Hon SIMON POWER (Minister of Justice) : I move, That the Gangs and Organised Crime Bill be now read a second time. The Gangs and Organised Crime Bill was introduced by the National-led Government in its first 100 days in office. I take this opportunity to thank the Law and Order Committee for reporting the bill back in a little under the usual 6 months so that we can continue to advance this important package of reforms.

The Gangs and Organised Crime Bill amends the Crimes Act 1961, the Local Government Act 2002, and the Sentencing Act 2002 to expand and enhance the tools available to police to fight gangs and organised crime. The bill amends section 98A of the Crimes Act to make participation in an organised criminal group an offence punishable by 10 years’ imprisonment, which is a doubling of the existing penalty, to better reflect the culpability of those involved in this insidious activity. This section, which has rarely resulted in convictions, has also made it easier to prosecute although still requiring the Crown to prove appropriate knowledge of the accused. These amendments are complemented by provisions that will enable police to obtain an interception warrant where there are reasonable grounds to believe a person is participating in an organised criminal group. The Local Government Act is also amended so that police or territorial authorities can seek a removal order against gang structures where they are intimidating.

The ASSISTANT SPEAKER (Hon Rick Barker): I do not want to interrupt the Minister, but there is a lot of chatter in the House this afternoon. Could people, if they want to have a conversation, move out into the lobbies and have a conversation there, please? That includes the person who is interjecting over my voice.

Hon SIMON POWER: Finally, the Sentencing Act is amended to make participation in an organised criminal group or other form of organised criminal association an aggravating factor at sentencing.

As I understand it, there is a high degree of cross-party support for this bill, and I thank those parties in the House that are prepared to support this bill through its next stages. The Law and Order Committee has recommended several useful changes that will make the bill’s proposals more effective without, in effect, changing the bill’s policy intent. I am advised that the committee received 11 submissions on the bill and heard seven. A number of submitters raised concerns about a possible breach of fundamental rights of association and expression, and possible discrimination. But the bill has been carefully crafted to ensure that it does not infringe on those rights. No amendments to the bill were required to ensure compliance with the New Zealand Bill of Rights Act, and I am pleased about that.

The first substantive change to the bill that the committee recommended is a small amendment to section 7A of the Crimes Act. It concerns offences with transnational aspects, such as participation in an organised criminal group. The amendment will enable people who contribute to the objectives of organised criminal groups in this country from offshore to be prosecuted under section 98A. Officials also recommended a change that will enhance the bill’s effectiveness for police by helpfully increasing the range of serious violent offences covered by section 98A(2). Currently, a group is an organised criminal group if it has as one of its objectives serious violent offences that are punishable by 10 years’ imprisonment or more. The amendment will expand this threshold to 7 years’ imprisonment or more so that organised criminal groups who commit a wider range of serious violent offences are captured. Additional offences that will be covered by this amendment include perverting the course of justice with a violent component, certain firearms offences, and certain wounding and injury offences.

Furthermore, the existing threshold for obtaining an interception warrant for serious violent offences under Part 11A of the Crimes Act 1961 is relevant offences punishable by at least 7 years’ imprisonment. Accordingly, the proposed amendments to section 98A(2) will introduce a consistency and coherence into the definition of “serious violent offence” across the relevant provisions of the Crimes Act. The committee also recommended amendments to clause 5 of the bill to ensure that unnecessary duplication in the listing of offences does not occur in the definition of “specified offence” for interception warrant purposes. Actually, the effect of this amendment is merely to ensure that only existing specified offences carrying less than 7 years’ imprisonment are listed. Those existing offences carrying 7 years’ or more imprisonment are already covered by the general threshold amendment in clause 5(1). The effect of the amendments proposed in clause 6(3) and clause 8 is simply to ensure that the grounds for applying for an interception warrant are specified consistently throughout the relevant provisions of the Crimes Act.

The recommended amendments to the Sentencing Act 2002 will see provisions that will strengthen the application of this new aggravating factor. As the provision in this bill was drafted, a prosecutor was obliged to show that a person committed his or her offending partly or wholly because of his or her participation or involvement in organised crime. This would have enabled criminals to argue, for example, that their motivations were purely selfish and were not intended to benefit the group, and that their gang patch and criminal associations were merely a coincidence. A person’s motivations are not always straightforward to prove. The amendment to enable the court to draw its own conclusions about the nature and extent of any connection between the offending and the offender’s participation in an organised criminal group or other criminal association is a definite improvement. I would like to thank, as I understand it, particular members of the Law and Order Committee for their contributions on this point.

This bill is just one of the initiatives from this Government that will enable the police to make some real progress against organised crime. This Government has already passed the Criminal Proceeds (Recovery) Act, which will come into force in December; the Anti-Money Laundering and Countering Financing of Terrorism Bill, I am advised, is making excellent progress, and the Search and Surveillance Bill is currently at the Justice and Electoral Committee. Together these initiatives will make a difference. In respect of this bill, I commend the bill to the House.

Hon CLAYTON COSGROVE (Labour—Waimakariri) : I thank the Minister of Justice for his contribution, and I say he is right that, at least from this side of the House, there is widespread support for the Gangs and Organised Crime Bill. We will be supporting it. I agree with the Minister that some of the most insidious crime in our society is perpetrated by gangs and organised crime, and often it is done below the radar. Often it does not have the profile of some other crime—

Hone Harawira: Corporate crime.

Hon CLAYTON COSGROVE: I agree with the member on that, as well. But in terms of organised crime and the gangs, the crime is often related to violence and preying on the young in order to traffick drugs, for instance, because there are different regimes in our courts and legal system for dealing with young people, as opposed to adults. So we do support this bill.

The previous Labour Government had legislation similar to this bill before the Law and Order Committee when this Government came to power. Had the Minister wanted to expedite this measure very quickly, he need not have waited 9 months. He might well have looked to support and possibly amend Labour’s bill. But we do support this bill, and we do support Minister Power’s intent in relation to it.

The Minister was right when he said some concern was expressed about the bill to the Law and Order Committee. Eleven submissions were put forward. Some of the submissions were opposed to the bill because the submitters were concerned that the proposals would impinge on the right to freedom of association, the right to freedom of expression, or the right to be free from discrimination. Other submitters were concerned that it would infringe the rule against double jeopardy. Some submitters conveyed support for the bill whilst suggesting further proposals. But I am convinced, and the Labour Party is convinced, about the bill. We do not believe those concerns are sufficient to propel us to oppose the bill; we support it.

But I say to the Minister there is quite a contrast in the House over this legislation. We have Simon Power, whom one could characterise as a builder, because he has put forward this legislation. But this legislation requires, when it is passed, implementation by agencies like our police force. We also have the Minister of Police, Judith Collins, who has become a wrecker. In order for the police to implement this legislation and enforce it, they require resources and support. The Minister of Police has now become the wrecker, as opposed to the builder, Simon Power. She has demanded—and this is in a transcript—before the Law and Order Committee that there be a $21 million cut to police resources. Today in this House she has tried to walk away from saying that she required a $21 million cut. I asked the Commissioner of Police whether a $21 million cut in funding, which has manifested itself in a 10 percent cut to the police vehicle fleet—and the commissioner will require vehicles, offices, money, and resources in order to implement this legislation—would create risk, perhaps a delay in response times and a degradation in service, and would endanger our communities. He said it could create risk, and he would have to manage that risk. I think that was a very honourable and honest position for the commissioner to put forward.

I then asked the Minister whether, after she had required $21 million to be cut from the police budget—

Sandra Goudie: Tell us about the bill.

Hon CLAYTON COSGROVE: The chair of the select committee says tell us about the bill. Well, the bill requires implementation once it is passed into law. The police budget is intricately linked to the implementation of this legislation. It will not be implemented by Sandra Goudie, but by the men and women in the blue—and often in the black—uniforms. So that is the connection between this legislation and the police budget, for the benefit of that member over there. I asked the Minister whether, if it is the case that the $21 million of cuts that she has required in the police budget manifest themselves in a delay in response time, a degradation of service to our communities, and the endangering of our communities, she will take responsibility for that. The answer—in transcript, in writing, on the record of this House—was that, no, that was an operational matter. I say to the Minister of Police, as we move to implement this legislation, that she has forced the police to carve out 343-plus police vehicles, because of her wish to cut the police budget.

Then we know that there are recommendations in papers, which were hidden and were deleted from the Treasury website, that cite the proposed sale of police stations. That was never made public by that Minister. She said in the House today that reviews were done by the police under the previous Government. The difference is that if those reviews were done then and were pushed up by Police National Headquarters, they were not approved. They were not approved, and they did not hit the previous Minister’s desk. Had they hit the previous Minister’s desk, then they would have been killed on the spot.

The next thing I will say is that because of this Minister’s cuts—and this goes to the heart of this bill—we now know that the police are restricting firearms training to particular sections and categories of police personnel. When the police go around to the gang headquarters, often they have to tool up. We have seen that in the past, because we know that those involved in organised crime—and Mr Garrett laughs away—have access to lethal weapons and can use lethal force. We know that the first responders to the scene of the Len Snee fatality in Napier were Youth Aid officers. They were Youth Aid officers. As we are talking about the murder of a policeman, Mr Henare and Mr Garrett interject. That says a lot about them, as we talk about the death of a police officer.

The point I make is this.

David Garrett: I raise a point of order, Mr Speaker. I object to the member accusing me of interjecting on his speech when, in fact, I did not say a word.

The ASSISTANT SPEAKER (Hon Rick Barker): The member well knows that that is not a point of order. It is a matter of debate, and the member has simply interrupted another member’s speech. I want the House, and the member in particular, to know that I do not think it is a good practice to interrupt the flow of debate. If the member does that again, I will ask him to leave the Chamber.

Hon CLAYTON COSGROVE: I am putting a very serious issue before the House. If we do not equip the police with the firearms training that they need, then when they come to implement this legislation, I ask whether it will be the case that if they are confronted by gang members or members of criminal organisations in the course of their duties, they will not be able to get access to firearms, or, if they can access them, they will not have the training to use those firearms to protect the community they serve and to protect themselves. If there is a fatality as a result of the police looking to implement, say, this legislation, then it will be interesting but unacceptable for the Minister of Police to wander into the House—if there is, God forbid, a tragedy—and say it is an operational matter. She will not be able to say it is an operational matter, because she and her Cabinet colleagues have required cuts to be made to the police budget. She and she alone has now required the commissioner to break the golden rule, whereby every woman and man in blue who went through the Police College received basic training in firearms. Everybody did, whether they were Youth Aid officers or anybody else.

Of course, a Youth Aid officer was the first responder to the scene of what turned out to be the fatal siege where Constable Snee was murdered and two of his colleagues were seriously wounded. So who is to say, if a Youth Aid officer was to knock on the door of a gang member’s house, whether that officer may be confronted by weapons? If it is deemed that because of the Minister’s cuts, a Youth Aid officer, in executing a warrant on a gang headquarters while implementing this legislation, should not have firearms training, then the question will arise as to whether—to quote Greg O’Connor—we have a nightmare and that officer does not have the ability to protect the community that he or she serves, or to protect himself or herself.

I think it is quite poignant that as we support this legislation we note that this is the theoretical phase. This is the phase when the House passes the law. Then we hand the law out of this House to public servants—in this case, to the law enforcement agencies—to implement. The Minister of Police has shown that she will refuse to give the police the resources they need, such as basic firearms training, police stations, and vehicles with which to chase down criminals. So it may be the case that a community constable or a Youth Aid officer, whose job is not specifically to fight this type of crime, will pass by an incident and see that he or she should intervene, but that police officer will not have the necessary resources at his or her disposal. I ask the Minister of Justice to ask his colleague the Minister of Police what is coming next. I ask whether we will start to ration the issuing of police stab-proof vests, because it may be that a Youth Aid officer does not require a stab-proof vest. Will we say that only some police officers will require such equipment?

SANDRA GOUDIE (National—Coromandel) : I commend the Minister of Justice, the Hon Simon Power, for introducing the Gangs and Organised Crime Bill to the House, and supporting the very, very important work that our men and women in blue—the police—do controlling the escalating rate of crime committed by people belonging to gangs. I also commend the members of the Law and Order Committee for their timely and efficient progress on the bill and their considered contributions to the bill. I will name them: Shane Ardern, the Hon Rick Barker, Simon Bridges, Dr Cam Calder, Clayton Cosgrove, David Garrett, Melissa Lee, Carmel Sepuloni, Metiria Turei, and Jonathan Young. It is commendable that we had such a timely process for the bill. However, I am disappointed that one of the participants on the committee, Clayton Cosgrove, has sought to do nothing but disparage the Minister of Police in speaking to this bill, because we had such a collegial response in support of the bill in that committee. The reason for that response was that the police wanted some action taken. They are fully supportive of this bill and of the tools that it gives them to be much more effective in what they do.

When speaking about this bill, people largely tend to think about gangs. They think that the bill is largely intended to curb the criminal activities of gang members. The Hon Rick Barker emphasised the fact that this bill is not just about gangs but also about organised crime, or crime perpetrated by any organised group. This includes white-collar crime perpetrated by an organised group of people or an organised criminal enterprise, as outlined by section 312B(1)(a)(ii) in clause 6: “a member of an organised criminal enterprise is planning, participating in, or committing, or has planned, participated in, or committed, criminal offences …”. The legislation is not restricted to gangs like the Mongrel Mob or other gangs; it could refer to groups of people who are not necessarily identified as a gang, but are, none the less, a group of people organised for the purposes of perpetrating crime. So that can include white-collar groups.

I refer to the police submission. The Police Association says that it welcomes the Gangs and Organised Crime Bill, and that the changes it proposes will be of some assistance in policing New Zealand’s serious and growing gang problem. In particular, the Police Association says it is important that the committee recognise that New Zealand’s gang problem is entrenched and continues to worsen, both in the growing emergence of true organised crime, and in the increasing prevalence of a gang culture. That is reflected in the worsening street gang problems, which have been well publicised in the media. We are all very, very aware of what has been happening. Everyone recognised that the changes provided by this bill are not silver bullets, but they are another set of tools in the arsenal that police can use to control gang activity.

The Police Association further said that its members estimate that there are now over 3,000 patched or full members of traditional gangs in New Zealand, spread across nearly 200 organisations or chapters. That is pretty significant for a small country like New Zealand. Youth street gangs and prospect numbers are hard to estimate, but that number could swell considerably. New Zealand’s goal for the police should be clear and unequivocal, and that is to reverse the growing gang membership and associated criminal activity. We fully support that goal. The proposals in the bill will contribute to that objective, which is what the bill seeks to do. The police recognise that the somewhat more effective policing of organised criminal gang membership allowed through the changes in this bill will enable them to effect their role in bringing the growing gang problems and membership under control.

As the Minister said, the bill is necessary because in the 9 years under Labour very little was done to combat the growing gang problem. Police see this legislation as a very positive step forward in bringing about some control. It was not until the Wanganui toddler Jhia Te Tua was shot in 2007 that some action was taken. It took 11 months for legislation to be introduced to Parliament. I am very pleased to hear that there is cross-party support for this bill, and that it will go through the process. I once again commend and thank the select committee for progressing this bill.

Hon DAVID PARKER (Labour) : I rise to speak in support of the second reading of the Gangs and Organised Crime Bill. On this side of the House the Labour Party stands for policies that we think will make a difference in the control of gangs and organised crime. We do not support measures that we think will not work or are inappropriate. We drew the line, for example, at the gang patch legislation, which was promoted as a local bill on behalf of the Wanganui District Council, because we did not think it would work. I believe that history will show that that legislation is ineffective. We must remember that it applies only to a small geographic area, and it depends upon whether someone is wearing a patch, rather than on the nature of his or her criminal activities.

The Gangs and Organised Crime Bill, however, is in a different category. We think the legislation will make a difference and that it will inhibit people or penalise them for their gang associations, and criminal associations where they are involved in criminal matters. One of the ways the bill does so is by clearing up the wording in the Sentencing Act that relates to aggravating factors pertaining to participation in an organised criminal group. The change in the wording of section 9(1) will make it easier for judges to find that gang associations are relevant to their sentence and should be an aggravating factor. That means, in effect, that those who take advantage of gang associations to commit criminal offences will face higher penalties as a consequence. That change is appropriate.

Another change made in the bill that Labour supports relates to gathering evidence through police surveillance in respect of gang communications. Those powers need to be controlled; we do not want to give unrestrained powers to any branch of the Government to put other people under surveillance. We really do not want to make some of the mistakes that, in my opinion, have recently been made in Great Britain, in terms of going too far in extending the powers of surveillance. We need to protect the civil liberties of New Zealanders to go about their business without undue interference from Government agencies. But there are appropriate public policy exceptions, and where people are participating in organised criminal enterprises, then obviously we want to empower the police to have the communications surveillance rights they need in order to intercept communications that can help to prevent crimes, or, indeed, to prove prosecutions against those who are participating in criminal activities.

The balance is achieved in the bill by requiring that the police must obtain a warrant from a High Court judge to intercept those private communications, but relevant to whether they will get that warrant are the reasonable grounds for believing that the person in question has committed an offence under the Act; is a member of a criminal organisation; or is planning, participating, or committing a criminal offence, and at least one of those actions is a specified offence. So we support that change in the legislation.

In terms of the effectiveness of these different measures, my own view is that the most important of them all is the proceeds of crime legislation. The Criminal Proceeds (Recovery) Bill, which is also being pursued by the Government, reflects earlier legislation that was prepared by the previous Labour Government.

Hon Darren Hughes: A very good Government.

Hon DAVID PARKER: It was a very good Government, as my learned colleague Mr Hughes makes the point.

Hon Trevor Mallard: He’s not learned; he’s not of the law.

Hon DAVID PARKER: Oh, that is true, too. The proceeds of crime legislation enables the Crown to confiscate property of criminal organisations, like gangs, that has been built up through criminal enterprise. It changes the standard of proof that is required to be proven by the Crown when it is seeking to confiscate property. I think we all know that if people have no visible means of support, have not got a job, yet have accrued very substantial assets and are a member of a gang, then the reality is that those assets have been accrued through their criminal activity. The accrual of those assets is at the cost of ordinary New Zealanders, whether it be from thefts, the illegal drug trade, or stand-over tactics. Those sources of revenue have been the source of the gang members’ wealth, and it is appropriate that we strip them of those assets. By doing so we remove from people one of the advantages of crime, which is illegally and sometimes too easily acquiring wealth from criminal enterprise.

I think the proceeds of crime legislation is more important than the Gangs and Organised Crime Bill. Having said that, I think the Gangs and Organised Crime Bill is good legislation, and Labour is happy to support its passage.

KEITH LOCKE (Green) : The Green Party will be opposing the Gangs and Organised Crime Bill, but not because we disagree with its aim. Its aim is to deal with criminality, particularly organised criminality such as robbery and all the rest of it, and dealing in drugs, such as P in particular, which is very damaging. We are very strong on opposing that form of criminality, and we are very strong on supporting the victims of it.

My former colleague Nandor Tanczos was very instrumental in bringing victims’ rights provisions into our legislation. I think this measure is going in the wrong direction. As a Parliament we have already made one move in the wrong direction by introducing the law criminalising gang patches. It will not be workable. It will throw up a whole lot of injustices, and we are starting to see that already.

The approach of this bill is to lengthen the sentence for participating in an organised criminal group from 5 years to 10 years, but that will only fill up our jails more and more. As we know, jails are often schools for crime more than places for rehabilitation. So to keep increasing sentences is not necessarily the right course of action for Parliament to take, but, unfortunately, it has been the pattern under both Labour and National Governments in the years that I have been in Parliament.

Clause 4 is headed “Participation in organised criminal group”, and when we look through the definitions in that clause, we see that they are vague, and it is difficult to apply legislation with such vague definitions to organised criminal groups. It is no accident that the previous legislation—the Crimes Act—on organised criminal groups has very rarely been applied in the courts. There have been very few convictions under that legislation, because of its vagaries and because of judges and juries not wishing to do injustices to people.

I make the point that the legislation does not apply just to gangs. Most gangs, as we know them, have patches and so on. But the charge of being a member of an organised criminal group has also been applied to five people who were arrested a couple of years ago as part of police Operation Eight, during which there were raids in Tūhoe country. I think that about 17 people were arrested, and five of those people are now being charged as, together, forming an organised criminal group. Those people have political motives, one way or another, as everyone knows—and, of course, I will not talk about the details or judge the guilt or innocence of the people involved. But it gives us an idea that this legislation can carry over to people who are engaged in political activities.

In that particular case, the police and the prosecution initially attempted to lay charges under the Terrorism Suppression Act. That failed. The police fell back on the Arms Act, and then they moved on to the provisions in the Crimes Act relating to organised criminal groups. The Green Party is concerned at the fact that the provision goes beyond what we would normally consider to be patched gangs.

The whole problem with this legislation—both the Crimes Act and this amendment bill—is that we can stray quite easily into guilt by association. It is very hard to know where to draw lines. Let us look at the amendments to the Crimes Act that are contained in clause 4. Subsection (1) of section 98A, inserted by clause 4, states: “Every person commits an offence … who participates in an organised criminal group—(a) knowing that 3 or more people share any 1 or more of the objectives …”, and it then mentions where those objectives are described. It goes on to state: “(whether or not the person himself or herself shares the particular objective or particular objectives);”. That is a bit vague for a start. People can somehow get into the orbit of a group even though they do not share its objectives, and they may then get caught up as being subject, perhaps, to a 10-year sentence. People do not need to be actively involved in committing the crime to be caught under this bill; they just need to be reckless as to whether their conduct contributes or may contribute to the occurrence of any criminal activity. That is very vague, as well.

Subsection (1)(c), in clause 4, states: “reckless as to whether the criminal activity may contribute, to achieving the particular objective or particular objectives of the organised criminal group.” That is separate from the previous bit I read out, which is to do with the crime; this is to do with the objectives of the group and, as is indicated in the other part of clause 4, which I read out earlier, the person caught up in the group does not even need to share the group’s objectives. But the person’s activity might, because of its recklessness, contribute to those objectives. So a whole lot of things have to be proved—it is a case of “and”, not “or” in terms of the requirements in the paragraphs of section 98A(1), in clause 4.

All those things have to be proved in a court setting. In the Green Party’s view, that leaves the door wide open to all sorts of problems. Family or friends could be caught up as being, in legal terms, members of an organised criminal group when they are not. When we look at how an organised criminal group is defined in the original legislation, we see that even that is very vague. In terms of the group, the Act states that only some of the people need be involved in the planning of a crime, not all of them. Section 98A(3)(c) of the original Act states: “its membership changes from time to time.”

Well, that is true; any group’s membership changes from time to time. People may be members today and not tomorrow. The whole thing gets very vague when we put it into law, and that is why I think it is a rather difficult path to go down. When judges and juries are looking at criminal activity—whether it be armed robbery, circulating P, or whatever—they can judge the circumstances of the criminality of the particular offender. To link it up with this highly confusing organised criminal group legislation is not helping us at all.

The other side of the issue is that the law and order bandwagon—adding bits to the Crime Act, extending sentences, increasing surveillance, and everything else—is not, from the Greens’ point of view, getting to the root of the problem. We have to be clear about the root of the problem, particularly as we have moved into a recession and unemployment is growing. We know that a recession often produces more people who are at a loose end. They are hard up, without income, their families are suffering, their kids are joining gangs, and all the rest of it. We have to look at the root of the problem and try to address it, and we have debates in this House about how to address the general financial and economic crisis—which the Greens see as parallel to the environmental crisis.

We need to look at benefiting the people at the low socio-economic end of our society. That is a much better way of reducing the prevalence of crime. We need to give kids alternatives to joining gangs. Most young kids join gangs not because they want to rob a bank or anything like that but because they want some social support or some group to belong to, and, unfortunately, gangs are the handiest groups around in some communities. We have to provide more sports clubs and social clubs. We have to provide more education and more ways to stop kids from leaving school. All those sorts of things keep them out of gangs. If people go properly through the education system and have aspirations to make a life for themselves in what we would call a proper way, they will not go out and join gangs. I think that is much better than the sort of legislation we have before us.

The ASSISTANT SPEAKER (Hon Rick Barker): Before I call David Garrett, I want to say to the member that I was unduly terse in my response to his point of order before. I withdraw that response and I apologise to the member.

DAVID GARRETT (ACT) : I rise to speak on the second reading of the Gangs and Organised Crime Bill. In my view and in the ACT Party’s view, the starting place for consideration of this bill and related legislation such as the gang patch legislation that the previous speaker, Keith Locke, referred to is an understanding and acceptance, sadly not shared by my friend to my left, Hone Harawira, that gangs are not whānau or groups of people trying to find something to belong to. They are criminal organisations. That is what they are. They are not motorcycle clubs or groups with any other common bond but the desire to intimidate, frighten, hurt, and commit crimes. I think it is very instructive that we have just seen the first conviction under the gang patch legislation, and it is deeply ironic that the person convicted was himself a victim of gang violence by one of the purported clubs—

Hone Harawira: The white boys!

DAVID GARRETT: —indeed, that is right—Hell’s Angels. Hell’s Angels claims to be just a motorcycle club. Well, it is not. It is the most organised criminal group in the country, and it has been since it was formed in 1961. It keeps a very low profile these days, and that is why legislation such as this is necessary. Its members do not do gang rapes any more. They are very nice to old ladies and they take teddy bears to children at Christmas time. But that is not because they are nice guys; it is all a cover for their criminal activity. That is why the police need every tool they have to fight Hell’s Angels, the Headhunters—another group of white boys—and others.

ACT fully supports this bill. For far too long our police have been forced to fight gangs with one hand tied behind their backs because, in part, Parliament and others have been horribly concerned about gang members’ human rights. That needs to change and we need to recognise that those people are outlaws. They are literally saying, by their badge on their filthy jacket, “We are outside the law.” The previous speaker, Mr Locke, said the Wanganui District Council (Prohibition of Gang Insignia) Act has already thrown up an injustice. That is typical of the extreme rhetoric of the Greens. What has happened in Wanganui, thus far, is one conviction of the president of the Mongrel Mob for openly flouting the law. How is that an injustice? That is an injustice only if one is a defender of, and apologist for, criminals.

While I am on the subject of the previous speaker, he said, in a somewhat tangled way, that the Wanganui gang insignia legislation was too complex and will catch those who are not directly involved in gangs. I say that Mr Locke, and others, should be aware that for centuries we have had a law relating to parties to an offence. If a person is in a car being driven to an aggravated robbery, in the full knowledge that that will happen, that person is a party to it. This legislation is no different. Mr Locke also said that it would be dreadfully difficult because it was so complex to get convictions. If that is the case, what is the problem? If it will be difficult to get convictions, then people who are not guilty will not be convicted. It is as simple as that.

The bill is part of a suite of measures that have been proposed by the National-ACT Government. The next one to come up will be the “three strikes” provision, which will form part of the Sentencing and Parole Reform Bill. That bill will prevent people from being killed. Many of those who would, and will, be imprisoned under a “three strikes” regime are gang members and associates. It will be a relief to prevent similar tragedies in the future. The most recent gang murder that I am aware of happened out in Porirua late last year. A gang member called Charlie Karaka had his gang patch skinned off him by some other clown, so Karaka was duty-bound by his gang’s ridiculous code to go out and find it. Tragically, the person he found whom he decided looked like the person who had skinned his patch was a Samoan choirboy—and I am not making that up—called Fitzgerald Risati. He was out celebrating his 24th birthday with his brother, and Karaka killed him. Karaka had 84 previous convictions and was a proud member of a group of thugs, but I do not know which one, quite frankly. I think it was the Mongrel Mob, but it does not really matter. The Gangs and Organised Crimes Bill is just another weapon in the arsenal of the Government and the police against those who group together solely to profit from bullying and intimidation.

I am always happy to agree with members opposite, and Mr Cosgrove made the point, quite correctly, that not all gangs wear patches. That is quite correct. My friend sitting to my left has said to me privately, and during this speech, that we have to remember they are not all brown gangs. That is absolutely true, as well. In my first reading speech on this bill, I noted that the better-dressed gangs and better-disguised gangs found it easier to escape prosecution. I think Hell’s Angels are probably the only gang who get their colours washed, and do not stink. This bill will make it easier to get the evidence needed to bust those criminals and to lock them up for longer. It will make it easier for the police to intercept private communications when criminal activity is suspected, and where, as the bill states in clause 6(1)(b): “it is unlikely that the Police investigation of the case could be brought to a successful conclusion without the grant of the warrant.”

Before the oversensitive members to my right become all concerned, this amendment is there to deal with those whose business it is to hurt others or who seek to profit from hurting others. Speaking for myself, I do not really care about their human rights. I am not interested. They have disqualified themselves from a number of the rights that the rest of us have, by their conduct. I do not care. I do not care about their loss of privacy, when they do not respect the privacy, dignity, or safety of other people. The bill will double the maximum sentence given to those who are involved with organised criminal activity from 5 years to 10 years. The current law requires any violent offence to be punishable by a sentence of at least 10 years before it can come under the ambit of organised criminal activity. In terms of the sentencing pattern, from the recent submissions on the “three strikes” bill it is very clear that that 10-year threshold is far too high. It was pointed out earlier this year that of the 420 murderers with at least three violent convictions to their name, none of them had had three sentences of 5 years or more. So setting a threshold of 10 years is far too high.

The bill also adds much-needed flexibility to the Local Government Act 2002 with regard to removal orders. The bill will allow courts to confront, head-on, any behaviour that may reasonably be defined as intimidating. Again, our criminal apologist friends will bang on about what is “reasonably” defined as intimidating. We know, and ordinary people who are walking along the street know, what is intimidating. The judges are sensible; so are juries. There is much in the bill that pleases the ACT Party, and I have touched on a few examples.

Finally, I point out one further feature: the bill amends the Sentencing Act 2002 to allow judges to include participation or involvement in an organised criminal group as an aggravating factor when deciding how long to lock up an offender. I find this wholly appropriate. The previous speaker, Mr Locke, differentiated between gangs and terrorists. In my view that is a difference in degree only. Gangs, like terrorists, threaten the ability of people to live their lives freely without fear of attack and intimidation. Ask any victim of gang crime and he or she will agree. The ACT Party supports any legislation that will help police and courts to rid us of, or at least reduce, gang terror. As such we are very pleased to vote in favour of this bill. Thank you

HONE HARAWIRA (Māori Party—Te Tai Tokerau) : Tēnā koe. Kia ora tātou katoa e te Whare. In following on from my colleague David Garrett, who has just graduated from the “Barney Rubble School of Criminology”, I say that there are some more enlightened issues and speakers on the Gangs and Organised Crime Bill in the House today, and I congratulate them on their comments.

Last Tuesday some 300 locals gathered in Wanganui to protest the local council decision to ban gang insignia within city boundaries. One of the locals, a man with a social conscience and no gang affiliation, called the decision “an erosion of civil liberties and a cheap publicity stunt by our mayor, masquerading as his attempt to solve a tragic social dilemma”. There is no question that gangs are a tragic social dilemma, and the social cost of their activities is reason enough for action.

Contributing 8 percent of court charges and 18 percent of the prison population, the Government’s gang strategy is costing the country nearly $200 million a year. That strategy has some interesting history, including Rob Muldoon’s interventions way back in the early 1970s; the 1979 Select Committee on Violent Offending; the 1981 committee of inquiry into gangs, out of which came the Group Employment Liaison Scheme; and the 1987 commission chaired by Justice Sir Clinton Roper. Here we are now in 2009 with a new plan to take away the patches, knock down the high fences, make gang affiliation a factor at sentencing, expand police surveillance powers, up the penalties, and cross our fingers that things will change. The background to this bill can be summed up in just a few words: wave a stick, and if that does not work, wave a bigger stick.

This bill, unfortunately, is all about penalties and punishment, yet all the research tells us that the heavy-handed approach that was adopted in Los Angeles, for example, led to a huge increase in the number of gangs and gang crimes, while over in New York a different strategy of community development, educational opportunity, and urban renewal has led to a massive decrease in gang activity. That is why the Māori Party supports more positive and effective strategies for dealing with gang activity. We know that we have to address crime by dealing to the causes, not just reacting to the effects.

I know that Pete Sharples and his crew have been working hard with networks to address some of the more disturbing issues associated with youth gangs in South Auckland through community initiatives built around employment and education schemes. I know too that youth gangs do not always buy into a lot of the youth at risk and Fresh Start programmes that work for others, so it is good to see some innovative stuff being done to change attitudes in youth gangs, and indeed to change the very nature of gang culture. So I say big ups to Pete, his Te Puni Kōkiri crew, and the outside connections as well for focusing on turning kids to the positive rather than just trying to bash the negative out of them.

The evidence is clear. The programmes that are effective in turning kids away from crime are the ones that give them a belief in themselves and hope for the future. That is where we should be focusing our attentions, our strategies, our resources, and our energies: investing in literacy, education, stable employment, decent housing, and the elimination of institutional racism. We should also focus on helping communities to respect one another, to care for their neighbours, to watch out for everyone else’s kids, and to turn themselves around.

Another concern we had was the proposed amendment to lower the test of gang association as an aggravating factor at sentencing, so that instead of having to be involved in a gang, or be a gang participant, an accused could be sentenced based on the nature and extent of any connection between the accused, the offence, and gangs. It would be kind of like hauling Minister Paula Bennett over the judicial coals if one of her hoodlum in-laws brought drugs into her house, convicting Shane Jones because he knew of one of his whānau putting the bash on somebody else who had threatened one of his daughters, Tau Henare ending up in court because one of his outlaws ran him out to the airport in a stolen car, or Georgina te Heuheu—maybe not Georgie, but members know what I mean.

It is not just men, either; it is women, too. The women’s prison population has doubled over the last decade, and, unfortunately, 60 percent are Māori. Indeed, just last month a book came out called Trust: A True Story of Women and Gangs. It is a story of a unique and unruly bunch of women with varying gang affiliations who lived together and stood side by side in a world that did not care a jot about their existence, their lives, their experiences, their struggles with poverty, and their hassles with the police. The final chapter contains a quote that fits right here: “Being Maori was always their foundation stone. But now, for most, it’s their search, their journey, their passion and their healing.”

I stand proudly alongside the Māori Party in opposing this bill, because it is a reaction based on ignorance and fear. I stand against it because it is based on failed theories of punitive action over positive thinking, and I stand against it because it will not lead to a more just society. It will, in fact, lead to greater injustice and a greater reaction to that injustice.

But I make one small concession. I watched TV on the first night of the ban in Whanganui and I saw all the brothers gathered in town. I have to say they looked different. They did not look mean, they did not look threatening, and they did not look like a volcano ready to explode. In fact, they just looked like whānau, like a lot of my cousins and friends from all around the country. Yet those same guys, when they are patched up and scarfed up, with hoodies on and gloved fists pumping the air in anger and defiance, look like a-holes, and they often act like a-holes to fit the image. I liked what I saw that first night after the ban. It is just a pity that this bill is all stick and no carrot, because I know, as I suspect most MPs in this House know, that we have to accentuate the positive and eliminate the negative if we want to latch on to the affirmative, or we will certainly get messed up by Mr In-Between. Tēnā koe, Mr Deputy Speaker. Kia ora tātou e te Whare.

Dr CAM CALDER (National) : It is a pleasure and a privilege to stand and speak to the Gangs and Organised Crime Bill, an omnibus bill that amends the Crimes Act 1961, the Sentencing Act 2002, and the Local Government Act 2002. Members of the House should be in no doubt that gangs and their activities are a blight on our country. Their activities are an evil miasma that overshadows all of society, and the despair and despondence directly attributable to gang-related activities can insinuate itself at all levels. I take my honourable colleagues’ comments to heart when they point out the complexity of the issue, because many gang members are not immediately recognisable as such.

This bill is yet another example of the Government keeping its promises. We are aware that the problem is complex. We do not have a magic wand, and we cannot change things overnight. This is not a place for silo thinking, and we must reshape the mesh at many levels and in different areas. The initiatives contained in this bill are but the first stage of the Government’s response. This bill had its first reading in the Government’s first 100 days in office, fulfilling a pledge made in the 2008 election campaign.

As I mentioned, the bill is an omnibus bill. It amends section 98A of the Crimes Act 1961 to increase the penalty for participation in an organised criminal group from a maximum of 5 years’ imprisonment to up to 10 years’ imprisonment. Between 2004 and 2007 the average prison sentence for this offence was 2 years, which is hardly adequate for the damage caused by the activities of many of those involved. The sentence does not adequately reflect the culpability of those gang leaders who organise such serious criminal activity as methamphetamine manufacturing and distribution, without perhaps directly offending themselves, and who engage in promoting an activity that has blighted, and continues to blight, thousands of lives.

The other side of the issue is the rate of successful convictions under section 98A for participation in criminal organisations, which has historically been very slow, and the number of prosecutions has been very low. From 2004 to 2007 there were only 339 prosecutions and only 19 convictions. I ask members how many that is. It is 19; a total of barely 5 percent. There are a number of reasons for this. The first reason is the complexity of that provision. The second reason is the high evidential burden placed on the prosecution to prove the offence. The bill draws on case law to clarify the evidential requirements under that section, which should ease the burden placed on the Crown to prove that an accused participates in an organised criminal group. That is intended to result in more successful prosecutions for participation, without criminalising mere association—an extremely difficult thing to legislate for.

The bill also requires a sentencing judge to take into account as a specific aggravating factor any offending committed due to involvement with such a group. Combined with the doubling of the penalty under section 98A of the Crimes Act and changes to the legal threshold, this amendment to the Sentencing Act should increase the penalties handed down to gangs.

This bill is not limited to the punishment of gang members. It also provides the police with the tools to apprehend those who commit organised crime or who are planning to commit organised crime. The bill expands, in two ways, on the ability of the police to undertake the surveillance of gang communications. The first is the provision of specific authority for the police to apply for an interception warrant in order to investigate the offence of participation in an organised criminal group. This in turn will disrupt organised criminal groups by catching those who organise or facilitate illegal activities. The illegal activities attributed to gangs range across the spectrum of malfeasance. There is no doubt, however, that the production, distribution, and sale of drugs is a prime financer of gang activity and a major source of revenue. Years of “hurry up and wait”, inactivity, and indolence by the previous unlamented, lackadaisical, lachrymose, and Luddite Labour administration has seen the scourge of methamphetamine—or P, as it is more commonly known—grow and grow. Police sources suggest that the vast majority of clandestine drug laboratories are inextricably linked to recognised criminal groups. The gangs, flush with funds, pay vast sums to expert P cooks, who oversee the preparation of their fiendish brew. The P produced is sold and used to entice more acolytes or associates to join criminal groups, and its subsequent use, often combined with the use of alcohol, fuels much of the violent crime reported so often in our media. This Government finds this daily diet of wormwood and gall unacceptable, and is committed to making improvements.

The bill also lowers the general threshold for offences that can be used as the basis for interception warrants, from attracting at least 10 years in prison to attracting 7 years in prison, or more. This means that the police will be able to obtain interception warrants for a wider range of offences, such as car conversion. The offence of car conversion is not normally regarded as serious in the broad gamut of things, but we can see that it allows the police to intercede before a more serious offence may occur. It sends a message to gangs that the net to catch their criminal activities is widening, and it should enhance the prospects of successful prosecutions under section 98A of the Crimes Act.

The bill also provides that a removal order may be sought from a District Court in order to remove intimidating structures, such as gang forts. For years, fortified gang premises have concealed potential offending. The current law allows the police or territorial authorities to seek a court authorisation, under the Local Government Act, to remove those structures if they are connected to criminal activity or the intention of their use is to cause injury. The previous Government rejected law changes that would make it easier for the police to destroy gang fortifications. The Government argued that the current law appears to be sufficiently broad, yet it could not say how many gang forts had been stormed and, strangely, in 2007 the law was removed as a key operational practice from the police statement of intent. As the august organ Private Eye may well have observed if reporting this: “Surely some mistake—Ed?”.

In 2008 I had the privilege of campaigning for 7 months in the vibrant and diverse electorate of Manurewa. The majority of people in this community are hard-working and ambitious for themselves and their children. Sadly, there are some, particularly among the younger residents, who lack a sense of purpose and a feeling of belonging. It is these young people whom the gangs are targeting, and regrettably they find a fertile source for new apprentices in crime. Not surprisingly, as a result it was clear to me last year that the wider Manurewa community was lacking the fundamental right that any Government should offer its citizens: the right to live with a sense of security. This Government finds that situation completely unacceptable. We are addressing it at a number of levels, and already more than 60 new sworn police have been assigned to the area—the first tranche of a promised 300 extra police. I turn to addressing the problem at other levels. Three new early childhood centres will be built in the area, and the local uptake of the home insulation plan to improve the health of the general community has been good.

I return to the Gangs and Organised Crime Bill initiative towards combating this problem. We will endeavour to improve security, and the feeling of security, in the community through this initiative as well. The Government argues that gang forts are not only a threat to public safety because they could potentially cloak illegal activity, but their very presence is threatening and makes a neighbourhood feel less safe. The amendments to the Local Government Act 2002, as part of our proposed Gangs and Organised Crime Bill, will also provide additional powers to have those structures removed and with that the intimidation they represent.

This bill is yet another example of how this Government, with its principled, pragmatic, and inclusive manner, is listening to New Zealanders and working on their behalf. Thank you.

Hon SHANE JONES (Labour) : Kia ora anō tātou e te Kaihautū o te Whare. Te tuatahi, kei te tautoko te Rōpū Reipa i tēnei pire.

• [An interpretation in English was given to the House.]

[Greetings to us once again, Mr Deputy Speaker of the House. In the first instance, the Labour Party supports this bill.]

First, I wanted to greet you, Mr Deputy Speaker, in te reo Māori and make sure that every single Māori voter in New Zealand, with all their relations, knows that Labour opposes gangs and supports the Gangs and Organised Crime Bill. We have heard from the Government of the day, supported by the Māori Party and the ACT Party, about the issue of gangs, but the Government of the day has not told us that if it had wanted to act expeditiously on gangs, then all it really needed to do was pass the bill entitled the Organised Crime (Penalties and Sentencing) Bill, which has already been through the select committee process. That bill effects the same purpose as the Organised Crime (Penalties and Sentencing) Bill and has already been through an exhaustive set of deliberations, but because of short-term petty politics the Government of the day chose not to join with this side of the House and work on that particular legislation.

We have come to expect politics, loud voices, apologists, and extremists over the gang questions. We have heard from the ACT Party an extreme view, and we have heard from the Māori Party the predicable apologetic view. Labour will support the Gangs and Organised Crime Bill because gangs are a menace to the families, daughters, and sons of the communities gangs infest. Those people will never take a blind bit of notice of the sad apologies from the Māori Party or the declamations of the ACT Party, and they know that the National Party is simply hyping up the issue, as it is with Michael Laws. They know that it is only ringa kaha, only the strong arm—hopefully countenanced by the House—that will make them change their behaviour, if they are associated with individuals who profit not only from menacing individual relatives but from threats, intimidation, thuggery, violence, and murder—for example, the murder of the policeman who was killed in South Auckland when he was trying to do something quite lawful and plant a device to track down those involved in the P trade. That particular incident became a trophy to the gang culture. That particular incident did not bring any shame into the minds of those who killed the policeman; it has actually been exploited by them as a recruitment device.

Every single thing that we as parliamentarians can do to make gang members’ lives miserable we should agree to, because their stock-in-trade, their raison d’être, is to make their neighbours, communities, schools, and clubs a source of money-making mayhem, thuggery, and violence. We must not shy away from the reason why such people exist. They exist because while the vast majority of us are soldiering on in “Strugglers’ Gully”—trying to earn a living; maintain our various lifestyles; and care for families, partners, parents, and grandparents—they have another approach. They want to be on “Easy Street”, and when they are caught out they will serve up innocent, wandering, and unsuspecting families as sacrificial lambs.

The reason why the association test in the bill is fantastic is that the very people who lie behind the gangs use every trick in the book to ensure that they escape from either detection, scrutiny, or accountability. At the end of the day, it is only the police, working with the community, who can stop this rot. The onus will be on the police to use their resources wisely, break down gang associations, and take no prisoners. They should not bother going to Khandallah to belt students in the back of the neck so they end up with a brace, when just 15 minutes down the road gang-related people are either cooking P, distributing P, or boasting about how rich they are getting from their P trade. The police themselves need to be absolutely dedicated to using wisely the amount of resources they have to give effect to legislation such as the bill.

Some in the Labour Party, and our leader, with a host of others, have recently been over to South Australia. Despite congenital differences, we can learn quite a bit from the Aussies. South Australia has taken a hard line on gangs. Admittedly, their approach has been tested in the courts as going a step too far and being an invasion of liberties, but people cannot enjoy the rights of citizenship unless they are going to observe some of its obligations and duties. The only duty that gang members have is to make our lives a misery. The only right they recognise is the unfettered ability to carry on their illicit trade.

The fear we have on this side of the House—and I certainly have this fear—is that the Māori community will think, as they listen to the Māori Party, that bills of this nature are a punitive response directed disproportionately at Māori or perhaps Pacific Island families. The bill is colour-blind. The bill is dedicated to rooting out, irrespective of ethnicity, gangs’ criminal, murdering, and villainous ways, and if there is any doubt as to just how frightened people are, one needs only to wander around the provincial cities and communities and quietly talk to people about what they really think about gangs. People can trust only the police to address the problem, and we as MPs have an obligation to back the police, provided that they themselves are using the resources wisely.

As I wind up my speech I will isolate some of the things that Labour has been involved in over more recent times, in terms of trying to bring the gang scourge to a head. I am referring to 6,134 arrests and 26,000 charges. There was such a sustained effort to highlight the issue over that period of time that the police were very busy. But has the effort actually changed the behaviour of people who flock like locusts to the gang community? No, unfortunately not. Admittedly, the families who are under threat feel empowered.

The bill serves further notice on advisers, if not individuals, that once gang members have wealth, irrespective of how ill-gotten it is, the first thing they do is get a QC and a couple of other flash lawyers, bamboozle the High Court and the District Court judges, and stretch the resources the police have at their disposal to run a decent case. The bill changes the evidential standards that will be required to be met by the police in trying to bring cases to a head.

I know that there are a host of rationalisations as to how different pockets of the community are disproportionately afflicted by the gang culture. But with every day that goes by that culture spawns a new generation of young people who do not look to Corporal Apiata, Buck Shelford, or Temepara George as their role models; they look to Mossy Hines, who now joins his ancestors in Hawaiki, no doubt making Horowhenua a safer place. They do not look to those heroes who are better role models for our rangatahi; unfortunately, they are condemned to look at the faces of menace, disharmony, and, quite frankly, violence.

It might be said that the association test could cause people to get wrapped up in a drag, and I have no doubt in my mind that there will be the occasional case where such egregious errors come to pass. But at the end of the day, if people focus on the wrongdoing and the characters who are perpetuating the wrongdoing, then the bill will serve a great purpose. Kia ora tātou.

MELISSA LEE (National) : It is a pleasure to support the second reading of the Gangs and Organised Crime Bill. It is lovely to hear members opposite supporting this bill and speaking so passionately about it. There are some 3,000 patched gang members in New Zealand, who are spread across nearly 200 organisations or chapters. There are the gangs we know of, and, of course, there are gangs who operate without patches, without gang fortifications, and without other gang paraphernalia but who still operate gang businesses that have become a scourge on our society. New Zealand has a gang problem. Gangs are a very complex problem and they require a multi-faceted and multi-pronged resolution. I have no idea why young people feel the urge or the motivation to join gangs.

I support the honourable member opposite, Shane Jones, who has just resumed his seat. He talked about looking at different role models other than gang members. Mr Locke said earlier that young people join gangs to get social support. As a young child I left my country of birth to live in foreign lands. The sojourn ultimately moved me to New Zealand, and as a newcomer to this country I did feel like an outsider. It took a long time for me to feel as if I belonged here. But I did not join a criminal gang. I understand the desire to belong, to be part of a group.

Todd McClay: You joined this one.

MELISSA LEE: Yes, I joined the gang in Parliament. But to choose to belong to a gang where the common denominator is violence and illegal activities is simply stupid. It is unfathomable. Many people come to New Zealand as refugees and migrants who have no English, no money, no family, and no real support network, yet these people do not join gangs or involve themselves in gang activity. The National Government is committed to clamping down on gangs and has given this bill legislative priority, because New Zealanders deserve to feel safe in their homes and on the streets.

This is familiar ground for Labour members as well—those on the opposite side of the House—as the previous Labour Government talked about it. Yes, the Labour Government said it would get tough on crime, and tough on causes of crime. Well, did it? Let us look at the results of the last 9 years—the very long 9 years—of a Labour Government. Violent crime rose. Violent youth crime went up as well. Drug-related crime rose, and so did gang-related crime. Labour talked a lot about gangs, but talk did not stop crime rising. It did not stop the P trade from flourishing. Members knew in 2007 that just under 75 percent of the clandestine drug labs were linked to known criminal gangs. When National announced in August 2007 that it was clamping down on gangs, surprise, surprise, Labour claimed that it had been working on similar proposals. In 2009 after 9 years in Government, Labour decided to announce it was setting up a committee to talk about gangs. The word “committee” has, over the years, become synonymous with Labour, as has a commission of inquiry—all talk, spending lots of money, and nothing being done at the end of it.

This National-led Government has wasted no time in bringing before this Parliament practical and realistic initiatives to combat gangs. The Gangs and Organised Crime Bill will give more power to the police with an interception warrant. It will lessen the evidential burden on the prosecution to prove participation in an organised criminal group. It will increase the penalty for participation in an organised criminal group from a maximum of 5 years to 10 years. I think that is fantastic. Extending police surveillance powers in respect of gang communications and providing greater powers to remove gang fortifications are measures I support wholeheartedly.

Many of us would have heard heart-wrenching stories or would even know people who have been affected by the drug P—I have. I have seen the bruises and the devastated face of a mother who was at her wits end trying to help an adult daughter addicted to P, helping her to try to get off P, and being beaten in the process. That is addiction to a drug that is manufactured and distributed by gangs in this country, who are making money out of it, and destroying our families.

We do not need an inquiry. We need some action, because New Zealanders deserve the right to feel safe in their homes and in their communities. They deserve to know that the Government is doing something about gangs and organised crime. This Government’s Gangs and Organised Crime Bill goes a long way to do just that, and to not just talk about it like the previous Labour Government did. Thank you very much.

CARMEL SEPULONI (Labour) : I rise to speak on the Gangs and Organised Crime Bill. I think it is very important to note that across the House there is widespread support for this bill. That is indicative of the fact that there is widespread concern about crime and criminal activity. So I am a little bit concerned that the previous speaker, Ms Lee, seemed to think that it was only a National Government concern, and that the rest of Parliament does not care about crime. That is incredibly unfair. We agree that many insidious acts have been committed by people who are somehow involved with gangs or organised crime.

One thing that has not been touched on much today is that we are talking about just the leather-wearing gang members. There are also the white collar criminals who are often let off the hook and perceived as being somewhat cleaner than those gang members that are associated with crimes and who wear leather jackets. I think we need to be very careful that when we talk about this bill we make sure we acknowledge the fact that it is not just leather-wearing gang members that we are talking about. We are also talking about white collar criminals.

Before I go into the specifics of the bill, it is really important to note—and Mr Jones touched on this before—that the National Government has pushed this bill through, and we are supporting it, but it did not really have to do that. It could have just supported the Organised Crime (Penalties and Sentencing) Bill, which had already been to select committee, and which had already had robust discussion and debate when Labour was in Government. Instead, National decided to start from scratch so that it could take ownership.

I raise a point of order, Mr Speaker. There has been a lot of talking going on with a particular member over there, and it is quite distracting.

Mr DEPUTY SPEAKER: Members can converse. I am the judge of whether there is too much noise, but I will ask you to continue. I do make the point that members cannot stand and talk in the aisles. That is a point that has been made on many occasions, and that needs to stop.

CARMEL SEPULONI: Labour supports this bill. We are committed to removing criminal gangs from our society. We acknowledge that organised crime is a serious problem. In fact, it is estimated that up to 30 percent of prisoners currently identify as gang members or are affiliated to gangs in some way. Labour does not tolerate gang leaders profiting from their activity. With that in mind, one must remember that the people this bill is dealing with are not just those wearing leather jackets. They are also the white collar criminals that I have just spoken about.

It is interesting that this bill is called the Gangs and Organised Crime Bill, but gangs are not actually defined in this bill. It is only organised crime that is defined in this bill. There was a lot of conversation and discussion about that, and the rationale for defining only organised crime is that organised crime, through its definition, incorporates and encompasses gangs. So in some ways it is kind of misleading to put the word “Gangs” in the title, because gangs and organised crime are the same thing. But I guess this Government likes to sensationalise things and draw on an emotive response from the public. That is obviously the rationale for putting in that word.

The bill defines the offence of taking part in organised crime in a new section 98A(1), which is to be substituted into the Crimes Act by clause 4(1) of the bill. The new section 98A(1) states: “Every person who commits an offence and is liable to imprisonment for a term not exceeding 10 years who participates in an organised criminal group—(a) knowing that 3 or more people share any 1 or more of the objectives (the particular objective or particular objectives) described in paragraphs (a) to (d) of subsection (2) … (b) either knowing that his or her conduct contributes, or being reckless as to whether his or her conduct may contribute, to the occurrence of any criminal activity; and (c) either knowing that the criminal activity contributes, or being reckless as to whether the criminal activity may contribute, to achieving the particular objective or particular objectives of the organised criminal group.” Labour is committed to effective measures that provide the police and the courts with the tools necessary to hold these offenders to account, and that is why we support this bill.

There is a slight contradiction in some of the actions of the Government, given that we are pushing this bill through, because recently we have heard that the Minister of Corrections and Minister of Police, Judith Collins, has cut $21 million from the corrections budget—or was it the police budget, or it may be a combination of both budgets. This bill will not succeed in cutting back on crime altogether. A combination of things need to happen. The Government needs to make changes across the board. It is difficult to comprehend how this will be effective when, on one hand, the Government implements this bill, but, on the other hand, it takes away important resources from departments that need them.

I have an example that I saw in the Taranaki Daily News the other day. Jonathan Young, our member from New Plymouth, will be interested in hearing this. It was a newspaper article discussing the cuts that have been made with regard to police vehicles, and how that will affect the police in that area. I think it is important that we consider that in light of the bill and in light of everything that is happening in law and order at the moment. In New Plymouth the police have had four vehicles trimmed from their fleet of 44, and four vehicles have also been lost from the rural district of Taranaki. The New Zealand Police Association has warned that the move could affect secondary police work, such as the execution of warrants and follow-up inquiries. Police Association president Greg O’Connor is reported to have said that if the Government are going to do that, then “be prepared for a reduction in services”.

On one hand, we have a bill being put through that we support wholeheartedly—the Gangs and Organised Crime Bill—but, on the other hand, we have cuts, cuts, and very serious cuts in resources in relation to our police stations and cars. The cuts are being made not just in the number of cars. Clayton Cosgrove was talking about this matter earlier. We also have cuts to firearms training for the police. We will have police officers showing up to scenes where they will be required to use a firearm, but they will not be able to do that because they do not have the training in order to be able to do it properly. I thought about that. I was saying to Mr Cosgrove the other day that with those cuts to training with regard to firearms and to police vehicle numbers, we will have some police officer who does not have firearms training showing up at the scene of a crime. He will have to drive all the way out to the wop-wops to pick up another police officer, who does not have a police car but who does have a firearms licence and has had that training, and drag him back to the crime scene. I am sure that members opposite can see how that could create major difficulties with regard to being able to respond to a crime that is taking place.

I will refer to some of the cuts that are happening in light of this bill, which is incredibly similar to one that came before the select committee when Labour was in Government. I will refer back to Labour’s record and to what we have done in response to gangs and to crime in general. In 2007 the police made 6,134 arrests of persons with identified gang connections and brought over 26,000 charges against them. I think that is a pretty good record. Labour was increasing prison sentence lengths for belonging to a criminal gang and it was improving police surveillance powers over gangs through the Organised Crime (Penalties and Sentencing) Bill, which is awaiting its second reading. That bill has been picked up by the National Government. Two of the major amendments in this bill are practically identical to the amendments that we were proposing in the Organised Crime (Penalties and Sentencing) Bill, which is currently on the Order Paper awaiting its second reading. They are an increase in the penalty for offending under section 98A of the Crimes Act and the new aggravating factors under the Sentencing Act 2002. While Labour was in power the police announced that the Organised and Financial Crime Agency of New Zealand would receive 35 more positions, bringing its total to 58 from the 1,250 additional police staff added during the last parliamentary term. The police now have 234 dedicated staff in organised crime units, made up of 40 squads around New Zealand. Labour introduced the Search and Surveillance Bill to allow for more explicit powers for reporting agencies.

JONATHAN YOUNG (National—New Plymouth) : I would just note that the only positive aspect of the speech from the previous speaker was the mention of Taranaki, so I thank Carmel Sepuloni.

National campaigned on getting tough on gangs. The initiatives contained in the Gangs and Organised Crime Bill represent the first steps this Government will take to deliver on its campaign promises. There has been a marked increase in drug-related crime and violent crime in New Zealand, and a very high percentage of that crime has been caused by gangs in our society. The Police Association estimates that we now have 3,000 patched or full members of traditional gangs in New Zealand, and they are spread across nearly 200 organisations or chapters. This is a major problem that affects and should concern every New Zealander. Let us not be misled by the claims of some people that gangs in New Zealand are groups of people who simply want to be left in peace—albeit behind their fortified walls—as if peace-loving citizens from outside are the real intruders.

The scourge of P that is destroying the lives and futures of our young people and creating untold heartache amongst families is perpetrated by people who do have not one ounce of concern, not one notion of care or responsibility, not one iota of decency and contribution to make to New Zealand society. A recent report from the New Zealand Police regarding clandestine P labs indicates that just under 75 percent of these labs are linked to recognised criminal gangs. They ply their evil trade at the terrible expense of innocent people. They ruin lives and devastate our society, and any defence of their activity, any calling for softening, is an outrage.

Although there may be some members of gangs who seek to be law abiding and respectful of other people’s lives, and who want to enjoy their lifestyle uninterrupted, unfortunately that minority is extremely small. I have met only two gang members who turned their lives round and sought to help other people to do the same by trying to stop them from entering gangs. I know there may be more, but I know of only two; both of them are former gang leaders. Why would they try to stop young people from joining gangs? Because they know that gangs are breeding grounds for lawlessness and untold misery for all those they affect. The wife of one of those men who was a leader of a gang spoke to me of years of violence inflicted upon her, until her husband turned his life round. The last I heard was that the district court in their home town was putting law-breaking young people under their care to help stop them from slipping into a life of crime and gang involvement.

I applaud people like that. They have turned away from a life of drug dealing and violence, and have now become contributors to our communities. But those stories are few and far between, and we must not be disengaged in the war against crime by the endearing and redeeming stories of a few. We cannot be soft on people who are staunch in their criminal intent. We cannot meet violence and drug trafficking with a soft response under the guise of nonchalance regarding the choices and responsibilities of people. We cannot defend the rights of dealers at the expense of the lives of our sons and daughters.

Let me read some of the effects of P, and why every decent New Zealander should be concerned and should be at war against this insidious drug and its dealers: “Burnt lips, weeping sores, rotten teeth: the faces of methamphetamine users stare from the computer screen. … The before-and-after pictures show the ravages of meth madness, the addiction to a drug of many names. In New Zealand, the synthetic drug often cooked up in clandestine labs is called speed, pure, P, burn, gooey, crank, meth, crystal, ice and Ya Ba. This highly addictive psycho-stimulant mimics adrenalin and triggers the brain’s fight-or-flight mechanism, which can make users aggressive and violent. P addicts can also suffer from ‘meth mites’, a side effect caused by the high toxicity levels in the drug. ‘The phenomenon occurs when the body can’t digest the hazardous additives in meth. It instead forces them out through the pores, causing sores, acne and chronic scratching,’ … Users feel like they have insects crawling under their skin. To get those insects out, these people scratch, claw and dig into themselves, making holes in their faces and bodies. The list of health problems that come with P addiction is long and terrifying. It can cause heart damage and strokes, memory loss, psychosis, delusions, extreme weight loss, hair loss, convulsions, depression, mood swings, kidney, liver and brain damage, respiratory problems and death.”

The Gangs and Organised Crime Bill presented by the National Government contains measures that are specific and practical. They are designed to achieve results that make New Zealanders safer in their homes and in their communities. This bill gives effect to key components of the Government’s policy on gangs by increasing the penalty for participating in an organised criminal group. The bill amends section 98A of the Crimes Act to increase the penalty for participation in an organised criminal group from a maximum of up to 5 years’ imprisonment to a maximum of up to 10 years’ imprisonment. As the Minister of Justice reported, the average prison sentence for this offence between 2004 and 2007 was 2 years. That does not adequately reflect the culpability of those gang leaders who organise serious criminal activities such as methamphetamine manufacturing and distribution without directly offending themselves.

This bill also expands police surveillance powers in respect of gang communications. The bill lowers the general threshold for those offences that can be used as a basis for interception warrants from those attracting at least 10 years’ imprisonment to those attracting 7 years’ or more imprisonment. This means that police will be able to obtain interception warrants for a wider range of offences, such as car conversion. This sends a message to gangs that the net on their criminal activities is widening. This should enhance the prospects of successful prosecutions under section 98A of the Crimes Act.

The bill also provides greater powers to remove gang fortifications. It provides that a removal order may be sought from a district court in order to remove intimidating structures, such as gang forts. This Government argues that gang forts are not only a threat to public safety but also potentially cloak illegal activity. Their very presence is threatening and makes a neighbourhood feel less safe. The Gangs and Organised Crime Bill will therefore give additional powers to have these structures removed if they are intimidating in nature.

We have heard of the intent of the National Government to bring some changes rapidly into our society to bring safety and security. Unfortunately, the previous Labour Government was very slow and very lax in this matter. It was stated on Wednesday, 29 October 2008—

Hon Trevor Mallard: These are Melissa’s notes!

JONATHAN YOUNG: I say to Mr Mallard that just 10 days before the last general election it was reported that “Labour will establish a Commission of Inquiry into gangs and organised crime if it wins the election, Police Minister Annette King said …”. She told the Police Association 10 days before last year’s election that “the commission would establish the extent of gang involvement in organised crime and its findings would provide a stocktake on the level of organised criminal activity in New Zealand.” This statement came from the previous Government’s Minister of Police 10 days before the last election, which tells us there were 9 years of inactivity.

I commend this bill to the House in its second reading. I also commend the Minister of Justice, the Hon Simon Power, for working so hard and so quickly in bringing legislation to the House that gives all New Zealanders greater security and safety than ever before.

Hon PETER DUNNE (Minister of Revenue) : I move, That the Student Loan Scheme (Repayment Bonus) Amendment Bill be now read a second time. This bill is comparatively short in form, but it is substantial in its significance. I need to put into context why this measure is being proposed.

Since the student loan scheme was introduced in 1992, nearly 800,000 New Zealanders have taken out a loan to help them continue their education at a tertiary level. As the number of borrowers in the scheme has grown over the years, a number of changes have also been made to it. One of the more significant of these changes was the introduction of interest-free loans in 2006, which has given a major boost to those people who would not otherwise have had the opportunity to further their education.

The measures that are contained in this bill follow on from that change, and are aimed at encouraging borrowers to repay their student loans faster. There are two points I will highlight. Borrowers paying off their loans earlier benefits not only the individual borrowers as they move through their careers but also the Crown in managing what is now a $9.6 billion asset. To put it simply, the longer that it takes borrowers to repay their loans, the more expensive the cost of that borrowing becomes to the Crown.

The bill introduces an incentive for faster repayments in the form of a 10 percent bonus for borrowers who make extra payments that total $500 or more in any given tax year. Under the provisions in the bill, all borrowers, including those who are overseas, will be eligible for the bonus, provided that they are meeting their student loan obligations and that they have a loan balance with the Inland Revenue Department of $550 or more at the beginning of the tax year in which they make their extra repayments. The bonus will then be added or credited to their account after the end of the tax year in question. For those who want to pay off their loan in full, the maximum bonus that is payable is one-eleventh of the loan bonus. Once it is enacted this legislation will have effect from 1 April this year, with the bonus being credited to borrowers’ loan accounts after 1 April 2010. Because there is no time limit to the entitlement to the bonus, borrowers who may be better placed to make extra repayments later in their working lives, when their financial position is stronger, will be able to do so under the provisions of this bill.

In reporting back the bill to the House, the Education and Science Committee made a number of small recommendations, mainly of a technical nature, to ensure that the bill and the scheme work as intended. I acknowledge the work of the committee and the officials who served it for their detailed consideration of the bill and for the recommendations that they have made to make the scheme work as proposed. I think that the bill as it now stands and the measures that it contains will give borrowers who want to pay off their student loans early a useful and welcome incentive to do so.

This is an important step forward. But it would be an error to say, as I think some members on the other side of the House seek to assume, that this is the only measure or incentive to improve and facilitate the repayment of student loans and to make the system better. We are currently undertaking consultation on a range of other initiatives, and announcements will be made in due course about further enhancements to the scheme. In the meantime, I say to the House that this is a significant incentive for students to pay their loans earlier. I cannot fathom why anyone would oppose the introduction of such an incentive. Therefore, I commend the bill to the House.

Hon TREVOR MALLARD (Labour—Hutt South) : I hesitated as I rose to speak, because I thought that the Minister of Education, Anne Tolley, might have got to her feet in order to make a contribution to this debate on the Student Loan Scheme (Repayment Bonus) Amendment Bill. It is often the case in these matters, which are technically the responsibility of the Minister of Revenue, that the policy is driven out of education. This was certainly part of National’s education policy at the last election. But I see that she has not chosen to participate in this debate to date, and therefore I think it is important that we proceed, notwithstanding—

Hon Darren Hughes: The de facto Minister is here!

Hon TREVOR MALLARD: Mr Peachey has been pointed out as being in the House, and I want to compliment him on the way he ran the select committee. There are not many people who can run a select committee on a bill on which there is division, such as this, in the way that he has in good humour. It is also worth saying thank you to the officials, who made a real contribution to this. For such a small bill, there was quite a lot of extra work for them—getting background information and reports, and working off a variety of different assumptions around interest rates to give some different models.

In the end, none of that work was able to convince the Labour Opposition that this bill is a good one. In fact, when is comes to the Committee stage, we will be considering whether it would be appropriate to rename the bill. It could be the “Bill for Economically Illiterate Former Students” or the “Bill for Making a Generous Contribution to the Taxpayer Over and Above the Tax that You are Liable to Pay”—or one of a number of approaches like that. That is because, depending on the interest rates at the time, someone with a student loan and with somewhere between 21 months and 36 months—there is a debate as to the time—left to repay it would be foolish to take the benefit of the scheme. People would be better off putting their money in the bank, collecting the interest from it, paying their tax on that, and making a contribution out of the net amount at the end of the time when it is appropriate for them to repay their loans.

If the bill is passed I think we will see students working very, very carefully around getting the timing right. There is a point, depending on the interest rates and the direction they take, when it would be of benefit to students to take advantage of this scheme. As I said, there is a debate around 21 months or 36 months, depending on the models and some of the assumptions, as to when that point is met. From the Minister of Revenue’s point of view, the problem with that situation is that if students can understand it and work it really well, the taxpayer ends up being worse off rather than better off. The Inland Revenue Department ends up being worse off net over the period of the loans than it would in other cases. The Minister shrugs his shoulders, and I agree with him. The way revenue goes up and down, and round in circles, it will not make any difference. The Government will not be making decisions about another $1.5 billion of broadband based on this decision.

Hon Peter Dunne: It makes a difference to the students.

Hon TREVOR MALLARD: The Minister is right; it can make a difference to the students if they get it right, but there is a very fine point where it works for them. As the loan comes down and time winds out, there is a point where the right thing to do is to take advantage of the scheme, but it is relatively late in the loan rather than something that can and should be done as a matter of course by the students if they, for example, have 9 or 10 years to go. Anyone who has 9 or 10 years to go on their loan and pays an extra $500 or more in this is a mug. It would be stupid and foolish.

Hon Sir Roger Douglas: Not necessarily; there are other reasons.

Hon TREVOR MALLARD: I accept Roger Douglas’ point, and he made it in the select committee. He is right; there are other reasons people pay it off. Sometimes people are given gifts that are tied. For example, grandparents might decide to give a contribution to pay the loan off. The most generous grandparents would put the money into an account, let the grandchild get the interest, and pay off the loan with that interest. But there may not be a high level of trust between the grandparents and the grandchildren, and I think many of us, especially those of us who have been Ministers of Education or who have had kids and have been involved in this loan scheme, know that people play at the edge of the rules. People do not always do what is the right or the fairest thing to do. I accept Roger Douglas’ point that it could be a good thing for grandparents to get a bonus on their payments for their grandchildren on the way through, or on an inheritance, or the like.

From my perspective, and I want to address the Minister of Revenue now in a serious way, something that could unblock Labour’s opposition to the bill is if material sent out about the scheme from the Commissioner of Inland Revenue recommended that people seek advice before they take advantage of it. I am not saying that people have to pay for that advice or that who they get it from should be defined, but I want people, before they go into the scheme, to talk about it with someone who might know a little bit more about interest rates, present values, and that sort of thing. I think people can then go into it with an informed decision. I agree with Sir Roger that there can be some good reasons for going in it. They are extraneous reasons; they are not proper economic reasons. There could be some good reasons for going in, and they could overbalance or outweigh the economic decisions.

I have an amendment on the Table of the House that was supplied to the Minister’s office some time ago. It is a relatively simple one that would require the commissioner to advise people to seek financial advice. In my opinion, it would not be a big thing—the forms are yet to be printed—to include a line on those forms. I am tempted to go back to Sir Roger’s friend Ruth Richardson and her line “What’s the mischief in it?”. What is the problem with the Commissioner of Inland Revenue suggesting—not requiring, just suggesting—that people get advice? I cannot see that there is any problem at all. If the Government took up that suggestion, then, on balance, the bill becomes so trivial that we would support it and we would help it go its way through the House in a relatively rapid fashion. Our major objection to the bill, the problem of people picking it up in an ill-informed way, would be lessened and therefore we could support it. So I am interested to hear from the Minister of Revenue. I leave him time between now and the Committee stage to think about whether the suggestion in my amendment is an appropriate thing to do. Even if he does not really think it is appropriate, I would like to hear what he thinks the harm in it would be, and I look forward to his response.

Again, I thank Allan Peachey and the officials for the work that was done on the bill. As I say, there are divided opinions on the bill but in the select committee that situation was handled very well by Mr Peachey. Thank you, Mr Assistant Speaker.

ALLAN PEACHEY (National—Tāmaki) : I appreciate the opportunity to lead off the National Party’s contribution to the Student Loan Scheme (Repayment Bonus) Amendment Bill debate. I thank the deputy chairman of the Education and Science Committee and Labour speaker who just preceded me, Mr Mallard, for his kind comments. I think it is fair to say that members of the select committee get on pretty well and are pretty committed to doing what is best for, in this case, New Zealand’s young people. I certainly appreciate the assistance that Mr Mallard and his side gave as the committee worked through the bill. It was a relatively straightforward bill. We received three submissions, and two of them were in person. We made four relatively minor amendments, which, as the Minister of Revenue said, were aimed at tidying-up a few things. Once the bill is passed, hopefully the Act will work that little bit better. I also acknowledge the assistance we had from officials from Treasury and from the Ministry of Education. One of the reasons that the process went so well was the quality of their advice and the work that they were doing. I would like to put on record the committee’s appreciation of that contribution.

The Student Loan Scheme (Repayment Bonus) Amendment Bill amends the Student Loan Scheme Act 1992. In essence, it provides a bonus of 10 percent for any extra payment, or payments, of $500 or more made in a tax year. I listened with interest to Mr Mallard’s comments, and they have a compelling logic to them. However, two points need to be made. The first one is a key to financial success in New Zealand, and that is to clear one’s debts as quickly as one possibly can. People should do that whether it is a student loan or a mortgage. Clearing debts is a key to financial success. I would not be comfortable with any suggestion, even if there were a bit of economic logic to it, of youngsters delaying the repayment of their loan.

There is another point to this bill, as well. We are talking about taxpayers’ money. It is money freely lent to students, by taxpayers, to fund their education. It seems to me that the taxpayers’ purpose in making that money available is to enable students to get an education, not to make financial gains through the banking system, or the money markets, or that sort of thing. Maybe we need to give a little bit more reflection to that issue, because, at the end of the day, it is taxpayers’ money. Some of that money is paid by families who do not get close to having their children go through tertiary education. I think we need to show a little bit of respect for that.

The amendment bill has two aims. I want to concentrate, for a few minutes, on the first one. It is to encourage borrowers to repay more than the compulsory minimum amount so that they can pay off their loans sooner. I reiterate a point I have already made: I do not think it is the business of this House to be trying to persuade, or influence, young people to delay paying off their debts in order to earn a bit of interest in the banks or have a flutter on the financial markets. The bonus scheme is expected to reduce the repayment times of borrowers who take up the offer by about 1.5 years. That is a significant length of time, and, certainly, there are long-term financial gains for people with loans who are able to take advantage of this scheme and pay off their loans more quickly. They are not just financial gained loans or an increase in disposal income, but the opportunity to marry, have children, purchase a home, and travel overseas. People have much greater freedom and flexibility to do the things they want to do when they have paid off their debts. That gain of nearly a year and a half is one worth taking.

This bill is an incentive to people to repay their loans more quickly. That is all it is. It is estimated that the amount owing on student loans will be about $15 billion by 2014. That is a lot of money. It is a significant burden on New Zealand taxpayers, and I am not sure that speakers who have gone before me have sufficiently emphasised, although the Minister of Revenue mentioned it, the impact of making student loans interest-free on 1 April 2006. That $15 billion comes from taxpayers. Many of us are of the view that taxation is far too high anyway, and that it deprives people of the opportunity to take responsibility and make progress in their standard of living. I think we need to bear that in mind and, as I have said before, show some respect for the reasons why the taxpayer makes loans available. It is to enable people to get an education. It is not to enable them to enhance their income on the financial markets or through bank deposits.

Since student loans became interest-free on 1 April 2006, there has been a downward trend in student loan repayments. I am sure that was not the intention of the Labour Government at the time, but that is what has happened. If one comes from the position that I do—that it is better to clear one’s debt as soon as one possibly can—it is not a good consequence of making student loans interest-free. I suspect that it is probably an unintended consequence, as so often happens. The downward trend in student loan repayments by borrowers and in the number of people fully repaying their loans early is something we need to be concerned about. I do not believe that it is good for students or borrowers, and I certainly do not believe it is in the interests of the taxpayer.

That leads me to the second aim of the bill. Some would say that it is a secondary aim, but I think it is a very, very important one. It is to reduce the cost of the student loan scheme to the Government and, therefore, and most important, to the taxpayer.

Hon Trevor Mallard: Will the member answer a question? If it is reduced to the Government, who is paying the extra?

ALLAN PEACHEY: I am sorry; I do not follow the question.

Hon Trevor Mallard: If the cost to the Government is reduced, who is paying the difference?

ALLAN PEACHEY: If the cost to the Government is being reduced, then the taxpayer is benefiting from that and the taxpayer does not have to dig so deep into his or her pockets to fund the scheme. Let us be really clear about this. We are talking about money advanced by the taxpayer. It is money that is not available to the Government to do other things with, for example, like tax cuts. Therefore, it is in the interests of borrowers, the taxpayer, and the Government, to encourage the repayment of those loans.

This is a relatively short bill. It is simple in its operation. If one owes $1,100 and pays off $1,000, the remaining $100 is wiped off that person’s loan at the end of the financial year. It is a very, very strong message to borrowers that the Government wants them to pay back their loan more quickly both for their own interests and in the interests of the taxpayer. Thank you, Mr Assistant Speaker.

STUART NASH (Labour) : I stand to speak in opposition to the Student Loan Scheme (Repayment Bonus) Amendment Bill 2009. I want to make a point about something that the honourable member Allan Peachey has just talked about. This is Financial Literacy Week. Allan Peachey said he would always encourage people to clear their debt as fast as they can, no matter what sort of debt it was. That is not the thinking of the current generation, and let me tell members why. This generation knows that if one can leverage debt to make a higher return than the rate of interest one is actually paying, then it makes sense to use debt as a tool to encourage economic growth and economic wealth. Debt is a very appropriate tool in many instances, and if more New Zealand businesses had used debt to finance growth, instead of selling equity and, therefore, control, I believe we might not have seen the level of hollowing out of our economy to the extent we have. People have not used debt for economic growth; they have sold down equity. That is the attitude of my parents’ generation.

I want to repeat a mantra I have been parroting ever since I came into this House. It is something that is fundamental to the social democratic philosophy that this Labour Party is built upon, and it is that education is the cornerstone for economic and social development. In my office I have a poster on my wall with a quote from Malcolm X, which states: “Without education you’re not going anywhere in this world.” It is education that empowers personal, professional, community, and economic growth. It is a tool that provides options to young people, and it is the food that fuels the spirit of ambition and aspiration. That is what education is. The powerful words previously quoted were from a man who discovered the value of education as a tool to open eyes that had been closed, to open the ears of those who refused to hear, and to open the minds of those who justified hate. I would argue that one of the most significant pieces of economic development legislation passed through this House in the previous 9 years was the passage of the Act that instigated interest-free student loans.

Louise Upston: It’s called the biggest election bribe out.

STUART NASH: Goodness me, is the member saying that we should not have given interest-free loans to students? I will tell members why this was great legislation. It is because it removed the albatross of crippling debt interest payments from around the necks of thousands of students and allowed them to remain in New Zealand to pursue their chosen career without the need to head overseas to chase the pound in order to repay, or in certain circumstances escape from, a debt with no end in sight.

I ask my Labour colleagues whether they know that members opposite voted against interest-free student loans. Can they believe that? National members voted against interest-free student loans. Amazing! Obviously, most of them went through a university system that was free. In the case of Paula Bennett, she received a training incentive allowance, which she has since had removed. The irony of that decision has not gone unnoticed amongst the vast majority of people who would have been eligible for it, as Paula Bennett was.

Members opposite voted against interest-free student loans. It just proves once again that the Labour Party is the party of students and the party of sustainable economic growth. I say to Mr Quinn that when we talk about education and robbing the poor to give to the rich—[Interruption] How can you justify—

Paul Quinn: I raise a point of order, Mr Speaker. I think he referred to you: “How can you”; that is what he said.

The ASSISTANT SPEAKER (Eric Roy): I think the member mistakenly may have done that; I just caution him.

STUART NASH: How does Mr Quinn go out to his constituents and justify giving $35 million to private schools while taking away $13 million from adult and community education? I would like to hear the arguments in favour of that, because there are no arguments. I can report that in Hawke’s Bay, where I am based, none of the high schools that were offering adult and community education will now be running night classes. Adult and community education affects around 6,000 people in Hawke’s Bay, and adds a conservative economic impact of at least $10 million to the region. That is value for education—a return of about $50 for every dollar spent on adult and community education. Does Mr Peachey want to know about financial literacy? Maybe that member should do the figures on the return from adult and community education, let alone the impact of community, personal, and role model advantages. Getting rid of adult and community education is very short-sighted. Giving $35 million to private schools whilst taking $13 million from night classes is very definitely a mix-up of priorities. That is simply not fair.

Phil Twyford: Perhaps it was a mistake?

STUART NASH: I say to Mr Twyford that maybe it was a mistake.

Phil Twyford: They couldn’t possibly have meant to.

STUART NASH: Well, I would not think so, at all. However, Mrs Tolley has been told by New Zealanders up and down the country that it was wrong, but she just does not seem to have listened.

Talking of not being fair, I read that Bill English’s Tax Working Group has suggested raising GST to 15 percent so the top tax rates of 38 percent and 33 percent can be lowered to 30 percent. Watch out for the 75 percent of New Zealanders who earn under $40,000 per annum! That is another story, but it is certainly not fair.

I return to this bill. Apparently, this is Financial Literacy Week, yet we had the previous National speaker, Alan Peachey, who was a headmaster at one of the top schools in this country, supporting legislation that the Hon Trevor Mallard has laid out in black and white does not make economic or financial sense, except in very small circumstances. Why would a student take up this option when in fact it does not make financial sense? It is unbelievable.

The question is about who this bill will actually help. I can tell Mr Dunne that it will not help those who need it, and neither did the tax cuts for those earning under $40,000 per annum. This bill is obviously supposed to help students with loans, but let me inform the House a little bit about the students who are taking up loans. This is from a 2006 report entitled Student Loan Borrowers: 1997-2004: “Those who had studied at honours level or higher in their last year of borrowing had higher rates of payment … than average. This could be attributed to higher levels of qualification, leading to higher incomes. … This leads to a faster rate of repayments”.

Well, goodness me! Higher incomes, faster rate of repayment—what about all those students who are studying for degrees that do not offer the higher rates of repayment? As well, the rates for full student loan repayment were highest for engineering and related technology courses. Funny that—these are the grads who coincidentally earn the most money. Students enrolled in food, hospitality, and personal service courses had the highest median amounts of student loan. Those are not the jobs that bring in the huge dollars, yet they are just as important to our economic growth and well-being as any graduate jobs. Why does National not do something for those graduates and workers? And talking of supporting workers, I certainly hope that the National-led Government will support Darien Fenton’s “A fair deal in hard times” campaign, and vote for her member’s bill that guarantees redundancy to ordinary Kiwis in our communities who have been unlucky enough to lose their jobs.

A quarter of student loan borrowers in 2005 were enrolled in society and culture courses. Are we saying that those graduates do not deserve any form of tax relief? I do not know. The majority of borrowers identified themselves as European or Māori; however, those who identified themselves as Pasifika borrowed the highest amounts.

Another thing I would like is to tell Mr Dunne that my real concern is to know how the Inland Revenue Department will administer this bill. Has Mr Dunne asked his team about that, given that National has cut close to 300 jobs at the department—300 jobs have gone from the Inland Revenue Department. The old saying “Don’t call us; we’ll call you.” takes on a whole new meaning. I ask Mr Dunne once again how the Inland Revenue Department will administer this bill. Anyway, all I can say is that this bill is a nonsense. It does not solve anything, and it does not favour even one of this nation’s students. Thank you.

CATHERINE DELAHUNTY (Green) : Tēnā koe, Mr Assistant Speaker Roy. I rise to take a brief call on the Student Loan Scheme (Repayment Bonus) Amendment Bill. I suggest to members who did not like Stuart Nash’s speech that they will like mine even less. They may as well prepare themselves for complaining, shock, horror, wincing, and nausea, because they will not agree with what I am going to say. Interruption] Exactly. I am not the Green Party’s tertiary spokesperson, but I am on the Education and Science Committee, which heard the submissions on this bill. Several of them were from student associations. The Green Party stands with those submitters; we are opposing the bill.

I acknowledge the members of the Education and Science Committee. It is a good committee. I would love to be able to agree with everybody, but sometimes we have to stand our ground. We are here to represent the community, to stand with the submitters, and particularly to stand with the students. The students were against the bill. The associations lobbied very clearly on that matter, and we stand with the students.

Paul Quinn: We represent the community.

CATHERINE DELAHUNTY: Absolutely.

The Green Party is also interested in the comments on taxpayers, because we are more than happy, as taxpayers, to invest in education. In fact, we think it is one of the primary reasons why we pay tax. But we remain resolutely unconvinced by the student loan scheme.

However, in terms of this bill, the main problem we have with it is timing. Why, in a recession, would the Government suggest a reform that benefits only borrowers who can already save up money, unless it wants to reward a specific constituency of the privileged, and ignore people with very little capacity to get the bonus on offer?

The bill is consistent with the current modus operandi of the Government around education, which could be described as cut, tweak, and twist. Cuts include adult and community education classes, Enviroschools, drama advisers, literacy classes, Youthline training, etc. Cuts could include student unions, if by some ghastly act of fate Sir Roger Douglas’s bill on unions in universities gets drawn from the ballot. [Interruption] If it is supported by the Government, then it is an even more ghastly tweak of fate.

However, this bill is not a cut. It is actually a tweak rather than a cut. The tweak is that the Student Loan Scheme (Repayment Bonus) Amendment Bill is very unhelpful to a majority of student loan holders. It is a classic tweak bill and it is an annoying waste of time, except for a small group of people who get a limited benefit. The twist strategy I am referring to includes a mean twist for people who have no savings to pay off extra debt. The twist also includes the somewhat twisted logic that we need things like national standards in education, when we already know who is struggling and why they are struggling. It is pretty twisted to give $35 million, as Stuart said, to private schools rather than to the public system. In the end, if the children of the poor do not get the best possible public education they will not become tertiary students.

Who is being targeted here to benefit? Not women, not tangata whenua, not Pasifika nor any other migrants, not many current students, not the poor students, not the people at the bottom of the heap, and probably not even the Inland Revenue Department, which must be absolutely thrilled to have more complex variables added to the delivery, implementation, and debt collection associated with the student loan scheme. Even people who believe they should make a financial contribution to the cost of their own education will not necessarily benefit from this bill. As was pointed out previously, graduates who have decent paid jobs can afford to save up and get a bonus, but that is not the case for many students who are currently in the process of going through their education.

As I mentioned before, we are in a recession and we have rising unemployment. We do not know how far unemployment is going to go, or when it is going to stop. It should be pretty obvious that many people cannot afford to put aside money to get what is a relatively small bonus. If the Government really wanted to do something about student debt, it would design a provision that actually affected the people in most need of help, not the people at the end of paying off their loan who might be beginning to recover economically from the loan scheme, and who might be able to put aside extra money to attract the bonus.

The Greens see this bill as somewhat similar to the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill, although it is not quite as heinously unfair—just not very useful. People would be better off investing their money in an interest-bearing savings account. The bill is, no doubt, designed to get more people to pay back their loans faster. I do not know a single person who wants to be in debt, and who would not like to get the student loan monkey off his or her back. Some people choose not to attempt higher education because they see debt as a deterrent. So why are we not finding ways to fund public tertiary education that do not involve useless tweaking and token forms of assistance? At the Education and Science Committee we had some very cordial discussions on this issue. Some members commented that if people were motivated, they could pay off debt no matter how wealthy they were. But in my view, and in the Green Party’s view, paying off debt relies on certain factors, such as having a supportive family, some kind of decent job, lower rents or mortgages, and not having a whole lot of children. The motivated poor always already prioritise their money, and, as I have said in this House before, they prioritise the power bill and the doctor before they pay off their student loan.

I enjoyed Maryan Street’s first reading speech about this bill, in which she asked questions about the underlying Government agenda. Very useful points were made and good questions were asked. The Green Party totally supports the speech made by Te Ururoa Flavell about the effect of the student loan scheme on Māori students. Even within whānau or families, inequity can be reinforced when people who choose education get into debt, while those who go straight into work have disposable incomes and much nicer clothes. What is the message here? Is it that education is too costly and that we should not bother? That message has had an impact on my family and on many other people. Some of the kids are doing very well, but are not educated, whereas others are in major debt.

So let us get the fairly weak idea of this bill off the Order Paper and let us start addressing the substantial issues in tertiary education, like fully funded public education and support for everyone, not for the few. I know that this House may see these suggestions as a quaint idea, but they will actually create a better world. Kia ora.

Hon Sir ROGER DOUGLAS (ACT) : I will be relatively brief; I had not necessarily intended to speak on the Student Loan Scheme (Repayment Bonus) Amendment Bill but I could not resist in the end.

The point has been made by Mr Mallard and other speakers that in many cases students would be better off putting their money into a bank account and letting it accumulate. That is true, but there is a small window when students are probably better off paying it back, and there are, of course, other reasons why students might repay. When all is said and done, it is not compulsory that students pay in advance; it is a totally voluntary thing. They might, for example, decide they want to pay off the loan early, because that will help the Government accounts. That is quite a good reason. If students want to do that, then I am all for it. In many ways, as I think Mr Peachey said, paying off the loan early may well bring a certain peace of mind to people. They will feel better when they have got rid of their debt, etc. That is one side of the issue.

I personally do not support Mr Mallard’s amendment. Mr Mallard is really saying to people that if they pay off $1,000, they will save only $100, and he recommends they spend $200 on a financial adviser, who will tell them they should not pay it off. But they will be $200 worse off. That seems a bit nuts to me, and I cannot really see the point.

The real point I will make today is about the crocodile tears from Mr Nash and from the Green speaker who just spoke. Let us think about student loans very, very clearly. Students generally come from wealthy families. In New Zealand, 80 percent of students come from families in the top 20 percent in terms of income and assets. Also, students who go through tertiary institutions come out likely to earn somewhere between 150 percent and 200 percent of the average wage. So we have here a very privileged group who come from families whose incomes are well above the average wage, and who, when they are qualified, will earn on average somewhere between 150 percent and 200 percent of the average wage.

Mr Nash, other members of the Labour Party, and the Greens are saying that they want the poor people—whom I used to represent in Ōtara—who leave school without qualifications to go into the workforce to pay higher taxes, to subsidise students. This policy is about redistribution. It is redistributing from the poor and from low-income people to high-income people. Let us understand that this relates to the whole issue of tertiary education. Most people receiving costly educational courses are from middle-income and upper-income groups. What we are doing—and we might want to do it—is saying to low-income people, to people who are relatively poor, that they have to work and pay high taxes so that people who will earn twice as much as them over their lifetimes can get a free education or a free ride. We have the poor subsidising the wealthy. In the case of doctors and vets, we find not only that the poor are subsidising the education of the wealthy, but also that at least 25 percent of those students are now overseas, earning substantial incomes.

Let us not kid ourselves about this. People who go to university are generally amongst the top 20 percent in terms of wealth and income. People who go through university—and good on them—will earn somewhere between 150 and 200 percent of the average income. Who will pay for them? People who leave school—Rangitoto College or anywhere else—without qualifications and go immediately into the workforce at 17 or 18 years of age are the ones who have to pay higher taxes than they would otherwise have to pay to subsidise university students. Let us understand what we are doing.

LOUISE UPSTON (National—Taupō) : I rise in support of the Student Loan Scheme (Repayment Bonus) Amendment Bill at its second reading. The bill will make a substantial difference to hard-working New Zealanders who have a student loan, and who want to be proactive in paying off debt. This Government believes that people do want to pay off their student debt so that they can take on other projects in their lives, such as setting up a business, getting married, having children, or taking on a mortgage. This bill provides the incentive to do that, so I strongly disagree with Mr Nash, who said that this bill does not favour New Zealand students. Of course it does, because New Zealand students, like any other students around the world, do not want to be burdened with debt indefinitely. This bill gives them an incentive, and I think that that is what we should keep our focus on. This bill is about an incentive. It is about encouraging our young people to get out of debt faster. I will not go into the level of indebtedness New Zealand has; we have all heard and seen the figures. But with this bill we send an important incentive and an important message to our young people who have student loans that we will assist them and incentivise them to pay off their student loans faster.

This bill amends the Student Loan Scheme Act 1992 by providing a bonus of 10 percent on any payments that exceed the borrower’s compulsory repayment obligation for a tax year by $500 or more. They can drip-feed repayments or they can make a one-off bulk payment once a year. The options are open to them in terms of how they wish to do that, but the important thing is the message about encouraging borrowers to repay more than the compulsory minimum in order to pay off their debt sooner. Shorter repayment times mean that young New Zealanders will be debt-free earlier, which frees them up to put other choices in front of them sooner.

The secondary aim, of course, is to reduce the cost of the student loan scheme to the Government. The bonus will be credited to the borrower’s student loan account at the end of the tax year, which will reduce his or her loan balance. For borrowers paying off their loan in full, the maximum bonus payable will be one-eleventh of the loan balance. For example, if the loan balance is $1,100 the borrower would make a voluntary payment of $1,000 and the maximum amount of the bonus would be $100. Borrowers wanting to repay their loan in full before 31 March 2010 will have a few options. They can pay the loan balance in full and the bonus will be credited to their loan balance after 1 April, or they can pay ten-elevenths of their loan balance, with their bonus being credited after 1 April 2010.

I will focus for a moment on why it is important to provide incentives for students to reduce debt. A recent study conducted at Canterbury University by one its PhD students tracked 1,232 final-year secondary school pupils through their first 2 years of university study. The study found that the students both underestimated the cost of tertiary study and overestimated what they would earn at the other end, which is having a compounding impact on those who take on debt when they go to university. Nearly half of the students said that debt was a normal part of today’s lifestyle, but if we talked to their parents or grandparents I think we would find that they have quite a different message. The PhD student said the students were not fully aware of the cost of a student loan and the options available, so let us look at this in a bit more detail. The school-leavers estimated that their annual expenditure would be $12,000, which is significantly less than the actual $19,000. They expected to earn an average income of $11,000 or close to $12,000, and they overestimated that amount by $5,000.

The University of Canterbury Students Association has said that students are losing their concept of debt. That is a worry. I will share with members an example of a student I have been speaking with recently, or, I should say, an example of someone who has actually completed university studies. This young woman was at university for 5 years. She went to university straight after school. She earned two bachelor’s degrees and an honours degree. Despite this young woman working part-time throughout her degree, the balance of her student loan when she left university was $60,000. Even though she now has a fulltime job, this young woman will be 50 years of age before her loan is repaid, based on the current minimum repayment amounts. That will be a huge obstacle in her future ventures in life, whether it is starting a family, taking on a mortgage, or starting a business. The Student Loan Scheme (Repayment Bonus) Amendment Bill will be a huge incentive for students to pay off more than the bare minimum and be debt-free earlier.

I will mention another study about students. The report, Living with a Student Loan, incorporates Statistics New Zealand data from the Ministry of Education, the Ministry of Social Development, and the Inland Revenue Department. It is one of the few studies undertaken since student loan schemes were introduced. A couple of changes were made during the select committee process, where the bill gets to be debated at length, where we listen to submitters, and where we take on board their comments. We made some minor changes in the areas of commencement provisions—for non-salary and wage earners, and also for the multiple voluntary payments made in a year—but I remind the House that this is yet another pre-election commitment on which this Government is following through. This is a Government that does what it says it will do. We are keeping our promises.

In terms of this particular bill, which was an election promise that we are delivering here today, there is a public perception that student loan balances are very high, and that it takes borrowers years to repay them. Since the inception of the interest-free component from 1 April 2006—surprise, surprise—there has been a downward trend in student loan repayments received directly from borrowers, and also a decrease in the number of people who fully repay their loans each year. Who pays for that? Well it is hard-working New Zealanders; it is the taxpayers of this country who pay for student loans that are not paid off early. As Mr Douglas said, it is hard-working New Zealanders—perhaps those who do not have a tertiary education, or those who left school perhaps at 16 or 17 and went straight into the workforce. It is their hard-earned tax dollars that are paying for student loans, when we are offering students with loans a means for them to be debt-free earlier. We are giving them the opportunity to rid themselves of their burden of debt earlier by incentivising them to pay it off. We are not presuming that hard-working New Zealanders who do not have a tertiary education should carry that burden. We are putting in place incentives for students with loans to pay off their loans.

It is estimated that student loans will grow to $15 billion by the year 2014. That is an extraordinary amount. There is no time limit on entitlement for this bonus scheme. For example, if people have worked for a few years and are in a better financial position, then they are able to make those extra payments later in their working life. That will fit in with this scheme. They will be able to take advantage of the bonus incentive when it better suits their financial position. We are not saying that there is an expectation on those who have just come out of university and taken on their first job to start their repayments straight away. It is entirely up to them, and it is a matter of when their financial circumstances suit them. We are giving them that choice but, more important, we are giving them an incentive.

I add that as well as this bill delivering on an important national election promise, in this bill we are going further than we promised we would. This is an example of where the bill is more generous than what was promised before the election, because it includes overseas-based borrowers. It is not limited to repayments made 10 years after a person graduates, and the $500 repayment does not have to be made in one hit. We know that in terms of cash flow, it would make it easier for a lot of people if they were able to spread that payment over a longer period of time. All these changes where we are over-delivering are good news for those people who want to pay off their student loans sooner.

This bill is a significant step to encourage student loan repayment and, more important, to reduce the overall repayment times. The message, very clearly, is that our young people will be debt-free sooner, and that is an important thing for all New Zealanders. I am pleased to support this bill.

CHRIS HIPKINS (Labour—Rimutaka) : I have to say, after listening to Louise Upston pouring her heart out about student debt and about how hard up students are, that I am absolutely staggered that National voted against every measure that the previous Labour Government put in place to make the financial position of students a little bit better. Those members voted against freezing fees, to stop fees going up massively by thousands of dollars a year, as they did the last time National was in Government. They voted against removing interest on student loans while students were still studying and not able to make repayments. And they voted against making student loans interest-free altogether.

Louise Upston, just a few moments ago, called that measure a massive bribe. She called it a massive bribe. But she is not alone in thinking that interest-free student loans are a massive bribe, because what did John Key say about interest-free student loans? He stated: “What a cost to the country! What an unaffordable and irresponsible cost to the country!”. He called it “rushed and reckless, thrown together in desperation”, but here is the really good one. John Key stated: “Our caucus would never have signed off a zero percent interest rate because the economics are so bad. It was never for us, because we have standards.” That is what John Key said about interest-free student loans. I do not think that Louise Upston was fully briefed on John Key’s position on interest-free student loans before she stood up to speak, which is not unusual, I think, for National members.

I have to say that I hope this bill fails and that not many people take it up. I say that because the more people who take it up, the more concerned I would become about the very, very alarming rate of financial illiteracy in New Zealand. Anybody who took it up would have to be completely financially illiterate, because it makes much more sense for people to hold on to their money and put it in the bank, even if it is earning only 1 percent or 2 percent interest, than to go for this bonus and, therefore, lose out on the potential to earn interest. It would make sense in the last few months of their student loan repayments; if it was used for the final repayment of a student loan, then it might make sense.

The only reason that providing a bonus for repayments would make sense is if interest on student loans were going to be reintroduced. It would make sense only if interest were going to—

Louise Upston: It makes sense, because you’re reducing debt.

CHRIS HIPKINS: Louise Upston said that it makes sense. She said that reintroducing interest on student loans makes sense. National’s position all along has been that charging interest on student loans makes sense. That is what Louise Upston has just told us. I do not agree with that. The Labour Party does not agree with that.

Louise Upston: I raise a point of order, Mr Speaker. The member has incorrectly represented the words that I used.

The ASSISTANT SPEAKER (Eric Roy): That is a debating point.

CHRIS HIPKINS: Thank you very much. This is a bad bill. This is a bad bill that will not leave students better off financially, and will not lead to their repaying their loans faster.

We in Labour are certainly committed to making life a bit easier for students. We took several measures over the last 9 years in order to do so. We took a lot of measures in the last 9 years to make life easier for students, because we want tertiary education to be available to all New Zealanders; we do not want cost to be a barrier to tertiary education. Unfortunately, National voted against every single one of those measures to make tertiary education more affordable for students.

National promised at the last election that it would not reintroduce interest on student loans. That was one of its key promises. But we know that when it comes to tertiary education, National is not very good at keeping its promises. I recall a former Minister of Education under a National Government going up and down the length and breadth of the country prior to a general election saying that he would resign as the Minister of Education if tertiary student fees were not abolished, full stop.

Sue Moroney: And did he?

CHRIS HIPKINS: Did he do it? No, he did not. He not only did not abolish fees; he increased them, and he introduced the student loan scheme so that people could pay for them. He never resigned, because the National Party’s election promises are not worth the paper they are written on. That is a proud history that the National Party continues to adhere to.

Louise Upston said earlier that interest-free student loans were the biggest election bribe out. The total cost of the interest-free student loans policy was a couple of hundred million dollars a year, as opposed to the billions of dollars’ worth of tax cuts that the National Party promised at the last election. It promised billions of dollars’ worth of tax cuts, but it broke that promise, too. It passed tax cuts legislation under urgency, and then it went back into urgency to take them away. If Louise Upston thinks interest-free student loans are the biggest election bribe out, at the cost of a couple of hundred million dollars a year, what on earth does she think the billions of dollars’ worth of tax cuts were? That was a much, much bigger election bribe, and one that the National Party never intended to keep.

Allan Peachey talked earlier about clearing debt being the key to somebody’s future. I actually agree with the idea that people should aim to clear their debts. I think that is a very admirable goal. But this bill will do nothing to help students clear their debts. In fact, if students take up the bonus repayment option up, it could result in their taking longer to repay their student loans. As I said in the beginning of my speech, that would highlight a level of financial illiteracy that was very alarming.

The other thing is that this bill will disproportionately benefit graduates on higher incomes, because they are most likely to be in the position to make additional repayments. Students with large debts—who have struggled their way through university working part-time, then gone into Public Service jobs, social work jobs, or anything like that—are not likely to have the level of disposable income one would require in order to take up the bonus repayment option. People on higher incomes who are financially illiterate may decide to take up the option, but unfortunately it is only those on higher incomes who will benefit; it will not help those on the lowest incomes, who may have quite a high student loan debt.

If someone pays $500 extra off his or her loan—above the minimum repayment requirement each year—that student would have his or her total loan abated by 10 percent. This bill is a typical National bill in that it advantages those at the top of the income scale, but it is a con. Why would anyone go for a 10 percent discount when the loan is attracting no interest at all in the first place? If National wanted to encourage higher-income earners to repay their student loans more quickly, there are other ways it could do that without introducing this sham called the bonus repayment option. Anybody in the financial position to be able to take it up is likely to be financially literate enough to know that he or she would be completely mad to do so.

As I have said, the National Party consistently opposed every measure the previous Labour Government took to reduce the cost of studying for students. It opposed the cap on student fees. It opposed no interest while studying. It opposed interest-free loans altogether. So it is not surprising that it is now putting in place a measure that will make sense only if it reintroduces interest on students loans, which I suspect is part of National’s long-term agenda. Do not be surprised if we are back in this House at some point in the next few years debating the reintroduction of interest on student loans.

• Debate interrupted.