Hon BILL ENGLISH (Minister of Finance) : Mr Speaker—

Hon Pete Hodgson: I raise a point of order, Mr Speaker. I notice that there appears to be no mention of inappropriate expenditure for self-drive ministerial vehicles in the bill that is front of us, and I wonder whether that means we must wait until next year for the issue to be—

Mr SPEAKER: I am at an absolute loss to understand what that point of order was about. I take a pretty dim view of it, if it was what I perceive it might have been. We will have no more of that.

Hon BILL ENGLISH: I move, That the Appropriation (2008/09 Financial Review) Bill be now read a first time.

• Bill read a first time.

Hon MARYAN STREET (Labour) : It is not often that legislation goes to a select committee and returns to this Chamber worse than before. Usually the select committee deliberation is a process of improvement of legislation, not a process of degeneration. This legislation before us now is, in fact, materially worse than it was before.

There are a number of questions to ask, and the parts in particular that I wish to speak to, and will speak to during the course of this Committee stage, relate particularly to the constitution of polytechnic councils. But it is worth going back to review the purpose of polytechnics and to try, in the discussion of that, to divine the purpose of this legislation, because it is not clear. It is not clear why the Minister for Tertiary Education requires such dominant control of polytechnics around the country. It is not clear why the Minister refuses to have guaranteed iwi representation on polytechnic councils. It is not clear why the Minister is afraid of student representation on polytechnic councils, or of industry, union, and staff representation on polytechnic councils; none of that is clear.

The purpose of a polytechnic is to deliver post-compulsory—that is, tertiary—educational opportunities that are fit for purpose in its particular region. Here we have a Government, within the space of 12 months, taking to the polytechnic sector in a way that it has not taken to any other part of the tertiary education sector in New Zealand. At a time when jobs are at a premium, when people are being laid off, and when normally they expect to be able to turn to their tertiary institutions and say “OK, times are tough. Let me go and upskill; let me go and retrain.”, this Government, through this legislation, is not only limiting opportunities but limiting the way a polytech might respond to the educational learning and training needs of its community. That is most clearly demonstrated in the provisions around the restriction on the number of councillors and on who might be on a polytechnic council.

This legislation, under the Minister’s hand, provides for polytechnic councils to consist of no more than eight members. Although the number is not of particular concern—I do not mind if there are eight—what is of concern is that there are no guaranteed positions for iwi, or for communities, or for anybody who may have an interest, a legitimate interest, in the operation and the offerings of that polytechnic. The second thing of concern is that four of the eight members will be appointed by the Minister, and that is the worry, because that goes to the heart of the autonomy of the institution, which in turn impacts on the academic freedom of an organisation. That has to be of concern to everybody in the tertiary education sector, because who knows who is next?

I would like the Minister for Tertiary Education to get up at some point in this debate and explain exactly why she has chosen to restrict not only the numbers on the councils but also who might be able to be appointed to a polytechnic council. It is not sufficient for the Minister simply to say in the legislation that in principle it is a good idea to have Māori representation. When we are talking about polytechnics that are grounded in the training of young people, and in the retraining of adults who are losing their jobs, it is not sufficient simply to say that iwi representation is desirable in principle.

We know that many of the industries for which polytechs deliver particular training programmes are located in areas where Māori take up a large number of the educational opportunities and where Māori dominate the industries that are being served. I take the example of the Nelson Marlborough Institute of Technology in my own area of Nelson. The forestry, horticulture, viticulture, agriculture, and aquaculture courses that are offered through its programmes are absolutely pertinent to the development of that region. Not only do iwi have a vested interest in the development of the region but they also have an interest, and a very strong interest, in many of those industries as well. So it is not sufficient for the Minister simply to put legislation up that says that we will have only eight members on a polytechnic council, and, by the way, that she will appoint four of those members. It is not sufficient.

I can only assume that the National members on the Education and Science Committee were directed by the Minister to make this legislation worse, because that is what they have done. There will be no student representation on polytechnic councils—which is something that has been in place for a long time—no guaranteed staff representation, and no guaranteed union or business representation. Those are the very people who might be able to advise a polytech on the offerings that that region needs, the kind of training that the industries require the polytech to provide, the certificates, diplomas, and degrees that are necessary to feed into the future, and the future skills required in each of the regions.

This legislation is not only ill-advised but also demonstrates the hallmark of this Minister, which is the obstinacy of the ignorant. She has no grip on the content of the tertiary education portfolio, she has no way of responding, because of her lack of awareness of what is currently provided, and she has no vision for the skills that ought to be provided by our tertiary institutions, most particularly the polytechs, for the next 10 or 20 years. That is the vision that is lacking.

The tertiary education strategy is a wafer thin document that does not link tertiary education opportunities to skills training and the skills that are required for the future of this country. It is a shabby piece of work. It is not worthy of a Minister to come to this House, to strip back polytechs without any justification—with no hint of justification—with no reason that is possible to divine, except for some obscure or hidden reason, to which she is not owning up. That is not good enough—that is not good enough. Because she is ignorant of the impact of these changes on local communities, her refuge is obstinacy. That is not sufficient. That is not a ground on which to make law.

This is not good law; this is not good process. The bill should have come out of the select committee better than when it went in. That did not happen in this case. There are a number of amendments in my name seeking to improve the representation on polytechnic councils, including iwi, staff, students, and community interests. All of those are legitimate claims on the membership of a polytechnic council, and none of them has been adequately addressed in this legislation.

This is a shabby piece of work. It is not going to serve our polytechs well. But, worse than that, it will not serve the needs of our society into the next 10 to 15 years. It is not the stuff that visions are made of. It is not the stuff that will provide for our educational needs in the future. It is offensive on several counts.

Hon TREVOR MALLARD (Labour—Hutt South) : The Minister for Tertiary Education seems to have a problem in respect of the Education (Polytechnics) Amendment Bill. She seems to be able to talk or attend the House, but not both at the same time. We saw that last week in the second reading debate, where she made a fleeting appearance in the House, saw that she had missed her speech, and ran away like a startled chicken. She would not stay in the House. She would not take a later call, as was her right.

We see now a Minister who does not have the courage of her convictions—

The CHAIRPERSON (Eric Roy): You cannot make that inference. All members are honourable members. The member cannot use that word.

Hon TREVOR MALLARD: I cannot believe that this Minister is so out of touch with her portfolio that she does not have the confidence to get on her hind legs and take a call. I think it is disgraceful that the Prime Minister leaves in this position a Minister whose level of competence right through the portfolio is pathetic but in the tertiary area is especially bad. This was the Minister who complained when the vice-chancellors met her—

Sue Moroney: What do they do?

Hon TREVOR MALLARD: Well, it was a case of what they do, but then she complained that the chancellors would have met the Labour Party. She did not understand the difference between a vice-chancellor and a chancellor within the university system. That is just typical of the lack of preparation, the lack of understanding of this sector, on the part of this Minister.

I say to my colleagues from the Māori Party that I regret the fact that they did not take us up on our offer from last week to give us a copy of their amendment so that it could have been considered by our caucus. It was an offer that I made to the Māori Party whip, and I think it was regrettable that this was not taken up. I say to the member Te Ururoa Flavell that consideration will go on now as to whether that amendment will be supported. However, if the member had any real hope of trying to build support for it, then I would have thought he would come to the party that is the biggest party likely to support the shape of his amendment, rather than have us find it on the Table of the House during question time.

I also say to Māori Party members that I will be interested to hear their calls and, in particular, what their view will be on the third reading of this legislation, if, in fact, as I predict, their amendment is rejected by the Government. If it is rejected by the Government, will the Māori Party support this legislation in its third reading? Will the Māori Party vote for something that takes away Māori representation, as it has done on the bill’s first and second reading? I think it is incongruous and surprising that a party pushing so hard for Māori representation in Auckland can vote at least twice for legislation that strips out Māori representation, as it does in this area.

In my second reading speech I gave some credit to Roger Douglas, because I think it is pretty rare in Parliament that the views of one member—albeit backed by the rest of his party—have managed to shift the legislation, and to take it from something that was bad to something that was worse. I see that my National colleagues on the Education and Science Committee are smiling; they know what the story is. They know that without the support of the ACT Party this legislation would not be passed. I think that they, especially Allan Peachey, would probably think that that would not be a bad thing really, because with this legislation we are getting to something that is so far away from a model that involves a community, and from what has been the strength of polytechnics—that is, the involvement of their communities in the decision making.

Local communities do know best; they can have a major influence. They know where the jobs are, they know where the skills that need to be developed are, and that is something that I think is particularly important. But there is a possibility, under this legislation, for the Minister and those appointed by the Minister to totally exclude the local community, or parts thereof. For example, we can look at the Wairarapa. What could well come out of this bill is that the Wairarapa would have no representation, at all. I think that John Hayes did a pretty good job of bringing his local representatives along to the select committee. They promoted the point of view of the Wairarapa and its importance, but did that make it to the legislation? No, it did not; they were ignored. I am sure that one of the things the candidates for the Wairarapa will be working on in the future will be that particular area.

The next question I ask is why this Minister applies this measure only to polytechnics. Why does it not apply to wānanga? There is not a word, not a whimper, and not a whisper from Minister Tolley in the chair.

Chris Hipkins: She’s busy reading about Riley the rat.

Hon TREVOR MALLARD: Ha, ha! No, no—there is no one there able to read that to her. There is not a word.

What about universities? Why does this legislation apply to polytechs and not to universities? How does the Minister differentiate between those different forms of Crown entities?

Hon David Cunliffe: What’s the logic?

Hon TREVOR MALLARD: I think there is no logic with this particular Minister; it is something that is absolutely and utterly lacking.

I also want to know what the rush is. What is the urgency about this legislation? Why is it the key legislation that has to be passed before the Minister goes home for Christmas? You know, she has another bill on the Order Paper that she told us ages ago was much more important. Maybe she does not have the numbers to do what she wants on that legislation; therefore, it languishes on the Order Paper. But nothing in this legislation necessitates movement at this sort of speed.

There is a question about whether corporatisation is going on as part of this exercise. If we were to pick a piece of the education system that Sir Roger would want to sell first, as a bit of a trial, a bit of an experiment, then I am sure that polytechs would be that part of the system. I know that a number of private training establishments are lining up to take over polytechnics if they can, and I wonder whether this corporatisation of polytechnics is in fact the first stage of the agenda that will go on, with the second stage moving on to their sale.

I have two final comments to make on the bill. The first is that as Minister of Education, dealing on occasions with both universities and polytechs in pretty severe financial difficulty, I had no problem with the legislation as it existed, as far as getting people in there to sort the institutions out was concerned. There were some big steps to be taken, on occasions, and they were taken. As Minister I was not always popular for doing that, especially around Taranaki because of the steps that had to be taken there. Popularity was not very important as far as I was concerned; what was important was whether I had the right tools. The tools were there; this legislation is unnecessary.

The final point I will make is that the exposure, as far as we are concerned, is in fact much bigger in the university sector than in the polytechnic sector. That is the area where we are likely to have the bigger problems, but the Minister is not addressing that.

GRANT ROBERTSON (Labour—Wellington Central) : It is absolutely clear that Part 1 of the Education (Polytechnics) Amendment Bill is part of the agenda of this Government to take further control of polytechnics in this country. We on this side of the Chamber were criticised from time to time when we were in Government of having some kind of nanny State agenda. Well, it is quite clear from the behaviour of this Government towards polytechnics that it does not value academic freedom within polytechnics, does not value community representation within polytechnics, and, in fact, is trying here to take further and closer control of polytechnics. No doubt it wants to move down the path of further funding cuts, and, potentially, get rid of some of the polytechnics in this country.

In Part 1 we see a dramatic reduction in community representation, and in the role of communities in governing their polytechnics. That is a great shame, because one of the things that happened under the tertiary reforms in the previous Government is that communities began to have a greater ownership of polytechnics. Communities were part of setting the agenda in terms of how polytechnics would be run, because those polytechnics are critical to providing the labour force for regions. On this side of the Chamber we recognised that critical role, and we began to work more closely with employers and with representatives of workers to make sure that community need was being dealt with by polytechnics. In one fell swoop that is being taken away by Part 1 of the bill, because there is no guaranteed representation for employers. Employers are the people in a community who look to a polytechnic to provide the skilled staff they need. That is the case in any region in New Zealand. Let us take the example of the Wairarapa, which Mr Mallard mentioned earlier. Employers in that region look to the Universal College of Learning to help provide them with their labour force, and they are being cut out of representation at the governance level by this bill and by this Minister. Workers’ representatives, who know about the training needs within communities and know about what is required in terms of developing a skilled workforce, are being taken out of representation at the governance level by this Minister, the Hon Anne Tolley, and by this bill.

The Minister previously told students—another group whose representation in terms of governance has been taken out—that she valued their role. She told the New Zealand University Students Association in July that she highly valued the position of student representatives on governance boards of tertiary education institutions, and that it was particularly important as part of effective and robust quality assurance mechanisms. So what did the Minister do? Not only has she taken out student representation, but she did so after the select committee process. She came over the top of the select committee and went back on what she told students in July. She decided not to stand up for what she told students in July.

The Minister in the chair can go on signing her Christmas cards and not listening to a single word this side of the Chamber is saying. She has not taken a call to defend this legislation; she is signing her Christmas cards. That is how much this Minister thinks of polytechnics, of students, of employers, of workers, and of Māori; she will sit there and sign her Christmas cards instead of getting up, taking a call, and actually defending the fact that she has stripped away community representation from polytechnics. She has gone back on her word to students, which she gave in July, that she valued their representation. It is an ongoing pattern for this Government; it does not want to listen.

Hon Trevor Mallard: I raise a point of order, Mr Chairperson. I apologise to my colleague, but he has just pointed out something that I think is very important. Members have an enormous amount of flexibility, and they do multitask when they are in the Chamber. It is my view—and I think there have been previous rulings in the Chamber that support it—that Ministers in the chair are in a special category. They are there to follow the debate, and there are more restrictions on what they can do than there are on other members. I think there have been previous rulings to do with, for example, the use of laptops. I think it is beneath the dignity of the Chamber for the Minister in the chair, who is meant to be taking notes on the bill, to be writing on Christmas cards.

The CHAIRPERSON (Eric Roy): I am just exercising my mind as to those things that have been eliminated, such as knitting and one or two other things.

Hon Trevor Mallard: Not in the chair.

The CHAIRPERSON (Eric Roy): Yes; those things have been ruled out of order. But in terms of correspondence and the nature of correspondence, I do not think there have been any rulings on those things. Ministers make a call as to how they want to present themselves. In this case I cannot judge whether the Minister is listening, which is what the member is asking. I think that the task she is engaged in is not overly complicated, and I will permit her to continue.

GRANT ROBERTSON: I would never want to contest your ruling, Mr Chair, but I think multitasking by writing Christmas cards and thinking about the bill might be beyond this particular Minister, actually.

In the time remaining to me, I make the point that communities and polytechnics have to work together. If we are to get good outcomes in our workforce, and if we are to get the kinds of skilled people we want, we need communities to be part of governance, and this Minister is stripping that out. Polytechnics could have been playing a significant role in our recovery from the recession if this Minister had been more motivated to invest in polytechnics and support them to play their role, instead of trying to strip out their governance measures, as she is doing today. Instead of wanting to take away student representation and take away Māori representation, she could have supported polytechnics to be an important part of the future of New Zealand. Instead, we are left with the distinct impression that polytechnics are not important, that they are on the chopping block, and that they are about to have their important role of supporting regional economies taken out. The Minister in the chair should take a call, leave her Christmas cards behind for just a moment, and tell us why.

CATHERINE DELAHUNTY (Green) : Tēnā koe, Mr Chairperson. Tēnā koutou katoa. It is appropriate that I start my speech today by acknowledging the loss of a very fine young leader from the polytech sector, Mr Todd Fernie, whose death has been made known to the Green Party. Todd was a leader at the Auckland University of Technology in scholarship and in supporting students with disabilities. This loss will be huge. He was a fine leader in human rights in the polytechnic sector, particularly for people getting a second chance at an education and for people who have disabilities and a disabling society to contend with. We think of him today.

I return to the bill. I have been listening to the debate, and I know there are people outside the Chamber who are listening and who do not regard this bill’s passage as a particularly humorous experience. They are looking seriously at what is driving this bill and what is really behind the changes. I stand to speak for a third time on this deeply frustrating bill, which the Green Party has consistently opposed. I will speak briefly, because what more can be said except that the vast majority of submitters were opposed to the bill?

No one has yet made a good argument for reducing representation. The model is a flawed business model. It is arguably a breach of Te Tiriti o Waitangi. It is limiting community participation, student participation, union participation, and employer representation on polytechnic councils. It gives the Minister excessive powers to appoint half the board, as well as to appoint the chair and deputy chair.

What is behind the bill; what is the rationale? No one produced a good argument in the second reading debate, except possibly Roger Douglas, who said that small boards work better. The majority of the submitters were quite clear that they did not expect to keep having up to 20 people on the boards, but that eight was far too small a number for them. Many of the submitters were happy to look at 12 to 15 as an adequate number. It is very important that we look at the broader issue, and not just at the issue of having a small group of people who are easily managed. This is about a community institution that represents community interests in education, so eight members simply is not enough.

We must also look at the issue of ministerial powers. It is not common for an external person to appoint the chair and deputy chair of a board. It is far more common in the effective working of a board that the chair and the deputy chair are appointed by the members, as a mandate for the members to build trust and to act in good faith. Now we have an external person, the Minister, who not only will appoint four members of the board but also will appoint the chair and the deputy chair. As an earlier speaker said, this is a curiously nanny State-ish approach.

Hon Shane Jones: Shocking!

CATHERINE DELAHUNTY: It is shocking, as the member says.

Ministerial appointments must be driven by something, and as the failure of polytechs has not been established, it would appear that it is an ideological position, driven by a business governance model. That is fine for businesses. The bill is trying to fix a problem that the public tertiary education system does not present, because it is not a business. I know it is hard for some people in this Chamber to believe, but not everything is a business. This is actually an investment in the public good. If it is a governance problem, we need to recognise how we can improve that without reducing the opportunity to recognise the public good.

I worked at Tairāwhiti Polytechnic, and that polytechnic had its issues. Requiring it to act like a business led to some very negative distortions in terms of the student body. Believe it or not, a polytechnic is there for the student body, but what that polytechnic has done is encourage students to enrol for courses for which they were not necessarily suited. We were encouraged to enrol them, whether or not they were suited to particular courses, because the polytechnic needed to survive financially. Students would end up doing courses they were not suited to, and end up in debt and with no qualification. I cannot see how that was in the public interest, or in the public good. But it is a business! If it is a business, all we need to do is get people to pay their money, and there is no responsibility for whether those people actually get an effective qualification out of it. But that is all called choice. I would argue that that is not in the interests of education that is for the public good.

CHRIS HIPKINS (Labour—Rimutaka) : It seems that Max Bradford has made a reappearance in the Chamber today. I am sure he would be very, very proud of several of the bills on the Order Paper. He would be very proud of this Education (Polytechnics) Amendment Bill, and I am sure he would be very proud of the Electricity Industry Bill, which we will also be discussing later tonight. Max Bradford would be very proud of the Education (Polytechnics) Amendment Bill because it bears a striking resemblance to his tertiary review green paper that he introduced into the House in the late 1990s, in the dying days of the last National Government. As a matter of fact, a lot of the proposals that the Minister for Tertiary Education, Anne Tolley, has brought forward to the Committee today mirror the proposals that Max Bradford brought forward about 10 or 12 years ago. That shows how much National’s thinking has moved on in the last decade. National members are debating the same failed ideas that National was putting forward in the late 1990s.

Max Bradford’s tertiary review green paper wanted to introduce a corporate governance model not just for polytechnics but for universities and wānanga as well. It wanted to place a higher share of the cost of tertiary education on to students, in the form of higher fees, and it wanted there to be more private sector involvement in the tertiary education sector, through private training establishments. Ultimately, that is where this bill is going. This bill is a precursor to more private sector involvement in tertiary education.

I have to say, though, that there is one difference between the proposals that Max Bradford would have brought forward at the time and the proposals brought forward by Anne Tolley: Max Bradford would have shown up in the House. He would have spoken in the second reading debate, not scurried away. He would have sent the bill to a select committee. He would have fronted up. He would not have sat in the chair and signed Christmas cards while the bill was being debated in the Committee stage. He would have fronted up and justified the reforms that he was putting forward. We have seen nothing even close to that from this Minister. One would think that after the embarrassment of missing her own second reading speech, the Minister would have been the first person to rise to her feet when the Committee stage came up, to correct the fact that she was too hopeless even to be in the House for the second reading. It will show on the record of the House that there was no substantive second reading speech from a Government Minister because Anne Tolley was too hopeless to show up in the House and make a speech.

Anne Tolley does not care enough about that to try to correct it now, while we are in the Committee stage. For a moment I thought she was conscientiously writing down the points that were being raised by Opposition members, so that she could stand up and respond to them. In fact, we have no evidence that she is going to do that. She thinks that her Christmas cards are more important than the law that she is trying to make in this Parliament. She thinks that Christmas cards are more important than participating in the debate on a law that will be in her name.

Carmel Sepuloni: They’re apology cards to everyone she’s upset.

CHRIS HIPKINS: They could be apology cards to everybody whom she has upset this year. I cannot see enough of them to judge whether that is the case.

This bill is an outrageous abuse of process by the National Government, and it shows once again how little regard the National members have for the voices of people whom they disagree with. They are seeking to remove from the councils of polytechnics the voices of people who are likely to disagree with them.

I have been a member of a tertiary institution council, the Victoria University of Wellington Council. I became a member of that council in 2000, and it would be fair to say that at the time I became a member there had been several years of governance failure. The university was practically broke. Up until that point the university council had included many of the people whom the National Government holds up as pillars of good governance. Roger Kerr was on the Victoria University council when the university just about went broke. He was pushing the types of reforms that the National Government has brought forward in this bill. In fact, I would say to the Minister that the reason Victoria University turned itself round is that it had a very inclusive approach to dealing with its financial deficit and its financial problems. The leadership of the university and the council were very committed to hearing the voices of students, staff, employers, unions, and all of the other stakeholders in the community—the alumni—and were interested in involving those people in the process. That started at the council level. It started right at the highest level of the institution’s governance, and as a result there was widespread buy-in to the changes that resulted from that process. I think there was—

The CHAIRPERSON (Eric Roy): I will give the member another call, but I will just give a little clarification, because he has been a wee bit remiss. It is a convention in the House, and it is recorded in Speakers’ Rulings on pages 24 and 25, that the absence of a member should not be referred to in either the House or a select committee. The point has now been made, and I do not wish to have members continuing with that theme. Members can say a member did not take a call and make a lot of references in that vein, but referring to the absence of a member is not something that is permitted, by convention.

Hon Trevor Mallard: I raise a point of order, Mr Chairperson. The point that I would like you to clarify now is whether it is permissible to say a Minister came into the Chamber for a short time and left the Chamber in a hurry, and to clarify where those lines are drawn. That was the case. The Minister did come into the Chamber. She was here for a very short time, and she ran away—

The CHAIRPERSON (Eric Roy): The member is now getting into the area that I said the member Chris Hipkins should not be going into. I think he has just repeated the things that I have a concern about. I am trying to be consistent with regard to rulings. Any single thing that refers to the absence of a member is out of order.

Jo Goodhew: I raise a point of order, Mr Chairperson. I seek your assistance with regard to Speaker’s ruling 108/5. I ask whether speaking to the question could be a ruling that you would perhaps make on this issue. We are hearing a fair bit of repetition that does not in any way address the question. I ask for your guidance on that point.

The CHAIRPERSON (Eric Roy): The presiding officer takes a range of things into consideration, particularly when it comes to closure time. Repetition, relevance, and a whole range of things are in there, and that is the way that we will deal with that when the time comes.

CHRIS HIPKINS: As I was saying, this part of the bill that we are debating reduces the stakeholder representation on polytechnic councils. That ranges from employer representation through to former student representation, current student representation, staff representation, and so on. In my experience, having been on a university council—those councils are not covered by this bill, but until this point they have followed the same governance model as polytechnic councils—the student and staff representatives are often some of the people who are the most prepared for meetings. They offer an insight and a perspective that is not offered by the corporate governors—if we can call them that—who are involved in the governance of the institutions. As a matter of fact, those representatives managed to haul the institutions back, in some instances, from making decisions that would be detrimental to the long-term interests of the institutions. One of the last Victoria University council meetings that I attended as a student representative—and there will be no guaranteed student representatives on polytechnic councils, if the Minister continues to force this bill through Parliament—

Jo Goodhew: There can be four.

CHRIS HIPKINS: Jo Goodhew said there will be four. Obviously, she has not read the bill, as there have never been four student representatives on polytechnic councils. I think a maximum of three was the allowance for polytechnic councils previously, so perhaps the member might like to read the bill that has been put forward in the name of the Minister.

As I was saying, the student representatives, in particular, provide a unique perspective on the governance of councils. That allows the corporate members, or the non-stakeholder representatives, on a council to be given a unique perspective. At perhaps the last university council meeting that I attended at Victoria University, we were debating a number of changes to some of the statutes of the university. The student representatives put forward a position that the corporate members, or the ministerial appointees, ended up supporting, because they thought that the issues that we were raising on the statutes dealing with student grievances and so forth were very legitimate. Those views would not have come forward if the stakeholder model of governance had been abandoned, but, unfortunately, the model that the Government is moving towards is very much one where stakeholders are excluded from governance. The Government is moving away from the idea of having a representative, participatory democracy, where the people who are impacted on by the decisions of a particular body have the chance to have a say in those decisions. Stakeholders certainly have not had the chance to have a say on much of the legislation brought before the House, including this bill, because the Government has an aversion to the regular parliamentary process. Ministers do not speak on their own bills, bills are not routinely referred to select committees, and so forth.

In conclusion, I simply wrap up by saying this is a bad bill. It excludes people from the governing processes of polytechnics.

Hon Member: So sad.

CHRIS HIPKINS: It is very sad. It excludes from the governing processes of polytechnics people who have a lot to offer to the good governance of polytechnics. The Minister seems to completely fail to understand that stakeholder representatives provide a unique perspective. They provide very valuable input into the governance of polytechnics, and it is a shame that she is excluding them from the process.

TE URUROA FLAVELL (Māori Party—Waiariki) : Ka nui te mihi ki a tātou e hoa tēnei pō. I am pleased to take a call on the Education (Polytechnics) Amendment Bill on behalf of the Māori Party. I simply say that members may be aware of the President of the Māori Party, Professor Whatarangi Winiata.

Hon Shane Jones: Yes, great man—a very good Anglican.

TE URUROA FLAVELL: Ā, he tika tāu! [Yes, you are right!] He is the sort of person who tries to look at everything in a positive light, he seldom gets angry, and he tends to look for the good in everything that is going. We in the Māori Party are very, very much like that. In the second reading of this bill, although we had some concerns in particular about some of the matters raised by Labour members about Māori representation, we spoke to those. We had the view that down the line, there might be the possibility of addressing the issues that I raised in our second reading speech. I signalled at the time that we were looking to put forward an amendment, which is on the Table, for the Committee to consider that might move towards addressing those issues. I apologise to the Hon Trevor Mallard and I acknowledge that with regard to the offer made, we attempted to move in that direction, but, unfortunately, in trying to deal with the parliamentary wording, the wording that we wanted did not quite match up. So the amendment does not quite fulfil everything that we wanted, but it is as close as we will probably ever get to within, I suppose, the realms of the constraints of the parliamentary process. I acknowledge the point that was made and I apologise for that.

Hon Trevor Mallard: Can you get Tau Henare to vote for it?

TE URUROA FLAVELL: We will leave Mr Henare to decide for himself whether to vote for that one, but I acknowledge the point that has been made.

In the second reading, I think I tried to make the point that historically, as with representation in many parts of our democracy, when it comes to Māori representation and the ability of tangata whenua to have an input at the top table of decision making, the chances are very thin. We had that whole debate throughout the Auckland super-city discussion, and even with regard to health boards and local body elections, it is very, very difficult for Māori to find a space on decision-making bodies. Usually, what happens is we fall back on those people whom we might call culturally aware or culturally safe to provide the view for Māoridom that at least puts our hand in there to try to find that space. Some institutions go as far as having advisory boards, but, as Dr Sharples alluded to earlier with regard to the Auckland City debate, this is at the second tier of decision making and we say that we are past that. The Māori representation that we want to talk about comes from a Treaty perspective—from a Treaty right.

Often people ask how we should implement the principles of the Treaty of Waitangi. Well, we have the answer. It is to have a bicultural model that recognises Māori representation on polytechnic councils, and our amendment goes in that direction. We look forward to gaining the support of the Committee, hopefully, for that move. However, the Māori experience is that we cannot rely on clauses like “it is desirable” or “acknowledge special status”. We cannot do that. We cannot rely on those sorts of clauses for the special status of Māori, because they do not address the constitutional significance of the Treaty in any debate on Māori representation.

Our amendment tries to set up a process by, firstly, making the space on the council. Members will see that the amendment is divided into two areas, one named “Constitution of polytechnic councils”, which is trying to find that space. The second part is about how appointments are made. I hope that members will take the time to look at that amendment. I think the key wording that we put into the amendment suggests that it must include at least three members, which is our pitch at least trying to work very hard to find Māori space on those councils. I can say that we have heard about the desire of some to have student representation on councils, and again our amendment has moved towards the direction of addressing that issue.

There are some questions that we would like to put forward. They follow on from some of the debate that we had with Tairāwhiti Polytechnic, which I believe provided some discussion to the Education and Science Committee. Tairāwhiti says that it is OK with regard to its model, right now. Why? Because it has a heap of Māori living on the East Coast, that is why. They find their space at the polytechnic council table. Waiariki Institute of Technology says that it has supported this model. Indeed, it provided the basis of a paper that I provided to the Minister, which was supposed to be the basis of a model from the select committee, but it also moved to a new paradigm that was about our recognition and representation against a Treaty model. We have put that amendment forward, and I suppose it will all be tested this afternoon when we vote on the amendment. At the end of the day, our view is that if we cannot get to that model, then the rest is history. So that might give some sort of answer to the Hon Trevor Mallard.

But the good thing is that some might say that putting those models up is too hard. We have to be brave to make the huge decisions about having equal representation for Māori. It is a huge ask in this day and age, but, strangely enough, John Key was brave enough, because he said: “Pita Sharples, go and ask your people about the issue of the Māori flag. Even though the country might get a little bit upset about it, at least let us be brave enough to put it out there and ask the question.” While members opposite are going on about it, I will make the point that at least people were brave enough to put the question out there, unlike some.

In wrapping up, the question is where we go from here. It is quite simple. We have an amendment, and if it is not passed, then obviously in good conscience we cannot support the remaining stages of the bill. That is pretty straightforward. Aside from that, the Māori Party will be working alongside the Minister of Education in terms of our arrangement with National to find a way forward. It might not necessarily reach the height that we want, but, nevertheless, that is what happens when one is in a small party and one is in a relationship. It is better than sitting on the opposite side of the fence where one cannot say anything or do anything. That is where we are at the moment.

I do not want to go against my colleagues opposite, so I will say that in respect of the amendments proposed by Maryan Street, we are prepared to look at her amendment as the voting goes, because it certainly addresses some of the issues that we want. It does not go all the way, but it certainly comes into line with some things we want to put on the table in respect of our model. As I say, the Māori Party will continue to forcibly push for the Treaty right for representation at tables across the board over our period of coalition with the Government. Of that, members can be sure.

LOUISE UPSTON (National—Taupō) : I move, That the question be now put.

CARMEL SEPULONI (Labour) : I want to point out that the Education (Polytechnics) Amendment Bill really is a signal of the steep slope down which we are going with regard to representation. One thing that has not been talked about so far—and I want to take this angle a little bit—is Pacific representation, because that is part of the reason I am here. Before I even get to that, I want to acknowledge one of our Pacific members on the Manukau Institute of Technology Council who recently passed away. Nancy Sheehan was 48 years old, a mother, and a great woman, and she was one of our Pacific representatives on the Manukau Institute of Technology Council. Now we have only one Pacific representative on that council, but thank goodness we still have one.

I point out that representation is important across the board, whether it be Māori representation, union representation, student representation, or staff representation. But for us the issue is about having fair representation for Pacific people in areas where we have high numbers of Pacific people. This bill effectively takes away the likelihood of fair representation happening. We know that the number of councillors has been cut down from 20 members to 12 members, and then to eight members, and we know that half of those members will be appointed by the Minister for Tertiary Education. We also know that we cannot trust the Minister to make sure that any of her appointees are actually Pacific people, whether or not the polytech is, like Manukau Institute of Technology, Unitec, or Auckland University of Technology—the latter institution is not counted in this instance—located where there are large numbers of Pacific people. We cannot trust the Minister to think to make sure one of her appointees is a Pacific person. Even if the Minister was to appoint a Pacific person, I think the Pacific community would largely agree that the person she appoints would not be representative of us, or that the person would not be the right person to represent us. I just wanted to point that out.

The scary thing about this legislation is that the issue it raises is not just about representation on the polytechnic councils; it is about where else we might lose representation, moving forward. Already I have heard through the grapevine that some moves are being made to take away the representation that Māori and Pacific people have in Creative New Zealand. The Government wants to change the legislation so that Māori and Pacific people will no longer have that representation. We have already seen, earlier this year, the National Government decide that Māori will not have representation on the super-city council. This issue will be a recurring one; we will see it over and over again. I am very concerned about it, as a Pacific person and as a person who represents Pacific people, and we should all be worried about it.

Te Ururoa Flavell said earlier that we cannot rely on clauses that state representation is “desirable”. I have seen the Māori Party amendment, and I cannot say that the amendment is bad; the amendment being put forward by the Māori Party is actually OK. But I cannot understand why the Māori Party still had to vote for the bill when we discussed it last week, despite the fact that everything that was being said by the Māori Party and by Labour was opposed to what this bill suggests. It is not just about denying Māori representation; it actually removes the legislative right for Māori to have representation. Māori already had it, but this bill actually takes it away. The Māori Party could have said it did not support the bill and still put up an amendment. I was confused and really disappointed last week, because the member’s speech went along the lines of saying the same things that Labour was saying with regard to what Māori should be guaranteed under the Treaty, but then it got to the end and went “whammo”; the member said the Māori Party supported the bill despite all of that. Now that was rather confusing to me, and I have not heard anything today from the member Te Ururoa Flavell, the same member who spoke on the matter last week, to convince me that what he was discussing last week made any sense, at the end of the day. I just wanted to point that out.

I go back to the issue of representation. Last week Sir Roger Douglas also stood up in the House and said students and staff should not have any role in the governance of polytechnics. Considering that they are two of the largest stakeholders, particularly students, I cannot understand why he would think that they need to be excluded. But he obviously shares that sentiment with the Minister for Tertiary Education, because she is pushing for that. She says that students, staff, and all the other groups that I have already pointed to do not need to have a voice. Sir Roger Douglas also pointed that out last week. Obviously, we can see why they support the measure. But, as far as we are concerned, students and staff are key stakeholder groups and should have a say on what happens in their local polytechnics.

The National Government seems to want to reframe what polytechnics are about in the first place. Polytechnics were set up to serve the communities in which they are based, and, therefore, it makes a lot of common sense that the people in those communities should have a say on how polytechnics are run. But by doing this, the Government is effectively saying that is no longer the purpose of polytechnics. We on the Opposition side of the Chamber wonder what the Minister thinks the purpose of polytechnics is now, if that is what she is doing. She is taking away representation. She is taking away the opportunity of local people to have a say in their local polytechs. Therefore, I wish the Minister would stand up and clarify the National Government’s new direction for polytechnics, and clarify their new role in this time and space, now that National is in Government. We seem to be missing that clarification. We have not had an explanation of that new direction, because the Minister continues to fill in her Christmas cards and give her apologies to everyone whom she has upset during the year.

The Labour spokesperson on tertiary education, Maryan Street, has put up a number of amendments in respect of this bill. I hope that the National Government takes the amendments seriously and actually looks at them, rather than just pushing them aside and not even looking at what is being suggested. The National Government could take on board a lot of the wise, wise suggestions that our spokesperson on tertiary education has made. She has pointed out that we need to have more than eight people on the councils. Eight members are not enough, and having four appointed by the Minister leaves far too much power in the hands of the Minister over the decisions that are made and the direction that a polytechnic takes.

It has been put to the Minister that we query why she feels she needs to have so much control over what happens in the polytechnics. The National members have pointed out that this measure will allow the Government to intervene more rapidly when polytechnics have issues with regard to their financial or educational performance, but the concern we have is that the Minister will not stop there. Effectively, she will be denying the right of local people, the people who have some stake in what happens in their local polytechnics, to guide the direction of education that occurs in their area.

After we have had to listen to this Government go on and on about how the previous Labour Government was a nanny State and tried to tell everyone what to do, we are concerned that this Minister is trying to intervene and take full control over what happens in our polytechnics. This seems to be in complete contrast with what this Government originally said it would do: that things would come down to individual responsibility; that people would have the right to make up their own minds about things. Now, the Minister is intervening here and taking the lion’s share of control over what will happen in our polytechnics.

I will conclude there. I have made my point about representation. I think that the National Government needs to take seriously the amendments put up by the Hon Maryan Street and the Māori Party. Thank you.

JO GOODHEW (Junior Whip—National) : I move, That the question be now put.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : It is typical of the nature of the Education (Polytechnics) Amendment Bill that the Government is already trying to take closure motions on it, because this bill is all about stifling debate. Members will be aware that in my electorate of Palmerston North tertiary education is a substantial industry and a substantial part of our economy. This bill has sent shock waves through people working at the university, the polytechnic, the wānanga, and the other private training establishments around the city, because they are wondering who is next.

Hon Maryan Street: Tell them about UCOL!

IAIN LEES-GALLOWAY: My colleague Maryan Street is asking me to talk about the Universal College of Learning, and that is exactly what I am here to talk about. This bill does not suit the needs of that polytechnic in any way whatsoever. The homogenised, one-size-fits-all approach to tertiary education that this Government is so obsessed with does not suit the Universal College of Learning at all, because it has three communities to represent. It has Palmerston North, where its head office is based, it also has Whanganui, and it also has Wairarapa. People have been so concerned about the implications of the limitation on community representation and community involvement that the mayors of Wairarapa and Palmerston North have both been moved to submit to the Education and Science Committee on this bill. Unfortunately, their views were completely ignored, and, again, that just sums up the Government’s approach to this. It has completely ignored representations made by the communities directly affected by this bill.

I have a question for the Minister for Tertiary Education. I do not believe for a second that she will get up and answer it, because she has not made a contribution to the debate so far today―

Chris Hipkins: You might get a Christmas card!

IAIN LEES-GALLOWAY: She might send me a Christmas card, but I will not hold my breath. My question is why she has started with the polytechs. We all understand that this bill is a practice run for the universities, the wānanga, and anything else she can get her hands on, but I ask why on earth she has started with the polytechnics. They are the institutions that are most closely linked to their local communities. They provide the kinds of services, the kind of trade education, that their local communities need. Who should have the most say in what those institutions are doing? It should be the employers. They need to have input on the kinds of graduates they need. It should be the workers, as well. They should have input on the kinds of skills that the people coming out of polytechs to work alongside them will have. It should be the local communities. It should be those who have the most interest in what those polytechs actually do and what they achieve, but this bill shifts the emphasis away from that, away from academic freedom, and away from freedom of debate, and it puts all the power in the hands of the Minister.

This is not nanny State. I have heard a few members make comments about nanny State this afternoon. This is bully State. This is the Government getting right in the thick of it, taking control of our polytechnics, and having a one-size-fits-all view that just does not work and will not work. For goodness’ sake, why should the student body have its voice on polytech councils stifled? Students should be in there, making decisions and being part of the education that they receive, but, no, everything will be shifted to majority control by those who have been appointed by the Minister, because she knows best. She will not tell us, talk to us, or engage in this debate, but apparently the Minister knows best.

Grant Robertson: Can she actually speak?

IAIN LEES-GALLOWAY: Well, that is a good question; we might find that out soon. The absolute guts of this bill is about restricting freedom of debate, academic freedom, and the ability for communities to have a say in their own tertiary education and what is provided to their communities. In Palmerston North we have an organisation that works with three different communities. The initial bill—before the bill made it to the select committee—proposed having eight people on the council; there was no way that those three communities could have been adequately represented. But now, as Maryan Street said, the bill that has come back from the select committee is even worse. It has clamped down on the ability for communities to decide who they want on the council, to the point where only the Minister will have any say in, and any control of, how our polytechnics are run.

CAROL BEAUMONT (Labour) : I am gravely concerned about the passage of this legislation. I believe that the provisions of this bill will undermine the quality of tertiary education in our country, and in particular it will continue a very negative trend of this Government; that is, a failure to invest in skills and a failure to understand that we need to upskill our workforce so that we can become a more productive and successful economy. The reason I believe that is that the representation on the polytechnic councils is being severely limited, is being controlled by the Minister, and is being required to act like some sort of commercial board of directors. That is just not appropriate for an institution like a polytechnic, which is a public organisation, a public institution, with multiple educational and social objectives. That includes ensuring that the needs of the local community are being met in terms of learning and skill development. It also means that the needs of the industry, within that area or sector of the economy it is providing learning for, are also being met. The provisions of this bill undermine that.

There is no explanation being given as to why this legislation is necessary. Indeed, it worries me that the Minister is deliberately targeting the polytech sector for reasons that I think many New Zealanders will be very, very fearful of. Handing more power to that Minister to control what are important tertiary institutions, important parts of our community, is something that will worry a lot of New Zealanders. Frankly, this is one of the worst-performing Ministers in this Government. She has trampled all over the sector since she has been there and she has basically ensured that our education system will go backwards.

Reducing the number of representatives on the councils to eight, four of whom are appointed by the Minister and four of whom may include some sort of stakeholder or community representation, is just a joke. What is the problem with the existing polytech system? There has been representation provided for staff, for students, for unions, for employers, and for the community at large. That is appropriate and our polytechs have done a good job. They could do a great deal more. That is one of the points I really want to emphasise. This Government has missed a very real opportunity. We have skill needs in this country; there is no doubt about that. A lot of work has been done under the previous Government to try to pull together a skills strategy, a skills plan, that has the agreement of unions, employers, the Industry Training Federation, the tertiary education sector generally, and the Government as a whole, because we know there is a skills deficit in this country. All of us in this Chamber could probably agree with that.

If we want to really change things, to provide people with real opportunity, then we should be putting a great deal more resource into the polytech sector. We should make sure that the polytech sector has the kind of governance that will reflect the needs of, for example, local workplaces. That is why having union and employer representatives is so important. I will focus on that for the moment. Those are the people who have an idea of what the particular needs are in their workplace. They know what the pre-employment training needs of workers going into industry are, and know what their ongoing upskilling needs are. It is the employers and it is the workers in our workplaces who know those things. It is not accountants, necessarily, and it is not the people whom the Minister might appoint who will be her yes-people. It is the people actually doing the job. I know that that is something members on the other side of the Chamber have a real problem with. In fact, I am surprised: I think this is the first time I have ever said the word “union” and not had a rabid barrage across the Chamber. I do not know what is going on here!

The reality is that workers and their unions have a vital interest in the services of our polytech sector. It is an opportunity provided for them to upskill, as I have said. Why would we be undermining our polytechnics? Why would we be giving this Minister more control? What is she planning? I am really concerned that she will run our polytechs down, ensuring that they cannot do the job properly, and then say they are a failure and they have to be got rid of in some way, or privatised.

Hon ANNE TOLLEY (Minister for Tertiary Education) : I just want to take a very quick call to answer a few of the questions raised. I want to say that it is amazing—well, it is not actually amazing, but it is quite typical—that when one listens to the debate from the other side of the Chamber, those members have only two answers: either to throw more money at something or to throw personal abuse. That is all they know.

First of all, let us look at the polytech sector, which is absolutely critical to tertiary education in this country. The previous Government ran polytechs into the ground. There was $416 million worth of propping up over the last 5 years. So Labour members did not see whether they were effective. They did not check whether they were providing good education for young people and giving them good qualifications. No, they did not do any of that. They just chucked more money at the sector and hoped that it would be all right. Well, it is not all right. It is not doing the job for our young people, especially out in our regions. The Education (Polytechnics) Amendment Bill in front of us today will change that.

The member who led off the debate from the Opposition today, Maryan Street, has to take responsibility as a previous Associate Minister of Tertiary Education for leaving an unfunded commitment of half a billion dollars’ worth of promises in tertiary education. There was no funding for those promises. The previous Government gave this new Government no option but to have another look at how we could fill the gaps and give tertiary education some certainty in funding going forward. That was on top of the $416 million that the previous Government chucked at the sector, which was short-term, propping-up funding.

I can understand why the newer members of that caucus do not know that and why they stand up in this Chamber and ask why we are targeting the polytechs. We are targeting the polytechs because their Labour Government rammed them down financially so that they are not viable. Those members talked about representation and a whole lot of people sitting around representing groups, but they did not talk about anyone making the hard decisions on behalf of students about making sure they get good qualifications and a good education to counter the amount that they have to borrow in loans. They did not talk about ensuring that they have the opportunities. That is what this bill is all about. That is what this Government is all about, and we will make sure that it happens for young people.

BRENDON BURNS (Labour—Christchurch Central) : I am delighted to follow the Minister for Tertiary Education’s intervention in the debate on the Education (Polytechnics) Amendment Bill. She has exited from her Madame Defarge - like act of writing the Christmas cards as we drop the guillotine upon the polytechnic councils of this country. Finally she has come to life and suggested that the previous Labour Government threw money at the polytechnic sector. Well, I tell her that I joined the polytechnic council of Nelson Polytechnic, later renamed Nelson Marlborough Institute of Technology, in February 1999. Who was in Government at that time? What was the first act that that council had to grapple with? The institution had to take hold of and try to sort out a nearly $2 million deficit. So she cannot tell us that Labour ran polytechnics into the ground. Polytechnics have often been regarded as the poor cousin of the tertiary sector, and this bill enshrines that, boots and all. This legislation will make them the powerless poor cousins.

I wonder who the Christmas cards are being written to. She could be writing to the former members of polytechnic councils to say farewell, to thank them very much, and to tell them to get stuffed, because she does not want to have community representation on polytechnics from hereon in. She could be saying to them that she wants to run them like a business and that she will make sure that whoever runs the councils will act to her and to her agenda. Labour has some suspicions about what that agenda will mean. We have had some signals of that, I think.

The question that has to be asked is why simply polytechnics? Why not wānanga? Why not university councils? Well, maybe because the Minister has now realised that the chancellor is not actually a German president and that university councils are a tougher act to take on than polytechnic councils. They have the political clout that polytechnics do not have, so they are probably safe for a time. But their time will come soon.

I acknowledge that Te Ururoa Flavell, from the Māori Party, managed to get the Minister’s attention briefly while he was speaking before. That was a credit to him because it is the only attention the Māori Party has had on this issue, along with its Supplementary Order Paper, which effectively tries to replicate what is already in place and what is being abolished by this bill, which is the representative model that allows iwi, in the case of the Nelson Marlborough Institute of Technology council, to have three representatives. That council works extraordinarily well. I suggest that the Māori Party members are trying to extract a little bit of dignity from this issue with this Supplementary Order Paper. I wish them good luck on that! But really all it would do is reinstate what is being abolished by this bill.

I ask some of the members of the Government, opposite, to stand up and talk on this bill rather more than, for instance, Colin King, the member for Kaikōura, has. He took two short calls in previous debates on this bill. I want him to explain how this bill works for his electorate of Kaikōura. How will the Marlborough community, which is where he is resident, be represented in future on the Nelson Marlborough Institute of Technology council? If, as is logical, the council selects the chief executive, a staff member, a student, and maybe a Nelson iwi representative, then where will the Marlborough community representative be? Where will that voice be heard? Where will Marlborough iwi be heard on that council? Where will Marlborough employers or union representatives be heard?

The council of that institution has included many strong voices for the Marlborough community. I am thinking of people such as the former mayor of Marlborough, Leo McKendry and Fran Jessep, a Marlborough businesswoman and past member of the Canterbury Community Trust board. They were very strong advocates for Marlborough on that council. Their advocacy helped the Blenheim campus of the Nelson Marlborough Institute of Technology to gain The Marlborough Wine Research Centre for the nation, with millions and millions of dollars of research funding brought to that campus as a result of that advocacy, which was strongly put to the council by Marlborough representatives. That will not happen any more under this bill. It is a very, very sad day.

I will comment on the idea that polytechnic councils have all had 20 members. They have not. Most have had much less than that. The Labour Party has signalled very clearly that we are prepared to see a reduction—

Hon Member: Fewer!

BRENDON BURNS: Thank you—fewer representatives than twenty. But there is no case to gut it back to eight members, with four chosen by the Minister, effectively giving her the control. I think this really underscores this Government’s attitude to the education sector.

SUE MORONEY (Labour) : This is a very interesting day in New Zealand politics. Māori have learnt today that they can have a flag, which some of them agree with, on one day of the year, but they cannot have a seat around the table in their polytechnics, where they rely on so many of their young people to be trained for their futures. I think that is very telling about this National Government, and about its agenda towards Māori people. It is also very telling about the Māori Party and its support for this bill, which, as we have already heard, removes the dedicated Māori representation from polytechnic councils.

The debate has been enlightening for another reason. We have finally heard the Minister’s second reading speech. She gave it about 2 minutes ago. It was supposed to enlighten us on the reason why this bill is before Parliament. According to the Minister, who got up on her feet just a couple of minutes ago, the reason is that the polytechnics cost too much. Apparently our polytechnics cost too much. I would like the Minister to get back up on her feet and tell us how much money will be saved by this bill. If that is the reason, and if it is a cost-cutting measure, how much is being saved by the culling of, maybe, five or six representatives from these boards?

I did make a second reading speech on this bill, I say to the Minister. She was not in the Chamber at the time, but I asked the question then about how much money these people got paid for being on these councils. When we asked that question in the select committee, the answer from officials was that actually they did not get paid very much at all. It might have been a couple of hundred dollars, if they were lucky. Essentially, it was a case of people providing a community service for a community that they cared about. What is this Government’s response? The Government’s response to those people is to say that they are not wanted. Their ideas and their passion for skills and industry development are not wanted around the polytechnic council table. Their knowledge of their communities, and the responsiveness that they have been so good at, are not wanted in the polytechnic council.

What is the agenda here? I do not believe it is about cost cutting. Nothing in this bill will save a nickel or a dime. It is simply about taking away the community’s voice. It is about increasing ministerial control over those councils. I think, given this Minister’s performance, New Zealanders should be very worried about what this Minister has in line for polytechnics. One of the strengths of our polytechnic sector has been its responsiveness and its understanding of the local industry. Polytechnics have done that through having representatives around the table who thoroughly understand the local job market and the local training and skill needs, and who are able to impart that knowledge around the table. I am not sure what this Minister is so frightened of, about having those voices around the table.

She also said in her second reading speech, just recently, which took about 4 minutes—or probably 3 minutes, actually—that the polytechnic council sector had been letting young people down. I see no evidence of that. What I see in the area that I am familiar with, Wintec, which is in the Hamilton and Waikato area, is that they have done a very, very good job, particularly in the area of skills. But this Minister’s response, in believing, somehow, not through any research, review, or report—

Moana Mackey: Maybe through an editorial.

SUE MORONEY: Oh, she may have read it in the newspaper. I do not know. Maybe she read it in the book about Riley the rat. She has made an assessment that the sector has been letting young people down, and her response is to take away the student voice from polytechnic councils. How concerned can the Minister be about the needs of young people in our communities when she has put forward a bill that takes away the rightful representation of students around the council table? If she is so concerned about educational standards, why has the Minister put forward this bill, and why have the National members on the select committee argued for and voted for the position of staff representative to come off the polytechnic councils? If those members were concerned about educational standards, they should have stood up for those things, and they did not.

I think we need to hear some more from the Minister. Because if that was her second reading speech, well, when the constitution of these councils is challenged, the officials will not have much to report on, will they? They will not have a second reading speech to rely on, to find out exactly what the Government intended, and what the real intention was behind these Government changes. They will have nothing to refer to, because in the House on the day of the second reading, Gerry Brownlee, I think it was, stood up and said virtually nothing.

Hon JOHN CARTER (Minister of Civil Defence) : I move, That the question be now put.

The CHAIRPERSON (Hon Rick Barker): I am very conscious, members, that Part 1 is the largest part of this bill, and I am prepared to have the debate carry on a little longer, as long as members understand that the debate on the second part, which is much smaller and more process-oriented, will be considerably shorter.

Hon STEVE CHADWICK (Labour) : It is great to have an opportunity to speak on the Education (Polytechnics) Amendment Bill. I was absolutely aghast at the end of a day’s debate, 2 weeks ago, when the Māori Party supported both the Government’s legislation on the emissions trading scheme and the second reading of this bill. When we went home to Rotorua and the rohe of Waiariki, people said they were aghast that that support had been the Māori Party’s response to this education bill. I am pleased to hear Te Ururoa Flavell putting forward an amendment that addresses, or re-addresses, the issue of Māori representation on polytechnic councils. I am pleased to see that amendment, because I wondered whether the Māori Party had seriously lost its way 2 weeks ago, and had rolled over and had its belly tickled just a little too much.

This is a very sad day, with this bill going through its Committee stage today. It reminds me very much of the days that Chris Hipkins talked about of Max Bradford and the green paper and white paper on tertiary education. Members may remember back to when I won the Rotorua electorate from Max Bradford, when one of the largest community concerns was about the future direction of the then National Government regarding the future of polytechs. The previous Labour Government spent 9 years investing in a Skills Strategy that was critically important to the unemployed in our region and the wider region, which included Taupō, Murupara, Rotorua, and Whakatāne. We worked with industry and union representatives on what we expected to see in educational institutions like our polytech in Waiariki, the Waiariki Institute of Technology, which was hard-won for us in Rotorua. With this bill, the Minister is single-handedly wielding ministerial power to take away that community voice. I think this is a sad day for the communities of Rotorua and other regions of New Zealand.

I am also very aware, because I have been lobbied and informed on this matter, that the Minister’s office called for the Waiariki Institute of Technology’s submission on the bill. In that submission, the institute proposed another model in terms of Māori representation on polytechs. That has not been listened to. It was great, and we were all very heartened that the Minister had called for that submission, but we expected to see changes made to the bill.

The situation is quite the opposite to what the Minister said in her “second reading” speech. Our institute is not in deficit. It has turned itself round to match the skills needs of the community in our wider region, and it has done so within budget. It is seen as a great leader. The people involved will be hugely insulted at the comments of the Minister in the chair, the Hon Anne Tolley, today that the previous Government let down the young people of our region. They did not feel let down. They took to second-chance education with great relish, because that is what they were inspired to undertake by the previous Government.

I will mention here the sort of representation that we saw from the Māori and student representatives on the polytech council. I was very close to this issue, because I met the chief executive officer of the institute every 3 months, as well as the polytech council. We had problems with the management of different faculties. One of them was the early childhood education faculty, and we had real concerns about its robustness as we trained those who would go into the early childhood education sector. Do members know that it was the Māori and student representatives who brought that issue to the council table, and who had the council face the issue and turn that faculty around? And the council did. Without those voices, that would not have happened. As well, we heard from the student representative that the student health centre would close down, and also that there was no access around the faculty for students with a disability. Do members think that ministerially appointed representatives to the councils of regional polytechs will bother about student health, about access to the campus and back to where these students have to stay, or about the safety of students when they are leaving faculties late at night? No. Those issues came squarely from the student representative, and that representation has now been taken away by this cruel Government.

Hon TAU HENARE (National) : I move, That the question be now put.

The CHAIRPERSON (Hon Rick Barker): I said before that I think I will take a couple more calls. I hope that they will be solid contributions.

Hon MARYAN STREET (Labour) : I shall go to the amendments that are in front of the Committee of the whole House at the moment, because they go to the heart of some of the concerns we have about this legislation. I listened carefully to the Minister of Tertiary Education’s contribution earlier, and still I was not able to divine the purpose of this legislation from her comments. It is completely untrue to say that the previous Government ran the polytechs into the ground; in fact, it is this Government that has axed the quality reinvestment fund, which was one of those sources of funding that polytechs could apply to in order to ensure that they were able to continue delivering the offerings that their regions required. So that is one of the things that has been cut, and, of course, there are adult and community education cuts yet to come in the polytech sector—but we will save that issue for another day.

I am particularly concerned that every National member opposite clearly has been bludgeoned into submission by the Minister and feels unable to contribute to this discussion. I have a great deal of respect for Allan Peachey, who is the chair of the Education and Science Committee. I know that he will feel very strongly about this legislation, because there is not a piece of the education sector about which he does not feel strongly and about which he is not informed. I regret that those members have been silenced by the incompetence of the Minister and prevented from saying anything in the Chamber. The debate lacks rejoinder because of their silence, and the lack of rejoinder means that they know that this is shonky legislation and will make life for the polytechs worse, not better.

I have tabled a number of amendments, and I am very pleased with the amendment tabled by the Māori Party and I want to speak to that. We will support it; in fact, the Government could have silenced many of our criticisms if it had indicated whether it would support it. If the Government supports the Māori Party, which is, after all, its confidence and supply partner and its best mate when it comes to flying flags, then that might have silenced a lot of our criticism, because my amendments go to the representative nature of the polytech councils. So in the omnibus amendment, which the members opposite may wish to take note of—although I doubt it—I suggest that five members be appointed by the Minister and that those five include a staff member, a student, a member of the community served by the polytech, a member of the iwi served by the polytech, and the polytech’s chief executive. So there would be some guaranteed positions on the polytechnic council.

Secondly, the amendment then says that six members would be appointed by the council according to its statute. That would let the polytech decide in accordance with its own statutes the composition of the dominant membership on the polytech council. That is the omnibus amendment, which is trying to avoid the Minister having control of the polytech councils; that is a dangerous precedent. If the members opposite cannot see that—I am sure Mr Peachey can—then more fool them, because this legislation is the thin end of a wedge for the tertiary education sector. Couple this with the fact that the Minister has not given one iota of a reason but reverts, retreats, into that obstinacy about which I spoke earlier, which is no position for a Minister of Tertiary Education. If, however, the Māori Party amendment should fail, I would seek the support of the Māori Party for our amendment, our omnibus amendment, which achieves similar things in slightly different terms. We are prepared to support the amendment that the Māori Party has put up.

Hon PHIL HEATLEY (Minister of Fisheries) : I move, That the question be now put.

SUE MORONEY (Labour) : I will make a contribution on Part 2 of the Education (Polytechnics) Amendment Bill. Of course, Labour also opposes it because it brings transitional matters to bear on the newly constituted councils. In particular, it brings in the concept of “reconstitution day” for polytechnic councils. Yet we still have not heard one single reason why there is a need for reconstitution of these polytechnic councils.

But we know that, as a result of Part 2 of this bill, there is a narrow window of opportunity for the current councils to have at least some say over what the constitution of those polytechnic councils will look like going forward. They have a small window of opportunity between 1 March 2010 and 1 May 2010 to say the types of people who will be filling the four positions that this Government is allowing councils to have some say over. Of course, of the eight positions in total, the Minister will have complete say over the appointment of four of them—that is, half of the council will be under the direct control of the Minister. Current councils will have that small window of opportunity next year to determine that they think it is important that student representatives be on their committees. They have an opportunity to say so, but it is only a small window of opportunity.

That means that, come reconstitution day, we could find that we have some very differently constituted polytechnic councils right throughout the country. Although all of us on this side of the Chamber embrace diversity, we also think it is important to have some consistency within the sector. But this Government, on reconstitution day, will bring about absolutely no consistency in the membership of those councils up and down the country. Sadly, we have seen that the Government has voted against the Māori Party amendment to Part 1, so no doubt we will see some polytechnic councils with no representation of Māori. On reconstitution day, then, it will be very interesting to see exactly which councils have gone for what type of representation.

This bill is so badly written and has been so badly debated that I am almost ashamed to say I am a member of the Education and Science Committee, which deliberated on it and made it worse. The only thing that makes me very proud is that the Labour members on the select committee produced a very good minority report, because we did not agree with the majority view of the select committee, which brought the bill back from the committee in a worse state than it had arrived in. We face the situation where if those councils do not, or cannot, decide themselves by 1 May next year, then the Minister will appoint every single position—all eight—to the polytechnic council in a particular region. The Minister will appoint them, should a council not be able to agree in that narrow window of opportunity who its community representatives should be.

It is also entirely possible under this bill that a polytechnic could end up with no one from its actual community on the council, because nowhere in this bill is there a requirement, at all, for anyone from the geographical area in which that polytechnic council resides to be appointed or elected to any of those eight positions. We could find that situation on reconstitution day.

Furthermore, on reconstitution day we could find polytechnic councils where there are no women, where there is no gender representation, or where there is no ethnic representation. It became very apparent during the select committee process, as the submitters came in to see us, that far and away the way in which most polytechnic councils get women on to their councils is primarily through staff representation and—we can guess this one—also through student representation. Now that those positions have been removed from being dedicated positions around the council table, if this bill goes through in its entirety, I think that on reconstitution day, 1 May, we will see fewer women on polytechnic sector councils. I think that that is a great shame.

My colleague Steve Chadwick, speaking before, talked about the importance of training early childhood educators, for example, in polytechnics, and I say that we certainly need that voice.

Hon MARYAN STREET (Labour) : I rise to take a call on Part 2 of the Education (Polytechnics) Amendment Bill. Part 2 is a short part of the bill, which covers transitional matters, yet as my colleague Sue Moroney has pointed out, if one looks at the detail of these clauses and at what might happen, then one can see that it is entirely possible that the Minister could appoint all members of a polytechnic council if the polytechs were not geared up to do what they need to do for the purpose of these transitional clauses.

I need to reiterate comments I have made before, because they pertain to this part of the bill as much as they did to the earlier part. This is ill-thought-through; it is a part of the legislation that provides a window for polytechs to do the best they can to ensure that community representation remains on polytech councils. This is the only thing that can spur polytechs into achieving at least some modicum of community representation on their councils, because the Minister cannot be guaranteed to do so. The Minister may say in the legislation that it is desirable to have Māori on polytech councils, but nothing in the legislation requires that to happen, or even acknowledges the purpose of polytechs and the kinds of students who look to polytechs for upskilling, retraining, and qualification acquisition.

This is the technical part of this legislation, which is as offensive as the substantive part in Part 1, because it simply points out that polytechs now have to ensure that the people they are now allowed to have on their councils do represent their communities, so that the polytechs can have at least some semblance of remaining in touch with their communities and representing and addressing the learning needs of their communities. That is so, even if it be through the Universal College of Learning, which, as my colleague Iain Lees-Galloway said earlier, has to serve the quite different communities of Wanganui, Palmerston North, and Masterton. That polytechnic now has to make sure that it has a broad enough representation in only four members, so that it can guarantee there is some voice for the community in the running of a major tertiary institution in its region.

It is not good enough to have no speeches from Government members, regardless of whether or not they were on the select committee. It is not good enough to have no contribution from any of those members, and to have only a fatuous one from the Minister. As well as being factually incorrect, it was a disgrace on every other level. The speech did not give any rationale, and it did not explain the need for this legislation. So National caucus members are going like sheep to the slaughter and are simply following without demur, because they have not been allowed to say anything. They are voting for legislation that is a disgrace—

Hon Dr Wayne Mapp: Argh!

Hon MARYAN STREET: —and that does not serve tertiary educational opportunities well, I tell Dr Mapp. It does not serve skills acquisition for the future of this country well. I thought that, for somebody who used to teach in the tertiary education sector, that member might have had at least a passing acquaintance with skill needs and educational offerings. The transitional matters in Part 2 of this legislation are the only prompt to polytechs to get community representatives on councils, quick and fast.

• The question was put that the amendment set out on Supplementary Order Paper 106 in the name of the Hon Anne Tolley to Part 2 be agreed to.

GRANT ROBERTSON (Labour—Wellington Central) : The debate on the title clause is an important one, because the current title is a very anodyne one: the Education (Polytechnics) Amendment Bill. I do not think that the title in any way reflects what the National Government is doing tonight in terms of polytechnics. I think the bill should be called the “Education Polytechnics (Ministerial Control) Amendment Bill”, because that is, quite clearly, what is taking place here this evening. The Minister is taking control of polytechnic councils by giving herself the ability to appoint four of the eight members, and inevitably one of those members will be the chair and one will be the deputy chair. But at least there is concern about ministerial control, and the view that the title should refer to that control is a view held not only by Labour.

I would like to put on record parts of the submission of the Human Rights Commission on this bill. The commission has raised a number of concerns about ministerial control. It says in its submission: “The balance of power is tilted in favour of Ministerial appointees,” and it goes on to explain why it has concerns about that. It states: “As the regulatory impact statement provided with the Bill notes, … there is a risk that the proposals will create a perception that the Minister will have more control over polytechnic councils.” In fact, I would say that it is not a perception but a reality. The commission goes on to say that it notes that a comprehensive 2003 independent review of governance across New Zealand’s tertiary education institutions recommended reducing, rather than increasing, ministerial powers of appointment.

That review was comprehensive and independent, and it said we should reduce ministerial powers of appointment. But instead we stand here tonight debating a bill that should be entitled the “Ministerial Control of Polytechnics Bill”, because it is going the opposite way. It is, in fact, increasing ministerial control. It is taking away academic freedom and taking away the ability of communities to be represented on those councils.

The Human Rights Commission finished its submission by saying: “While the legislation retains references to both concepts, a number of proposals increase the level of Ministerial control over appointment and removal of council members. As a result, the Bill potentially reduces academic and other staff members’ involvement in governance and institutions’ autonomy.” That is the nub of this issue. This bill is moving control of polytechnics away from the communities they serve and into the hands of the Minister.

Another title that would accurately reflect this bill would be the “Education Polytechnics (Exclude the Community) Amendment Bill”, because that is actually what it does. It takes away the representation of the community. If members on the other side of the Chamber are concerned—although we would not know because they have not actually said anything—that that is just Labour’s view, I will read to them from the submission of Jono Naylor, the Mayor of Palmerston North. This is what he said: “The stated public policy objectives of this bill include to improve the governance capability and effectiveness of polytechnic councils. Yet this bill seeks to reduce local governance and create the potential for majority power on all polytechnic councils to reside with ministerial appointees. This will have the consequence of reducing the perception of academic freedom and reducing the long-term resilience and capabilities of local communities to be significant parts of local service decision making.” That is the point. This bill is reducing the ability of communities to have a say in how their polytechnics are run.

During the last Parliament under the previous Government, we tried to move towards communities being more closely involved in polytechnics, because they are so important to the regional labour markets in those communities. This bill means that employers, the people who most benefit from those people who graduate from regional polytechnics, have no guarantee of representation whatsoever. They are part of the community that will be excluded from being part of that governing role, as a result of this bill. Equally, organisations representing workers will not be included, let alone students, staff, iwi, and all the people who make up the communities that are part of their polytechnics. Those people, who feel a sense of ownership of polytechnics and want to support them, will be excluded by this bill.

Perhaps, in the end, what this bill should be called is the “Education Polytechnics (Tolley’s Folly) Bill”, because the Minister has today given the most appalling performance. We have heard only one intervention from the Minister today, and it was an intervention that was full of mistruths about the last Government’s record on polytechnics. She did not in any way attempt to justify the bill. On the other side of the Chamber there are experienced members who have not spoken once today to defend this bill, and that is a great shame.

SUE MORONEY (Labour) : It is a little difficult to debate the title and commencement clauses of this bill, given that we still have had very little information from the Minister in the chair, Anne Tolley, about the reasons why we are even debating this bill to start with. Certainly, the short contribution she made—which was, I presume, in place of the second reading speech, which she arrived in the House too late to deliver at the time—did not give us any clues, and neither does the title. The title, as my colleague Grant Robertson has said, is the Education (Polytechnics) Amendment Bill. New Zealanders might see that title and think the bill was going to do something to improve skills development in our country. They might think it will do something for our young people, who are, in large numbers under this Government, going on to the unemployment benefit. They might think it is something positive. Little would that title give away that the thing this bill does do is dumb down the voice of communities in the running of their polytechnics. It also dumbs down the voice of the people in local industries.

If there is one criticism we sometimes hear in New Zealand about tertiary institutions and their responsiveness to communities, it is that sometimes they are not close enough to what is going on in industry. It is said sometimes that they take more of an academic view than actually listening to what is happening in industry. Yet here we are debating a bill that takes away the industry voice around the polytechnic councils—the very voice that was able to directly say what the needs of the local community were and what the local labour market needs were, and make sure that the training was absolutely responsive and relevant to young people, and sometimes mature students, in those communities of interest. Here we are with a title that gives us no clues about what is about to be carried out under this bill.

It is Draconian legislation. It reminds me of what a National Government did back in the 1990s to the health system. Do members remember? National took away elected community representatives from our district boards and then called them Crown health enterprises. It took away elected community representatives and replaced them all with ministerial appointees. All of them were replaced with ministerial appointees, and guess what? We saw user-pays come into the health system as quick as one could blink, quite frankly. The community lost its ability to influence any decision-making about what was happening in our public hospitals or our broader public health system. I see exactly the same mistake being repeated here, again by a National Government. We have a bill that sounds like it might be quite positive—the Education (Polytechnics) Amendment Bill—but it is in fact repeating the mistakes of the past.

We have heard that the bill gives the Minister the ability to appoint the entire polytechnic council, and we could end up—as we did in the 1990s in the health system—with the entire polytechnic council meeting behind closed doors, not reporting to any community representatives, and not having any accountability. They may not even live in the area, because there is no requirement under this bill for that to happen.

The date on which this legislation commences, and that is another part of this debate, is 1 March 2010. That is a very important date for the polytechnic councils to take note of, as it is the date on which they really have to start making some firm decisions, unless they want complete ministerial control of their council, come 1 May. It is on 1 March that councils first get the window of opportunity to say that, yes, they do require a student representative on their council going forward, that they will require a staff representative on their councils going forward, and that they do think it is important that Māori are required to be around the council decision-making table.

If the current councils do not start carefully considering those provisions on 1 March, then they will lose that window of opportunity. If they have not constituted by 1 May four of the positions that they are allowed to constitute for the new council going forward, then they will face the prospect of having their entire council appointed by the Minister. That is something we should be very concerned about. I do not know that the polytechnic councils understand how important that window of opportunity is. From 1 March the councils must make their statements, because otherwise the Minister will do it for them.

The CHAIRPERSON (Lindsay Tisch): I move, That the report be adopted.

Hon RODNEY HIDE (Minister of Local Government) : I move, That the Local Government (Auckland Law Reform) Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Auckland Governance Legislation Committee for consideration, and that the committee present its final report on or before 4 May 2010.

A lot of work has been undertaken on the governance of Auckland, and I believe that the rest of the country has seen Auckland at its best. I would particularly like to thank the Auckland Transition Agency, Mr Mark Ford, and also the legal counsel for the transition agency, Mr Rob Fisher, for the outstanding work they are doing on behalf of Auckland and, indeed, the country.

This bill completes the legislative framework for implementing the Government’s decisions on governance arrangements for a Greater Auckland. It builds on the two previous Auckland governance bills considered by the House this year. The governance of the Auckland region has been cause for concern for at least the past 50 years, with all attempts at reform during that period failing to provide enduring solutions. These problems and the lack of workable solutions were amply demonstrated in the report of the Royal Commission on Auckland Governance. That report, released in March 2009, found that Auckland’s regional council and seven territorial authorities lacked the collective sense of purpose, constitutional ability, and momentum to address issues effectively for the overall good of Auckland.

This Government has addressed the urgent need for change expressed in the royal commission’s report. Change is essential to allow Auckland to develop into the world-class city that it is capable of being, and must be, for the future of both Auckland and New Zealand. The importance of local government to the growth and prosperity of Auckland should not be underestimated. Good governance enables civic leaders to think regionally, plan strategically, and act decisively. Governance arrangements affect the ability to solve the larger and longer-term challenges effectively. The Auckland region needs decisive leadership, robust infrastructure, and facilities and services to cater for its people. The provisions of the two previous Acts and the proposals in this bill will deliver a united Auckland governance structure, strong regional governance, integrated decision-making, greater community engagement, and improved value for money.

We have also been, and remain, committed to making these decisions in a timely manner so that Auckland can get on and start reaping the rewards of the reforms. This bill will give the new Auckland Council the tools to be up and running effectively in November next year, following voters electing their new representatives in the October 2010 local government elections.

The previous two Acts set out the Government’s key ideas for Auckland. The Local Government (Tamaki Makaurau Reorganisation) Act 2009 and the Local Government (Auckland Council) Act 2009 provided for the creation of one Auckland Council with one mayor, and the disestablishment of the existing local authorities, on 1 November 2010; the establishment of local boards, to ensure the participation of local communities in council decision-making; the establishment of the Auckland Transition Agency as the body responsible for the transition to the new core Auckland local governance arrangements; the high-level framework for the structure of the new Auckland Council; and the direction and provision of powers for the Local Government Commission to determine the boundaries and the wards of the Auckland Council, and the number and boundaries of the Auckland Council’s local boards and their membership.

This is an omnibus bill that develops and enhances the two earlier Auckland Acts and amends many other pieces of legislation. The scope of the change to be achieved is significant, and it is complex. Multiple organisations are to be disestablished and their staff and assets moved into new or different organisations. The planning and rating systems of eight councils are to be integrated into one unified system by 2012. Local boards, which are a new and exciting concept for local government in New Zealand, are to be established and integrated into the council’s planning and decision-making systems. The key provisions of the bill are to make further provision for the Auckland Transition Agency to undertake the establishment of the new local governance arrangements in Auckland, to effectively and fairly manage the transition of staff and assets to the new structures, and to prepare for local elections in October 2010; to provide the substantial detail for the Auckland Council to be able to operate effectively upon its establishment on 1 November 2010; to provide a structure and governance framework for council-controlled organisations to achieve the regional effectiveness of operation that underpins the Government’s reforms; to establish Auckland Transport and make further provision for Watercare Services Ltd; to provide further detail of the relationship between the council’s governing body and the local boards; to provide mechanisms to enhance Māori, Pacific, and ethnic participation in council processes; and to provide transitional planning, funding, and rating arrangements through to July 2012, including details of how Auckland will move from eight planning and rating processes to just one.

Although the Government is committed to having the legislation enacted as soon as practicable, we are also mindful of the need to provide the citizens of Auckland and other interested parties with the opportunity to submit their views on the Government’s proposals through the select committee process. This bill is comprehensive and complex, and it is only proper that it receives such scrutiny. As the bill will make changes to existing councils’ planning decisions in June 2010, it must be passed by the end of May 2010. To achieve this, I propose that the select committee reports back to the House by 4 May 2010.

I conclude this speech with a quotation from the New Zealand Herald, which has done a good, but not always uncritical, job of reporting the progress towards a Greater Auckland. The New Zealand Herald stated: “For more than 50 years, civic reformers have tried to introduce some type of unified metropolitan government into Auckland local body affairs. Their attempts to replace the structure of small, static local bodies have been bitterly opposed and nearly always failed.” That comment was made in the New Zealand Herald in 1959—50 years ago. Until this Government resolved to act, there had been no reason to be confident in the future of Auckland. This legislation, when enacted, will complete the process of providing that confidence.

I would like to take this opportunity to thank my colleague the Associate Minister of Local Government, John Carter, whose work on behalf of Auckland has been outstanding. I think that two Ministers could not have been better served than we have been by the Department of Internal Affairs, headed up by Brendan Boyle. The department’s officials have gone beyond the call of duty to assist us and to make this bill and the changes in Auckland a reality. I cannot believe the job that the Parliamentary Counsel Office did in preparing this legislation. Its officials literally worked around the clock. It was a truly amazing piece of work.

I am proud to introduce this bill, and I look forward to one Auckland, finally, after all these years, becoming a reality. Thank you.

PHIL TWYFORD (Labour) : I will begin my comments with some remarks about the political context of the Local Government (Auckland Law Reform) Bill, which has been brought to the House today. What a shame for Auckland, and what a shame for the super-city project that this legislation and this reform process should be shepherded through by the most damaged man in New Zealand politics. He is responsible for the shambolic process of the last 9 years—

Hon Dr Wayne Mapp: The last 9 years? You’re responsible for the last 9 years.

PHIL TWYFORD: It was 9 months; I thank Dr Mapp. He has delivered bad process, bad judgment calls and bad law. Surely, the Government must be regretting putting Mr Hide—the fallen perk-buster—in charge of the Auckland super-city. His credibility lies in tatters, and, unfortunately for the Government, he has become the symbol in the eyes of the country of the Auckland super-city reform process.

Right now, on the eve of this important bill’s coming to the House, Auckland is in disarray over the question of ward and local board boundaries. A right-wing gerrymander is evident in the boundaries that have been proposed by the Local Government Commission. Is that the fault of the Local Government Commission? No, because its hands were tied by the second super-city bill, by this Government’s insistence on having two-member wards, and by its insistence on having an inadequate number of councillors. We are seeing the prospect of a gerrymandered council, communities going without representation because of the two-member wards, and under-representation right across the board. This is the Minister who professes to be an adherent of the principle of one person, one vote—a vote of equal value—yet he is presiding over the most unfair electoral jack-up that we have seen in local government in New Zealand for a long time. He tried to wash his hands of it in question time today by blaming the Local Government Commission, when, in fact, it is he who tied its hands.

We have widespread dismay over boundaries, we have iwi threatening to boycott the statutory board for Māori, and we have Franklin, Papakura, and northern Rodney mounting a secessionist bid even before the super-city is off the ground. The whole enterprise is turning to custard, and meanwhile Mr Hide is riding the rollercoaster at Universal Studios and trying to get bodybuilding advice from Arnold Schwarzenegger. Well, that really says it all about the way this Minister has run this process for the Auckland governance reforms.

The single most important issue that has vexed Aucklanders all year—the powers of local boards—is still unresolved. Mr John Carter and Mr Hide promised this House and promised Aucklanders that they would resolve it and that they would clarify it with this legislation, yet we are no further ahead. They failed to take the tough decisions on the powers of local boards. What did they do? Clause 17 of this bill simply kicks the issue to touch by kicking it through to the Auckland Transition Agency and asking it to make the tough decisions.

The matter of campaign spending limits shows this Government’s typical disregard for basic democratic principles. The status quo would set a spending limit of $70,000 for a mayoral campaign. The Government is proposing that the Auckland mayoral campaign be fought with a limit of $580,000. That is outrageous. Three Auckland mayors have already declared that to be completely inappropriate and undemocratic, and that says it all about this Government’s approach to politics and democracy. A $580,000 campaign limit for the last 3 months of election campaigning will benefit only the super-wealthy and those candidates backed by big business. I urge this Government to think again on that question and to listen to the three mayors of Auckland who have declared it to be a misjudgment.

I will make some comments about probably the single most substantive thing in this bill, which is the structuring of the Auckland Council around at least seven council-controlled organisations. The great majority of the business, the functions, and the activities of this council will be managed and delivered through arm’s length, stand-alone commercial entities—council-controlled organisations. That, I suggest, has significant implications for the ability, or the inability in this case, of Aucklanders to hold their elected representatives accountable for the work of this council. It will undoubtedly result in a loss of democratic accountability. Two of the very things that these reforms were set up to address—silos in decision making, and duplication—will be structured into the new Auckland Council by the creation of seven stand-alone commercial entities, each with its own chief executive and board of directors. What is that, if not duplication? What is that, if not silos?

Transport is, I think, an example of a significant part of this council’s business that simply should not be delivered through a council-controlled organisation or a stand-alone commercial entity. Transport is not a profit-making enterprise; it is a spending enterprise. In the minds of Aucklanders, transport is the single biggest deliverable and the single most important thing that they want to see this super-city get right. It will constitute half the budget of the Auckland Council. It should be democratically controlled. It should be managed and overseen by democratically elected representatives of Aucklanders.

There is also the matter of privatisation. This bill includes provision to strip away the protections against privatisation of the Ports of Auckland, without the people of Auckland having a say. Currently, the law requires that Aucklanders approve by majority in a referendum any move to sell off the shares of the Ports of Auckland. Aucklanders care about their ports; they want the ports to remain in public ownership. The opinion polls show that overwhelmingly. What does this Minister do? The Minister of Local Government knows that this Government cannot survive if it openly advocates the sale of assets, even though he believes personally that the Ports of Auckland should be flogged off. So what does he do? He sets about systematically stripping away the democratic protections against privatisation of Auckland’s assets. The Government also decided to make water infrastructure able to be owned for periods of up to 35 years by the private sector. If we put those things alongside its decision to get rid of section 88 of the Local Government Act, we see a privatisation agenda.

I will comment on another important issue that should be in this bill, but has been completely ignored and completely sidelined by the Government. It is one of the most important findings of the Royal Commission on Auckland Governance, which was the recommendation for the establishment of a social issues board to form a tight, collaborative partnership between central government and local government to tackle the entrenched poverty and inequality that is a feature of Auckland today. What has the Government done? Paula Bennett has announced a fig leaf in the form of a social issues forum, which does nothing and has no decision-making power. That is a terrible shame.

In conclusion, I urge the Minister not to truncate the select committee process, like he did with the second super-city bill, effectively allowing, given where we are in the calendar, only 3 months to consider submissions and properly subject this bill to the kind of scrutiny it deserves. We have had an abuse of urgency in the previous two Auckland governance bills. The first bill had no select committee scrutiny at all, and the second bill was rushed through in an inadequate process. It is not good enough. This is significant constitutional change to our system of Government, and it deserves better.

Labour has serious concerns about this bill. I have talked about the campaign spending limits, the corporatisation of the business of the Auckland Council, and the removal of democratic accountability. I have talked about the privatisation controls around the Ports of Auckland being stripped away, and the failure to clarify or flesh out the powers of local boards. We have serious concerns about this bill. Bringing it to the House today caps off a shambolic 9-month process that is an insult to the good sense and integrity of our country’s biggest city. It has cast a pall over the entire venture of Auckland governance reforms, and this Government could and should do a lot better.

Hon JOHN CARTER (Associate Minister of Local Government) : The Local Government (Auckland Law Reform) Bill and this issue deserve to have thorough scrutiny and a proper debate. I guess we will look back at this time in history and say that the shame of this issue is that when this Government brought this legislation into the House it had an ineffective, hopeless Opposition that was not capable of debating the issues. The sad fact is that for Labour members the debate was led off by a member who cannot focus on the things that matter to Auckland. Indeed that member has said that Mayor Andrew Williams is an outstanding mayor. Well, that says it all! In fact, he was trying to tell the House that the members of the Local Government Commission are right-wing lackeys. That will come as a surprise to Sue Piper, I am sure. But enough of that; there are things that are more important.

I want to join with the Minister of Local Government in thanking all those who have been involved in this legislation. I thank Mark Ford, Rob Fisher, and others from the Auckland Transition Agency, the staff of the Department of Internal Affairs, and the staff of the Parliamentary Counsel Office. We have had outstanding support. I also put on record the leadership of the Minister of Local Government, and the drive and energy he has brought to this legislation. It would not be in place in the way it is if it were not for his leadership. People will look back and say that he was exactly the right person to lead this legislation at this time and make progress.

The Minister of Local Government referred in his speech to the New Zealand Herald. I too want to draw the House’s attention to articles that have appeared in the New Zealand Herald. One headline states: “Auckland local authority reform moves”. Another article is entitled: “Inquiry on two-tier local body system sought”. Other articles are headed: “Rapid population growth adds to problems in Auckland”, “Minister strong advocate of new system”, and “Two-tier local body plan ideal for Auckland”. So the articles go on.

Those six articles are worth reading. Of course, they are interesting because they appeared in the New Zealand Herald on 15 September 1959. One article states: “For more than 50 years civic reformers have tried to introduce some type of change in Auckland.” That article was written in 1959, and it shows that for more than 100 years the people of Auckland have had expectations that there would be change. It was not until this Government, with Prime Minister John Key and Minister of Local Government Rodney Hide, that we have got on and are making the changes. New Zealand and Auckland will be better for it.

I remind the House of what the National Government has done. We have brought in two other bills relating to Auckland. The first bill concerned the “what”—that is, what the issue is; the second was about “who” and the powers and the roles of the mayor and the councillors; and this bill, the third bill, relates to “how” it will be. It is about assets and liabilities. This bill transfers those assets to the council from the present structure. It ensures that those councils and subsidiaries continue as they should. This bill protects the interests of staff—this is very important, and it is one of the issues I expected Labour members to pick up on, but they have not—as they move from the old councils to the new councils. It also gives the new councils the power to get on and start running from 1 November 2010. That is important, because for us to get this issue under way we had to make sure that we worked to a timetable that benefited the people of Auckland—and we will.

This bill deals with the issues that were raised during select committee consideration of the last Auckland bill, such as the issue of ethnic committees. This bill deals with that issue, but the previous speaker never bothered to mention that. This legislation also deals with issues concerning mana whenua. Of course, it does not do all that people would like, but it does address those issues. They are important issues for the people of Auckland and for the people of New Zealand, and we will be properly addressing those issues as we go through the select committee process on this bill—the third bill.

I want to address in particular the issue of local boards, because much has been made about the powers and responsibilities of the local boards. The Minister of Local Government and I have said we intend to ensure that the local boards have proper authority and responsibility. One issue that was important during select committee consideration of the second bill was that there was unanimous agreement on that point. We also agreed that it was not our role to try to designate those responsibilities. We did not have the ability to specify a list of responsibilities that the boards may have.

We know that the boards vary. Waiheke Island has different needs from those of Waitakere, for example. So we have done the responsible thing. We will give the authority to the boards, and the Auckland Transition Agency, which is currently working through this process, will ensure that the responsibilities are delegated. For example, the agency will look at what happened at Waitakere or Papakura, and it will say: “Here are the responsibilities that the authorities carry out for them.” They will take away those issues relating to the regional councils and pass them to the Auckland Council, and the rest of the responsibilities will remain with the local boards.

That is how the transition will take place. They will be delegated those responsibilities and, as a consequence, the responsibilities will not be able to be changed unless there is agreement between the boards and Auckland City. I cannot think of a better way to ensure that the local boards get all the representation and responsibility they need.

I also want to talk about the council-controlled organisations. I heard Sue Kedgley from the Green Party talk about “Crown-controlled organisations”, but they are actually council-controlled organisations. They are the responsibility of the Auckland City Council. Let us understand that we are setting up an authority that goes like this: the mayor and the 20 councillors, who are democratically elected, will be responsible for the decision making and the setting out of the parameters that the council wants to see implemented on behalf of the people. The local boards will work within that, as will the council-controlled organisations. The council-controlled organisations are operational; they are not governance organisations. We need to understand that their job is to carry out the wishes and the commands of Auckland City, and that is exactly how those organisations will operate.

I have every confidence that when the new mayor and the councillors are elected, they will set parameters that allow the council-controlled organisations and the boards to get on and do the job that we envisage, as we set up the structure, will ensure that there is proper democracy. I am confident that “local” is put back into local government, and that where we need to have a council-controlled organisation—such as Watercare Services, an operational organisation—it has the ability and the responsibility to get on and deliver water or whatever service is required of it for the people of Auckland and in the best interests of the people of Auckland. But, most importantly, we will finally have a structure that allows for efficiency in decision making. The lack of such a structure is, most of all, what has held back Auckland for so long. We will finally get a structure that allows us to make progress. That is not only in the best interests of Auckland but in the best interests of this country. I am proud to be part of it.

Hon SHANE JONES (Labour) : Kia ora anō tātou. We are arriving at the tail end of the year and may I offer you, Mr Deputy Speaker, merry Christmas wishes and good cheer to all of us in the House, although we have come to the Local Government (Auckland Law Reform) Bill with some very significant differences between Labour members and my fellow Northlander the Hon John Carter and the Minister of Local Government, Mr Hide. This legislation is on local government, but, as an unfortunate consequence of the way in which the governance machinery has been put together, the last people who will be empowered are local communities. The most powerful person, as a result of this bill, will be the chief executive officer of the new super-city council. We realise this restructuring is in the pursuit of efficiency and effective governance, and many of us on this side of the House actually supported the establishment of the royal commission to achieve those outcomes. Let us not hide that. But where we have parted company is that as the machinery has turned into law, we have ended up empowering a new level of uber-bureaucrat. That uber-bureaucrat will be the super-city chief executive officer, along with his or her divisional managers, and there will be no accountability from them to local communities.

It might be said that if one empowers local communities, one undermines the philosophical foundation stone of this reform; but do not call it “local government” if one will not leave meaningful power and authority with local people. When local people are disempowered from shaping the character and the personality of the various areas of Auckland within which they live, we have created a megalopolis. It will be like the metropolitan city state akin to the ancient regime of Italy. Just as people were disempowered there, they will be disempowered as a consequence of this Parliament, dominated by National, refusing to lay out in law what the duties, rights, and obligations of local communities are. I think that is a very sad development.

The cheerleaders of the development of the super-city at the moment are focused on the fact that we are at the end of a marathon. Let us acknowledge the work that the parliamentary legal draftspeople have achieved and the sales job carried out by Mr Hide and Mr Carter, but they have not honoured what they said they would deliver. We were told that in the third piece of legislation, the unanswered questions of Auckland communities would be laid out and answered through the sovereignty of this House. That has not come to pass. Instead, we have ended up with—and in a moment I come to matters pertaining to mana whenua and Māori—a powerful chief executive officer who will unilaterally determine the rights and duties of all the employees, and in section 35C of this bill he or she is given the unfettered authority to make a call on the terms of employment and entitlements associated with employees whose employment may be moved to other places.

I will harp on about this because when we do not posit in the elected representatives enough power or statutory authority to rein in the bureaucracy, we are disempowering voters. As I have said during this entire debate, if we disempower local representatives and if we put a barrier of a financial nature so high that genuine representatives of diversity in the community do not sit at the governance table, we get a groupthink where we have a calibre of representative based on who can get there by dint of a deep pocket. Their objectives and their style of operation will not be different from those of the chief executive officer, whose earnings will be between $850,000 and $1 million. Their earnings will be vastly more than the Prime Minister of the country or any of the other elected representatives.

Let me come back to how the Government has sought to deal with the Māori issues in Tāmaki-makau-rau. I say one thing for Mr Hide: his bigotry has been overt from day one. He has not concealed that. For those of us who have known Mr Hide for over 10 to 15 years, it is probably a mark of distinction in terms of the man’s record. He does not believe in Māori enjoying distinctive rights of representation and he has said so. He does not believe in the existence of any Māori rights associated with local government that cannot be enjoyed by other Aucklanders, so to that extent we know what we are dealing with. However, it is unfortunate that his guile was not replicated in the form of the Māori representatives. Very briefly, let me record what they did. The first thing that Dr Sharples did was to attack, unwisely, one of the more redeeming features of the royal commission’s report, which was to have Māori representation on the council. He said it was too timid. He carried on to say it was completely unworkable. Then he decided to set up a council where, given that there are about 15 tangata whenua groups vying for representation, he would give them all representation. Without realising it, he was playing into the well-honed politics of bigotry offered by the current Minister of Local Government and into the innate conservatism of National. Those of us watching this train wreck could see it was no wonder that Māori members were clapping and cheering because they have a flag, because that is what they were only ever going to get.

Hon Tau Henare: Who’s “Wanda”?

Hon SHANE JONES: I hear my whanaunga from the north raising his voice on this vexed issue of Māori representation. Other than his description of Mr Hide’s anatomy, he had no other useful comments to make during the entire debate. However, I say that although he might share certain similarities in terms of anatomy with Mr Hide, his heart was in a different place. His heart was with his Māori people, who favoured direct Māori representation. With this bill, after squandering the opportunity of using the royal commission and after wrecking any prospect of a workable model based on the poor stewardship offered by Dr Sharples, we have ended up with the very thing that Te Ururoa Flavell, Hone Harawira, who is currently missing in action, Rahui Katene, Dr Sharples, and Tariana Turia said they would never tolerate—that is, a tekoteko board, i.e. a tokenistic, symbolic board of advisers. Bizarrely enough, the provisions establishing that board state that its first role is to choose its name. The second thing it can do is change its name. In the event that it changes its name, it has to tell the myriad of forces that presumably want to get on this board that it has a new name, and it has to tell the council its name. What is in a name? Symbolism. That is why this board will not be embraced as a meaningful route for Māori into local government. It would have been so much better to replicate the model introduced by the Labour Government of the late 1980s, and destroyed by Warren Cooper, which emulated what we have in this House, which is direct Māori representation. I tell members to keep away from mana whenua representation; that belongs on the marae. It does not have a place in a democratic franchise of one person, one vote.

So it is very sad that we have a local government reorganisation where we have no knowledge of whether these local powers are vacuous or hefty. We know that we have a Māori board with no power. It is meaningless. It will be tokenistic and it is not even supported by the Māori Party. It is rather bizarre that the day the Māori Party celebrates the arrival of the flag is the day it sees how empty is the whole vessel of its entire year’s efforts. It shows not only political naivety on its part but also how powerless it is. So naturally we will be vigorous participants as this bill goes forward. But it is a very disappointing day for people genuinely interested in diverse communities having meaningful representation in our largest city. Kia ora tātou.

SUE KEDGLEY (Green) : Not surprisingly the Local Government (Auckland Law Reform) Bill is a terrible bill. It is a Machiavellian bill that strips away layers of democracy in Auckland and siphons off most of the key functions of the Auckland Council into council-owned companies, which will meet in secret and will be staffed by unaccountable, unelected, political appointees handpicked by the Minister of Local Government himself. Can members believe it? This bill gives the Minister of Local Government, Rodney Hide, the power to select virtually all of the members—apart from two—of the council-controlled organisations that will run most of the Auckland Council. Effectively, the bill will undermine the power of the democratically elected Auckland councillors who will find themselves with very little to do. All of the key powers will have been siphoned off into these so-called council-controlled organisations.

The bill sets a new precedent in political interference in local government. The Minister, not the people of Auckland, will decide how many council-controlled organisations the Auckland Council will have. The Minister, not the people of Auckland, will decide what their objectives will be and all of the details concerning the structure and operation of these council-controlled organisations. The Minister will have the power to appoint the directors of these companies. He will have the power to decide, for example, who will be on the all-powerful Auckland transport council-controlled organisation and the Watercare council-controlled organisation. Rodney Hide will be able to select—and he probably will—Dr Brash and others of his political cronies for these critical council-controlled organisations, which will run the day-to-day activities of the council.

If members look at the powers these council-controlled organisations have, they will see they are unparalleled. If members look at the Auckland transport council-controlled organisation, they will see that it will run every aspect of Auckland’s transport. It will run the electrification of the Auckland rail network and integrated ticketing. The only aspect left for the Auckland Council to manage is the off-street parking facilities owned by the council. The Auckland Transport Agency will have the powers and functions of a local authority. It is to act as if it were a regional council. It can make by-laws, it is a requiring authority, it can seize property, and with all of these functions it will be run by unelected and unaccountable directors.

One of the most critical aspects of this bill is the clause that states that councillors are prohibited from exercising any powers or functions that the Minister has conferred on to the council-controlled organisations. So, under this bill, councillors will be prohibited from exercising any powers or functions that are being undertaken by, for example, the Auckland transport council-controlled organisation. We have mayors running around Auckland saying they want to be elected as mayor in order to fix Auckland’s transport problems. The only trouble is they will have virtually no powers to do anything to influence Auckland’s transport. All they will be able to do is bang the table in frustration, because they will not have the powers to make the changes they want. If they want to get involved in the debate on the electrification of rail or on integrated ticketing, which are some of the most important issues facing Auckland, all they will be able to do is sit around banging the table in frustration and impotence because the Crown-owned companies will have all of the authority to implement policy in every aspect of water, transport, and other issues.

The question that has to be asked is what the democratically elected councillors will be left to do, once these nine Crown-owned companies have been established, and given these extensive and unprecedented powers. In every other council in New Zealand it is the council that decides whether to set up a council-controlled organisation, and the council decides who will be on it. I have been on the Wellington City Council. I have been on the equivalent of a council-controlled organisation, and I know how they work. I know that they meet in secret, behind closed doors, and the democratically elected councillors will have no influence whatsoever.

This is a very clever move by Rodney Hide to undermine the democracy of the Auckland Council and get the council ready to sell off the $28 billion worth of assets. He will get it ready to sell by putting everything into these companies, so they are ready to sell. He has made it easier, for example, to sell the port shares, because we will not even have to have a referendum. Great move, Rodney! I worry that Aucklanders will realise all of this too late.

Then another clever little Machiavellian move is to increase the spending limits for the mayor to $580,000. Guess who will be able to afford that? Only Rodney Hide’s rich cronies in the ACT Party will be able to. This will make sure ordinary Aucklanders will not be able to stand for mayor. They will not be able to afford to contest the mayoralty, and even running for the Auckland Council will be prohibitively expensive for most Aucklanders.

Then there are these impotent, pathetic local boards. On the one hand, we have the Auckland Council with most of its functions siphoned off into these at-length boards that meet in secret, and, on the other hand, we have these local boards with no set powers whatsoever. The council will be able to decide whether any function will be delegated to a local board or will be taken back from the local board. There is wording in this legislation that states if the council thinks that a local function might need to be integrated with the rest of Auckland, the Auckland Council can decide to take that function back. So it is a Draconian level of Government interference into a local council, and I fear it is a precedent for what will happen around the rest of New Zealand.

I predicted that Rodney Hide had chosen this portfolio to implement “Rogernomics Part 2”. This bill shows exactly how he will do it. He is setting up the council so that it will be able to sell off the council’s assets in 3 years’ time, or possibly before. The council will be able to sell those port shares, and get its hands on the Auckland Airport shares. I fear that Aucklanders will realise too late what the Minister has managed to do here.

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

SUE KEDGLEY: As I was saying before the dinner break, this is an extremely clever bill that siphons all the critical functions of the Auckland Council into arm’s-length boards, called council-controlled organisations, which will be peopled by unelected and unaccountable directors who will be appointed by none other than the Minister of Local Government, Rodney Hide. So Rodney Hide has his hands all over the super-city. He gets to choose how many companies will be set up in the Auckland Council, who will be on it, and what their functions will be.

Something that I do not think people understand is that none of the democratically elected councillors will be able to exercise any power over any functions that have been siphoned off or delegated into those companies. The problem is that most of the functions of Auckland Council have been siphoned off into these council-owned companies. Actually, we might more accurately call them Crown-owned companies, because by the time the Minister has appointed the directors to these boards, and has decided how many there will be and what their functions will be, they will be effectively Crown-owned companies.

The other issues of significance for mana whenua include the fact that the board that is supposed to promote their interests will have no power, resources, or authority beyond the dubious right to be consulted. The local boards will have no power, authority, budget, resources, or clear functions. The members who are elected to the local boards will find themselves, just like the councillors on the Auckland Council, with little to do other than thump the table in frustration. Thank you.

TE URUROA FLAVELL (Māori Party—Waiariki) : Kia ora tātou e te Whare. This day in the House, as with every day, is a day on which the Māori Party has attempted to provide a template to see Te Tiriti o Waitangi in action. We do so in the best interests of this nation, we say. It is a commitment we make as a partner in a relationship of a confidence and supply agreement with the National Party, an agreement that was established on the premise and the promise that both parties will act in accordance with the Treaty. To do so, we believe, requires that no decision will be made without the support of Māori. I will say again that we believe that no decision will be made without the support of Māori.

In essence, that is what the Treaty is about. It requires the Māori voice. That is what the Māori Party affirms, and it is a vision for governance that suggests that, as provided for in the Treaty, tangata whenua should have an equitable say in the decisions that affect them, through Treaty-based representation. So today is a significant benchmark to assess how well the current Government is meeting its own responsibilities.

This third and final bill to implement the Government’s governance arrangements for the Auckland region, the Local Government (Auckland Law Reform) Bill, is an opportunity to make right the wrongs incurred by previous efforts. The bill amends the Local Government (Tamaki Makaurau Reorganisation) Act 2009 and the Local Government (Auckland Council) Act 2009, to resolve further matters relating to the reorganisation of local government in Auckland. As the House is well aware, the Māori Party vigorously opposed the first two bills to implement the Government’s governance arrangements for the Auckland region: the Local Government (Tamaki Makaurau Reorganisation) Bill and the Local Government (Auckland Council) Bill. It would not be stretching the point too finely to say that about the only mention of Māori throughout these two bills was in a title, and even then that came about as a rebuttal of the constant filibustering from members on the other side of the House.

It was with pleasure that I listened in the House today, to learn that members of the Labour Party had been reading the excellent releases and reports from the Māori Party, including our statement of last week about Māori representation in local government. Research by Kahui Tautoko Consulting Ltd for the Department of Internal Affairs found that “key to effective participation and better decision making was having Maori representatives with the same status as other elected councillors.” It could not have been better timing to be told again that local government authorities work more effectively when they have Māori representation, so in our haste to make decisions on the interim and transitional provisions for the operation of the Auckland City Council from 1 November 2010, Māori representation must surely be a given.

The Kahui Tautoko Consulting research concluded that “setting aside seats for Māori on local councils should be viewed as an acknowledgment of the promise of partnership in the Treaty signed by Māori and the crown.” We have to ask ourselves, then, in considering the establishment of the various new governance arrangements in Auckland, whether the interests of mana whenua are being taken into account. The bill contains provisions for the Auckland Council to be able to operate from its establishment on 1 February 2010, and within this there are provisions for a board to promote issues of significance for mana whenua and for Māori of Tāmaki-makau-rau.

A key plank for the Māori Party in our campaigning is to ensure that local governments acknowledge the authority of mana whenua, so our co-leader and Associate Minister of Education, the Hon Dr Pita Sharples, determined that he would seek to develop a range of options that would help us to do that. During the early stages of this bill, we as a party invested considerable resources into following the set of recommendations from the report of the Royal Commission on Auckland Governance. As members will recall, there was a strong recommendation that Māori should be represented on the Auckland Council, in the form of three seats to be shared between mana whenua and Māori. The royal commission also recommended the appointment of a mana whenua forum, with powers to appoint members of Watercare Services’ Māori advisory group. It is now part of the shameful record that during the passage of this legislation the evidence brought forward from the royal commission was disregarded by the National-ACT coalition.

I take us back to the points I made about the first bill in this series of three relating to Auckland governance. I talked about the quality of representation that we might consider would be involved in proper engagement. Quality representation would comprise a focus on partnership, protection, participation, and pragmatism. Quality representation in local government would be best determined and demonstrated by a tight organisational structure, an appropriate environment, and leadership that promoted and enhanced the recognition of Māori values. Proper engagement would involve the protection of mana whenua, of wāhi tapu, and of taonga Māori. Proper engagement would be expressed by meaningful and mutual beneficial participation of Māori in the council. Proper engagement would be in the practical means of maintaining and resourcing a consultative mechanism, and a mechanism for tangata whenua and council to contribute to a decision-making process.

Despite the royal commission’s definitive conclusions, despite the calls from the people of Auckland, and despite the submissions overwhelmingly in support of Māori representation and the statutory Māori board put up by my colleague Dr Sharples, we find ourselves at this juncture still no further along the way. So I find myself turning to the deliberations from the hui held on 4 December 2009 at Te Noho Kotahitanga Marae in Auckland. That hui was entitled “Māori and Local Government—Beyond the Supercity: Ko tehea te huarahi tika?”. Dr Sharples announced the substance of the proposal about the independent statutory board, but it would be fair to say that it did not receive the widespread endorsement of the hui.

The purpose of the statutory board is to “promote cultural, economic, environmental, and social issues of significance for mana whenua and Māori of Tāmaki-makau-rau, to assist the Auckland Council in making decisions, performing functions, and exercising powers.” It was a noble attempt, but in effect it does not have any more powers than an advisory board. The council can be prompted by, promoted to, or guided by the board, and it can consult the board and take into account its advice, but all the decisions are still made by the council. When a decision is required, such as the appointment of Māori members to select council committees, the authority that oversees the decisions of the board is strictly governed by that council.

Never ones to give up, we have continued in the best of our tribal traditions to explore ways in which to amend the Local Government Act and subsequent super-city legislation, to ensure the mandatory adoption of Māori seats at local government level. We have not been successful in this bill and we will oppose it, therefore, at its first reading. But we will never lose hope that the commitment to Treaty justice, a commitment to partnership, protection, participation, and pragmatism will live for another day. We in the Māori Party will be there to make sure that we hold the Government to account on that.

Hon TAU HENARE (National) : Prior to the dinner break Shane Jones, who wants to be the leader of the Labour Party one day—and that may come sooner rather than later—talked about how National had ruined any chance of Auckland City moving ahead in a progressive way, because of National’s wish not to have Māori seats. He sounded like the drag queen of the Labour Party, because 2 or 3 months ago, outside in the lobby and in front of not one but two members of the National caucus, Mr Shane Jones said that not only was he thankful that that issue was not before Labour but he did not agree with it. He flatly said he did not agree with having Māori seats. So I think it was a bit rich of the Hon Shane Jones to get up in the House and say what a bad move National made.

Hon Member: When did he say that?

Hon TAU HENARE: He said it a couple of months ago, out in the lobby.

The Local Government (Auckland Law Reform) Bill is the third bill in what has been a very interesting process. I can sum it up by saying on one side we have the philosophical differences between National and Labour. On the Labour side we have the accusations by the likes of Shane Jones, who say National is the cheerleader for some sort of privatisation-business conglomerate. On the other side we have the real people, the mums and dads of Auckland, who are concerned only with rates, rubbish, and roads.

Carol Beaumont: Who are being disenfranchised by you.

Hon TAU HENARE: “Who are being disenfranchised”, says Carol Beaumont. If they were being disenfranchised, they would not be able to vote. That is the emotive language we get from Labour members, but the mums and dads, the people on Struggle Street, want to know only about rates, rubbish, and roads. The issue is not about identity. The western districts will always be the west. It does not matter what sort of model we have. The people of east Auckland will always be east Aucklanders. Andrew Williams will always be Andrew Williams across on the North Shore, and the south side will always be the south side, regardless of which model we have.

This issue is not about the workers, the unions, or the left wing; it is about getting the biggest city in New Zealand moving along at a pace that will take the rest of the country with it. It is about development. It is about opportunity. It is about hope.

Phil Twyford: Never mind about democracy!

Hon TAU HENARE: Never mind about democracy. After the cards have all fallen on the table—

Phil Twyford: I’ve given you all your lines!

Hon TAU HENARE: I raise a point of order, Mr Speaker. I know that the member has not been in the House very long, but he is not allowed to use that term in this House. I ask you to ask him to withdraw and apologise. He used the word “lying”.

The ASSISTANT SPEAKER (Eric Roy): No, he did not. [Interruption] No, I do not need any assistance. I heard what the member said; he did not use that word.

Hon TAU HENARE: I am sorry. I did not hear correctly; I must have a hearing problem.

Phil Twyford: You’ve definitely got a speaking problem, too.

Hon TAU HENARE: No, I do not have a speaking problem. I know where I am standing at the next election. It is not for the North Shore, it is not for Waitakere, it is not for Auckland Central, and it is not for wherever—[Interruption] That is right; Phil Twyford will be the super-city candidate—the super-silly candidate is more like it. For goodness’ sake, these changes are the final step in getting Auckland going. It is left to National—it always has been—to get things moving, and to get the country moving.

For 9 years Auckland was a cesspool of inter-area politics where Bob Harvey, Andrew Williams, Len Brown, John Banks, and others were all protecting their own patches. It is time they thought—and we thought—about the whole of Auckland and how to get that engine room of New Zealand going for the betterment—

Phil Twyford: Are you going to talk about the bill?

Hon TAU HENARE: That is what the bill is about, I say to “Mr No Seat Man”. I wish Carmel well, by the way. This is about the opportunity.

I want to talk about the Māori seats, which my learned colleague Te Ururoa Flavell has spoken about. I have said on many occasions, inside and outside my caucus, that I was supportive and a proponent of some form of Māori representation in terms of seats, and I make no bones about that. But I believe in democracy, and that if one is outvoted, then one falls in behind the team. I pose this question to my colleague from the Māori Party: if one knows that one has already lost the argument in terms of getting the Māori seats, should one not go for the best alternative option—

Hon George Hawkins: Why did you cross the floor?

Hon TAU HENARE: I am just telling members, I say to that fool. Why would one not go for the next-best option? And the next-best option is to get some form of representation through the advisory committee. It is not the best option, in my mind, but my caucus colleagues—and I support them 100 percent—have decided that the best option is to have Māori representation, and issues pertaining to Māori, worked out in that advisory committee.

So I am absolutely happy about how this whole thing has progressed. It is about having strong representation, it is about moving forward the biggest city in this country—

Phil Twyford: Have you read the bill?

Hon TAU HENARE: I tell the member to go and find a seat—anywhere in New Zealand. There must be 16 of them—

Hon Gerry Brownlee: They’ll come up with another excuse to keep him out.

Hon TAU HENARE: That is right. The Labour Party will come up with another excuse to keep him out of that seat—wherever he is. I feel sorry for that member. He was supposed to get the Mt Albert seat, but he was kicked out from there. He stood in North Shore; he stood all over the place. In fact, I am reminded of that song “I’ve Been Everywhere Man.” I am sorry to say that Labour members have the problem, not Auckland. Mums and dads in Auckland want this city to go ahead, and they will get what they want.

SU’A WILLIAM SIO (Labour—Māngere) : Aucklanders listening to that speech will be asking themselves whether they can trust this Government with the people of Auckland. They will be asking themselves whether they can trust this Government with New Zealand’s economy, when 150,000 people are unemployed and the Government is sitting on its hands, doing nothing. They will be asking themselves whether they can trust this Government, when tax cuts went to business and to high-income earners and there was nothing for ordinary hard-working Aucklanders. They will be asking themselves whether they can trust this Government with protecting our communities, when it manufactures a case to break up the accident compensation scheme, to sell it off, and to raise levies for motorcyclists. They will be asking themselves whether we can trust this Government with the governance of Auckland, with its people, with its region, and with its assets.

Mary Gush of the Ōtara Community Board was one of many people who submitted during the hasty and rushed select committee hearings on the second Government bill, the Local Government (Auckland Council) Bill. Like many Aucklanders, Mary slammed the Government’s process of the Auckland super-city legislation as undemocratic and shambolic. Later she said to me that what this Government was doing could best be described as rape and pillage of the Auckland region, its assets, and its people. She shook her head in disbelief at this Government, and especially at the Minister of Local Government who is behaving like a medieval warlord, except that of course he now wears a suit and tie and has gone to get advice on power lifting from the Governor of California.

The Minister rammed the first bill, the Local Government (Tamaki Makaurau Reorganisation) Bill, through under urgency, without public consultation, and established the Auckland Transition Agency with powers, authorities, and privileges to oversee the Auckland region, thereby removing the rights of democratically elected mayors, councillors, and community board members in the Auckland region. In the second bill, the Government attempted to make out that it was listening, and rushed people through a very compressed select committee process. Before the Auckland Governance Legislation Committee had completed its report and released its final recommendations on the second bill, the Minister of Local Government and the Prime Minister released their decisions on the boundaries, which favoured their electorates, and they said there would be no Māori seats. This was all before the select committee had completed its work, despite over 80 percent of Auckland submitters supporting Māori seats, and despite about 10,000 people marching down Queen Street, calling for this Government to hear their voices on democracy in the Auckland region.

The Local Government (Auckland Law Reform) Bill is the third and final bill implementing the Government’s decision on the Auckland super-city. In the first bill, the Minister of Local Government asked the head of Watercare Services to lead the Auckland Transition Agency and to lay the foundation for a new Auckland governance structure. We now see in this third bill that in addition to the Auckland Council comprised of one mayor—one super-mayor—and 20 councillors we will now have two other very powerful entities working side by side, supposedly: Watercare, which is going to control Auckland’s water resources and control the charges for people’s drinking water and sewerage; and the Auckland Transport Agency, which will control Auckland’s transportation contracts that are worth, I would estimate, millions and millions of dollars. It seems to me that these powerful structures will be working at arm’s length from the Auckland Council.

The question that people are now asking on the street is how on earth will local boards ever have influence on these business entities, if they are so far removed from local communities? How will the local Māngere board, for example, be able to get speed bumps on one of its local streets or fix up sunken or broken footpaths if it is so far removed from these very powerful business entities? Aucklanders were promised by the Minister of Local Government and his Associate Minister that this bill would crystallise the powers of local boards. This bill does not do that. Initially, we saw that the super-mayor and the 20 councillors would have the full power and control of the budget for the region, the rates of expenditure, and of the buildings, parks, lands, housing for the elderly, activities for our young people, and art. But now we will have the very powerful Watercare and Auckland Transport Agency business entities.

Even the operational structure for the super-city that was released a few weeks ago relegates local boards at a lower, third-tier level. I put it to this House that that suggests if it is out of sight, it is out of mind. That also emphasises the point that they are talking about democracy, but all the time they are removing democratic rights from the people of Auckland. These structures are not democratic structures; these are business entities. These are structures designed to keep ordinary hard-working Aucklanders on the treadmill of paying higher and higher rates.

I want to ask the Minister a question about the council workforce. I have read media reports that suggest that all staff would be transferred, under the super-city Auckland Council structure, and retain the same terms and conditions of employment. However, I raise a concern that sections 35C(2)(b) and 35C(4)(c)(iii), inserted by clause 24, allow for the chief executive to inform an employee of new terms of employment, without negotiation. This is in conflict with clause 57, it is in conflict with the transitional authority discussion document, and it is in conflict with assurances that I understand have been given to the unions representing the workers concerned.

I have been given to understand that this matter has been raised with the Minister, and assurances have been given that these are drafting mistakes that will be corrected during the select committee process. I ask the Minister whether he will confirm that that is correct—that these are simply drafting mistakes that will be corrected. I hope he will respond. He needs to confirm whether all staff will retain the same terms and conditions of employment when they are transferred to the new Auckland Council.

I will talk a little bit about the council structure. We in Labour strongly advocated that there would be single-member wards throughout the Auckland region. In my part of the electorate, for example, at present there is Māngere, Ōtara, and Papatoetoe, with a combined population of about 125,000. We currently have two councillors in Ōtara, two councillors in Papatoetoe, and three councillors in Māngere. But we have now been forced, under the new structure, to elect only two councillors for those three wards. I will give an example to the House that shows the unfairness of that particular structure. Let us compare it with Gisborne, which has a unitary authority and a population of 45,000. It has a mayor and 14 councillors. I ask this House and this Government: where is the fairness in this? We on this side of the House recognise the diversity of the Auckland region, in terms of the Pacific and Asian communities, and want it to have Pacific and Māori boards. This Government has come back and said yes, we will have that advisory board. But what it is doing is giving it with the left hand but with the right hand it is taking away these advisory boards in 2013. In Samoan we have a phrase for that: E togi le moa, ae u’u le afa. It is bait; it is deceptive. It is giving with one hand, but taking away with the other.

I come back to the question that Aucklanders are now asking. Can we trust this Government? I would say no. More and more of the Government’s supporters, its voters, are now saying they cannot trust this Government. Merry Christmas, Aucklanders. This is your Christmas present from the National-ACT Government.

Dr JACKIE BLUE (National) : I rise to speak to the first reading of the Local Government (Auckland Law Reform) Bill. I would like to reassure Aucklanders that this bill will work for them, and that it will be a great Christmas and New Year’s present for them, because Auckland will finally get moving after decades and decades of slowing down and of having congestion on the motorways.

This is the third Auckland governance bill and it completes the legislative framework for a greater Auckland. I congratulate the Minister of Local Government and the Associate Minister, the Hon John Carter, on their leadership in getting these three bills to the House and on doing so in a very timely way. These bills—let us face it—have been the result of a royal commission that consulted far and wide under the previous Government. For over 20 months commissioners talked to groups and to individuals. They consulted, they talked, and they came to the decision that Auckland needed to have one council and that that was a matter of urgency; it was not something that should happen in the future. People had been talking about it for so long, and the commissioners said that it was urgent. There needed to be one council and the council needed to be in place by the local body elections in the next year, and it will be.

This issue has been going on for over 50 or 60 years. The Hon John Carter pulled out the newspaper clippings I have here.

Simon Bridges: Those are big speech notes.

Dr JACKIE BLUE: Yes, they are big speech notes. They are newspaper clippings from over 50 years ago, and I will read through some of the headlines.

Todd McClay: Historic.

Dr JACKIE BLUE: I know; they are historic: “Remedies sought for confusion—Auckland local authority reform moves” is the first headline. Then we go to 1959. I was only a little baby at that stage, but this was news in those days: “Inquiry of two-tier local body system sought: overseas examples hearten reform advocates”, “Rapid population growth adds to problem: division in Auckland local body affairs”, “Minister strong advocate of new system: two-tier local body plan ideal for Auckland”, and so they go on. This issue was hot news 50 years ago and it is still hot news now. This Government will sort it out once and for all; we are doing so. I say “Well done!” to our Minister the Hon Rodney Hide and to John Carter.

The previous two Auckland governance bills have been about the “what” and the “who”. They have been about the structure of Auckland’s new council, and the power and roles of the mayor, councillors, and local board members. This third bill is about the “how”. It transfers the assets and liabilities of Auckland’s existing councils to the new council and protects the interests of the staff who will move from the old councils to the new council, which I think is a very important point. There has been a lot of uncertainty, with talk of redundancies and downsizing. The staff need to know what will happen and they need to have certainty. This bill will give them that. The bill will also give the new council the powers it needs to be up and running on 1 November 2010, which will be the time of the local body elections. National is committed to achieving that and we are on track for that. In particular, this bill provides for ethnic communities with the establishment of an ethnic advisory panel, and it also provides special recognition of mana whenua. The new local boards will have true local powers and will be real local authorities.

I was privileged to be part of the Auckland Governance Legislation Committee, with other members from the House, and I believe that it was a very constructive select committee. We went to all corners of Auckland and heard the people. We heard their concerns and we heard their fears. Their main concern was about local boards and authority, and whether they would lose their identity as a community. I believe that we have addressed those concerns. In fact, I do not believe that; I know we have. On the concern about the local power thing—the local boards, their powers and their roles—I say that these local boards will be ready by the local body election next year. There is no doubt about that.

The Auckland Transition Agency will have the responsibility of initially allocating the activities of local boards. The boards will be responsible for that using the principles set out in the legislation. This will not be something that is pie in the sky. The boards will have powers as set out in the legislation, where those principles have been expressed so eloquently. They will have powers, and people need to be reassured that their local board will be able to effectively represent them to the new council with their community concerns. The local boards will have a lot of responsibility. They will have to liaise with the council and the council will have to liaise with them. It is a two-way communication. There is no way that local boards will be left high and dry. They will definitely be part of the community, and people in Auckland need to be reassured by that.

This bill will go before the Auckland Governance Legislation Committee and I hope to be part of that committee going forward. I know that we will work constructively. The committee will hear submissions in February and March, so that we can get this bill in front of the House again for its final reading and then progress it into law. This will be the chance for the public to have their say, and they will have their say; they will not be rushed. Everybody who wants to be heard will be heard, as they were in the last select committee process. This legislation is about Auckland getting moving, finally, after 50 years of inaction and inertia. We are going to get Auckland moving, and I say: “All power to Auckland.” I commend this bill to the House.

Hon GEORGE HAWKINS (Labour—Manurewa) : When the first bill, the Local Government (Tamaki Makaurau Reorganisation) Bill, came into this House I was quite pleased. I thought there would be a move to make Auckland one city, because that was what we believed in. But we did not understand just how devious the bill was, and we kept the House here over the weekend because the bill did not do what it promised. Then the No. 2 bill, the Local Government (Auckland Council) Bill came in, and people came from all over Auckland to make submissions.

Hon John Carter: It was well heard, too.

Hon GEORGE HAWKINS: Yes, and the committee was well chaired. In fact, it was better chaired than I thought it would be, because the chairman promised everyone that everything would be fixed in this third bill. Have members looked at the third bill? Everything has been fixed, all right, and there are terms that I cannot use here. The chairman smiled at the people of Auckland, and they were taken in; taken right in. They thought they were getting something different from what they got. You know, when three Ministers outside Cabinet are making all the play on this bill, we have to wonder—

Hon John Carter: Three?

Hon GEORGE HAWKINS: Yes, three—that member does not even know how many. First of all there was the Minister of Local Government, Rodney Hide. Then there was John Carter. And of course the third one was Pita Sharples. He fought for Māori representation, and all he got was a flag.

Hon John Carter: Ha, ha!

Hon GEORGE HAWKINS: “Hone” Carter can laugh over there, but that is what actually happened. But people were swallowed right up—

Hon John Carter: Swallowed right up?

Hon GEORGE HAWKINS: Yes, of course they were. And when we debated the second bill—and I predict it will be the same with this bill—we noted that Cabinet Ministers did not speak. Judith Collins did not speak in the Committee stage or the third reading of the last bill, and she will not speak on this bill. Pansy Wong did not speak. Where were Murray McCully or Wayne Mapp? Oh, Jonathan Coleman spoke, but he made a mistake. He was meant to be sitting down, and people were tugging on his coat when he spoke. And of course then there was Paula Bennett, whose seat is already gone—a 635-vote majority. I think it is 635; it might be slightly less. [Interruption] Well I am counting, and I think Mr Twyford is, too. It does not take too many people to change their votes—and they are disappointed that that member did not get up to speak on this bill.

All the members from the North Shore said nothing, except Darien Fenton, who represented all of the North Shore. She did what John Key should have done, and what Wayne Mapp and Mr McCully should have done. And there is the Mayor of North Shore. I know that Andrew Williams is not generally a mate of the politicians down here, but he is certainly not happy about the way the wool has been pulled over the faces of the people on the North Shore.

Hon Dr Jonathan Coleman: You’ll get a text in a minute.

Hon GEORGE HAWKINS: Well, I would not mind getting a text from him, because I think that he has the guts to get up and say what is right. He is sticking up for his people, and that is what mayors should do. The trouble is we will have only one mayor and 20 councillors. That is too few to run Auckland. Yet they will raise $580,000 to run their campaigns in the last 3 months.

So what will happen? They will spend a million bucks, at least, to try to become Mayor of Auckland. Is that a good thing? No, it is not, because it will take it away from ordinary people. Ordinary people will not be able to stand for the mayoralty. It will be those people who have organisations behind them, like Citizens and Ratepayers. And we know what that means—that means the mayor will be a Tory, and not even in disguise. These Tories are really good! They do not like the workers. I want to ask John Carter whether the bill has some mistakes in it, which have already been found, that will be corrected. But, no, he is too interested in what goes on in Christchurch, or in trying to find out what goes on in Cabinet, because he is not told.

We have the situation that many workers who have given loyal service to their various councils will lose their jobs. That is the reality. This bill will not do anything to help those people. We have good mayors who will not stand again. I am talking about people like Calum Penrose in Papakura, Bob Harvey—

Hon Dr Jonathan Coleman: He was going to retire anyway.

Hon GEORGE HAWKINS: Oh! Well, there is an opportunity for Paula Bennett. Maybe she could try that, instead of losing out in Parliament.

But the biggest, biggest hoodwink of them all is rates. People will get something bigger, and it will cost less? It sounds like the Warehouse. The reality is that rates will rise, and when they rise the people who brought this bill to the House and passed it will see their majorities diminished. Tau Henare spoke a few minutes ago. He made comments about various people. I think he should be very careful where he is on the list, because Aucklanders will remember that he said he supported Māori seats but that he would not cross the floor. The real test of people is whether they will stand up for what they think is right.

Simon Bridges: When have you crossed the floor, George?

Hon GEORGE HAWKINS: I have crossed the floor. I think—

Simon Bridges: Give us an example; make it more interesting.

Hon GEORGE HAWKINS: There is the member for Tauranga. He tried to sort out Auckland, but he had not been to many places in Auckland. He liked being on the Auckland Governance Legislation Committee. It was good fun. He even got to Waiheke. He enjoyed Waiheke.

Simon Bridges: I loved it.

Hon GEORGE HAWKINS: Yeah, he loved it. But what did he do for the people of Waiheke? He helped in the deception of the National Government, and, of course, people will not get the things they want.

When it comes to boundaries, many people are disillusioned and worried. Drury and Ardmore have been taken out of Papakura and put into Franklin. The member for Hunua might be celebrating that, but the reality is that these people will lose the representation they have had for the last 20 years. People will lose representation. People will have less say, but they will pay more. That is what this bill is all about. It is about making sure that the Government has its mates in prime positions. But I can tell the Government that there will be quite a few Labour people who will get there and make life difficult. You see, members cannot hoodwink 1.5 million people each time they go to an election. I think that next year’s Auckland local body elections will have the biggest turn-out in years. People will be voting, while thinking about their wallets and how much thinner they will be because of higher rates. [Interruption] There is a Wellington member screeching out. I have not seen a member’s bill from him suggesting that this process should happen in Wellington. I have never seen anything he has done, except heard him make a noise. That is what his expertise is. [Interruption] There is the member for Rotorua. At least he has a bit of a go. He is not very successful, but at least he has a bit of a go. He is a one-day man—an Easter Sunday man—and the rest of the year can go wherever it likes.

But in the end, John Carter will not be able to smile at the people who come along to make submissions, because they know the last time he smiled they did not get what they thought they would get in this bill.

Hon John Carter: They’re getting more, George.

Hon GEORGE HAWKINS: Oh, they are getting more! There is a National politician—he says they will get more. What a load of bunkum!

Hon John Carter: They’ll be so happy.

Hon GEORGE HAWKINS: The only one who has ever got anything out of this has been Rodney Hide. He has had victory after victory. He got rid of Māori representation. This bill will be very carefully fought.

SIMON BRIDGES (National—Tauranga) : This bill is great news for the people of Auckland, and I will tell members why. We are almost there. We are almost at the beginning of the future for the city of Auckland. We are almost at the beginning of the future, which means that Auckland will be a first-class, international city as a result of the changes that this Government and its coalition partners have made.

The immediate goal is the election on 1 November 2010. That will be very good indeed. From that day on there will be no more late-night texting from Andrew Williams. In fact, I cannot guarantee that, but I am pretty confident that there will be quite a strong victory for citizens and ratepayers. We know that Labour will not do well. Labour does not even know what it is doing in the seat of Waitakere. It has Darien Fenton on one side, Phil Twyford in the middle, and Carmel Sepuloni on the other side; I ask members not to picture that. Labour members do not know what they are doing, so I am predicting that citizens and ratepayers will do well.

But that is the short term, the transitory stage; it is not the long term. The big picture here, the thing we need to keep our eye on, is the prize. As we speak in this debate, and as we go back to the select committee and let the people have another say—and they have loved having a say so far—we need to keep in mind that the prize is a first-class, First World city in this country. Our biggest city, where most people choose to live, will be a First World city. The basis for this is an effective regional governance model, where we have regional matters at the top and strong local representation. That will be excellent. There is no question that under a unified Auckland we can see a much better governance structure.

We will have a single council with the ability to get things done. We have not had that in Auckland, and Jackie Blue spoke eloquently about that. We have not had that for at least, and probably more than, 50 years, which is longer than George Hawkins has been a member of Parliament. We have not had that for a very long time, but I think that the single council, the unified Auckland we are getting—and this bill is the last step towards that; we are almost there—will give us the makings of a world-class city. I am not so naive as to think that we can change the governance structure of the council and it will automatically equal growth and a world-class city, but it will certainly remove an impediment that has been there for a very long time.

Phil Twyford: You haven’t actually read the bill, have you?

SIMON BRIDGES: It is the kind of impediment that Phil Twyford likes—“Fill-in Phil”, who, as I said, will be crying into his pillow each night when he thinks about all the policy work he has been doing for the Labour Party while the ladies in that party slap him one. I do not think there is actually a lady in this House at the moment on the Labour side who has not given Phil Twyford a good slapping.

This bill is the beginning of the future. We are almost there. This is great news for the city of Auckland. I am looking forward—I hope—to being on the select committee as we do something historic and make the beginnings of a first-class, First World city.

CAROL BEAUMONT (Labour) : Frankly, I have been appalled at the contributions from across the House, and that last one really took the cake. I hope the people of Auckland can see how “seriously” the National Government is taking this very, very important issue. This is a serious issue. It is not an issue for making jokes and platitudes about, in the way we have seen tonight.

I am appalled at the whole process so far, concerning the Auckland super-city and Auckland governance arrangements. This third and final bill joins the other parts of this process in being absolutely outrageous in its complete disdain for the people of Auckland and their points of view. The whole process has been a power grab from start to finish, and people know that. Members opposite—or one of them, anyway—were saying earlier that people do not care about this issue; they care just about rates, rubbish, and roads. That is actually not true. In the part of Auckland that I am working in, people care about this issue very deeply. They know that they are having their right to have a say, their right to have a voice in this city, taken away from them. These are the people who live in the Maungakiekie electorate, who are now being lumped in with the people of Ōrākei, and who are likely to have no representation of their own in the area in which they live. They will have nobody to represent the particular points of view of that part of Auckland. That is because this whole process has been a power grab to set up a process by which Citizens and Ratepayers—National in drag—will control Auckland. It is undemocratic, and the process around this issue has been wrong. At least this bill is going to the Auckland Governance Legislation Committee, but let us hope that sufficient time is allocated for people to deal with the issues in it.

One of the things that people will want to deal with is not in this bill. People have been waiting to hear about the role of local boards. That is a serious issue; it matters to people. I sat in on the submissions on the Local Government (Auckland Council) Bill, and I heard John Carter and others say: “Don’t worry. We will be giving more power to the local boards. Yes, we’ve heard you. We’re listening, we’ve heard you, and we know you value your local boards. We’re going to be empowering those local boards. Wait for the third bill.” Well, we have waited. The people have waited, and they have watched. What has happened? Nothing! There is not a word in this bill about the power of local boards.

In the area that I am working in there are two very effective community boards, and the people there want to know what the role of the new local boards will be. The residents, the people who live there, value their community boards. They value the fact that the people on those boards represent them well, listen to what they are saying, attempt to put their point of view across, and actually make change. Many of those people will be interested in standing for local boards, but nobody knows what is happening yet. That is because the Government has pushed the matter out there, said it has nothing to do with the Government, pushed it away, and said that somebody else would make those decisions, and that is after promising everybody that the role and powers of the local boards would be included in this third bill. So I think there are many very unhappy Aucklanders at the moment who have been waiting to hear about that particular part of the bill.

Let me tell the House that the people in the Maungakiekie area are also very unhappy about the draft ward boundaries. Those boundaries are a complete disgrace. They are going to disenfranchise that part of Auckland, and they are likely to seriously disadvantage the community. What has happened is that an enormous two-member ward has been created that puts together two very different communities that have very little in common. The fact is that a number of people, from business associations through to the community board and individuals, have all submitted that they understand that the southern suburbs that are in that ward, such as Ōtāhuhu, Sylvia Park, Mount Wellington, Panmure, Point England, Glen Innes, Oranga, and Onehunga, are very different from the northern suburbs, such as Glendowie, St Heliers, Mission Bay, Kohimārama, Meadowbank, and Remuera. The differences are at every level—incomes, land use, ethnic diversity, and age. There is a much younger population in the southern suburbs. This is all well understood by the residents, but the fact is that the Government has been very quiet on this point, and the local member of Parliament has certainly been very quiet on this point. He would well know how angry and concerned residents are about those boundaries. I hope he will urge the Local Government Commission to listen to the local community, because this is a very, very serious problem.

There are other things in this bill that I want to mention. I want to talk about campaign expenses. Again, along with gerrymandering the ward boundaries—

Hon Member: Gerry—gerrymandering?

CAROL BEAUMONT: —yes, gerrymandering the ward boundaries—there have now been excessive campaign spending limits that favour putting in place rich candidates, or those who are backed by business. I am very glad to see that two of the contenders for the mayoralty, John Banks and Len Brown, have both said that the suggested spending limits are too high. There is a limit of $580,000 on campaign expenditure during the 3 months leading up to an election date. Currently, the expenditure of a mayoral candidate in Auckland City, for example, is limited to $70,000. So a campaign spending limit of $580,000 is a massive increase.

Members opposite seem to be making some comments about Len Brown. Len Brown put out a media release today, for those who have not yet seen it, calling for lower campaign spending limits. He points out that $580,000 is clearly excessive, that that sort of limit will price out many potential contenders, and that it could mean that the election is in effect bought by a wealthy candidate.

That is an appalling situation. If we add up the campaign election expense limits of the current component parts of the new Auckland Council, we get to $370,000, so there should be some economies of scale operating across the whole area. But, certainly, the other way we could look at it is to look at the current Auckland City limits and extrapolate the maximum expenditure by the population of the new Auckland Council; we would come to a figure of $245,000. But, no, we have a figure of $580,000 for campaign expenditure. The reality is that not only are the boundaries being set up to disadvantage many parts of Auckland but, certainly, depending on where people are living, their vote will be worth a lot less in some parts of Auckland than in others. People understand this. We can fool ourselves that it does not matter, but it does; it matters very strongly.

I am certainly talking to a lot of people about this issue. They are angry about those boundaries. They are angry about the expense limits. They are angry about the fact that the Government has failed to address the question of the power of local boards.

There is one thing I really would like to seek a response to, as I can see that the honourable member John Carter is listening, and that is great. Like my colleague George Hawkins, I would like to congratulate John Carter on his chairing of the select committee that dealt with the second bill, the Local Government (Auckland Council) Bill. He did a very good job, but the sad thing of course is that he is failing to deliver now. He did say to people that he was listening to them and that he knew they wanted local boards to be empowered. He said that the Government would be doing that. Well, hello—where is it?

While I have members listening, I suggest that new sections 35C(2)(b) and 35(4)(c)(iii), inserted by clause 24, allow for the chief executive to inform an employee of new terms of employment without negotiation. That is in conflict with clause 57, and it is also in conflict with the Auckland Transition Agency discussion document and assurances given to the unions representing the workers concerned. Similar issues apply to the transport-related provisions in the bill. We understand that this matter has been raised with the Minister, and assurances have been given that these are drafting mistakes that will be corrected during the select committee process. So I am asking a question across the House: could John Carter stand up briefly and confirm that that is correct? Thank you.

Hon PAULA BENNETT (Minister for Social Development and Employment) on behalf of the Minister of Local Government: I move, That the Auckland Governance Legislation Committee consider the Local Government (Auckland Law Reform) Bill, and that the committee report finally to the House on or before 4 May 2010.

• Motion agreed to.

Hon GERRY BROWNLEE (Minister of Energy and Resources) : I move, That the Electricity Industry Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Finance and Expenditure Committee for consideration. The purpose of this bill is to improve competition in the electricity industry and to constrain price increases, to improve the security of supply and the management of dry years, and to improve governance arrangements in the sector. The bill also generally tidies up and consolidates other electricity legislation.

In April this year I set up a ministerial review of the electricity market, in response to serious concerns about security of supply, inadequate governance, and rising electricity prices. The review team, which included an advisory group of six independent experts, released a discussion paper in August with a series of recommendations. One hundred and thirty submissions were received and considered. The ministerial review team concluded that, first, although a large part of the increase in electricity prices over the last decade could be justified, prices have risen faster than increases in the cost of new generation; second, retail margins for consumers are high and increasing, and competition is weak outside the main centres and, in particular, in the South Island; third, some generators have market power in dry years when water levels are low; and, fourth, current governance arrangements are unsatisfactory and could be improved. The Government made decisions earlier this month on the review’s recommendations, and this bill implements those decisions that require legislation.

I will briefly mention electricity prices. The bill includes several measures to put downward pressure on prices, particularly for residential customers. The measures include a limited reconfiguration of the three State-owned generator retailers. The Tekapo A and Tekapo B stations, currently owned by Meridian Energy, are proposed to be transferred to Genesis Power. This will improve the geographic balance of the State-owned enterprises by giving Genesis Power a generation and retail presence in the South Island, and it will increase the diversity of views of the management of hydro storage resources. The three State-owned enterprises will also be required to enter into one-off, long-term financial hedge contracts, and the Whirinaki power station would be, as it is proposed, transferred to Meridian Energy. The asset reconfiguration aims to increase competition, particularly in the retail market. It is expected that the State-owned enterprises will carry out these changes at the Government’s request, but there are provisions in the bill to enable Ministers to direct the State-owned enterprises and to provide immunity to directors, as a backstop. That procedure has been used in previous reforms of this nature.

It is also timely to allow the lines companies back into retailing, to encourage further retail competition. Part 3 of the bill will replace the Electricity Industry Reform Act, which separated the industry in 1998. The bill, however, retains corporate separation rules and other provisions needed to prevent the re-emergence of anti-competitive practices and to make sure that consumers benefit from the changes. The newly formed Electricity Authority will also be required to put in place a liquid hedge market and to introduce a mechanism for hedging against price risks caused by transmission constraints. These are long-overdue changes to open the market up to new generators and retailers. There are temporary backstop powers for the Minister to amend the new electricity industry participation code to deliver on these improvements if the new regulator fails to do so.

A suggestion is also coming through that sufficient new generation is being built, although there is a widespread perception that New Zealand has a fragile and vulnerable electricity supply system. Frequent dry years over the last decade have highlighted that concern. Currently, some market participants have incentives to call for conservation plans to lower spot prices in tight times—in other words, the participants ask others to bear costs while they get benefits. The reserve energy scheme introduced in 2004 also reduced the incentive on parties to manage risks for themselves. When the lakes get low enough, the Whirinaki station has been cranked into action. Consumers, over and above their prices through levies, paid $90 million last year for diesel to fuel the Whirinaki power station. The bill puts in place several measures to address these issues. It does away with the reserve energy scheme, retailers will be required to compensate consumers during public conservation campaigns, and a floor will be put on spot prices during supply emergencies. Along with other non-legislative measures, these changes are designed to improve the incentives for better management of dry years and other supply risks.

The Electricity Commission was set up in 2003, following the failure of the industry’s self-governance arrangements. However, it was poorly designed, with too many objectives, too many functions, and too much dependence on the Government of the day. This bill disestablishes the commission and replaces it with an independent Electricity Authority. Its independence from the Government will improve certainty and predictability for the industry. The objectives of the Electricity Authority are much narrower than those of the Electricity Commission. The proposed objectives are to promote competition in the electricity industry, promote the reliable supply of electricity, and promote the efficient operation of the industry for the long-term benefit of consumers. In contrast, the commission has all of those objectives, plus fairness, environmental sustainability, the promotion of energy efficiency, and seven other more detailed requirements. The authority’s functions are narrower and more tightly defined. Its focus will be on rule-making and on improving the operation of the market. It will develop and administer an electricity industry participation code, replacing the current governance rules. Changes to the code will not need to be approved by the Minister, and that will bring New Zealand more into line with Australian and British electricity regulators and regulations.

Overlap with other regulatory bodies will be reduced, and synergies will be improved by the transfer of a number of functions to other bodies. The systems operator will take over the management of emergencies, as well as responsibility for forecasting and providing information on the security of supply. The promotion of energy efficiency will be considered and consolidated in the Energy Efficiency and Conservation Authority. The approval of grid upgrades will be transferred to the Commerce Commission, to ensure that all grid expenditure is considered in an integrated manner. There will also be a security and reliability council to provide senior-level, expert advice on security issues to the systems operator.

The bill incorporates the provisions of the Electricity (Continuance of Supply) Amendment Bill, as reported back from the Commerce Committee in July of this year. It also incorporates provisions from the Electricity Industry Reform Act, which is repealed by this bill, and the Electricity Act. These provisions are part of the framework for the regulation of electricity and, as such, fit within this bill, leaving the Electricity Act to focus entirely on access to land and electrical safety matters.

This bill implements the measures requiring legislation that come out of my review of the electricity market. I believe that the overall package of changes will help to constrain prices, improve the management of dry years, and ensure that the regulator is focused on making timely and overdue changes to the market. As I said at the start of my speech, it is my intention at the end of this debate to move that the bill be considered by the Finance and Expenditure Committee.

CHRIS HIPKINS (Labour—Rimutaka) : There we have it! Max Bradford is back, and he looks a bit like Gerry Brownlee. Max Bradford would be very, very proud of the National Government today. It has picked up his failed tertiary education reforms, dusted them off, and passed them through the Committee stage of Parliament this afternoon. Now it has picked up his failed reforms to the electricity industry and it is to give them another whirl, as well.

The Electricity Industry Bill is another example of National’s blind faith in the market: it believes that increased competition will lead to lower power prices. But, of course, that worked so well the first time around! It also believes that the market will provide security of supply. That worked really well the first time round, too! Does anyone else remember that in 2001, a year after the Labour Government was elected, Max Bradford was still on TV, saying the market would result in lower power prices and a greater security of supply? How did that work out? We had an electricity shortage in 2001, and then we had another shortage in 2003. Now the National Government is going back to the failed policies that Max Bradford pushed through in the late 1990s. The former National Government got us into this mess, and now National is getting us even deeper into it as well, with its blind faith in the idea that the market will provide everything.

One thing that people who are watching at home will have noticed from Gerry Brownlee’s speech is that there was no mention of the lower power prices that the National Party promised New Zealanders prior to the last election. Does anyone remember that? Gerry Brownlee and John Key went up and down the country, talking about the fact that power prices were too high and that a National Government would deliver lower power prices. Yet nothing in this bill delivers lower power prices; it is not even close to doing that. The best that Gerry Brownlee can do is to tell people that they need to shop around. If they want lower power prices, he says they need to shop around. There is nothing in this bill that would lower power prices.

People who are watching at home will be interested to know that the Government has done absolutely nothing to address the growing gap between the prices paid by the large industrial users of electricity and domestic users. Although the prices that people at home pay for electricity have continued to go up, in the last year or so the prices paid by the industrial users of electricity have gone down. Interestingly, when Gerry Brownlee put his Cabinet paper through, he left out the graph of power prices in the most recent year. Why did he do that? Because it highlighted the huge and growing gap between the power prices paid by people at home and those paid by the big commercial users. This bill, being forced through by the Government, does absolutely nothing to address that particular gap.

Once again, this bill is another example of hotchpotch legislation from the National Government, which has no coherent strategy whatsoever. Gerry Brownlee promised us some time ago, at the end of last year, I think it was, that he was going to release a new energy strategy, and that it would be released at the beginning of this year. He promised that in early 2009 there would be a new energy strategy. We are still waiting for it. There is no sign of the new energy strategy from the Minister of Energy and Resources. There is no sign either of the new energy efficiency strategy that the Minister also promised. Again, here we go: we have hotchpotch legislation with all sorts of different measures, but there is no coherent strategy.

One of the words that were missing from the Minister’s speech was “sustainability”. While John Key and the other representatives of the Government are overseas in Copenhagen talking about emissions reductions, sustainability, and climate change, there has not been a single word about that in the Minister’s speech. Sustainability is invisible in this bill. There is no talk about sustainability whatsoever, yet sustainability is a critical part of New Zealand’s energy future.

The Labour Party believes that any reforms of the electricity sector need to deliver on three key priorities: sustainability, security of supply and transmission, and affordability and predictability of pricing. To take sustainability first, I tell members that the New Zealand Energy Strategy, released by the previous Labour Government, was designed to achieve a low-emissions energy system with renewable sources accounting for around 90 percent of baseload generation by 2025. That was the goal. We wanted to move to a system that had more renewable electricity generation, yet the Government has completely turned its back on the idea that New Zealand should have 90 percent of its baseload generation from renewable sources. Of course, that is completely consistent with other measures that this Government has taken. This bill is completely consistent with the decision late last year to repeal the thermal restriction, which would have meant that new baseload generation came from renewable sources, unless it was required for security of supply. That was out the door as soon as National became the Government. Of course, it repealed the biofuels sales obligation, which would have created a sustainable biofuels industry in New Zealand, reduced our carbon emissions from transport, and helped to lead to a more sustainable energy future.

There was no mention of sustainability in the Minister’s speech this evening. As I have already mentioned, he announced that he is scrapping the Energy Efficiency and Conservation Strategy, but he has not given a clue whatsoever as to what the new strategy will look like. That is very important in the context of the international discussions that are going on at the moment around climate change. Although the Government may be talking about reducing carbon emissions to 10 to 20 percent below their 1990 levels, it is yet to articulate a single policy that will reduce New Zealand’s carbon emissions. No consideration whatsoever is given in this bill to emissions pricing.

The second priority that I mentioned was ensuring the security of supply and transmission. I think it is important that we put the security of supply in context here, because Mr Brownlee’s own ministerial review found that there had been, in fact, sufficient new generation to meet the demand. So there is no security of supply crisis here. The review that the Government itself commissioned found that sufficient new generation capacity had been added to meet the demand.

In the longer term the best way for New Zealand to ensure that it has a sustainable, secure supply of electricity is to make sure it is renewable, because renewable energy sources—Aaron Gilmore is shaking his head, and I cannot possibly understand why. A renewable energy source will naturally lead to greater security of supply, because if it is renewable, then it keeps on going. I will tell Aaron Gilmore what is running out: gas and oil. They will run out eventually, and so will coal. If we had renewable electricity, it will, firstly, be cheaper, because as the non-renewable energy resources of the planet diminish, they become more expensive, and renewable energy will become relatively cheaper. In the long term the use of renewable sources will lead to lower electricity prices and to a more sustainable supply of electricity.

I come now to the third priority that I mentioned: ensuring the affordability and predictability of power prices. Absolutely nothing in this bill will lead to more affordable electricity for New Zealanders at home, who are struggling with rising power prices. Some of the power price increase can be explained by the fact that electricity in New Zealand has been very cheap over a long period of time. Māui gas ran out—

Jonathan Young: It is still pumping right now!

CHRIS HIPKINS: It is still pumping, but it is running out. The lifting of the cap on the price of the Māui gas caused by the running down of the Māui gasfield has led to a significant increase in power prices, which highlights how vulnerable our system is if we rely on non-renewable energy sources to create electricity.

The solution is to generate more renewable electricity. There are plenty of alternatives to more hydro dams: wind farms, tidal electricity, and geothermal energy. Geothermal energy has been barely mentioned by the Government; no strategy for geothermal energy has come out of the Government so far. If Mr Brownlee wants to have a more secure supply of electricity, then perhaps he should get his act together and start to look more closely at geothermal generation.

This bill is another example of a bill that is driven by blind ideology on the part of the National Government, and it will not work.

Finally, I want to talk very briefly about the asset swap that this bill proposes. That is another thing that will not work, and I say the only people who will benefit from the asset swap are the potential private owners who want to buy the State-owned enterprises when the National Government sells them in its second term. National only ever committed itself to retain the generating State-owned enterprises in Government ownership during its first term in Government. This measure is partly driven by National’s desire to get those State-owned enterprises ready to be hocked off. It does not make any sense; it is a completely backward move. The breaking up of the Waitaki hydro system could lead to a loss of water efficiency, so it is a short-term thing. Forcing Meridian Energy to take on Whirinaki could result in that station being hocked off to the private sector, as well.

This is a bad bill. It is ideologically driven, and the Labour Party will be opposing it.

AMY ADAMS (National—Selwyn) : Is that not interesting? The National Government introduces a comprehensive electricity industry reform, the Electricity Industry Bill, and Labour’s response is that everything is fine and we do not need to change anything.

Let us just recap on the last 9 years under the previous Labour Government, when power prices went up by 72 percent―

Hon Members: How much?

AMY ADAMS: ―72 percent—compared with a 28 percent rise in inflation over that time. The Labour Government took $3.1 billion of dividends out of those power companies while prices were skyrocketing―$3.1 billion. What is Labour’s response? It says: “There is nothing to fix. Why are you guys fixing it? It’s fine.”

The electricity industry is not fine. We have had an excellent technical advisory group looking at it. It has reported to the Minister, and Cabinet has come back with a series of recommendations that will focus on three things: security of supply, which is fragile and is not reliable; the inadequate, inflexible, and overburdened governance system; and, most important, why prices have been going up at such an astronomical rate under the current system.

For us, those three things mean that the system is not fine and that it does need work. So for Mr Hipkins to tell this country that everything is fine and that this Government should not be fixing anything, is deluded. The electricity system needs major reform, and Minister Brownlee has done the hard work that that member’s party did not do during 9 years in Government. He is now putting in place the steps to ensure the industry can have a secure supply, that it can have effective governance, and that we will not see future price rises galloping ahead at the rate they did under the Labour Government.

Let us look at some of the provisions in this bill. In terms of increasing competition, which is one of the major factors that will lead to lower increases in electricity prices, we will now see retailing by lines companies. Automatically, we will see more competition in the sector as the lines companies are allowed back into the market. To complement that, the strategic asset swaps between the power companies will mean there is far less regional focus. Meridian, for example, will not have the monopoly it currently has in the South Island.

I am a South Island power consumer, and we pay huge power bills. I can tell members right now that in the South Island we can choose any company we like as long as it is Meridian. I ask Mr Hipkins what sort of competition that is. It is no competition at all. These asset swaps will seriously address that. Along with getting the governance under control and addressing security of supply, this is the first step to a much-improved power sector in New Zealand. I commend the bill to the House.

Hon DAVID PARKER (Labour) : May I start by saying that I agree with the provisions in the Electricity Industry Bill in respect of penalising generators and retailers if a conservation campaign is necessary for retail consumers. Indeed, I hope that I was one of those who brought to bear that thinking. Last year we had repetition of an event that occurs periodically in New Zealand. New Zealand has a very high dependence on hydroelectricity, and it is true that if we have a high reliance on hydroelectricity, which most of the time is a real benefit, if we have a very, very dry hydro inflow sequence, the system comes under pressure because we do not have as much water to flow through our generators. Last year, for 3 months, we had the lowest inflow sequence since the 1940s―for over 50 years.

Two things were clear from that. Firstly, despite that very low inflow sequence, the system coped. So despite the lowest hydro inflow sequence for 50 years, we maintained security of supply in New Zealand even with the doom and gloom predictions at the time from, amongst others, the Hon Gerry Brownlee. Secondly, it became apparent that it was easiest for industrial users and generators to sacrifice the interests of residential consumers. The industrial users generally have tariffs that are lower than those paid by residential consumers, but they face a loss if they have to reduce their production as a consequence of a shortage of electricity in inordinately dry years. They resist that by complaining that other people, other than them, should bear the pain. In the case of electricity generators and retailers, unless they have a hedged position if there is a low hydro inflow sequence, they also face the real risk that they will be burnt during a low hydro year because they have an obligation to supply their big industrial users and their other users. If they cannot generate enough electricity, they suffer a loss because they cannot generate as much as they have promised they will sell. So they too have a financial interest in causing someone else to turn off their electricity.

Both of those major groups, the retailer generators and the industrial users, have an interest in putting the costs on to residential consumers. The cost to residential consumers is obviously higher on a per unit basis than it is to commercial users because they generally have to pay a higher per unit charge. As the system is currently configured, it does not have any economic disincentive for the generators or the industrial users to prefer the interests of residential consumers or to properly take them into account. Accordingly, this change to allow conservation campaigns to trigger a financial cost to the wholesalers and retailers and, indirectly through that mechanism, to industrial users is a welcome change to settings, and I congratulate the Minister of Energy and Resources, the Hon Gerry Brownlee, on following that through.

However, there are some other problems. I agree with Chris Hipkins in that I cannot see the sense in breaking up the Lake Tekapō assets. The Waitaki system assets run from Lake Tekapō, though the Ōhau canals, through the Pūkaki system, through Benmore, through Aviemore, then the Waitaki system. They are all hydrologically linked. They are most efficiently run as one unit. This bill is putting an artificial financial market outcome higher than the natural physical configuration of these assets. That is not good policy. It will increase costs in the long term, it will see the water less efficiently used, and it will add to the costs of the generators because we will have different engineers and different managers of these same assets that are in physical proximity to each other. It just does not make sense, so that is a mistake.

The next mistake is in respect of the abolition of some of the Electricity Commission’s powers. Let us reflect on why the Electricity Commission was formed. Max Bradford’s reforms had this fiction that we would somehow have competition in lines companies. As a consequence, there was a rule for Transpower—the organisation that runs the backbone of New Zealand’s wires. There is only one, it is an absolute monopoly, and there will never be competition in it. Yet Max Bradford had a rule that was written by Treasury for him and was put into effect by the last National Government. It said that Transpower could invest in upgrades only if its customers agreed that the upgrade was necessary. It was a nonsense. Meridian Energy, Mighty River Power, Genesis, TrustPower, and Contact Energy would never agree. As a consequence, TrustPower never had any confidence that it would get paid for additional investment that needed to be made in our transmission infrastructure so it did not make it. That is absolutely reflected in the amount of money that was spent on transmission upgrades in the period of the late 1990s and early 2000s, when that rule applied. The amount that was spent was less than $100 million per annum. In fact, sometimes it was in the tens of millions—closer to zero than to $100 million per annum.

Since we have changed that rule, because investment in transmission capacity was most obviously overdue, transmission expenditure has increased not twofold, not threefold, but tenfold. There has been a tenfold increase in transmission expenditure. That comes with risk; the risk for a monopoly is that it will over-invest in its infrastructure. We have to control against over-investment as well as under-investment. We did that through the Electricity Commission. Through the Electricity Commission we have had approvals of the big upgrade through the Waikato. That upgrade process saved New Zealand consumers about $70 million because it knocked costs off an overly costly model that was initially proposed by Transpower. We have had approval of the new HVDC upgrade across Cook Strait. We have had approval for a ring supply into Auckland; there has been a linear supply into Auckland and when we had the outage at Ōtāhuhu a few years ago we saw how fragile that supply was. If a linear supply breaks—and there is always a risk that kit will break—there is no alternative way to route power into Auckland to any substantial degree, and, therefore, we have moved to a ring route to Auckland, which is well through the Electricity Commission process. We have had upgrades in the South Island. We have a tenfold increase in expenditure on transmission and it was necessary.

We have also had good transmission planning. We told the Electricity Commission throughout the previous Labour Government that we wanted more renewables. The Government is now saying that those environmental outcomes are irrelevant to replacement for the Electricity Commission. That is a mistake. Through those prior provisions, or the current provisions in the principal Act, we told the Electricity Commission that renewables were important. The commission had a look at the issue, it saw that geothermal was the important source of new renewables in the central North Island, and it came forward with plans to approve major expenditure on what is called the Wairākei Ring to get all of that geothermal out of the central North Island into the points of demand in Auckland and also south of Auckland. The current provisions work well there compared with the prior provisions of Max Bradford.

In terms of allowing lines companies to re-enter retailing, that was impossible under the Max Bradford reforms because, again, they were left unregulated. Despite being absolute monopolies those local lines companies were left unregulated. Some of them overcharged and under-invested so consumers ended up paying twice, once through the inflated prices, which were unregulated until the previous Labour Government resolved that, and second, because these companies had distributed all their profits, consumers had to put up with the reality that additional money was needed for spending on that infrastructure. Now that those lines companies are regulated in their price path through the Commerce Commission it is probably not so bad if they re-enter retail competition. We will look at that. But it is nonsense that we are taking energy efficiency concerns from the Electricity Commission. We now have a system where all of the participants have an interest in selling more electricity rather than there being an economic return on increased efficiency to sell less. The Electricity Commission was not the whole answer to that but it was making progress—it brought forward energy-efficient light bulbs in New Zealand. Gerry Brownlee does not like energy-efficient light bulbs, but the Electricity Commission did very well in bringing them forward.

John Hayes: Nanny State!

Hon DAVID PARKER: That is just absurd. Helping New Zealanders have lower power prices through improved efficiency makes economic as well as environmental sense. I am dismayed that the National Government does not see that obvious truth even now. So taking away the commission’s conservation function is nonsense. Indeed, I think that the Government should be pursuing something Labour started in Government but did not finish, which was to give an economic reward to lines companies for increases in efficiency and investment in efficiency rather than just rewarding them for additional sales of power. I think it is still a moot point as to whether there is sufficient competition in electricity. I do think this bill cures the problems identified by the Wolak report. It really is just changing seats rather than changing the fundamentals of an ineffective market.

DAVID CLENDON (Green) : The one proposition that the Greens can agree with in the Electricity Industry Bill is that there is certainly work to be done, and considerable scope for improvement, in the interests of assuring a reliable and affordable supply of electricity to New Zealand homes and businesses. The reforms dating back to 1998, which is over 10 years ago, have clearly fallen well short of delivering on the outcomes that were promised at that time. The intention of this bill appears to be at least to remedy some of the issues around security and pricing, and that intention can only be applauded. However, the Greens will not be supporting this bill, given that it would be relying far too heavily on one key assumption and one mechanism. That singular focus represents a missed opportunity—indeed, a number of missed opportunities—to make more meaningful and positive changes in the sector.

The bill seeks to promote increased competition within the sector, and relies on that competition to effect efficiencies that will flow on, if not to give price reductions to consumers then at least to slow or stabilise the inexorable rises in electricity prices that we have seen since the last major round of reform a decade or more ago. We could support moves to make the electricity retail market more competitive and more efficient if we thought it likely that the reforms would deliver economic and environmental benefits. But there is a distinct lack of evidence that in a market of the size and nature of New Zealand’s, this proposed model would achieve those goals.

One of the many options missing from this bill is any reference to the real solution, or set of solutions, that must address issues of demand and conservation of energy rather than be so tightly focused on managing and manipulating the price of supply. We can remake and remodel the electricity retail sector, but that will do little to affect the fundamentals of supply and demand. We will look in vain for long-term sustainable savings for households or businesses until such time as we invest in energy conservation measures, and provide incentives for a distributed supply network based on renewables. This proposal to effectively reshuffle the deck in regard to ownership of the key assets of the three State-owned enterprises may serve to avoid the so-called regionalisation of competition, but along with the so-called virtual asset swaps, the obligation to enter into long-term hedging contracts would seem to add up to very complex mechanisms, inevitably with a very high level of transaction cost. The previous speaker, David Parker, noted the attempt to impose an economic solution in a context where ecologically and physically it makes no sense.

The proposal to disestablish the Electricity Commission in favour of a much more narrowly focused electricity authority is also of concern. The commission has had some success. It has built up a level of expertise and skills that are likely to be lost to the sector, and the reduced ambit of the new authority reflects an unfounded confidence in market solutions. It puts responsibility for key outcomes in places where there is little or no likelihood of them being adequately managed. We are far from persuaded that the proposed reallocation of other functions of the commission would in fact be picked up in any satisfactory way. The expectation that the Minister should be responsible for making regulations to ensure fairness in dealings between retailers and distributors and their consumers, represents a triumph of hope over experience, given that conflicting political and economical demands and expectations are sure to land on that Minister.

The bill proposes that the promotion of energy efficiency should be consolidated in the Energy Efficiency and Conservation Authority, but nowhere does it reflect on any increase in the Budget or other resources available to that agency to advance that work. We would argue that, in any case, every agency involved in the electricity supply chain should be actively engaged in the promotion of energy efficiency and demand reduction.

The proposal that generic environmental policy and law, notably the Resource Management Act, should be relied upon to ensure the environmental sustainability of the sector, is a remarkably disingenuous approach, which denies the value of a national strategy for a sustainable supply that could help to future-proof the industry and protect its consumers. The generic approach ignores the reality that Resource Management Act provisions have often been inadequate to prevent the consenting of some projects, like the wholly unsustainable Rodney Power Station proposed by Genesis. The residents and other objectors very early in that process recognised there could be no certainty of gas supply to fuel it, and even less certainty that the gas might be available at a price that would make the project viable, although the applicant has only much more recently arrived at that same conclusion.

We note that there is no place reserved on the new governing authority for consumers or a consumer advocate, despite the fact that they are paying nearly half of the electricity industry revenues. This seems to continue a trend of diminishing opportunities for public participation, which was much in evidence in the Auckland governance legislation debated earlier this evening, and in the reforms of the Resource Management Act pushed through Parliament earlier this year.

There is some very poorly targeted spending proposed in the bill, including the expenditure of some $15 million over 3 years to promote customers switching between retailers. One would have thought that if the provisions of the bill could achieve a more competitive market, as its proponents would suggest, then consumers would be astute enough to manage their own switching, as indeed they do in the telecommunications market, with no substantial contribution of funds from the Government. That proposal would almost certainly be a gift primarily to the advertising industry, which would be employed by the power companies to sell the real or imaginary benefits of dealing with one or another of the companies. The added cost of that would just as surely land on consumers in the long-term, as we saw in the tertiary education sector when it was encouraged to adopt a competitive approach to the provision of education. Rather than spending $15 million on that rather peculiar market intervention, it seems much more sensible to fund, for example, another green solar water heating programme, which could add a further 15,000 solar water heaters to homes, thus saving householders significant amounts on their bills and reducing the pressure for increased supply.

Another way to much better spend $15 million would be to invest in the roll-out of smart meters in people’s homes. One of the specific recommendations of the ministerial review that did not get picked up in the legislation was the development of smart meters. The nearest the bill comes to incorporating this recommendation is in clause 120, where there is a brief reference to the creation of flexible tariff options for the consumer, and smart meters are certainly a tool that can facilitate that. The Parliamentary Commissioner for the Environment has made a powerful plea for smart meters, and in particular a smart meter protocol ideal for New Zealand’s needs, the so-called ZigBee protocol, which has had widespread use in North America and which has been mandated in the Australian State of Victoria. A rapid adoption of the commissioner’s recommendation would be an enormously valuable addition to this bill. Smart meters, and the in-house display units that can sit alongside them, have been shown to reduce power bills by some 5 to 15 percent, purely through increasing householder awareness of their power usage. Smart timers and plugs are readily available, and could save householders money and reduce demand immediately, and we could expect to see smart appliances on the market very quickly, once meters were installed, to exploit their benefits. The Greens entirely support the parliamentary commissioner’s recommendation in respect of meters, and to that end Jeanette Fitzsimons has drafted a member’s bill.

In announcing the review, the Minister of Energy and Resources, Gerry Brownlee, indicated his attraction to the idea that consumers could be compensated in the event of there being conservation campaigns, particularly in dry years. I return to my earlier point that far from discouraging energy conservation, we should always and everywhere be encouraging it, in residences and businesses, and in good and bad years. The analysis that was done by Professor Wolak indicates considerable questions about whether the proposed penalties on suppliers would in fact be a particularly effective tool, given the history of the large profits made in the sector that will be scarcely dented by the proposed penalties, even in dry years.

Climate change and the end of cheap oil will have massive implications for the price and security of energy, given that we are at the end of a very long supply chain. This bill fails to even recognise those threats. It fails to incentivise solutions based on the investment and development of green technology, and on renewable distributed generation, so it will not be supported by the Greens. Thank you.

JOHN BOSCAWEN (ACT) : It is a pleasure to rise on behalf of the ACT Party to speak on the Electricity Industry Bill.

I start by thanking the Minister of Energy and Resources, the Hon Gerry Brownlee, for the way that he has involved the ACT Party in the preparation of this bill and bringing it to Parliament. National has been very good at consulting with one of its confidence and supply partners. The ACT Party will support this bill being referred to the Finance and Expenditure Committee on its first reading. We look forward to hearing submissions on the bill in the committee, and to hearing the views of New Zealanders and those with expertise in this area.

Listening to this debate this evening, one would think that the Labour Party is concerned about electricity prices. One might be excused for thinking that the Labour Party actually cares about how much electricity prices go up, and how much ordinary New Zealanders—mums and dads—have to pay for their electricity. Nothing could be further from the truth. We heard from Amy Adams just a few minutes ago. She talked about how power prices had gone up by 72 percent in the last 8 years, against a CPI that had run at 28 percent. So in the last 8 years, under the Labour Government, electricity prices came close to doubling. What do we hear from Chris Hipkins? He interjected across the House asking whether power prices are going down. He said that there is no mention of the lower power prices that the Prime Minister and the Hon Gerry Brownlee talked about when they campaigned up and down this country.

I would like to take members back just 2 weeks, to when we were debating amendments to legislation on the emissions trading scheme. The Labour Opposition strenuously opposed those amendments—strenuously opposed them. What did those amendments do? One of the things those amendments did was delay a 10 percent increase in the price of electricity from 1 January 2010—a 10 percent increase, I say to Mr Hipkins. It may not concern the Labour Party that electricity was to go up by 10 percent on 1 January 2010, because when electricity has already gone up by 72 percent in 8 years, what is the problem with another 10 percent? Labour members have come along to this House this evening, pretending to be concerned about ordinary New Zealanders. The Labour Government passed an emissions trading scheme that would have imposed a cost on emissions that would have led to an anticipated 10 percent increase in the price of electricity.

Hon Darren Hughes: $110 billion.

JOHN BOSCAWEN: Only $10 billion, the interjections come. A 10 percent increase in the price of electricity.

The previous emissions trading scheme was strenuously opposed by the ACT Party. It was also strenuously opposed by National when it was debated in this Chamber last year before the change of Government. But, sadly, what did we see from the National Government? We saw an amending bill that, rather than imposing a 10 percent increase from 1 January, increases electricity prices from 1 July next year. So electricity prices are to go up. The good news is that they are to go up by only a further 5 percent, and that increase will be delayed for 6 months. Electricity prices will go up by a further 10 percent in 2013, which is 2½ years later.

Labour members come along here this evening to have us believe that they are concerned about the price of electricity going up. They talk about the mums and dads, the homemakers, and the residential consumers having to pay more for their electricity. If it had not been for that amending bill that went through, electricity would have gone up by 10 percent on 1 January next year, which is just 15 days away.

But it is worse than that, because the emissions trading scheme works by adding 10 percent to the price of all electricity that is sold. Only those generators that generate electricity from fuels such as coal or gas have to pay that carbon tax, so it results in windfall profits. Generators such as Trustpower, which is substantially generating electricity from renewables—from hydro and wind sources—is able to increase its prices by 10 percent, but does not have to pay the off-setting carbon tax. So for Trustpower it represents a massive profit windfall. That is equally true for Contact Energy, Mighty River Power, and Meridian Energy. Meridian Energy and Mighty River Power are Government-owned, so one might justify this provision on the grounds that it is a tax, it will result in extra profits for those generators, and that profit will come back to the State. One might justify it that way, but why are we having any increase in electricity prices, even of 5 percent on 1 July next year, just to see it go in windfall gains for Trustpower and Contact Energy, which are privately owned electricity companies?

It was also particularly interesting that Mr Hipkins referred to the need to grow our renewable generation. I absolutely agree. If Mr Hipkins had been a member of the Commerce Committee, he would have heard a submission in recent weeks from Mighty River Power about how it has developed the Kawerau geothermal station and its plans to develop other geothermal stations around the volcanic plateau. Those stations operate at very high gross margins. The fuel—the steam—that drives those stations comes out of the ground and it does not cost anything. Mr Heffernan, the chief executive of Mighty River Power, told us that the profit margin is something like 88 percent, so there is a very, very good margin when developing geothermal power stations. New Zealand will no doubt have a lot more geothermal power stations, all brought on without a need for an emissions trading scheme that will artificially increase the price of electricity for all New Zealanders.

But I was interested to hear Mr Hipkins’ comments on the break-up of the Waitaki power catchment, and those comments were echoed by Mr David Parker. I think that both Mr Hipkins and Mr Parker made very good points. They talked about the inefficiency of breaking up that system, they talked about how that water may not be efficiently used, and they talked about the need to double up the management and the engineering resources. So that is why I say to the House that the ACT Party will be listening with interest to the submissions at the select committee, and we will be interested to see what is in New Zealand’s best interests.

I would also like to comment on the issue of smart meters or electricity meters, which was also raised by David Clendon. I would like to compliment a member in the House this evening Clare Curran, who is also a member of our Commerce Committee, and who has taken a particular interest in this subject. When this issue was first raised 3 or 4 months ago members of the committee were very concerned about what appeared to be the haphazard nature in which smart meters were being rolled out throughout New Zealand. I commend Clare Curran’s interest in that, and it would be good to see some common sense and some consistency.

New Zealand needs cheaper electricity. It needs more efficient supply. It needs greater reliability and it needs greater competition. The market will work. Mr Hipkins criticised the fact that the market was not working, but if there is insufficient competition, Labour had 9 years to do something about it, and it did very little.

The ACT Party will support this bill’s first reading and we look forward to New Zealand having cheaper power and a more competitive market. Thank you very much.

Hon Dr PITA SHARPLES (Co-Leader—Māori Party) : There used to be a smart catchcry in New Zealand. It was: “Will the last person to leave please turn out the lights.” Well, over the last couple of years the lights probably would have been replaced by a candlestick. Why? Because there has been a massive 65 percent increase in the price of electricity in the last decade while in the same space of time there has been a 34 percent increase in inflation. So one does not have to be an accountant—

H V Ross Robertson: Or a genius!

Hon Dr PITA SHARPLES: —or a genius—to work out that electricity prices have increased at almost twice the rate of inflation, which is a 31.9 percent difference.

Many of us in Aotearoa, in the context of electricity, will be forever traumatised by the death of South Auckland mother Folole Muliaga hours after the electricity supply was disconnected to the family home. Although the Ministerial Review of Electricity Market Performance suggests that a large part of the increase in electricity prices over the last decade is justified, prices to some customer groups, especially residential households, have risen faster than justified by the generation cost increases. These things cause us particular concern in the context of low-income families, so many of whom are Māori. When we learn that Consumer New Zealand is supportive of the bill, it has to give us good heart.

As a party, the Māori Party has fought consistently to address the situation faced by low-income families struggling simply to survive. We know that Māori households tend to spend more on electricity and liquid fuels than non-Māori, and they also use a greater share of their total weekly spend on such items. When we entered into negotiations around the emissions trading scheme we became aware that although a greater impact on Māori households can be predicted for emissions trading scheme - related electricity price rises, this is possibly not the case in respect of liquid fuels, given that more affluent Māori households tend to spend a relatively higher share of their weekly spend on fuels than do other Māori and similarly affluent non-Māori.

That raises a possible case for greater targeting of support to households for emissions trading scheme - related rises in electricity prices. So we were delighted to achieve a 50 percent increase in support in terms of electricity costs for 2 years as part of the Māori Party’s support for the scheme. That translated into a 5 percent increase in electricity prices instead of a 10 percent increase. It all adds up but, as always, we will not be satisfied until we can come to the best possible arrangements for our people.

This bill disestablishes the Electricity Commission and instead sets up the Electricity Authority, which will have a very specific pro-competition focus. So how exactly will that benefit Māori? We are optimistic that the authority can promote the benefits to consumers of comparing and switching retailers. There is also specific provision for a $5 million-per-year fund to facilitate consumer switching. Although this is positive we wonder whether the $5 million-a-year fund to facilitate consumer switching might be better spent educating New Zealanders on how to consume less rather than on how to switch companies.

I return to the broader aim of the bill, which is regulation of the electricity industry in order to improve competition in the electricity market and improve the security of electricity supply. So the purpose of the bill is to increase competition in order to keep price rises down, particularly in the retail market for residential customers. There is some uncertainty as to whether the provisions of the bill will be able to achieve its purpose of increasing competition. Some electricity companies are saying that the asset swap will create uncertainty and risk, creating reluctance for companies to expand nationally; others are supportive.

Another important question we have, given the corporate model of electricity supply, is whether the increased competition will actually facilitate the minimising of electricity price increases so that households will face only necessary price increases. Will it simply be as ineffective as switching between petrol companies? We are aware that customer switching can effect change and keep down prices, such as in the situation with Contact Energy in 2008 when it wanted to raise prices considerably, including to cover increased directors’ fees. The company lost more than 40,000 customers in a short space of time, which is much more than the average amount of switching that goes on, which is about 23,500 in an average month. Sector-wide it is 12.5 percent and it includes those moving house.

Significantly, we are mindful that the ability of the Minister to regulate on price is being removed via this bill. Although the bill allows the Minister to make regulations relating to fairness issues for consumers, which is all very good, in many ways it is simply playing with the various chess pieces on the board. The provision is necessary as fairness is not an objective of the new Electricity Authority as it was for the Electricity Commission.

The bigger picture, however, is energy conservation and investing in sustainable energy—two objectives of the Electricity Commission that will not be transferred to the Electricity Authority. In many ways, then, the amendments the bill makes to the energy sector as a whole could be said to be in the wrong direction. It does not address growing energy demand or facilitate the roll-out of renewable energy generation. This is one of the key issues that we will be seeking to receive further wisdom on at the select committee.

There is a need to continue to invest in sustainable energy generation and to do so within a sustainability framework given that electricity prices will continue to increase with oil price increases and given that electricity production will come with an increasing carbon price tag attached. We are really interested in the range of options our people are currently exploring: the establishment of micro-grids for rural communities, consisting of small-scale wind, solar, micro, hydro, and anaerobic energy systems while also maintaining a connection with the national grid. This will both lower costs and improve security of supply.

Finally, I return us to the global landscape and I call on the wisdom of those who attended the Indigenous Peoples’ Global Summit on Climate Change at Anchorage, Alaska in 2009. The Anchorage Declaration, which arose from that summit, concluded: “We are experiencing profound and disproportionate adverse impacts on our cultures, human and environmental health, human rights, well-being, traditional livelihoods, food systems and food sovereignty, local infrastructure, economic viability, and our very survival as Indigenous Peoples.”

There are many key issues impacting on our people around electricity use. The Māori Party has always sought to promote the development of renewable energy sources, including wind and solar, in order to protect and preserve limited resources such as oil, gas, and coal. We have many questions about this bill that still require further discussion, but we believe that the basic premise is certainly worth supporting. We are voting in support of this bill at its first reading, and we look forward to the evolving debate.

DAVID BENNETT (National—Hamilton East) : I do not want to take too long a call on the Electricity Industry Bill. I think most of its aspects have been canvassed by many of the members who have already spoken. But I think the reality is that all New Zealanders have endured large power increases for many years. Many New Zealanders feel that that is unjustified, because they believe that in a country with such a renewable energy base they should have security of supply, but also not an excessive increase in prices. It was something that many New Zealanders felt, and this Government listened to them. It went out there and did a review. It was not a Labour Party kind of review; it was a review that was taken notice of, and something was done as a result of it. That is something that the Labour Party would have no concept of, anyway. It was a real review, and it came out with some real solutions. The Minister of Energy and Resources has taken those solutions on board, and made some real decisions. That is what Parliament has been known for in the last year, and what National has put its stamp on in this political system.

This Government is seen as a decision maker that makes real change for the benefit of real New Zealanders. It is not here just to undertake reviews, and to resile from achieving any of the results that people want to see happen. This bill is good. I think of the good people of Mighty River Power in Hamilton who work hard to provide the electricity supply for the good people of Auckland. We have the ability to work on this, through the bill, and to provide lower prices through the restructuring that this bill provides for. Thank you.

Hon PETE HODGSON (Labour—Dunedin North) : Almost inevitably we have had yet another round of debate on electricity prices, and under whose watch prices went up and by how much. We have had figures thrown all over the place by the Māori Party, by the ACT Party, and I am sure, earlier in the debate, by National. Well, here is something to think about. In the middle of the last decade the Māui gasfield ran out and the price of gas just slightly more than doubled, and gas—

Aaron Gilmore: It didn’t run out, the contract price. It didn’t run out. It’s pumping today.

Hon PETE HODGSON: Oh, so we have a brilliant operator who has told us that the Māui gasfield has not run out. Well, actually, he is correct. But what was a stream is now a trickle, and we cannot run a decent electricity system on a trickle of gas. The Māui gasfield has run out, to all intents and purposes. As part of that, the price of gas just over doubled. Most of the time—not all of the time, but most of the time—the marginal price of electricity in this country is set by the domestic gas price. That is what sets it, not oil, as Pita Sharples said, and coal sometimes does, and occasionally in January it is actually set by the hydro price. But it is nearly always set by the gas price.

The price of gas just slightly more than doubled. What is National’s excuse? National has not seen any increase in the gas price in the last 13 months. But we have seen an increase in electricity prices. What was the excuse that Max Bradford used, when he said in April 1999: “We will see prices decrease.”? In April 1999 they went up in one city by 13 percent, in another city by 14 percent, and in one other city by 18 percent. I rather suspect all of those increases were rolled into the ones that were levelled against the previous Government by speakers on the other side of the House.

But enough on prices; we have a reasonable reason. The underlying reasonable reason is that when the Māui Gas contract was originally signed, way back in the 1970s probably, from memory, it has—[Interruption] It might have been a Labour Government, I do not know. It must be the second-longest contract in the New Zealand economy. I do not think it is as long as our blood bank contract with Commonwealth Serum Laboratories in Australia. I think that contract is about 50 years old. But this contract has to be the second longest. How do I know? Because I spent about 50 hours renegotiating it on the 19th floor of Bowen House with a whole lot of people who were pretty keen to take each other to court, and we got there.

But in the course of those negotiations we rediscovered something that needs repeating. When the original Māui Gas contract was signed, the inflator was made by law to be half the rate of inflation. So right through those decades, including the high inflation years of the 1970s and 1980s when the inflation rate was 10 percent, the Māui Gas price went up by 5 percent, and so on, year after year. If members want to know why the price of Māui Gas doubled, there it is in a nutshell. If members want to know what the large driver on electricity prices was in the time of the Labour Government, there it is in a nutshell. Owe it to history. Own up, tell the truth—that is what happened.

Hon Gerry Brownlee: And who negotiated the contract first up? A Labour Government—

Hon PETE HODGSON: Gerry Brownlee is now accusing the 1972-75 Labour Government of being the problem in the first place because that Government negotiated the contract. He is right; he is right. So what do we do about that? Do we say that the negotiations that occurred nearly 40 years ago should be visited on this Opposition? Or should we simply reflect on the fact that the history came home to roost in the course of the middle of the last decade—

Hon Christopher Finlayson: I believe in guilt.

Hon PETE HODGSON: Guilt—[Interruption] Yes—ha, ha! Back then, everyone thought they were doing the right thing for everyone else. Back then we did not know that subsidising fossil fuels was a bad idea, because back then climate change was not exactly at the forefront of everyone’s mind.

Hon Darren Hughes: Except Aaron Gilmore’s.

Hon PETE HODGSON: Except Aaron Gilmore—

Aaron Gilmore: I wasn’t even born then, mate!

Hon PETE HODGSON: —who of course was pre-natally aware. As he attended his pre-natal calculus classes he learnt not only that climate change was happening but how to differentiate and integrate the various equations that were leading to the ultimate outcome that we hope to see from Copenhagen in a week. This guy is amazing! His pre-natal awareness of these matters leaves me gobsmacked. Let us now turn to the bill, and leave Aaron Gilmore where I think he should be left.

Aaron Gilmore: I love your work; love your work.

Hon PETE HODGSON: The member loves my work. I want to know from Gerry Brownlee where the vision is, because I do not think that shutting down the Electricity Commission and replacing it with the Electricity Authority and the Security and Reliability Council is visionary, at all. What is more, I have noticed that Gerry Brownlee has said that the Electricity Commission may not play in the area that is known as energy efficiency. Well, I think that is a mistake.

Every time there is an extra marginal need for some amount of electricity, one gets it by new generation, by getting rid of a constriction somewhere in the transmission system, or by improving the demand side. Those are the options. We do not import or export the stuff; we are too far away from anyone else. So those are our three options, and Gerry Brownlee has taken option No. 3 away from the Electricity Commission, even though it might be that on some future price curve—in fact, almost certainly on a present price curve—energy efficiency would be the most economically efficient thing to do. But Gerry Brownlee has said no, he cannot do it. It has to be done by the Energy Efficiency and Conservation Authority, according to a budget set by Parliament, and not done in any way that resembles integrated resource management—that does not in any way resemble integrated resource management. I think that is a mistake, I tell Mr Brownlee; I really do. I really think that he could have got that wrong.

I do understand that Mr Brownlee feels the architecture was a bit messy; I must say that I felt the same. I felt the same with the Electricity Commission, the Commerce Commission, the Energy Efficiency and Conservation Authority, and on it goes. I understand the problem, but I am not sure that he has exacted a very fine solution. In fact, I think he will come to regret it. That is my view—that is my view.

Hon Gerry Brownlee: Oh, we’ve got a wee way to go. That’s why we have a select committee.

Hon PETE HODGSON: OK, so it is going to go to a select committee; therefore it might be given a bit of a chance. I do acknowledge that the Government has retained a market. The market was introduced by Max Bradford; we paid a terrible price for that market. We paid a terrible price for that market, yet the moment one seeks to reverse the changes of Max Bradford one rolls up against two things. Either one nationalises Contact Energy and TrustPower, or one accepts that that part is irreversible. And if it is irreversible then a market is necessary, so making the market work as well as possible is a good idea.

One thing that I find curious about this legislation—and I rather suspect that my colleague the Hon Lianne Dalziel also finds it rather curious—is that we have new law that says that Transpower is the system operator. Heaven forbid! Who did that? Was it done by the Ministry of Economic Development, by the Electricity Commission, or by the good Minister himself, or was it done by the invisible hand of the market? No, it was done by TransPower. TransPower is the system operator, it has always been the system operator, and for as long as it has been the system operator, people whose eyes are swirly say that that should be put out to competition. And people whose eyes are straight say to not be stupid.

I wonder what is so wrong with Gerry Brownlee that he thinks he has to exclude the possibility of the system operator ever being put out to competition by making it illegal in law. Is it that he does not trust his own ideology, or the ideology of the fellows over there on the ACT benches? Is that what is happening? Is he getting so much pressure that he is saying “I’m going to get rid of this. I’m going to put it into law.”? Or we can reverse the argument, as I am sure my colleague the Hon Lianne Dalziel might. What is it about National that it is agin competition? Why does it not like competition any more? What was wrong with the system operator coming out of, maybe, the stock market? Why could not it become the system operator?

Hon Gerry Brownlee: They could.

Hon PETE HODGSON: Oh, it could. But not any more. It cannot, because Gerry Brownlee has said “No, no. We’re going to pass a law against it.”—a law against the competitive possibility. Those are very interesting National tactics—the sort of thing that would have been expected from Labour long ago. But, no, the National Government has done it, with no explanation from the Minister on that; I think he owes us one.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : I thank the honourable “Professor of History” across the Chamber for giving us a dissertation on the history of the electricity market in this country.

I take a short call just to reaffirm my support for the Electricity Industry Bill, and to reaffirm the principles of the bill, which were not canvassed by the previous speaker, Pete Hodgson. Those principles are about increasing competition and constraining future price increases. They are about improving security of supply and ensuring effective and streamlined governance. Many have already referred to those principles, but those at home listening at a quarter to 10 this evening may ask why they should believe those characters in that Chamber in Wellington, who are going on about that electricity market. So I will introduce a few objective statements. One is from a Dominion Post editorial: “There are reasons to believe the changes will increase competition,”. Well, that is funny, because members opposite do not believe it. Our colleague Jeanette Fitzsimons has said that the Government’s moves to make the power retail market more competitive are good.

I support this bill for the reasons that my colleagues have already espoused. We look forward to seeing this bill in the Finance and Expenditure Committee to discuss it in more detail. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I am very pleased to be able to speak on the Electricity Industry Bill, but I wish to speak against it. I did not support its introduction. That is because although I agree with the overall aim of the bill, I do not think it achieves the aims that have been established for it. As I understand it, the first aim is to improve the governance arrangements for the electricity industry. I agree with that, but unfortunately the bill does not do that. Secondly, it aims to provide for specific regulatory improvements to be made. The word “improvements” is a bit of a barrier. The third aim is to make improvements to the overall structure of the electricity sector. My view is that fixing what is wrong with the sector is a bit like unscrambling eggs, and I do not know anyone who has the recipe for unscrambling eggs.

Aaron Gilmore: I’m working on that!

Hon LIANNE DALZIEL: Well, that is very nice for the member. This bill proves that the Government does not have a recipe for unscrambling eggs, either.

I found it quite intriguing that a National member stood in this House and invoked the name of Max Bradford in support of this bill. I do not think that that name should be invoked in this House in support of anything other than a mea culpa on that side of the House for the destruction of what was an excellent electricity service in this country under a previous National Government and under Labour Governments before that. It seems to me that that is actually where things went horribly, horribly wrong, and there is really nothing that the Government can do other than admit that it got it horribly wrong and say that we have to find other ways of addressing the real problems that we are faced with in this particular sector.

As I said, Labour does not support the bill, for a lot of reasons. The main reason we have for not supporting this bill is the cruel hoax that was played on the people of New Zealand during the last election campaign, when National said that a National Government would stop increases in electricity prices. I recall that. In fact, I recall hearing the Minister of Energy and Resources, when he was an Opposition spokesperson, walking the length and breadth of this country saying that a National Government would make sure that electricity prices did not increase. This bill really fails to deliver on that promise.

Hon Gerry Brownlee: I never said it.

Hon LIANNE DALZIEL: He certainly was very open in his criticism of the previous Government in terms of increases in prices, and he said that a National Government would bring those increases to an end.

National promised it would do everything it could to take the sharp edges off the recession and help struggling Kiwi families. We have heard National members say that since the election but, unfortunately, the Government’s electricity market review and this bill clearly miss the point. Nowhere does the overview of the bill even mention constraining or reducing prices. Gerry Brownlee will not offer to resign if power prices continue to go up, because he knows that they will continue to do so.

I am concerned that the Government does not have a big-picture vision. I think that the priorities are quite wrong in respect of the approach it has adopted here. Any reforms of the electricity sector need to deliver on the three priorities of sustainability, security of supply, and affordability and predictability of pricing. Those are the three absolute essentials. The Government might say that that is what the bill is intended to address, but in fact it does not address it. These reforms do not address and deal with these priorities, nor do they give us any clue as to how to balance the competing considerations at stake.

Transferring assets between power companies and reshuffling the bureaucracy is really just smoke and mirrors and does not guarantee any immediate relief for Kiwi power users. It has been interesting to hear Government members say that part of what they are trying to achieve here is to encourage a bit of shifting between different retailers. They are going to encourage consumers to shop around, particularly through an annual $5 million contestable fund, levy-funded to facilitate switching between retailers. I had to ask somebody recently what retailer I would be with if I had never changed since Southpower stopped selling electricity in Christchurch. They said that I would be with Meridian Energy. Meridian Energy is my power company because I, like most New Zealanders, am the target of any sort of programme that requires people to do nothing. That is what most people do. I know that the Government wants to encourage contestability, but a lot of people out there would prefer to stick with what they have.

One of the reasons why I am very happy with Meridian Energy as my retailer is that it has made a real effort, in terms of its responsibility in terms of its carbon footprint. Yet now it is being told to go directly to jail, to not pass go, and to not collect $200, and it will be given a little gas-fired—or rather diesel-fired power station. We will have that included in my retailer’s—

Hon Gerry Brownlee: You don’t know where your electricity comes from; don’t be silly.

Hon LIANNE DALZIEL: I am making the point that my retailer has certain ownership of certain assets, and now they are being swapped. I do not agree with that. I do not get any say in what my retailer is or is not able to do. I do not agree with the transfer of assets occurring. I do not agree that the Government should be shifting them on the board, as it is at the moment.

It seems to me that there is only one reason for these asset swaps to be occurring, and that is making certain electricity assets or certain State-owned enterprises more appealing for privatisation in the medium term. John Key said during the last election campaign that there would be no sales of State assets in the first term. I think now that we are at the end of the first year of the first—and, I hope, the only—term, the public will start to click that everything that is being done at the moment is being done to build that foundation for the future sale of State assets. That is exactly why this is being done.

I turn to the regulatory impact statement. Normally I can pick up a regulatory impact statement and read all of the particular issues that have been debated and consulted on, all the different options that have been considered, all of the risk benefits, the cost-benefit analysis, and the risk and opportunity analysis as well. I cannot find that in this bill any more, because of a decision that the Government made with a new Minister for Regulatory Reform in the shape of Rodney Hide. It has been decided that bills will no longer contain the full regulatory impact statement; they will contain the executive summary and links. I have not had a chance to go back to my office and click on the link so that I can pull off the full regulatory impact statement. All I have is the short executive summary. It does not give me the level of detail that I require in order to have a proper debate in the House on this subject. When the bill goes to the select committee, obviously we will have a copy of the regulatory impact statement. We will question officials about the detail around the process that has been gone through, we will look at the cost-benefit analysis, we will look at the risks and opportunities, and we will assess as a committee whether it comes up to scratch. But I make the point, in dealing with this bill tonight, that this new process, a so-called better process, for regulatory assessment and regulatory impact analysis is just not good enough. I should be able to pick up the bill off the Table of the House and read what that analysis says, and I cannot do that. I am afraid the Labour Opposition will be opposing this bill.

AARON GILMORE (National) : In the short time available to me, I say that Lianne Dalziel was the Minister of Commerce under the previous Labour Government, which oversaw a 72 percent rise in electricity prices over about 8½ years. It makes one wonder why the price rises were not even higher during that period of time, given the lack of understanding in what was just said. That lack of understanding of the energy sector seems to occur amongst members on that side of the House.

I am honoured to be part of a Government that understands what the problem is and that has some of the solutions that exist to deal with the problem in the electricity sector. I think that some of the initiatives in the Electricity Industry Bill will work quite well. They include the asset swaps and the ability to bring into place a little more increased competition, because it has been proven that about $100 worth of advantage exists for customers swapping from one retailer to another. I think that is a good thing. The ability for that to happen will be a wonderful thing, and this bill will deliver it. This Minister of Energy and Resources, Gerry Brownlee, will help to deliver it, and I look forward to being part of the Finance and Expenditure Committee that will debate this bill at length. Thank you very much.