JOHN HAYES (National—Wairarapa) : I say “Good morning New Zealand” and give a particular welcome to those listeners in the Wairarapa, my electorate. This legislation demonstrates everything that is wrong with this Government. First of all, the wording has child-like simplicity, as my colleague Tim Groser said last night. Secondly, when we look at what this bill will do we see it will do nothing. This is worthless legislation, and the Government is doing exactly the same thing with this legislation as it did with the Climate Change (Emissions Trading and Renewable Preference) Bill. With that bill the Government set up the theatre of doing something important. This housing legislation is all theatre as well. It will do nothing and has no substance, whatsoever. It is a political fig leaf. This legislation demonstrates that the Government is again transferring responsibility from central government to ratepayers, through territorial authorities—just as it has done over the past 9 long years. This legislation will simply impose more taxes on to communities.

With this legislation the Government aims to put increased costs on to developers and builders, just as it did with the Retirement Villages Act 2003. This Government has put huge compliance costs on to entities that try to provide accommodation for our old folk. What is the net result of those huge compliance costs? In the last 3 or 4 years all those small retirement villages have folded. This housing legislation will do exactly the same thing, because it aims to load developers and builders with increased costs. This legislation will increase bureaucracy in territorial authorities, because it creates a new employment category—the housing inspector.

In this House there is no disagreement about the need for affordable housing for people, but there is a philosophical difference between the squawkers on the other side of the House and the serious people on this side. This bill highlights the serious philosophical differences on this issue of affordable housing. Our method of dealing with this issue is, first, to create the conditions where this economy grows and money is left in people’s pockets, not sucked out by an over-bloated Government. The first thing is to leave money in people’s pockets, and that means capping the growth of Government, capping the amount of taxes, and then reducing them over a period of time, so that people have more money in their pockets.

Second, we have to strip away the increased bureaucracy that this Government has created. I think particularly of the Resource Management Act. In the House last night I gave the example of a fellow from Greytown, where I also live, who had to pay $900 to get resource consent to build a fowlhouse for four hens. What arrant nonsense this Government is imposing on our communities.

Third, we have to remove the constant stream of burdens that have been imposed on territorial authorities by this Government over the last 9 years. I am thinking of air quality requirements, I am thinking of water quality requirements. Those things may apply in Wellington, Auckland, and Christchurch but I promise you they do not apply in much of provincial New Zealand. By imposing those requirements we put a huge burden on our communities.

Then I address the lack of intellectual thought that goes into the big projects that this Government proposes to support. If we are thinking about the need for more affordable houses, we realise there is quite a simple solution. It applies in my electorate, which stretches from Ngawī and Cape Palliser on the south coast, to north of Waipukurau and Waipawa—

Dr Pita Sharples: Takapau.

JOHN HAYES: —including Takapau where Pita Sharples was born and I look forward to seeing him there soon. There is a huge amount of land in our electorate. I want to move quickly from that statement to the logic around developing infrastructure in the region. This Government has said it will build Transmission Gully, but when we think about it, we realise that Transmission Gully will not open up any new land on the west coast of the North Island. But if we were to put a tunnel through the Rimutaka Hill, we would provide rapid access to all of that land in the Wairarapa.

Hon Dr Michael Cullen: Ha, ha!

JOHN HAYES: Dr Cullen laughs, but I assure him that a tunnel through the hill would cost $400 million less than Transmission Gully, and it would have a positive internal rate of return or cost-benefit ratio—unlike Transmission Gully. If we did that, it would open up huge amounts of land to be used for affordable public housing, because the land has a reasonable price. Then we would get access to Government buildings in Masterton—emptied out because of this Government’s policies. We would get access to the hospital in Masterton—emptied out because of this Government’s policies. We would get access to empty buildings in my electorate—empty because this Labour Government has closed schools in my electorate. There is huge capacity there. The infrastructure is in place; it is already built, but it is rotting because this Government is sitting on its backside and cannot focus beyond the big cities.

The National Party stands absolutely opposed to this legislation because it will not provide one additional affordable house for anybody in this country. It is an outrage that this legislation has consumed huge money in bureaucratic time, huge money in House time, and huge money in select committee time. This legislation is childlike and meaningless. It will not deliver affordable accommodation in this country, at all. It will increase the burden on ratepayers through territorial authorities, because the Government is trying to create the theatre of some sort of substantive change, when none exists.

JUDY TURNER (Deputy Leader—United Future) : I want to take a very brief call on behalf of United Future on the Affordable Housing: Enabling Territorial Authorities Bill. As I mentioned in the second reading, United Future supported the first reading. We were excited to see the Government weighing up some options around affordable housing, but we have been disappointed in what has come out the other end and are unable to support the bill any further.

The bill gives powers to territorial authorities that they may, or may not, use. If they do choose to exercise the powers contained within the bill, it is unclear whether they are obliged to apply them in an even-handed way. The truth is a council could impose rigid obligations on one property developer and choose not to require similar obligations of another. How that would play itself out at a local level is completely unclear.

The bill provides very limited guidelines to the territorial authorities about who they can capture with these new powers, if they choose to use them. It is unclear, for instance, whether they can capture current landowners who purchased land in anticipation of establishing a housing development sometime in the future, and who were unaware at the time that they purchased that land that the territorial authorities would subsequently be given powers to slap some serious challenges on to their business plans.

United Future agrees with, I think, all parties in this House that central government should be looking very seriously at a range of options to better facilitate the provision of affordable housing in New Zealand. However, we do not believe that this bill is a well-considered option, and we are sorry to say that we have to pull our support at this stage. The bill has some other interesting provisions that have merit, but we cannot agree with the main thrust of it, which I think is to place upon the territorial authorities much greater responsibility for the provision of affordable housing. One of the things that United Future is scared of is that it shifts the responsibility to the territorial authorities in a way that is unhelpful. We think that the territorial authorities could choose to incentivise the provision of affordable housing through reduced compliance costs—that is a hugely positive possibility that, even now, they could choose to do—but they should not actually dictate to a landowner. That is why United Future is a little surprised that the Māori Party has chosen to support this bill. That party has a fine track record in this House of advocating and standing up for the property rights of others. I think that is an area that that party has neglected to consider in terms of the imposition that this bill allows the territorial authorities to place on landowners.

The motive is good, the motive is fine, but the bill certainly breaches the principles of our party, and we are unable to support its third reading.

Hon RICK BARKER (Minister of Internal Affairs) on behalf of the Minister of Customs: I move, That the Customs and Excise Amendment Bill (No 3) be now read a second time. This bill was introduced into Parliament in December 2007, and it has three purposes: to reform the statutory appeal review rights and the forfeiture and seizure regime in the Customs and Excise Act, to provide greater flexibility for the Customs Service to deal with ad hoc arrivals and departures of craft, and to give the service better control over illegal tobacco manufacturing operations.

The matter of appeal rights arose as a result of a Law Commission report on the forfeiture regime in the Customs and Excise Act. The Government has agreed to reform the appeal rights available, to allow the owners of goods that have been seized the right to be able to reclaim the goods in a much less complicated way. The Law Commission concluded that it should be possible to challenge the seizure, by an initial internal review process, which would involve little or no expense to the challenger and should be accomplished without delay. To give effect to this, the appeal rights in the Act are being repealed by this bill, and are being replaced with a Customs Service internal review process. Applicants who are dissatisfied with decisions resulting from an internal review will be able to appeal those decisions to the Customs Appeal Authority.

In relation to ad hoc arrivals and departures, I tell the House that all arriving craft and those departing New Zealand are required to do so at a nominated customs place. There is currently very limited power to make exceptions, and this bill will allow that flexibility to be there. On the matter of tobacco, I can say that in a recent case the court determined that the amount of tobacco a person could hold for personal use was quite substantial. The argument at the select committee was whether this new determination should be done through statute or by delegated legislation. The select committee gave this matter careful consideration, and the Minister of Customs also discussed the matter with the Law Commission. The happy result was the acceptance of the recommendation of the majority of the committee, that the personal use exemption should be moved from delegated legislation into primary legislation, and clause 6A gives effect to this decision. On behalf of the Minister of Customs, I commend the bill to the House.

SHANE ARDERN (National—Taranaki-King Country) : Madam Assistant Speaker, given your opening comments at the beginning of Parliament today that you wanted both humorous and erudite speeches, I respect your call! I start off by saying that the National Party supports this Customs and Excise Amendment Bill (No 3), for a range of reasons that I am sure will be covered in the speeches following. First of all, as the Minister just said, the bill does three things. Forfeiture and seizure regulations will be amended, as per the recommendations by the Law Commission and others, and there will be an ability to appeal to the High Court, and to the appeal authority within the Customs Service if something is seen to be less than acceptable by someone who may be before that authority.

The second thing, which I guess is probably the most important, but which I am sure will not get the most debate, is the ad hoc arrivals and departures. I think most people accept that something needed to be done in this regard, because the Customs Service was left in a bit of a legislative vacuum with regard to the situation prior to the proposal today. Obviously, with increasing air travel, large airliners, and sometimes an inability for customs to cater for three or four planes—747s—arriving all in one go, the ability, ad hoc as it were, to shift them in adverse weather conditions to somewhere like Ōhākea or Palmerston North, for example, if the jet is of a size that can land in those places, is clearly sensible. The concern I have about that, of course, is whether the resourcing for biosecurity as well as for customs will ever be big enough in those destinations, in that ad hoc circumstance, to be able to cope with the volume that will suddenly be placed on facilities that are not normally required to carry out that efficient service.

So that is yet to be tested. I know that the Foreign Affairs, Defence and Trade Committee put some time into that. I was not a member of the select committee, but I know that my National colleagues on the committee certainly scrutinised these things closely. So that is yet to be tested; I am not very anxious about it at this stage but it is an area that needs to be signalled as potentially of concern.

The third area of amendment that the Minister touched on was the tighter control of exemptions for tobacco growing for personal use. I notice that the select committee members clearly did not entirely agree on this. In fact, there was quite an unusual circumstance whereby on one of the Government’s select committees—a committee chaired by a Government member—the Labour members put in a minority report. That is not the norm, as I understand it, in a committee where the Government has a majority. For Government members to be putting in a minority report is quite an unusual circumstance. The only thing I can draw from that—and I am sure my colleagues who will follow will enlighten us as to how it came about—is that the agreed figure of 15 kilograms of tobacco per person that is allowed to be cultivated is about the consumption of some of the members on the committee in a week.

So they clearly were not happy with that, and the Labour members felt strongly about it, and wanted that amount to be much higher— otherwise there would not have been a minority report from the Government on that. It is interesting, and I will be interested to hear the debate from the Government members, of course, who will take a call, and explain how they ended up with the Labour Party members having a minority report on that matter.

I noticed that the Green Party also had a minority review about the exemption of 15 kilograms for personal use. I would probably guess that they were not keen on that quantity. I would give the Green Party the benefit of the doubt, and suggest that it was probably trying to get the amount down rather than up. Clearly the Government was not—it was trying to get it higher. I am sure the National members brought some sensible sort of consideration to that.

My colleague John Hayes points out to me that the committee is chaired by the very capable Martin Gallagher from Hamilton. Dr Wayne Mapp is the deputy chair, and Taito Philip Field, I am sure, was rational at all times. Tim Groser, of course, would have been completely against tobacco growth, and would have opposed it at every opportunity. John Hayes, my good colleague from the Wairarapa, is another person whom I know is an ardent protester against the use of tobacco. The only person whom I could see who buckled must have been the Hon Murray McCully, and that would have brought about the exemption of the quantity of 15 kilograms.

Going back to the original bill, the weakness that was uncovered, I guess, in the forfeiture and seizure regulations by the Law Commission, is one that has been around for some time. I understand, based on some of the research I did prior to the debate, that there have been some substantial examples of people who have felt that they have not been given a fair deal. But on the whole, the Customs Service—and we must remember that the Customs Service in New Zealand is the oldest Government department—has a very proud record. It does not often feature in the media. It does not have a high profile, which in itself says it is doing a good job.

It is the oldest department. It was the first Government department set up more or less as a gatherer of taxes that was handed over to the Inland Revenue Department. The Customs Service is one of our most important departments in terms of maintaining the integrity of our sovereign nation. Some of the new technologies that are being developed for this department are very exciting, particularly in the wake of the 9/11 event in the USA around terrorist activity. They are developed not only in the US, I hasten to add, but also in Europe and other places. They show some exciting opportunity not only for customs but also for biosecurity. I hope that going forward, the Government will have the wisdom to adopt that latest technology, and I also sincerely hope that there is an opportunity to explore further synergy between the Customs Service and Biosecurity New Zealand at our borders so we can accommodate, particularly the ad hoc arrivals, but not just the ad hoc arrivals but also the increasing volume of passenger flow with tourism and trade that we as a nation are experiencing.

I want to give the Customs Service a bit of a bouquet because I have met with a number of its people. In fact, I recently attended a ceremony here in Parliament where the Prime Minister presented a number of people with 50-year service medals, which is not very common, I have to say, in most Government departments. Its staff turnover is one of the lower percentages in Government departments, but there has been a concern around that—there has been a bit of a flight of institutional knowledge in recent times. Attracting and maintaining the institutional knowledge and also the expertise that is needed to run a department such as the Customs Service is absolutely essential not only for the safety of our revenue, but also for our integrity and safety.

So I close by saying that the Customs Service, in general, does a very good job. It is more or less apolitical. I doubt that we would ever get much debate in Parliament between parties as to whether the approach being taken is the right one. I wish I could say that with Biosecurity New Zealand; we cannot, but maybe we will achieve that one day. At this point in time the Customs Service is one of those departments that does a very good job.

MARTIN GALLAGHER (Labour—Hamilton West) : As chair of the Foreign Affairs, Defence and Trade Committee, let me thank all members of the committee for their sterling work on the Customs and Excise Amendment Bill (No 3). We acknowledge that in the spirit of a true MMP committee in Parliament there was a variety of views. But in essence, I think previous speakers have certainly outlined the context of this bill.

I just want to make the point that the bill replaces a dual system with an internal review process with a right of appeal and a Customs Appeal Authority, and, hopefully, this creates a cheap and expeditious review process.

In a sense this bill is something of a technical bill, but I have to say, to be honest, that I was a little surprised in terms of the time that we took on it, but it was time well spent. Hopefully this will be a good law. I compliment the Minister, the Hon Nanaia Mahuta, and her officials and thank them for all their wonderful advice. This was a very, very interesting bill. I was delighted to be on the select committee when we considered it.

TIM GROSER (National) : A former member of the House who actually rose to the top of the greasy pole and became Prime Minister, albeit very briefly, once told me that one of the interesting things about coming into this House is that it is like entering into a giant postgraduate training institution, because whether or not a member likes it, one is forced to address a whole range of issues that one would never in any other occupation ever have to deal with. Although there is always a concern for any member of Parliament about being once-over-lightly, the reality is that one gains over a period of years considerable knowledge. One offshoot of that is that one drills down into any technical bill, and I would argue that a bill with a title the Customs and Excise Amendment Bill (No 3)—eye-glazing-over material, it cannot get more technical than this—is a beautiful example of the point that was made to me a few years ago. Behind this bill there are some really important things, but one has to drill right into it. I will start by making that point in respect of the whole treatment of what is actually called “chop chop”, which is home-grown tobacco. To understand what the actual issue is here is, I think, an interesting illustration of this former member’s point.

This issue is actually about organised crime. We start off with a health policy objective and so we have extremely high excise taxes on tobacco, as you know, Madam Assistant Speaker. There was a landmark World Bank study that we came across in the course of our examination of this legislation, written in 1999, which from memory stated something like: “All the evidence around the world tells you that the most effective measure you can take against smoking is to raise the price.” If one raises the price by 10 percent, the literature suggests there is a 4 percent reduction in usage. This country and many other countries have extraordinarily high excise taxes on cigarettes for, I would argue, health policy reasons. I personally do not believe that revenue is the leitmotif of this policy; I think it is a genuine effort by Governments around the world, including various New Zealand Governments, to deal with the shocking health implications of smoking. However, as soon as one has done that one increases a massive incentive to arbitrage the difference between the low cost of manufacturing a cigarette—or producing a cigarette—and the retail price. This is one of the chief sources of finance for organised crime around the world.

So behind this so-called incredibly technical and, one might say, almost boring bill are issues like organised crime. Tobacco smuggling is a huge issue. According to British authorities, it is a larger source of finance for organised crime in the UK than narcotics. In Quebec, 60 percent of cigarettes sold are estimated to have been smuggled. In New York there are huge State taxes on top of federal taxes, and we were shown an estimate whereby one trailer truckload of contraband cigarettes taken into New York and sold through legal, for the most part, outlets is worth about a million dollars. It is also related to terrorism. When the federal authorities broke into the apartment of the first bombers of the World Trade Center, they found a whole stack of counterfeit cigarette stamps showing that the excise had been paid. By the nature of our job as members of this House, we are forced to get into issues that we would, frankly, never want to get into, and what we find behind them are issues like this.

Our concern was primarily gangs in New Zealand, and since the question has been raised as to the personal exemption on home-grown tobacco, I will just explain what I took to be the committee’s view. The difference between the overall view of the committee and the minority view is not a large issue in terms of the underlying problem. It simply is that one set of people in the select committee working to exactly the same script wanted to leave it to regulations. We in the National Party, as a matter of principle, do not like so much discretion being left to officials. We prefer the House to state its view. So the reason why we came up with a firm figure is an issue of principle about how law is made. We just do not like ambiguity in things that affect the lives of our citizens, and we do not like changes to be made that people are not happy with, and consultation with officials instead of the bill coming back to the House. That is the reason, but that point of principle is not really an issue of any substantive policy difference among the members of the select committee.

I have to say that the limit on home-grown tobacco—“chop chop” is apparently what it is called; I had never heard the term before—provoked a lot of discussion. First of all there was an enormous amount of confusion. I do not think we were terribly convinced by one of the submitters because of the conflict of interest between that submitter’s interests and our view about what matters in the community, but I will not go into that. There was a huge amount of confusion over whether the measurement should be of dry or green matter and how many cigarettes one person could smoke in a day. But fundamentally we have come up with quite a high personal exemption use. It is the same as Canada’s, so it is not extraordinary in any sense. The logic behind it is this. We felt strongly that we want our customs and police authorities to concentrate on real criminals. If we have a very low level of exemption, the law has to be administered to some halfwit out there who has just gone a gram or two over. We did not want the good men and women who carry out such tough services on behalf of us all to be, frankly, wasting their time with trivial matters of this nature. So we have gone for a relatively high personal exemption, precisely to allow the authorities conducting our business on our behalf to concentrate on the real problem, which is organised crime.

There is potentially an enormous amount of money to be made out of organised crime. We find as we go through the bill that there are some very tight definitions around the manufacturing and growing process. I do not have the precise clause in front of me but it is a concept that it must be grown on a property one lives in; people cannot start up some little semi-garden plot and start to farm it. It has to be manufactured in one’s own home, and it has to be absolutely for one’s own personal use. There are a few issues around that. We understand that we will never have a watertight situation. In the case of somebody who rolls his or her own tobacco and gives it to a mate, we could probably argue about whether that was within the law, but the whole philosophy of the members of the committee was that actually this is a huge and serious problem. It is not out of control in New Zealand as it is in many other countries, where it is linked literally into terrorism and massive and vicious organised crimes. There has been testimony on homicides, murders, and witness intimidation that we can find right throughout the literature on this subject, but in New Zealand the issue is gangs and we want to be sure that we are not wasting the time of the authorities but are focusing on the real target.

That is a first introduction to the bill. I think it is good legislation. Like the select committee chairman, I think the members worked very, very well together, and I think we have something that is worth putting into law.

JOHN HAYES (National—Wairarapa) : I rise in support of the Customs and Excise Amendment Bill (No 3), and I invite members of the House to have a good look at it. This bill is a good bill. It is good, well-written legislation, in contrast to the emissions trading scheme legislation and the affordable homes legislation. If anybody in the House looks at the documents on the Table, he or she will see that a huge number of changes and additions have been made to those bills. This legislation is substantial, common-sense legislation. It is not theatre without substance, which the affordable homes legislation we have just passed is, and which the emissions trading legislation is. This bill reflects the substantive work of this House, and I am in absolute support of it.

The legislation comes from a department that is very well run. One of the pieces of education for me over my 3 years in this Parliament has been to see chief executives and their teams come to select committees to contribute to, and interact with, them. Martyn Dunne, the Chief Executive of the Customs Service and the Comptroller of Customs, stands out head and shoulders. He has a good team, and the department is very well led, to the point where during this Parliament our committee has not gone through a questions and answers process with the Customs Service, because we have such confidence in the administration of that department.

This legislation makes, effectively, three changes to our existing law. The first is to adopt a more pragmatic regime in respect of the forfeiture and seizure regime contained in the Act. This has application in my electorate. For example, a woman recently moved from Switzerland to New Zealand, there was a mix-up in the rules, and she ended up with all her household effects being seized. It was a nightmare to unlock the arrangements, because of the complications of the law that she had to operate under at that time. I got involved and we managed to get a good, common-sense solution. Those sorts of bureaucratic inanities are removed by this legislation, and I support totally that element of it.

The second part of the bill gives the management of the Customs Service more flexibility to deal with ad hoc arrivals in, and departures from, New Zealand. The bill talks about “craft”. “Craft” could be aircraft, or yachts or small boats. It makes eminent sense, for example, to allow the Comptroller of Customs to decide whether to send someone to Milford Sound so that a man rowing here from Australia can clear customs there rather than being required to paddle up to Picton or to Westport—if they are authorised Customs Service ports. The provision would work in the same way for yachties up in Northland. Let us say a yachtie wants to head out to Tonga from Houhora; Customs Service officials could be sent up there to clear a yacht or a cruise ship, if that would make sense. What we are doing here is putting common sense into the hands of the Comptroller of Customs, and that is an extremely good thing to do.

The third element of this legislation is that—as my colleagues have said—it regulates the amount of tobacco, or “chop chop”, that can be grown for personal consumption. There is an issue that has not been discussed in the House this morning, and that is that the Customs Service collects excise tax from tobacco. Because the rules have been a bit loose, some people operating in the top of the South Island—not in my electorate—said that they could grow tobacco for personal consumption, and they were growing tobacco in quite significant volumes. The Customs Service took a case against some growers, and it lost because of the inadequacy of the law. So I think our select committee has been perfectly sensible in deciding what quantity of tobacco meets the needs of personal consumption.

The first two changes, as I have said, are rooted in absolute common sense and pragmatism, and I think they represent good, simplified law that is not in the nanny-State mould of the Real Estate Agents Bill, which we were debating yesterday afternoon, or the emissions trading scheme bill, or, as I have already said, the bill we were just dealing with—

Chris Tremain: The appalling affordable housing bill.

JOHN HAYES: —the appalling affordable housing bill, as my colleague Chris Tremain reports, and I totally agree with him. An issue that caused some concern amongst members of the committee was the personal exemption for production and manufacture of tobacco leaf beyond an area controlled by the Customs Service. As my colleague Tim Groser has pointed out, we did a great deal of research on it and looked at what other countries did. There was an element—and I will be more straightforward than Tim was—of self-interest on the part of the people who came here to back the bill. That is because all cigarettes available in New Zealand are actually manufactured in Australia, and the manufacturers of those cigarettes were quite keen to shut down competing supplies from locally grown tobacco.

I go back to the legislation. It seems to me that the issue fell into two parts. The first was in the context of an argument with the Crown Law Office over whether the committee should put penalties within the legislation, or whether we should leave them to be determined by Order in Council—essentially, by officials. On the question of whether punishment for offences under the legislation should be contained in the primary legislation, or whether it should be put into delegated legislation, a majority of us strongly supported the principle that individuals who face a possible jail sentence should have the certainty of having the penalties spelt out in the primary legislation—in other words, in this bill. The flexibility and the speed with which delegated legislation could be amended could create uncertainty in people’s minds, and as a committee we felt that that was undesirable.

We recognise that in bringing the exemption for tobacco into primary legislation, we have left an anomaly in the law in that there is an exemption in the context of producing alcohol. I hope the next Parliament will consider correcting that anomaly by bringing all exemptions relating to offences punishable by imprisonment into our primary legislation. The next Parliament ought to look at the offence of illegal alcohol production and bring the penalties for it into the primary legislation.

The other part that concerned the committee was the amount of tobacco that could be grown for private consumption. The committee eventually agreed that 15 kilograms was a realistic amount. We did not want to have an amount that was so low that the Customs Service was engaged in trivial pursuit of people growing tiny amounts of tobacco in their garden or backyard for their own use. Although there are some health issues around the volume, the majority of the select committee came to a consensus that 15 kilograms was a good figure. I would note that the Government members on our committee did not agree with that figure, but common sense prevailed. I personally would have preferred a rather greater exemption, but that is the value of democracy—that we reach a common-sense, generally agreed perspective.

With those words, I offer the National Party’s full support to this legislation, and I particularly commend the officials for the excellent job they did in advising the select committee. Thank you, Madam Assistant Speaker.

PETER BROWN (Deputy Leader—NZ First) : I sensed the member John Hayes’ relief when his 10 minutes came to an end. He struggled through those 10 minutes, and I have to say to the honourable member that we suffered the pain, also. It was a relief to us when he finished.

This bill is a tidy-up bill. To my mind it does three things. It updates the penalties and procedures around offences and seizures, and New Zealand First members think that is a good thing and eminently sensible.

It provides for an individual—[Interruption] I think the Berocca is kicking in over there. I sense the Berocca is kicking in. The bill provides for individuals to grow and cultivate tobacco for their own private, individual use—provided that they grow it on their own land, and provided that they manufacture the tobacco, into whatever form they want, in their own house. Those are the two provisos—and, of course, they have to be over 18.

I was interested in the Greens’ minority report; it intrigued me. It states: “The Green Party member opposed writing into the legislation a limit of 15 kilograms for the personal use exemption as evidence received suggested that such a high limit was not appropriate.” I wonder what those members would have said if it were cannabis—an illegal drug. They do not mind growing and smoking cannabis, but they have an objection to some old veteran growing a bit of tobacco, putting it in his pipe, sitting on his porch, and enjoying watching the All Blacks win against whomever they are playing. We think that amount is a good insertion in this bill.

I am particularly keen on the insertion that provides for craft—sea craft, aircraft—that, in extraordinary circumstances, arrive in a place that is not controlled by the Customs Service. I think it is a good move. It is a sensible move. There are three provisos. The bill allows sea craft or aircraft to arrive as a result of a statutory obligation or navigation requirement, and that is a good move. I can remember that when I was a chief officer at sea our ship carried a little amount of explosives—and I am not talking in respect of this country. When we arrived at the place we were taking them to, we declared that we had explosives—a dangerous commodity. We were totally upfront—as we New Zealand First people normally are about things. We arrived at this particular port, and we declared that we had explosives on board. A little bit of panic resulted and we had to berth away from the mainstream berths. That was a genuine circumstance.

Shane Ardern referred to aircraft, and I thought he made a very good point. I will not go over it. The bill allows for the result of a mishap—something happening on board either an aircraft or sea craft—or bad weather. Ships have to pull into all sorts of places in bad weather; I can tell members that it is sometimes pretty rugged.

Finally, it allows for craft authorised by the Chief Executive of the Customs Service, for whatever reason. I listened to Shane Ardern, and he made a very good point: can our border control officials and individuals cope with such circumstances? This bill at least provides a midway step. It compels the chief executive to consult before he or she gives an authority for a craft to berth wherever it needs to berth. The chief executive has to consult the Ministry of Agriculture and Forestry, the Ministry of Health, and the New Zealand Police. If it is an aircraft, the chief executive has to consult the Civil Aviation Authority, and if it is a sea craft, Maritime New Zealand. I think that is a step in the right direction; it recognises that other Government departments may need to be involved, and that they need to be consulted.

I will stop where I began by saying that this bill is a very good bill. It is very sensible. It is tidy-up legislation, and New Zealand First supports it.

• A party vote was called for on the question that the amendments recommended by the Foreign Affairs, Defence and Trade Committee by majority be agreed to.

CHRIS TREMAIN (Junior Whip—National) : I raise a point of order, Madam Speaker. It is a point of clarification. Voting on amendments is normally done in the Committee stage.

The ASSISTANT SPEAKER (Hon Marian Hobbs): No, no. These are the amendments made by the select committee. When a select committee amends a bill and brings it back to the House, at the time of the second reading we authorise those amendments made by the select committee. That is what we are doing now.

Hon LIANNE DALZIEL (Minister of Commerce) : I move, That the House take note of the Commerce Committee’s report on the Companies (Minority Buy-out Rights) Amendment Bill and that the bill be now read a second time. The objective of the Companies (Minority Buy-out Rights) Amendment Bill is to make technical amendments to the minority buy-out provisions in the Companies Act 1993 to ensure that they function efficiently, cost-effectively, and appropriately. The minority buy-out provisions provide an exit regime for shareholders of companies who have unsuccessfully opposed certain types of fundamental changes to the structure or operations of the company by virtue of a special resolution. The regime then entitles them to have their shares purchased by the company at an appraised price.

The rationale behind these provisions is that if the company’s structure or operations change significantly after the shareholder enters the company, the shareholder should be entitled to decide to exit the company but also be afforded some specific protection against financial loss by reason of the decision to leave the company. The provisions have been amended largely in accordance with the recommendations made in the Law Commission report on minority buy-outs.

The Law Commission commenced a review of the minority buy-out provisions after Justice Doogue criticised the provisions in Natural Gas Corporation Holdings Ltd v Infratil 1998 Ltd, stating that the existing regime was lacking in information for shareholders, particularly as to valuation, method, and date. This bill addresses those concerns. Since the first reading of the bill the Commerce Committee has recommended a number of amendments to strengthen the bill, which, I am sure, will help it achieve its objectives.

I conclude by thanking the officials, and members of the Commerce Committee, for their work in considering the bill, and acknowledging the contributions of those who provided submissions on the bill. I commend the bill to the House.

GERRY BROWNLEE (National—Ilam) : The Companies (Minority Buy-out Rights) Amendment Bill is one of those interesting bills on which, when they come before the Commerce Committee, there is genuine interest on the part of all members to ensure that we get good and workable legislation. In this case we are talking about the rights of individuals who purchase interests in various entities, only to find that a bigger parcel of shares than theirs is taken up by someone else, or that there is a proposal to buy out those individuals by someone else, not always at a price that might be in the best interests of those individuals. It is not uncommon for a price to be struck for a buy-out that is ahead of the market, but not necessarily ahead of the expectations of some of the smaller shareholders in the particular company. As the Minister said, when people make a decision that a new arrangement inside a company they had previously been confident about investing in comes to the fore, then people should a right to exit—indeed, to test the strength of whoever has bought the company and of the new philosophy that may, presumably, come with that.

The committee has made a number of recommendations for amendments to the bill, and we will discuss those further in the Committee stage. The bill is fairly technical in nature, but, as everyone knows, it is the fine print that always ends up costing us. So if we were to typify this bill, we would typify it as being a bill that puts some rules around the effect of the fine print.

One of the things that we are a little uncertain about is the involvement of the Arbitration Act, or bringing in the Arbitration Act as the vehicle for sorting out disputes between, I guess, an offered value and the value that someone would like for their shares. Those sorts of provisions can be very costly, and it is a little unclear exactly who would meet the costs of that arbitration process. I do not believe that is specified in the bill, so the Minister may wish to take us through that when we go through the Committee stage. That may be an oversight. If in fact there is a right to arbitration and a right to a price that reflects the best value of those shares, I think the question should be asked and answered in the bill as to how the cost of dealing with the arbitration is to be met, because it can be quite expensive.

The provision of interest on, I guess, unpaid moneys owing after a price is struck is a very positive contribution in this bill, and, once again, that matter is covered in a new clause in the bill. We will discuss that further during the Committee stage, so that the Hansard record is clear about what the select committee believed it was doing as this law was being put into place.

We also recommended amending new section 112C, inserted by clause 7 of the bill, to provide that legal title to shares passes to a company on notification of the company’s decision to purchase the shares. The relevance of that is that if in fact a board accepts a proposal, and the purchaser indicates that it has accepted it, the potential exists for it to be quite some time before a settlement is reached—or is concluded, which is perhaps a better way to describe it. None the less, to all intents and purposes the owner of those shares, once this bill is passed, will in fact be the purchasing entity.

It has been a very interesting exercise to consider all the various contortions of minority buy-out rights inside competition law, and I think this bill goes a very long way towards trying to make clear some of the things that have been matters of confusion for players in the commercial world. We look forward to the coming debate in the Committee stage. The bill is relatively short, but it is very, very important. As I said before, most people find that the devil is in the detail, and that it is the fine print that trips us up. So we expect that the Committee stage today will traverse all aspects of the provisions of the bill, in order to ensure it is abundantly clear exactly what it is all about. It is interesting, though, that the bill is in only two parts, and we do notice over a period of time that when important bills are debated just part by part, there is not a lot of time to consider all of the clauses in them.

However, I am sure that by the end of the day this bill will probably be law or, I should say, ready for the Royal assent. Subject to being satisfied with the answers to our questions in the Committee stage, I say we will continue to support the bill.

Dr RICHARD WORTH (National) : On one view of it, the Companies (Minority Buy-out Rights) Amendment Bill might not be considered interesting, but it affects a very substantive change to the law. All tributes go to the honourable Minister, Lianne Dalziel, who at all times has kept an open mind on the merit of this legislation, and who has been prepared to make change where there was a warrant for doing that.

These changes being made by this legislation are to the Companies Act 1993, which of course is a code that deals with a whole lot of aspects of corporate activity in New Zealand. The Act constitutes a code, if you like, for those activities that are very much at the heartland of New Zealand business. The provisions relating to minority buy-out rights are contained in sections 110 to 115, so the provisions are not very extensive but they raise essential issues of equity. The argument is really simple: if the goalposts are moved, despite the shareholder’s opposition, he or she is entitled to decide that he or she no longer wishes to be a player, and to also be protected from losing financially by reason of a decision to leave the field. I think it is worthwhile citing a comment made by Alexander Khutorsky, who is well known in this area of corporate law, for what he said about the intended functioning of buy-out provisions. In a merger context he said this: “In theory the existence of appraisal statutes has a two-pronged effect on merger transactions. First, the appraisal remedy is supposed to guarantee that dissenting shareholders get a fair price for their equity stakes. This prong of the appraisal statute is embodied by a procedural scheme whose end result is a judicial valuation of the minority stake in the target, with attendant money damages where appropriate. Perhaps more important than the actual exercise of the remedy is the ex ante effect which the mere existence of the remedy is supposed to produce. This second prong works by inhibiting the incentives of majority owners to act strategically by providing for the possibility of a threat of litigation and uncertain damages awards. The corporate planner’s assumed preference for certainty, coupled with potential cash-flow constraints in meeting potentially sizeable judicial awards, should encourage the planner-majority owner to offer fair consideration in freeze-out transactions.” That is quite turgidly but thoughtfully worded. It is a simple enough concept: a person is a shareholder in a company, the other shareholders do something that the person does not like, so what are the rights of that person? So we see in this bill the setting up of a code—the amendments to and filling out of provisions in the existing law—that gives rights to the shareholder who wants to get out. In money terms, that is the way in which those rights have been exercised.

There is a history in all of this, of course, and in fact it is quite a long history. But what prompted the Government to move—actually, to move quite slowly—was a case called Natural Gas Corporation Holdings Limited v Infratil1998 Ltd. The judge in that case, which is a trigger for all these changes being made today as this bill progresses, started off by saying “To the best of the knowledge of the parties, this is the first time that the minority buy-out rights sections have come before the court.”, and “It is common ground that the minority buy-out rights sections are defective. Although they provide for the company to nominate a fair and reasonable price for the shares to be acquired, they do not state at what date that price is to be ascertained. Nor do the sections make any provision for the company, in nominating the fair and reasonable price, to give any information to the minority shareholder of the basis of the valuation. Nor do the sections provide any mechanism for the completion of transactions falling within them. As already noted, s 112(4) is silent as to the basis upon which the shares at issue are to be dealt with and the time when the company is required to pay the provisional price. Nor has the arbitrator power to make orders in respect of the completion of the transaction following the arbitration. Having created minority buy-out rights, the Act fails to provide for important features of the transactions that can arise under them. In the context of the Act as a whole and its history, that is understandable. However, here there is a relatively substantial sum of money involved. In other cases there could be a substantial number of shareholders involved. While the Law Commission and the legislature may have been wise to avoid the complexity of some of the North American legislation, it would seem essential that, if the minority buy-out rights sections are to be effective, they should be urgently reconsidered.”

Against the background of those comments, the Law Commission looked at this issue. It came up with a report; it suggested draft legislation. Parliamentary Counsel had a look at that legislation, and made some changes. The Commerce Committee made some further changes. But these are the sorts of issues that arise: should notice be given of the availability of the buy-out rights, along with notice of the special resolution sought to be passed? Should the company be required to give particulars of the basis on which its offer is being calculated? Should the statute specify the date at which the shares are to be valued, or otherwise dictate the basis of valuation? Should the shareholder be required to convey title to the shares—Mr Brownlee alluded to this issue—at the same time that the shareholder has paid the price calculated by the company on the basis of the value as initially assessed by it? Should the legislation spell out broader powers that authorise the arbitrator to award compensation for costs and delay? And should the arbitrator have the power to make ancillary enforcement orders? This legislation that is before us today actually covers all those points.

In the time I have remaining, it is interesting for me to look briefly around the world to see how other countries, and other jurisdictions, have dealt with this issue. Delaware, in the United States, which I guess would be recognised as the state in the United States that has the most company registrations—more companies in the Fortune 500 are registered in Delaware than elsewhere—has I think pioneered standards of excellence in corporate governance and has specific provisions dealing with this. I will not go through those provisions, but they talk about that need to establish a fair value for the existing shareholder. When we come to the Committee stage we will see that is not quite the way that New Zealand has approached the issue, and it certainly was not the way that the approach was to be taken when the bill was introduced. In New York, where they have similar provisions in the New York Business Corporation Law, section 623—as the Minister reminded me last night—they use this concept of “fair value”, the same as in Delaware. In Canada they talk about “fair value” in the context of the compensation award.

The American Business Association has a model code where “fair value” is actually defined. We have not done it in that way. I think we have done it in a much more sophisticated way. But in the American Business Association model “fair value” means the value of the corporation shares determined in three circumstances. First, immediately before the effectuation of the corporate action to which the shareholder objects; second, using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal; and, third—and this is quite significant—without discounting for lack of market ability or minority status, except in certain cases.

I commend this legislation as it has come back from the Commerce Committee with a number of changes that we are later to consider. Looking at section 110 of the Companies Act, and the sections that follow it, I think we have produced an outcome in a New Zealand context that is highly workable.

Hon PAUL SWAIN (Labour—Rimutaka) : Mr Assistant Speaker, yes—

Gerry Brownlee: He was no help at all.

Hon PAUL SWAIN: Well, that is a bit uncharitable from that member, and he is getting me to engage with him when my speech must not be longer than 1 minute. I have already spent probably about 15 seconds.

Gerry Brownlee: No, he was no help at all—

Hon PAUL SWAIN: I think that is a bit uncharitable from that member; in fact, I have defended his contribution on many occasions. By and large the Commerce Committee has worked well. I congratulate Dave Hereora. He was the one who spent a lot of time getting his head round the Companies (Minority Buy-out Rights) Amendment Bill. I am obliged to the previous speaker, Dr Richard Worth, who does know a bit about it. When he gives little sermons in the House like the one he has just given, I always find them particularly interesting, especially when he goes back into history.

Gerry Brownlee: I bet sometimes you wonder why you slept through it.

Hon PAUL SWAIN: No, to be fair to the member, I did not sleep through the speech he just gave; I found it very, very interesting. But I am now off the point. There is the potential to go on for 10 minutes if—

Gerry Brownlee: Could have fooled me.

Hon PAUL SWAIN: Normally I love interjections because they give me something to draw on, but I do want to make a couple of quick contributions. As the member Richard Worth quite rightly said, this bill came from some recommendations from the Law Commission around a case involving Natural Gas Corporation Holdings. It was about trying to set a regime so that shareholders had better rights. It is interesting to know that when I was the Minister of Commerce the first thing we did was to introduce the Takeovers Code, which the National Party had basically rejected. That code, of course, gave important rights to small shareholders. It is really important that we are introducing this legislation, which is another leg of this particular important part of companies law.

As has already been said, we know what the objective is: to ensure that the markets function properly. It is time to give minority shareholders not so much protections as special abilities to have a fair share value price if they oppose certain transactions of the company—that is, if the company is no longer the company that they had shares in. For example, if the constitution of the company is amended, that amendment might imply restrictions on the company’s activity; the company might approve a major transaction that a shareholder does not agree with; or it might improve an amalgamation that the shareholder does not agree with. The shareholder may disagree with what is being done and want to opt out. This bill makes sure that there is a proper process for, particularly, assessing the value of the company shares at the time, so that minority shareholders’ rights are protected as best as they can be.

This is good legislation. It is another piece of legislation from the Commerce Committee. I almost said the committee is ably chaired by the chairman; he does chair it quite well, but he made some uncharitable comments about me, so I will not say it. What I will say is that this is good legislation and needs to be progressed.

LINDSAY TISCH (National—Piako) : From the comments made by previous speakers, members will be aware that National is supporting the Companies (Minority Buy-out Rights) Amendment Bill. The genesis of the bill came out of a case back in 2000, and a review of the law following the Hon Justice Doogue criticising the existing law in the case Natural Gas Corporation Holdings Ltd v Infratil 1998 Ltd. His criticisms related to the lack of information available to shareholders in relation to the valuation of shares and the date at which shares were to be valued. That case was really the genesis of a review that then led to a Law Commission report back in 2001.

At the time of that case the judge said the matter was urgent—that it needed urgent action. And here we are with this bill 8 years later, which shows how urgent it has been to this Government.

Hon Lianne Dalziel: There was a Law Commission report in the meantime.

LINDSAY TISCH: The Law Commission report was in 2001. Well, I say to the Minister that in the court case—and she will have a chance in the Committee stage to be able to articulate the points that she wishes to make—the judge said the “fair and reasonable” test for the valuation of shares is well established. It is an objective test. There is no accumulated jurisprudence in relation to the “honest estimate”, and it would be a subjective test. One of the questions that came out from submitters to the Commerce Committee was, what actually is the “honest estimate” test?

The key points that were canvassed at the select committee included the issue of valuation. Gerry Brownlee raised the point that where shareholders are aggrieved at the company’s choice of valuation method, would they retain the right to reject a price offer and to bring the matter to arbitration, and if so, who would pay for that? Another point that came up in the submissions was the date of the valuation of shares. Clause 7 states that date is to be the close of business on the day before the special resolution is voted on. That is the date that the Canada Business Corporations Act covers, which was the point that Dr Richard Worth mentioned when we were looking at other jurisdictions. Another area was the date at which minority shareholders would lose their legal and beneficial title to the shares. We will be covering that point in some detail during the Committee stage.

The points that I have made add value to this bill. We are very happy with it. We had a very good discussion on it at the select committee, and some other points will come up during the Committee stage.

PETER BROWN (Deputy Leader—NZ First) : This will be a very short call. New Zealand First will support the Companies (Minority Buy-out Rights) Amendment Bill because we recognise that it does improve the current situation. One of the concerns raised by New Zealand First members when we were reading the bill—we were not on the Commerce Committee—was the one of arbitration. It concerns us a little bit this morning, which is the very reason that I have taken the call, to hear the chairman of the select committee and one of the members of that committee register those concerns. There is no recommendation in the commentary coming back from the Commerce Committee as to how the arbitration problem, which was well outlined by Gerry Brownlee and to a lesser degree by Lindsay Tisch, will be addressed—in particular the one of cost. I want to put on record that New Zealand First has concerns around that. We will be supporting the bill because we recognise it is a significant improvement on the current situation, but we would like to have the arbitration question addressed. We would have preferred to have some comment from the select committee in the commentary.

• Bill read a second time.

GERRY BROWNLEE (National—Ilam) : I raise a point of order, Mr Speaker. Earlier this morning a very interesting situation arose. There was a point of order from Mr Tremain in relation to the previous bill we were discussing—that being, I believe, the Customs and Excise Amendment Bill (No 3), which had provisions on tobacco. At the conclusion of the second reading debate on that bill, a vote was taken on amendments. The Assistant Speaker Marian Hobbs gave a ruling that the vote was taken at that point to give effect to the select committee’s amendments to the bill. I notice that the select committee I chaired made a number of amendments to this bill, but we appear not to have any such motion now. I want to clarify what the difference is between this bill and the Customs and Excise Amendment Bill (No 3) that means we deal with it in a different fashion.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you for that, Mr Brownlee. I am able to advise you that the requirement for a resolution relates only to amendments agreed to by a majority of the select committee.

GERRY BROWNLEE: Thank you. I learn something every day, particularly when you are in the Chair.

The ASSISTANT SPEAKER (H V Ross Robertson): You certainly do, Mr Brownlee. That is very true.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā koe, Mr Deputy Speaker. Kia ora tātou e te Whare i tēnei ahiahi. It has always been of interest to me that politicians, unfortunately, are rated as the lowlifes in a long list of respected professions. To bring the House up to date today, I can say that, contrary to the speculation raised in the House this morning that carpet sellers, real estate agents, and car salesmen are scraping the barrel, it is actually rather sad that politicians are still trailing way behind—Māori Party members are exempt. I guess there has, however, been some progress. In this year’s Reader’s Digest list of respected professions, we politicians scored second to last, with only telemarketers behind us. That is hardly a vote of confidence in the trustworthiness of politicians, and with issues such as “paintergate”, “corngate”, “speedgate”, “doodlegate”, and all those sorts of things to contend with, it is probably understandable. On the other side of the gate, when the Māori Television Service revealed recently that it was on Crosby/Textor’s advice that in 2003 National decided on the strategy of attacking Māori with the infamous Ōrewa speech or the equally sad “Iwi/Kiwi” billboards, it does not do much for our reputation.

So when we come to the Companies (Minority Buy-out Rights) Amendment Bill, which is described as being driven by the express purpose of instituting a fairer and more clear process, we of course are inclined to be pretty supportive of such a move. But things have become a little bit cloudy. When we looked into the background to this bill, we were referred to the case of Natural Gas Corporation Holdings Ltd v Infratil 1988 Ltd—the first High Court case, I am told, to consider the minority buy-out provisions of the Companies Act 1993. In his decision on that case Justice Doogue said: “It is common ground that the minority buy-out rights sections are defective.” He continued: “Although they provide for the company to nominate a fair and reasonable price for the shares to be acquired, they do not state at what date that price is to be ascertained. Nor do the sections make any provision for the company, in nominating the fair and reasonable price, to give any information to the minority shareholder of the basis of the valuation.”

I have taken a little bit of time to return to the High Court finding, because it is yet another instance where the trust and confidence that the public have in the political system runs the risk of being undermined—undermined by flaws in legislation that Judge Doogue referred to as a “statutory vacuum”. Justice Doogue recommended that if the minority buy-out rights are to be beneficial and workable, they should be urgently reconsidered. In response to Justice Doogue’s findings, the Law Commission report highlighted problems with the existing legislation and concluded it was defective in its failure to set out a workable method of valuation. What they concluded, I see, was that the current test in sections 110 to 115 of the Act gives insufficient guidance or certainty to companies.

So here we are today looking to amend the Companies Act to ensure that the buy-out regime functions efficiently, cost-effectively, and appropriately. We were relieved to see the recommendation from the Commerce Committee that the concept of “fair and reasonable method” is retained. However, the committee went further and suggested that a “fair and reasonable method” requires an objective assessment of value. Not only are we valuing fairness and reasonableness but we are even putting the effort into measuring that it matters. That is all great and good. I understand that Chapman Tripp, in its submission to the select committee, endorsed this move, advising that statutory guidance as to the fair and reasonable price to be paid was desirable and would provide more certainty. Fairness and reasonableness is actually a very simple concept, and fairness and reasonableness in this bill is in the context of a dissenting vote.

The bill is essentially to improve the way in which a minority shareholding in a company is valued when minority shareholders have elected to have their shares purchased by the company. It seems such a simple concept, but as we know, a dissenting vote in the experience of this House is anything but simple. In fact, the dissenting vote of my colleague Tariana Turia on the Foreshore and Seabed Bill was rapidly followed by her crossing the floor, and the birth of the Māori Party not much later. We in the Māori Party operate from a different premise: that a dissenting vote in itself is not a fatal offence. Indeed, we welcome the opportunity to share diverse experiences and to agree to disagree when consensus appears unable to be reached. I suppose the point is that we must have a process in place from which to respond to dissenting points of view. We welcome, therefore, the initiative in the Companies (Minority Buy-out Rights) Amendment Bill to establish clarity in relation to the process of minority buy-outs and an appropriate methodology for the valuation of shares. The bill, as Chapman Tripp, barristers and solicitors, advised, is a step in the right direction but it does not go far enough.

I just want to wrap up by saying we cannot leave this debate without acknowledging our disappointment that there appears to have been no apparent consultation with Māori companies, no apparent consultation with Māori company directors in the Law Commission review, and no specific submissions sought from Māori companies. At this point I would like to hold up this article from this morning’s Otago Daily Times, headed “Call for Maori involvement with Business NZ”. I would recommend this article to any member of the House with an interest in the future of New Zealand. In this article, the Māori Party candidate for Ikaroa-Rawhiti, Derek Fox, lays down a challenge for Business New Zealand to include more Māori in its organisation, and in the way its policies and strategies are formulated. His argument was that Māori have a huge interest in the future of New Zealand, as collectively tangata whenua are the biggest producers of meat and wool, and the biggest shareholder in the dairy giant Fonterra.

It is a challenge that this House, and this Government, could also respond to, and one which we would have looked forward to seeing in the roll-out of the Companies (Minority Buy-out Rights) Amendment Bill. We make these comments in the honest hope that the Minister and the ministry may take on board the commitment of the Māori Party to do all we can to invest in the growth of business in New Zealand. We look forward to being involved in the future discussions, and to that end we will support this bill at this reading.

• Bill read a third time.

SIMON POWER (National—Rangitikei) : I raise a point of order, Mr Chairperson. Just for clarification, because this is a very complex piece of legislation, and so none of us on this side of the Committee get out of order in respect of contributions that we might make during the Committee stage, the debate that we are about to enter into relates to Part 1. Does that include those matters contained only in clauses 3 and 4, including the new Part 4 substituted, which of course would lead us right through almost the entire bill up to what would be regarded as Part 2, which commences with clause 27? Am I reading that correctly?

The CHAIRPERSON (H V Ross Robertson): As I understand it, Mr Power, it includes clauses 3 through to 26, so that would include new clause 4, and it also includes the schedules as well.

SIMON POWER: I understand. Thank you for that clarification. Those members of the public and the Parliament who were tuned into this debate yesterday will be aware that this bill is receiving the support of a substantial majority of the parties in the House, although not of all, and we are now in the Committee stage of the bill where we can spend some time on it. We are lucky to have in the Chamber the Hon Paul Swain, who has some technical expertise in this area and who will be able to assist us during the Committee stage.

These matters relate to the principal part of the bill, and in particular I will commence with the purpose clause. The reason I am going to start there is that I want to allow the Minister time to reflect on Supplementary Order Paper 244, which she has tabled in respect of a couple of amendments made to this bill, and ask her to explain to the Committee how that Supplementary Order Paper and the amendments contained therein relate to the work done by the Commerce Committee, and whether we are talking about technical changes or major changes. I notice that the initial amendment actually has to do with legal costs surrounding the input methodologies, and it might be worth the Minister’s while to just clarify those matters so that we do not get sidetracked into a lengthy and technical discussion on those points.

Just returning initially to the purpose clause, the Minister said in the second reading, if I recall correctly, that the key to this particular clause was to balance the issues of investment alongside the benefits with consumers. Regulation, and the role that it would play in balancing those two variables, is essentially what this legislation is all about. I did raise the issue—and I would be interested in any comments that the Minister might have on this—of whether that purpose clause goes wide enough or is intended to capture the consumer of tomorrow, and how that is balanced alongside these regulatory decisions in respect of infrastructure and pricing at the consumer end. So there are two things that I would ask the Minister to comment on at this early stage. The first is the matter of balancing the rights and interests of the consumer of tomorrow against the purpose clause and the matters that I have outlined. Secondly, would the Minister be kind enough to give a quick overview of the Supplementary Order Paper so we will know, as we work our way through, that we will not have to have too many technical discussions about that document. I am signalling those two matters at this point.

Because of the way this bill has been structured, we will have a substantial debate on Part 1 of the bill. As I rightly understand from the Chairperson’s colleague who was previously in the Chair, Mr Robertson, we are dealing now with clauses 3 to 26. This is essentially the guts of the entire bill, barring the matters relating to airports and airlines, and regulation in that regard. We will be getting into quite a complex and detailed discussion around the input methodology determination and the rights of merit review appeal. I will be interested in the Minister’s comments on valuation techniques, the calculations relating to the weighted average cost of capital, and other matters. This is a good time to do that, because the first and second readings do not allow us to have those discussions in a detailed way, and of course the Minister did not appear before the Commerce Committee during its deliberations on the bill. So now is an opportunity for the Minister to give us some of her thoughts publicly on these matters.

As I say, we are certainly supportive of this bill, but I think there have been some big changes around those merit review processes. I think it is worth the Minister making some comments on the consumer-owned electricity trusts, as well. I would not say that those matters are controversial, but they deserve further explanation from the Minister. I think what I will do at this stage is signal that those are the areas, along with the Supplementary Order Paper and the purpose clause, that we are interested in hearing from the Minister on. Once those matters have been dealt with, I am sure we can proceed at a seemly pace through the rest of the Committee of the whole House.

Just before the Minister takes her call, I take this opportunity to thank the officials who were involved in putting this legislation together. As I said yesterday in the second reading, as did the Minister and Mr Swain, this is complex stuff and we were guided through it by the officials from the Ministry of Economic Development with a degree of competency that frankly allowed those of us who are not specialists in this area to decipher some of the more technical aspects of the legislation in what I thought was a pretty reasonable way. I think probably two or three members of the committee in particular grasped the issues quickly and were able to have some good discussions with the officials during the process.

I will not say any more, other than that I look forward to hearing from the Minister on those points and I am sure she will not mind if we spend just a little time on those three or four issues prior to moving through the Committee stage.

Hon LIANNE DALZIEL (Minister of Commerce) : I would like to thank the member for his constructive contribution to the debate on this bill, and indeed we have had really good cooperation from the Opposition in respect of the matters contained within it.

I will deal with the first point that was raised, which is about how we judge the interests of future consumers versus current consumers. I think that is set out in the purpose clause. The purpose is “to promote the long-term benefit of consumers in markets … by promoting outcomes that are consistent with outcomes produced in competitive markets such that suppliers of regulated goods or services—(a) have incentives to innovate and to invest, including in replacement, upgraded, and new assets;”. I do not think we should ignore the fact that that is No. 1 of a series of four tests against which those outcomes are being measured.

Starting with the incentives to innovate and to invest is really sending a signal about how important it is not to forget that future needs are just as important when we are looking at a non-competitive market. New section 52A, to be inserted by clause 4, sets out incentives for suppliers of regulated good or services to innovate, to improve efficiency, and to provide services of a quality that reflects consumer demand—that is, current consumers. The purpose of this provision is also to ensure that suppliers share with consumers the benefits of efficiency gains, and to limit the ability of suppliers to extract excessive profits. I think we have the order right, and that sends a very good signal.

The amendments to Supplementary Order Paper 244 are technical amendments. Perhaps as we go through the debate there may be particular questions the member would like me to refer to. There are no material changes to policy contained within these amendments. Essentially the first one is to clarify that input methodologies cannot provide for the legal costs of appeals to be passed through to prices. That is probably one of the less technical aspects of the changes being promoted by the Supplementary Order Paper. I will use new section 54T as an example. The Commerce Committee recommended that the power to transfer jurisdiction be limited to Transpower only. Therefore, the Supplementary Order Paper makes a consequential change to section 54T, to limit the criteria and consultation requirements to Transpower and transmission issues. If the member goes through the different parts of the explanatory note of the Supplementary Order Paper, then he will see that the amendment is simply designed to deliver technically what has been approved by way of policy.

The third area that I want to spend just a little bit of time on is the question of appeals on input methodologies. It has not been a controversial area, but it has been an approach we have adopted to try to achieve a purpose. The purpose is certainty, in an area where the previous law has not allowed for certainty in investment decisions. The only way to get in front of the Commerce Commission in respect of negotiating administrative settlements was to breach a threshold. We are already on the back foot when we are doing that. We are being punished, as it were, for failure in the past, instead of a forward-looking approach being taken, which is what the new provisions of the bill allow. I personally was very passionate about having appeals at the input methodologies stage, because it is really important that when businesses are making investment decisions, they have certainty in respect of how the regulator will act. Businesses actually could not be certain in this area of the input methodologies, which I have to say are pretty much the basis for all of the court cases that have been taken in respect of the Commerce Commission and Part 4 and Part 4A.

We recognise, though, that the input methodologies having appeals in the High Court will present some novel challenges for it. I think we will have to use constructively the period between the passing of this legislation and the implementation of the input methodologies and the appeals that may arise from that. As we have 2 years, essentially, through to 2010, there will be ample time to appoint suitable and available experts—the panel of lay members. We will be ahead of the game, as it were. In that time, the High Court will be able to consider the best way to optimise the appellate process so that it is fair to all while dealing efficiently with the issues raised in appeals.

Once this legislation is passed, I intend to write to the Rules Committee to ask it to start thinking about the processes around High Court appeals to deal with this rather novel area of law, as it will become. I think it is worth doing that, because the alternative would have been to set up a specialist tribunal just to deal with this. I believe very firmly that the first time this occurs, and the input methodologies are then set, appeals will arise out of that. I think that is pretty much a given. I believe that will settle it for quite some considerable time. Even though the system may be reviewed again in 7 years’ time, I do not think we will see significant changes beyond that initial period.

I am very keen for the High Court to give some thought to how it might handle a process where it might be better to get people around the table to talk about issues and really thrash them out, rather than leaving the case for the Commerce Commission, with the case for the individual parties to be made by counsel, and then for rulings to be made. I think that will be a challenge in terms of the new process, but I think it will be worthwhile. I am very grateful that we have the support of the Opposition on this bill. I believe it will improve investment in our important infrastructure companies.

SIMON POWER (National—Rangitikei) : I thank the Minister for that explanation. I am particularly interested to follow the procedure around the new role for the High Court and how that pans out in a non-legislative sense. I am not sure of the procedures around how a Minister of the Crown does that, but if it is just a matter of informing the body—or signalling to it—

Hon Lianne Dalziel: The Rules Committee.

SIMON POWER: We need to make sure that those processes take into account what will inevitably be a different framework initially. If that is the way it is done, then that is the way it is done; I cannot comment on that. But I would certainly be interested, in one capacity or another, to see the processes that unfold from those particular discussions.

Hon Lianne Dalziel: We’ll keep you engaged.

SIMON POWER: I thank the Minister.

There are two or three other matters that I would just like to put on record for the Opposition. In fact, the Minister has addressed one of them in part already: the issue of the new appeals regime for the input methodologies, and when it is that merits reviews are to occur. I know one of the major concerns from parties originally about having a two-step review process, or appeal process, was that the issue that gaming could occur. The concern was that because the two steps were in place, that could easily be used as a way of—I would say—stalling the finality of the determinations. But in the end, unless I am wrong—and the Minister or the officials can nod or shake their heads at me at this point—the initial finding is to stay in place while those particular reviews or discussions are going on. So the risk that front-end gaming will take place is eliminated almost completely, because that initial stand is to be held in place while those discussions occur. If I have got it right, that means that if, indeed, a merit review is undertaken, it will be undertaken at a time when the original determination is held in place, which means that there will be no material gain to be made from taking the appeal process through more than one stage. That makes sense, and as long as that process within the context of the two appeal stages is understood by all players—which it will be when they read the legislation—I think that is an important step forward.

It is worth making a comment about the consumer-based trusts for just one second. Of course, the model behind the measure applying to them is that, because the consumer is—in theory, anyway—both the owner and the end user, the squeeze, if one likes, on pricing means that both those parties, because they hold two such crucial roles together, require a less rigorous regulatory framework. In essence, they are able to ultimately control pricing by controlling their representatives on various trusts and other such bodies, and controlling any input they might have into the senior management or governance process surrounding decisions on price setting and the like.

It is also worth making one point about a curious relationship that we discovered during the Commerce Committee hearings, which I know the Hon Paul Swain and I were most engaged by. It is the interesting situation of the Northland community trust company, where the “democratic” processes that are supposedly responsible for keeping that natural price setting in place are slightly skewed by the fact that the trustees are appointed directly by the member of Parliament for Northland and the Māori member for that area—in other words, in current terminology, by the honourable members John Carter and Hone Harawira. That presents a slightly skewed version of the democratic model that the consumer-based trust is designed to put in place, because, of course, no direct participatory pressure is able to be exerted in the same way that would occur with the other consumer-based trusts. I think it is worth making that point, but I do think this measure is a tidy way of dealing with those trusts.

I have one final question that the Minister may be able to deal with before I hand over to my colleagues, who have far more expertise and detailed knowledge of these matters than I do. It is on the issue of the capacity of the Commerce Commission to deliver on the input methodologies on time. That is an important point, and it was one that I, and to a lesser extent the Hon Paul Swain, raised with a number of submitters during the select committee process. When Ms Rebstock appeared for the commission—it was all in open session, so I am not breaching any privilege—she assured the committee that we had sufficient expertise and capacity to get these input methodologies determined in a way that would not hold up the process. That is an important assurance that this Committee needs to hear from the Minister. Although I know the Minister has no direct political ability to interfere with the commission’s work, nor should she or any other Minister, for that matter, it would be helpful to be reassured that she is confident, in her ministerial capacity, that the commission does have the capacity to meet those time lines in what is—and I know Lindsay Tisch and Richard Worth know more about this than I do—exceptionally complex and very, very difficult work.

I will leave my contributions on this part of the debate there, but I ask the Minister just to give the Committee of the whole House some assurances in that regard.

Hon LIANNE DALZIEL (Minister of Commerce) : Again I am very grateful to the member. I was just jotting down and checking my recollection of what had happened. We have resourced the Commerce Commission to develop the input methodologies. It is a specific allocation for it to do that. The commission has already issued a discussion document with both the process and the timetable included in it. It intends to hold a conference on all the input methodologies in February 2010, so that is after it has consulted on all of the individual input methodologies. It plans to have it determined by mid-2010, in accordance with the legislation, with 20 days then allowed for appeal.

LINDSAY TISCH (National—Piako) : One of the most controversial parts of the select committee process was dealing with the inclusion of airports. Although we came to some consensus that they should be included in the disclosure regimes, there is probably more debate over this than on any other point. I have a particular interest in airports—I mentioned this in the second reading—so I want to concentrate my comments just on the airport part of the bill. Airports were a late inclusion and, as I have said, National feels that they should be included in the regime.

One of the issues that came out when we were trying to set a pricing regime was whether companies should be operating as a whole. The argument came forward that in airport company situations they were not: they were not operating as a single till, each of their entities was separately in a charging regime, so that they became profit centres. One of the arguments was simply that if we want to have some fairness and equity in terms of setting prices, we should actually be looking at their operating as a whole.

The information supplied to the committee indicated that some airport companies over-recovered in regard to their airfield activities under the Commerce Commission scenario based on historic cost of those specialised assets, and also under the Commerce Commission scenario of using the optimised depreciated replacement cost, which is the optimised deprival value, for specialised assets. We were keen to make sure that this part of the debate was fully canvassed and, as I said, it was the most controversial.

The bill now has a regulatory regime that allows for the setting of the airport charges, and moves it away from the Airports Act into the Commerce Commission. But, I say to the Minister, I need some clarification in terms of what we are looking at with the methodology. We have just had an inquiry into State-owned enterprise valuation methodology, and my understanding is—and the Minister’s advisers here today may be able to help me with this—that the aim of applying the optimised deprival value methodology is to value the assets at the cost to the owner of reinvesting in that business if he or she was deprived of those assets.

So if they were taken away, what actually is the methodology we would use? The optimised deprival value methodology is usually higher than the historic cost. My understanding is that in New Zealand the post-tax nominal weighted average cost of capital is normally used. The next point is that the rate works perfectly well with the historic cost valuation. The next point is that combining the post-tax nominal weighted average cost of capital and the revalued assets can create a double counting of the inflation effect. Those are questions that the Minister, with her advisers, may be able to help me with.

On the other side of the equation, of course, we heard that although the airlines and the Board of Airline Representatives of New Zealand in particular were keen to have the airports included in the Commerce Amendment Bill, the airports—which would argue that they have for the last 20 years operated very successfully without this new regime—were not happy that this was included. They gave examples of where there are deregulated regimes. They mentioned Stansted and Manchester in the United Kingdom, and they mentioned Sydney. But we felt that at the end we need to have this fair and consistent so that there was some equity and that we were not operating where monopolies could be seen to be operating, and that including the airports in this bill was the right way to go. So with those points I would be interested in the Minister’s reply to me as to the clarification of those valuation methodologies, which she may be able to help me with.

Hon LIANNE DALZIEL (Minister of Commerce) : I continue this debate in the spirit of people genuinely wanting to debate these issues. The provisions relating to the input methodologies are the most important provisions in this bill apart from the introduction of a purpose statement for this particular part. Given that these rules determine how financial statements should be prepared for regulatory purposes, they actually allow the Commerce Commission to identify whether a natural monopoly business is taking monopoly rents. So they are the fundamental part of any form of regulatory control under the legislation, including the very light-handed information disclosure regime that we have just mentioned.

I think the member is asking me to set the input methodologies; we are not doing that. That is the Commerce Commission’s role, and it will be doing that by 2010. Asset valuations could use the optimised deprival value, they could use the optimised depreciative replacement cost method, and they could use the depreciated historic cost method. I think the member has gone through some of those options and asked me to define what it should be. The whole point of defining them up front is so that businesses have certainty going forward about how the Commerce Commission will interpret their obligations to report on their financial statements under any of the regimes included under the Act. That is the same with asset revaluations, the allocation of common costs, taxation, and the cost of capital.

That is the purpose of getting the input methodologies done ahead of time—so that there is certainty. I will not pick and choose which one I might prefer for any particular purpose, but we will have an input methodology that deals with asset valuations, and there will be certainty. That is the key point of this bill.

Dr RICHARD WORTH (National) : The Commerce Amendment Bill is highly complex legislation in two parts. One can mount sustainable criticism as to why that was done, because it clearly carries with it the potential to stifle debate, with a significant number of subparts in each part. I really wonder at the utility of prolonging the Committee stage. Instead I flag what might be called some high-level issues that caused various stages of the select committee process to pause.

The major part of the substantive change, of course, is in Part 1. Little can really be said of Part 2 because it just effects a number of amendments to other pieces of legislation. So I will focus on Part 1 for a moment and talk about the main changes. Clearly, as has been signalled before, a significant change was the introduction of a purpose statement specifically for the purpose of the Act, to give clearer guidance to the courts and the regulator that the aim of regulation is to promote investment. It is very easy to forget that. We are not seeking in this particular bill to stifle business activity. Rather, it is the opposite, and that is to promote investment.

The main changes are that for the first time there is a clear emphasis on the importance of incentives for regulated businesses to invest, there is a requirement for the Commerce Commission to clearly set out the regulatory rules, which are called “input methodologies”, with all their complications applying to these businesses, and to complete this work by a nominated date in the legislation. These rules are to be subject to merits review, and clearly specifying the rules will greatly improve certainty and predictability for businesses and improve business confidence.

One of the other changes the bill makes is that it allows what one could call “fit for purpose” regulation, such as information disclosure and this negotiate and arbitrate regime as alternatives to full price control. When it comes time to speak about Subpart 11, relating to airports, I will perhaps make some comment about that. Another thing it does, of course, is provide a much simpler and more predictable regime for electricity lines businesses, removing the threat of relatively heavy-handed regulation for minor breaches of thresholds, and with time limits for commission decisions.

There is a more appropriate regime of information disclosure for small, locally consumer-owned electricity lines business, where, as Mr Power has said, the customers are essentially the owners of the business. That should—should—lower their compliance costs and result in savings to consumers. There is an enhanced regime for gas pipelines that enables them to propose a price path to the commission, and there is a more robust information disclosure regime for three airports: Auckland, Wellington, and Christchurch—those international airports with monitoring by the Commerce Commission. Mr Tisch has said that that was controversial. The current regime, contained in the Airport Authorities Act, is seen by the airlines to be satisfactory. Not so, the airport companies would say.

Let me just talk about some of the issues that detained us for a short time. The first was the time line for preparation and consultation of input methodologies. This is complex stuff. It centres on new section 52U, in clause 4. But, generally, I would describe the key process requirements in this way. First of all, the commission has to publish a notice of its intention to begin work on an input methodology, including the process to be followed and the proposed time frames. Second, it must subsequently publish a draft input methodology.

Then it has to give interested parties a reasonable opportunity to give their views on that draft. Then it must have regard to any views received; to that end, it may hold conferences. The commission has said it intends to hold one formal conference on all input methodologies by, I think, February 2010. Next, the commission is required to determine all the input methodologies specified in new section 52S, in clause 4, for electricity lines, gas pipelines, and airports by 30 June 2010, with an ability for limited extensions. So it is a complex time line. I do not doubt it will place the commission under some logistic pressure.

Suggestions were offered by officials that there was a case for additional input methodologies under new section 52S. In fact, it is my recollection that the departmental report recommended two additional input methodologies. But there are some problems with that, and I think those problems were fairly noted by the Commerce Commission and have resulted in a position where that is not now to be advanced.

There was also an issue, which centres on new section 52Z(2), in clause 4, about whether new evidence should be permitted on appeals, because that provision prevents parties from introducing new evidence or information in appeals on input methodologies. That is a reasonable approach to take, because it should discourage gaming, and it should, in particular, require parties to put up their best evidence and experts in front of the commission. This gaming that occurs in appellate processes is not uncommon. One need only think about what happens in the world of resource management with the Environment Court to see that it is a legitimate concern, and it is a concern that is appropriately addressed in the Commerce Amendment Bill. Of course, the downside of not allowing new evidence is probably small, because there are no facts or changed circumstances at issue. So, presumably, the High Court Rules will provide a sufficient basis of protection in respect of the introduction of new evidence.

Others have spoken on these issues of appeals on final decisions in addition to appeals on input methodologies, and I do not want to deal with that. We were concerned, however, about the prospect of delays occurring in the High Court in the hearing of appeals on merits and appeals relating to input methodologies. I do not think that issue has been well addressed. The reality is, as others have said, that the courts are open to everyone, like the Ritz Hotel—those who have money can make their way determinedly through the processes, but for many there are huge costs, and the delays associated with cases reaching trial are a compounding effect. So I do not believe we have that issue right, and it may well have to be looked at in the period of the next Parliament.

Members of the Commerce Committee will recall the debate on the issues around whether the commission should be able to appoint itself as an arbitrator under the negotiate and arbitrate regime. The reasons for not allowing the commission to appoint itself an arbitrator are several. They include, clearly, the fact that the commission is a regulator not an arbitrator, so if the commission appoints itself arbitrator it is making regulatory decisions, becoming almost a judge and jury in its own cause, we might say. The second point is that the commission may well be vulnerable to review as an arbitrator, and it may well be seen as conflicted, having made the rules for negotiation or arbitration. I guess there may be a reduced likelihood of the parties reaching a negotiated settlement, and the commission may be perceived by one party or another as likely to make arbitral awards favourable to that party.

There is a big issue, as Mr Tisch has said, about whether airports should be included in the bill. It is right to say that I believe all members of the committee were lobbied determinedly by the different interests in that regard. The view that carried force on the day was that the major airports do have strong natural monopoly characteristics. The select committee was treated to an interesting statistic from Infratil showing that that company aimed to provide its shareholders with a consistent return of 20 percent per annum over the long term. That is a very high rate of return for a low-risk infrastructure business that is not facing competition.

It is also possible to argue quite credibly that the information disclosure regime under the Airport Authorities Act is ineffectual. There are no input methodologies on how information must be compiled for disclosure, and there is no monitoring and analysis by an expert body. As we look back at the history of disputes between airlines and airport companies, we would have to say that those disputes have been expensive, protracted, and, in the context of the court processes that have followed, not really satisfactory.

So information disclosure is a very light-handed form of regulation. It is proper to record that other OECD countries apply much more stringent regulation to their major airports even though their airports are subject to more competitive pressures from, for example, high-speed public transport than New Zealand’s airports. There are other matters that I could talk about, but I identify those as the issues that the Commerce Committee looked at with the closest consideration.

LINDSAY TISCH (National—Piako) : I want to carry on with a point made by my colleague Dr Worth. The Commerce Amendment Bill does not actually tie in, in terms of pricing methodology and disclosure. Airports will be able to treat information disclosure separately from pricing, and will be able to continue to set prices as they see fit. That will be one of the challenges the Commerce Commission has, and we will be looking very closely at what the regulations are and how this provision will work. I say to the Minister of Commerce that I do not think it is as clear-cut as we would like it to be. There are some huge challenges, and I mention that one in particular—

Hon Lianne Dalziel: Which is why the Commerce Commission will handle that.

LINDSAY TISCH: Sure, I appreciate that. The other thing that is of concern is in regard to the transitional provisions, and I mentioned it in the second reading. Section 56G(1) in clause 4 states: “As soon as practicable after any new price for a specified airport service is set in or after 2012 by a supplier of the service, the Commission must—”, and it goes through the requirements. If the commission decides there is monopoly pricing, it can recommend to the Minister that an inquiry be held, and an inquiry could take anywhere between 2 and 3 years.

Hon Lianne Dalziel: Like it does today.

LINDSAY TISCH: Yes, so it could be 2015 or later before anything is done to address a situation of overcharging that could well be occurring. That will be a huge issue, in that the bill is trying to satisfy that concern on the part of airlines.

The other point is that, with that delay, it is unlikely that any changes would take place before 2016-17. So there is a huge lead time. I understand how that works, but I flag that these are things that National members will be looking at and monitoring closely. We like regulation in that it is light-handed; we do not want a heavy-handed approach. But it has to be fair and equitable in this case.

• The question was put that the amendments set out on Supplementary Order Paper 244 in the name of the Hon Lianne Dalziel to Part 1 be agreed to.

SIMON POWER (National—Rangitikei) : We know that any discussion in the Committee of the whole House in respect of clauses 1 and 2 are wide-ranging and comprehensive debates, and do not—

Hon Lianne Dalziel: Since when?

SIMON POWER: They are, as opposed to the particular discussions that the Committee may have had, in some detail, surrounding Parts 1 and 2. It is not my intention to engage in a wide-ranging debate on clauses 1 and 2, because it would seem that the Committee—apart from, I think, one party—is largely in agreement with the provisions. We have canvassed in detail many of the matters relating to the appeal provisions in respect of price setting and paths for price setting for electricity lines companies and gas companies. We have had lengthy discussions this afternoon about issues surrounding Part 2, although I believe we had those discussions in the Committee stage on Part 1 when talking about airports and airlines. We have canvassed matters around consumer-owned lines companies.

We have talked about the capacity of the Commerce Commission to deliver the input methodologies at the time they are required. We have had further discussions about merits review, and the potential for gaming and how that issue has been dealt with. We have had further discussions on matters relating to the purpose clause—in particular, the Minister addressed the Committee about the confidence she has that the consumer of tomorrow is protected by the purpose clause being wide enough. We will see how that goes. We have had further discussions, and heard from the Minister, about the Supplementary Order Paper. The Minister has addressed some of those matters and given the Committee an undertaking that the Commerce Commission has the capacity to deliver those input methodologies within the appropriate time frame.

This has been a slightly shortened debate, I think for only two reasons. The first, as I said earlier, is the near-unanimous support for the legislation by parties in the House, but, more particularly, because the select committee process itself was a detailed and painstaking process, which saw us move through many of these issues in a very, very detailed way. So for that reason there is probably not a lot I can add to this debate, except to say that overall what we will be looking for when this legislation is eventually bedded down, is that the intention of the legislation is actually occurring. Peculiar to this legislation, that will not necessarily be so in the short term for the large bulk of the matters that are passing through the House this afternoon, but we believe on this side of the Chamber that there will be many opportunities during the course of these provisions being enacted and being utilised, for us to stop and pause, not in a legislative sense but in a policy sense, to ensure that what this legislation is intended to do is actually occurring. Of course, that is always the test—the theory being applied in practice. Having said all of that, I will leave the matter there, unless any other member, including the Minister, has a contribution to make at this time.

• Clause 1 agreed to.

• Clause 2 agreed to.

• Bill reported with amendment.

• Report adopted.

Hon LIANNE DALZIEL (Minister of Commerce) on behalf of the Minister of Energy: I move, That the Electricity Industry Reform Amendment Bill be now read a second time. The Electricity Industry Reform Act of 1998 required ownership separation between electricity lines companies and electricity supply companies in order to facilitate competition in the electricity industry. I actually recall being in the House when that particular, interesting legislation was passed, and I recall Max Bradford being the Minister responsible for it. I also recall the promises of lower costs of electricity, but that was not to be.

The reason for this amendment bill is to follow up on amendments passed in 2001 and 2003, which allowed electricity lines businesses to own generation up to specified quantities if they complied with corporate separation and arm’s-length rules. This bill seeks to encourage lines companies to invest in permitted generation, particularly renewable generation. It proposes to achieve that by relaxing some of the corporate separation and arm’s-length rules relating to generation and retailing, and by allowing electricity lines businesses to sell more electricity, to hedge the output of their generation, and to invest in generation and retail without limit outside their own lines areas.

Of course, this bill has been to a select committee since the time it was introduced, so I feel that that is sufficient for my contribution on the second reading of this important legislation. I recommend the bill to the House.

LINDSAY TISCH (National—Piako) : It is very interesting that the Electricity Industry Reform Amendment Bill, which we are having a second reading on now, is in line with the National Party’s policy at the last election in 2005. Here we have a bill that will be passed, and National is supporting this bill because it is something that we have identified as being important. It is actually consistent with National’s 2005 policy that would have allowed line companies to enter into generation.

Lines companies have an interest in electricity distribution. They also have very stringent limits on what they are able to invest in, at the present time. Some have the ability to invest in generation, and this bill implements policy changes, firstly, to make it easier for owners of lines companies to sell the output of the generation they are permitted to own, under the 2001 and 2004 amendments to the Electricity Industry Reform Act 1998, often referred to as EIRA. The objective is to encourage owners of lines businesses to invest in permitted generation, especially generation from renewable sources. That is fine; that is something we subscribe to. It will be achieved by allowing retail sales of electricity to go up to 100 percent of the nominal annual output capacity of permitted generation, by allowing trading and financial hedges, by allowing grid-connected generation to count as local generation in certain circumstances, by requiring at least one independent director and not permitting executive directors, by allowing the same person to be a manager of both companies up to a threshold of 30 megawatts, and by allowing the cost of corporate separation and compliance with arm’s-length rules.

The second policy change is to narrow the scope of ownership separation requirements in order to focus on the geographic areas where there is potential for the exercise of market power and anti-competitive practices—namely, where lines and supply are co-located. And the third main change is to amend the definition of “renewables” to include all renewable energy sources.

We have just debated another bill that has had its third reading, the Commerce Amendment Bill, which adds value to the points we are now debating under the Electricity Industry Reform Amendment Bill. Year in and year out, we have power shortages. Not a year goes by when there is not some concern about whether there will be enough electricity, over the winter periods in particular, to be able to have the lights on in our homes in Auckland and to be able to keep industries operating. Even this year, with having experienced so much rain in the Waikato, we find that the Southern Lakes are still below their normal levels. Yet given that we have had so much torrential rain, one would expect that the Southern Lakes would have had the water. But that has not been the case, and it has not been the case for over the last 9 years. One of the things in terms of generation, and in terms of the whole energy sector, is that this Government has made it far too difficult for investment in these areas.

Hon Member: Bollocks!

LINDSAY TISCH: Well, it has, because in the 9 years of the last National Government we put in 1,600 megawatts—1,600 megawatts of new electricity came on line. What has it been under Labour? What has it been under Labour’s 9 years? It has been less than 700 megawatts. So why is there no generation? Why are we having these challenges each winter, as it comes up, when people talk about shortages of power and of maybe having to cut back? I will tell members the statistics; I am not making them up: in the 9 years of a National Government we put on line 1,600 megawatts—1,600 megawatts went into the grid so that we could have security of supply in our homes, in our businesses, and wherever we live. This Government, which is on its last legs now, has put in only 700 megawatts or less over the last 9 years. That is an absolute insult, when energy is part of that infrastructural area we need to be so mindful of, whether in terms of energy, roading, or broadband. This Government is found wanting in those three areas.

Let us put this in the energy distribution concept—electricity distribution is important in underpinning New Zealand’s economy. The Government has $6.3 billion worth of assets, and that compares with Transpower’s, which is separate at $2.4 billion. There are 1.9 million connected consumers. There are 149,000 kilometres of lines, and that compares with Transpower’s 11,000 kilometres. The forecast investment is $3 billion to $5 billion over the next 5 to 10 years, to meet the needs of consumers. At the moment the demand is of $3 billion to $5 billion per year, and hopefully with this bill we will be able to achieve those figures, because at the moment we are falling far short. Demand for electricity is growing as the economy grows, while spare capacity networks have been consumed and assets are ageing.

The digital age is driving demand for a more reliable energy supply. Our prices have declined by 4 percent in real terms since 2001. The electricity distribution sector can have an important role to play in distributed generation and fibre optics networks if regulation will allow, and that is certainly what we are trying to achieve here.

What are the potential benefits of this bill and of the Commerce Amendment Bill? There will be some certainty that there will be the $3 billion to $5 billion of new distribution investment over the next decade, which could be distributed in a timely manner. The investment will improve security of supply through certainty over longer-range planning. It will increase reliability and quality. We will see new technology implemented sooner and more often. There will be a lower cost of the regulatory environment, and something we are always very mindful of is that the costs associated, and any regulation that goes with those costs, are fair and equitable.

The new regulatory regime will provide the environment for lines businesses to improve efficiency of energy use—for example, by reducing line losses, upgrading demand sites and management services, and installing smart meters. A number of technologies will become available to be implemented under a new regulatory regime, which of course is to increase the distribution generation.

Strong consumer protection still remains with this bill, and the bill will be beneficial to smaller lines companies. There are 28 lines companies, and 16 of them are owned by trusts. The bill will be beneficial to smaller lines companies, like those on the West Coast in Buller, where my colleague Chris Auchinvole comes from. Those companies will be the beneficiaries of this legislation. The bill frees up small companies to get engaged in electricity generation, thereby improving their income and securities of supply. It limits, of course, their independence on imposed costs from other generators.

Without this bill becoming law it will be extremely difficult for us to progress and to provide that security of supply that we believe is so important. As I said, this is in line with what National said in its policy of 2005. We said there that our policy was to allow lines companies to enter into generation. The select committee has made only minor changes to the substance of the bill, and the changes were made unanimously. National is happy to support the second reading, and we look forward to the Committee stage shortly.

Hon HARRY DUYNHOVEN (Associate Minister of Energy) : As the Associate Minister of Energy it is a pleasure to rise to support the Electricity Industry Reform Amendment Bill. I gave the first reading speech on behalf of the Minister, the Hon David Parker, on this bill.

Can I just ask the previous speaker from the National Party, whose conservation policy was announced this afternoon by the Labour Party, whether National might announce another energy policy, and whether National will sell the electricity assets that belong to the three State-owned enterprises belonging to the people of New Zealand. Will National sell them? There is absolute silence. The second issue is whether National’s policy is to go nuclear. Those are the two issues that the people of New Zealand are really interested in.

In talking about this bill, I say that it is absolutely needed, simply because of the mess that was inherited and the number of things that, over the years, have proven to be deficiencies, which we are now addressing.

I commend the Hon David Parker, and I commend the select committee. I think the bill is excellent, and I am sure the House will pass it—perhaps not unanimously, but all the thinking people in the House will pass it

PANSY WONG (National) : The previous speaker who has just resumed his seat is Harry Duynhoven, who just typifies the concern the public have. Labour is now so bereft of any ideas that it resorts to announcing National’s policy. Labour has nothing to say. The member had nothing to say about the Electricity Industry Reform Amendment Bill. It is amazing that 9 long years ago the Labour Government thumped the table over what Max Bradford did. Does this bill reverse anything of the 1998 electricity industry reforms? What happened to Labour’s vision for energy security for New Zealanders? Where is the vision? I want to ask this question on behalf of the New Zealand public, particularly the good people who live in Botany Downs who told me they are sick of hearing, every winter, a debate about whether there will be power cut, or a blackout. Would the passage of this bill save New Zealanders from facing the awful threat of power cuts and blackouts every year?

National will support this bill, although I doubt very much that sneaking this little bill in under urgency—in the midst of the vacuum, the total lack of vision concerning security of energy supply for New Zealanders—will save anyone from reliving the nightmare of the last 9 years. This is a very timid approach to electricity industry reform, but, unfortunately, like the rest of the public, we have stopped expecting any vision or any bold movements. A little bit of an improvement is almost welcome because, unfortunately, there is nothing on offer. So I just want to tell Labour members that although they are continuing to run out of ideas, they should stop stealing National’s policies.

It is a pleasure for me to take a short call on this short bill. It shows a lack of vision and I think it deserves only a short, sharp rebuttal from members on this side of the House, because I do not believe that rushing this bill through under urgency will convince New Zealanders that the 9-year nightmare of threats of power cuts will be resolved.

PETER BROWN (Deputy Leader—NZ First) : Let me make it quite clear that New Zealand First supports this bill. We will support it right through the process unless something major changes during the Committee stage. But we see it as another piecemeal attempt to add to the Electricity Industry Reform Act of 1998; it is a piecemeal attempt to patch it up. National is claiming credit. In 2005 it wanted lines companies to get involved in generation. We suggested that to Max Bradford in 1998. We said he should not close the door completely on the lines companies. And what did he do? He closed the door completely on them. Let us face it, the Max Bradford reforms worked at the time simply for one reason only: we had more capacity than there was demand for electricity. It set up four State-owned generators. Contact Energy was independent but owned by the State at that time, and three new ones came on board, so there were four competing with TrustPower Ltd to sell electricity to the country, and they had more to sell than New Zealanders were using. So there was downward pressure on prices. But, gradually, bit by bit, that was eroded. The demand went up, and the capacity was not coming on stream. We were told at the time that we needed to bring in 150 megawatts or more per year. Lindsay Tisch told us that in the last 9 years 700 megawatts have come on stream. I do not know whether he is correct, but I know it is a good deal less than 150 megawatts per year.

Lindsay Tisch: It is less than 700. The figure’s right.

PETER BROWN: I will take the member’s word, but if it is not correct, it is close.

Hon Parekura Horomia: I wouldn’t.

PETER BROWN: On this occasion I will, because I think he is on the right side of it. I say to this House that concerns around electricity are major issues with the public. There is the issue of security of supply and the issue of price. [Interruption] I think we are having a two-way conversation across the Chamber in the middle of the debate. Electricity is so much of an issue that New Zealand First has had more correspondence on this issue in the last few months than ever before. The price keeps going up. We are told we have a competitive market, but the public are not seeing that.

New Zealand First passed a remit at its recent convention. Our members want to investigate the feasibility of amalgamating the three State-owned generators—that is, Mighty River Power, Meridian Energy, and Genesis Power. New Zealand First members want to give consideration to the feasibility of amalgamating those three. To answer Harry Duynhoven, I say I have had more correspondence in recent times on this country having nuclear power. It is not a position New Zealand First supports, but I have to say we have had more correspondence in recent times about going nuclear.

Hon Dr Michael Cullen: It’s more expensive.

PETER BROWN: It is good to hear the Minister of Finance say it is more expensive. But people are concerned about the environment and the cost. That is where we measure the debate, and I would take the Minister of Finance on over that. I am not advocating it. New Zealand First’s position is to stay nuclear free, but I am just pointing out the concerns of the public. They want the concerns of the electricity industry addressed. This bill goes some way towards that. It allows lines companies to get involved in generation, which is something we said to Max Bradford, as I recall, in 1996 or 1997. So it is all very well for Pansy Wong to say National had the idea in 2005. We said, and I think Labour also said at the time: “Don’t cut it straight down the middle.” This bill allows the lines companies to have more generation.

Pansy Wong: Tinkering.

PETER BROWN: The member should read the bill if she wants to know what it says. This bill will certainly get New Zealand First’s support.

Let me tell the House what we should be trying to achieve as politicians in terms of energy. We want an abundance of supply. We do not want to keep worrying year after year about whether the lakes are low. We want an abundance of supply. We want a reasonable price. If we have a market, then we want a genuine market, where companies compete and bring the prices down. That is not happening. We want an electricity supply on a sustainable basis—I think the National members agree with that, and I know that my Labour colleagues agree—and, of course, we want it to be as environmentally friendly as possible. Hence the public concern.

Some members of the public, probably only a small minority, are writing in more and more saying that we should look more closely at nuclear power. That is not my position and it is not my party’s position, but we are facing realities. There are some people out there who want to take a closer look at doing that. Just to dismiss that idea and to simply say that we will amend things here in a piecemeal attempt in the Max Bradford legislation of 1998, or whenever it was, is a way forward, but I say that it is not the long-term way forward. We should be looking more closely at the way we supply electricity in this country, and it may well be that we will have to amalgamate the three big State-owned players or to show a little bit more vision. I do not know the answer; all I know is that this bill will make an improvement. But whatever we say, this is a piecemeal, patch-up job. Thank you.

CHRIS AUCHINVOLE (National) : I listened with interest to the previous speaker, Peter Brown, as I always do. I remember that I followed him in the first reading debate on this bill. I am not quite sure what it is about this Electricity Industry Reform Amendment Bill, but here we are, debating it in urgency. I noticed from checking back on the first reading speeches that that debate seems to have been held in urgency, as well.

The reality is that there is a great need for urgency in electricity matters—a great need—and a very dilatory approach has been taken to ensuring that we have a secure supply of electricity in New Zealand. I would vary slightly from the view of the previous speaker that we have to have an abundant supply. It is a little bit difficult to convince electricity-generating companies that they should have capital at risk of being used. I think that what we need is a sufficient supply with appropriate back-up where required.

Hon Dr Michael Cullen: Hear, hear! Absolutely right.

CHRIS AUCHINVOLE: “Thank you very much.”, I say to Dr Cullen. I thought of that all by myself. But it does follow business logic.

There are, of course, costs to deferral. If we look at the sad situation of the Dobson dam, which was put off for 8 years before it was morphed into the Arnold River scheme, we see that there was a huge loss of opportunity cost in that. But the reality is that even though the project now has its approvals and its permits, it is not guaranteed, because the company involved in building it still has to consider whether it is the most attractive option for it.

It is a delicate situation, but it has not been helped by the figures given to us by my colleague Lindsay Tisch, who mentioned just how short the present Government has been in producing electricity generation over the nearly 9 years of its tenure. The Minister of Energy can wax as enthusiastic as he likes about all the activity that is planned for the future current compliant projects, but even he has to acknowledge—and he does—that there was a considerable lag during the middle years of this Government’s tenure. Perhaps saying “middle years” is a little unkind, because it signifies that there was a beginning and that there might be an end fairly shortly. But there was a pause, and that pause has not been without consequence.

If we look at the Tasman end of West Coast-Tasman, we see that there are whole industries up there that drop shifts in the winter to help conserve power, which restricts their usage. Consistently now, every 4 years, we seem to have this stricture on power. Apart from that, one of the consequences is that new companies cannot really start up unless they can anticipate having a secure supply. That is where we think this bill will help, and National is very happy to support it.

The purpose of the bill is to better ensure that costs and prices in the electricity industry are subject to downward pressure, that the benefits of inefficient electricity pricing flows through to all classes of consumer, and that new investments and generation from renewable energy sources occur.

Quite apart from the other areas, this legislation will be of considerable benefit to West Coast-Tasman, which has smaller lines companies, such as Westpower, and Buller Electricity in Buller. The mission statement of Westpower specifies what it does. It distributes electricity, generates electricity, and provides power systems, electrical contracting, asset management services, and electrical engineering consultancy services. It actually has quite a humming business there. The ElectroNet part of its business has about 120 very skilled employees. Both Westpower and Buller Electricity exist for the community and are owned by the community, but the present legislative and regulatory charges on companies the size of Buller Electricity and the larger Westpower company are considerable.

This bill will allow small lines companies to become engaged in generation, particularly hydro schemes, as the bill specifies that hydro power is renewable. Without this legislation, if Westpower wished to engage in building a hydro scheme, it would have to seek a special exemption from the Commerce Commission. This costs a load of hooch and is prohibitive for a small enterprise even to consider. The bill allows companies to look at having hydro schemes for an increased security of supply and a reduction of supply costs. Let us remember when we look at electricity that there is a 20 to 30 percent peak time loss of electricity simply in its transmission. Where it comes up from Lake Coleridge and across Mount Horrible through into the West Coast at peak times, we have a 20 to 30 percent heat loss in transmission. In North Canterbury, Marlborough, Tasman, and the West Coast 73 percent of the power used is brought in from outside the area. So we are almost guaranteeing that we will always have high transmission loss.

We need to grow the telephone book on the West Coast, so we need development. Without power there will not be any development. We have 56 rivers, we have heaps of creeks, but we have limited reservoir capacity. New systems will probably depend on run-of-river operations taking full advantage of the renewable and ever-abundant rain resource that we enjoy so much down on the Coast. There are added advantages. Westpower, as I mentioned earlier, has a contract subsidiary company called ElectroNet. It employs 120 people, with a very high calibre, high level of skills. Building generation builds career paths in that sort of company. It is with pleasure that National supports this bill, which will none the less still require the National Party’s revision of the Resource Management Act for this to be a truly useful initiative.

• Bill read a second time.

Dr PAUL HUTCHISON (National—Port Waikato) : I speak on Part 7 of the Family Courts Matters Bill, a bill that I think I recall the Hon Rick Barker saying was purely a technical bill, but one that clearly extends to much more than matters of pure technicality. In fact, I note that the Hon Rick Barker has put forward Supplementary Order Paper 202, which proposes to divide the bill into 12 bills.

With regard to Part 7, the proposal is to have the title of the Act as the Family Proceedings Amendment Act 2008 and have the commencement come into force on a date to be appointed by the Governor-General by Order in Council. Part 7 deals particularly with counsellors and mediation, and the roles they play in this matter of the Family Court, which are absolutely vital and fundamental.

I think it was Principal Family Court Judge Boshier who said in his submission on behalf of the Family Court just how absolutely vital it is to ensure that the help from counsellors, psychologists, or mediators is of the highest quality, because there has been variability in the past and the negative consequences of this help not being of the highest professional standard can be considerable. Nevertheless, over the years a high professionalism has developed in this area, and I understand that several organisations are particularly representative of mediators and counsellors.

I see that the Arbitrators and Mediators Institute of New Zealand and LEADR, an association of dispute resolvers, also submitted. They also stressed just how vital it is to have professionalism within their ranks, and to be consistent, to be available, and, of course, to be able to provide a rapid response if necessary. Nothing is worse than having long gaps between making the order to have counselling or mediation and it finally coming about because, when the parties are ready to embrace it, it is important to get on with it while one can. I note that section 12, which is to be substituted in the Family Proceedings Act by clause 54 and is entitled “Duties on counsellors”, states in subsection (1) that a counsellor “(a) must explore the possibility of reconciliation between the parties; and (b) if reconciliation does not appear to be possible, must attempt to promote conciliation between the parties.”

In their submission, the Arbitrators and Mediators Institute and LEADR spent a lot of time defining the difference between counselling and mediation. They stated: “Counselling is a process in which an individual client is assisted by a counsellor to consider their internal and emotional responses to the external world with a view to improving their own emotional and psychological health and their ability to respond to external stimuli in a more constructive manner.” Undoubtedly, this requires enormous professionalism and skill. On the other hand, they said that mediation is a process “where an independent mediator works with parties to identify issues between the parties, explore options, and try to agree to outcomes”. Clearly again, the potential of their being successful is incredibly important.

I note that in those organisations’ submission they also make an appeal to be recognised in terms of their pay. They say that they have not been appropriately rewarded, particularly for some of the longer and more complex cases. They feel that their skill level makes it necessary for them to be paid at a similar rate to that of lawyers, and I wonder just how my learned legal colleagues around me would feel about such a proposition. I will end by saying that there is no doubt that skilful mediation, wide mediation, and counselling are very, very important.

CHESTER BORROWS (National—Whanganui) : I appreciate the opportunity to make a contribution to the debate on Part 7 of the Family Courts Matters Bill. I guess it is the experience of so many of us working out of electorate offices that people who contact us from time to time about judicial matters are frequently people who find themselves in a state quite broken by the Family Court process. Not having had any personal experience in relation to matters before a Family Court, my only experience is through the mouths of those who have. It is a real shame that people find this process so bruising and damaging. In actual fact, I think that if there is one thing we could do at some stage in the future it would be to remove as much as we could the adversarial process of the Family Court. Children are frequently at the centre of that process. They become not a toy or a plaything, but certainly the most bruised chattels—almost—of those who are scrapping over things that invariably originate away from children and are to do with the relationship of the adults in the situation to start with. I think that that is a real shame.

Given the clauses in Part 7, National is pleased to be able to support this bill and this particular part of the bill especially, because it puts at the heart of matters the opportunity for mediation, and it requires that there is a consideration of reconciliation or that these matters are explored. It is a shame that things progress so quickly before the Family Court. I guess no one gets to the Family Court without quite a bit of baggage from previous years or incidents leading up to it, but it is a shame that in the middle of what can often be an acrimonious and hostile period people are required to explore reconciliation, at a time when it is probably least likely to occur. It is often quite amazing, though, that after the process is complete—it may be a matter of months, it may be a year or so down the track—if one explores the state of the relationship at that time one sees that it is often in a much healthier state than it was at the time of progressing through the Family Court process. Unfortunately that is the time when the orders are made, and it is almost as if the relationship is set up for failure at that point. However, it is very difficult to see how a judicial process imposed on a personal relationship can do anything else. So not only do we have sympathy for people involved in this process as the parties, we also have enormous sympathy for children who are placed into the process by dint of their parents needing to bring matters before the court. The mediators and the counsellors then have to work through that court process.

It is a real shame, too, that various parties always seem to find the whole process something that they feel completely dissatisfied with. Frequently many of us as members of Parliament are contacted by men who have been through the process of the Family Court and found—from their point of view, in any event—that they have not been treated well. But then on the other side of that we have women who feel that as soon as they entered the process they ran up against family trusts who had paid for big gun legal counsel to fire against them, and they found themselves—from their perspective—disenfranchised by the Family Court situation as well. So we end up back where I started from, which is that it is a shame that the adversarial nature of the Family Court system or the judicial system is such a big part of the Family Court system, no matter how much we would like to try to move it away from that. National is pleased to note that there is a move to maybe deaden that adversarial process, to look to counselling and mediation as things that could become keystones of the Family Court process, and to lessen the impact on those who are involved in it.

There is one very disappointing factor, though, and that is that the Government did not produce a bill capable of dealing with the anomaly that the Family Court cannot order DNA tests to establish paternity. A man accused of being a father is required to pay child support without paternity having been proven, and a DNA sample cannot be required by the court. It is very much a matter of consent on behalf of the custodial parent of the child; the court cannot force a DNA test to be made so that paternity can be proven. But at the same time the court can move against the nominated father and require that paternity payments be made. It seems a huge anomaly. It is one of the prime areas of complaint that we see through our electorate offices all the time, and it has not been addressed by this bill.

Anyway, National looks forward to the upcoming election—whenever the Prime Minister decides to give us a date—we look forward to the prospect of having the privilege of Government, and we look forward to the ability in the future to rectify the law to make it fairer to those coming before the Family Court.

JUDY TURNER (Deputy Leader—United Future) : United Future is supporting Part 7 of the Family Courts Matters Bill, which, largely, covers the issues of counselling and mediation. I agree with the previous speaker, Chester Borrows, that we need to start to look in family law to some of the rather fine progress that has been made in other jurisdictions around better ways of helping families weed whack their way through what is often a pretty appalling experience when a couple’s relationship has come to an end.

If we are serious about moving away from a more adversarial approach, I suspect we will need to consider, at some stage, the assumptions in law regarding parenting arrangements for children. Those assumptions allow lawyers to have a field day. If, for instance, there was an assumed starting position in law of shared care, then I think we would find that the approach to working out the parenting and care arrangements for children could be very, very different. One of the blocks to that is provisions in other law. Law is such a complicated thing, and we quite often find it very difficult to amend one law without making adjustments in other areas of law.

One of the areas of law I have come across that does deal directly to Part 7 is the fact that in New Zealand our benefit system is inflexible to the point that one cannot share a benefit. It means we are forced to establish a primary caregiver who is entitled to a domestic purposes benefit and a non-custodial parent—or a parent that has access only—who is not entitled to share a part of that benefit.

United Future would welcome an urgent review of a number of issues to do with child support. Currently we use some very blunt instruments to calculate child support. All these issues add to a series of assumptions that facilitate an adversarial tone in our Family Court. After the election, if any Government is serious about moving in a less adversarial way, then it will have to realise that there are some very serious considerations—layers and layers of considerations—that will need to be taken into account.

I also pick up the issue mentioned by Chester Borrows about DNA testing. The Law Society said that this was the great failure of this bill—that it was a wasted opportunity. I have a member’s bill on the Order Paper, and I will be seeking to advance that—obviously, after the election. The Attorney-General has already indicated there may be some areas of my bill that need strengthening, and I am very open to that. My bill is currently focused on allowing a father who is involved in a dispute as to whether he is the father of a child—a named father, or an unnamed father, as the case may be—to have that clarified simply and quickly through a DNA test. The issue the Attorney-General has raised is whether, for instance, a child who would like to clarify that position is able to make such an application. I am perfectly open to the suggestion that we could strengthen what I am proposing.

I think we have to understand that there are two situations that the Family Courts Matters Bill has failed to address when it comes to establishing who is the father of a child. There is the case of the father who believes he is the father of a child and would like to have meaningful contact with that child but, because he is not named on the birth certificate, cannot even apply to have any access. The other side of the coin is a gentleman who is named as the father and suspects that he is not, but is now liable for sometimes quite hefty child support payments whilst all the time unconvinced that he is, indeed, the father. In fact, when we talk to such gentlemen we find that many of them would be happy to pay, provided they knew for sure they actually were the father.

I think there is another important thing to note in Part 7. One of the things submitters asked us to be mindful of was that there is a huge difference between mediation and counselling. There was some concern that, as we progressed, we would morph these into one consideration and misunderstand the very distinct differences between those very important roles. The Social Services Committee was very mindful of that. We talked about issues around the participation by children in mediation, and when that was age-appropriate. Who would decide that? Could counsel for the child attend mediation and counselling on behalf of their client, the child?

The committee had to weigh up and consider a number of issues like that, and those are not small decisions. Many would have to be made on a case by case basis. The committee was reluctant to see a law that would set up a clear and demanding expectation on children to attend; nor did we want to provide a situation where children were blocked in a way that could be unhelpful for their ongoing well-being. United Future is happy to support Part 7.

PAULA BENNETT (National) : I rise to speak on the Family Courts Matters Bill in the Committee stage. I will pick up on a couple of issues that have been raised by National members.

When we think about this bill and the necessity for it, the first thing that springs to mind is why any party ever launches into such a complex area that raises so many questions. We hear stories from women—and I am sure many of us know such women—who have had difficulties as far as Family Court matters, paternity issues, and payments for their children are concerned. We also hear the other side of the story, which Judy Turner just raised, and that is the issues men have as far as paternity, access, and payments are concerned. The reality is that there are two sides of that story, and we hear compelling arguments from both sides.

At the end of the day, in what turns out to be a lose-lose situation, the main losers are the children. That is why it is relatively courageous and a great thing that we discussed this issue in the Social Services Committee and we are discussing it here in the Committee stage. It is never easy; nor is it ever going to be. We are dealing with emotions and with people who are, quite frankly, at a crisis point, and, as we all know, when children are involved it becomes extremely complicated.

We need to pick up on many other issues. I really do agree with Judy Turner that currently—and this bill touches on this too—we pitch one parent against the other. Immediately, we say that one parent will be the custodian and one will be the payer, and that is the way it will be. It almost feels like one parent gets the child and the other has to pay for the child, and that is where a lot of these issues happen.

Part 7 talks about counselling. I think it is great to address some of the concerns about what those parents and, in particular, those children need. I think the best advice we could give to anyone in this situation is to keep the courts out of it wherever possible. If people can sort themselves out without getting the Government and the State involved, then that is the best thing a family can do. But if a family is in a difficult situation, then they need legislation such as this, and parts of this bill will make a difference for such people. I think the Minister himself, the Hon Rick Barker, acknowledges that when families are dealing with such an emotional and stressful time, no legislation will be able to fix every problem and account for every issue and situation that can arise.

I also want to talk a little bit about where we are with DNA testing. We are in a situation where it is easily done, and, from what I can see, all parties except for the Greens support addressing that issue. I did not have the good fortune of sitting on the Social Services Committee for this bill, but I did sit on the committee about 2½ years ago when we went through issues relating to payment and the Inland Revenue Department. From what I could see, Labour, National, ACT, and United Future considered child support to be a substantial financial obligation, and there needs to be discussion as to how we address the issues of DNA and paternity. It was a shame that we could not do that within the scope of the bill.

Part 7 talks a lot about the need for counselling and what that means for the children concerned, and I think that is important and necessary—

The CHAIRPERSON (Hon Marian Hobbs): I am sorry; the expressions on my face have nothing to do with the member’s speech. I have cramp—it is nothing to do with the member’s speech.

PAULA BENNETT: I must say that you were throwing me a little, Madam Chairperson. I thought I was on the wrong part; it can happen like that.

Anyway, it is great that we are debating this bill. I think there is a lot more debate left on the matter, and it is a bit of a shame that we are dealing with it under urgency and at the end of a parliamentary term. Thank you.

The CHAIRPERSON (Hon Marian Hobbs): Thank you. I offer my abject apologies. We in this Chamber are human beings.

• The question was put that the amendment set out on Supplementary Order Paper 200 in the name of the Hon Rick Barker to Part 7 be agreed to.

• Amendment agreed to.

• Part 7 as amended agreed to.

Dr PAUL HUTCHISON (National—Port Waikato) : Part 10 relates to the Mental Health (Compulsory Assessment and Treatment) Act 1992 and, obviously, will become an amendment bill itself after the Hon Rick Barker’s Supplementary Order Paper takes effect. National is glad to support this part. In particular, it deals with restrictions on the publication of reports of proceedings. Undoubtedly, this is absolutely pertinent when it involves individuals who have been committed under the Mental Health (Compulsory Assessment and Treatment Act) 1992.

I note that in the submissions there was unanimity between the various submitters that this was the appropriate thing to do. Judge Boshier, speaking for the Family Court judges, did query the competence of a person who is to be the subject of an order to make a rational decision about publication. He says they are concerned about the level of understanding any patient may have about the implications surrounding publication. The judges proposed deleting this provision and dealing with all publication matters under the Family Courts Act. That was very much echoed by the family law section of the New Zealand Law Society and by Professor Bill Atkin.

It is undoubtedly important that the rights of vulnerable people are protected. I guess that is the nub of this legislation, because any change to the openness of the legislation must strike that balance between open justice and the privacy of individuals, of children, and of the family involved, and in that aspect, of course, of people who have a mental disability.

It is pertinent that this week the bill that allowed the ratification of the United Nation Convention on the Rights of Persons with Disabilities was unanimously carried in this Parliament—only 2 nights ago. I think there was general celebration both through the sector and through the Parliament that New Zealand had made the benchmark move to have that convention ratified. Again, it was made very clear in that legislation that vulnerable people, such as those with severe mental disorders, do need protection. What was good about that was that it also allowed those who were able to participate in a whole variety of actions, to do so and not be excluded because of their mental illness. So again it struck a very good balance between the two.

But there is one, slightly sinister, area that I thought it was worthwhile bringing up. From time to time when couples are in huge strife and things become very intense and emotional, there have been instances where one partner may attempt to commit the other under the Mental Health (Compulsory Assessment and Treatment) Act 1992. That, of course, is an awful situation to be in, and it just exemplifies how important, once again, the mediation and counselling processes are if such a condition arises. And of course, once again, publication of that sort of highly intimate detail would be totally inappropriate. There is no doubt that Part 10, which amends the Mental Health (Compulsory Assessment and Treatment) Act, is absolutely appropriate.

• The question was put that the following amendment in the name of the Hon Rick Barker to clause 75 be agreed to:

to omit from section 25(b) “and” and substitute “or”.

• Amendment agreed to.

• Part 10 as amended agreed to.

PAULA BENNETT (National) : I would like to ask a question of the Minister in the chair, the Hon Rick Barker, with regard to new section 2BAA, “Civil union includes immediately preceding de facto relationship” in clause 77. I certainly have some questions around that provision, and I did not sit on the Social Services Committee. New section 2BAA states: “For the purposes of this Act, if a civil union was immediately preceded by a de facto relationship between the 2 civil union partners (‘A’ and ‘B’), the de facto relationship must be treated as if it were part of the civil union.” An example of civil union is then given: “If the de facto relationship of A and B lasts 1 year, and their civil union lasts 2 years, the civil union must be treated as if it—(a) began 3 years ago; and (b) lasted 3 years.”

That, of course, raises many questions. How do we know whether people were in a de facto relationship? Are we insisting, a little bit like we do with some other legislation, that they show they incurred bills together and were living in the same premises? Under what definition is a relationship a de facto relationship? There are certainly questions around how to prove that.

A Minister’s speech-writer wrote about “triples”. I wonder whether a triple relationship would come into a civil union relationship if the relationship is a de facto one. I wonder how that would fit in. I am not quite sure what “triple relationship” means, but we certainly heard the issue raised in one of the speeches from the other side. If people were in a de facto relationship for some time, how do we define the de facto relationship? Is it defined as two people living together and sharing the bills? What happens if it is a triple relationship, as has been mentioned by Labour members earlier? How would that work in regard to the Property (Relationships) Act, which Part 11 amends?

DAIL JONES (NZ First) : I went to the seminar when the Property (Relationships) Act was being put into effect. The issue of a doubles relationship was raised, and one of the ways in which people make sure that everyone knows there is a doubles relationship—in particular, the party who perhaps might gain the most—is that after 12 months they have a great party to celebrate the first anniversary of the relationship, then they have the second anniversary, and then the third anniversary. So if the matter ever went to court they would have all their friends there to say that quite clearly this relationship started on such and such a date. Although that may sound facetious, apparently that is done and it is a wonderful way of establishing, by way of evidence, that the parties have been together for 3 years.

So far as a triples relationship is concerned, well, some people might say that chance would be a fine thing, but there seems to be some aspersion being cast on a speech prepared by a speech-writer for the Minister and some people seem to be taking advantage of that. I clearly remember a select committee hearing that I was on, dealing with a family matters bill, and the suggestion was raised that there might have been a polygamous relationship between a homosexual man and two lesbian women. I suggested that could be a triples relationship, because both the women had had children from the man. [Interruption] This was evidence that was given in the select committee. I raised the question whether it was polygamous, and they all denied that it was. It was an interesting point, and the Labour Party members were horrified to think that anyone could possibly believe there could be a polygamous relationship. So far this House has, on the question of the Property (Relationships) Act—

The CHAIRPERSON (Hon Marian Hobbs): Good! I am so pleased to hear it.

DAIL JONES: That issue was raised by the previous speaker, Madam Chair, but it really seems to be a very, very long bow, and I cannot see that polygamous relationships would ever be accepted. I hope I have illuminated the matter a little for the member who has raised what is a very interesting point but has no bearing on the bill.

• Part 11 agreed to.

Dr PAUL HUTCHISON (National—Port Waikato) : Thank you for the opportunity to speak on the title and the various other clauses you suggested, regarding this Family Court Matters Bill. Once again, I note that the Minister in the chair, the Hon Rick Barker, initially regarded this bill as purely a technical bill, but National members have on many occasions pointed out that this is much more than a technical bill. However, contrary to the fact that it is appropriate for it to be called the Family Courts Matters Bill, in actual fact it will be divided into 12 bills. I will not go through them all, but they range through a vast spectrum from the Adoption Amendment Bill and the Care of Children Amendment Bill (No 2), right through to the Mental Health (Compulsory Assessment and Treatment) Amendment Bill and the Protection of Personal and Property Rights Amendment Bill (No 2). All of these are highly relevant to the smooth and effective running of the Family Courts Matters Bill.

I am only too conscious of just how important it is to have technical expertise within the court, to make sure that these matters are run effectively. I was quite interested, at one stage, to read that although the court is being opened out, the judges prefer—well, they insist on—having the right to ask people to leave if they feel that it is appropriate. I think that is absolutely correct, because I remember very much, when I used to be carrying out caesarean sections, that husbands would come in to hold the hands of their wives, and from time to time I would have to say to them that if there was any possibility of there being a technical reason for them to go, then I would ask them to respond appropriately. Occasionally, as members can imagine, when a spouse fainted and cracked his head, there was all hell to pay. That did happen on the odd occasion. I can see a similar analogy in a court of law, where a judge might indeed find that he or she will be required to ask one of the many people now allowed into a court in this new open situation, to leave.

But I emphasise that Judge Boshier, in his submission to this committee, stressed just how important it was to have those expert qualified counsellors, psychologists, and mediators, and how important it was to ensure the professional integrity of those people in the running of the court—much more particularly to the end result of the sort of anguish we see when a small proportion of cases comes to court. As I noted before, the delicate balance between the openness of the court and the restrictions that can apply, was very carefully and poignantly expressed by the English Law Commission: “What is more serious is that the parties, and more especially, their innocent children whose identity is frequently revealed as a result of the details which can be published, suffer the disturbing experience of having the most intimate details of the family life exposed. While it may be said that the parties have only themselves to blame, no such argument can apply to their children whose privacy the law takes pain to protect in other cases.” I understand that in Australia, where there is openness, this indeed can have quite severe negative repercussions.

I also take this opportunity to comment on one of the opportunities this bill does not encompass, a missed opportunity, and that concerns DNA testing, on which Judy Turner from United Future has a bill awaiting the ballot. I personally can relate just how important it is to get up to speed and use DNA testing within the court system. I vividly remember, some long years ago, being asked as a junior registrar to go to the court in Pukekohe, of all places, to be an expert witness on a paternity case. It happened that there were eight young men and one young woman, and of those eight young men only one had any assets. But according to my calculations, using the dates I was given, the one with assets was indeed the least likely to be the father. However, the judge surprised everyone and, unfortunately for that young man, the judge awarded him the responsibility for that young woman. It seems to me that probably for a decade or so it would have cost him sorely, and probably unfairly. I make the point, then, that yes, maybe this is a missed opportunity, but hopefully in the next Parliament the matter can indeed be rectified. Thank you.

CHESTER BORROWS (National—Whanganui) : I will pick up on a couple of points that were made by my good friend Paula Bennett. She was talking about triples, and I wanted to draw attention—

Hon Darren Hughes: Name-dropper!

CHESTER BORROWS: Well, I align myself to as many famous people as I can. But I need to draw attention to those metropolitan members, because they may not know that in the provinces, some of these multiparty accords are actually celebrated. If any members have the privilege, as I will have tomorrow, to visit any of the bowling clubs, they will find that on the boards around the clubrooms they will see that the clubs list the status of various people. They have triples boards, and championships in the triples, and all the names are listed. But they also have fours. Then the doubles are listed—well, you know, there are always quite a few in the doubles—and the poor people who are just in the singles. They are all on their own, but there are heaps of them, as well. So this is not something new that the honourable Minister’s speech-writer has come up with; this is something that apparently has lain latently within the provinces for a long time.

However, let me get back to Part 1 of the Family Courts Matters Bill. [Interruption] I said “lain”, not “laid”. Anyway, the National Party is pleased to be able to support it, in a major way, because it does not refer to triples, doubles, singles, or fours. The Family Court system must be a system that is open and fair, and this bill increases the openness and the transparency of Family Court proceedings. We believe that that is a good thing. Those who have to go through the court process frequently feel bruised and broken by it, more so, probably, than in other court systems. It is, and has been, shrouded in secrecy for a long time, and we can understand the reasons for that, especially at the time that secrecy was introduced. Really, whose business is it, other than those intimately involved with the break-up of a marriage-type relationship? Parts of the proceedings are not things that should necessarily be open to the public to scrutinise and comment on.

However, those who are at the core of matters proceeding before the Family Court, and especially those who feel they have not had openness and due process shown to them, are those who most want to have the dealings of this particular court open to some public scrutiny. We believe that that is a fair thing to happen. We mentioned in earlier speeches the incongruity of there not being a provision within this bill—and it would have been most suitable to have had one there—for DNA tests to be compulsory where, for instance, a parent, particularly a father, is accused of being the father. A father can deny that, but has no means of being able to require a DNA sample to be taken so that paternity can be proven. Yet the Family Court, as the law stands at the moment—and will continue to stand, even after the passage of this bill—has the ability to require paternity payments, child support payments, from the accused father, whether or not it is proven he is the father, and he has no ability to prove he is not. That is a real anomaly within our system. Right across society there is a lot more openness and transparency put on a number of what have previously been private areas, yet we have the ability to hold people to account, merely on an accusation without any proof. I think that that is a bad thing.

Another point I make is that we frequently hear, in any discussions around the court system, that the only people making any money out of this are lawyers: “It is a real heyday for lawyers—rah, rah, rah!”. You know, I speak as a lawyer with a “long” history of practising in the courts for 2½ years, and never appearing before the Family Court. But I would like to point out that that really means we have an adversarial—

Hon Member: Did you win any cases?

CHESTER BORROWS: I have never won a case in the Family Court—

Hon Member: Have you lost any?

CHESTER BORROWS: —and I can say that I have never lost one either. So there you go.

Hon Member: Did you meet Denny Crane?

CHESTER BORROWS: I sit on the fence—I should be in one of the minority parties, and I have never met Denny Crane. But having said that, the fact is that it is our adversarial system that forces lawyers to act in the best interests of their clients. It is the system that forces one side against another, and it is frequently in an atmosphere of hostility and animosity that actually means that the lawyer has to thump the other side as hard as he or she can. That is the nature of the system. The fact that going to those depths costs frequently a significant amount of money, is the nature of the work. If we are looking for something that is open and something that will be fair, then maybe in time this country will have to look at the way it does the Family Court system.

Finally, I would like to make the point that we must never forget that the most critical people at the centre of all these issues that appear before the Family Court are frequently children. An acrimonious series of court hearings with children at the heart of it, and scraps over custody and access, can only leave them—the most vulnerable people within the system, and those most at risk, although counsel for the child are appointed—having long-term harm, not of their own choosing. It is those people who will need to be most protected by the way this bill is implemented, and by the way the Family Courts carry out their business in the future. Thank you.

PAULA BENNETT (National) : Thank you for the opportunity to just finish up quite quickly on the Family Courts Matters Bill. I suppose when we see that people are protesting outside judges’ houses, and we see people protesting as to how they feel about the results they have had via the Family Court, and when we have certainly had them all through our offices, writing to us, and certainly expressing their displeasure with the process they feel they have had, then it is paramount that we get this stuff right, that it is given due process, and that it has been through the select committee process.

As I have said earlier—and I want to reiterate it again—as far as I am concerned it is one of those processes where it is very hard to find winners. It is very hard to find anyone who comes out of this court process and feels like they have actually accomplished what they want to. At the end of the day, my personal opinion would be that if one is not getting to spend as much time with one’s children as one possibly can and find something that actually is equitable for both parties, then it is always a bit of a shame for everyone involved.

Overall, in terms of the bill, I think what has tried to be accomplished is to make the needs of the child paramount. I think, at the end of the day, that all sides of the House—certainly every party—were concentrating on what was best for the child. I think one sees that when we look at the Minister bringing in things around the Domestic Violence Act, and the stuff that goes with those, that have been introduced via the courts. There might not be many counselling services for the children, but if one believes that every child has every opportunity to succeed, then it does not matter how small the number is, quite frankly. It is something that should be addressed in this bill, and it is something that I am pleased we have seen introduced via it. I think mediation, and how we introduce it, is important in order to perhaps make people feel like they can talk a bit more easily, and that has to be a plus when it comes to the bill. I think it is important that we give people options as to how they can actually go through this process, which is a very emotional and often a very distressing process, and actually make it as easy as we can. Of course, I am one of those people who believe that keeping Government out of it, and keeping the courts out of it, wherever possible, will actually mean a better result. But when that cannot happen for people, and they have lost that ability to actually discuss it amongst themselves, then I think that we see some of the changes through this bill, and we are very pleased to be supporting that. Thank you.

• Clause 1 agreed to.

• Clause 2 agreed to.

• The Committee divided the bill into the Adoption Amendment Bill, the Care of Children Amendment Bill (No 2), the Child Support Amendment Bill (No 2), the Children, Young Persons, and Their Families Amendment Bill (No 7), the Domestic Violence Amendment Bill, the Family Courts Amendment Bill (No 2), the Family Proceedings Amendment Bill, the Family Protection Amendment Bill, the Intellectual Disability (Compulsory Care and Rehabilitation) Amendment Bill, the Mental Health (Compulsory Assessment and Treatment) Amendment Bill, the Property (Relationships) Amendment Bill, and the Protection of Personal and Property Rights Amendment Bill (No 2), pursuant to Supplementary Order Paper202.

• Bill to be reported with amendment presently.

Hon Dr MICHAEL CULLEN (Leader of the House) on behalf of the Minister for Arts, Culture and Heritage: I move, That the Cultural Property (Protection in Armed Conflict) Bill be now read a first time. At the appropriate time I will move that the bill be referred to the Government Administration Committee for consideration.

This bill relates to New Zealand ratifying the Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict, commonly called the 1954 Hague convention, and its two protocols. I am sure that members will be aware that the 1954 Hague convention arose out of the experience in World War II when the Nazis, in particular, were prone to stealing the cultural properties of other nations that they had invaded and occupied. Vast amounts of cultural treasures were translated into Germany, some never to be seen again. New Zealand ratified the convention in Paris on 24 July this year, and the bill enables us to accede to the two protocols to the Hague convention. The convention and its protocols work for cultural property in a similar way that the Geneva convention and its protocols do to safeguard civilians in the event of armed conflict.

The bill has three main, relatively simple purposes: to create a number of criminal offences in relation to cultural property, to prohibit trade in cultural property removed from occupied territory, and to prevent unauthorised use of the convention emblem. Accession to the two protocols will reinforce our participation in the Unesco family as a champion of the protection of cultural property.

CHRISTOPHER FINLAYSON (National) : National will support the first reading of this bill. As the Minister said, it meets various obligations that are required before New Zealand can accede to the first and second protocols to the 1954 Hague convention, and, as the Minister said, we ratified the convention on 24 July 2008.

The convention was adopted in the wake of massive destruction of cultural heritage in World War II. It is the first international treaty that focuses exclusively on protection of cultural heritage in the event of armed conflict. As can be seen by the bill, the convention covers not only movable but also immovable property, and this includes monuments of architecture, art, or history, archaeological sites, works of art, manuscripts, books, and other objects of artistic, historical, or architectural interest, as well as scientific collections of all kinds, regardless of their origin or ownership.

Indeed the issue of how to protect property in a time of war could be said to be as old war itself. Consider the Punic Wars and Cato the Elder’s famous clarion call: “Carthago delenda est.” The attitude of total warfare toward Carthage resulted in its complete destruction at the end of the third Punic War. The fields were sown with salt and the city was ploughed over. Many years ago I visited St Petersburg, formerly known as Leningrad, then Petrograd. Someone pointed out to me various markers, which were actually not far from the Winter Palace. They showed just how close the Wehrmacht came to the centre of that magnificent city. Places like Tsarskoye Selo, now known as Puskhin, were practically destroyed by the Germans, and the damage done in St Petersburg was also enormous. Think, too, of Stalingrad, Coventry, London, and, of course, what happened to Dresden in the closing months of the Second World War. The beautiful Saxon heritage of the city was laid waste, and, indeed, some buildings, like the Frauenkirche, have only recently been finally restored.

As the Minister mentioned, the theft of paintings, for example, from the Louvre by the Nazis in the Second World War is another illustration of what happens to cultural property in a time of conflict. Goering and others looted museums and art galleries and took their ill-gotten gains back to Germany with them. That is why the issue raised by this bill and the convention is such an important one, and why it behoves this Parliament to deal with this issue. It is a very, very important issue.

One issue we will want to look at very carefully in the select committee is the all-important defintion of “cultural property”. It could be said that one of our biggest cultural treasures is our unwritten, uncodified Westminster constitution, and one may well ask about the damage to our constitution in an intensive period of warfare, namely this election year. Of course, our constitution is the property of the people, not the Government, but this administration treats it as its plaything and as something it can meddle with for its own advantage. I need only mention the Electoral Finance Act, which is possibly the worst legislation ever passed by this Parliament. With breathtaking arrogance, the Government rammed this legislation though the House at the end of 2007, despite opposition from every newspaper, the Human Rights Commission, the Law Society, and thousands of citizens. The Act makes it nearly impossible for those opposed to the Government to campaign against it. It undermines freedom of speech, and, in fact, it is so difficult to interpret that there have even been complaints recently to the Electoral Commission about the Film Archive showing the dancing Cossacks advertisement, which was first screened by the National Party during the 1975 general election. Apparently, some Labour stooge is alleging that it breaches section 5 of the Electoral Finance Act.

If the Act is retained—and let me assure the House that one of the first things a National Government will do is ditch it—one out of three New Zealanders will find his or her speech severely curtailed, all because the Government believes in conspiracy theories and cannot bear the thought of losing an election. So that is a very important issue of constitutional cultural property that we will need to consider during the course of the Government Administration Committee’s deliberations.

Finally, I might observe on the Electoral Finance Act that it was passed in such a partisan manner that the Government threw out the convention of bipartisan support for electoral reform, so I note with irony that the Green Party has finally woken up and realised what a mess it was involved in with the passing of that bill. Indeed, their co-leader recently said that all the confusion could have been avoided if the regulated period had started on 1 April, not 1 January, which is exactly what I attempted to achieve by way of a Supplementary Order Paper, but it was voted down by, among other people, the Greens. Then today we had the most recent assault on our constitution. The Labour Government is intending to appoint another committee of review.

The exact scope of the legislation we will be looking at in the select committee is unclear. Clearly, it will address the issues I mentioned in the first part of my speech about the protection of both movable and immovable property in a time of armed conflict. But it is beyond argument that our constitutional cultural property has also been severely damaged by the Huns and Visigoths on the other side of the House. We have a Government that is disdainful of the constitution and its importance. It has contempt for the rule of law. It has politicised the Public Service. It has breached fundamental human rights, like the right to free speech. Destruction of cultural heritage is a terrible thing indeed. Just as terrible, if not more so, is a decayed Government that passes repressive laws and does not practise what it preaches. Notwithstanding that, we support the first reading of this legislation, and look forward to careful consideration of it at the Government Administration Committee.

Darien Fenton: Oh!

CHRISTOPHER FINLAYSON: I know that Darien Fenton, who is an assiduous member of that committee, cannot wait for the bill to get there.

SANDRA GOUDIE (National—Coromandel) : I rise to support my most esteemed colleague Christopher Finlayson. National is supporting the Cultural Property (Protection in Armed Conflict) Bill.

When I looked at what this bill actually does, I wondered about what would happen if we were suddenly in the midst of armed conflict. I sincerely hope that the country we are in conflict with, no matter which country it might be, has read the Hague Convention on the Protection of Cultural Property in the Event of Armed Conflict. I hope it has that piece of paper close at hand and knows that if we are all gathered here in the House with the rest of the population of Wellington, we are safe. If it has not read that United Nations document, I wonder where that would leave us—which creek we would be up and whether we would have a paddle. But if we are in this building and the country has read it, we may be protected. A heck of a lot of reliance is being placed on a piece of paper.

The other thing that really intrigued me was what happens when, in the midst of armed conflict, that country—whether it has read the convention or not—bombs Parliament House. Does that particular country then get hauled through the courts? With the penalties in the bill for criminal offences against cultural property, will their commanders be extradited to New Zealand, where we will take them through a court of law to bring about some justice for the loss of a building? Of course, they would never reinstate the building. However, we may lose some of the very poor legislation that has been put through Parliament over the last 9 years, and we could start afresh—we could certainly do so on the Electoral Finance Act. So actually, when we think about it, we see that there are some positives! I was intrigued to see that a soldier is actually being convicted under the War Crimes Act. We have to wonder how far this type of responsibility will actually go, how many of those in charge would be liable for prosecution, and whether we could bring that into effect.

When I looked further at the support for this convention, I saw that we received only a handful of submissions, including submissions from the Historic Places Trust and one or two people who support our heritage—a worthy cause, of course; we all value our heritage. Only last night I discovered the ship manifest for the Lady Egidia, which docked in Port Chalmers with 400 passengers in 1861. That was a huge number of immigrants to come into New Zealand in 1861. I am quite interested in that type of thing. I value our cultural heritage—as I know many, many New Zealanders do—and it is important to protect it. However, whether doing that is feasible in a realistic sense during a time of conflict remains to be seen.

We have become a signatory to the Hague convention. What does that mean? We now have to go through the process of deciding which of our buildings or cultural heritage assets are the most important to us. For instance, we have to decide whether the building we are now in, Parliament House, is one of the most important places to us in terms of our cultural heritage—I would suggest that it is. Once we have decided, we can at that point put an emblem on the front of the building, identifying it as being protected under the Hague convention.

It is a rather interesting emblem. It looks like an open, upside-down envelope. If we put that on the front of the building, then everybody will know that it is protected under the Hague convention. In the event of conflict, people from another country will see that. In fact, they probably could see it from their own country, because satellites are so powerful these days that we can google anywhere, home in on a street, and see who is there. That is what satellites do, so it is not too silly to suggest that other countries might be able to see the emblem. It is also not too silly to suggest that it might prevent this building from being bombed—or whatever technology is used at that time to destroy something or someone. Advances in technology are such that people can target pretty precisely where they want to do the most damage.

Next we will have to decide which aspects of our cultural heritage we want to protect the most. We will also have to provide a limited number of refuges intended to shelter movable cultural property in the event of armed conflict. Cultural property will need to be moved from one place to another to ensure its protection, and we hope that the site where it is stored will protect it. Under the legislation, certain centres will be defined as “containing monuments”—we must not forget our monuments. A huge number of our monuments pay tribute to all of those who died in wars while protecting our democracy and freedom. Sometimes when we are debating a bill in the House, we feel like we are on the beaches of Dunkirk, trying to hold back yet another tidal wave of poor legislation that is imposing costs on our citizens—the people of New Zealand—by whatever means. That legislation has been brought about through the misjudgment and misguidedness of the current Government as it puts more and more costs on to the citizens of New Zealand.

Mr DEPUTY SPEAKER: Order!

SANDRA GOUDIE: I will come back to the bill, Mr Deputy Speaker. The debating chamber is an important war memorial. It is a part of our cultural heritage. It feels at times as if we are on the beaches of Dunkirk; that evacuation is also a part of our heritage, and the monuments to the world wars are very much a part of it. That is why I refer to the fact that when one is standing here debating bills, it feels very much like one is trying to protect that cultural heritage from an avalanche of legislation that constantly undermines our freedom, democracy, and choice. So that is the linkage to those principles. Unfortunately, they are not protected by the Hague convention from being undermined by the current Government.

We go on to the decision about which cultural property deserves enhanced protection. Well, enhanced protection is of course for “cultural heritage of the greatest importance for humanity;”, as the bill states in article 10(a) of schedule 3. Article 10(b) states that the property must be “protected by adequate domestic legal and administrative measures”. Depending on the degree of intention from a local authority, that could be a light-handed or a heavy-handed approach to the protection of our cultural heritage. The other point, in article 10(c), is that the cultural property must not be “used for military purposes or to shield military sites”. [Interruption] I beg the member’s pardon?

Hon Steve Chadwick: Tell us about the mangrove swamps.

SANDRA GOUDIE: They do not need protection. We have a lot of mangroves around the country. I do not know whether we would really want to claim those to be a cultural heritage plant, because—no, I do not even want to start going there.

As I was saying, article 10(c) ensures that people do not run a war from a cultural heritage site protected by the Hague convention.

I just hope that any nations that decide to wage war upon us have read the Hague Convention on the Protection of Cultural Property in the Event of Armed Conflict and understand that we have signed up to it—we ratified that convention on 24 July 2008—and that we will meet those obligations. We hope that other countries have read about our commitment to the Hague convention, and will respect our cultural heritage accordingly.

DAIL JONES (NZ First) : New Zealand First supports the Cultural Property (Protection in Armed Conflict) Bill. I believe that some consideration will have to be given in the Government Administration Committee to the definition of movable and immovable property. This has been touched on by an earlier speaker. “Movable property” and “immovable property” are terms that are not usually used in New Zealand land law. We usually refer to real estate or personal property; movable and immovable property are terms from European civil law. I expect that in the select committee a clearer definition will have to be given of what is intended, and that we will go back to Roman law principles and suchlike. So that matter will need to be clarified.

I suppose that if this legislation had been in force during the Greek civil war, the damage to the Acropolis might not have been undertaken, because the Greeks kept their ammunition in the Acropolis, and one day, inevitably, it blew up to a large extent. One thinks, of course, of New Zealand’s efforts in the Second World War and of what happened at Monte Cassino. The Germans were ensconced there and, of course, the inevitable action was taken to try to get them out. Those problems do arise.

If we read the bill and look at Part 2, which relates to offences, we see that this part makes it clear that an offence is committed only if the act is intentional and the person either knew or had reason to believe that the property was cultural property. In addition, the act must occur in the situation of hostilities. Again, an offence is not committed if the person is acting in accordance with the convention and the second protocol—for example, if the person is acting by imperative military necessary. Imperative military necessity is explained in article 6 of the second protocol.

Further offences relate to cultural property removed from occupied territory. Clause 15 creates new offences of removing cultural property unlawfully from the territory of a party to the first protocol, other than New Zealand, while the territory is under occupation. Clause 17 creates new offences of dealing in smuggled property or in enhanced protection smuggled property. The offences apply only to things done in New Zealand.

This is one of those bills where the bill itself is 32 pages long but the schedules are 54 pages long, and it will be a very interesting time working them all out in the select committee. New Zealand First supports this bill going to the select committee and, on the face of it, it supports it generally.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) : Tēnā koe. Kia ora tātou katoa e te Whare. On behalf of the Māori Party I rise to make a very short statement on this Cultural Property (Protection in Armed Conflict) Bill, which defines cultural property as the cultural heritage of all people. That includes monuments, archaeological sites, historic buildings, works of art, manuscripts, books, scientific collections, archives, museums, libraries, and refuges. And that is it. There is nothing Māori in here, at all. That is kind of surprising when we are talking about cultural property, and even more surprising when we are talking about protection in armed conflict, given the efforts of Māori involved in armed conflict on behalf of this country, and given also the number of Māori MPs in Labour who allowed this to go through completely de-knackered of any Māori content.

Māori, of course, refer to the claim for Wai 262 when they talk of cultural property—a claim lodged with the Waitangi Tribunal to protect and preserve indigenous flora and fauna and associated cultural and intellectual heritage. It was filed in 1991, on behalf of six claimant iwi, by Dell Wīhongi of Ngāpuhi, Saana Murray of Ngāti Kurī, Te Witi McMath of Ngāti Wai, John Hippolite of Ngāti Kōata, Tama Poata from Te Whānau a Rua in Ngāti Porou, and Katarina Rīmene of Ngāti Kahungunu. The tragedy of Wai 262 is that only one of the claimants is still living today. And still we wait, and we wait, and we wait for a finding.

Wai 262 is code for the exclusive and comprehensive rights to flora and fauna, cultural knowledge, and property as taonga that is protected by article 2 of Te Tiriti o Waitangi. Wai 262 is also a claim that says that the Crown has failed to actively protect the exercise of tino rangatiratanga and kaitiakitanga over indigenous flora and fauna and other taonga, and also over mātauranga Māori; that the Crown has failed to protect the taonga itself; that the Crown has usurped tino rangatiratanga and kaitiakitanga of Māori in respect of flora and fauna and other taonga through the development of policy and the enactment of legislation; and that the Crown has breached the Treaty of Waitangi by agreeing to various international agreements and obligations that affect indigenous flora and fauna, intellectual property rights, and rights to other taonga.

I will not speak for much longer, but I will say that I was also interested to hear the reference made to constitutional significance earlier in this debate. Yet again, unsurprisingly, there was no mention of the foundation of our constitution, Te Tiriti o Waitangi, which gives rise to the thought that perhaps the Māori Party might recommend the inclusion of a Treaty of Waitangi clause in this bill in order to give Labour’s Māori members the opportunity, at least once in the last 3 years, to vote to support the Treaty of Waitangi.

The Māori Party will support this bill going to the select committee, but only because we know that there are a lot of people out there who will want to challenge the racist basis of this bill and the very exclusive way in which cultural property has been defined and valued. Tēnā koe.

CHESTER BORROWS (National—Whanganui) : I rise to support the Cultural Property (Protection in Armed Conflict) Bill and I am very pleased to do so, because it is certainly time that we acceded to the first and second protocols of the Hague convention that we originally signed way back in 1954 when the world was mourning the loss of cultural heritage that was destroyed in World War II. These days we cannot imagine the effect of the wholesale slaughter of soldiers and civilians that went on during those years from 1939 to 1945, and it was quite common when our parents were young to talk of young women who had lost their sweethearts during the war. Many of them never married, and recently $1.5 million was gifted to Wellington College by 92-year-old Violet Dunn in memory of Tom Paul who was killed during World War II. She wanted to ensure that her beloved’s memory would endure by giving the money to benefit the school he attended from 1931 to 1935.

Similarly, we find it hard to imagine how people felt about the wholesale loss of cultural property during those years. The destruction of heritage buildings, even whole towns, and the artworks, manuscripts, books, and scientific collections contained within, was devastating. Whole museums, libraries, and galleries disappeared and with them the works that were inside. The Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict was signed in 1954 because the high contracting parties believed that peace time was an opportunity to develop a future safeguard for cultural property. Interestingly, this was not the first attempt at the convention. There had already been conventions signed at The Hague—one in 1899, which detailed the laws and customs of war on land and naval bombardment in time of war, and another in 1907. These were followed by the Washington Pact, signed in 1935, which particularly mentioned the protection of artistic and scientific institutions of historic monuments. But obviously none of these had worked. The 1954 convention focused on the protection and safeguarding of cultural property, ensuring respect for cultural property, particularly by any occupying forces, and the protection and transportation of movable cultural property and the personnel who looked after it. The convention also details the use of a distinctive emblem to identify cultural property, to be attached in time of peace.

The first protocol was designed to prevent the exploitation of cultural property from occupied territories. It also requires each high contracting party to take into custody any property that is imported into its territory. The country is then responsible for returning that cultural property to the competent authorities in the territory previously occupied.

The second protocol concerns measures to take in time of peace for safeguarding cultural property against the foreseeable effects of an armed conflict. It includes the requirement to prepare inventories, to have emergency plans to protect structures, and to remove movable cultural property. It also requires the designation of competent authorities to look after all of these measures. It also allows for a waiver in case there is an imperative military necessity. The waiver allows, on the basis of imperative military necessity, the ability to direct an act of hostility against cultural property if the cultural property has by its function been made into a military objective—for example, a group of armed soldiers hiding out in a church and shooting their attackers—and there is no feasible alternative available to obtain a similar military advantage to that offered by directing an act of hostility against that objective.

The rest of the bill details offences and penalties, and detailed regulations about search, seizure, and forfeiture. It also outlines measures of compensation and the return of cultural property. I am pleased that National is supporting this bill. I hope that the use of its provisions will not be necessary in New Zealand or need to be used in reference to New Zealanders in other, war-torn countries.

• Bill read a first time.

Bill referred to the Government Administration Committee.

Dr RICHARD WORTH (National) : It is a privilege to speak in support of this bill, and I commend it to the House.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) : On 25 October last year a crowd of over 700 kaumātua, pakeke, rangatahi, and tamariki marched through Rotorua in a peaceful protest against the police terrorism raids into Tūhoe. They marched for civil liberties, they marched for indigenous rights, and they marched for justice.

On that hīkoi were senior students from Te Kura Kaupapa Māori o Te Rotoiti. The tumuaki of the kura, Hawea Vercoe, told the crowd of the views of his students on hearing the news. During our kōrero on the topic, he said, one student commented: “It must have been scary to have the police with guns coming to your house, especially when you are just waking up.” Another student questioned the tactics used by the police by asking: “If the police thought there was trouble happening in the bush, why didn’t they just go and see the kaumātua or call a hui at the marae?”.

In the years that lie ahead of us, those young people, those whānau, and this nation will return again and again to the events of 15 October 2007 to question the role of the police. They will return, just as this year on 25 May we returned to Takaparawhau to reflect on the traumatic actions of 30 years ago, when State forces rudely, violently, and incorrectly arrested 222 people who were occupying Bastion Point. The year 1978 was one of many low points in contemporary Māori-police relations, with Tainui Āwhiro’s occupation of ancestral land also being rudely and violently interrupted by police arresting and charging those people with trespass on their own tribal burial grounds.

So how wonderfully ironic it is, then, that 30 years later Angeline Greensill, Māori Party member of the House for Hauraki-Waikato, and Rāhui Kātene, Māori Party member of the House for Te Tai Tonga, will take their rightful place in this House, for they are the children of Eva Rickard and Big John Hippolite, who were arrested at Raglan all those many years ago, and that they will be joined on the Māori Party list by Grant Hawke, the chairman of Ngāti Whātua o Ōrākei Trust Māori Board, who, along with myself and hundreds of others, was arrested at Bastion Point in 1978. Those who think that those events are just bad memories to haunt the national psyche should please note that the Tūhoe court cases are ongoing, and that the Independent Police Conduct Authority has still not released its findings on the shooting of Steven Wallace, who was killed by police in April 2000—April 2000! The homicide inquiry was over by June 2000, the policeman was cleared of criminal charges in 2002, the coroner’s findings were released in 2007, yet still the questions remain.

I have taken the time to track back over some of these events of national significance because they form a crucial context to the Policing Bill, which aims to improve the effectiveness of the police, and which should take as a starting point the climate of anger, mistrust, and fear that still haunts those communities and many others besides. I have taken the time to track back over some of these events to remind the House that the purpose of this bill, which is to confirm and strengthen police operational and governance arrangements, will never be achieved until we take a genuinely fresh look at the powers of the police. The 60 recommendations of the Bazley report gave us some real pointers about what standards of conduct the police as an association, as a branch of Government, and even as an agency of social control should have, if there is to be any improvement in the relationship between police and Māori.

Police wield great authority and considerable power in our society. It was disappointing to hear the arrogant dismissal by the Police Association’s Greg O’Connor of concerns about the Taser as being due to people being “hijacked by political parties with points to score”, or corrupted by the influence of minority interest groups making the Taser seem more dangerous than it is. Well, well, well! I wonder whether the British Defence Scientific Advisory Council’s medical committee would consider itself to be a minority interest group for having the temerity to say that if children and adults were shot by a Taser, they were at great risk of suffering “a serious cardiac event”.

Maybe Mr O’Connor would like to volunteer to be the target of a Taser shot; not the controlled experiment that the police did for television, but one out on the street where one’s head would not land on mats and would be likely to bounce off the concrete. I say that because I know that the police had a hell of a time trying to get some poor bugger to volunteer for the TV shot, and even though he knew what to expect he still screamed in agony and suffered the uncontrollable muscle spasms, the writhing body-wide cramps, and the total loss of control that the Taser causes.

After Greg O’Connor has been dropped screaming to the ground, maybe one of the politicians who support the Taser can go next, and maybe one of those members’ teenage kids can go next—especially those of the Māori politicians who support the use of the Taser, because, believe me, it is their kids and mine who are the prime targets for these weapons of torture. And let us do it out on the forecourt of Parliament, so that we can all see the pain and suffering that 50,000 volts will cause our kids, so that we can all hear the screaming, and so that we can all witness the horror that the Taser will bring to our streets. No takers? Nah, I did not think so. I can just see the Tui billboard now: “True, Tasers don’t hurt. Yeah, right”. I know that members will ask “Why us? It’s not us politicians committing crimes.” But, in fact, we do. The only difference is that when we get snapped we just pass a law to make our wrongs right. It is a pity our kids out on the street cannot do that.

We support the new human resource management processes, the new code of conduct, and any moves to improve police organisation, but I return to the key issue we face: the poor way that the police deal with communities, particularly Māori communities. That theme ran through many of the submissions that were presented. The Māori Party takes those views very, very seriously, and 3 weeks ago we argued for the inclusion of a Treaty clause to ensure that Māori would be involved in all decision making, from governance to operations. We proposed a simple amendment to the bill stating that “in interpreting and administering this Act, effect be given to the Treaty of Waitangi”, thereby highlighting the Government’s Treaty obligations and the need for the Government to do all it could to improve its relationship with Māori. That Treaty clause was voted down by every one of Labour’s Māori MPs. Indeed, the only people with the courage and the foresight to support the Treaty were the Māori Party and the Greens, and my deepest thanks to the Greens for their support.

We remember the use of armed police to destroy Māori communities all over the country, from the Hokianga to Takaparawhau, from Hauraki to Whāingaroa, from Tūhoe to Taranaki, and from 1846 right through to the cowardly police terrorist raids into Tūhoe in 2007. We know only too well that our people will not forget the hurt and the pain inflicted by the forces of the State upon Māori. Given the refusal of the Government to recognise and deal with that history in an open and honest, Treaty-based manner, the Māori Party will be standing alongside its people in voting against this bill. Tēnā koe, Mr Deputy Speaker.

JACQUI DEAN (National—Otago) : National supports the Walking Access Bill. It is a good bill and the reason National supports it is that it is National Party policy, and it has taken the Government only 5 years to come around to its position on access over private land. The key to why National supports this bill is that it does not impinge on private property rights. That is a position National has long held.

When Labour first introduced the walking access issue—and it shows just how out of touch Labour is with the primary sector—it called for the creation of compulsory walking strips across private land. Compulsory walking strips bring to mind the proposals the Government made in relation to the new dog control laws. Do members remember that Labour wanted to have private fenced-off walking strips between the front gate and the home? When the Government was exploring that particular daft idea I had visions of people who, like me, live on State Highway 1. There is a long area from our front gate to our home. I could just imagine a fenced private walking strip to provide safe access to our front door and protect people from our lovely old Labrador, who would have licked them to death. But I go back to the Walking Access Bill. The particularly daft idea of the Labour Government some 5 years ago has been dropped, and we now have the Walking Access Bill in its current form, which National does support.

The Local Government and Environment Committee received a number of submissions—30 or 40, I think—on the Walking Access Bill. A number of people were very concerned that designating a public walkway across a paper road would then cut off vehicular access to the paper road. That was a huge concern of submitters, and rightly so. But that was dropped from the bill—yet again at select committee—by National members advocating for people to have access. We have the most beautiful country in the world. The South Island is arguably the most beautiful part of the most beautiful country in the world, and a number of people in the South Island are very keen on access to our beautiful lakes, our beautiful rivers, our beautiful fishing spots, and our beautiful high country tracks. One could go on forever about access opportunities. This bill will negotiate access via the New Zealand Walking Access Commission. But the key for National is that nothing in this bill impinges on private property rights. That is sensible. That is a position that National can endorse and agree with. So from that point of view National supports this bill.

The provisions of this bill establish the New Zealand Walking Access Commission, and I will go into the commission’s role in more detail. Its members will be appointed by the Minister. I would be very disappointed to see any appointments made after this enactment of this bill, because there is such a short time to go before the election. I would be interested in comments from the Minister on that. I would be extremely disappointed if long-held conventions of this House were disregarded, as they were last weekend when the Minister of Conservation made up to 50 appointments to conservation boards. That is not in the good spirit of this Parliament, and I hope it does not happen. I ask the Minister to take a call on that and give us some indication as to whether, upon the enactment of this bill, the Minister intends to make appointments to the Walking Access Commission. I invite the Minister to answer that query.

Last week I attended a function for members of the Walking Access Consultation Panel. A number of people from around New Zealand sat on that panel and did an awful lot of good work. I must say that I think the work of John Aspinall of Wānaka was particularly useful, because as a high country farmer himself he understands very well what it is like to own a beautiful part of New Zealand where people want to visit. It is a very, very strongly held belief of his that access is by negotiation and not by compulsion—and compulsion is just typical of Labour. That is what Labour members want, is it not? That is what they wanted when this bill was first introduced.

I want to finish this thought, because I think it is important. The Labour Government wanted to have compulsory walkways over private land. Not only is that impractical and expensive but it impinges on every private property right held very dear by people in New Zealand. High country farmers in the South Island and other private landowners have no problem with providing access to the most beautiful features of their properties. In fact, it is a convention in New Zealand that if a fisherman, a four-wheel driver, a tramper, or someone horse-trekking wants to go across private land, he or she rings the landowner and asks for permission. That permission is given and away one goes. That permission might be withheld if lambing is going on or if the property is a deer farm and one wants to visit at a certain time of year. But, in general, there was no problem with access, and nothing actually needed fixing.

The good thing about this bill is that the Labour Government has come right round to the right position. It has taken it 5 years but the Government has come right round to National’s position of providing access by negotiation, not compulsion.

R DOUG WOOLERTON (NZ First) : New Zealand First supports the Walking Access Bill, and I am pleased to hear that National does. I just want to talk a little bit about property rights, because in case Jacqui has not had a look around lately—

Jacqui Dean: I raise a point of order, Mr Chairperson. I would prefer to be referred to by my correct name, if that is alright with you.

The CHAIRPERSON (Hon Clem Simich): You are absolutely right. Mr Woolerton—

R DOUG WOOLERTON: I apologise, Mr Chairman. I could not remember the lady’s proper name at the time so I had to refer to her as I did. If that gave offence I apologise.

I wanted to say that the previous speaker probably does not recognise the changing face of the rural environment, given that the National Party does not take the interest in that sector that it once did. My brother, for instance, has a property that encompasses the properties of 10 previous owners. One of them was the property of Bill Waring—Marilyn Waring’s father. Just to rock up to a farmer’s gate and ask for permission to go across the property is not what will be the case in many instances. One is more likely to be talking to the manager of a property, who will be far more reluctant to give permission to anybody to wander across the property to access lakes, streams, or rivers.

The setting up of a commission is an ideal way to go. I think this will be a start. I think walkways will become a part of the landscape in future, and they will be surveyed and recognised. It will not be a grace and favour situation where a property owner says: “Yes, I am in a good mood today so I will let you walk across my property.”, or in the future, the property of his or her employer. In New Zealand we need to respect the fact that there is not just one lot of property rights. There is private ownership and there is the public right to access rivers, streams, and so on. That is what makes us unique, and different from the country that many of us or our forefathers hail from, and, indeed, from the country in whose traditions this Parliament was established.

In that country—in many parts of Europe, and particularly in England—the landowner controlled the lakes, streams, rivers, etc., and if one wanted to fish in the stream or on the lake, then one had to pay the landowner. In this country we must protect those other sets of rights: the rights of people to have free and unfettered access to their lakes, streams, and rivers—not the landholder’s lakes, streams, and rivers. We in New Zealand First say that if a track needs to be surveyed across that property—not fenced, but identified—we are more than happy that compensation be paid to the landowner. We are more than happy if that person has to be compensated in some way for any inconvenience whatsoever. We are happy for that to happen. We hope the commission established by this bill will look at these things into the future, and we hope these things will be common practice in this country.

I think the bill enhances our lifestyle; I do not think anybody who owns farms will have anything to fear from it. In saying this I acknowledge somebody who has been perhaps rather harshly treated in recent history on this issue, and that is the Hon Jim Sutton, who initially started this bill. The Walking Access Bill has been finessed out of a bill that he proposed. We would have had trouble supporting his original bill, but that is the way democracy works, and that is progress. We are happy to support this bill and happy to support Part 1.

Hon Dr MICHAEL CULLEN (Leader of the House) : I move that the Committee report progress.

NATHAN GUY (Senior Whip—National) : I raise a point of order, Mr Chairperson. I would have thought that we have another 5 minutes of debating time before we report progress.

Hon Dr MICHAEL CULLEN (Leader of the House) : If we have members rising to take a call and the motion cannot be moved by 6 o’clock, we will be here from 7 o’clock onwards.

The CHAIRPERSON (Hon Clem Simich): I will report progress. [Interruption] We could well be here until 7 o’clock—or longer—if that is repeated.

• Progress reported.

• Report adopted.

The ASSISTANT SPEAKER (Hon Marian Hobbs): Before I make the next announcement, I thank the staff. It has been a long time, and people have been working really hard over these last few days.