher volume of alcohol would contribute a higher portion of the levy. The new system will not affect the total sum collected for the levy, and the effect on the price to consumers will not be significant—approximately 2c less for a 750 ml bottle of spirits, and a difference of less than 1c for a bottle of wine, a six-pack of beer, or a four-pack of ready-to-drink beverages.

I welcome the changes that attempt to future-proof against new types of beverages that will most likely hit the market over the coming years. When growing up in the 1970s I thought there were four classes of alcohol, as are described in the bill, but I thought they were Lion Red, DB, wine in a cask, and top shelf. I did not really understand at the time that top shelf was not actually a product brand. I remember the first time I sneaked a sip of whisky from a bottle and understood instantly why our people call alcohol wai piro—putrid water. I could not stand the taste then and I cannot stand the taste now. Seeing the range of beverages available and on sale these days, I can only imagine the types of firewater that will be available in the future, with the different mixes of alcohol—spirits and wines—all tasting like children’s cordial. Therefore, it is great that the levy system has been future-proofed to cater for these possibilities. This future-proofing was the first of the improvements to the Act to address the four problems that needed rectifying.

Other speakers have covered most of the technical aspects, but before I wind up I take the time to return our attention to the need for ALAC to receive greater funding in order to support its aims. As principal of Kaitāia Intermediate School, it broke my heart to hear from members of the Kaitāia police and the local safer community group the stories of some pupils’ drinking excesses on Friday nights. It is not uncommon for the police or that community group, in the course of their patrols, to come across highly intoxicated—and in some instances comatose—kids. I can tell the House that, as the father of a 13-year-old girl, the stories of how some of these kids—young girls, mainly—acquired some of their hard liquor absolutely turned my stomach.

I do not want to leave anyone in any doubt as to the need for greater funding for ALAC so that there can be greater access for our youth to educational programmes on the safe consumption of alcohol. My personal belief is that there is not really a safe level of alcohol consumption for youth. However, the reality is that youth drinking is a fact of life, and is often condoned by parents. So if youth drinking is going to happen, our youth need access to information they can relate to, in the hope they can make safe decisions when consuming alcohol. As adults, we need to step up and set an example to our youth, who are really only mimicking our behaviour.

METIRIA TUREI (Green) : I want to make just a very short contribution tonight. The Green Party is supporting this bill, and we are pleased to do so.

I hear a number of concerns from other members about the drinking culture, and the kinds of messages that social marketing is trying to send to the community about the dangers inherent in drinking. Of course, alcohol is a drug like any other drug. It is one of the two major legal drugs in this country. The problem, as I see it, is that alcohol is not treated as a drug in law and in regulation. It would be consistent, and indeed a very good message for this Parliament to send, to have alcohol listed in the Misuse of Drugs Act. I imagine it would be most appropriately listed in schedule 4, and be what is known as a class D drug.

If that was to happen, alcohol could be dealt with by regulation; Parliament would not have to deal with legislation every time we wanted to make a change. We would then be able to provide very strict regulations about the advertising of alcohol and about the provision of alcohol in the community, and we would be able to deal with issues like these levies and taxes on alcohol, all within a regulatory framework that would put alcohol squarely where it belongs, which is alongside other drugs that impact on our community. It would be a very consistent position if we were to put tobacco into the Misuse of Drugs Act, as well—in the same schedule—and therefore give this Parliament, the Government, more control over how regulations and restrictions are set for the sale, the marketing, and of course the display of those drugs in our community.

We must be serious about the harms those drugs cause to our community. They are serious harms. Those drugs cause deaths. I think it is 5,000 deaths a year for tobacco and 1,000 deaths a year for alcohol. People are being killed by the use of those drugs, so they should be treated as other drugs are treated. It is clear that there is no real drive to reintroduce prohibition for the drug alcohol and the drug tobacco. But that is why we have, in law, the capacity for a schedule 4, class D classification, in the Misuse of Drugs Act. It sends the message to the community that drugs, when misused—particularly by young people, but also by the community as a whole—are harmful. Therefore Parliament should rightly have the role of setting restrictions on how those drugs should be used. That would be a consistent position; that would send a consistent message. It would also send a consistent message to the producers of these drugs, the manufacturers of these drugs, that Parliament and the country consider them to be harmful, and will take the maximum amount of responsibility for controlling them in a way that reduces the harm that we have seen them cause to our people.

Dr JACKIE BLUE (National) : I am delighted to support the third reading of the Alcohol Advisory Council Amendment Bill. This bill amends a 30-year-old Act, the Alcohol Advisory Council Act 1976. The bill in front of the House is in essence a technical bill, an amendment to this Act.

In 2004, as we have heard from other members’ contributions, the Ministry of Health reviewed the levy-setting mechanisms of the Alcohol Advisory Council Act 1976 and found four major problems, which are dealt with by the new bill. The first is that the levy-setting mechanism is outdated because it is based on only four classes of liquor: beer, wine, fortified wine, and spirits. In fact, we know that there are now many more, such as pre-mix cocktails and ready-to-drinks. Secondly, some terminology is outdated. The Act uses proof litres, which have not been used to measure spirits since 1986. In comparison, the New Zealand Customs Service measures spirit volumes as litres of alcohol. Thirdly, the review found that the current levy-setting mechanism is unnecessarily complex. Finally, the review noted that there is no process for Cabinet to be involved.

This bill updates and simplifies the current mechanisms for setting the Alcohol Advisory Council (ALAC) levy, which is imposed on all alcoholic beverages manufactured in or imported into New Zealand. I would like to take some time to compliment ALAC, and to talk about its process and levy. ALAC’s total budget for 2008-09 is almost $13 million, and it is funded largely from the alcohol levy that is collected by the New Zealand Customs Service. The levy is charged on both New Zealand - produced and imported alcohol products, intended for consumption in New Zealand. The levy ensures that the funds are targeted at alcohol-related problems. In the 2007-08 year the ALAC levy was just over $12 million, representing approximately 1.5 percent of the total excise and levies from alcohol. The total excise collected for 2007-08, in comparison, was $795 million.

ALAC is a Crown entity, with a single focus on alcohol. It has a statutory role to research, provide advice, and make recommendations to Government authorities in the fields of health, education, and social welfare, and to any other relevant bodies or persons, on alcohol issues. ALAC’s vision is of a nation where people understand the harmful results of alcohol misuse, and share responsibility for minimising them. Where people aspire to moderate alcohol consumption in the environments where alcohol is consumed, ALAC will also support moderation, and abstinence will be accepted as a valid choice to make. These are indeed very commendable visions.

Alongside this, people who have problems with alcohol consumption will be able to receive appropriate support and treatment. As such, ALAC’s important mission is to lead a change in New Zealand’s drinking culture. I have heard tonight that New Zealand has a drinking culture that accepts binge drinking as a normal social behaviour. ALAC’s research shows that about one-third of adult New Zealanders consider drunkenness to be socially acceptable. ALAC considers that this view is no longer acceptable, nor is it sustainable for New Zealand. The social and financial cost of alcohol-related harm has been estimated to be in the billions of dollars per year, in New Zealand.

In the past ALAC focused on strategies to reduce alcohol consumption; now it focuses more on patterns of drinking and the ways people are drinking, as that is the area where most harm occurs. To change the way people drink, ALAC is trying to change the drinking culture. ALAC’s social marketing campaign has achieved high awareness, and it is encouraging New Zealanders to think about their own behaviour. I applaud its powerful recent television adverts.

This bill proposes to align the ALAC levy according to alcohol classification bands, which is similar to the approach used by the New Zealand Customs Service. In essence, this means that drinks with a higher alcohol volume will have a greater levy than drinks with a lower alcohol volume. There is no doubt that this proposed legislation is fairer and modernises current practice. The proposed regime is also simple to calculate, and it has been worded in such a way that new composition alcohol drinks not yet thought about or designed, other than beer, fortified wine, or spirits, can be accommodated. Back in 1976, who would have thought that ready-to-drinks would be one of the biggest growth markets, particularly among young people? The new regime is flexible enough to allow for the emergence of new types of beverages that would not easily fit into the liquor class in the current system, such as ready-to-drinks.

This is not a contentious bill. It was heard by the Health Committee in the last Parliament, of which I was a member. The Health Committee was assured that this bill would have a minimal impact and be far easier to operate. Indeed, it was evident from submissions that industry groups, including producers and importers, were generally supportive of simplifying the process of calculating the levy. We were told that price changes would be very small. The estimates were for an increase of less than 1c for a bottle of wine, a six-pack of beer, or a four-pack of ready-to-drinks, and 2c for a 750 millilitre bottle of spirits.

The Health Committee did, however, recommend some changes to the original bill. We were concerned that there was inconsistency between the excise and the ALAC levy collection systems. For example, in the table in the schedule of the original bill, table wine with more than 14 percent alcohol would have incurred a higher ALAC levy than table wine of less that 14 percent, but under the current excise system, both incur the same levy. The Health Committee felt that this was inconsistent. The new table provided in the bill now ensures that there is consistency between the two systems. In the table wine example there are, in fact, six classes. Retaining the levy but aligning it to the excise collection system is the option supported by the Government and most stakeholders, as it is simpler than the current method, as well as being cheaper and more transparent than other alternatives.

One other change was recommended by the Health Committee. The definition of “rate” has been inserted into the bill to clarify that it is the percentage figure given in the table in the schedule of the bill.

This bill does not address measures to reduce alcohol-related harm. That is not its intention. That will be for future debate on other legislation currently before the House. This bill aims to simplify the calculation of the levy that funds ALAC, which has a significant role in reducing the burden of alcohol-related harm in society.

There is no doubt that there is growing concern in the community about the effect of alcohol and that the community wants to have more of a say. That has been clearly evident in the community in Mt Roskill, where I am a list MP. Last year, the Mount Roskill South community came together to oppose the imminent opening of a liquor outlet that was only 100 metres away from a school, a kindergarten, and a church. If the proposal had been successful, it would have meant that there would be 10 outlets in the Mount Roskill South area. Members of the community were concerned about the growing number of serious incidents of youth crime and violence in the area, and thought that more alcohol outlets would fuel that trend. They had a number of concerns about the current legislation having no teeth, and were concerned that the local body alcohol strategy had no legal status. I am pleased to report to colleagues that in the face of this united front, the proposed outlet did not go ahead.

My community is not alone; many communities around New Zealand are up in arms, determined to have their say. But that issue is for other current legislation in front of the House. In summary, the Government supports this bill and the amendments that have come through after consideration by the Health Committee.

STUART NASH (Labour) : I rise to speak in support of the Alcohol Advisory Council Amendment Bill, and, as my colleagues have done, I welcome the changes that this bill will facilitate. Any bill that provides a level of consistency across any form of industry and/or product can be only a positive step in the right direction. Even though this bill is technical in nature, we must, as parliamentarians, always work to ensure that all legislation is fair, up to date, and simple to calculate. We must also work to ensure that, as far as possible, legislation is future-proofed to take into account possibilities imagined but not yet realised.

This legislation had its genesis in the 2004 Ministry of Health review of the levy-setting mechanisms outlined in the Alcohol Advisory Council Act 1976. The review found four major issues concerning the methodology around the Alcohol Advisory Council (ALAC) levy calculation and apportionment. First, the levy-setting mechanism is out of date. The alcohol market has changed considerably since 1976, and the provisions no longer reflect the range of alcohol now consumed in New Zealand. Second, the spirits category requires the calculation of proof letters, a concept that is no longer in use and has been replaced with litres of alcohol in terms of determining excise duty. Third, the current levy-setting mechanism is unnecessarily complex, and, fourth, section 27 of the Alcohol Advisory Council Act 1976 does not have a process by which Cabinet can be involved in the levy-setting process.

This bill solves the problems that exist in the current levy-setting mechanisms by introducing an updated and simple calculation system that reflects the current alcohol market. As has been noted, this bill does not address concerns around the abuse of alcohol in our society, and it does not debate the social issues around the causes of alcohol abuse and misuse. However, as is the case with the Sale and Supply of Liquor and Liquor Enforcement Bill—another Labour-introduced bill before the House—any legislation that helps our communities to be better served through education and enlightenment around the healthy and safe use of alcohol is a start, and I think we would all agree with that. Our communities deserve this, and our constituents demand this for the sake of our diverse communities and society as a whole.

I think we all know that ALAC does a magnificent job and is a very important body in terms of the delivery of social outcomes to our diverse communities. As has been previously mentioned, ALAC was set up by Norman Kirk’s third Labour Government on the recommendation of a formal commission of inquiry into the sale of liquor, and it is just one of many examples of Labour putting in place important social agencies and advisory councils to help educate our diverse communities around the issues confronting all New Zealanders, either directly or indirectly.

Like many previous speakers, I think that if we went to the ALAC website we would see that it has had about four or five times more hits than it would normally have in a day. Let me talk about ALAC’s vision. I ask members whether they have heard it before.

Dr Jackie Blue: Say it again; it’s a good one.

STUART NASH: Yes, it is worth reinforcing, because it is a very important agency. ALAC’s vision, as its website states, is for “A New Zealand drinking culture that supports the moderate use of alcohol so that whānau and communities enjoy life, free from alcohol harms”. The website goes on: “We will know we are on track when New Zealanders share responsibility for: minimising harm that results from alcohol misuse in our communities, families and whānau; a culture where all aspire to moderate consumption and reject drunkenness, or choose abstinence if that is best for them; widespread understanding of the harms associated with the misuse of alcohol; supporting the measures that control the environments where alcohol is consumed; ensuring that those who do have problems with alcohol consumption will have access to appropriate support and treatment for themselves, their whānau, families and communities.”

I do not think anyone would disagree that those are very laudable goals and objectives. ALAC has a budget of only $12.7 million, but many of us will be familiar with ALAC’s work. Members may be pleasantly surprised to learn that DB Breweries, Lion Nathan, and the Wine Institute are among the organisations that endorse ALAC’s work. Even these companies understand that sensible drinking is the only way we can keep ourselves and our communities safe.

An example of ALAC’s work is the current campaign saying “It’s not the drinking. It’s how we’re drinking.” In my view, this is very effective. It is a salient campaign because it takes alcoholism and binge drinking out of the scenes of pubs and bars and puts it into contexts that we all recognise. There are real people in these ads. These are the guys we play rugby with. They are our girlfriends, work colleagues, mothers, fathers, and wives. Now, when I say “our girlfriends” I am not talking about “my girlfriend”. That is a generic statement, of course. Goodness me! Alcoholism knows no social or economic barriers. I am saying that the advertisement brings our families and the families of our nation into it. We are all affected by the destructive consequences of binge drinking.

It also appears that alcohol consumption does not recognise age or political affiliation. There are some absolutely dreadful statistics for 12 to 17-year-olds. How about the following: 17 percent of 12 to 17-year-olds reported that getting alcohol is not a problem, and 24 percent said they can afford as much alcohol as they want. Goodness me! One in three make no attempt to limit their drinking. We are not talking about university students here; we are talking about high school students. One-third of young people reported that they make no attempt to limit the amount of alcohol they drink—so they do not care about waking up with a hangover. Thirty percent reported that they make no attempt not to drink so much that they forget what is happening. Many claim that it is OK to get drunk—these are 12 to 17-year-olds. Fifty percent reported that it is OK to get drunk as long as it is not every day. Sixty-one percent disagreed with the statement that it is never OK to get drunk.

As for adults, well, goodness me! Twenty-seven percent of adults reported they feel more confident when they drink alcohol. Twenty-four percent agreed that everything seems happier when they drink alcohol. Thirty-nine percent agreed that when they drink alcohol it is easier to meet people and to get to know people. Forty-five percent claimed they enjoyed the buzz they got when they drank alcohol, and 68 percent claimed that drinking alcohol helped them to unwind and relax. Goodness me! Are we that pent up and frustrated? Twenty-three percent disagreed with the statement that they limit the amount of alcohol that they drink so they do not wake up with a hangover. I could go on—and they are pretty damning statistics, are they not? Members can find all those statistics on the ALAC website, and I urge them to go to it, because there is some great stuff on that website.

We are drinking more as a nation. The total volume of alcoholic beverage available for consumption in December 2005 was 458.8 million litres, which is an increase of 14.1 million litres compared with December 2004. That is 100 litres per man, woman, and child in this country. So when we think about the harm caused through excessive consumption of alcohol by those who lose control under the influence, we understand how necessary it is for an organisation such as ALAC to exist. As members of Parliament we have all heard stories from victims who have felt and experienced the misuse of alcohol. There is an ad about people who have been affected by drink-driving, and it shows the drinker being referred to as “Mate!”, but, later, just as “Dave.”

I contend that ALAC’s role is extremely important, and will become more so as the economic crisis starts to deepen even further into the bowels of society. Currently, 7 percent of adults who drink say they do so to escape reality. ALAC undertakes valuable research, disseminates information, and runs educational programmes and innovative treatment programmes designed to target those at risk. For those and other reasons I support the passage of this bill through the House.

NICKY WAGNER (National) : I, too, rise to support the third reading of the Alcohol Advisory Council Amendment Bill. It has been unanimously supported in this House, and it has been very interesting to listen to MPs talk about the use of alcohol in their communities, reflect on their childhoods, and even talk about how alcohol and tobacco should be listed as drugs.

But this bill really concerns only a technical amendment to the Alcohol Advisory Council Act of 1976. The bill is about updating, streamlining, and making a cheaper calculation system for the levy that funds the Alcohol Advisory Council (ALAC). ALAC was set up over 30 years ago after a Royal Commission of Inquiry into the Sale of Liquor. It was set up because at that time, in 1976, it was thought there was a need for a permanent council whose aim would be to encourage responsible alcohol use and minimise the misuse of alcohol. It has been particularly interesting to listen to MPs, to listen to the statistics, and to ask, when ALAC has been going for over 30 years, how much real progress it has made. We are all concerned about the binge-drinking culture in New Zealand; we are all concerned about our young people. We are looking at ways to control the number of outlets in cities, and the hours those outlets are open. Alcohol is more available, but how much has ALAC actually delivered over the last 30 years?

This bill supports the existing levy that underpins the money for ALAC, but it ties the levy directly to, and aligns it with, the separate excise and excise-equivalent duties that are also calculated on alcohol. The whole idea of this change is to make the levy easy to calculate and to have a more transparent process, but it is also to reflect the products in the current alcohol market. Back in 1976 we were drinking very differently—drinking different products, drinking in different places, and drinking at different times. It is interesting to see how the definitions of alcohol have changed. For example, we have taken the four definitions for wine that were originally in the levy, and reduced them down to one.

We have also looked at definitions in terms of the new products that are very commonly in use, but I think that the ones that are perhaps the most frequently used, and the ones that are perhaps most disturbing to New Zealanders are the ready-to-drinks—that is, the mixtures of spirits and sticky soft drinks that young people particularly enjoy. I think that one of the problems that really concern people is that those ready-to-drinks are so similar to soft drinks. Obviously the marketing is designed so that young people can pick them up and go glug, glug, glug, just as they did with soft drinks in the years when they were kids. Ready-to-drinks taste the same as soft drinks, look the same, have similar graphics, and have bright-coloured containers. I think those are the things that make young people attracted to the drinks, but also that cause them not to understand how powerful the drinks are. Ready-to-drinks are certainly leading to lots of trouble for young people.

When we were looking at this levy, we also wanted to make sure that it was flexible enough to be able to deal with future products that we have not thought about yet—to future-proof it so that it would not have to be updated again, as we are doing right now. This levy will not affect the people who pay it. In fact, it is supported by the industry—by producers, manufacturers, and wholesalers. It makes only the most minor of price changes: a few cents on a bottle of wine, on a six-pack of beer, or on those ready-to-drinks.

We support the levy because we support the fact that a levy should go to ALAC, and that ALAC should be educating New Zealanders to use alcohol sensibly and to reduce alcohol harm. We support it because we understand that we need good research into how we are drinking, why we are drinking, and where we are drinking. We need good research so that we can create more innovative treatment programmes. We need good research so that we can educate our young people, and ALAC is particularly active in the education area. It works with schools, it works with communities, and of course it has a very powerful and regular advertising programme to educate us that “It’s not the drinking. It’s how we’re drinking.” In other words, it educates us that alcohol is not necessarily bad—it is how we use that alcohol that can be bad. Those advertising messages are very powerful; 94 percent of New Zealanders have seen them, have listened to them, have been moved by them, and have considered how much they are drinking now and how much they should be drinking in the future. Yes, ALAC is there, it is doing good work, and it is educating New Zealand. It is trying to make us use alcohol more sensibly, and we support it. And we support this bill, which streamlines, simplifies, and calculates the levy for ALAC. Thank you.

BRENDON BURNS (Labour—Christchurch Central) : I rise in support of the Alcohol Advisory Council Amendment Bill. This is, as has been noted, a rather technical bill, but it is none the less a very important update for the Alcohol Advisory Council (ALAC). ALAC’s role is around the minimisation of the harm that alcohol causes, and I believe it is a desperately needed agency in this nation of ours, particularly when we see the many other people whose job it is to promote alcohol. Not very long ago—around the time when ALAC was first suggested in the early 1970s—our drinking culture revolved around the 6 o’clock swill. It was mostly focused on men aged at least 21, and on those much older than that. Now, of course, our drinking culture is evident around the clock—24 hours. Rather than just being about men in pubs, it is very much focused on the availability, around the clock, of alcopops, spirits, wines, and, still, beer—but 100-plus different varieties of beer.

There is absolutely nothing wrong, as most members of the House would agree, with having a sophisticated drink—most of us enjoy it. Just last Thursday I had the pleasure of accompanying the Leader of the Opposition, Phil Goff, on a wander down The Strip in my electorate of Christchurch Central. It was very good natured—people were out enjoying an early evening drink.

Hon Member: Did anyone recognise him?

BRENDON BURNS: Lots of people recognised the Leader of the Opposition. Many people insisted on stopping and talking to him. He did not have a drink with them, but he certainly had his photograph taken with them. That is the sort of sophistication that we all want to support and encourage.

But, unfortunately, that is not the only picture we see with alcohol, which is why ALAC is so important. In fact, ALAC is a brick in the wall against alcohol. Our Sale of Liquor Act, which has as its principal objective the minimisation of harm, is really observed in the breach rather than in practice. In the city of Christchurch, sometimes we do not have to look very far to see a manifest failure to realise the objective, as specified in the Act, of minimising harm. Obviously, ALAC is the agency that tries to assist in that role. We all know that very, very messy consequences arise from the prevalence of alcohol and its associated culture. If we have any doubts about that, we can ask anybody who is at the mop-up end: police officers, ambulance officers, staff at accident and emergency departments, health agencies, and church and social workers. Our current, wide-open liquor laws are driving many of the problems we face in our inner-city areas, and Christchurch is no exception to that. The laws contribute to some of the damage that is done, such as to our reputation as a tourist destination. All sorts of tougher sentences are being promoted, and societal change and other issues are being aired. This bill is a small step in the right direction.

I held a forum last June on the issue of alcohol availability and the harm that it has done—the sort of harm that ALAC is charged with trying to reduce. There was very wide consensus around the need for the minimisation of harm to actually take effect, which this bill attempts to support. At that forum last June in Christchurch, we had almost universal support from the then Minister, Lianne Dalziel, our mayor, Bob Parker, the police commander for Canterbury, publicans, youth workers, and retirees. Barely a dissenting voice was heard at that forum; there was not even any real dissent around the issue of age. What was at stake, and what was discussed, was the harm that alcohol is doing—the very harm that this bill attempts to support ALAC in minimising.

At around the same time, I went with Lianne Dalziel, who was then the Associate Minister of Justice and responsible for liquor laws, on a tour through my inner-city area on a Saturday evening. It brought home in quite stark relief some of the issues we want to try to address around the minimisation of the harm that alcohol does. When we see a 15-year-old sprawled in her own vomit on a main street in Christchurch at 11 o’clock at night, we begin to understand the scale of the issue we are facing. ALAC, through the levy this bill confirms, will help to try to reduce some of the problems that we, as members of Parliament, all see in our communities.

In Christchurch, one issue is around the number of liquor outlets. There are 1,200 outlets across the city, which is more than three times the number of 20 years ago. We can buy alcohol late at night from a supermarket, at 3 a.m. in a bar, and at 5 a.m. from a convenience store. I was pleased that just yesterday the Committee debated the Sale and Supply of Liquor and Liquor Enforcement Bill, which begins to deal with some of those issues. Clearly, Parliament never intended that dairies would be selling alcohol. We also want there to be a move towards the prosecution of people who supply alcohol to younger people, which is also a subject of that bill.

One issue that came up at the forum I held last year related to the input of youth. Alcohol abuse and the harm minimisation that is needed are not just youth issues. Our current laws create quite a volatile cocktail in respect of alcohol being glamorised. ALAC, through its advertising campaign, tries to offset that, but it is really pushing it uphill with a rake to see the clever advertisements that are promoted by the liquor industry, which basically say people cannot have fun unless they have a beer or alcohol in hand. Also, ALAC very much has youth as its focus, and that is why this bill is an important small step. We do not even have disagreement from the Hospitality Association. I believe it thinks that ALAC needs to be well funded, and that we need to minimise the damage that alcohol is doing.

One thing we need to acknowledge is that alcohol is our No. 1 drug problem as a nation. There is sometimes a lot of focus on P, marijuana, and other drugs, but alcohol drives three-quarters of hospital admissions and weekend assault injuries, and it is at the base of most of our domestic violence problems. For most of our crime in total, it is probably a major factor. We need to acknowledge that liquor licences are very easy to get hold of. Basically, people who apply for a liquor licence will get it unless they have a criminal conviction. Occasionally, small victories can be won, such as the rejection last year of an attempt by a Christchurch supermarket to get a full liquor licence for its Moorhouse Avenue store.

The liquor laws are just one signal of what we face as a community and society. We need to develop a broad consensus for some change. I am pleased to see this bill, as it is a small step in the right direction. If we are looking for changes, we need to look at a number of ingredients: parental responsibility, a change in community attitudes, and education programmes. The availability, pricing, and supply of alcohol are also important. We need ALAC, using the funding it will receive under this legislation, to play its role. The Government of the day, whatever its flavour may be, also has to take responsibility. Obviously, it receives a large amount of money through excise tax on the sale of alcohol. Therefore, in the final analysis, the Government is responsible for ensuring that the principal object of the Sale of Liquor Act, which is the minimisation of harm, is actually put in place and into law, and that ALAC and other agencies are funded to assist in achieving that goal.

MICHAEL WOODHOUSE (National) : I rise to take a quick call in support of the Alcohol Advisory Council Amendment Bill. As the curtain falls on the debate on what has been variously described as a technical bill, a tidy-up bill, or a simplifying bill, I reflect on some of the discourse that has taken place.

At the various stages of this bill, speakers have been at pains to point out that this legislation is not intended to contribute to a reduction in alcohol-related harm. The Sale and Supply of Liquor and Liquor Enforcement Bill, which was introduced yesterday, and other bills that are coming up are appropriately designed to do that. Those speakers usually went on to describe the very good work done by the Alcohol Advisory Council (ALAC) and other organisations that work to reduce alcohol-related harm. We were also treated to a confessional from members who described aspects of their ill-spent youth. Of course, they are now reformed. No MPs I know would abuse alcohol—at least that they can remember.

More seriously, we debated the concerning aspects of the very public disorder of events in my own home town of Dunedin, such as the toga parade, the Undie 500, and other alcohol-fuelled events. We also heard some very serious descriptions from Messrs Flavell, Jones, and others of the serious harm alcohol can cause, and it is on this relevant—for me—issue that I will reflect. Last Saturday night a friend, who was a former colleague and one of the nicest people I have ever met, was killed in a car accident in Central Otago. Investigations into the cause of the crash are continuing, but early indications are that alcohol played a part in the actions of the driver of the other vehicle. Alcohol may once again have taken a life and destroyed the lives of many others. No amount of legislation, education, advertising, or attempts at behaviour change will prevent this type of tragedy from occurring.

Although we may differ on the manner and the extent to which this House intervenes in the lives of its citizens, I believe we all have a fundamental goal at the heart of our reason for being here. It is to protect, support, and encourage the well-being of our citizens socially, psychologically, and financially. So when we sometimes light-heartedly debate a technical bill, an update bill, a simplifying bill, or a bill that will not set the world on fire, I hope that we do not lose sight of the goal of passing laws—however technical—that improve the safety and quality of the lives of the citizens of our great nation. I commend this bill to the House, and I look forward to its safe passage.

• Bill read a third time.

CHESTER BORROWS (National—Whanganui) : The purpose of the Criminal Proceeds (Recovery) Bill is articulated as being “to make more effective provision for the confiscation of property that either represents the profits of criminal offending or was used to facilitate the commission of crime”. In thinking of what examples of that might be, and noting some of the points that have been raised by other speakers in respect of this, we think about land.

A point was raised by the honourable member Te Ururoa Flavell in respect of jointly owned land—Māori freehold land, and Māori customary land—but it applies equally to any land. Co-owners who may be in the position of losing their interest in a piece of land can easily be called to mind. We could take as an example somebody who allows a property, like a flat, to be used by extended family—or a family bach or some rural land. A young person may grow cannabis on that land for profit, without the knowledge of the co-owners, and, as a result of a subsequent police operation, the young person is caught and is prosecuted. Perhaps the land is sublet to somebody who grows cannabis on it without the knowledge of other co-owners.

So an action is commenced by the recovery body to have that land forfeited. Obviously, a co-owner who makes an application has the right under clause 33 to appear before the court and to adduce some evidence. The co-owner can eventually make an application against that forfeiture, because the co-owner should not be deprived of his or her co-ownership of, or interest in, that land by the activities of a third party or another co-owner, if he or she did not have any idea that the activity was going on. So if someone is doing something on land that is co-owned, and other people with an interest in that land do not know about it, then it does not mean that the land will be forfeited at the expense of those co-owners’ interests.

Vessels and vehicles that are used in the commission of crime are frequently forfeited. Other people could have interests in a vessel or vehicle that has been used for a drug-dealing offence, and that is the subject of a forfeiture application. It could well be that other people—maybe the spouse or the children—rely on that vehicle to go about their business. They similarly could make application and be heard, or have someone else make application on their behalf and be heard, in argument against that forfeiture.

Thirdly, there is the issue of money in the bank. If money in the bank is going to be confiscated, then there needs to be a provable track of the illegitimacy of that money. If money has been stashed away in some form—in a TAB account, in a bank, or stuffed in a mattress somewhere—and if the recovery body is able to prove the illegitimacy of that money and the fact that it is there, then it would be the subject of an action before the court for forfeiture.

Just returning to the issue of land for a moment, it is important to make the point that, in respect of Māori land, the claimant’s interest would be captured under the legislation as it is written now. The National Government has indicated that it will not be supporting Supplementary Order Paper 5, in the name of Te Ururoa Flavell, in respect of Māori freehold land and Māori customary land, because we believe that the protection is already contained within the legislation as it is written.

Another point that has been made is that Supplementary Order Paper 7, which is being promoted by the Minister of Justice, talks about foreign restraining orders to attack those who have unlawfully benefited from significant crimes.

RAYMOND HUO (Labour) : It is a great pleasure to stand in support of the Criminal Proceeds (Recovery) Bill. I like this bill because, as my Labour colleagues have said earlier in this House, it has real teeth. I note the amendments moved by the Hon Simon Power last night, and I also note that the bill will be divided into three bills. I have no problem with those amendments, and I will focus on them in this debate.

With reference to what Simon Bridges said last night in his speech on this bill, I think we need to reiterate that the reason we are supporting the bill is that it is a good bill and it has real teeth.

Lynne Pillay: And it was a Labour bill.

RAYMOND HUO: Of course.

To tackle crime, particularly organised crime, and to address the relevant issues, we need bills of real substance and ones that are not just examples of window dressing. We are getting measures that are internationally condemned as failed models—for example, the boot camp bill and the “three strikes and you’re out” bill. I do not know how to describe the “three strikes and you’re out” bill, but I note that it is one that has a 20-year implementation period. As for the boot camps, the headline of a Dominion Post story on 2 March says it all: “Judge puts boot into boot camps”. The judge who was being referred to is the Principal Youth Court Judge, Andrew Becroft. He was quoted as saying that the traditional boot camp for young offenders was “arguably the least successful sentence in the Western World.” He said: “It made them healthier, fitter, faster, but they were still burglars, just harder to catch,”.

Therefore, I am very pleased to see that the Government has decided to progress the Criminal Proceeds (Recovery) Bill, which, according to a press release published in 2007, is legislation designed to hit gangs where it hurts. I congratulate the Hon Mark Burton, a former Minister of Justice, who introduced the bill in March 2007, and Mr Martin Gallagher, who chaired the Law and Order Committee. Both have done excellent work on this bill. I also thank the Hon Simon Power for including the bill in the National Government’s 100 days of action. I am glad that the Government rated this bill as more worthy than other measures that have been talked about in the media over the last couple of months, including the ones I have mentioned above.

The bill is based on the principle that crime must not pay. It provides for a new forfeiture regime for the proceeds of crime. It deals with organised crime and allows us to tackle gang leaders who do not get their own hands dirty but enjoy the benefits of their fellow gang member’s illegal activity. Instead of applying the standard of “beyond reasonable doubt”, the bill gives the Crown the power to confiscate profits and assets obtained through criminal activity on the civil standard of proof, which is the balance of probability. No criminal conviction will therefore be required before forfeiture can occur.

The bill establishes two orders to deal with the removal of the profits of crime from a person. One is the profit forfeiture order and the other is the assets forfeiture order. I also note that the Law and Order Committee report mentions points in respect of the issue as to where the recovery body might be located, which would help to clarify where the recovery body should lie.

I agree with the amendments moved by the Hon Simon Power last night. Labour believes this bill finds an appropriate balance between targeting the proceeds of crime and protecting personal and property rights. Thank you.

AMY ADAMS (National—Selwyn) : Along with my fellow members of the House who have spoken on the Criminal Proceeds (Recovery) Bill I can say that it is a great pleasure to speak on the bill and on its Part 1, which has the purpose clause and the like in it. It really is pleasing as a member of the House to be able to stand and hear, from around the House, support for what is good legislation. It will give some real teeth to the crime-fighting initiatives in this country.

I acknowledge that the bill was introduced by the previous Labour Government, and I commend it for doing that. I would have been more impressed if Labour had got around to passing it, but none the less that is something we will rectify.

As we have heard, the bill, in its essence, creates a new civil forfeiture regime for property that has been acquired through crime. Although we already have the Proceeds of Crime Act, it has become apparent that that Act is not sufficient to get to where the real money is being made in crime today. We know that a lot of money is being made through advanced criminal organisations, many of which are the motorcycle gangs and similar gangs that we see, and we know that it is simply not enough to have a forfeiture regime that necessitates the linking of the owner of the property and the actual committing of the offence.

Here we have a bill that sets out to establish a forfeiture regime that enables property to be taken not just from those directly involved in the committing of the offence—and that is the important point—but from anyone who has directly or indirectly profited from that crime. In doing that we are able to really strike at the heart of the people who are making a massive industry from crime.

The clauses that really set out the overall tenor of the legislation are clause 3, which is the purpose clause, and clause 4, which sets out the general overview of restraint and forfeiture of property. But there are some other key clauses in Part 1 that I think are worth touching on. Certainly, the lawyer in me is always drawn first, in a bill like this, to look at the interpretation clause. Anyone who has worked in law understands that that is often where the real teeth and meat of the provisions are.

There are a couple of clauses that I really want to highlight. My friend Chester Borrows has already talked about one of the provisions, which is the definition of “property”. That is an important point. Too often we forget that property is far more than just property in the common parlance, meaning land; it is any form of property, including cash, shares, Harley Davidsons, and debts—any form of property at all.

Hon Member: Dope.

AMY ADAMS: Well, quite often it is dope. Equally, it is not necessary for there to be whole ownership of that property. This measure cannot be defeated simply by having joint ownership with a spouse, a girlfriend, the guy down the road, or whomever. Those are important points to note.

It is also important to comment on the definition of “relevant period of criminal activity” in clause 5. This bill will set up a forfeiture provision that can look back 7 years, and if there has been relevant criminal offending in that time, then the provisions can apply. Relevant and significant criminal offending in this sense includes offences where the maximum term of imprisonment is 5 years or more or—and this is important—offences from which the proceeds or benefit amount to a value of $30,000 or more.

When a person has unlawfully benefited from that type of offending over that 7-year period and has knowingly directly or indirectly benefited from that offending, and, just as important, whether or not he or she was involved in undertaking the committing of the offence, then this provision will kick into gear.

Anybody who seriously suggests that we do not need this sort of reach-through provision in our proceeds of crime legislation needs to think again. By way of example I offer the Killer Bees and Tribesmen sting last year in Auckland and the Waikato that was much written about, which resulted in 51 arrests and the seizure of $200,000 in cash, 538 grams of pure methamphetamine with a street value of more than half a million dollars, 400 grams of cannabis, 15 vehicles, and 12 firearms.

Certainly, the extent, power, and influence that gangs are gaining through this profitable trade cannot be understated, but those sorts of seizures should not fool us into thinking that the legal system we have is working. We know that the seizures of property, under the existing Proceeds of Crime Act, has fallen away considerably, both in number and in value. That tells us that we need reach-through provisions such as those we have in this bill.

LYNNE PILLAY (Labour) : It is a pleasure to stand and take a call on the Criminal Proceeds (Recovery) Bill. I join with my colleague Raymond Huo in acknowledging that this bill has been brought forward from the previous Labour Government. If we look at the 100 days of action, this bill is up there in that it achieves a great deal. It is not window dressing and it does not deal to the most vulnerable in our society, so on that basis I speak very strongly in support of this bill.

The purpose of the bill, as previous speakers have acknowledged, is to reform the existing law by repealing the Proceeds of Crime Act of 1991. I think we all acknowledge and accept that life has become more sophisticated in many ways, and certainly in terms of being accountable for crime in this country. Under the current Act, property that either represents the profits of criminal offending or is used to facilitate the commission of a crime can be confiscated once the criminal conviction is secured. The major change in this bill is that a criminal conviction will no longer be required for the confiscation of property that represents the proceeds of crime or the value of unlawfully derived income. In a nutshell, this bill is based on the principles that crime should not pay and crime must not pay. Labour members certainly believe that this legislation helps to uphold this very, very important principle.

I acknowledge Martin Gallagher, who chaired the Law and Order Committee. The report from that select committee recommended a number of changes. [Interruption] The peanut gallery over there has a few things to say, but I suggest to those members that they might like to acknowledge the members of the select committee in the previous Parliament who were committed to legislation in terms of competency and scrutiny. The member interjecting, Paul Quinn, sits on the Justice and Electoral Committee that I sit on. He has much to learn in terms of applying his thinking to bills that come before the committee and trying to rationalise things, but I guess those are things he will find difficult. I can see members on the other side of the House thinking “Tell us about it. He is a challenge.” I can see Chester Borrows nodding wisely and thinking “You think you’ve got problems, mate.” We agree with Chester.

Paul Quinn: I raise a point of order, Mr Chairman. I suggest that the member is right off the topic of the purpose of this bill. She is giving a running commentary on the behaviour of the Justice and Electoral Committee.

The CHAIRPERSON (Hon Rick Barker): That is not a point of order; it is a point of process. The debate has been in quite good humour. People have wandered off the track, and have often been encouraged to wander off the track by interjections from members on one side or the other. I suggest the member should let the debate go on, and we will have an interesting conclusion.

LYNNE PILLAY: Thank you, Mr Chairman; that is very sensible.

As I said, I acknowledge the Law and Order Committee. I think the Minister in the chair, Simon Power, will acknowledge that a number of the recommended changes have been taken up. I can see him nodding wisely—if he could just do that again. Yes, we can all see that. It is very effective. I would like to run through some of those recommendations. The first is that the police should be the recovery body—a very, very sensible recommendation—and that the definition of the owner of property is extended to include those who may have an interest in it. That extends what I think was a key part of the original bill. That definition clarifies a very important part. The amendment to instruments of crime is to include the proceeds from the sale of property. Again, if we are drawing in and making sure that everything is encapsulated, it is a very, very sensible amendment. Certainly, the clarification of the circumstances in which property is acquired, after a restraining order was made, is very important.

RAHUI KATENE (Māori Party—Te Tai Tonga) : I rise to take a brief call to explain the concerns of the Māori Party about the Criminal Proceeds (Recovery) Bill and its effect on Māori land. We all know that Te Ture Whenua Maori Act 1993 was enacted to halt the alienation of Māori land. However, just last year, contrary to that principle, in considering a situation under the existing legislation a District Court judge decided that the existing legislation overrode Te Ture Whenua Maori Act, and that Māori land was available for seizure. In that case the judge considered that Parliament wanted the court to confiscate Māori land. I do not know where he could have possibly got that idea from, but he thought that Parliament wanted the court to confiscate Māori land. That judge thought that the existing legislation on the proceeds of crime should override the principle that Māori should retain the small amount of Māori land remaining to us.

In its current form, this bill does not correct that view. Mr Flavell’s Supplementary Order Paper provides the opportunity to us at Parliament to correct what, I hope, is a mistake in perception. If we do not do that, there is a chance that more Māori land will be at risk. Last evening the Minister told my colleague Mr Flavell that he had been advised by officials that innocent owners would be able to make application to the court that the land should not be sold. Let me explain to members how that will work. I have an interest in a Māori land block on Rangitoto ki te Tonga / D’Urville Island. I live in Christchurch, work in Wellington for 3 or 4 days of most weeks, and travel around my electorate the rest of the time. I never get to Rangitoto, no matter how much I yearn to. I do not know what is happening on that land block from day to day, or even from month to month, but I am spiritually attached to that block because it is the only speck of land left from the vast landholdings that my iwi held years ago. It is where many of my tūpuna are buried.

However, suppose, unbeknownst to me, one of my distant whanaunga was suspected—not convicted, but suspected—of cultivating weed on the block. If that whanaunga was arrested, under this bill the land would be seized. There would be no court case, and therefore no resultant publicity. The alleged offender would be too whakamā to say anything about it to any of the other owners, and the land would be sold—bang! It would be too late to apply to the court. When would I have the chance to stop this confiscation? When would any of the innocent owners have the chance to go to court to prevent this sale? If I, like most Māori land owners, could not afford to make this application or to pay for a lawyer, who would pay to make this application? The advice the Minister has received is worth less than this paper that I am reading from. The only other way we could make a change to this provision is to make an amendment to Te Ture Whenua Maori Act. I invite the Minister to take a call to respond to our concerns.

Hon SIMON POWER (Minister of Justice) : In response to the concerns raised by the member who has just resumed her seat, I say that I went over this territory last night in respect of advice I have received. The advice was that Māori who have multiple ownership structures in place for land, when they are innocent of an alleged offence that has been committed on the land in which they have an interest, have instruments available to them to exercise their rights. That does not mean that those rights will necessarily or automatically accrue, but a process is in place. I can say to the member that I will watch carefully to see how the provision is utilised, and I give her an assurance that I will monitor the situation carefully.

JOHN BOSCAWEN (ACT) : It had not been my intention to take a call in this debate. However, I feel honour-bound to stand up and respond to some of the comments that came from the Labour member Raymond Huo.

Mr Huo seems to think that if he continues to repeat a mistruth, it might somehow gain credence in this Chamber and in this community. In addressing the Committee, Mr Huo talked about the internationally failed ideas of the “three strikes and you’re out” legislation. Those were his words. He also said that he did not know how to describe it. Well, if Mr Huo does not know how to describe it, I would be very happy to explain it to him.

Hon Steve Chadwick: I raise a point of order, Mr Chairperson. It would be nice if members tried to pronounce names correctly. That is not the correct pronunciation. The pronunciation is “Haw”.

JOHN BOSCAWEN: Speaking to the point of order—

The CHAIRPERSON (Hon Rick Barker): There is no point of order. Would the member just continue with his speech.

JOHN BOSCAWEN: Thank you, and my apologies to Mr Huo.

The member said he did not know how to describe the “three strikes and you’re out” legislation. Let me just explain. ACT’s “three strikes” bill is not a failed idea. It seeks to clamp down on criminals in New Zealand who commit serious violent crimes on a repeated basis—on a repeated basis. The people of New Zealand do not need to be protected from shoplifters or petty burglars. They need to be protected from people who commit serious violent crime. When Parliament starts to look at the victims of crime and addresses how we make society safer, we will start to make progress in society. The way the “three strikes” bill will operate—as proposed by the ACT Party—is that if a person commits a serious violent crime, he or she will be sentenced for whatever term the court awards—

The CHAIRPERSON (Hon Rick Barker): The member has had ample time to respond to what I think was a passing comment made by Mr Huo. This debate is about another bill; this is not an opportunity to speak up about other aspects of the ACT Party policy. I invite the member to address the bill, please.

JOHN BOSCAWEN: I will conclude my remarks by just saying that I was not prepared to sit here and have a mistruth go unchallenged. Thank you.

• The question was put that the amendment set out on Supplementary Order Paper 5 in the name of Te Ururoa Flavell to clause 5 be agreed to:

SIMON BRIDGES (National—Tauranga) : It is good to take a call in relation to Part 2 in the Committee stage.

I agree with Lynne Pillay that the Criminal Proceeds (Recovery) Bill stands for a great purpose—that crime should not pay. Part 2 achieves that purpose. It puts it into play and implements it. Part 2 is also the lion’s share of the bill—approximately 220 clauses. They provide for the restraining orders and for the civil forfeiture orders.

• Progress reported.

• Report adopted.