Hon PETER DUNNE (Minister of Revenue) : I move, That the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill be now read a first time. Later I shall be recommending to the House that the bill be referred to the Finance and Expenditure Committee for consideration.

The main feature of the bill is a very positive measure for New Zealanders who have been working in Australia and who wish to return home permanently. Currently, they have to make compulsory superannuation contributions to an Australian complying fund. Those funds are then locked into the scheme until that saver reaches retirement age. For New Zealanders who have worked in Australia for some years this can present a significant financial dilemma when they make the decision as to whether to return home. New Zealanders who spend a period of time working in Australia are required at the moment by Australian law to make contributions to an Australian complying superannuation fund, which they are then locked into. When they make the decision after some years as to whether to return home, they are faced with a significant financial dilemma because of the fact that their funds are locked into Australian complying funds.

The changes proposed in the bill will help resolve the problem. They will allow New Zealanders with retirement savings in certain Australian superannuation funds to transfer their funds to KiwiSaver when they come home permanently. Conversely, KiwiSaver members who want to move to Australia will be able to transfer all of their savings in the scheme to the Australian complying superannuation scheme. This includes their New Zealand Crown contributions and any member tax credits that they might have. These changes will remove one of the obstacles facing New Zealanders who want to return home by allowing them to consolidate their financial affairs in their chosen country of residence. The changes also represent a positive step towards improving the movement of labour between our two countries and are the result of an agreement signed with the Australians in July this year that recognises the broader close relationship that we have.

The remainder of the bill focuses on a number of smaller but important technical measures. All of these measures are intended to improve the way the tax rules work, to make them easier to understand, and to reduce compliance costs for taxpayers. In this respect, a number of enhancements are being made to the KiwiSaver rules. Those enhancements include clarifying the enrolment rules for those under 18 years of age so that guardians and young people themselves have greater certainty about their future obligations under the scheme rules. Members may be aware of a number of issues that have arisen already where there has been confusion. People under the age of 18 have been enrolled in the scheme in a very well-meaning way by parents, guardians, and relatives, only to discover a little later on that they have picked up an ongoing liability. The changes will also allow scheme providers to send members annual reports via an email hyperlink, if the member agrees, in order to reduce the compliance cost for providers, while members will get the information that they need in a form that they increasingly prefer. It also removes a technical obstacle affecting the eligibility of certain members who apply for the KiwiSaver first home deposit subsidy. Taken together, all these changes will make the KiwiSaver rules easier for people to understand. They reduce unnecessary compliance costs and they ensure that the rules work in the way that they were intended to.

This bill also makes technical changes to the rules on gift duty. In particular, the bill introduces a number of changes to remove uncertainties around whether gifts such as amenities and artworks made to local or central government or to approved donee organisations are subject to gift duty. The change will make it clear that these gifts are exempt from gift duty, and will be welcomed by those who want to contribute to their communities by gifting items such as artworks or other items for public benefit. A previous uncertainty about whether donations made to public organisations would be subject to gift duty could be seen as a barrier to making such donations. We had the absurd situation whereby, for example, gifts made to the Auckland Art Gallery were subject to gift duty, and gifts made to Te Papa were not. There was no logical reason; that was just the way the law had developed over time. These changes will clarify that situation.

Finally, the bill makes some other technical amendments to make the tax laws easier to apply. They include changes to the legislation on binding rulings, which set out how the Inland Revenue Department will apply tax laws, to give greater certainty about the tax implications of business decisions. Other changes contained in the bill are of a remedial nature and remove certain unintended consequences following on from earlier reforms.

When taken together, all the taxpayer-friendly changes in this bill will help improve the way our tax rules work, and they will reduce compliance costs for taxpayers. Therefore, I am happy to commend the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn) : Thank you for the opportunity to take a call on the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill, and I thank the Minister of Revenue, Peter Dunne, for his introduction. Labour is supporting the bill, at least to go to the Finance and Expenditure Committee. We will be interested to see what technical arguments are raised by submitters at that point.

It is interesting to note the context in which we are debating this bill. Yet another important step in the great tax debate has unfolded before us in the last couple of weeks. It pays to recall some of the salient events that have led us to this point today. First, there was the great global financial crisis that begun in September 2008. Then there was an election in November in which the incoming National Government promised 3 years of income tax cuts. Then in December of last year the House was thrown into urgency to pass the first step in a change that would result in the top 3 percent of New Zealanders getting 30 percent—one-third, nearly—of the tax reduction.

Then Budget 2009 effectively gutted the New Zealand Superannuation Fund, with a decade of deferrals of contributions, which no amount of papering over the cracks, as is being attempted in this bill, can disguise. That fund is now projected to be some $35 billion in arrears by the time those deferred payments are lost. A new survey put out by ShapeNZ has told us that 53 percent of New Zealanders—which is more than half—do not believe John Key when he said that it is possible to both defer payments to the Superannuation Fund and maintain existing levels of entitlements. It is a mathematical nonsense, unless the Government is saying that in addition to writing off tens of billions of dollars of pollution subsidies on our young people, it will also make them catch up the difference that it alleges today’s taxpayers cannot afford, at a time when half the taxpayers per capita, or per retiree, are trying to pay those bills.

Retirement savings portability is a good idea in principle, subject to the detail being worked through. Labour is prepared to support this provision going to the Finance and Expenditure Committee. But New Zealanders are right. They are deeply concerned about the provisions that this Government has instituted that undermine the security that they will have in retirement and that will undermine the New Zealand Superannuation Fund.

It is an irony that in the Crown accounts released last week the Government’s bacon has been saved by the increase in value of assets of the two funds that it has alleged were in crisis and that it has ceased paying into—the New Zealand Superannuation Fund and accident compensation. Were it not for those, the Crown’s books would be in far worse shape. The excuse from the Government is that it does not have a cash surplus so it cannot afford to invest. Well, that is great. It says that people will invest only if they are in cash surplus situations, notwithstanding the rate of return. That is clearly nonsense because the New Zealand Superannuation Fund’s long-term average rate of return is 10.25 percent, according to its latest annual report. The cost of capital to the Government is around half of that figure. So the Government is foregoing—

Charles Chauvel: Doubling its money.

Hon DAVID CUNLIFFE: It is just about doubling its money because of this vain principle that is really disguised as something else, which is that it never believed in the Cullen fund. One can only ask whether, if the National Government had changed the name to the “English fund”, it would have discovered a newfound love for it. It is petty politics and no amount of papering over the cracks with this worthy attempt at a bill will change the fact that National has gutted New Zealand superannuation and that a majority of New Zealanders no longer believe John Key. They did not believe him on the 3 years of tax cuts, they were not surprised when the promise was broken, and they did not believe him when he said that he could maintain entitlements to superannuation and cease pre-funding.

Savings and KiwiSaver, which this bill deals with, are important topics to all New Zealanders, or at least they should be. This Government said that it cares about the fact that our tradable sector is in decline, yet it turns a blind eye to the biggest part of our current account deficit: the financial deficit. There is an outflow of funds because our financial sector does not save enough—and New Zealanders do not save enough in it—and the profits are flowing out of the country to those who own our financial institutions. All New Zealanders should be concerned that we have to borrow more to cover that deficit, and they should be very worried that this Government’s only solution is to flog off what is left of the family silver to try to fix up that gap, rather than address it at source. I would have thought there was little doubt that KiwiSaver was a step in the right direction—not the last word but a very healthy step in the right direction—of lifting New Zealand’s savings rate.

So what has this Government, in its wisdom, done? When it came into office it cut by half the incentives for New Zealanders to increase their savings through KiwiSaver. It was a short-sighted and ridiculous policy that went back to 1975 and the ghost of Muldoon, which, by the way, stalked the 2025 report. In the last week we had Don Brash rising from the crypt again, and we have John Key ritually disowning the product even as he invests another $300,000 in paying for it. That report said it was not enough to have a 30c top tax rate, because that would be too timid. I see Roger Douglas nodding vigorously, or maybe he is just asleep. No, he is awake; he is smiling, I think. I say “Well done” to Sir Roger.

Hon Trevor Mallard: Awake, and alive!

Hon DAVID CUNLIFFE: He is alive, and he is smiling because he knows that one day, when the Māori Party has what it wants, the Government will have to fall back on the ACT Party to pass legislation. Then he will drag the 2025 report and all it contains out of the closet and say to the Government: “That is the price of doing business.” I ask what that is. It is a 20 percent flat tax rate and a cut of the minimum wage by a quarter. For a Cabinet Minister, that equals $600 extra a week. For a worker on the minimum wage, that equals $100 less a week when he or she is already struggling—down from $500 to $400 per week.

I say to Bill English, who was sitting here showing great interest in this debate—yes, I see the Minister of Revenue, Peter Dunne, straining his head towards the boss and wondering where he is, but I cannot refer to that. Bill English is taking a great interest in this debate. We know he is so fiscally prudent that he believes it is impossible to live on $400 a week—goodness me!

So here is that Minister presiding over a bill that papers over the cracks of fundamental contradictions in this Government’s tax policy. It has gutted KiwiSaver, it has gutted the New Zealand Superannuation Fund, and it is trying to place a veneer on it whereby people can just take their money across the Tasman, retire in sunny Queensland, and it will all be all right. Is the Government’s solution to closing the gap with Australia to export older New Zealanders? Will it try to raise the national IQ or the national income by exporting our senior citizens? Is that what lies at the heart of this debate? Is that what is behind this bill? We have seen nothing more sensible out of the 2025 Taskforce report, at all. It is a return to the failed policies of the past. It is an absolutely shameless shift of net income from the poor to the rich, and at the same time a gutting of the New Zealand Superannuation Fund and of KiwiSaver, just when the assets in those funds have saved the Crown’s bacon, as was revealed in the last monthly Government accounts.

This bill deserves to be scrutinised. Labour will support it going to the select committee, but it can do little to save the contradictions already built into this Government.

CRAIG FOSS (National—Tukituki) : Talking of contradictions, I am not quite sure whether the previous speaker, the Hon David Cunliffe, wants the Government to borrow a whole lot more to fill up the New Zealand Superannuation Fund. Right now we are borrowing $250 million or $300 million a week simply to keep the lights on, and that member wants us to borrow $600 million a week to top up the fund. I just cannot work the numbers out. I am looking forward to discussing those facts with the member as Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill moves through the Finance and Expenditure Committee, which that member is a part of. I just cannot understand how in one breath those members are concerned about the debt under any measure, and then, every time, they want to spend more. And right now they want us to borrow more money to put in the fund to invest in New York or somewhere. I just cannot quite work that one out. It is the same with the accident compensation scheme. The sage-type investment advice we are getting from those members, on whose watch we lost $10 billion to $12 billion last year, is very interesting. I think we need to test them against that. But I digress somewhat.

It is a pleasure to rise and speak to the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill. I will speak briefly to it. The Minister outlined the key points to it. There are a couple of points that I am very interested in, and I look forward to further discussions in our committee. I think we will have quite a few submissions on those particular points about providing certainty to some of the binding rulings, and improvements such as the ability to rule when matters are before the courts and clarifying existing legislation and intent. This has been an ongoing issue for the professional sector. The sector has been concerned about the uncertainty and the bottlenecks in disputes procedure in taxation law and looks enviously across the Tasman, where the sector has that nailed down in a much better way than we do. Having said that, I am looking forward to many submissions on that particular part of the bill when it comes before the Finance and Expenditure Committee after its first reading.

The bill finally removes one of the two barriers to the 500,000-odd New Zealanders who now live in Australia coming home. Sadly, many of them will now be permanently there, but this will remove one barrier to their mobility back home. The other barrier that was removed to allow New Zealanders to return home was on 8 November last year with the change of Government. Many New Zealanders are starting to look fondly towards moving home. I look forward to debating this bill further in the House.

STUART NASH (Labour) : I find it astounding that Mr Foss believes that a lot of New Zealanders are looking fondly across the Tasman and wanting to come home. Maybe they are doing so if they earn more than $100,000, but if they are earning $40,000 or less than the minimum wage, why would they? The Government gave no tax cuts to anyone except the wealthy.

I stand in support of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill. It is common-sense legislation that simplifies the law for many. As mentioned by the Minister of Revenue, Peter Dunne, the bill also includes a number of technical changes to rules surrounding KiwiSaver, gift duty exemptions, and binding rulings, in order to improve the way the rules work and to reduce compliance costs for taxpayers, and other remedial matters.

I suspect that the main talking point will be that the bill introduces changes to the tax rules, as alluded to by other speakers, to allow New Zealanders returning home from Australia to bring their retirement savings with them. This is good for a number of reasons. It is a way of future-proofing New Zealand.

We all know that the current Minister of Revenue was a Labour member of Parliament for a number of years—10, I think it was—and he worked with the Labour Party for a number of years. But he has fluctuated, philosophically and politically, and has now gone back to the past. In coming from a background such as his I personally cannot see, as a Labour man myself, how the honourable member could possibly align himself with a National Party that has overt philosophies around privatisation and tax cuts for the wealthy. What was that figure? It was that one-third of tax cuts went to the top 3 percent of income earners. How could a former Labour MP for 10 years sit over there and agree with such philosophies?

Hon Member: Under urgency.

STUART NASH: Especially when they are brought in under urgency. It is amazing, is it not? It is absolutely astounding.

Hon Trevor Mallard: It was a hell of a lot longer than 10 years. It felt like a century.

STUART NASH: Yes. But I suspect that deep down he still retains those social democratic values that define our philosophies, which the next Prime Minister of New Zealand, the Hon Phil Goff, personifies so clearly.

I say that this bill is future-proofing the country, because the Minister must know that precious few Kiwis will be returning to this wonderful country as long as the National Government is in power. After all, what is attractive about privatising the accident compensation system? In fact, I will tell members who will be coming across the ditch in a great hurry. It will be the Australian insurance companies, who will be wringing their hands in glee at the anticipation of the privatisation of the scheme. It is coming, and I ask members opposite what is next, because that is what the voters in Napier and New Zealand are asking. Will the Government force children who play sport to pay their own accident compensation levies? And what about the elderly? Let us face facts: the elderly use up a fair bit of the accident compensation budget, so will the Government start charging them, as well? What about primary school kids? Will there be another tax on their parents? Of course, kids fall out of trees, and they use the accident compensation scheme. So what is next? What sort of country is the National Government turning this wonderful New Zealand into?

Shall we go further? I wonder whether the Government will privatise Kiwibank. After all, Mr English refused to recapitalise, so the bank had to start borrowing offshore. It was disgraceful. What about privatising Television New Zealand, or even the Department of Conservation. Well, the Government has already done so, to a certain extent, because it is allowing a preferential planting right on Crown land for selected groups.

I wonder whether National will accept the advice of its former leader and privatise schools. There is a plan for Mr English and Mr Key: let us make money out of education. Well, let me tell members something. Kiwis are not simply pieces of data on a spreadsheet to be manipulated and manoeuvred in a sick attempt to save a dollar here and a dollar there, at the expense of our long-term future and well-being. We are hard-working mothers and fathers, sisters and brothers, who are struggling at this point in time, and this just makes it worse.

We have seen too much of this with the axing of the KiwiSaver contributions, as my colleague the Hon David Cunliffe mentioned. As for adult and community education courses, I ask whether members know that in Napier there will now be no night courses run next year. A total of 6,000 people took night courses in Napier this year, but none will be doing so next year, because there is no money to fund them. Those courses survived for decades, even under the Rt Hon Sir Robert Muldoon, who really stuffed this country up. But at least he understood the value of education. For a lot of people, it is second-chance education.

What about the axing of the tertiary incentive allowance, through which the honourable Minister who cut that allowance got her degree. She stood up and said that if it had not been for the tertiary incentive allowance she would not have got her degree. Then she cut it. And now we have a former leader of the National Party appointed to the head of a Government working party called the Productivity Commission. The Prime Minister stated that this report had some nuggets in it. Well, I wonder what those nuggets are. Maybe they are doing away with interest-free student loans or cutting the minimum wage by $100 a week. Imagine that! Imagine cutting the minimum wage by $100 a week. Wow, that is amazing. Or maybe there will be a flat tax structure. That would be great if we earn over $100,000 a year and do not give a damn for ordinary Kiwis. For the vast majority of Kiwis this sort of productivity report is a slap in the face for ordinary, good, hard-working New Zealanders, and the Government should be ashamed of itself.

What will we see next year? The whole of New Zealand will hold its breath in anticipation. We will watch the rush to travel agents as Kiwis book their tickets to Australia for a couple of years before coming back to New Zealand once Phil Goff becomes Prime Minister in 2011.

Amy Adams: The next Labour Prime Minister hasn’t been born yet, Stuart, I am sorry to tell you.

STUART NASH: I say to Amy Adams that he is a man of integrity, honesty, and substance, and he will make a great Prime Minister.

As mentioned, this bill is future-proofing the country for when Kiwis choose to return. This is a sensible arrangement that allows New Zealanders to bring their Australian superannuation funds back into New Zealand and consolidate them under one account. This is a sensible and common-sense measure for a number of reasons, but one of the most compelling is that there is potentially $16.6 billion in lost contributions from New Zealanders working in Australia who under this scheme could come back to New Zealand. Even if a fraction of that money was to come back home, it would have a positive impact. Let us look at the problems that are going on in Australia at the moment. Australia is into its fire season—I think it has 52,000 fires a year—and it has a water shortage problem. Water is our competitive advantage. New Zealand is an oasis. New Zealanders will be coming back in 2011—members should not worry about that. Like I said, if even a fraction of that figure were to return once Labour regains the Treasury benches, it will be good for the country. It is only 2 more years, but those are 2 years too long for many hard-working New Zealanders who are struggling to make ends meet under this Government.

Members can imagine the outflow from this country if Don Brash’s suggestion that the minimum wage should drop by $100 a week was one of the nuggets that Mr Key and Mr English liked. That is not a way to achieve parity with Australia, unless parity means emptying out the country of people who simply cannot afford to stay here. As we know, the Australians actually have a compulsory superannuation fund, which makes this bill look like a very attractive proposition for us in New Zealand. In fact, believe it or not, New Zealand used to have a compulsory superannuation fund. So when Mr Foss stands on the other side of the Chamber, looks across here, and says that the Australians seem to have that side of things better sorted than us in New Zealand, he is dead right—they do; they have compulsory superannuation. We used to have compulsory superannuation over here, did we not, I say to Sir Roger. We had compulsory superannuation over here. I ask Sir Roger who designed the scheme that was in place, until a chap called Sir Robert Muldoon—illegally, apparently—abolished it. I ask members to imagine how much better off this country would be if he had not done so. Goodness me—it is unbelievable.

We are on the way a second time. The first step, which was implemented by Dr Cullen, Phil Goff, and Labour, was to introduce KiwiSaver, which is very popular. But, true to form, National cut the employer contribution from 4 percent to 2 percent. That is amazing. How will that increase productivity? It will not.

I will support this bill going through to the Committee stage. Labour members will go over it with the level of scrutiny that it deserves and that New Zealanders expect. We will end up with the type of robust legislation that New Zealanders came to expect over the 9 years of a Labour Government. However, under this Government they have been let down recently, due to a lack of process and too much urgency resulting in poor legislation. Thank you.

RAHUI KATENE (Māori Party—Te Tai Tonga) : A key aspect of this Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill is that it completes another chapter in the story of trans-Tasman relations. The relationship between Australia and New Zealand is given another boost with this bill, which gives effect to an agreement signed by the Minister of Finance and the Australian Treasurer on 16 July 2009. In the aftermath of the 2025 Taskforce report and a conservative monthly economic indicator report for November, the bill gives another push to those who already believe that the grass is greener on the other side of the Ditch. The bill allows those with retirement savings in a KiwiSaver scheme and the Australian equivalent to consolidate them into one account in their country of residence, exempt from entry or exit taxes. The bill also amends the rules for KiwiSaver for those in the scheme who permanently emigrate from New Zealand to Australia.

But as Tapu Misa wrote so convincingly in yesterday’s New Zealand Herald, it isnot the gap between New Zealand and Australia that we should target; it is the gap between rich and poor in New Zealand. Misa suggests that the gap between rich and poor in New Zealand is actually the gap we should be addressing; it is the gap that holds us back. Yet the 2025 Taskforce had the gall to suggest that in order to close the wage gap with Australia, all we needed to do was to reduce the adult minimum wage to $9 an hour. Such a move would result in a wage cut for half a million low-paid workers of $140 a week. It is not as though we can comfortably accommodate such regressive policy; the Gini coefficient, an internationally recognised measure of income inequality, rose from 26 in 1981 to 31.7 in 2007. Zero in this scale represents perfect equality, whereas 100 is absolute inequality. Set against other nations, New Zealand, when measured against the Gini index for inequality, is ranked sixth worst for inequality.

So, with the levels of income equality being as marked as they are, one can understand the enthusiasm that is being expressed for making a number of amendments to the Income Tax Act 2007 and other related legislation, such as the Tax Administration Act 1994 and the KiwiSaver Act 2006. The thinking is that boosting the incomes of mid to high income earners through tax cuts and tax exemptions will create economic benefits that will trickle down to lower-income earners. We call this the trickle-down effect. Just like those infamous buckets in Cuba Mall, the theory is that boosting the incomes of mid to high income earners will create more room for spending, which will create more jobs, which will bring about a greater demand for services, and which will mean that those at the bottom will be supported to climb out of poverty into a better quality of life—except that what we have experienced in recent years in Aotearoa is more like a trickle-up effect, which lands us back in the state of growing income inequalities.

This bill aims to take a couple of immediate steps to address the inequalities of income for New Zealanders. One is the enrolment of under-18-year-olds into KiwiSaver. The bill will enable discretionary entry for those under 18 to be amended to allow those who are now under 16 to be enrolled by their legal guardians, and to allow those aged 16 to 17 to co-sign with their legal guardians in order to enrol. In itself this is a good thing, in that it creates an opening and an opportunity for young New Zealanders to respect the savings culture—to invest in their own financial well-being and future. Another related aspect of this is the new relationship between KiwiSaver and the first home purchase. Basically the rules excluding individuals with an interest or past interest in a leasehold estate, such as having their name on a rental lease agreement, are amended so that they are eligible for first-home withdrawal.

We have been particularly interested in the opportunities for Māori to benefit from any initiatives that can address the lower levels of Māori homeownership. One of the greatest tragedies during the time of the previous Government was watching the decline in the homeownership rate amongst Māori, with the proportion of Māori who own their homes falling from 61.4 percent in 1991 to 45.2 percent in 2006. Māori Housing Trends 2008 reported that Māori had been hit by the same challenges as other New Zealanders who have found that property prices and rents have got out of reach in recent years. So it has been really exciting that the Māori Party has been able to work alongside the Minister of Housing with a whole bunch of initiatives to help Māori first-home buyers, such as streamlining the Resource Management Act and the Building Act to make building cheaper, reducing taxes so that there is more take-home pay to service the mortgage, and keeping interest rates under control through better Government spending at a time when interest rates might otherwise rise as the economy recovers. These are all important steps in our economic recovery, but there are other initiatives in train, including this one related to KiwiSaver.

The Māori Party is also proud of the developments associated with the Housing Innovation Fund, particularly in extending the scheme to make it available for new builds and for buying a first home on multiple-owned Māori land. The opportunity for first-home withdrawal is a positive amendment to the tax law that we hope will pave the way for more Māori to own their own homes.

There are some other interesting amendments in the legislation. Cure Kids is added to the list of charitable donee organisations in schedule 32 of the Income Tax Act 2007. This enables donors to obtain a tax deduction on their donations to Cure Kids—previously known as the Child Health Research Foundation—which was established over 30 years ago to address the lack of research into life-threatening childhood illnesses in New Zealand. We are talking about illnesses like asthma, childhood diabetes, childhood heart problems, liver diseases, and spina bifida—all areas in which Māori and Pasifika children are disproportionately overrepresented.

Then there are amendments to the gift duty exemptions. The bill exempts the following gifts from gift duty: gifts to local or central government bodies, gifts to donee organisations, and gifts of property made via a court order under the Law Reform (Testamentary Promises) Act 1949 or the Family Protection Act 1955, which will apply retrospectively from 24 May 1999.

All of these measures are perfectly legitimate, valid ways of making changes to the tax laws, and, as such, they give us grounds to support this bill. But I cannot leave this debate without raising again the need to do better in addressing inequality. In The Spirit Level, which was produced this year by Richard Wilkinson and Kate Pickett, the authors suggest that in highly unequal countries like New Zealand, the cost is almost always high rates of social dysfunction. They draw upon more than 30 years of data to demonstrate that in an unequal society there are more people in prison; there is more violence; more people suffer from ill health, mental illness, or drug or alcohol addiction; there is more adult and childhood obesity; there are increased infant mortality, homicides, and teenage births; and educational outcomes and performance are lower. If anyone is under any illusion that this tax bill will address those issues of profound inequality, I would caution against it.

But that does not mean we should abdicate all responsibility for change. We must do something to address rising food prices and the impact that that has on the ability of those in low-income households to purchase healthy food, by exempting this food from the goods and services tax. That is the substance of the next member’s bill that I will be submitting, and I would appreciate members’ support for it. The other wider issue, of course, is the need to include broader economic measures, such as unemployment and income levels, with growth measured using a genuine progress index.

The Māori Party will vote for this bill to go through to a select committee today, and we look forward to the future discussions on it. Kia ora.

AMY ADAMS (National—Selwyn) : I am happy to take a call in the first reading debate on the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill. Although the debate has been reasonably wide ranging this afternoon, it is probably worth coming back to the fact that the provisions in this bill are reasonably simple, straightforward, non-controversial, I would suggest, and, from what I can garner, very well supported in the House.

Those provisions are very simple, really. The main provision is around the portability of superannuation savings between Australia and New Zealand. It will take us a step closer to that common, single economic market between us and our closest neighbour and friend. I think that is an important point, because a huge amount of money gets left behind, lost, and disassociated from its owners in superannuation schemes, particularly in Australia, which has had a history of compulsory superannuation. Those schemes have a vast pool of money that does not find its way back to its appropriate owners. There is a good chance that a large chunk of that money relates to New Zealanders who have done some work in Australia, come back here to live, and really forgotten about it or lost track of it. This bill will allow New Zealanders coming home to consolidate their financial affairs in New Zealand, bring that money back, put it into their KiwiSaver scheme, and run their retirement savings through one pool, which is very sensible. It is a good initiative, and certainly one I support.

The bill also confirms the annual tax rates and makes important remedial changes to the KiwiSaver provision, specifically and most important to how it applies to those aged under 18—getting them into the scheme, whose consent is required, the deductions from PAYE where child rates apply and the like, and a number of other tidy-up measures.

The only other point that I wanted to touch on—and I did hear the Minister talk about this in his opening remarks—is the removal of gift duty for gifts made to donee organisations, which is income tax language for charities. That is a very important step forward, because for too long a gift to charity has certainly been deductible for income tax purposes, but if one was not careful it would attract gift duty if one managed to cross the threshold of $27,000 a year. That is a significant barrier to large-scale donations to charities. It is a provision that I could never see the sense in, and I am very pleased that it has been picked up on and addressed in this bill. I hope that encourages New Zealanders in their philanthropic efforts. It is a good bill and I commend it to the House.

Hon DAVID PARKER (Labour) : As prior speakers on behalf of the Labour Party have no doubt already said, Labour will be supporting the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill to the select committee. We are particularly pleased to see that the KiwiSaver provisions introduced by the previous Labour Government have led to an arrangement being possible with the Australian Government for the portability of savings under Australian superannuation schemes, so that they can be brought back home to New Zealand KiwiSaver compliant schemes.

It is interesting to reflect upon the divergence of the New Zealand and Australian economies in the last few decades, particularly given some of the, I think, simplistic analysis by the 2025 Taskforce, which was chaired, of course, by Dr Don Brash. The big difference between New Zealand and Australia over the last three decades is when it comes to savings. The Australians save well; New Zealanders do not. Australians have been saving for their retirement for decades; New Zealanders have not been. Indeed, if any member in this House can speak authoritatively on that issue, I would have to say it is Sir Roger Douglas. Sir Roger introduced into this House in 1972—I think, from talking to him recently; I had to check with him for the exact date—a private member’s bill. He was in Opposition at that stage, in the Labour Party. The bill introduced compulsory superannuation savings in New Zealand. Not long thereafter a Labour Government was elected, and that Labour Government introduced—again, using the model that Sir Roger Douglas had developed—compulsory superannuation savings in New Zealand.

Those compulsory savings were used by the National Party under the Rt Hon Sir Robert Muldoon as the cornerstone of its campaign against the Labour Party at the following election. He did a couple of things that were terrible. Members will remember the “reds under the bed” cartoons—or, I should say, the dancing Cossacks cartoons—and the talk that the whole of New Zealand was, according to Sir Robert Muldoon and the then National Government, going to end up owned by the superannuation scheme, and that therefore it was a bad thing to do. National promised that if it was re-elected, it would axe the scheme and would give everyone the money back. Indeed, Sir Robert Muldoon encouraged people to stop making contributions to the superannuation scheme, despite the fact that the law remained on the books of the country. As a consequence, he was successfully taken to court, in what is still a notable case, Fitzgerald v Muldoon. Mr Fitzgerald took the Prime Minister of New Zealand to court for ignoring the laws of this land in telling people that they did not have to comply with the requirements of compulsory superannuation.

That is a big difference that has arisen between the fortunes of Australia and New Zealand. For the three decades since then, we have not had settled superannuation policy on any long-term or durable basis, and we as New Zealanders have not saved enough. We have spent too much and we have not saved enough.

The most recent recurrence of this terrible trend in New Zealand of National Governments unwinding the positive moves towards better provision for long-term savings for superannuation and investment capital for new or expanding enterprises in New Zealand is, of course, the current Government. The current Government has relied upon KiwiSaver to achieve the advances that are referred to in this bill in terms of the portability of superannuation from Australia into New Zealand. Those advances would not have occurred but for the KiwiSaver scheme. The KiwiSaver scheme is sufficiently similar to the Australian scheme that the Australians have been convinced that there should be portability, and that the superannuation savings under Australian schemes should be able to be converted into KiwiSaver.

Of course, KiwiSaver in itself is less effective than it was. The savings deficit in New Zealand is significant. New Zealanders need to save a lot more. KiwiSaver gave significant tax credits to employers, which eased for them the transition into contributing to the savings of their employees. Employers got a contribution by way of a tax credit to the amount that they were spending on their employee’s savings. The employee was required in response to save 4 percent of his or her earnings. The inducements to the employee included tax benefits to the employee. So through the combination of the tax credits to the employer and the tax benefits to the employee, droves of New Zealanders were beginning to save 4 percent of their income, plus 4 percent matched by their employer over time. That has been halved by the current Government. In doing so, the current Government also removed the tax credit to employers, so if the employer is now contributing, it is at a real cost to him or her, and there will be less encouragement from employers for employees to begin to save for their retirement and to reverse the long-term trend in New Zealand of insufficient savings.

Those insufficient savings show up most transparently in our current account deficit. Year by year, New Zealand gets poorer as we sell more of ourselves to overseas lenders. That is essentially what a current account deficit does. Except to the extent that the additional capital that is coming into the country goes into productive investment, the rest of it is consumed, and in New Zealand the majority of it is consumed. As a country, we get poorer and poorer to the extent of our current account deficit, which is largely consumed. That reflects the fact that we spend more than we earn and we do not save enough. As a consequence, our country gets poorer and poorer year by year. Although the Government has been saying that it will reverse that, and that it will cause the next round of economic growth in New Zealand to be in the productive export sector, the tradable sector—be it primary produce or manufactured goods and services—the reality is different. The growth we are now starting to see in New Zealand is actually from the re-inflation of the Auckland property market. We are seeing an increase in residential housing activity. We are not seeing the increase in export-related investment that we need to cure our current account deficit. In part, that is because the competitive investment capital is not available to our businesses at competitive international rates. In part, it is because we have a volatile exchange rate.

Neither of those issues are fixed by this legislation, but Labour will, none the less, support the bill being referred to a select committee, because it is good that we at last have some vestige of savings policy in New Zealand through KiwiSaver that is being recognised by the Australian Government as sufficiently good to allow reciprocity, or conversion of Australian-based superannuation into New Zealand schemes.

Other changes made in this bill are supported by the Opposition. Indeed, I think we did some of the preliminary work under the Hon Peter Dunne, who held the same role in the previous Government, relating to gifts to charities, and to the removal of gift duty consequences for larger gifts to charities. That seems to be a desirable thing to do, as well. In closing, I say that Labour supports the bill being referred to a select committee, but it laments the fact that KiwiSaver is not as good as it could be.

Hon Sir ROGER DOUGLAS (ACT) : I want to take up some of the points that the Hon David Parker has talked about. But before I do, I just wanted to say that although all of us recognise that the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill is necessary, essentially what it is doing is fiddling while Rome burns. What we as a Parliament are doing is essentially borrowing the equivalent of a hospital every week, and we intend to go on for 4 years borrowing $250 million a week, or a hospital a week. Frankly, that is unsustainable. The fact is that if we come back to retirement—and I think if we are talking about superannuation, we cannot actually talk just simply about superannuation; we have to talk about retirement—the cost there is not simply superannuation; it is also healthcare in retirement, which is getting more and more costly. If we look at this year’s Budget, if we look even at provisions in this bill, we find that 60c in every dollar of personal tax that each and every one of us here and throughout New Zealand pay goes to the retired. It costs $1 in every $3 of personal taxation to meet the superannuation costs of the retired. It cost 27c in the dollar of every dollar of personal tax to meet the healthcare costs. That is 60c in the dollar, and we have a retired population of around only 12 or 13 percent. When that gets over 20 percent, this country will be bankrupt unless we do something about it.

I do not believe that any of the political parties in this Chamber have a policy that would help get us out of that. Our Māori Party member, Rahui Katene, who spoke in this debate, talked about inequality. Although I agree with her, I do not agree with the cure. Let us take superannuation, for example. The present superannuation scheme is unfair. It is certainly unfair to Māori. Māori enter the workforce generally at a younger age than most New Zealanders do. They therefore work longer in the workforce than most New Zealanders do. In other words, they are paying more taxes over their working lives, yet they die at an earlier age on average and get nothing. Only a superannuation scheme that is fully funded meets their requirements and the requirements of many others on low incomes.

The same is true in other areas like education and health. That is why I advocated the other day in a paper that I published that the first $600 of income a week should be tax free, giving around $6,500 extra a year in people’s pay packets. But if people took that tax reduction, they had the responsibility to buy their accident and sickness cover, their health cover, and to save for their own retirement. The fact is that if the average person did that over his or her working life, he or she would be likely to retire with somewhere between $800,000 and $1,000,000 in the bank. Certainly, that would be better for low-income earners, often Māori, and Pacific Islanders.

It is time for this country to actually take stock. The thought that this Government is going to borrow the equivalent of a hospital a week for the next 4 years makes me shudder. We can fix it. The paper that I put out demonstrates how we can fix it if we are prepared to make some necessary changes. It is true that this Government inherited a mess from the previous Labour Government—there is no doubt about that. But at the end of the day, it does not matter who created the mess. This Government has the responsibility to deal with it. Labour will not recover for a long time from the fact that over and above inflation, it increased Government spending by about $18 billion a year.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : I rise to support the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill. In July this year, despite the sideshows presented by the Opposition, the Hon Bill English and the Hon Wayne Swann signed a memorandum of understanding to establish a trans-Tasman retirement savings portability scheme. That scheme, as many have already mentioned today, opens the way for New Zealanders to return home from Australia and bring their retirement savings with them.

New Zealanders who have lived in Australia—and I include myself in that group—will be able to bring home their savings, which are currently invested in Australian superannuation funds and Australian businesses, and invest them in New Zealand businesses and New Zealand infrastructure. This bill will enable the exchange of funds. Of course, some will take their KiwiSaver savings and transport them to an Australian fund, but, given the history of New Zealanders working in Australia and those who are now returning to live in New Zealand, given the change of Government, and given the optimism that this National Government has brought to this country, the flow of those funds will undoubtedly be greater from Australia to New Zealand.

As the previous speaker, the Hon Sir Roger Douglas, mentioned, this bill will not solve all our problems. I do not believe Rome is burning. But the bill is consistent with the raft of other legislation that we are putting in place to make it easier for businesses to raise capital and for funds to invest in the rundown infrastructure of this country. It will make it easier to create a single trans-Tasman market, not just for goods and services but also for labour and a number of other investments that cross between our two countries.

Some of the details of the bill will be discussed in the Finance and Expenditure Committee and throughout our deliberations. Key points are that the transfer of funds is voluntary, and that the transfer between New Zealand and Australia will be exempt from any taxes, which I think is particularly important. The amounts that are transferred between the two countries will not be available for investment in a third country. I support this bill and look forward to its implementation, and we expect that to occur in the second half of 2010. The bill will assist us through the hard edges of the recession, and I look forward to working through it with the select committee in the coming months. Thank you.

Hon CLAYTON COSGROVE (Labour—Waimakariri) : As my colleague David Parker said, Labour will be supporting this bill to the select committee. This is an interesting debate, because it is indeed rich with irony. This is the first bill on superannuation matters that National, in Government, has brought to the House that is positive. The other bills that have been brought forward involved the suspension for 10 years of the pre-funding payments to the Cullen fund, and pulling the rug out from under the, at the time, 1.2 million Kiwis who had signed up to KiwiSaver, by gutting the Government contribution. Then we have this bill, in the name of the Hon Peter Dunne. I note that as a member of the previous Government he supported the building of those two funds, both KiwiSaver and the Cullen fund, as it is colloquially known, and now supports the actions taken by the current Government. But now, of course, we have a bill that is positive: the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill. I refer to the trans-Tasman portability provisions: KiwiSaver to there, and Australian superannuation funds to here. Yes, I agree that it is a positive outcome.

The other irony in this debate is that we heard from Sir Roger Douglas. I pay tribute to him for putting in place, under the Kirk Government, a superannuation scheme on which, if we had it today, we might be debating, in this bill, the portability aspects of the legislation, but we probably would not be having debates about some of the ills that Sir Roger and others have talked about, in terms of people’s retirement savings and a lack of a savings culture, because we would have had that fund, well ahead, I would have said—I think it was about a decade or 12 years ahead—of when the Australians decided they would embark on a compulsory superannuation scheme. I remember that Paul Keating as Treasurer took heaps. I think from memory it was 1987 or slightly earlier when he introduced that scheme. It took heaps, but I think for only about 3 or 4 years. I worked in Australia in the mining industry for a number of years, and I remember asking people about the history of superannuation because it was a new experience for me to be paying into a compulsory superannuation scheme.

Of course, for the Australians it is death, taxes, and superannuation—nobody cares. It is just what they do; it is the appropriate thing to do. The Howard Government fiddled with it in the mid-1990s, in the same way. He pulled part of the rug. He did not pull the whole carpet and the underlay out from under people, as Muldoon did in 1975, as Bolger did in the 1990s, and as Shipley did. Ironically, it was the current finance Minister, as he was then as well, I believe, who cut superannuation to our superannuitants and senior citizens three times.

Then we come to today, and we face a Government that has suspended payments to the Cullen fund. It has done it all again in the typical Tory way—not only fiddled with superannuation but gutted superannuation. Bill English said there is no economic literacy. What was the exact quote? He said: “National says that borrowing to save is economic illiteracy.” That was from Bill English. He has carried on that wonderful tradition that he started in the 1990s, that Muldoon started in the 1970s. Every time a National Government gets into power, it guts superannuation. If the pre-funding is suspended for 10 years, we will never recover from that. He has decided, for political purposes, to pass the cost of superannuation on to the next generation. His legacy, in terms of preparing and planning for this country to have a viable savings plan, is to suspend it. Ironically, the Cullen fund recently made $2 billion, so was it economic illiteracy, as he puts it? Does he still hold the view that it is economic illiteracy to save for one’s retirement? I suspect that that will be the legacy of this Government.

Chris Tremain: To borrow to save.

Hon CLAYTON COSGROVE: If that is the case, then New Zealanders with a mortgage—because I know that that member who interjects is a real estate agent—would never make any contribution to their superannuation retirement savings, because they are borrowing on the other side of the ledger. They would not do that, would they? It does not add up. That member on the other side is fired up. As I said before, that is the history of the National Government, from Muldoon to Bolger—remember it? “I won’t alter the age, no ifs, no buts, no maybes, from 60 to 65.”—to Shipley, and English as it was then, who cut the pension three times, refused to inflation-proof it, reversed all those things we did in Government, reversed the lot. We set up the Cullen fund, put it to 65 and then 66 percent, no less, of the average wage, gave our elderly folk security in retirement, and set out the social contract for those who are working now, with an expectation of what they had to do in order to meet their retirement savings.

Those Kiwis also stepped up to the plate, 1.2 million of them and counting, as they signed up to KiwiSaver to make their contribution. The Government put in, the employer put in, and, as I say, we set up the so-called Cullen fund to pre-fund superannuation. Most of that has been gutted by this Government. So this debate has a touch of irony, as we have the original architect of a compulsory superannuation scheme, Sir Roger Douglas in the 1970s, contributing to this debate, and as we have over there the man Bill English who, as finance Minister, aided and abetted by Jenny Shipley, and in the Bolger Government, was responsible for all the savage cuts to superannuation and the increase in the age. We have the irony of this being the first bill in respect of superannuation that has any positive effect that has been brought to this House by that Government—portability.

I suspect that other speakers are right—there will be people on both sides of the Tasman who will exercise their rights to transfer their funds and will now look at this in a very positive way. I say to Peter Dunne that I wonder whether he feels irony in this debate, as a person who, under a Labour Government, contributed very, very positively and advocated very, very strongly for the Cullen fund and for KiwiSaver—and I pay tribute to him for that—yet who now sits in a Government that has basically unravelled what I think he believes in most.

I do believe he has honourable intentions in respect of these policy issues. He believed in them, he backed them, and he advocated for them. The sad thing is that that Minister sits in a Government that has torn them all asunder. I wonder whether he senses the note of history or irony in this debate. What this Government is doing—although this bill is positive—is basically sending a bill to the next generation to pay for their superannuation. The policy platform does not encourage savings. In fact, it undermines them, as the Government has ripped out and halved the Government and employer contributions and has taken away some of the incentives. Yet Kiwis will still sign up, because Kiwis have worked out that they have to make some provision.

But this is the way National has acted throughout its history, since the 1970s. I know that Mr Gilmore, being the fountain of knowledge on all things—and he may have done history in his undergraduate degree—will know that I am correct. If he looks up his encyclopaedias or flicks on to the Internet he will know. He could Google “Muldoon and superannuation”, or “Bolger and superannuation”, or “Shipley and superannuation”, or “Bill English and superannuation”, and he would see that every time his party got into power it did nothing but undermine, pull apart, and crash and burn any savings culture in this country.

So it is with a touch of irony and history that we do deal with, I think, a positive bill, which we will support. This is the first piece of superannuation legislation—ironically, it was brought in by Peter Dunne—that does anything positive for Kiwis both in this country and on the other side of the Tasman. They will come back. Government members talk about a legacy. They had left to them a legacy of a Cullen fund making money, of a KiwiSaver scheme set up with huge support from New Zealanders. A platform and a savings culture was being established, and within months the new Government decided to pull the pin on it. So Bill English has lived up to his National Party roots and his legacy. He will go down in history, along with Bolger, Shipley, and Muldoon, and the others, whose greatest impact on New Zealanders’ lives was to pull the rug out from under them in respect of their retirement savings.

AARON GILMORE (National) : That was a wonderful bit of rhetoric from the member for Waimakariri, the Hon Clayton Cosgrove. Maybe it was a deputy leadership challenge. I think the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill is all about some wonderful steps. I think it is great that the member for Waimakariri thinks that the former National Prime Ministers are super. I think it is great that he thinks they are super, but I will talk about another super man. Bill English, who is in the House, has done a wonderful job of putting in place some wonderful portability around KiwiSaver. When I was born, New Zealand had a higher per capita income than Australia. Since that time, we have gone backwards.

This bill will allow somewhere in the region of $15 billion to $16 billion, as I understand it, sitting in Australia right now to come home. Some of the tens of thousands of Kiwis who, since the last election a year ago, have decided to come home will be able to bring their capital to New Zealand and invest in the things that are here in New Zealand. I think that is a wonderful thing. We welcome them home. Whether they are seniors or young people, wherever they come from, we welcome them home. They are coming home in droves because what they want is a John Key - led National Government, and they are very happy to come here. They want to bring their investments home.

Our Government is focused on issues of growth, but the member who just resumed his seat, Clayton Cosgrove, talked about the vagaries of history. I do not care, really, about the history; I care about the future. The other thing I want to talk about is the fact that the portability of KiwiSaver will allow some people to bring money here. The member has worked in Australia. One of our members who spoke earlier worked in Australia. They have money tied up in superannuation schemes there, and they can bring it home in KiwiSaver, and that money can then be used to invest in and grow New Zealand businesses.

I want to touch on one other aspect of this bill that no one has spoken about, and that is the technical issue around non-resident oil-rig operations. This country is mineral-rich. We have spoken a lot about Australia and Australia’s wealth. Well, our third-biggest export last year was oil, despite what people believe. This bill will push out for a bit longer some of the exemptions that the oil rig operators have. At the moment there are two oil rigs drilling off the coast of Taranaki, and I expect there will be more in the next 6 months. There is something like $1 billion being invested in oil rig drilling operations over the next 6 months, and some of them will be successful. That will allow us to grow our economy faster and catch up with Australia. That is all I want to touch on. I look forward to further debate at the select committee.

• Bill read a first time.

• Bill referred to the Finance and Expenditure Committee.

Hon BILL ENGLISH (Minister of Finance) : I move, That the Insurance (Prudential Supervision) Bill be now read a first time. At the appropriate time I intend to move that this bill be referred to the Finance and Expenditure Committee for its consideration. I will outline the main features of the bill, but first I will point out one small fact of history to Clayton Cosgrove, who was speaking earlier. It is that the problem with what Mr Muldoon did in 1972 was actually that he made superannuation too generous—completely the opposite of the way that the situation was presented by the Labour member.

The Insurance (Prudential Supervision) Bill will be administered by the Reserve Bank as part of its Government-appointed role of prudential regulator of our financial services sector. The bill will deliver comprehensive prudential regulation of insurers who are carrying on insurance in New Zealand. All insurers operating in the New Zealand market will be required to be licensed and supervised by the Reserve Bank and to comply with minimum prudential requirements. The introduction of this legislation is another significant step towards achieving clear, robust regulatory arrangements across the financial sector. It will replace outdated and disjointed legislation, fill gaps where no prudential regulation currently exists, and remove inconsistent legislative application between different insurance sectors.

Unlike certain other parts of the financial sector, the New Zealand insurance industry is not generally perceived as being an industry in distress. However, the flow-on effects of the global financial crisis will inevitably have an impact on the value of the investment funds, so it is timely to introduce regulation that sets clear prudential standards. In addition, the bill brings the regulation of insurers into line with established international benchmarks and expectations. We believe that this will increase the confidence of offshore observers and participants in the New Zealand market and improve the confidence of the public in the insurance industry.

The proposed legislation exists as a stand-alone bill in its own right rather than as an amendment to the Reserve Bank of New Zealand Act. The powers conferred on the Governor-General, the Minister, and the Reserve Bank under this bill must be exercised for the purposes of promoting the maintenance of a sound and efficient insurance sector, and of promoting public confidence in that sector. These purposes will be achieved by establishing a system for licensing insurers, imposing prudential requirements, providing for supervision by the Reserve Bank in respect of compliance with the requirements set out in the bill, and conferring certain powers on the bank to act in respect of insurers who are in distress or in other difficulties. The bill will have reach over all insurers operating in the New Zealand market. It will include life insurers, non - life insurers, health insurers, and discretionary mutual providers of insurance services.

Although the bill is obviously designed to deliver effective regulation, it is comparatively light-handed in its application, and it is intended to deliver regulation that does not mire the industry in a compliance mentality. It contains a strong emphasis on director and senior officer obligations and accountability, which are intended to be reasonably self-administering for compliance insurers once implementation is completed. The bill recognises a number of the realities of our market, including its small size and significant diversity, and it deals with these by having marginally varied requirements between the different categories of insurers. However, there is also a strong focus on competitive neutrality in the application of regulation to insurers.

In addition to the licensing requirement placed on all insurers, the bill proposes that all insurers, except for a limited class of small friendly society insurers, will be required to have a financial strength rating from a rating agency approved by the Reserve Bank. All insurers will be required to have satisfactory, fit, and proper assessment programmes for directors and relevant senior officers, and satisfactory risk management programmes governing their day-to-day operations. The bill will contain capital and solvency requirements to apply to all insurers, which are derived from a risk-based approach that takes into account the specific situation of each insurer. A minimal capital requirement will also apply under the solvency standards. Life insurers will be required to maintain statutory funds for the protection of funds allocated to long-term policyholder liabilities. There will be enhanced financial reporting requirements on all insurers and a requirement for all insurers to have an appointed actuary to assist in this reporting. All insurers will be required to produce an annual financial condition report, to both the management and the Reserve Bank as a regulator. The Reserve Bank will be required to approve all transfers of policyholder liabilities and amalgamations between insurers, and amended legal requirements are included within the legislation to increase the efficiency of this process.

The bill provides the Reserve Bank with broad-ranging information-gathering powers appropriate to the role of the industry supervisor, and it empowers the bank to have an active role in respect of insurers in financial distress. This will include the ability of the Reserve Bank to participate in insolvency procedures and, in extreme circumstances, in statutory management.

The development of this bill has been assisted by an extensive consultation programme, involving stakeholders across the insurance industry and providers of related support functions. The consultation included the release of a draft bill in April 2009, which attracted more than 90 submissions. The Reserve Bank has also been in close dialogue with relevant overseas insurance bodies, including the International Association of Insurance Supervisors and the Australian Prudential Regulation Authority, as well as with other New Zealand Government agencies. There is general industry acceptance of the need for the prudential regulation of insurers and general support for the direction taken by the bill.

In conclusion I say this bill broadens the ability of the Reserve Bank to promote a sound and efficient financial system. It is a significant step forward in terms of updating the regulation of insurers and improving the transparency and clarity of regulation in the sector. It is my hope that this legislation will lift public confidence in an industry that is characterised by complex financial arrangements that are often difficult to understand. As a result of comprehensive consultation, I suspect that we will have a strong degree of support for this bill’s referral to a select committee.

Hon DAVID CUNLIFFE (Labour—New Lynn) : Labour welcomes the introduction of the Insurance (Prudential Supervision) Bill. We will be supporting the bill’s referral to a select committee, and we look forward to hearing a wide range of submissions from the industry and affected parties. Sadly, this bill does not go far enough. Although we support the broad aim of broadening and improving the prudential supervision capabilities of the Reserve Bank and welcome in principle the extension of that role to the insurance industry, we note that the Government has had little to say about other broader enlargements of the prudential supervision role. In this brief introductory set of comments I plan to reiterate the key contents of the bill, to briefly cover some of the risks and benefits that this legislation potentially has—noting, in particular, some of the concerns of the domestic captive insurance industry—and to then talk about the broader mandate for prudential supervision that I have outlined.

The key provisions of the bill include provision for an insurance company to obtain a licence when it has met the criteria for eligibility. It requires an insurance company to maintain solvency, to obtain and publish financial strength ratings, to meet fit and proper standards for its directors and relevant officers, to have and comply with a risk management programme, to appoint an actuary, to prepare an annual financial condition report and 6-monthly financial statements, and to maintain at least one statutory fund that relates to the life insurance business and is solely for the purpose of meeting life insurance liabilities.

The bill recognises and accommodates the supervision of overseas insurers based in New Zealand by the home regulator, subject to such regulation meeting the satisfaction of the Reserve Bank. On that point, I note that the Labour Opposition underlines the importance of the independent, full-service role of the Reserve Bank that we currently enjoy. We note that there has been some discussion in the media, particularly from some our Australian banking colleagues, about seeing the extension of the Australian Prudential Regulation Authority’s oversight to cover the New Zealand market. The Labour Opposition would vigorously oppose such a move, believing that it is in New Zealand’s national sovereign interests that we maintain a full-service, independent Reserve Bank in this country. So we welcome, at least in principle, the extension of the Reserve Bank’s role to include the prudential supervision of the insurance industry, in concert with such specialist advisers as are deemed to be appropriate.

Considerable detail is contained in the bill around the licensing provisions, the risk management requirements, what defines a fit and proper person, the statutory fund separation for life insurance and similar long-term insurance funds, capital adequacy and solvency standards, and appropriate financial and regulatory reporting. The bill also covers insurance credit ratings and the supervision framework, including effective distress management provisions.

The bill has a number of both costs and risks as well as potential benefits, and we look forward to those being debated through a proper select committee process, as we had for the last tax bill to pass through this Parliament, as we did not have for the preceding tax bill, and as we certainly did not have in relation to the emissions trading system bill. I am sure that the chair of the Finance and Expenditure Committee—who will, I expect, want to take a call—would be the first to echo the point that all parties share an interest in having a proper and effective parliamentary process.

Craig Foss: Let’s hope.

Hon DAVID CUNLIFFE: Let us hope, indeed.

Some of the costs and risks that the Finance and Expenditure Committee will want to consider with regard to this bill include the point that the compliance costs on insurers that are applying to be licensed under the regime are not excessive, are relevant, and are, on the other hand, sufficient to underpin a proper regulatory role that is credible and enduring. The select committee will also want to consider the point that the proposed regulatory and supervisory requirements will impose some additional costs, including the need to maintain structures that verify compliance. Those costs are not expected to be significant relative to insurers’ revenue and profits, but we will want to verify that. We will also consider the point that the compliance with capital adequacy and solvency requirements may place constraints to some degree on an insurer’s operation, and we will want to examine whether those are not enough, just right, or too much. We look forward to submissions on that point. The regulatory reporting and public disclosure requirements will impose some additional costs, and we look forward to seeing the cost-benefit analysis there.

The proposed mandatory requirement for insurers to have a financial strength rating will also impose some additional cost, which is potentially outweighed by the transparency value to consumers of being able to obtain a better assessment of the risk base of their insurer. That will be high in the minds of ordinary New Zealanders, who have weathered their way through the recent recession that the country is now emerging from, but that the Government would rather have New Zealanders think we are still in.

The explanatory note of the bill states “the mandatory ratings requirement and its associated disclosure requirement could place commercial pressure on some insurers and lead to some insurers merging with others or leaving the sector.” We will want to know how many insurers are expected to merge with others or leave the sector, what degree of concentration we might expect to see in the market, and whether that raises any competition concerns. We would potentially be interested in the view of the Commerce Commission around those matters, and of the Securities Commission with regard to transparency improvements. The Reserve Bank is to have the power to require information from insurers, and we support that. But we will be interested to know what information is required, and we will want to know that the bank’s powers are sufficient for it to do the job, that its powers are graduated, that it does not have the problem of a hole in the middle between the basic, routine information-gathering powers and the ability to escalate short of system stability requirements, should there be a perceived problem that needs to be addressed. We will want to look at the licensing requirements and the fiscal cost to the Reserve Bank. We note that the Reserve Bank will not be charging a licensing fee for the first 3 years, so we will want to look at the fiscal risk to the Crown.

I note that concern has been expressed by the captive insurance industry. It notes that there will be a regulated domestic captive industry under this bill, but an unregulated foreign captive industry. I believe the select committee will want to take close note of any competitive dynamics that that sets up, because I believe all parties will share a common interest in ensuring that the New Zealand domestic industry is not disadvantaged relative to its foreign counterparts by these prudential rules, which are potentially in the interests of all parties. We will want to make sure that there is not a disguised incentive for the outsourcing of captive insurance programmes.

That brings me now to the wasted opportunity in the bill, which is the opportunity that the Finance and Expenditure Committee broadly drew attention to in respect of the Reserve Bank’s announcements that it was moving into counter-cyclical prudential policy, pursuant to Basel II and the G-20 processes. It rather begs the question of why the Government has not advanced some intention to fine-tune the Reserve Bank of New Zealand Act, when we have the Reserve Bank itself saying it wants to innovate in the area of prudential supervision. The Government is bringing forward this legislation to broaden the prudential supervision of an allied industry, the insurance industry, yet we have the paradox that the Minister of Finance himself says nothing can or should be done to enhance counter-cyclical prudential supervision and its relationship to monetary policy.

I am very pleased to note that the Leader of the Opposition, the Hon Phil Goff, with the full support of his caucus, has been the first to say that more work is needed in this area, and that Labour withdraws from the orthodox consensus about a period that has now passed. The days prior to the global financial crisis, prior to the Basel II process, and prior to the G-20 process were the days when inflation stalked the Earth as the only problem of note. Now, in this post-recessionary environment, growth and jobs and the potential for recovery are as important as inflation control and price stability, but the Government appears not to have got it. The Government has not got it, going by the statements of the Minister of Finance, and it has not got it in respect of this bill. Here it is—probably quite rightly—broadening prudential supervision into insurance, but missing the opportunity to have Parliament scrutinise the broadening of the prudential role of the Reserve Bank in the banking sector, which is, of course, the key issue.

CRAIG FOSS (National—Tukituki) : I was enjoying the speech of the previous speaker, the Hon David Cunliffe, until he got on to monetary policy. I note that I was part of the National minority on the Finance and Expenditure Committee last year, which reviewed the monetary policy and the various instruments initiated by the previous Minister of Finance, the Hon Michael Cullen. We examined all sorts of options in respect of tools in the tool box for the Reserve Bank, etc. I think that committee review went on for 5 or 6 months, and I think it was virtually unanimous. There was total consensus, other than a small minority report from New Zealand First, which is no longer here, and the committee reported that it had gone through the various fiscal and economic cycles and that the status quo was working. You know, an election comes around and the Government becomes the Opposition, and its members look for something to talk about, but the uncertainty that the member’s statements create destine Labour to remain in Opposition for somewhat longer, because they create uncertainty and premiums.

Briefly, the speaker made a point regarding captive insurance, and I think that will take up a fair bit of our time on the Finance and Expenditure Committee. There has been a fair bit of discussion about that already, and I fully expect a fair few submissions on the issue. I acknowledge that a lot of the work on the Financial Advisers Bill and the non-bank deposit takers bill and regulations, and the upgrades and changes were started under the previous administration. This bill is yet another plank to that. So its history is quite robust, and I think there will be consensus across the House as this Insurance (Prudential Supervision) Bill goes through, subject to changes and debate at the select committee.

It is an upgrade and a modernisation. If any good things came out of the systemic financial markets failure around the world—we were not quite as badly affected here as many other parts of the globe were—they were the examination of current prudential regulation monitoring, a sudden awareness of many holes in the system, and an acknowledgment that, in respect of the huge asset base, the obligations in the cross holdings from the various insurance funds across the financial sector can have a major impact on the financial sector and the New Zealand economy.

Having looked through the Insurance (Prudential Supervision) Bill, I note that a lot of the wording looks similar to wording in the Financial Advisers Bill, which the Finance and Expenditure Committee considered last year, so there is some commonality there. As the chair of that committee, I am sure that its members will welcome considering this legislation. We will have a busy few months. I look forward to submissions on the bill. I think the previous speaker outlined most of the issues that will be raised in respect of it, although I set aside the points he raised with regard to monetary policy. I commend the bill to the House.

RAYMOND HUO (Labour) : The Insurance (Prudential Supervision) Bill is important. How important is it? The bill is expected to receive the Royal assent in the fourth quarter of 2010 and will come into effect 18 months after that, which means that after that date it will be an offence to carry on, or permit someone to carry on, an insurance business without a licence. The overall purpose of the bill is to encourage the maintenance of a sound and efficient insurance sector that promotes confidence among policy holders and the general public.

The bill establishes a licensing regime for insurers and prudential regulations, with compliance largely self-administrated, while supervision is provided by the Reserve Bank. The Reserve Bank had earlier released a draft bill for stakeholder consultation. The paper provides an overview of the bill. The Reserve Bank was not seeking policy input, but was asking for comment on legal drafting and operational issues.

The key features of the bill are, firstly, licensing. Every person who carries on insurance business in New Zealand, except the defined Crown and public entities, must hold a licence issued by the Reserve Bank. Licences may be subject to conditions, including requiring a specified amount or proportion of insurance business to relate to New Zealand policy holders. Businesses must meet certain criteria, including having an appropriate incorporation and ownership structure, governance structure, and financial strength and the ability to carry on their business in a prudent manner. Businesses must have a fit and proper policy, and overseas applicants must have home regulation that is at least as satisfactory as the relevant New Zealand law.

The second of the key features is the solvency standards. The Reserve Bank may approve solvency standards for insurers after consulting with those it considers will be substantially affected. The third feature is credit ratings. Licensed insurers will be required to have a current credit rating from an appropriate rating agency, subject to limited exceptions for small and new or captive insurers.

The fourth feature is overseas policyholder preferences. Overseas insurers will be required to disclose the nature and extent of any requirement in their home jurisdiction that relates to the recognition and priorities of creditors’ claims in the event of insolvency and has the effect of giving a material preference to policyholders in the insurer’s home jurisdiction, or is otherwise materially disadvantageous to New Zealand policyholders. The fifth key feature is actuary audits, and the sixth is financial reporting. The seventh feature is statutory funds, which means life insurers will be subject to a detailed statutory fund regime. A life insurer must establish at least one statutory fund in respect of its life insurance business, relating solely to its life insurance business or a particular part of that business.

The eighth feature is Reserve Bank prudential supervision. The Reserve Bank will be able to require that an insurer and its associated persons provide to the Reserve Bank any information, data, or forecasts about any matters relating to the business, operation, or management, including corporate, financial, and prudential matters for business carried on in New Zealand or elsewhere. The ninth feature is audit, or actuary reporting. The tenth one is distress management. The Reserve Bank will be able to direct an insurer to prepare a recovery plan where the insurer is failing to maintain a solvency margin, the business of the insurer, has not been conducted in a prudent manner or the insurer is failing to comply with requirements.

The eleventh one is liquidation, voluntary administration, and statutory management. The twelfth feature is the transfers and amalgamations, and the thirteenth is criminal liability. There will be criminal liability for certain breaches, with the potential for substantial fines on summary conviction, and, in some cases, imprisonment. It is worth noting that according to the New Zealand Captive Insurance Association this legislation could create an unregulated captive insurance industry in New Zealand. The legislation would allow foreign companies setting up insurance subsidiaries in New Zealand to regulate it. A captive insurance company is designed to underwrite risks of its parent corporation only. The association president said this morning that this bill drafted by the Reserve Bank of New Zealand would regulate domestically owned captives but would not provide for the licensing and, therefore, regulation of foreign-owned captives.

The Hon David Cunliffe said earlier in his speech that that would raise a certain kind of concern. At the moment there are six Australian-owned captives set up in New Zealand. The association’s view is that foreign-owned captives are forming in New Zealand and want to be regulated. The association president said: “The Reserve Bank is, by default, encouraging an unregulated foreign insurance industry in this country. This will be extremely harmful for New Zealand international financial services reputation”.

This is a sensible bill and we will be supporting it through to the Finance and Expenditure Committee. It establishes a prudential regulation framework for the insurance industry. In doing so, it gives a number of powers to the Reserve Bank to carry out its new role. Sadly, this bill does not go far enough. It goes nowhere near dealing with one of the key economic issues facing the country currently in the state of monetary policy. Labour believes that we need to improve our export performance so we are all better off. Exporters need certainty, and at the moment they do not have that with the exchange rate so volatile. Labour wants to lift New Zealand’s economic performance so we all benefit in terms of high standards of living and high incomes. To do that we need to re-examine monetary policy, which apparently is not working at the moment. Unfortunately, Mr Key’s Government has so far only attacked Labour’s call to look at our monetary policy, and defended the status quo. Overall, this is a sensible bill, and we will be supporting it through to the Finance and Expenditure Committee. Thank you.

DAVID CLENDON (Green) : The Greens will be supporting the Insurance (Prudential Supervision) Bill to be referred to the Finance and Expenditure Committee, given that it establishes a level of regulation in an industry where it is clearly desirable that there should be some regulation. The timing is interesting to the extent that the almost complete absence of regulation of the finance sector was clearly a major contributor to its near collapse internationally. A great many New Zealanders have suffered real and substantial losses, initially financial loss, but also a flow-on effect of loss to their health, their security, their well-being, and their capacity to make choices about how and where they live their lives. So it seems appropriate for the Government to have some role in regulating a very closely related industry. We are informed that the bill is intended to bring New Zealand into line with international expectations for insurance regulation, and grew from a review begun by the Ministry of Economic Development in 2005.

At first glance, the reference to a reliance on self-discipline within the industry raised some red flags, given that the history of industry self-regulation, voluntary codes of practice, and mechanisms of that nature have at best a chequered history generally in New Zealand, as elsewhere, and not least in the financial sector. Ordinary New Zealanders put responsibility for a great deal of their financial security—indeed, their personal and emotional sense of well-being—into the hands of insurance companies. It seems appropriate that the Government should put in place mechanisms to ensure that that responsibility is well placed.

The four main parts of the bill are the prudential regulation, the credit ratings, the requirement that people be fit and proper persons, and the establishment of a risk management programme and some minimal solvency requirements. They would all seem to be very sensible elements or a sensible framework for this bill. We have heard comments already that it appears that the requirement to have capital in excess of a minimum requirement seems quite complicated, and perhaps that might be ironed out or made to be less complicated.

The Insurance Council of New Zealand acknowledges that New Zealand is one of the least regulated insurance markets in the world. It points out that in many countries—including the UK, the USA, and Australia—insurance commissions regulate the industry. In some cases, this extends down almost to the level of micro-managing the requirements—for example, that issuing approvals for new product releases be managed at that the level.

Clearly, any form of regulation will impose compliance costs on an industry and inevitably those costs will be passed on to consumers, so it is important to establish compliance costs that are appropriate but not so onerous that they will have a negative impact on people’s ability to access these services. The compliance costs associated with the provisions of this bill are not insignificant—for example, it seems that it may cost in the order $40,000 a year to obtain and hold a credit rating—but in the context of the industry and its financial capacity they would not appear to be onerous. We note that exemptions for small players seem adequate to remove groups such as those offering funeral insurance at a low level from the requirements and cost implications of the bill.

It has been argued that such a bill is unnecessary and that the self-regulation environment in New Zealand is satisfactory and successful because the industry has been proactive in developing its own framework. It must be said that that framework is multifaceted, is set out to achieve a high standard of ethical behaviour and a degree of transparency, and, indeed, requires proof of financial solvency. Although this may be based on a history of reliability, the same could be said for much of the financial sector up until recent times. We know goodwill and past performance are not necessarily a wholly reliable indicator of future performance and future risk.

We note that one element lacking from the bill is a formal mandate for reporting to the public, which limits or even prevents public oversight of how well the Reserve Bank, which will have primary responsibility for overseeing these matters, is doing in relation to the purpose of the bill. It may be assumed that the Reserve Bank will adopt a practice similar to its oversight of the banking sector: following section 165A of the Reserve Bank of New Zealand Act and providing twice-yearly financial stability reports. But again, this is absent from the bill as it stands, and we expect a formal mandate for the bank to report in this way. Under the bill currently, solvency information will not be made publicly available, and although there will always be a level of commercial sensitivity about some of this information, we expect to see at least industry-wide information to make this acceptable.

In summary, we think that in some ways it is extraordinary that we have got to this time without having some formal mandate for regulation of this sector. We look forward to seeing this bill go to select committee. Thank you.

RAHUI KATENE (Māori Party—Te Tai Tonga) : TheInsurance (Prudential Supervision) Bill starts off with honourable intentions. It promotes the maintenance of a sound and efficient insurance sector and public confidence in the insurance sector. It is a laudable goal to promote confidence among policyholders and the general public.

As members of the Finance and Expenditure Committee, we have heard more than our fair share of uncertainties and financial anxieties amongst stakeholders and the general public alike. I was interested therefore to learn that at the end of last year, although all other variables of the market were heading downwards, life insurers were sitting pretty, with a 9.5 percent increase in total premiums. Statistics from the Investment Savings and Insurance Association showed that total premiums for life insurance policies for the year to 30 September increased to $1.512 billion. Apparently, this was all to be expected, as people looked “for the safety, security and peace of mind that life insurance provides”.

With this grand setting, the bill introduces a major change to the insurance sector by clarifying and refining the legal, accounting, and actuarial responsibilities of the proposed regulatory environment. It is to be noted that this is indeed a major change, as historically our insurance industry has been lightly regulated. Over the last few years there has been a desire to bring the insurance sector more into line with the regulatory focus of its international peers, a desire that was given shape some 6 months ago when the Reserve Bank released the draft Insurance (Prudential Supervision) Bill for stakeholder consultation.

The bill will establish a system for licensing insurers, impose prudential requirements on insurers, provide for the supervision by the Reserve Bank of compliance with those requirements, and confer certain powers on the bank to act in respect of insurers in financial distress or other difficulties. In that respect, it has been described as a relatively light-handed approach to regulation, with the emphasis being placed on self-discipline. In effect, compliance is largely self-administered, although supervised by the Reserve Bank. We welcome the move towards establishing certainty while at the same time encouraging an improvement in general practice.

The Māori Party has supported other bills to improve regulation of the financial sector, including the Financial Advisers Bill, the Financial Service Providers (Registration and Dispute Resolution) Bill, and the Reserve Bank of New Zealand Amendment Bill. We are, of course, aware that the fact that this bill is even on the books indicates the failure of the market to regulate itself. The House can be assured of our general support for this bill to remove inconsistencies in application between different insurance sectors, and to provide legislative regulation where no prudential regulation currently exists. We see this as a safety mechanism that is in the best interests of all those implicated in the insurance industry, but I want to raise a few questions around this whole issue of insurance. We know that insurance can be a huge cost for Māori, iwi, and hapū who have responsibility for a marae or local gathering place. Legal risk and/or indemnity insurance costs may be a disincentive for Māori, and better information about insurance may help to address this problem. I also recall a report from the Ministry of Women’s Affairs that suggested that most Māori women do not have private provision for health or sickness insurance. Although we support the intention of moving to a sound insurance sector, we need to make sure these issues are aired as we consider the take-up of insurance and eligibility and access for Māori, along with other New Zealanders.

The Māori Party agrees that the financial stability of insurers is essential to provide the level of protection necessary for a sound insurance sector. We also all know the stories of constituents who have been ill-served and ill-informed by those in the insurance sector. Consumers must be well placed to monitor the financial strength of insurers, both on their own and collectively. In the best interests of the people, we will vote to support the bill at this first reading and we look forward to subsequent debate.

AMY ADAMS (National—Selwyn) : It is my pleasure to also contribute to this first reading debate on the Insurance (Prudential Supervision) Bill. A number of themes have come through quite strongly in the debate this afternoon. One of those has been the fact that over the last 18 months or so the world has changed, and one thing that has become clear to us all is the importance of trust and confidence in our banking and financial sectors. Certainly, although New Zealand has not escaped the recession unscathed, it has done considerably better than many other countries in the world. In large part that has been because our banking sector has been much stronger than that of many other countries we have seen. If anything was needed to bring home to us the importance of that, it has been not only the relative success of the banking sector but also the complete failure of trust we have seen through the non-bank lending sector and the finance company failures that have hurt and terribly scarred so many New Zealanders.

Those wider issues really do set a context for what we are dealing with here with prudential supervision of the insurance sector, because that sector also plays its role in the financial security of all New Zealanders. Through this bill, the House looks to bring a lot of outdated and disjointed legislation together into a cohesive prudential set of regulations that will ensure New Zealanders can have the same high level of trust and confidence in the insurance sector that we would want them to have in all aspects of the financial markets.

This bill will set up a system whereby the Reserve Bank is both the regulator and the supervisor of all insurers in New Zealand. It will cover all types of insurance such as life, non-life, and medical. One of the important aspects of it is to ensure that New Zealand does not become seen by international jurisdictions as a soft option with a loose regulatory framework around insurance, and this bill has been very careful to benchmark our rules with comparable international equivalents to make sure that that is not the case. The bill talks about a number of requirements on the insurers such as financial strength ratings, satisfactory, fit, and proper risk management programmes, and risk-based capital and solvency requirements, all of which are quite familiar themes to those of us who have been looking at prudential supervision in other areas.

Interestingly, I note in the bill that although the Reserve Bank has a supervisory role, it is a reasonably light-handed approach. The regulations require the insurers to take ownership for themselves and exercise self-administration and self-discipline. Certainly it will be interesting when we go through the select committee process to explore that further, to look at the risks involved, and to examine with the Reserve Bank the pitfalls and benefits of that approach. It is a more light-handed regulatory system. We do not want to put onerous costs on the industry, but we do want to ensure that New Zealand has an insurance sector that New Zealanders can have confidence in. I commend the bill to the House.

BRENDON BURNS (Labour—Christchurch Central) : I am very pleased to take a call in the first reading of the Insurance (Prudential Supervision) Bill. I acknowledge the comments of the member preceding me in saying that the world has indeed changed in the last 18 months. Those who at the beginning of last year might have still believed that the market was God and that anybody who talked about the need for rules and regulations was talking the devil’s talk, might now accept that the market does need rules and regulations. The financial markets of the world have been brought to their knees in the last 18 months, and that underlines the need for appropriate regulation such as implemented by this bill.

Labour will be supporting this bill’s referral to a select committee. I presume it will be referred to the Finance and Expenditure Committee. That is for the House to decide, but, if so, as a member of that committee I look forward to looking at the bill in more detail. It is a sensible bill, establishing the need for monetary policy and Reserve Bank powers, and we will look at its needs in terms of a prudential regulatory framework for the insurance industry. In doing so, the bill gives a number of powers to the Reserve Bank to carry out its new role.

Sadly, this bill does not go as far as it might. It goes nowhere towards dealing with one of the key economic issues facing our nation at present, which is the issue of monetary policy. We are looking again on Thursday at the Reserve Bank, and whether it might move on interest rates. We have no certainty about these issues, and the bill should give the Reserve Bank some more power so that it is able to be more flexible in implementing current monetary policy. Indeed, Labour does believe that we need as a nation to improve our export performance. It is our lifeblood, as the cliché so often goes, but it is important to give exporters certainty. Exporters such as the Manufacturers and Exporters Association, which is headquartered in my electorate of Christchurch Central, are 100 percent behind the comments of Phil Goff in a recent speech, when he said we need to review the Reserve Bank’s approach to monetary policy because it is doing nothing to assist our export sector and to grow the economy of this nation, and to give it some of the sustainability that will be so important into our future.

As a party, Labour wants to see New Zealand lift its economic performance and lift our incomes so that we can all do better, but to do that we must look at monetary policy. It is not set in stone, and it is not working in the interests of this nation. Everybody but the National Government seems to believe that that is now the case. I think that when the Prime Minister asserts that he will defend the status quo on monetary policy he is really defending something that is truly indefensible. The status quo is not delivering for New Zealand. When our dollar is stretching through to US73c and US74c, when it was US50c at the start of the year, how on earth can our exporters compete in a market where they are 50 percent more expensive than at the start of the year?

It is the volatility of the dollar, underpinned by our current monetary policy, that causes the problem for exporters. They could survive if they knew where the dollar might be over a time period, but the fact that it ranges from one end of the spectrum to the other across a short time frame causes them immense damage. There are estimates that every 1c movement in the value of the dollar costs this country $100 million in lost export opportunities.

We are supportive of this bill, as it addresses the need for some regulation across the insurance industry, and that is highly appropriate. The bill will require insurers to obtain a licence, having met the criteria for eligibility; to maintain appropriate solvency; to obtain and publish financial strength ratings, so that we get some sort of sense of where the insurance companies are, on the spectrum of financial strength; and to meet fit and proper standards for directors and relevant officers. We have seen in the wider financial industry the capacity for directors to not be appropriate and for strange practices to take place.

We want to see under the bill the requirement for insurance companies to have a risk management programme. Obviously, they are managing funds and they need to be giving assurance to those people who take out insurance policies with them that they will appropriately manage the potential for upside and downside risk. Appointing an actuary is another key requirement under the provisions of the bill and, obviously, to prepare annual financial condition reports and 6-monthly financial statements so those watching the insurance industry will be able to get some assessment of the relative strength of the insurance companies.

The main areas that are being brought through in the bill include the licensing of insurers to see that there is a consistent set of minimum standards met by all insurers. Obviously, they must obtain a licence. Once that is granted, they can be monitored against those standards. This then reduces the need for consumers to be having to make complex inquiries to be assured about the strength of a particular insurance company. That was something that was observed during the collapse of many finance companies over the last couple of years. Consumers have had a devil’s time trying to work out whether their particular financial company is kosher, strong, and able to survive the market downturn. Often they do not find out until it is too late and their money goes down the gurgler when, if there had been appropriate financial regulation, they may have been able to have at least some signals of the strength of that particular company. It is good to see these provisions introduced for the insurance industry.

Another main provision the bill is introducing is that insurance companies will have to be licensed before the bill is enacted. We are not doing this in any rapid time provision. It is estimated that there will be an 18-month lead time for the insurance companies to meet those requirements and to get licensed and covered by the ambit of this bill.

One of the other key provisions of the bill will be about capital adequacy and solvency standards. That truly will be an essential element of the legislation. Obviously an insurance company needs to give assurance to the market that it has the reserves and can meet the tests that apply in market situations from time to time. Overseeing all of this will be the Reserve Bank. It will require financial information from the insurance companies, and potentially the public will have access to that, should they have the need to assess in greater detail.

The background to the bill really comes down to the need to ensure we have a sound insurance sector. In the same way that we are now beginning to contemplate changes to financial companies, we need to know that when one is taking out policies or making investments with an insurance company, that company has the capacity to endure through the blips that happen across financial markets on a fairly regular basis. New Zealand’s insurance industry is known to be generally sound. There are no signals of distress, and that is very important. It is one of the good things across the New Zealand financial market that, although we have had 20 or so smaller financial companies implode, we have some stability across the banking sector more generally, and the insurance companies have certainly reacted to that.

They recognise, and certainly Parliament is now recognising, that we need to have assurance on these issues. We cannot just put our faith and trust and hope in the systems. We need to know as a nation of investors that the insurance industry will endure the regular storms that happen on the financial markets.

In the lead-up to the bill’s introduction there has been extensive consultation. That has been appropriate, and no doubt it will continue through the select committee process. That is also important, and I am pleased to be able to commend the bill to the House today.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : I also stand to support the Insurance (Prudential Supervision) Bill. As many previous speakers have suggested, this bill encourages the maintenance of a sound and efficient insurance sector. It is about promoting confidence and trust, but also about promoting efficacy in how that sector operates within the New Zealand market. The bill replaces some of the rather outdated and disjointed insurance legislation that we have in place today, and it aligns our insurance regulatory framework with the benchmarks that are set overseas. New Zealand’s financial markets do not operate within a vacuum, but within a complex financial market that spans the globe.

The economic conditions this year have been quite turbulent. They have resulted in the deepest recession that the world has experienced for a number of decades. But what this bill attempts to do is not to over-regulate this particular market; it is a light-handed way of approaching the markets. In terms of some of the scandals that have affected the financial sector, we have to be careful, as legislators, that we do not try to legislate for honesty, probity, and those who are operating in markets in a very dishonest way. The bill is about setting the right frameworks. It is about allowing our regulators and those who oversee these markets to have the right tools, with the right frameworks, and also the resources are put in place so that they are able to oversee the efficient running of the insurance market.

So what do we do? This bill establishes a system of licensing insurers, which I think most in this House would agree with. It imposes prudential requirements on insurers and allows for the Reserve Bank of New Zealand, which has overseen monetary policy in this country in an independent way, to provide for compliance with certain requirements. It is also about allowing policyholders to trust that those participating at the corporate level in the insurance market are operating in the way that they are supposed to, which is providing insurance products and services. It is a comprehensive bill, because it covers life, non-life, as well as medical insurance. It is also designed to provide for, and ensure that, New Zealand’s financial markets are fluid. It is part of a series of reforms this Government is putting in place, as a continuation of some of the reforms of the last Government, that will allow for securities. As well as the corporate trustee model, which has been reformed, there are a number of reforms in the area of financial advisers that we are currently going through.

So this bill is one small part of an overall reform of our financial and securities markets. It will be good for the select committee to look into the detail of the bill that is proposed, and I look forward to discussing it within the Finance and Expenditure Committee. I commend this bill to the House. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East) : It feels like déjà vu here; almost 3 years ago to the month I released, as part of a suite of nine documents under the Review of Financial Products and Providers, a document focused on insurance, and that is the genesis of the Insurance (Prudential Supervision) Bill, which we are considering today. So, obviously, I am very pleased to welcome it to the House, and I give my absolute assurance of support for its passage. Obviously, there will be detailed consideration of the bill at the Finance and Expenditure Committee, and I am sure there will be elements of it that different members of that committee want to look at in detail.

I thought it would be interesting to remind the House about the outcomes the Labour Government was seeking from the insurance sector at the time; I think they are worthy of reflection in light of what has happened since this report was tabled: “The overall outcomes Government is seeking from the insurance sector are: A sound and efficient insurance sector; Facilitation of effective risk management; Confidence in the insurance sector”—and that is what my colleague who has just resumed his seat, Peseta Sam Lotu-Iiga, was talking about—“that encourages participation by consumers, firms and providers; and Not to compromise or constrain contestability, competitiveness and innovation in the insurance sector.”

The one word that I have circled on the page here is “innovation”, because, now that we have looked at what has happened internationally, the word “innovation” may not be the right word when we are talking about the principles that underpin the quality of confidence that is required in our insurance industry. When we look at the failure of various banks and other institutions over in the United States, we see that we were exempt from those failures here because the out clauses that those banks in the US had were not out clauses that our Reserve Bank allowed here in New Zealand. Those out clauses gave the ability to insure against the risk of the almost impossible thought of the whole thing turning into a house of cards and crumbling, and that is exactly what happened in the United States. And, of course, when AIG failed as well, the whole house of cards came tumbling down. We must never ever allow that to happen. I agree with my colleague who has just resumed his seat that we cannot legislate for good behaviour, and we cannot legislate for integrity, but we sure as hell can legislate in this Parliament for the kinds of checks and balances that will ensure that those who have a dishonest approach or who are negligent with other people’s money, as we have seen, are able to be held to account and are not able to get away with what other people have been able to get away with in other jurisdictions.

I am glad we are talking positively about regulatory intervention. I think that sometimes in this House we have become a bit risk-averse with the word “regulation”. Why do we not just say rules for protecting consumers? Let us not use the word “regulation”, if people are so cut up about it. Rules for the protection of consumers are what we are talking about here.

We listed all the reasons for regulatory intervention back in 2006. Under “Asymmetries of information and complexities”—who has the information and who knows what protection is there—the report states: “Consumers need to be well informed about insurance products and providers through accessible, timely and easily understood information in order to assess which product and provider will best meet their financial needs.” How many people in this House have read the small print on their insurance policy? I do not think a single member in this House would put up his or her hand to admit to that. OK, I see that the Associate Minister of Immigration, the Minister of Labour, the Hon Kate Wilkinson, is nodding her head; she reads every last bit. She was a lawyer, so I expect her to do that. I have a legal background myself, but I cannot say that I have ever read every single last bit of an insurance policy. But they are complex documents; in them people are entering into complex agreements, and they do not even begin to understand them, which is why the consumer focus of the protection that regulation offers needs to be well understood.

There are issues of transferability. Once people are locked into an insurance policy and things go wrong with it, or things go wrong with those people, I am afraid that it is not so easy to find another insurer. Anyone in this House who understands the nature of the expression “pre-existing condition”—and all of us who are dealing with accident compensation cases at the moment understand it very well—knows that a pre-existing condition can lock people out of the cover of an alternative insurance provider, if they are unable to continue with the first provider for any particular reason. So the question of transferability is a huge reason why insurers have this imbalance of power over consumers in many, many respects. Of course, if a policyholder is locked into a policy of a company that then falls over, then, obviously, that is a great issue, as well.

Unfair or fraudulent conduct happens on both sides, by all participants—both insurers and policyholders themselves. There can be misleading practices on both sides of the equation, and therefore there needs to be some regulatory protection there.

There are questions of expectation and confidence. Obviously, we have huge issues in terms of our exposure to earthquakes. Here in Parliament we are 400 metres from a fault line—not that I like to remind anyone of that while we are actually in the building. There is the question of insurance liabilities following on from a large earthquake—those sorts of things. There are major issues with insurance. Of course, we are protected from some of the huge costs that other countries have imposed on them, because of our wonderful accident compensation scheme, which assists in respect of personal injury.

Then we have externalities around distress or failure in the insurance industry that is likely to pose a risk to the soundness of the financial system. That potentially has international reputation impacts. The other point we made was that large-scale events like a natural disaster may have some implications for the economy in terms of business interruption. I recall very clearly the cost that was imposed on many, many countries around the world post - September 11, which was not a natural disaster but was a disaster none the less. What happened was the cost of reinsurance rates went through the roof. New Zealand was completely protected because of our accident compensation scheme. So it is worthwhile mentioning that point.

So that was the basis of the consultation that went out to the general public. I think it was a very, very good process, and I want to place on record how responsive the insurance industry itself was to that process. It wanted to have its regulatory frameworks modernised. Some of its legislation is nearly a century old and does not in any way reflect the insurance market of today. The insurance industry deserves huge ups in terms of its willingness to be engaged in this process.

The Review of Financial Products and Providers announcements on all of the nine discussion documents were made in June 2007. That was about 2 weeks before Bridgecorp collapsed, which was a tragic coincidence of events. Among those announcements was Cabinet’s decision in June 2007 that the prudential regulatory authority for the insurance sector would be the Reserve Bank of New Zealand, and that is what this bill does today. Responsibility shifted from the Ministry of Economic Development to the Reserve Bank of New Zealand and the office of the Minister of Finance. Essentially, Cabinet approved the overall architecture of the insurance prudential supervision regime in December 2007, then we went out to get some further stakeholder engagement, and that essentially was signed off in May 2008.

There were four principles that the Government was guided by in terms of the decisions that were made throughout this process. Overall, there was to be a relatively light-handed approach to the supervision and regulation of insurers. It was to be cost-effective, subject to meeting regulatory objectives and prudential requirements. Competitive neutrality was the principle that we adopted. And, of course, it was to provide the benchmarking and consistency that we have heard others speak of today. The primary intention was to have the appropriate regime for New Zealand’s circumstances, having regard to appropriate international best practice.

I know that I am running out of time, which I had not expected to happen, so I will simply make reference to clauses 198 to 208, which make special provisions for Lloyd’s. I do know whether other speakers have contributed on this issue, but I met with Lloyd’s when I was in London a couple of years ago, and they were very keen to see this particular provision written into our law. So I congratulate the Government on taking up the proposal that was put forward. It is an important protection, this bill is an important advance for New Zealand, and I welcome its introduction to the House.

DAVID BENNETT (National—Hamilton East) : I will just take a short call on the first reading of the Insurance (Prudential Supervision) Bill. First of all, some Opposition members have been talking about the need for monetary policy reform, and of their vision of the world and economics. I think the New Zealand Parliament and the New Zealand people need to be aware that the New Zealand economy has come through this recession as well as could be expected for a Western economy. The prudential supervision of our banks has given us a lot to be thankful for and our monetary policy has been shown to be effective and successful once again. Labour Opposition members are hopping on the bandwagon that, I think, New Zealand First started a number of years ago, but nobody has any solutions that are any better than what we have at the moment and they are raising false hope by going around saying that they have a better system.

The reality is that this recession was a combination of factors: not only were there some unusual financial whiz-kids in the US and other Western economies, but also it was a wake-up call for the West in that the Eastern economies have focused more on their production of goods and services and exports. They have basically shown us that we need to reinvent the wheel and get back to basics. That is what the New Zealand economy needs to do. We need to get back to being an export-led economy that actually pays its way in the world. That is the wake-up call that this recession has given to the Western World and it is up to the West to accept that, to move on, and to play the game. The competing economies of the world are playing that game and if we do not wake up and do so, we will fall further down the list of international economies.

This bill is an attempt to give a balanced approach to dealing with supervision of the insurance industry. It is not too stringent but at the same time it presents a definite level of support and regulation, so that people can have confidence in insurers. The supervision to be provided by the Reserve Bank of New Zealand will be important in providing a mechanism to give that discipline to the industry. This bill is important, as we look forward, in providing a certain degree of regulation, but not over-regulation, of the industry. The Opposition talks about the need for monetary policy reform but that is not the answer. The answer is for New Zealand to be an export-led economy. That is what this National Government is about and what it has been working towards for the last year or so, since it has been in office.

• Bill read a first time.

• Bill referred to the Finance and Expenditure Committee.

Hon NATHAN GUY (Associate Minister of Justice) : I move, That the Statutes Amendment Bill be now read a first time. At the appropriate time I intend to move that the Statutes Amendment Bill be referred to the Government Administration Committee, and that the committee present its final report on or before 1 April 2010. As the House will be aware, a Statutes Amendment Bill is useful for making minor technical and non-controversial amendments to a number of Acts. It allows amendments to be made that would not usually receive sufficient priority to be progressed. This is achieved with the support of all parties in Parliament. In 2008 a Statutes Amendment Bill was developed but never introduced, as an agreement from all parties on the proposals was not reached before the general election. The 2009 Statutes Amendment Bill includes amendments that were submitted in 2008, as well as a new set of proposals. These were originally in two separate bills but it was decided that it would be a better use of House time to combine all the proposals into one bill. This means that this year’s Statutes Amendment Bill is indeed a large one. As introduced, it amends 47 Acts administered by 15 different departments. I shall give the House some examples of these proposed amendments.

The amendment of the Births, Deaths, Marriages, and Relationships Registration Act 1995 replaces references to “birth record” and “birth register”, with references to “birth information” for consistency with other provisions of the Act. Another amendment to that Act provides that a birth certificate need not be signed by a parent who is overseas, if the parent cannot be contacted within a period of time that is reasonable in the circumstances.

I also comment about the amendment to the Flags, Emblems, and Names Protection Act 1981. It amends section 20(3) by adding the name “New Zealand Food Safety Authority” and the abbreviation “NZFSA”. The effect is to prohibit the unauthorised use of that name or that abbreviation. That is an important point.

The amendment to the New Zealand Institute of Chartered Accountants Act 1996 changes all references to the “Institute of Chartered Accountants of New Zealand” to the “New Zealand Institute of Chartered Accountants” in order to reflect the change that the institute has made to its name.

The amendment to the Trans-Tasman Mutual Recognition Act 1997 amends Schedule 1 to correct an error relating to the year of the Plant Variety Rights Act 1987, which currently is incorrectly stated as 1981.

An amendment to the Social Security Act 1964 amends section 73 to remove outdated references to a former jurisdiction of the Māori Land Court to confer entitlements to the relatives of a deceased person out of the deceased’s estate.

An amendment to the Misuse of Drugs Act 1975 amends section 31 by omitting references to “registered post” as a means of delivery and substituting a requirement that the delivery use a “traceable system”. This change is made because “registered post” is no longer available but the item to be delivered still needs to be traceable.

I believe that I have traversed a range of some of the important parts of the Statute Amendment Bill. There are a whole lot of others, and I am sure other members across the House will make a very valuable contribution to what is a very important Statutes Amendment Bill. It is a way of advancing technical yet important amendments. I commend this bill to the House.

CHARLES CHAUVEL (Labour) : I will begin my brief contribution this evening by thanking the Labour spokesperson on justice matters, the Hon Lianne Dalziel, for delegating to me as her associate the responsibility for liaising with the Government on Statutes Amendment bills. I also thank, in the same vein, the Associate Minister of Justice, Nathan Guy, for his scintillating contribution.

Labour will support the amendments contained in this Statutes Amendment Bill, but we reserve the right to reconsider any individual amendment in the select committee, and obviously in the Committee of the whole House if and when further information arises. I will point to just one or two bits of the legislation that raise some concerns, and I signal to the Minister that they are concerns we are going to need to hear more about. These concerns arise in respect of nine of the proposed amendments that appear in the legislation. I did flag these matters to the Minister when I wrote to him on 8 September, in response to his letter consulting the Opposition, dated 24 August, but I think it is appropriate to register the concerns at this very early first reading stage.

The first of the nine concerns that Labour has relates to the definition of “foreshore” in the National Parks Act 1980, because there is a proposal that that should be amended. At the moment the National Parks Act refers to the definition contained in the Harbours Act 1950, but that has been repealed. So the new definition proposed in clause 103 is: “… any land covered and uncovered by the flow and ebb of the tide at mean spring tides”. In my letter to the Minister I expressed concern that this could have unintended consequences, given that there was in progress a review of the Foreshore and Seabed Act at the time of the letter. Now the review has been reported and is being actively considered by the Government, and we all await its outcome with baited breath. The Associate Minister of Justice has assured me that the Ministry of Justice and the Attorney General are both satisfied that the change will have no direct effect on the 2004 legislation or the review; we will certainly be keeping that matter under close review.

The second substantive issue I wanted to draw to the House’s attention was the intended amendment in clause 25 to section 9 of the Births, Deaths, Marriages, and Relationship Registration Act 1995. The intention is to substantively change the meaning of when a parent is unavailable, within the meaning of the legislation, to sign a birth registration form. Although we in Labour concede that that is a sensible amendment on its face, we think that it sails quite close to the definition of what would be a substantive policy change, so we want some assurance that it is merely a machinery change.

The third matter relates to the proposed amendment to section 26ZZQ of the Conservation Act 1987, as substituted under clause 53. The proposed amendment seems to extend the scope of an offence rather than merely correct an error. Again, at the select committee or in the Committee of the whole House, we are going to want some reassurance about that.

I will deal more briefly with the other six concerns that I have pointed out to the Minister. First, the Juries Amendment Act 2008 is legislation not yet in force that amends the 1981 legislation. That Act is amended by clause 96 to expand the range of jury districts from 30 kilometres to 45 kilometres. That might well just be a sensible amendment but we will want to test the reasons for it. There is also an amendment under Part 26 to the Marriage Act 1955 to change the criteria for the appointment of celebrants. Again, it will be important for us to be satisfied that that is appropriate.

There is an amendment to the Property Law Act 2007 in two sections under clause 117, section 139 and section 156, concerning the circumstances when a mortgagee obtains a court order for possession of mortgage property. The suggestion is that possession should be backdated to the date of the application so that the mortgagee can collect any income from the property from that date. Again, we will want to go through and understand the justification for that.

An amendment in clause 119 to section 94A of the Protection of Personal and Property Rights Act 1988, which concerns the independence of witnesses to enduring powers of attorney, seems to be a policy-related amendment. Again, we will want to understand the justification for it.

There are two proposed amendments in Part 35 to the Radiocommunications Act 1989. These will allow regulations to be made concerning the importation for supply, and the offering for sale, of radio apparatus, in the same way that regulations can be made that control the supply of that equipment. We want to be satisfied that that is merely a machinery change.

Finally, there are amendments, under Part 5, to sections 405 and 412 of the Building Act 2004. The concern that I have personally, as chair of the Regulations Review Committee, is that there will be, through these proposed amendments, a diminution of the ability of the House to scrutinise certain instruments. Although this legislation might simply be correcting a drafting error, generally speaking members on this side of the House will not be supportive of legislation that diminishes the House’s duty to scrutinise the delegated power of the executive.

Other than those nine matters, which Labour will be paying close attention to in the course of the passage of this legislation through the House, I am happy at this stage, subject to the comments that I have made, to commend the bill.

JO GOODHEW (National—Rangitata) : I rise to take a very short call on the Statutes Amendment Bill just to reassert National’s support for this bill, which is all about getting on with the business. This Parliament, of course, is often in the news because of contention over bills that come before the House. But by its very nature, a Statutes Amendment Bill is supposed to be a vehicle for technical and short amendments to a range of Acts. In this case, 47 Acts will be amended. It is not appropriate to include in such a bill amendments that will be, by their very nature, contentious. Therefore, that is why we will be dealing with such a large number and a wide range of amendments in the bill.

The 47 Acts that will be amended range in subject from wild animals to wills, and from takeovers to telecommunications, rates, marriages, drugs, and national parks. So in fact a wide range of things will be discussed within the select committee, presuming that anyone does seek to submit on these amendments—that they generate enough interest. In the nature, again, of this Statutes Amendment Bill it is likely that some people will say “For goodness sake, let us just get on with it.”, because this will make the law more streamlined and simpler.

Let me give members just a couple of examples in relation to the changes to the Wills Act, which was passed only in 2007. One amendment is that “a will-maker need not actually sign his or her will in the presence of witnesses, but may acknowledge in the presence of witnesses that he or she signed the will earlier and that the signature on the will is his or her own:”. The other is that “a witness need not include a statement of his or her attestation, but statements of this kind made by at least 2 witnesses are evidence of the will’s valid execution.”

Another example of getting on with the business is the amendment to the Securities Act 1978. The amendment in clause 135 of Part 38 of the bill to section 68B(1) of that Act corrects a cross-reference error. This is yet another good example of the nature of this bill. It is non-contentious, and is about getting on with the business. This is the sort of thing that we talk about out in our electorates—the fact that this Parliament is not always dealing with legislation that we argue about. Somewhere around 60 to 65 percent of the bills that travel through this House have unanimous, or close to unanimous, support.

Therefore, I certainly commend this bill in its first reading. I look forward to welcoming it back into the House in some months’ time, and, therefore, to improving all 47 of these Acts with the passage of this bill.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I, too, rise to support the introduction of the Statutes Amendment Bill. I thought I would focus my comments on Standing Orders 258 and 259, because of course it is under Standing Order 258 that we get to debate an omnibus bill as a type of omnibus bill that may be introduced to the House as of right. A Statutes Amendment Bill is one of those. The reason it is in the list of things that can be dealt with by way of an omnibus bill is its uncontroversial nature. That is why we have a very detailed cross-party consultation process, which enables individual parties to reject any particular clause of a Statutes Amendment Bill. I think that is a very good process. It means that when the bill does arrive in the House it has general agreement, subject to the comment made by my very good associate, to whom I was delighted to delegate the responsibility of the Statutes Amendment Bill for the Labour Opposition, which is that sometimes there is a tendency for officials to slip in a little bit of policy when somebody is not looking very closely.

The idea of dealing with relatively minor technical amendments that do not meet the totally non-controversial nature required of a Statutes Amendment Bill has been a frustration that many of us who have been in Government have experienced over a number of years. That is why I wanted to focus on the importance of the vehicle. I think Jo Goodhew made a very good point. This morning I had a classroom of young people here from Aranui Primary School, which is in my electorate. They asked me about voting. They asked what the Ayes and the Noes were for. We had to explain what those old-fashioned words meant. It was very easy, actually. We just told them to knock the “A” off the Ayes and the “es” off the Noes and they then had a very clear understanding of what it was all about.

But they wanted to know why, in Opposition, we did not always vote against the Government. They did not quite get that. They thought that the role of the Opposition was to vote against the Government. I said that no, by and large most of the business of this House is conducted without a party vote, because generally speaking we are of one mind in respect of the overwhelming bulk of the legislation that we deal with here. But unfortunately our friends in the media are not so interested in the times when we agree with each other. It is not really headline news that peace broke out in Parliament last night. Therefore, the media focus tends to be when there is disagreement.

This bill is a very good vehicle. It was one of my drivers behind having a Regulatory Improvement Bill. We have Business Law Reform bills now, as an agreed Business Committee decision around the introduction of an annual Business Law Reform Bill, which enables a range of legislation to be addressed as an omnibus bill, instead of having to have just the one subject matter dealt with in the legislation. That has been a very useful way of dealing with business law reform.

The Regulatory Improvement Bill, which was my personal contribution to the suite of omnibus bills that we now have, was really designed to pick up those particular instances where things did not quite meet the standard required for statutes amendment in that there may have been an element of controversy or the technical amendments may not be minor, and the amount of red tape that could be cut or the amount of slack that could be given to business operations did not quite meet the business law reform agenda. It might be an amendment to the Resource Management Act, it might be an amendment to the Employment Relations Act, or something like that. It could be dealt with in the regulatory improvement framework as well.

We are very much in favour of omnibus bills that are able to be read together, as it were, within a sensible frame. In this case the Statutes Amendment Bill, having a number of pieces of legislation tidied up in one hit, I think is very positive legislation and I am happy to see it go to the Justice and Electoral Committee, I believe. Is that where it is going? I do not know whether I heard the Minister say where the bill is going, but it is definitely not coming to the Commerce Committee, and I am very pleased about that.

RAHUI KATENE (Māori Party—Te Tai Tonga) : The statutes amendment format is one that normally avoids the need for extended discussion. In the case of a Statutes Amendment Bill, by its very nature as an omnibus bill that consists entirely of amendments to Acts, we know that the amendments must be minor, technical, and non-controversial. Indeed, if there was to be any objection to a particular provision, the reference to the statute requiring amendment must be removed before the bill is tabled. It can be taken for granted, therefore, that any amendments problematic to the Māori Party have already been deleted from the bill. I do not intend to draw out the debate unnecessarily, challenging the basis for the minor drafting amendments submitted to, for example, the Animal Products Act or the Agricultural Compounds and Veterinary Medicines Act. Most of the changes are clear-cut. There is the amendment to the Births, Deaths, Marriages, and Relationships Registration Act, which repeals section 61 as registrars and celebrants no longer keep register books. There is nothing controversial about that.

Some of the changes will cause some angst amongst law lecturers. For example, when I was a law student studying equity, the word amongst students was that the law lecturer had not changed his lectures for decades. He was giving the same lecture year after year. Now, with the changes to the witnessing of signatures on wills, that will definitely have to be changed. It will mean that law students will no longer have to read hours and hours of case law on that subject. That will be a very popular amendment amongst law students.

Some of the changes are thoroughly sensible. A good example is the decision in clause 53 of the bill to substitute for section 26ZZQ of the Conservation Act a new section to provide that “a person in charge of a dog (as well as the owner of the dog) commits an offence if the dog attacks and seriously injures or kills protected wildlife in a controlled dog area or open dog area.” This is about encouraging collective responsibility to protect our native flora and fauna, and we should all support that goal.

We are pleased with Part 18, which amends the Electoral Act 1993 to simplify the process for updating the electoral roll when there are changes to an elector’s details as the result of a marriage or a civil union. Any action that can assist in encouraging and promoting voters to take up their democratic entitlement to vote will always receive the full support of the Māori Party. We only wish that there were other, more visionary amendments to the Electoral Act, including a provision that all people should be automatically enrolled on the register of voters at the age of 18: on the Māori roll if someone is Māori, with an option to transfer to the general roll, or on the general roll if the person is non-Māori. We believe that such an amendment, which was a proposal that came out of the Māori Party policy manifesto, would do a great deal to increase the opportunities for New Zealanders to participate in the democratic process.

Like Mr Chauvel, I noted that clause 103 substitutes a new definition of “foreshore” in the National Parks Act. I would be interested to hear back from the Minister as to the precise relationship of that new definition to the existing Foreshore and Seabed Act 2004. Section 5 of that Act defines foreshore and seabed to mean: “the marine area that is bounded,—(i) on the landward side by the line of mean high water springs; and (ii) on the seaward side, by the outer limits of the territorial sea;”—that is, 12 nautical miles. The report of the ministerial review of the Foreshore and Seabed Act 2004, Pākia ki uta pākia ki tai, reported that prior to the enactment of the 2004 Act, the foreshore and seabed were legally distinct areas, but that after its enactment the two are now legally coalesced into a single area. The ministerial review panel went further, and I quote: “The Act has to be the biggest single land nationalisation statute enacted in New Zealand history. Defenders of the legislation could maintain, however, that the government was under the impression that the area belonged to the Crown absolutely in any case, and that the legislation was not so much an expropriation as the correction of an anomaly.”

I raise the question of the definition of “foreshore” as it applies to the National Parks Act because I think that the ministerial review panel has suggested that there is considerable room for variation in the interpretation of the definition of that term. We would expect the highest standards of rigour to apply in the following stages of analysis, and we will be watching that debate with considerable interest.

Finally, I make mention of Part 43, which amends the Taratahi Agricultural Training Centre (Wairarapa) Act. Taratahi Agricultural Training Centre has just celebrated its 90th year of operation. It was originally established in 1919 in the central Wairarapa as a training farm for men returning from the First World War. It is a key organisation for inspiring young people to take up a career on the land and for providing them with opportunities to develop skills and have experiences of value in agriculture and other rural industries. Taratahi Agricultural Training Centre has invested considerable time in working with established tertiary training providers, such as the Universal College of Learning and the Waiariki Institute of Technology, as well as various Māori incorporations and trusts. I note also that included within its educational goals is the intention to increase Māori participation. So when an organisation with such a solid reputation and a vision for the future as that centre has asks for amendments to its board membership, surely it is the role of Parliament to simply oblige, and that is what we will be doing.

We will support the Statutes Amendment Bill at this, its first, reading.

JACINDA ARDERN (Labour) : It is my pleasure, as a member of the Regulations Review Committee, to speak to the Statutes Amendment Bill. My first experience of working with such omnibus bills—which are a means of correcting anomalies or errors in the law—was when I was a staffer in this place under the last Labour Government. I went through the process and I know that it is key, when working with such omnibus bills, to ensuring that the amendments are non-controversial. That is required almost by their very nature and the way that the Standing Orders allow them to be dealt with. They also must be widely consulted on and there must be consensus across the House for the amendments contained in the bill. It was certainly my experience, as a staffer having to consult a wide range of parties and those interested on both sides of the House, that it is in the interests of this House to make sure the amendments are non-controversial and fall within the correct criteria, the scope, of the Standing Orders as to how such bills are to be treated and the kinds of amendments contained in them.

I think we need to assess the Statutes Amendment Bill with that in mind, and I thought it might be useful to review the kinds of criteria that the Standing Orders expect this House to keep in mind when deciding whether we are looking at non-controversial and non-contentious policy changes. As I think my colleague Lianne Dalziel might have already pointed out, the criteria are set out in the Standing Orders. Standing Order 258(1)(f) states that Statutes Amendment bills must consist entirely of amendments to Acts, so they therefore must be omnibus bills. Then we see in Standing Order 295 the true reason, probably, why they need to be non-controversial. Standing Order 295(2) states: “If any member objects to a clause standing part of a Statutes Amendment Bill (or of a bill that was formerly part of a Statutes Amendment Bill), the clause is struck out of the bill.” I think that is a very pragmatic reason why the amendments need to be non-controversial and not substantive when it comes to a policy change.

Keeping that in mind, I think that the Opposition is right to point out those areas where we will be looking for further explanation and exploration of various elements of this bill. I do think that some of them, as Charles Chauvel has pointed out, border on the substantive side. I think it is right that Labour has decided to support the amendments contained in the bill but to reserve the right to reconsider any of those individual amendments once they reach the select committee, and, of course, again in the Committee of the whole House. We reserve the right to withdraw our support for those amendments.

I noted that the last speaker from the Māori Party touched on the change in the definition of “foreshore” in the National Parks Act 1980. Given the current debate that is going on around the future of the foreshore and seabed legislation, I think it is pertinent that we point out again that this could well have ramifications for that, and it is very important that the select committee consider that when it looks at that particular amendment.

Currently the National Parks Act refers to the definition contained in the Harbours Act 1950, which has been repealed. The new definition is “any land covered and uncovered by the flow and ebb of the tide at mean spring tides”. Our previous speakers have expressed concern that that will have unintended consequences in light of the Foreshore and Seabed Act. I note that we have been given some reassurance by the Associate Minister of Justice and by the Attorney-General that it will not have a direct effect, but given that this is a period of fluid policy discussion, I think it is important that we flag that we will be reserving our right to reconsider that.

There has already been some discussion around the amendment to section 9 of the Births, Deaths, Marriages, and Relationships Registration Act, which I want to touch on briefly. It is questionable as to whether this amendment is bordering on a substantive policy change, given that it allows a parent to be unavailable at the signing of a birth registration form. Although it may well be a sensible amendment, it is questionable as to whether it is substantive and in fact a policy change of sorts. We have also touched on some of the amendments to the Conservation Act, which we would like to look at a little more closely at the select committee.

There are several other concerns and they are in relation to the Juries Amendment Act 2008, the Marriage Act, the Property Law Act, the Protection of Personal and Property Rights Act, and the Building Act, and I am pleased my colleague Charles Chauvel has raised those issues. Quite rightly, and in the spirit of the way Statutes Amendment bills work in this House, he has raised them directly with the Minister with responsibility for this bill. It is in good faith that we operate on these bills, and it is very important that we maintain the conventions of this House in the way we deal with Statutes Amendment bills. A further 38 Acts are to be amended by this bill, and we have no objection to those amendments. Some of my colleagues may have already touched on that, but I think it is important to point out that although we are highlighting a few, there are in fact 38 Acts that we see no issue with.

I am pleased to continue to be involved, as a member of the Regulations Review Committee and the Justice and Electoral Committee, in the further consideration of this Statutes Amendment Bill, and I am pleased so far at the open discussion that has occurred on some of the areas where we have concerns. I hope that both sides of this House continue to act in good faith as we consider how best to progress matters in this bill that are non-contentious and those that may, on further examination, prove to be.

• Bill read a first time.

Hon PHIL HEATLEY (Minister of Fisheries) on behalf of the Associate Minister of Justice: I move, That the Government Administration Committee consider the Statutes Amendment Bill, and that the committee report finally to the House on or before 1 April 2010.

• Motion agreed to.

Hon SIMON POWER (Minister of Justice) : I move, That the Human Assisted Reproductive Technology (Storage) Amendment Bill be now read a first time. At the appropriate time it is my intention to refer the bill to the Health Committee. I did not realise when I became the Minister of Justice that I would be dealing with matters of human-assisted reproductive technology and the storage thereof, but here we are.

About one in five New Zealand couples have difficulty conceiving a child. Approximately one-third of couples who have difficulty conceiving undergo in vitro fertilisation, or IVF, treatment. In vitro fertilisation was first used in New Zealand in 1983, and now about 900 IVF babies are born each year.

The Human Assisted Reproductive Technology Act 2004 provides for the regulation of procedures such as in vitro fertilisation and artificial insemination. The Act established an information-keeping regime to ensure that people born from donated embryos or cells can find out about their genetic origins. It also introduced protections against the commercialisation of surrogacy, human gametes—that is, human eggs and sperm—and embryos. This bill proposes amending two sections of the Act that relate to how long human gametes and embryos may be stored. Section 10 of the Act provides that gametes and embryos may be stored for only 10 years, while allowing for extensions to this storage limit in particular cases.

As with other comparable countries, the Act recognises the desirability of placing a limit on the growing pool of stored gametes and embryos while at the same time acknowledging that in some cases there is often good reason to extend storage beyond the set limit; for example, people who in their youth underwent medical treatment that affected their fertility and who had their gametes stored at that time may have good reason to want them stored for more than 10 years.

The bill seeks to amend section 10 of the Act, so that the 10-year limit on storage starts from when the Act came into force, on 22 November 2004, or from when storage of a gamete or embryo began, whichever is the later date. This would have the effect that the Act requires no stored gamete or embryo to be destroyed before 2014. It is commonly understood that this is the position under the current law. However, the Government has received legal advice that indicates that, as section 10 is currently written, the 10-year limit starts from when a gamete or embryo was stored. This means that even if storage occurred before the Act commenced in 2004, the 10-year limit is to be calculated from the date of storage.

As in vitro fertilisation treatment has been in use in New Zealand for the past two decades, a sizable number of gametes or embryos in New Zealand has now been stored for more than 10 years. Fertility clinics acting in good faith may have therefore unknowingly breached the Act by storing gametes and embryos for longer than the applicable period. Unless section 10 is amended, fertility clinics may be required to destroy such gametes and embryos, with a devastating impact on the lives of those people who supplied them.

In proposing this legislation, the Government is providing comfort to those people who have made life decisions that are premised on their having access to their stored gametes or embryos. The exact number of persons who will benefit from this law change is not known, but it is unlikely, I am advised, to be small. In addition, the IVF procedure often results in surplus embryos, which are often stored for subsequent cycles of IVF treatment—as it is successful in less than half of all cases—or donated to help other infertile couples.

The bill also proposes amendments to clarify the roles of the two committees established under the Act in approving extensions to the 10-year storage limit. One role of the ethics committee is to consider and determine applications for extensions to the 10-year storage limit. The role of the advisory committee is to issue guidelines and advice for the ethics committee to use in deciding on such applications. The proposed amendments to sections 10 and 35 of the Act would remove any doubt about the functions of both the ethics committee and the advisory committee with regard to storage applications.

The bill is necessary, because to enforce section 10 as it stands would require fertility clinics or their clients to destroy all human gametes and embryos stored for more than 10 years. That would be unreasonable and unfair on fertility clinics and their clients. I commend this bill to the House.

Hon STEVE CHADWICK (Labour) : Members on this side of the House have been wondering what initiated this Human Assisted Reproductive Technology (Storage) Amendment Bill coming before the House tonight. I thank the Minister of Justice, the Hon Simon Power, for his clarity on that. I was on the Health Committee with Dr Paul Hutchison when it considered the original legislation, which became the Human Assisted Reproductive Technology Act 2004.

We knew that it would be quite comprehensive and complicated legislation, and we knew that it would need revisiting. In fact, I thought that we had put a clause in the bill for it to be reviewed, because we knew that the nature of the bill was so complex. So I am not really surprised that we are here in 2009 looking at the need for a tidy-up of legislation that was enacted in 2004, especially with regard to this 10-year provision. It was my understanding that we never intended this to become a problem. If this amendment fixes the legal interpretation of section 10, then it is absolutely understandable for us to be here doing this today. I would be surprised if the bill did not come about by the Advisory Committee on Assisted Reproductive Technology coming to the Minister and asking for clarity on that point, and perhaps the Minister then sought a legal opinion as to what we could do about this conundrum. Sylvia Rumble, who was the chair, was always concerned about this issue. This will now give clarity to go forward and get the guidelines drafted so that the ethics committee has clarity around the issue.

New Zealand passed this law relatively uncontroversially, and I think that was due to the nature of the way in which Dianne Yates shepherded her own bill through the House, with great passion but incredibly well researched. The legislation was also supported by clinicians, who were well informed about the need for legal protection in the field of human-assisted reproduction. I acknowledge Dianne Yates and her work. We know that if this is the first time that we are seeking clarity with regard to legislation that was introduced in 2004, then it must be enduring and well-drafted legislation.

We support this bill in all its forms and we look forward to the select committee consideration. There is always a story that comes out in the select committee that makes one realise that at that time, in that environment, when there was very little regulation or law, we needed to be concerned about the human aspect. When I was the Associate Minister of Health responsible for this issue, we were very concerned when we heard some heartfelt stories from infertile couples where, perhaps resulting from rape cases, women were later found to be infertile because of the damage done to their bodies. Those couples were seeking support for the second infertility treatment cycle, and some even had to go to Australia for their treatment. We had to face that issue quite constantly. I thank the Minister for his compassion.

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

Dr PAUL HUTCHISON (National—Hunua) : Thank you for the opportunity to speak on the Human Assisted Reproductive Technology (Storage) Amendment Bill. This legislation has come about because of a situation whereby the fertility clinics throughout the country that store gametes and embryos may inadvertently be doing so illegally. It is important to point out exactly what gametes are, because as I was wandering back to my room before the dinner break, a radio announcer was interviewing the Minister of Justice and asking what gametes were. They are eggs and sperm, and when eggs and sperm come together, they form embryos.

The Minister pointed out in his speech that the first in vitro fertilisation in New Zealand took place in 1983 at National Women’s Hospital, but it is important to realise that prior to that, sperm were being frozen and can be kept for long periods of time. It was not until recently that embryos have been able to be successfully frozen and then thawed, and it is even more recently that eggs have been able to be successfully frozen and then thawed.

Hon Pete Hodgson: Veterinarians have been ahead of medicine by decades.

Dr PAUL HUTCHISON: So they should be; I think that is quite right! I must point out that this bill is not about the biological arguments—undoubtedly, it is important to consider how long eggs, sperm, and embryos can be stored—nor is it about the ethical arguments, which are complex.

As the Hon Steve Chadwick pointed out earlier on, the genesis of the Human Assisted Reproductive Technology Act was a long one. It came about through the hard work of a lot of different people, including the Labour member Dianne Yates. Her bill was later merged with a Government bill, and a lot of people worked on this legislation, including ethicists, clinicians, and the New Zealand Infertility Society. It has been a hugely important topic for many, many years. The ethical and biological implications of this legislation are extraordinarily important to the individuals who are affected. Those people, for one reason or another, may wish to donate gametes or embryos, or may wish to be recipients of them.

This bill is about an anomalous situation that has been created inadvertently in an otherwise very complex legislative area. The amendment will make it clear both to the fertility clinics and to the ethics committee as to how long the storage of gametes and embryos may take place in New Zealand. I commend it to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I thank the member, Dr Paul Hutchison, for his kind comments, but I think he inadvertently said that the Human Assisted Reproductive Technology Bill had been subsumed into a Government measure. That bill was passed in the name of Dianne Yates. She originally introduced the legislation back in 1996 and it was a personal triumph of her tenacity in that regard that legislation was passed in this House. I understand that the member may have been referring to something other than that, but the legislation was definitely passed in Dianne Yates’ name. It was really important to her and it drove her.

I also acknowledge Dr Paul Hutchison for his support, because I know that he was on the Health Committee that looked at that particular legislation. As he said, quite rightly, a lot of people were engaged in the process of developing legislation that is really, really important in this very, very difficult area. Although the Human Assisted Reproductive Technology (Storage) Amendment Bill is a justice bill—it was introduced by the Minister of Justice—it is being referred to the Health Committee, which is a very good committee, on which we have the Hon Ruth Dyson, a tremendous member of Parliament and a great spokesperson on health. I think the fact that it is a justice bill going to the Health Committee indicates for anyone listening outside that it is a complex issue, because it involves the law and it involves very human emotions. That is why I think it is tremendous that the Government is taking the step that it is taking today to address an issue that has arisen since the original legislation was introduced.

The one thing that I am still a little bit unclear about is how this bill came to be introduced. I listened very carefully to the Minister’s speech and he talked about the fact that a legal opinion was obtained, which indicated that a particular section of the original legislation created a question mark around whether the 10-year rule would apply from the date of introduction of the legislation, or whether it was a 10-year limitation that applied carte blanche. I think the Government now has advice that it is the latter, and that is why it is important to have the cut-off point at the introduction date of the legislation, which takes us back to 22 November 2004.

I was not quite sure what brought it up in the first place. Was something brought to the Government’s attention? Did the Advisory Committee on Assisted Reproductive Technology itself bring a matter to the Government and say that it had a concern? Did somebody outside the parliamentary process or Government processes indicate that there may be an issue that could lead to somebody questioning the legality of holding the gametes for more than 10 years? I think answering these questions would be really useful, and maybe the answers will come out as part of the select committee as these things work through. I see Dr Paul Hutchison nodding his head; as the chair of the Health Committee he could take a particular interest in this matter.

On that basis we are very, very keen to see this bill introduced and referred to the select committee. The previous speaker on this side of the House, Steve Chadwick, said that she was pretty sure that the bill had within it a mechanism for review, but over the tea break I did not get a chance to double-check that. I think the select committee will probably refer to whether there is a review provision in the bill. It is probably precisely the sort of thing that we would want to be reviewed in terms of legislation that is necessary but often difficult because it is dealing with issues of the law and human nature itself.

I am very pleased that the Government is obviously taking this issue very seriously. The original legislation itself is upheld by the fact that it is being amended in this way. The intention of that legislation is being upheld by the amendment before the House. I support the amendment going to the select committee and I look forward to the report back to the House.

KEVIN HAGUE (Green) : I will take just a short call. The Green Party supports the Human Assisted Reproductive Technology (Storage) Amendment Bill. We think it makes sense for the legislation not to be applied retrospectively. We note the comment in the explanatory note that fertility clinics acting in good faith were breaching the Human Assisted Reproductive Technology Act by storing gametes and embryos for longer than the applicable period. It makes sense to reverse that problem and fix it. We also think it is valuable to clarify the respective roles of the ethics committee and the Advisory Committee on Assisted Reproductive Technology. The bill tidies that up nicely.

I will make some broader observations and pick up on the comments that Lianne Dalziel began with on the context of this area of law and this area of work. This area of assisted reproductive technology is one that involves deep human emotion, profound effects on the lives of human beings, and also very thorny and complicated legal and ethical issues. In speeches that were given in this House in the debate on the 2004 Human Assisted Reproductive Technology Act the Green Party outlined a number of concerns. We were really impressed with Dianne Yates’ original bill and were very pleased to support it. We felt in the long run, however, that the compromises made to Dianne Yates’ legislation in the final form that was enacted were unnecessary. They watered down the legislation in a way that was quite unhelpful.

In particular, this is an area of science and of medicine that has developed much faster than this Parliament’s—or, indeed, any Parliament’s—ability to control it. One of the opportunities lost by moving with a truncated form of Dianne Yates’ bill was to make a big step in catching up to the progress that had been made scientifically. We had felt that the Act that came into force set up one of the most permissive regulatory regimes in the world. This was a regime that Sue Kedgley said in her third reading speech was one that relied on guidelines rather than regulations. She said that it bypassed Parliament by delegating policy making in a highly contentious ethical area to a committee of unelected and unaccountable experts who meet behind closed doors.

So I think there are some residual concerns that we have about the Act. Another thing that Sue Kedgley said in that third reading speech was that she was sure that not passing comprehensive law would mean that the issues would come back to this House. I note Lianne Dalziel’s comments about a review, and I have not had an opportunity to check the Act and see what the provisions are. But I take comfort from the prospect that the Health Committee may well be able to consider what the review provides for and perhaps set up a mechanism for that to occur, to deal with the broader range of issues.

Since the 2004 Act came into force, we have had the report of the Law Commission in 2005, which addressed these issues very comprehensively. The Law Commission made some 29 recommendations, at least 12 of which relate pretty directly to the area of law that we are considering with this legislation. It seems appropriate for Parliament to have an appropriate mechanism to consider and deal with the recommendations that the Law Commission has made. I look forward to being part of the select committee process of considering this bill and considering any wider submissions that members of the public may wish to make, as well as making some decisions about what will constitute that review process in years to come. Thank you.

TE URUROA FLAVELL (Māori Party—Waiariki) : Kia ora tātou e te Whare. Tēnā koe, Mr Assistant Speaker. One of the iconic items in the photographic archive of Aotearoa is a picture of the Beatles wearing the traditional symbol of fertility around their necks—some people might not know that. That same symbol, which is at the key of the Human Assisted Reproductive Technology (Storage) Bill, was routinely distributed to passengers flying on our national airline during the 1960s and 1970s. Some members might remember that.

I am talking, of course, about the heitiki, our traditional symbol of fertility and childbirth. Heitiki represents our whakapapa back to Tiki, who was the first human. They also represent Hine Te Iwaiwa, one of our tupuna associated with fertility, childbearing, and birthing. Another theory is that the heitiki represents the unborn embryo, particularly of children who are stillborn. In our tribal histories we have evidence of previously barren women who were said to have conceived after receiving the gift of heitiki by their husbands or other relations.

I refer to our recognised symbols and stories in thinking about this bill, because I want to make it known that the issues of infertility, miscarriage, and abortion are not the sole preserve of the 21st century preoccupation. In the late 1700s, James Cook saw mostly men wearing tiki, but there have also been accounts from the late 1800s of women wearing tiki, particularly during pregnancy and childbirth.

In the old days there was a range of creative solutions to respond to the crisis of childlessness and infertility other than the storage of in vitro gametes or in vitro embryos. Childless couples were often supported by the gifting of children. We might call these children whāngai. In Te Ao Māori, whāngai in a literal sense means to feed. In contemporary times we might think of whāngai children as feeding a whakapapa line, an ancestral line, or a genealogical link. The sharing of children as an alternative to infertility is also a situation in which the whakapapa line of a whānau would be nourished. It is a very interesting contrast to the European term of adoption, which historically severs ties from one family line, creating the legal fiction of two new adoptive parents with no association to the birth parents.

How, then, do these varying cultural concepts apply to this amendment bill, which allows for fertility clinics to comply with the law and not have to destroy stored gametes and embryos? The key concept for us is about the integrity of whakapapa and the vital need for control and protection. Māori engagement with human-assisted reproductive technology is potentially one of the most sensitive and controversial areas of debate within our communities. We are, of course, aware of the crisis issues of infertility amongst our women. Current statistics reveal that the chlamydia rate for Māori is twice that of non-Māori. It also reveals that the gonorrhoea rate for Māori is three times that of non-Māori.

Every commentator in the public arena likes to broadcast the issues evident in respect of teenage fertility rates for young Māori women, but when it comes to infertility, there appears to be an uneasy silence. Why is it that the chronic issues around sexually transmitted infections are not up for debate in this House, on marae, or in public hui? With sexually transmitted infection rates at epidemic levels for rangatahi Māori, a very serious threat is posed to our population growth.

The Māori Party has a considerable sense of sadness that we even have bills like this in front of the House. The issues about fertility and reproduction are absolutely central for whānau ora and for the health of future generations. Our sadness is that we do not believe there has been enough opportunity for Māori to debate the tikanga of the circumstances around human-assisted reproductive technology. We want to see whānau ownership. A collective sharing and responsibility is fundamental in the debate around whakapapa. We want to hear Māori voices in the literature and in the policy design.

Along with that, an interesting point was raised by Marewa Glover and Benedicta Rousseau in the research report entitled Your Child is Your Whakapapa: Maori Considerations of Assisted Human Reproduction and Relatedness. In that research a key theme was the sense of survival in a collective sense and survival through the maintenance of whakapapa. It was rare in the discussions of assisted human reproductive technologies for the mechanics of particular technological interventions to be under discussion. The prevailing focus was about the very essence of human life and relationships—he tāngata, he tāngata, he tāngata—and within that, the emphasis was on the uniqueness of Māori identity.

But there is another powerful theme underpinning any discussion of human in vitro gametes and embryos, and that is the spiritual context of the process of reproduction. Members of the House will be aware that in te reo Māori we can have a very special way of talking about these issues. In terms of the process of abortion or miscarriage, we may refer to āhua kahukahu, the wairua or spirit within the embryo. Another way of describing this is as the unripened seed of a human child. In the old days those embryos would have been taken and placed on the wall of the whare wānanga to protect the knowledge, the mātauranga, of the house and to encourage the diligence of the students.

There are many other accounts such as this, but an essential part of the understanding is that the spirit of the embryo, the unripened seed, is seen as very, very significant. For many of us, when we consider the storage of human embryos and fertility clinics there is a sense of awkwardness and discomfort. That discomfort, that sense of something not being quite right, is the anxiety about the aspects of tikanga, of custom. We worry about the mana of the process, the wairua of the gametes, and the authority of the whānau. We are nervous that the tikanga of gifting and sharing of whakapapa brings with it certain expectations associated with the passing over of a life force.

Within this process, we would naturally expect a level of accountability and responsibility on the part of all of those involved to accept the commitment to whānau. We would want to scrutinise the records to ensure they are protected and that the crucial identity of whānau is preserved. These issues are fundamental to the natural law of whānau. Dr Mārewa Glover describes this law as facilitating the rangatiratanga of whānau over their whakapapa material. This means it should be up to the people from whom the in vitro gametes and embryos came from to decide how long they should be stored for and what they should be used for, including what happens in the event of their death.

Such vital issues of survival should not be left to the realms of an ethics committee to decide. Te Puāwai Tapu an organisation dedicated to the protection of Māori sexual and reproductive health, also recommends that these elements of ownership and control should be apparent at every stage throughout the process. It suggests that tikanga must be applied at all stages, from the decision to enter into the process of fertility treatment to the completion and return of āhua kahukahu, the unripened seed. Throughout these stages, Māori partnership in decisions and actions must be paramount. It is about investing in the cultural integrity of whakapapa and protecting knowledge and identity.

I cannot say that anyone in the Māori Party is at ease with the discussions around assisted reproductive technology, but we would be even more uneasy if these discussions went on without Māori being engaged in a real way. Having a few Māori on a committee or writing submissions is simply not enough. We will support this bill, with considerable caution, to enable the discussions to proceed at the select committee. We cannot give any great assurance of our support after that. However, it is simply, purely, and appropriately the right of Māori to tell us what our subsequent decision should be. Therefore, we will wait to see how the discussion goes. Kia ora tātau.

Dr JACKIE BLUE (National) : I am pleased to speak to the first reading of the Human Assisted Reproductive Technology (Storage) Amendment Bill. The purpose of this amendment bill is to bring clarity to some aspects of the existing law, the Human Assisted Reproductive Technology Act. The bill will bring reassurance to the fertility clinics in New Zealand that are unintentionally breaking the law by storing some gametes and embryos. The current Act prohibits the storage of human in vitro gametes or embryos for longer than the set period of 10 years, but it can be longer if approved by the ethics committee. The time limit of 10 years came into force in November 2004 with the introduction of the Human Assisted Reproductive Technology Act. In effect, this means that fertility clinics in New Zealand will be holding gametes and embryos illegally, and that will be of concern to those clinics. Clearly, that is not an intended consequence of the current Act, and this bill will rectify this situation.

This bill will also make it clear that the Advisory Committee on Assisted Reproductive Technology, or ACART, may issue or give guidelines and advice to the Ethics Committee on Assisted Reproductive Technology, or ECART, on matters that need to be taken into account when considering whether to approve a longer storage period. I acknowledge the important work of both of those committees. The area of human-assisted reproductive technology is a fast-evolving area. Therefore, it is important there is clarity in the work of these committees. The bill makes it clear that a longer storage period may be approved only if it is consistent with the relevant guidelines and advice issued by the Advisory Committee on Assisted Reproductive Technology. In effect, this bill will give greater certainty to those ethics and advisory committees about their respective roles in making decisions around storage periods. This will be reassuring to those fertility clinics that are unintentionally breaking the law.

I acknowledge the important work that fertility clinics do and provide in New Zealand. We have both public and private providers. The rate of infertility in New Zealand is steadily increasing each year, and it is estimated that one in five couples trying to conceive will experience fertility problems at some stage. A significant number of those couples will need assisted reproductive technology. When infertility is diagnosed, it can be devastating to couples. I acknowledge the important work that the health professionals working in those clinics in New Zealand do. I commend this bill to the House.

Hon RUTH DYSON (Labour—Port Hills) : I am delighted to stand and join many others from across the political spectrum who are speaking in support of the Human Assisted Reproductive Technology (Storage) Amendment Bill. I understand that there is a proposal to refer the bill to the Health Committee. Although I am pleased to be supporting the bill because of its contents, I am particularly pleased about the proposal to refer it to the Health Committee, as it will be very interesting for all members of the committee.

The member who resumed her seat, Dr Jackie Blue, is a member of the select committee, as is Kevin Hague, who has also spoken in this debate. Mr Assistant Speaker Roy, if I may refer to you and include you in the debate, you are part of the select committee. I am sure you would agree that all the members of it will find this amendment bill and the issue very interesting.

I have to say there is a downside to this bill being referred to the Health Committee. National Party members of the committee—Dr Paul Hutchison, Mr Eric Roy, Dr Jackie Blue, Nicky Wagner, and Michael Woodhouse—will have yet another excuse to deny my colleague Winnie Laban the opportunity to have her aged-care inquiry accepted by it. Frankly, that is very frustrating not only for Luamanuvao Winnie Laban but also for the Labour select committee members, for the Green Party select committee member, and for the general public. We know there are some very serious issues in aged care around the country. On an almost daily basis we are now getting serious complaints about the quality of care, about the training that is given to caregivers, and about all sorts of issues—

Michael Woodhouse: One needs to have relevance.

Hon RUTH DYSON: I say to that member that this is a first reading speech. I recommend a page a day of the Standing Orders to any brand new member who thinks he knows the Standing Orders better than the Speaker, because Mr Woodhouse has demonstrated, yet again, that he does not.

The Health Committee will have yet another excuse for it not to look at these issues, because this bill is likely, from the indications of the speeches that have already been given, to be referred to our select committee. I say to my colleague Winnie Laban that she needs to persist with her inquiry. She is getting overwhelming support from the public about the need to have an aged-care inquiry. I am sure that given every single party has spoken in support of this bill, it will not take a great deal of the time of our select committee, and we should be able to move back to the more pressing issue of the aged-care inquiry very early on in the new year.

Kevin Hague spoke on this bill early on and referred to the deep emotions that surround these issues. He talked about the very complex medical and legal issues that surround the storage of sperm, eggs, and embryos. I can only wholeheartedly agree with him. This is not a straightforward issue that individual members and their parties are just for or against. There are a range of emotional, medical, and legal issues that we need to consider with a lot of caution and care, but also with a lot of sensitivity towards the couples who are facing infertility, to whom Dr Jackie Blue referred in her contribution. In my view, she did that in a very sensitive and considered way, and really reflected the views of those couples in relation to the issues that will be before the select committee.

This bill does a technical tidy-up, but for many couples and many people who submitted on the original legislation, this bill will raise those emotions again. I am certainly prepared, on behalf of the Labour team on the select committee, to give our commitment to ensuring that no games are played with these issues, and that we consider them carefully and cautiously. Because this bill is quite a small and technical bill, I hope we can proceed with it at a reasonably rapid pace, rather than trying to drag up issues that may be related but are really outside the scope of this bill, which is quite narrow.

The Minister of Justice’s advisers have clearly alerted him to a potential legal problem. My understanding from listening to the earlier contributions is that there has not been a legal challenge, but, in the same way that the Inland Revenue Department can find any number of potential legal challenges to the tax system, the Minister of Justice has been alerted to a potential legal challenge in respect of the Human Assisted Reproductive Technology Act of 2004. It relates to how long sperm, eggs, and embryos are able to be stored. The issue boils down to this: when does the clock start ticking? The legislation says that they can be stored for only 10 years. The legislation came into force in 2004. Is that the day that the clock starts ticking on that 10-year storage length of time? Or does it take into account the 1, 2, or, maybe, 9½ years that sperm, eggs, and embryos were already in storage prior to the Act coming into force in 2004? That is the question that this bill seeks to address beyond any doubt, so that there cannot be any legal challenge to the legislation.

Because I was in Parliament when those earlier debates occurred, I am very confident that the select committee members did not intend there to be any challenge to the length of storage time. I particularly commend my friend and former colleague Di Yates, a former member of Parliament from the Waikato, who was very passionate about this issue and very committed to its progress in terms of legislative protection, but also understood very well its detail. I am sure she would be of great assistance to the select committee if we wished to look at what Parliament intended during the passing of the 2004 legislation, and what the Minister has now drawn to the attention of Parliament, which is the potential legal challenge over the storage time. What I do not want is those deep emotional and complex medical and legal issues to muddy the waters of what this Parliament has indicated is a very straightforward clarification—not correction—of the original intent of the legislation.

I am very pleased that the Minister has chosen to introduce this legislation. It is not at all clear whether he did so on the basis of advice from his officials, or whether the advisory committee that is set up under section 35 of the Human Assisted Reproductive Technology Act of 2004 actually gave that advice. I did not hear the Minister allude to that in his introductory comments, but if the advisory committee did not give that advice and if the Minister is acting solely on the advice of his officials, I would say that the advisory committee would be feeling a little short-changed. It is set up under the primary legislation that we are proposing to amend tonight. It is an advisory committee with functions that are laid out in section 35, and the membership is described in section 34(4)(a) to (g), so it is not a committee that is set up at the whim of a Minister. It is set up by the decree of our Parliament under the primary legislation. I would be very interested if one of the first questions the select committee asked was whether this amendment bill was introduced on the advice of the advisory committee or on the advice of the Ministry of Justice.

In any regard, it is an important clarification to make. I look forward to you, Mr Assistant Speaker, and I being part of the select committee deliberations in the very near future.

NICKY WAGNER (National) : I too am delighted to support the Human Assisted Reproductive Technology (Storage) Amendment Bill, and I agree with the Hon Ruth Dyson that it will be a most interesting bill for the Health Committee to consider.

As we have already heard, this amendment bill does three things. It clarifies uncertainties in the existing Human Assisted Reproductive Technology Act of 2004, and it deals with the issue that right now some fertility clinics are unintentionally breaking the law regarding the storage of gametes and embryos. It also clarifies the role of the ethics committee and the advisory committee in decisions on the storage periods for gametes and embryos.

In vitro fertilisation, or IVF, has been available in New Zealand for more than three decades. It got its name, which means “fertilisation within glass”, because early biological experiments that cultivated tissues outside living organisms were carried out in glass containers. Researchers used beakers, test tubes, and Petri dishes. We still talk of test-tube babies, but in vitro fertilisation is done in the much shallower Petri dishes.

New Zealand has a low fertility rate. In comparison with the highest world rates in places like Niger and Afghanistan, where women have more than seven children each, in New Zealand our rate is less than two, and our mothers are getting older. The median age of women giving birth is 30 years, which means half of all women who give birth are aged over 30. Birth rates for women aged over 30 have been increasing over the last 10 years. The median age of women giving birth to their first child is 28 years old. The average number of births per woman is decreasing. In 1971—almost 40 years ago—it was just over three; today it is under two.

About 15 in 100 couples in New Zealand have difficulty conceiving a child. About five in 100 couples have in vitro fertilisation treatment, and one in 100 babies is a successful in vitro fertilisation or test-tube baby. About 900 in vitro fertilisation babies are born in New Zealand each year. With older parents and lowered sperm counts in New Zealand men, the demand for in vitro fertilisation treatment in New Zealand is growing. The British Medical Journal suggests that infertility rates could double in the next decade, simply due to poor health and lifestyle choices. Many couples are finding that having a child is more difficult than chucking out the contraceptives and dimming the lights.

It is important that this legislation on the process and, in this case, the storage of gametes and embryos is clear. I fully support this amendment bill.

DAVID SHEARER (Labour—Mt Albert) : I rise to speak in the first reading of the Human Assisted Reproductive Technology (Storage) Amendment Bill. The Labour Opposition supports this bill in its first reading and referral to select committee.

The purpose of this bill is to amend several aspects of the Human Assisted Reproductive Technology Act of 2004. It is a fairly recent Act, but I think the amendment is necessary given the advances in science now and as we move forward into the future. My colleague across the House was just speaking of the increased need or demand for in vitro fertilisation treatment. That is a function of a lot of things but, particularly, as we have seen recently, of the falling sperm rate in the New Zealand population. It is therefore a useful and timely moment to look at the Human Assisted Reproductive Technology (Storage) Amendment Bill and to bring it into line with many of the needs that we see in this area at the moment.

This bill amends several aspects of the Human Assisted Reproductive Technology Act 2004, which prohibits the storage of a human in vitro gamete, the actual sperm itself, or the in vitro embryo—in a sense, the fertilised embryo or egg—for longer than 10 years, or a longer period if the Ethics Committee on Assisted Reproductive Technology, established under the Act, approves. Why is this legislation being amended? The 10-year prohibition applies to gametes and embryos that were stored before 22 November 2004, when the prohibition came into force. Because of this, the fertility clinics, acting in good faith, have unknowingly breached the Act. Many of these clinics are doing excellent work for couples throughout New Zealand in helping them to conceive children. They are acting in good faith, they are doing what they believe is the right thing, but unknowingly and unwittingly they are breaching this Act. This was not intended by the original 2004 Act, and the Government therefore proposes to amend the Act, with Labour’s support, to ensure that no account may be taken of the period for which the gametes or embryos were stored before 22 November 2004.

There has been a degree of uncertainty as to whether the Ministerial Advisory Committee on Assisted Reproductive Procedures and Human Reproductive Research under the Act may issue guidelines and advice to the ethics committee on matters to be taken into account in considering whether to approve a longer period for the storage. There is also uncertainty as to whether the ethics committee may extend the storage period only if the extension would be consistent with the guidelines handed down by the advisory committee.

The amendment therefore clarifies much of the 2004 Act, brings it into line with the intention of the original Act, ensures that the fertility clinics themselves are acting lawfully—even though, as I say, unintentionally they are acting unlawfully—and ensures that the 2004 Act is, in fact, doing what it was originally set up to do. For that reason, this legislation is needed. It should go to the select committee, where we can hear the full range and breadth of opinion from across the specific area of fertility, and the expertise that we can draw on, and we can look at this amendment in light of trying to make the 2004 Act apply and do what it is supposed to in light of its intentions at the time of enactment. For that reason, we recommend that the bill goes to select committee. We are in support of its main provisions. Thank you.

MICHAEL WOODHOUSE (National) : I will take just a quick call in support of the Human Assisted Reproductive Technology (Storage) Amendment Bill. It appears as though it will get unanimous support for referral to select committee, so I will not unduly hold up its passage. I am a member of the Health Committee. This is not an area that I know very well, but I am looking forward to hearing submissions on the bill.

I think Lianne Dalziel’s comments about how this bill was introduced by the Minister of Justice but referred to the Health Committee underscore how complex and emotive the issue is, and are very accurate. But although there is great good sense in referring the bill to the Health Committee, the fact that my esteemed colleague Dr Hutchison is the chair of that select committee and able to impart his considerable knowledge and experience as an obstetrician and gynaecologist in a previous life is, I think, reason enough to refer it to the Health Committee and I look forward to his wise counsel in that regard.

I also have to thank my select committee colleague Ruth Dyson for her advice on the Standing Orders. It is advice I do not think I needed; I am well aware of Standing Order 107 and Speakers’ rulings 47/2-7. I was not going to raise a point of order on this matter—it is a debating point, I guess—but for somebody to raise the issue of an inquiry into the health of older people, in the context of a human-assisted reproduction bill, is about as long a bow as one could draw in terms of relevancy and I congratulate the member on her ability to bring that into the debate.

On a quick reading of clause 5, which amends section 10 of the Human Assisted Reproductive Technology Act, I find it a little surprising that this issue appears to have been overlooked in the passage of the original legislation, but when we look at the myriad of complex issues that the House needed to consider at that time, it is probably not surprising. Members were talking about prohibited activities, restrictions on sex selection, surrogacy, and so on, and these are very complex and emotive issues. The fact that they were probably not clearly articulated in the way Parliament intended a few years ago is not so surprising after all. I look forward to the passage of this legislation, and I commend the bill to the House.

• Bill read a first time.

• Bill referred to the Health Committee.

Hon SIMON POWER (Minister of Justice) : Part 1 of the Legal Services Amendment Bill makes some amendments, unsurprisingly, to the principal Act, the Legal Services Act. Every grant of legal aid is subject to the condition that the aided person must make a repayment to the Legal Services Agency as calculated in accordance with those provisions and the Legal Services Regulations 2006. In Part 1, clauses 4 to 6 exempt victims of crime from the requirements of the financial eligibility test and from making repayments if they are applying for legal aid for coronial inquests or Parole Board hearings. This means that victims of crime can now apply for legal aid for coronial inquests or Parole Board hearings, irrespective of their income level.

Clause 7 enables the agency to decide not to recover legal aid debt at any time during the proceedings. This will benefit all legal aid applicants, not just victims of crime, and it will improve administrative practice. Clause 8 of the bill extends the Act’s regulation-making power to exempt a specified class or classes of person or proceeding from the application of financial eligibility criteria or repayment conditions. Among other things, regulations may be used to exempt victims of crime from financial eligibility criteria or repayment conditions in respect of proceedings other than coronial inquests or Parole Board hearings. This means that if another situation arises that is clearly not in the interests of justice but is one that has not been foreseen, the Government will be able to make changes to the Act much more rapidly. This strikes an appropriate balance between parliamentary control over the legal aid system and the Government’s ability to move quickly where the public interest requires it.

All six submissions to the Justice and Electoral Committee supported the general intent of the bill. Although many sought greater support from the legal aid system for victims in the wider justice system, the Government considers that the review of the Victims’ Rights Act and, of course, the recent legal aid review are the appropriate vehicles for considering these wider problems. Part 1 creates the incentive for the bill to address a specific problem in the Legal Services Act and provides flexibility to address future issues.

JACINDA ARDERN (Labour) : I am pleased to rise and speak as a member of the Justice and Electoral Committee, and, firstly, thank the Minister in the chair, the Hon Simon Power, for progressing what was very important Labour legislation. The Legal Services Amendment Bill was introduced in response to a particular crime that demonstrated what we would all agree—on the select committee, and probably more widely across the Chamber—was an anomaly in the law that deserved to be corrected. I am pleased that we are continuing to progress this bill.

My residual memory of the consideration of the bill and of the submissions was the heavy focus of the submitters on the view that although this was an important change, much more needed to be done in support of victims as they proceed through our criminal justice system. That was not something that the committee was in a position to progress within the scope of this bill, but it was something that we all obviously noted as a select committee. I also reflect that although this bill was a response to a quite discrete situation, there was every chance in the world that this could happen again. There were many other circumstances in which the previous Labour Government tried to be proactive in strengthening the rights of victims in our criminal justice system through legislation such as the Victims’ Rights Act, the Sentencing Act, and what was a very important fundamental shift towards highlighting and putting a preference towards reparation for victims when sentences are handed down through our courts.

But I come back to the bill. As the Minister has already pointed out, it makes three substantive changes to the Legal Services Act. The first, and probably the most important, removes the financial eligibility testing and repayment conditions for victims of crime. The next two provisions are really a safeguard to ensure that the select committee does not have to go through such a substantive and onerous legislative process again when we are facing an issue of pure and simple justice. In that regard, there are two extra changes. One is the discretion given to the Legal Services Agency to decide, at any point during the granting of legal aid process, not to recover legal aid debt. I will come back to that provision. The second change is the ability to change by regulation any future circumstances or criteria where it would again be a matter of natural justice not to recover a legal aid debt from a victim. I would not necessarily describe the select committee’s changes as substantive but I think they add clarity to what the previous Government and the current Government wished to achieve.

The first change is the insertion of new clause 4A to clarify some of the other provisions in Part 1 where these changes will apply, and I will cover those very briefly for the sake of clarity. Substituted section 9(8)(b)(ii) set out in clause 5 clarifies that legal aid may be granted in civil matters where there is “a hearing of the New Zealand Parole Board (other than one in a proceeding specified in section 6(c)(i)) that concerns an offender and is a hearing at which the victim may appear as of right or with the Board’s leave;”. That provision ensures that any case where a victim has the right to be present, and chooses to exercise that right, will fall within the ambit of that clause. Again, to avoid any doubt, that change was an important but reasonably minor clarification made by the select committee. A similar amendment to section 15(6)(d)(ii) was made in clause 6 so that at “a hearing of the New Zealand Parole Board … that concerns an offender and is a hearing at which the victim may appear as of right or with the Board’s leave;” a victim is again eligible to be covered by this legislation.

I will reflect in a little more detail about the recovery of legal aid debt being able to occur at any point in a process currently undertaken. Under the existing legislation the Legal Services Agency will act to recover debt at the end of legal proceedings, but currently does not have the power to make a decision midway through that legal process. Clause 7 allows the agency to decide not to recover debt, basically at any time. I think that is important. We have seen from some of the high-profile cases that go through our court system that they have the ability to take quite some time for that full process to be carried out. If we simply allow a situation—like the situation that gave rise to this bill—to endure to the very end of the case without giving a victim certainty over whether that debt will then be recovered, that may impact on the person’s ability to participate in the justice process. It may have other unintended consequences. I think those people deserve the certainty that this bill will now give them.

Finally, I reflect on the third provision, which deals with regulations and the ability of the Minister to suggest amendment, by regulation, to incorporate additional circumstances where it would be deemed appropriate, once this bill is passed, to add additional criteria or classes of person. The bill adds important checks and balances to ensure that those powers granted to the Minister will be used in an appropriate way, but I think the power is appropriate. Some of those specific criteria are set out in clause 8 and I note that we always have the backstop check of any regulations made by the Minister by the Regulations Review Committee, which is a fine committee and is chaired very well by Charles Chauvel. He is not even noticing my flattery! I have no doubt that any regulations, or changes made under clause 8, will be under considerable, rigorous scrutiny by that select committee. All in all, this is a bill that I was pleased to consider as a member of the Justice and Electoral Committee. I think that members on both sides of the Chamber will agree that it is a necessary change, and I am pleased to see that we have appropriate provisions contained in the bill to ensure that we will not have to go through a similar process in the future.

DAVID GARRETT (ACT) : I will take an even shorter call on this bill, the Legal Services Amendment Bill. I will focus on clause 7, which talks about the ability of the Legal Services Agency to decide not to recover legal aid debt in certain circumstances.

During question time in the House a week or so ago in the previous sitting, the honourable Attorney-General acknowledged in answer to a question of mine that every dollar of criminal legal aid was one dollar less that was available for civil legal aid. The example I used in that question, just off the top of my head, was persons—and I have had clients in this position, sadly—who need to try to recover the losses they have suffered from leaky buildings. The sad reality is that the vast majority of criminal legal aid is never recovered. The write-offs that occur now, and that will occur to a greater extent under the new section 36A to be inserted in the Legal Services Act by clause 7, will apply to criminals in the most part.

I question whether we should allow people like Mr Graeme Burton—the “Mr” just slipped out there—to continue to impinge upon the limited legal aid budget for the appeal that he is planning to bring against his recent conviction for attempted murder. I am told by reliable sources that after his recent conviction for attempted murder, he said: “Christ knows why it took them so long. I would have decided it in 10 minutes.” Nevertheless, he is to appeal that conviction, and every hard-working New Zealander will be contributing to his defence. There is not a snowball’s chance in you-know-where of one dollar of that sum ever being recovered. The honourable Attorney-General noted in his answer to my question that, without the final bills even being in, Graeme Burton’s most recent defence cost $12,000 of taxpayers’ money.

I personally, and on behalf of the ACT Party, am very pleased that to some extent this bill has been overtaken by events. The whole area of legal aid, as the Minister of Justice has just announced, is subject to a review as to who provides legal aid and how it is provided and funded. But it is not uncommon for our party to be saying that a review goes nowhere near far enough. I think we need to examine the assumption we have had for 30 or 40 years that criminals should be entitled to endless legal aid.

I read the other day that many criminal claimants for legal aid—I cannot quote the exact figure, but it was a significant proportion—have received criminal legal aid more than 10 times. More than 10 times they have appeared in court, on the taxpayer, with not a snowball’s chance in you-know-where of taxpayers ever getting back any of that money. Every single dollar of that money is denied to a client like mine, whom I will not name and cannot name, who is literally on the bones of his backside. He is lucky enough to have had pro bono legal assistance—I have got myself to this point, so I had better continue, I suppose—because he could not afford it. Initially it came from me, but, thankfully, it came from somebody else after I came to this place.

I think it is high time we conducted the comprehensive review that the Minister of Justice is undertaking of this whole area. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I rise to support the further passage of the Legal Services Amendment Bill. I guess that in many respects timing is everything. I would not like to agree with anything that the previous speaker, David Garrett, said, for obvious reasons, but the timing of this bill—given the report of the legal aid review, which has recently been released—means that in actual fact we really are not doing justice to the issue. I think that this bill ought to be referred back to the Justice and Electoral Committee for consideration to make the further amendments that will obviously come from the legal aid review. Given that I know that busy Ministers are always looking for passing trains to add carriages on to, I would have thought that this was the perfect carriage to hold on to in the select committee for a wee bit longer before progressing it to this stage. So I was really disappointed to see it on the Order Paper at this stage of proceedings.

I am concerned about a couple of things with this bill. One of them is that the select committee did not address the issue that I raised in the bill’s first reading. It is all very well to look specifically at the victims of crime with respect to coronial inquests, but it actually ignores those who have no one representing them at a coroner’s hearing when the cause of death has come not from a criminal action but from an action that we might describe as criminal in a less legalistic and more pejorative sense. I am talking about what happened at Christchurch Hospital in 1996, where people died who ought not to have died at that time in their lives. The reason they died was systemic failure at Christchurch Hospital, which was identified by a group of courageous doctors who were prepared to put a document together to show the sequence of events that led to preventable deaths.

Four of those families ended up with coronial inquests into the death of their loved ones—a mother, a brother, a father, a husband. They ended up in a coronial situation where everyone in the room but the family was represented by a lawyer. Everyone else was represented by a lawyer: the doctors were represented by lawyers, the Crown health enterprise—that wonderful experiment that we had in the 1990s—was represented by a lawyer, the nurses were represented by a lawyer, and the trainee interns were represented by a lawyer. Everyone was represented by a lawyer. The only people who had no legal representation were the families. The reason they had no one to represent them was that they could not afford the cost of hiring a lawyer to represent them in their case. That meant that the one person who could not be represented was the person who had died. That is what the coroner’s hearing was all about.

I said when this bill was introduced that I felt that it was really important that it did not look just at the victims of crime, but at the broader victims in situations where there were coroners hearings and where it would be appropriate for the Legal Services Agency to say to those family members that it would allow them to access legal aid, that it would not require them to pay it back after the result of the hearing came out, and that it would not test their financial eligibility for legal aid. It is not so much the family individually that is being represented but the memory of the individual who has died. What is being sought in a coroners hearing is the truth. I heard one of the lawyers put it very well. He said it was not so much a court of inquiry; it was a court of truth. People are looking for the truth; it is not a court of blame. He was representing one of the groups that were able to have representation in that hearing. None of my constituents had anyone except me to stand up and represent them, and I was not qualified to do that for them. I have felt very passionately about this matter for a long time. I put it on the Table of the House and I asked that the select committee look at it for the purposes of this bill. I would like the Minister in the chair, the Hon Simon Power, to respond to that.

The second question is the question of the legal aid review and the report that has come out. As the Minister is aware—he mentioned it in the House when he launched the review a few weeks ago—I intended to make a submission on the legal aid review. I made that submission. I went into some detail. I recognise that there are limitations on an Opposition member, who has to do all the background work and who has no officials to call upon in that regard. But I put a bit of effort into it because the concern I had about the legal aid review was that it was not going to take advantage of the two very important structures that I thought we had put in place over not one but several Governments: the Public Defence Service, as far as criminal legal aid went; and, from the civil perspective, the community law centres and the hub that they could provide for communities all around New Zealand. For a lot of people it is the access to the upfront advice that they need to get things on track.

It is also about the big guy against the little guy. The little guy often does not get the chance to have his case heard. In many respects when a number of little guys have been hit by the big guy—and members can look at the finance company failures if they want to look at an example of that—we ask how we can provide support for people who should not be subject to individual means-testing to take on a company. So I put together a submission that I thought was pretty broadly on track with how it could resolve these issues. Fortunately, I felt that I had been listened to. Although I did not have a direct input with the reviewers, I felt that I had been listened to and that the report itself reflected that.

But what has undermined the report has been the insistence that we have a much larger scale of fraudulent behaviour within our legal profession than I think can be warranted by way of statement. I think it is really important that the air is cleared in that regard. Margaret Bazley unfortunately stated in her report that up to 80 percent of the lawyers in one District Court’s jurisdiction—up to 80 percent—have been involved in unacceptable practices. I think that statement cannot stand. No evidence in the report backs it up. It is unfortunate that it has been said, because it undermines the quality of the recommendations that I would like to see supported.

I think this is an important opportunity for the Minister to take the time to address some of those concerns in the context of this bill. We always wish that we had time on our side, but in this particular case I think we could take a little bit more time. The Legal Services Amendment Bill could be an ideal opportunity for us to gain some very quick amendments that could be made. I would hate to end up with what will inevitably be an Erebus report - style approach as to whether people can be found guilty of things they have not been charged with. That will undermine the credibility of the report. I would rather see the Legal Services Amendment Bill as an opportunity to tidy up some of the elements of the legal services provisions that we agree on, on both sides of the Chamber, and move on, to the benefit of all concerned. I would like to hear the Minister respond to those two particular points.

Hon SIMON POWER (Minister of Justice) : I am happy to respond to at least two of a number of the issues that have been raised by the member, who rightly states that she has not only made a submission but followed up with me on some of the issues that have been raised in the report, amongst other things, in very recent correspondence relating to work that is ongoing in the criminal justice area. In respect of two or three items that the previous Government placed on the table as needing to be remedied as a matter of specific and very narrow amendment, I think it is important that we do deal with these issues quickly. I note that the party opposite has agreed to support the legislation.

I am reluctant to halt the progress of this bill while much broader work is being undertaken about the Legal Services Agency and other matters relating to legal aid. Part of that is because of the very matters the member has raised, which are primarily about the Public Defence Service and the use of community law centres. I think I am right in saying, but I stand to be corrected, that in recent correspondence the member indicated that she was quite pleased with where the report went on those issues. I do think there is broader work to be done, but I do not think that this bill would be the appropriate vehicle to deal with such structural work, as opposed to two or three quite narrow points relating to eligibility, and to representation at coronial hearings and Parole Board hearings.

I am aware of just how big a task we have ahead of us in respect of some of those recommendations. I note that the member has been actively involved not just in making a submission but also in offering to have discussions with the Government about how that restructuring and realignment would look, particularly with her interest in the area of the Public Defence Service and community law centres. I welcome that, and I will be having those discussions with the member prior to Christmas.

Hon DAVID PARKER (Labour) : I rise to take a call in support of the Legal Services Amendment Bill. I would like to address two points. The first relates to coronial hearings. I think it is very wise that we extend the provision of legal aid in some situations to coronial hearings. As we saw in the case that led to this particular provision, which was the murder of Karl Kuchenbecker by Graeme Burton, the family of Karl Kuchenbecker desired to have representation at the coronial hearing. Of course, they were up against the very well-funded actions of the State, which was able to appear, through the police and the Department of Corrections, at that hearing with legal representation.

It is not uncommon for coronial hearings to consider how the State has handled events, and criticisms of the State can sometimes properly be made for its failure to comply with its own intended processes. The murder of Karl Kuchenbecker by Graeme Burton is one example of that. It became clear through that coronial hearing that mistakes had been made by the police and the Department of Corrections, the effect of which was that Graeme Burton was still out on parole from earlier offences. He might not have been on parole—I might be wrong there; he might have been in breach of probation.

Hon Simon Power: Both, I think.

Hon DAVID PARKER: Both, was it?

Hon Simon Power: I think so.

Hon DAVID PARKER: It was a breach of his parole conditions and a breach of his probation terms. As a consequence of the failures of arms of the State, Graeme Burton was out in the community and in a position, because he had his liberty, to carry out the terrible crime that occurred when he killed Karl Kuchenbecker.

It is very easy for us to think that in that situation the family of Karl Kuchenbecker could protect their interests. But in reality, when one is up against the depth of the resources that the State has, one needs to be able to be on an equal footing, sometimes to protect the reputation of the loved one who has died, and sometimes to point out and highlight the errors incurred by the State. It is very appropriate, in my view, that this legislation helps us to properly deal with the rare, but terribly tragic, situations where the State has made mistakes that have contributed to the death of an innocent person like Karl Kuchenbecker. That is not to say the State is ever primarily responsible for those events; actually, the perpetrator of the crime is primarily responsible. I agree with this change. I have personal experience of some of the occasions when it is appropriate for this change to apply. I have no doubt that this is an appropriate amendment to help victims’ families in that regard.

The second area that I also agree is appropriate, but that worries me a bit more, is the creation of a right to legal aid in respect of parole hearings. I agree that there are occasions when the victims of crime ought to be able to be legally represented at parole hearings. But I am also very conscious that in the last decade or two in New Zealand, and indeed in many Western countries around the world, we seem to have gone down the path of saying the answer to crime is to impose ever-longer custodial sentences. It is the path of saying we ought not to have parole, and we ought not to trust the Parole Board to make wise decisions when trying to balance the various interests that are to be assessed when someone comes up for parole.

At the heart of parole is the longstanding belief by New Zealand Governments, whether of a National or Labour persuasion, that it is better to have a parole-based criminal justice system where people can be released prior to the end of their sentence, subject to conditions that make it less likely that they will reoffend once they are released on parole. The alternative is to have a system where there is no parole. The effect on overall sentences does not become much different in the end, because the courts take into account the lack of parole when they set the sentence. An offender would get a shorter prison sentence if we did not have parole than he or she does when there is the possibility of parole. But the disadvantage of not having parole is that people can be released at the end of their sentence without conditions as they re-enter the community, and that makes it more likely, rather than less likely, that they will reoffend after their penalty has been served. There is good, scientifically verified evidence to that effect.

Having said that, I say no matter how long an offender has been in prison, some people will never get over the upset that was caused by the terrible crime committed against them or a member of their family. It is perfectly understandable at a personal level that a victim of crime would feel that way, but that is not to say the view of the victim should be the final determinant in respect of a Parole Board hearing. It worries me that we might be creating an expectation on the part of victims of crime who, long after the criminal event, still cannot leave it behind and cannot get over it. I am not intending to be critical of them; I understand the human dimension to this. But none the less there is another public interest that is at large, which is not to waste money on unnecessarily long prison sentences, and also to use the very proper mechanism of parole to ensure the proper reintegration of the criminal, following sentence, back into the community so as to minimise the risk of reoffending. I do not think that we should always cave in to the loudest cries of those who claim that it is always too soon to reintegrate an offender back into the community.

So I would hope that through this debate and through the powers that the Minister of Justice has and the liaison he has with the Parole Board and with the legal aid authorities, he will signal that these new powers to grant legal aid do not mean that legal aid should be granted for unlimited amounts or should necessarily be granted in all cases. There is now an eligibility to apply for legal aid, but that does not mean to say it will on all occasions be granted. I think it is very appropriate that those discretions be maintained within the system; otherwise we will create an evermore litigious parole situation. The participants at the Parole Board already do a great service to New Zealand in very difficult circumstances, and are easily criticised by those with 20/20 hindsight. The Parole Board has to carry out a very difficult task, which could be made more difficult if we make the process overly litigious by always allowing the victims of crime to appear and restate their case time and time again.

I think that is probably where I will end my contribution. But I would encourage the Minister, when these new powers are conferred—and I am sure the Minister understands the subtleties here; I am not trying to be patronising—to use his wisdom to give those sorts of signals to both the legal aid authorities and the Parole Board, so that we do not see the development of an overly litigious approach to parole.

JOHN BOSCAWEN (ACT) : I do not intend to speak for a long period of time, but I want to make some follow-up comments to the comments made by my colleague David Garrett. It was very sad, to be honest, that no sooner had David Garrett made his comments and sat down, he was followed by the Hon Lianne Dalziel, and if I heard the Hon Lianne Dalziel correctly, she said words to the effect that she could not possibly agree with anything Mr Garrett had said.

I guess the point Mr Garrett was trying to make was that the Government has a fixed budget for legal aid, that the first charge on that budget is for criminal legal aid, and that what is left over is for civil cases. What Mr Garrett was saying was that the more we spend on criminal aid, the less there is for civil cases. What made Lianne Dalziel’s comments surprising to me was that she then went on to talk about the coroner’s inquiry into deaths at Christchurch Hospital in 1996. Clearly, as a Christchurch MP she is aware of the parties involved. She would be intimately aware of the distress that was caused to the families of the victims. She talked about the legal resources—the legal aid—that was available to the hospital, the legal aid that was available to the doctors and to the registrars. The point I took from Lianne Dalziel’s speech is that the only parties that were not represented by lawyers were the families of the victims. Am I correct? Lianne Dalziel is acknowledging that the point she was trying to make is that the only parties not represented by lawyers at that coronial inquiry were the relatives of the victims. The point Mr Garrett was trying to make is that it is those very people, those very ordinary citizens, who have a need for legal assistance and cannot get it under the current arrangements. They cannot get it, because the more money that is spent on criminal legal aid the less money there is available for civil legal aid.

I thought Mr Garrett’s points were very well made, and it was disappointing to hear them so ridiculed and dismissed by Lianne Dalziel when she rose to speak. She is clearly concerned that the people who most need legal representation cannot get it when they need it. Had legal assistance been available to the families of the victims, they may have had better representation at those coronial inquiries.

CHARLES CHAUVEL (Labour) : I want to take a call to follow up on what was said by my friend and colleague Lianne Dalziel in her earlier contribution on the Legal Services Amendment Bill. Although the Minister of Justice took a call in response to what she said, it was only a partial response. I see that the Attorney-General is now the Minister in the chair, and he might be interested in these comments. I see that he is taking a keen interest in what I have to say, which is always gratifying.

The opportunity this legislation presents is that it comes to the House a week after we received the Bazley report into the legal aid service. As Lianne Dalziel said, it presents a golden opportunity for the Government to stay its hand in implementing the reforms that are contained in this bill and allows for the opportunity to send the bill back to a select committee to have the legislation embrace those parts of the Bazley recommendations that the Government decides to proceed with. They are recommendations that in broad thrust are supported by members on this side of the House, so it seems to me that the Government has an opportunity to progress quite an important aspect of reform, as far as legal aid and general legal services are concerned, without undue delay. I urge the ministry to consider this opportunity and to not just dismiss it out of hand.

The other opportunity that I think debating the legislation tonight affords the House is another one that I hope the Attorney-General will appreciate. I think the lawyers in the Chamber—Amy Adams, Simon Power, and others who might be present—will remember the important case law about commissions of inquiry. Under our system, commissions of inquiry are not designed to find fault with individuals. They are not criminal processes. If this country did not learn that lesson from the Erebus tragedy, it should have learnt it from earlier cases that I know the Minister in the chair will recall. I think the authority is Cock v Attorney-General, as opposed to Clough v Leahy, the contrary New South Wales authority. It says that when we have a commission of inquiry, it is not there to find fault with identifiable individuals.

One of the problems that exists with the Bazley report is the findings Dame Margaret made about lawyers practising out at the Manukau District Court. They are lawyers who work hard in what are probably some of the most difficult conditions in the New Zealand legal system. They have been described as car-boot lawyers and it has been said that 80 percent of them could be gaming the system. It does them a disservice to describe them in pejorative terms and to say that if anything were to be done about them, they would just take vigorous legal action so there would be no point.

I urge the Minister to use this opportunity—the earliest opportunity the Government has had—to reply to those allegations, to dissociate the Government from them, and to restate the position that these people are deserving of respect from the House because they are an integral and important part of the provision of justice in one of the hardest legal markets that exists in New Zealand. It would be a real shame if the Government did not use this opportunity. It is the earliest opportunity since the presentation of the Bazley report, which dealt with matters that are intimately connected with this bill, as my colleague pointed out. It is an opportunity to make a definite statement—which I hope that we will hear from the Minister in the chair, the Hon Simon Power—that these lawyers are well respected, that the Government does not associate itself with the pejorative comments that were made about them, and that Dame Margaret had no evidential basis on which to make those comments. They should be rejected.

John Hayes: Don’t you speak about my constituents like that.

CHARLES CHAUVEL: Mr Hayes may well think that he knows something that everybody else does not know, but the fact is that these are hard-working people who deserve better from the Government and from the executive than this sort of adverse comment in a commission of inquiry report. I hope that we will hear a definitive rejection of those pejorative comments from the Attorney-General.

SIMON BRIDGES (National—Tauranga) : I move, That the question be now put.

• Motion agreed to.

• Part 1 agreed to.

JACINDA ARDERN (Labour) : Thank you, Mr Chairman, for the opportunity to speak very briefly on this part of the bill. I reflect again that the bill we have been discussing this evening is narrowly defined. I think that my colleague Lianne Dalziel has covered some of the areas where we would have hoped to have had a greater discussion with the Minister of Justice over the other areas that perhaps could have been picked up by this bill.

I think it is important when we are considering the overall coverage of the Legal Services Amendment Bill that we consider other issues raised not only within the select committee but also during the more general discussion in the Committee of the whole House about the place of victims in our criminal justice system. There has been the very difficult discussion about victims, when they are part of our criminal justice process. We need to find the balance between ensuring that they are empowered enough and are given support by the State to have their say—whether that includes legal support through all steps of the process—and the very difficult consideration of making sure that when that happens, all sides are able to have access to legal support during the consideration of a criminal justice case. That also means managing the expectations of victims who are involved in the proceedings. No one in this Chamber would argue against that being a very difficult balance to reach, because we are dealing with weighty, emotive issues when we consider victims’ rights, but I think that a very pertinent point was raised by my colleagues.

After listening to the discussion here this evening, I will raise the additional point that other areas of our law are outside the scope of the Legal Services Amendment Bill, and I think that additional consideration should be given by the Minister and the Government as to whether in future we will further the other opportunities that we have to enhance the role of victims in our existing criminal justice proceedings.

Within the context of this bill, I think it is useful to cross-reference to the Children, Young Persons, and Their Families Amendment Bill (No 6), which still sits on the Order Paper. It talks about the role of the victim in youth justice proceedings. That is an area where the Government would do well to consider again whether in our restorative justice processes, within family group conference processes, there is a place for greater guidance around the role of victims in those proceedings. That matter was consulted on previously by the previous Government and it is, I think, a non-contentious issue. The bill continues to sit on the Order Paper. I would urge the Government, given that we are debating the role of victims in our justice system this evening, to consider whether that bill should be progressed now that this one has been dealt with by the Government.

There is also the matter of the existing legislation we have in place that gives guidance to Government departments and to those who are working at the coal-face of our criminal justice system on how to deal with victims who are coming through our criminal justice system. It is one thing for this House to lay down its expectations, be it through the Victims’ Rights Act or the charter that followed, but it is another thing to ensure that those expectations are being adhered to, to the level that we in this House would expect. I know that many members of this House will probably have heard, in their time as members of Parliament serving the community, of examples where victims, particularly those who may be giving evidence in court proceedings, have not had the support that we in this House would expect them to have. They may not have had a lay advocate or a lay support person. They might not have had explained to them the process they are about to go through. They may have been mistreated or cross-examined beyond what we would consider to be reasonable. I think it is important that beyond just laying down the framework for our expectations, we also ensure that those expectations are being adhered to on a day-to-day basis within our criminal justice system. I think we would be wise to consider that within the context of this bill.

• Clause 1 agreed to.

• Clause 2 agreed to.

• Clause 3 agreed to.

• Bill reported without amendment.

• Report adopted.

Hon CHRISTOPHER FINLAYSON (Minister for Treaty of Waitangi Negotiations) on behalf of the Minister of Fisheries : I move, That the Maori Commercial Aquaculture Claims Settlement (Regional Agreements) Amendment Bill be now read a second time. This bill was jointly drafted by the Crown and iwi. It gives effect to a deed of settlement signed on 6 May between the Crown and the iwi of the South Island and Hauraki for an early settlement of the Crown’s pre-commencement aquaculture space obligations in those regions. The settlement will meet the vast majority of the Crown’s pre-commencement space obligations and covers the Hauraki Gulf, Marlborough Sounds, Tasman Bay, and the rest of the South Island. It has required a great deal of collaboration and hard work by both Government officials and iwi, and it is the result of innovative thinking and a desire from both sides to reach a quick settlement that is fair to both parties. The fact that the settlement spans more than half of New Zealand’s coastal area and well over 90 percent of the aquaculture sector is testament to what an achievement it is.

In 1992 the Crown reached a full and final settlement with Māori for all claims under the Treaty of Waitangi relating to New Zealand’s commercial capture fisheries. The Government has an ongoing responsibility to develop policies and programmes to recognise and provide for non-commercial customary fishing. Aquaculture was the unfinished business of that settlement, being the use of New Zealand’s coastal marine space to commercially farm kai moana. The settling of Māori claims to commercial aquaculture between 1992 and 2004 with the Maori Commercial Aquaculture Claims Settlement Act 2004 is an important element of the relationship between Māori and the Crown. Unfortunately, the transfer of settlement assets to iwi did not happen as anticipated in 2004. As a result of the lack of movement, a way to more effectively deliver the benefits of the settlement to iwi had to be found. The Crown and the iwi of the South Island and Hauraki have worked together and have found the way forward, through early financial settlement and regional agreements.

The Maori Commercial Aquaculture Claims Settlement Act does not currently allow for early financial settlement or for regional agreements of the type that the Crown and iwi have negotiated, and that Act needs to be amended. The bill that we have before us tonight will amend the Act and get the settlement assets flowing to iwi. The fair, full, and final settlement of Treaty of Waitangi grievances is a high priority for this Government. I will interpolate and say how delighted I was to be at Te Wai-iti Marae this morning with my parliamentary colleague Mita Ririnui for the signing of the Ngāti Whare deed of settlement. It was a very good day. On Saturday we will be back up in Murupara for the signing of the Ngāti Manawa deed of settlement.

I have written to all remaining iwi around the country in relation to this bill to offer the opportunity for them to have an early financial settlement in their areas. The Ministry of Fisheries, on behalf of the Crown, is currently engaging with those iwi, and there is a possibility that the entire pre-commencement space obligation will be completed well before 2014, which is the date envisaged by the settlement legislation. I note that the iwi of the South Island and Hauraki are willing to lend their support to helping the remaining iwi to accomplish similar settlements to theirs, and I publicly express my thanks to them for their ongoing commitment to this process.

The deed of settlement and this bill epitomise the principle of mahi tahi, which is to work together as one, not only between the Crown and iwi but also between iwi themselves, which is important. It is quite something that all the iwi of the South Island were able to set aside old differences and come together to negotiate a common settlement with the Crown. I particularly acknowledge the initiative of the Te Tau Ihu fisheries forum and its chair, Richard Bradley of Rangītane, during the early stages of the settlement for the South Island. I acknowledge the work of officials from the Ministry of Fisheries and the contribution of the iwi leaders of Te Tau Ihu, Ngāi Tahu, and Hauraki, together with the assistance of Te Ohu Kaimoana and the iwi legal adviser Justine Inns. I particularly thank previous Ministers, including the Hon Parekura Horomia, for their work in seeing the potential to negotiate an early financial settlement across these areas and starting the negotiation process. I also thank the Māori Affairs Committee for the efficient and expeditious manner in which this bill progressed through the select committee, and for the two very useful technical amendments that the committee has recommended. These changes will strengthen the bill and improve its effectiveness and application.

I note the overwhelming support for the deed of settlement and for this bill from iwi, local government, and the aquaculture and seafood industry. I commend the bill, with the technical amendments recommended by the select committee, to the House.

Hon PAREKURA HOROMIA (Labour—Ikaroa-Rāwhiti) : Te Kaiwhakahaere o te Whare, tēnā koe. I a koe te Minita, e Hōnore Chris Finlayson, e mihi kau ana nā te mea i roto i a koe, e mōhio atu tātou te tū roaroa atu o te take nei mō te whai atu a ngā iwi mō te āhua nei o te mahi i te takutai moana. Nā te mea, e mōhio atu wētahi o ngā iwi nei e kaha i te mahi kararehe, e manaaki atu i ngā āhua o te whenua. Nā te mahi pēnei tonu i te tuku atu i ngā hua i roto i te moana hei tipu atu, hei tū kaha atu pērā i ngā kararehe. Nā te pai hoki, e mau matatau atu tē nui o ngā iwi nei i te mahi hua takutai moana pēnei tonu. Pērā i a rātou i Te Wai Pounamu, e tino matatau atu ngā Māori ki te mahi pēnei tonu.

Nā te pai hoki, kei te tae tata i te otinga. E mihi kau ana ki te Minita mō tōna kaha. E kī atu wētahi o ngā iwi pērā i a Hone Morgan, pērā i a Fred mā, rātou mā e whai kaha atu, a Harry Mikaere i te mau pukumahi mō te tae pai atu pēnei tōnu. E mōhio atu tātou te wehewehe mai i te tīmata a te take nei engari, e noho pai, e tae tata ana ki te whakakotahi i tērā tino kōrero e kōrerotia atu, tātou a ngāi Māori.

E manaaki atu mō ngā kōrero nei a Richard Bradley me rātou mā ngā tino rangatira pērā i a Toko o te Hauraki, me Matiu Rei rātou mā. E pai ana e kite atu te whakawhitiwhiti pēnei tonu a Hauraki, a Ngāti Apa ki te Rā Tō, a Ngāti Kōata, a Ngāti Kuia, a Ngāti Rārua, a Ngāi Tahu, a Ngāti Tama, a Ngāti Toa, a Rangitāne me Te Āti Awa o te Tau Ihu. E nui atu ngā iwi e tahi atu pēnei tonu. E nui atu ngā iwi e whai tika mō te pai o te rangatahi ākuni ka tipu atu, ka peka ana i runga i te huarahi mō te mahi hou nei.

Ahakoa kāre e hoki atu te mahi nei, he mahi hou mō tātou katoa. Mai rā anō e haere atu ngā koroua, kuia ki te taha o te moana hei tiki, hei mahi atu i te ruku pūpū, te tiki parengo ngā āhuatanga pērā tōnu. Nā te pai hoki o te mahi nei, kei te whakawhitiwhiti, kei te taea hoki tātou a ngāi Māori i roto i a tēnei take. Ahakoa ngā piki, ngā heke mō te take o te takutai moana, tēnei noa wētahi o ngā puta hou e tū atu te ture mō te mau kaha atu a te āhua o te takutai moana. E kī atu tātou, e kaha tātou ki te manaaki i te mau ana o te āhua o te korowai o te kaitiakitanga, ngā kupa pērā tonu mō te mahi nei. I a rātou te tika e whai kaha i te taea ki te kōrero nā te pai e tautokotia atu ngā kaunihera o ngā wāhi rā mō te take nei. Nō reira, e mihi kau ana.

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

[Thank you, Mr Assistant Speaker. To the Minister, the Hon Chris Finlayson, I acknowledge you because you know how long it has taken for tribes to be involved in initiatives relating to the foreshore. Now, some tribes are better then others at working with animals and looking after aspects of land; they see stocks in the sea that can be harvested and developed like those on the land. The good thing is that many tribes have the expertise to use the benefits of the foreshore in the same way. Take those in the South Island, where Māori are very skilled at working like this.

The good thing is that the process is nearly completed. I acknowledge the Minister for his efforts, and people like Hone Morgan, Fred and the rest, and Harry Mikaere. They have worked hard to bring about this conclusion. We know that we were divided when this matter began, but things are going well and it is possible now to say that Māoridom is united.

I acknowledge the statements by Richard Bradley and other leading figures like Toko of Hauraki, Matiu Rei, and others. It was good to see interaction like this by Hauraki, Ngāti Apa ki te Rā Tō, Ngāti Kōata, Ngāti Kuia, Ngāti Rārua, Ngāi Tahu, Ngāti Tama, Ngāti Toa, Rangitāne, and Te Āti Awa o te Tau Ihu. There were many tribes who lived together as one like this. There were many tribes who sought to ensure that future generations would gain from the initiatives from this new venture.

While this will not go back, it is a new venture for us all. Our elderly menfolk and womenfolk since the beginning of time have frequented the foreshore to gather and dive for volute univalve molluscs, and to gather things like edible seaweed, as well. Because this work is going so well and there is interaction, we of Māoridom are progressing in this matter. Despite the ups and downs in respect of the foreshore, these are just some of the new outcomes that will make the foreshore sustainable. We can state our ability to protect the foreshore under the mantle of guardianship, and words like that; and we support regional councils as well in this settlement. And so I commend this bill .]

The Labour Party supports the Maori Commercial Aquaculture Claims Settlement (Regional Agreements) Amendment Bill, which secures a sustainable future for New Zealand’s aquaculture. Aquaculture is an important and growing activity for the New Zealand economy. I commend the Minister of Fisheries, Phil Heatley, not only for the signing today but for the one on Saturday and the many more that will happen, hopefully, sooner rather than later. We believe that any changes must address the concerns of the fisheries industries, and have to balance economic development, environmental sustainability, Treaty obligations, especially, and community concerns.

This bill is a clear merging of a whole lot of opinions, and most certainly a whole lot of leaders’ keenness to ensure that the business carries on. That they had the foresight to bring this settlement forward by 5 years is something they need to be commended for. It is difficult to get three or four community groups together, it is difficult to get three or four Pākehā groups together, but it is amazing that we have got a dozen iwi to agree together. That they are supported by their local councils is something we could learn from.

I again commend the Minister in charge of the bill for his effort. Labour members will certainly be voting for the second reading of the bill.

Hon PHIL HEATLEY (Minister of Fisheries) : It is a delight to see the second reading of the Maori Commercial Aquaculture Claims Settlement (Regional Agreements) Amendment Bill moved in this House and positively supported by the speakers. As the Minister of Fisheries I add my voice to that of the Minister for Treaty of Waitangi Negotiations and acknowledge the Hon Parekura Horomia for the work that he did over a 12-month period prior to our coming into office. We have seen talks around this settlement begin, and clearly it was a delight for us to take hold of the torch that he carried and to see the process of the settlement finished. We met several months ago at Te Papa with iwi, hapū, and, whānau involved in those negotiations, as well as officials, and we signed the settlement agreement. It was a wonderful privilege for me as a Minister to sign my first Treaty settlement. Again, I thank the Hon Parekura Horomia for beginning that process.

The reality is that we decided on a settlement for Māori way back in 2004 when the aquaculture reforms were passed. As part of that reform, the Maori Commercial Aquaculture Claims Settlement Act went through the House, giving Māori the opportunity to take hold of 20 percent of pre-commencement space and 20 percent of any new aquaculture areas that were put together following enactment of that legislation in 2004. It was understood that the pre-commencement space settlement would probably be settled by providing water space created through the zoning of aquaculture management areas. In other words, new aquaculture zones would be set aside by local regional councils—that is, water space—and much of that would be passed to Māori as part of the settlement.

Unfortunately, because aquaculture has not progressed the way that we all would like it to, no new aquaculture management areas have been created in the last 4 or 5 years, and therefore there has been no settlement space to pass to Māori. So it was a smart idea, instead of passing over space, to look at a cash settlement. That was a good idea conceived some time ago. Progress was made valuing the potential space, putting a dollar figure on it, and coming to some sort of agreement. That is what happened. It came to a figure of about $97 million, and I think there is a little bit more outstanding for those hapū, whānau, and iwi who have not settled yet. So we are still looking at that settlement, and, as my colleague the Hon Chris Finlayson said, it is progressing well.

I know this is just the second reading but I am enthusiastic to see the Committee stage and the third reading go through reasonably quickly, because Māori have been waiting a long time. We will see by the passing of this legislation a cash settlement to Māori. Hopefully they will use some of those finances to invest in aquaculture. They are not compelled to do so, at all, but perhaps they might invest in aquaculture. We trust that the reforms we are doing in marine farming next year will open up the doors for more marine space in New Zealand’s coastal area. I commend the second reading of this bill, I commend the bill to the House, and I am delighted that so many colleagues from parties on this side, in Government, and across the floor, from the Opposition, are so supportive of this legislation.

DAVID CLENDON (Green) : The Greens are pleased to make a short speech on the Maori Commercial Aquaculture Claims Settlement (Regional Agreements) Amendment Bill and to continue to support it through the House.

The 2004 Maori Commercial Aquaculture Claims Settlement Act, which this bill seeks to amend, was seen by some as an indication of the Crown’s willingness to deal fairly and even generously with Māori in respect of settling Treaty claims. But it may be more accurate to suggest that the display of generosity has been from Māori, who in accepting Treaty settlements have typically acknowledged the present-day reality and agreed to accept much less than the real value of the assets that were lost over generations of Treaty violations. It is to the credit of the affected iwi in this instance that they have been both diligent and determined in pursuing an equitable outcome to this matter while also being amenable to a negotiated outcome.

As we know, under the provisions of the principal Act Māori were allocated 20 percent of marine aquaculture space as settlement of their claims in this area, the allocation being for marine aquaculture space approved from 1992 to 2004—described as pre-commencement space. Iwi still have the right to 20 percent of all new space created from January 2005. The difficulty has been in providing Māori with that entitlement.

In looking at the reason for that, it is worth considering the issue of coastal management more generally, and worth recalling some of the commentary from relevant articles of Agenda 21, which emerged from the Rio Earth Summit as long ago as 1992. It was noted then that “current approaches to the management of marine and coastal resources have not always proved capable of achieving sustainable development, and coastal resources and the coastal environment are being rapidly degraded and eroded in many parts of the world.” It goes on to say that “Systematic collection of data on marine environmental parameters will be needed to apply integrated management approaches …”. Clearly, that commentary and, indeed, criticism of coastal management generally is applicable in New Zealand some 17 years later, when not too much has changed in terms of the condition of our coastal environment, where the trend is still towards degradation and other negative outcomes. This is despite the undoubted attachment to, and fondness for, the coastal environment so often expressed by New Zealanders of all ethnicities. Sadly, we continue to have a very poor record of stewardship.

Some of the extraordinarily vehement opposition revealed in recent years, both at a Government level and in the public domain more generally, is in regard to Māori asserting any rights to use or management of the coastal resource. It is all the more surprising when one considers what a very poor job successive central and local governments and other interests have done of maintaining the integrity and quality of that resource. Clearly, there have been not only significant political and economic barriers but also scientific barriers to the advancement of aquaculture and to Māori participation in it. Aquaculture is a relatively modern option, and in some ways an inferior option to the natural harvest of seafood, but, clearly, a major economic opportunity exists for all those concerned to meet the requirements and preferences.

New Zealand has been particularly slow to establish useful baseline data for environmental management generally and coastal management in particular, largely due to the fact that the acquisition of good scientific data is hampered by the peculiar quasi-commercial structure of our Crown research institutes. Research into aquaculture done recently by the coastal marine group at Waikato University has observed that inferior site location is one of the most common reasons for the double whammy of aquaculture failure as a business venture and the accompanied adverse environmental effects, and that good new sites in sheltered bays and harbours are becoming increasingly rare, necessitating a move to find optimal sites in open coastal locations. The Waikato research has been useful to the extent that it provides some characteristics enabling computer-based analysis and identification of potential aquaculture sites, but the reality is that it can identify optimal conditions but cannot create more of them. Although the principal Act assures iwi of access to a percentage of all new space, it is important when that allocation is made that issues of quality and viability are not overlooked.

This bill amends the principal Act, enabling the Crown to enter into negotiated regional agreements with relevant iwi, and provides a legal framework for these settlements to be rolled out. Essentially, this enables the Crown to provide cash rather than marine-farming space to Māori in terms of aquaculture settlements. Although this is a positive outcome, it falls some way short of enabling the engagement of iwi as active players in the aquaculture industry. As noted in a number of first reading speeches, the iwi implicated in this bill are mana whenua, so are entrusted with both the rights and the responsibilities that this status entails. Active management of the physical resource would always be a preferred option, given the strong cultural as well as economic significance of kai moana, but the cash payments will, however, certainly provide a range of opportunities to the affected parties. That is an outcome that the Greens will be happy to continue to support. Thank you.

Hon TAU HENARE (National) : I will not take too much of the House’s time tonight.

Hon Shane Jones: Thank goodness!

Hon TAU HENARE: I am just trying to work out which bozo spoke, because they all look the same.

Simon Bridges: Phil Goff’s chief adviser.

Hon TAU HENARE: Yes—well, that brings me to an interesting point. When this bill went through—

Hon Shane Jones: Hāngai ki te kaupapa!

Hon TAU HENARE: I should stick to the kaupapa? Well, that is rich coming from “Richie”—

The ASSISTANT SPEAKER (Eric Roy): As a matter of interest, I was just reading some Speakers’ rulings on decorum of the House. I do not think we have started this contribution very well from either side, and I just ask for a better level of decorum.

Hon TAU HENARE: OK. As I was saying before I was rudely interrupted by the other side—not by the Assistant Speaker—I was saying that this is one of the first bills I have seen go through to select committee without even a hint of dissent from anyone around the table. First of all, I congratulate all members of that pretty good select committee.

Basically, this bill amends the Maori Commercial Aquaculture Claims Settlement Act 2004. It allows certain iwi to go ahead with what are, in their opinion, some pretty good economic development opportunities that are just around the corner. I am reminded of a song, “What the World Needs Now is Love”. Well, it may well need love, but one of the things it really needs is food. Food is always a constant need around the world, and if iwi can get their hands on a means of production they can be big players in the world. God only knows that there are a couple of billion Chinese people out there wanting food, and one-point-something billion Indian people wanting food, and we have not even touched the other markets in the world. So I think that the opportunity that this bill allows is very, very great.

I did not want to be controversial. It is not my nature to be controversial—

Amy Adams: However—

Hon TAU HENARE: —however, I must say, before I get to the controversial bit, that my colleague from the Green Party, David Clendon, spoke of new ways of doing things. The interesting point is that I have just been looking through some of the research, in terms of an iwi in the North, the Waiariki people, who are based around the Ngunguru-Tutukākā region. There was an application in the 1880s from one of the settlers to have an oyster farm. That was in 1880, so it is not particularly a new idea. Maybe we have come to see it as a new idea, but these ideas have been around for a long, long time around the world. So I make that point of behalf of the Waiariki people.

I will also make a couple more points. We, the National Party, got a pasting from the Opposition on the so-called sweetheart deal in the emissions trading scheme, which basically gave, I suppose, a right to certain iwi, and which opened up—so certain people in this House have said—full and final settlements. Well, if somebody was to really have a look at this bill, they would see that that is exactly what this bill does. It opens up what was a full and final settlement back in 2004, because it suits the purpose. It is because of other things that are happening with legislation that we have needed to do this.

Hon Shane Jones: He wai!

Hon TAU HENARE: Oh, that is right—he wai. In Māoridom, whenever someone calls out that phrase, there are two reasons why. The first reason is that the speech is boring—and I can stump up to that and cop that sort of criticism—but the other reason is that the person does not want to hear the truth.

What I am saying is not too controversial. I just want to remind Phil Goff—and Shane Jones, who is a great supporter of Phil Goff at the moment—that sometimes we have to go back, look at what we have done, and, for the betterment of a settlement and for its longevity, open the purse again to see whether we cannot squeeze some more out of it in order to get that sort of longevity. So I make no bones about this settlement or the emissions trading scheme, because I see them as being the same.

Both are a means to an end. The end to this legislation is the ability of Māori to have an opportunity. The legislation will not solve a whole heap of problems; it will give an opportunity. It is up to those iwi who are part of this settlement to take that opportunity, and not only to take it for themselves but also to enrich the nation in terms of productivity and the earning of the dollars that our country so needs. I absolutely fully support the measures in front of the House tonight. Kia ora.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā koe, Mr Assistant Speaker, kia ora tātou katoa. E hoa mā, tātou o te Ao Māori ka pai te rongo ake i te āhuatanga o tō tātou reo e kōrerohia ana i roto i te Whare i te pō nei. Te tikanga, ā te tau hōu, kua puta tō tātou reo i runga i ngā irirangi e rua, nō reira, he pai tonu kia whakamātautau tātou i a tātou anō i roto i ngā kōrero i tēnei pō ā ngā wiki e rua kai mua i te aroaro.

Kei te āhua whakahīhī tonu a te Pāti Māori ki te tū ake ki mua i te aroaro o te Whare Pāremata i tēnei pō ki te tautoko i tēnei pire, te Pire Whakatikatika Whakataunga Kerēme Ahumoana Arumoni Māori (mō ngā Whakaaetanga ā-Rohe). Ka mutu, ko tētahi ingoa e tika ana mō tēnei pire, ko te “Pire Kua Eke ki Tōna Wā”. He pai tonu kia eke ki tēnei wā i te mea, kua roa te Ao Māori e tatari ana kia whakahōnore te Kāwanatanga i tōna kirimana i wānangahia i te tau 2004. Kua eke tēnei pire ki te wā kua whakatakotohia e te Kāwanatanga ki runga i te tēpu tētahi utu, mō te wā kotahi nei, ki a ngāi Māori mō te wāhanga ā-pāmu moana nei kāore i tukuna i ngā tau kua hipa ake. Ka mutu, ko te mahi a te pire he whakatikatika i te Ture Whakatikatika Whakataunga Kerēme Ahumoana Arumoni Māori o te tau 2004. Nō reira, he pai tonu ki a mātou te tautoko i tēnei. Kua roa mātou e akiaki ana, e panapana haere ana i tēnei pire kia eke ki tēnei taumata kia taea ai te pāhi i tēnei pire ki tōna taumata i te pō nei.

Arā anō ētahi paku kōrero o roto i te pire nei, me kōrero au mō ēnei take, tuatahi, ko te whakaaetanga o ngā iwi ki ngā kirimana ā-rohe nā runga i te mea, karekau he whenua hōu hei mea wānanga mā te motu. Ko te mānukanuka nui ko tērā e pā ana, āe, he pai tonu kia tukuna mai ai te moni hei whakatau i te kerēme engari, ko te take tino nui, kāre anō kia oti noa tērā hiahia o te iwi Māori kia whai wāhi anō tātou i roto i ngā mahi pākihi pāmu moana nei. I tukuna te pūtea kotahi nei mai i te Kāwanatanga ki te whakatau i tērā kirimana i ngā tau kua hipa o te tau 2004. I raro i tērā kirimana, i whakaaetia e te Kāwanatanga kia tukuna mai tata ki te 20 pai hēneti o tērā pānga whenua i mua noa atu o te wā, ka mutu, he wāhanga noa ā muri ake, ko tērā 20 pai hēneti anō. Nā, e pēnei i tā Tau Henare i kōrero nei, ko tēnei tētahi pire hei whakatinana, ko ngā kirimana ā-rohe. Ko tāna he whakatau i ngā kerēme o nāia tonu nei i raro i te Tiriti o Waitangi mō ngā take e pā ana ki ngā pākihi pāmu moana. Nā reira, ko tā te Kāwanatanga, he whakawhanake i te ture i nāia tonu nei kia pakari tonu te ture mō ngā mea pēnei i te pāmu moana nei.

Nō reira, hei whakakōpani i ngā kōrero, e rua pea ngā take hai whakatakoto ki mua i te aroaro o te Whare Pāremata. Tuatahi, āhua rite ki te Ture Takutai Moana o te tau 2004, ko te tiaki i te āhuatanga o te moana ka mutu, ko te āta titiro anō ki te pānga o te iwi Māori, ngā kaipāmu Māori, ngā mea hī ika i roto i ngā mea takutai moana nei. Nō reira, me mutu āku pea i konei kia taea ai te kī kua eke ki te taumata i te pō nei, ā, ka tukuna atu ki tangata kē. Ko te tikanga ia, anā ka pōtingia ā te pō nei. Kia ora tātau.

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

[Thank you, Mr Assistant Speaker, and greetings to us all. Colleagues, and indeed those of us of Māoridom, it is good to hear our language being spoken in the House tonight. The situation next year is that our language will be heard simultaneously. So it is good that we test each other tonight and in the 2 weeks ahead.

The Māori Party is proud to stand before the House tonight in support of the Māori Commercial Aquaculture Claims Settlement (Regional Agreements) Amendment Bill. And the “It’s About Time Bill” is a more suitable name for it, because Māoridom have waited a long time, since 2004, for the Government to honour it. It is about time for the Government to have come to the table with a one-off payment to Māoridom for aquaculture space for which compensation was never granted in the past. The bill amends the Maori Commercial Aquaculture Claims Settlement Act 2004. So we are quite comfortable supporting it. We have advocated for a long time that this bill progress to where it is tonight, and be passed.

There are minor aspects of this bill that I must comment on—namely, on the tribes being seemingly in favour of regional agreements because there is no new space for the nation to debate. The great concern is that the use of cash payments as settlement does not resolve the desire by Māori tribes to participate in the aquaculture industry. This one-off payment from the Government settles the agreement reached in 2004 whereby the Government agreed to nearly 20 percent of pre-existing space and 20 percent of future space. As Tau Henare stated, this bill develops regional agreements and settles current claims relating to commercial aquaculture under the Treaty of Waitangi. So the Government is immediately committed to developing a robust regulatory regime for things like aquaculture.

To end this address, there are just two matters to put before the House. Firstly, this bill is quite like the Foreshore and Seabed Act 2004 in that it protects matters relating to the sea and examines Māori tribal interests, Māori commercial aquaculture, and Māori deep-sea fishing interests. So my contribution ends here. It has achieved what it set out to do tonight. Someone else has the call now. It will be put to the vote tonight, that is for sure. Thank you all .]

Hon SHANE JONES (Labour) : I congratulate the Ministers of the day for advancing the Maori Commercial Aquaculture Claims Settlement (Regional Agreements) Amendment Bill. It is a sad reflection of how entangled the law has become that applicants from either the Māori sector or the general industry sector have been frustrated in securing statutory entitlements to advance aquaculture, so this type of innovation needs to be applauded.

To the Minister for Treaty of Waitangi Negotiations and to the Minister of Fisheries I say that there was a time when Doug Kidd, in an earlier life, identified $2 billion in 1993 as the target that the industry would achieve through the infusion of aquaculture-based earnings; that target still eludes us. But if we can reduce the barriers and expedite the entry both of our own Māori people and also of the industry to higher levels, then it is good for the country. Treaty settlements have to integrate our people into the business of earning real money through participating in industry sectors.

We thoroughly support this initiative and wish the recipients well. We look forward to finding other ways to work constructively with the Minister for Treaty of Waitangi Negotiations on other Māori issues, in the spirit of reciprocity. Kia ora tātou.

• Bill read a second time.

Hon PHIL HEATLEY (Minister of Housing) : I move, That the Residential Tenancies Amendment Bill be now read a second time. I introduced this bill into the House on 13 May 2009. The bill amends the Residential Tenancies Act, enabling landlords to better manage their properties effectively and helping to ensure that tenants have access to stable, good-quality accommodation.

The bill has now been considered by the Social Services Committee, ably and constructively chaired by Katrina Shanks, my colleague. I would like to thank the committee for its robust consideration of the bill and for expediting the passage of the bill through the select committee process. The bill is very complex legislation. There are a number of issues that had not been debated since legislation went through Parliament over 20 years ago. I also acknowledge the submitters who took the time to make written and oral submissions to the bill during the select committee hearing.

The Residential Tenancies Act regulates the residential rental market. The structure and composition of the residential rental market is changing. Increasing numbers of families, children, and older people who historically had high homeownership rates are now part of the rental market. About one-third of New Zealand households are living in rental accommodation, and it is predicted that by 2016, 456,000 New Zealand households will be renting.

The growing rental market means that it is becoming increasingly important to make sure that our tenancy laws are up to date, that they are unambiguous, and that they are responsive, and we need a regulatory regime that reduces unnecessary costs, promotes equity, and facilitates the future provision of rental housing.

Changes to the Residential Tenancies Act had been proposed by the previous Government as early as 2004. It saw that we needed changes. Unfortunately, no tangible progress was ever made. Meanwhile, the sector has been left in limbo. This National-led Government is focused on progressing modifications to this legislation to actually make the changes happen—not just to talk about it—and to give certainty to a sector that has been waiting for years for amendments to be made to this very important Act, which affects many, many New Zealanders.

This Government wants to see landlords being able to manage their investment portfolios in a way that optimises their returns but is responsive to demand. This Government wants to see tenants having access to suitable rental accommodation and being able to make informed choices about where they live, how long they live there, and what, exactly, they are paying for. We want landlords and tenants to be clear about their rights so that they are empowered to act. We want landlords and tenants to take a responsible approach to their obligations to each other, to the people they share their homes with, and to their neighbours and the wider community. We want to see a rental market that is efficient, responsive, and well informed, and this legislation certainly goes a long way to creating that vision.

One of the main initiatives in this bill is to provide protections for some of the most vulnerable tenants in New Zealand—those who live in boarding houses. They are currently not covered by tenancy legislation, but this bill brings boarding-house tenancies under the umbrella of the Residential Tenancies Act so that the minimum rights and obligations of people living in boarding-house accommodation are clear, adequate, and readily enforceable. It was dreadful last year to see the media coverage of people living in boarding houses, particularly in Auckland, that were substandard. They were grotty, they were slum conditions, and those tenants were not protected.

I personally believe that this provision is the most important part of this legislation. It will cover those vulnerable people in boarding houses who are often transient, who are often on low, low incomes, and who are often in search of more formal and permanent accommodation. It is very, very important indeed to cover them while they are in boarding-house tenancies. In fact, much of the overcrowding in houses out in the general sector, in the suburbs, is due to the fact that many of these people refuse to go into the slum conditions of some boarding-house tenancies. Now they will be protected, and they will be more willing to take on the opportunity to live in a boarding house, even if only for a short time.

I would like to take the opportunity to outline some of the other main initiatives. This bill will extend the Act’s coverage to more people involved in renting. It includes access to advice, information, and dispute resolution services. It will clarify responsibility for outgoings, such as rates or water rates, by introducing overarching principles to indicate where landlords or tenants are responsible for those charges. It will introduce clearer and fairer processes for terminating and renewing tenancies in order to provide an appropriate balance between flexibility and certainty of tenure, and it will encourage landlords and tenants to comply with their obligations under the Act by increasing the value of existing fines and exemplary damages, and by introducing some new sanctions.

Members will know that the Tenancy Tribunal plays an important role in the sector in adjudicating in a low-cost and speedy manner. This is helped by the fact that parties mainly represent themselves. However, where there is a significant disparity between parties, or where someone is unable to present his or her case adequately without assistance, then the party may use representation to assist. That is a good thing. This regime is fair, supportive, and helps keep costs down for everyone. The bill includes measures to ensure that most tenancy disputes are resolved quickly, fairly, and cost effectively, and measures to improve the enforceability of Tenancy Tribunal orders. The most vulnerable will most certainly be protected in the Tenancy Tribunal. As I have said, there are opportunities for them to get representation.

The Social Services Committee has recommended changes to the bill that will assist landlords and tenants in very practical ways. The changes streamline the process for managing goods abandoned by tenants at the end of a tenancy so that time and costs involved are reduced while still providing tenants with a reasonable opportunity to collect their goods. They allow letting fees to be charged by all letting agents—not just real estate agents, as is currently the case—to create a level playing field for all property professionals working in the business, and to improve competition. We foresee that many property managers will not, in fact, charge letting fees at all as something to offer clients in a competitive environment.

The bill will now not require landlords to disclose to prospective tenants where premises have been subject to a cleansing order; for example, where a house was once contaminated by the manufacture of P. This will reduce potential costs for landlords while retaining existing protection for tenants, and has been deemed by the select committee to be appropriate. That is to say, when a house has been used for the manufacture of P, it gets a cleansing order. The police have to tell the council, the local council issues a cleansing order, and the house has to be decontaminated. That is a protection for tenants living there.

Lastly, the bill will make more equitable the process of terminating a boarding house tenancy for rent arrears by giving boarding house tenants greater opportunity to remedy rent that is owing before a tenancy is terminated. I once again thank the Social Services Committee, chaired by Katrina Shanks, for its thorough consideration of the bill and for its pragmatic recommendations for changes to the bill. I commend this bill, as reported back from the Social Services Committee, to the House.

KATRINA SHANKS (National) : It is my pleasure to stand and support the Residential Tenancies Amendment Bill 2009. Firstly, I thank the Social Services Committee members, especially my colleagues Chester Borrows, Hekia Parata, Todd McClay, and Tim Macindoe, who were very constructive when we were looking at the bill. I also acknowledge Sue Bradford, who was an important member on the committee when we were looking at the bill. She was a huge advocate for those who are more vulnerable than others in our community. I acknowledge the officials, who played a very strong supporting role in helping to form the bill, and the submitters who came along to the committee. We had a huge number of submitters who came and spoke to this bill. In fact, we contacted additional submitters—for example, students associations—to come and give us their view on how the tenancies legislation will affect students and their accommodation.

This bill covered many contentious areas. One area was in respect of cleansing orders, whereby a landlord is issued with a cleansing order because there is a P lab in the house.

• Debate interrupted.