Hon Dr MICHAEL CULLEN (Minister for Tertiary Education) : I move, That the Education (Tertiary Reforms) Amendment Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Education and Science Committee.

The purpose of the bill is to implement the Government’s reforms of the system for the planning, funding, and monitoring of the provision of tertiary education. These reforms will develop a tertiary system that will fulfil better the country’s needs in terms of national identity, economic transformation, and support for families young and old. At the same time, the changes to the tertiary education sector will help to provide better value for the investment by taxpayers, and contribute to an even better education for tertiary students.

The Government is committed to a quality tertiary education and training system that is relevant to the needs of New Zealand. A key aspect of these reforms is the placing of national goals and priorities at the centre of the tertiary sector’s focus. We want a tertiary education system that produces the right mix of the skilled graduates needed to support economic transformation. We need a tertiary education system that delivers research relevant to the needs of our businesses and industry, our communities, and the country. The reforms are introducing an investment system that aligns planning, funding, and monitoring, and that focuses on investing in priority areas identified at national and local levels. The funding mechanism underpins investing in a planned approach. This investing in a planned approach is at the very centre of the reforms and changes.

The bill being read today for a first time provides the legislative mechanisms needed to give effect to the reforms. It will provide tertiary education organisations with a simpler, more streamlined relationship to central government. As the explanatory note of the bill states: “The public policy objective of the Bill”—and the reform—“is to ensure that the tertiary education sector contributes towards tertiary education outcomes that are more closely aligned with the social, economic, and environmental interests” of the country.

Under the new system the Government will be responsible for setting the sector’s long-term strategic objectives and the current to medium-term priorities for the tertiary education strategy. This is a simplified process compared with the current process of both a tertiary education strategy and statement of tertiary education priorities. The Government will also be responsible for determining the overall level of investment in the provision of tertiary education, and how it will be allocated between the different subsectors, and between teaching and learning, research, and organisational capability building. This will be achieved by the responsible Minister, who will issue funding mechanisms that the Tertiary Education Commission will implement.

The Tertiary Education Commission will be responsible for issuing guidance on how different tertiary education organisations can contribute towards achieving objectives in the tertiary education strategy. The commission will be responsible for approving plans submitted by tertiary education organisations for funding purposes, and for determining the amount of funding to be allocated. The commission will have the discretion to approve plans in whole or in part for funding purposes. The commission will monitor the performance of tertiary education organisations in meeting specified outcomes in accordance with specified quality and performance measures, and in working with tertiary education organisations to address performance issues as they arise. I do not underestimate the difficulty of specifying appropriate quality and performance measures in the tertiary education sector, but the English have made considerable progress in that regard.

The Tertiary Education Commission will be building the capability of tertiary education organisations to achieve the outcomes specified in their plans. Tertiary education organisations will be responsible for preparing proposed plans in consultation with their stakeholders, for submitting them to the commission for approval for funding purposes and, of course, for implementing those approved plans, including amending, reviewing, or replacing them as necessary over the plan’s 3-year time span.

The reform process is already well under way. In December last year the Government issued a new tertiary education strategy that sets the Government’s expectations and priorities for New Zealand’s tertiary education system over the next 5 years. Universities, wānanga, polytechnics, institutes of technology, industry training organisations, private tertiary establishments, and other tertiary education providers will each prepare a plan, in consultation with their stakeholders—students, local businesses, local councils, and their communities—on how they intend to meet their needs and contribute to the tertiary education strategy.

The plans will include information about what education will be provided, and performance commitments in relation to that. The key difference—the core, as I said—is linking funding with the delivery of the plan. This will give the public more confidence in the value of taxpayers’ investments in tertiary education. Confidence in the last decade, I think it is fair to say, has not always been available to the public. The plans will be multi-year ones, and this will give the Government and the sector more certainty in terms of funding. Prior to the submission of plans to the Tertiary Education Commission for approval, organisations will have actively engaged with the commission over the development of their plans. This will allow for any potential issues to be identified early, with a view to resolving them before approval is sought. The bill expressly provides for organisations to develop the content of their plans in collaboration with the commission. The commission will consider and approve for funding purposes the final plans for each organisation, and determine the level of funding allocated to each organisation. The commission will then monitor the performance of the tertiary education organisations in meeting specified outcomes in accordance with those specified quality performance measures, and work with them to address performance issues as they arise.

One of the aims of the reforms is to provide our tertiary education organisations with much clearer boundaries. Universities, wānanga, polytechnics, institutes of technology, industry training organisations, and private training establishments all have distinctive and important roles to play in education, training, research, and higher scholarship, and in building knowledge and understanding. I think that the current model, started by the 1989 Education Act, led to organisations pushing their boundaries without sufficient reference to each other or to the impact on the system as a whole. These reforms place clearer boundaries around what different types of organisations should be focusing on, and how they should be collaborating to provide more choice and better quality to students—in other words, concentrating on their distinctive contribution as opposed to each trying to emulate the other.

For all tertiary education organisations the new system will provide more certainty, so that organisations can plan ahead and focus on delivering a portfolio of courses and qualifications that meet the needs of students and employers, regions and communities. Although the new system will bring greater control to the way we invest in tertiary education, it is not about limiting access to tertiary education. Instead, it is about ensuring that tertiary education resources are focused towards education that meets social and economic priorities. We want organisations to focus not only on managing fluctuating demand for individual courses but rather on managing changes based on the needs of their communities and the country. We have seen enormous fluctuations in rolls over recent years in some tertiary education establishments.

There is also a risk that a system of plan-led funding may be perceived as a move towards the centralised control of provision. That is certainly not the intention. In fact, we are moving to a system that requires organisations to reflect better the realities of New Zealand as a whole, and the different skill and learning needs of regions and students. Students will have the confidence of knowing that the tertiary education environment is more settled, secure, and focused on achieving goals and objectives. They will know that the courses they are studying, the research they are undertaking, or the skills they are learning are a response to the needs of industry or to regions of the country. I say that that should be interpreted broadly, particularly in the great range of humanities. They will be more likely to undertake a qualification if they have greater confidence that their new skills will be relevant to their preferred career.

The research sector, employers, and communities can have confidence that their needs will be far better addressed by the sector. We are looking for greater cooperation, stronger linkages, and more general interaction to ensure that research courses and training are focused on the right areas. Perhaps most important, New Zealanders and taxpayers will be reassured that they are investing in a tertiary education sector that is both relevant and accountable, focused on quality, and more streamlined and efficient.

I want to make one personal point. This is not a system that I want to see become a purely utilitarian system of education. The Prime Minister, who is an ex-lecturer in political studies, a Deputy Prime Minister who is an ex-lecturer in history, and a Minister of Education who is an ex-lecturer in sociology are scarcely going to place great stress only on those courses that lead to immediate practical employment, producing widgets. That would be a rather strange denial of our own collective past. But the reality is that at the moment we have an enormous duplication of courses that are leading neither to an expansion of knowledge and understanding nor to direct employability. On the other hand, we also have significant underproduction of skills for which there is a great need in our communities, and of which we have a great shortage in terms of supplies to employers. That mismatch of investment and needs is one that needs to be addressed by a more focused approach towards investing in a plan by the Tertiary Education Commission and tertiary education organisations. I commend the bill to the House.

Dr PAUL HUTCHISON (National—Port Waikato) : Thank you for the opportunity to speak on this very important bill, the Education (Tertiary Reforms) Amendment Bill. I must say that I am pleased to hear that the mismatch that Dr Cullen was talking about will be addressed by this bill, given that he, the Minister of Education—Steve Maharey—and the Prime Minister are former university lecturers. I myself was a lecturer in medicine at the University of London at one stage of events, but I have also spent 25 years doing a practical, tangible job in surgery, which helps give the perspective—

Lindsay Tisch: The edge.

Dr PAUL HUTCHISON: —or the edge that would be the appropriate end point.

There is no doubt that our tertiary education system is fundamentally important for the optimal growth of social, environmental, and economic outcomes of New Zealand—as is suggested in the explanatory note of the bill. But we hear from Dr Cullen that the Government is committed to an education system that delivers quality education and relevance—in fact, I think he goes on to say quality education, relevance, and value for money. Sadly, the legacy we have seen over the last 7 years has not been that. We have seen literally hundreds of millions of dollars wasted on courses that have not been relevant and that have not shown quality—hence the need for a change. Whether this bill and the reforms that this Government is proposing will achieve it is highly questionable.

If we look at what the Government has done over the last 7 years we can see that it has created a bureaucratic monster—the so-called Tertiary Education Commission. The commission did a job earlier through the Ministry of Education with probably 20 or 30 people. It has now expanded to a bureaucracy of something like 320 people managing these reforms—and it will grow. As Dr Cullen has pointed out in the many, many publications that have been produced over the preceding few months, all sorts of people will be involved in these changes. He has said we will be investing in a planned approach at the very centre of these reforms, with central control.

This is a typical Labour Party Pavlovian dog approach to reforms. It says let us get it organised from the centre and let us grow the bureaucracy. I can see Dr Cullen clasping and steepling over there, but this is the fact: we have seen a massive bureaucracy arise under Labour through the Tertiary Education Commission over the last few years. We have seen massive poor-quality spending. What guarantees have we got that the end points of relevance, quality, and value for money might occur?

I think it is worthwhile to look back a little to what Dr Cullen’s predecessor, Maharey, said about education reform in 2001. He said there were problems with the equivalent full-time students system, that there was a need for responsiveness to economic and social needs, and that the quality of teaching and research must be taken into account in the future. Of course they must. The Government has had 7 years to do that and it has clearly failed, despite working on it over these years. I think that point had better be made right now. Maharey said in 2001 that the Government was going to form a Tertiary Education Commission, that charters would be extended to all publicly funded providers, and that: “Government has agreed to all of these, with the sole exception of the functional classifications, which I believe the Charters and Profiles Working-Party is advising against.”

So Maharey was saying: “Yep, this is what we’ll do.”, and the working party has advised against charters and profiles. This was back in 2001. But within about 24 months Maharey was suddenly extolling the virtues of charters and profiles, and saying they would form the centre of these great, new reforms that the Government was planning at the time. Minister Maharey said at the time: “These reforms give the wider community considerable say over how a tertiary education system meets their needs. Their active involvement will be crucial to the success of the reforms … These reforms represent the culmination of the government’s promise to overhaul our tertiary education and training systems.” That was back in 2002. Again, quite some time ago, Maharey said that the Tertiary Education Commission will begin “clear, strategic direction to the system as a whole.” When was that again? That was in 2003—4 years ago.

We have had a fair bit of time for it, and it is somewhat ironic that here we have Minister Cullen now realising that he has to fix up the chronic mess and bureaucracy created by his predecessor, Steve Maharey. What did the Hon Steve Maharey say in July 2003? He said: “Charters, along with profiles, are the tools that will bring the tertiary education strategy alive, and bring about much needed changes in the tertiary education system.” When I look at the Minister’s bill I see that the main components of this new system are as follows. He states that “a tertiary education organisation prepares a plan”. As I understand it the charters and profiles are going to wither on the vine and be subsumed by the new plan of Dr Cullen. I hope that Dr Cullen’s new plan will be a hang of a lot more successful than the profiles and charters of the previous Minister of Tertiary Education, Steve Maharey’s, which clearly were dismally unsuccessful. Dr Cullen goes on to say that the reforms are rewarding and encouraging tertiary education organisations to go out and create cooperative links with their stakeholders. They are now planning to do the very thing that Dr Cullen was saying this time, with these new tertiary education reforms he is proposing.

Dr Cullen has kept the Tertiary Education Commission—that big labyrinth of bureaucratic tangle that is really destined to continue to ensure that inefficiency will reign within the sector, when we want every scarce tertiary education dollar spent well. It is a great worry, because we have seen the Tertiary Education Commission not only decide to reorganise itself after 3 years, at the cost of something like $8 million, but bring in a whole army, a cohort, of new people to manage these reforms. We do not know what these people—the investment managers—are going to be like. Where are they coming from? How much will they be paid? How will they get on with the various tertiary education organisations? Are they going to control them? Are they going to put vetoes on them that affect the traditional autonomy that many tertiary education institutions—particularly the universities—wish to have to a certain degree?

I accept that there must be a balance between academic autonomy and freedom, and the fact that the Government is a major funder, but here in Dr Cullen’s plan and the bill we see a system whereby he has unashamedly said there will be clear, central control. These investment managers will go in and ultimately work out whether courses can go ahead. This is of fundamental importance to our university system.

Dr Cullen says that he wants clearer boundaries between tertiary education providers—the universities, institutes of technology and polytechnics, private training establishments, industry training organisations, wānanga, etc.—and that this is not about limiting access to tertiary education. Well, first of all, in terms of the boundaries, we agree that it is important for there to be boundaries. The Education Act indeed provides fairly clear rules about research-led institutions, teacher-led institutions, polytechnics, etc. But over the last little while we have had some merging of these. We have had a bill from the Hon Brian Donnelly that may well make it even more complicated. I agree that this is one area where clearer definition is important. But Dr Cullen says this is not about limiting access to tertiary education. I would certainly hope that to be the case, because we have seen in the last 15 years an enormous increase in access to education in New Zealand. But what we need is quality, relevance, and value for money, and I do not believe that this Labour Government bill will achieve those.

Hon MARIAN HOBBS (Labour—Wellington Central) : I rise to support the first reading of the Education (Tertiary Reforms) Amendment Bill. I am pleased to report that the tertiary education reforms for which this bill provides the required legal mechanisms have, since March last year, been consulted upon widely—very widely—with the tertiary education sector throughout New Zealand. There have been speeches, seminars, and developments—all sorts of things.

There is general support for the reforms from the sector—and I hope the Opposition member Paul Hutchison, who has just spoken, is listening to this—particularly for the way the system will be simplified and streamlined, because that is what the sector sees. In fact, I found something that Dr Hutchison said to be quite interesting. He said that investing in a planned approach was pure social democracy—pure Labour. I say to the National Opposition that the opposite of that approach is the chaos that the National Government left us with in terms of the A1s, J1s, and 5.2—the unconstrained system of the former equivalent full-time student - based funding, when anybody could apply to run any course, with no boundaries, no control, and no decision-making whatsoever. If that is what Dr Hutchison thinks is a good system—the opposite of the planned approach—then I would far rather have the planned approach. I would far rather support the development of the Tertiary Education Commission, with its rules and dialogue, than have the willy-nilly, anything grows—including mushrooms—approach, at any time.

The tertiary education reforms should be supported, because they have the potential to be of considerable benefit to New Zealand. Everyone in this House will agree that raising New Zealand’s productivity levels is crucial to the process of transforming our economy. The New Zealand tertiary education sector makes a unique and invaluable contribution to this, from investment in science and technology, from research, and from higher skill levels, whether—I say to Dr Hutchison—they are in the arts or in the sciences. But we need to ensure that the considerable investment that taxpayers make in tertiary education is reflected in the best results possible.

The key aspect of these reforms is the move from what was handed down to us—an annually funded, unconstrained, input-based system; members should remember the A1s and J1s—to a 3-yearly, constrained, and outcome-based system.

Katherine Rich: What does that mean?

Hon MARIAN HOBBS: It means that there is a cap on the budget and that we do not have the system we had—a system that the front benches of the National Party got up and down and told stories about for years, although National had been ultimately responsible for setting it in place. That was when the twilight golf courses were allowed to run. We now have the very opposite of what that member’s Government set in place at that time, allowed to run, and encouraged. This is the change—the vital change—to a 3-yearly, constrained, and outcome-based system.

The bill will give effect to the necessary legislative changes to implement the reforms, with its primary focus being upon the establishment of a new set of streamlined steering instruments. Legislative action is needed, because the current steering instruments for the tertiary sector, and the associated administrative requirements, are set out in the Education Act 1989. For the new steering instruments to have a legal effect, the relevant statutory provisions require amendment.

The first new steering instrument is the tertiary education strategy, which replaces the two-step tertiary education strategy and statement of tertiary education priorities. So it goes down from two to one. This single Government document will set out the longer-term strategic direction and the short to medium term priorities for the tertiary sector. The second new steering instrument is the Tertiary Education Commission’s investment guidance document, which translates the Government’s strategic direction and priorities into a basis for assessing individual tertiary education organisation plans. The third new steering instrument is the tertiary education organisation plans themselves, which set out how organisations intend to give effect to the Government’s strategic direction and priorities.

The reforms and the implementation of these new steering instruments aim to bring greater certainty to the way the sector is funded, while retaining the flexibility needed to manage changing needs within a 3-year cycle. Under the current Education Act 1989, the Tertiary Education Commission and the tertiary education organisations have limited flexibility to amend their profiles. In respect of plans, this bill provides tertiary education organisations with the necessary flexibility to amend, or review and replace, approved plans. The commission will be able to propose amendments or request that a tertiary education organisation reviews its plans with a view to amending or replacing it. If required, the commission itself can amend the plans.

The bill also proposes changes to the more complex accountability arrangements for the tertiary education sector. Under the current Education Act, tertiary education organisations have two direct relationships: one with the Minister through charters, and the other with the Tertiary Education Commission through profiles and the allocation of funds. One of the drivers behind the tertiary reforms—and, again, this is contrary to what the previous speaker said—is the need to simplify accountability arrangements and improve the transparency of decision making. Accordingly, under the bill, tertiary education organisations will have a direct relationship with the Tertiary Education Commission, which is responsible for the approval of plans for funding purposes. The removal of charters will remove the direct relationship between the Minister and the tertiary education organisations. This will increase transparency, as tertiary education organisations will have a single relationship, with the Tertiary Education Commission. So we will reduce bureaucracy. We will reduce the system from one of charters plus profiles and relationships with the Minister and with the Tertiary Education Commission, down to one plan. We have simplified this system and made it far more transparent.

The Minister will, however, retain those functions consistent with managing the Crown’s interest and risk. The Minister will continue to have a relationship with tertiary education institutions in respect of the establishment and disestablishment of institutions, the appointment of up to four council members, intervention in institutions at risk, and the receipt of the annual report.

The increased clarity in the new system will improve accountability. If Opposition members are wondering where that need came from, then I refer them back to the education sector review conducted by the State Services Commission in 2005. The need for accountability was a major concern of the review and was spelt out very clearly. This new system will reinforce the arm’s-length relationship between the Minister and the tertiary education organisations.

As an adjunct to the Tertiary Education Commission’s new power to approve plans for funding purposes, the commission has been given express powers of suspension and revocation. The bill specifies the limited circumstances in which these powers may be exercised, and makes clear that the effect of suspension or revocation will be the immediate cessation of funding. The powers are intended, of course, to be used only as a last resort.

The previous speaker waxed lyrical about academic freedom. I just remind him what academic freedom is. Academic freedom is not a discussion about how many medical schools we have; academic freedom is the ability, within the delivery of a medical degree, to teach what the professionals want from the degree. That is the difference. It is the same as saying that, yes, we will have a school of history, but it is not the job of the Tertiary Education Commission to decide which elements of history are taught. Therein lies academic freedom. Section 161 of the Education Act 1989 states: “It is declared to be the intention of Parliament in enacting the provisions of this Act relating to institutions that academic freedom and the autonomy of institutions are to be preserved and enhanced.” This remains unchanged. Actually, among some of the institutions mentioned in the Act is the New Zealand Qualifications Authority, which increasingly has been engaging with the adult and community education sector on quality assurance matters. Parts 19 and 20 of the Education Act are being amended in this respect to confirm the New Zealand Qualifications Authority’s role in undertaking quality assurance of adult and community education providers.

Currently, we have tertiary education organisations receiving funding from the Tertiary Education Commission that must comply with specified financial reporting requirements, such as providing the commission with a financial report audited by an independent chartered accountant. There are concerns that these requirements are far too onerous for small organisations, particularly those involved in the adult and community education sector that are seeking limited funding. Under this bill, the commission will have the power to exempt organisations, as appropriate, from the reporting requirements.

In conclusion, this bill gives legislative teeth to a system that simplifies and streamlines the relationship that tertiary education institutions have with central government. It also lowers compliance costs and reduces bureaucracy. It does so by moving away from the previous system upheld by National, which was based on an annually funded, demand-led—often by advertising for students—input-based system, to a 3-yearly, controlled, and outcome-based system. I too commend the bill to the House.

KATHERINE RICH (National) : It was very interesting listening to that member, Marian Hobbs, who has just sat down. I do not think she could have put any more education jargon into one speech. I say for those listeners at home that the Education (Tertiary Reforms) Amendment Bill is about reforming our system of tertiary education—about planning, funding, and monitoring the provision of tertiary education. Much of what is in this bill is very worthy—in fact, a lot of it sounds a little bit like motherhood and apple pie—but the jury is well and truly out as to whether this bill will make one iota of difference to the provision of tertiary education in this country.

The previous speaker said that this bill would lead to lower compliance costs. I debate that issue very strongly. If we look at the status of the Tertiary Education Commission in this country, we see—as my learned colleague said—that it was an organisation that started off having about 30 staff. It then grew like Topsy into an organisation that has in advance of 300 staff. One of the things I have noted as I have travelled up and down the country is that when I ask universities and other tertiary education providers what the commission actually does, in terms of providing value to the sector, I never get a straight answer. Nobody can actually say what the organisation does, and, importantly, what value it adds to the tertiary education equation.

Another thing that concerns me is Marian Hobbs saying that this bill will reduce bureaucracy. How can that be, when universities in particular will now have to go through an additional process of planning—doing all their internal planning, then sending it to the Tertiary Education Commission for it to then decide who does what?

Although the Government pretends that this reform is some magical announcement, there is also the issue that we are now 8 years into a Labour-led Government and these are exactly the things Labour talked about when it first took over in 1999. These were Labour’s objectives for the tertiary sector, yet the pace of change has been painfully slow. We have seen a large collection of glossy documents. We have seen the establishment of the Tertiary Education Commission, and that in itself has not been without difficulty. The organisation set up offices up and down the country—including in my home town of Dunedin—only to retrench a few years later and close down all those offices. When the commission came before the Education and Science Committee only a few weeks ago, we asked it why it had set up a whole bunch of offices and expanded bureaucracy, only to turn round and do something different. On our side we were absolutely gobsmacked when the commission said it was just that it was not “fit for our purpose”. On our side we found that extraordinary; here we had a new organisation admitting that it had been set up incorrectly and was not suitable for doing the job expected of it. We question the role of the Tertiary Education Commission and wonder what value it is actually providing to the provision of tertiary education.

Another area that is worthy of note is the history of tertiary education provision. The previous member said that these reforms will stop the likes of twilight golf courses and other flimsy courses that we have seen over the last few years. Well, the Tertiary Education Commission does not agree. When the select committee asked it whether there were still courses being provided in this country that were of questionable academic merit, it said it could not guarantee that there were not. When we asked whether there would be further courses of questionable academic merit provided, it said it could not guarantee that there would not be, either. Certainly, in terms of this bill, it is hard to see how these changes will stop the incidents that created such huge public debate, such as the homeopathy for pets course, the book voucher bribes to increase the number of students, the radio singalong courses—people just enrolled and then, supposedly, listened to the radio—twilight golf, and the mismatch between training and actual jobs in the marketplace. We need to think about the question that if the tertiary sector is doing so well, why is the Teachers Council working with our teachers colleges, as we speak, to put in place academic standards for our teacher graduates—standards that require teachers to be able to read and write and know what they are teaching? It does not seem to be a sector that is doing as well as it should be.

We have heard a lot of jargon spoken about the tertiary sector this evening. The idea that what we are talking about here will lower compliance costs is very much open to debate. The Minister of Tertiary Education said that this bill will lead to streamlined efficiencies and a focus on quality. Well, if our tertiary providers are not focusing on quality right now, then I think that is a sad reflection on the present provision of tertiary education. The Minister said that New Zealanders will be reassured by this bill. I think New Zealanders are getting sick and tired of this Groundhog Day scenario, where they are continually being involved in a debate about tertiary education, yet absolutely nothing happens. This Government has had 8 years to make a difference to tertiary education, and we have seen very little change.

References have been made tonight to the involvement of the previous Minister of Tertiary Education, Steve Maharey. He was the person who oversaw the proliferation of a lot of community courses that made no difference to New Zealanders’ learning, added nothing to the economy, and continued to grow like Topsy and cost taxpayers a lot of money. He is probably the only Minister in Parliament who says it is a compliment to have Dr Cullen take over his portfolio. No one in this House would agree that when Dr Cullen takes over a Minister’s portfolio, it is a reflection that that Minister has done a great job in the area.

We have seen a huge amount of discussion and hot air about tertiary education, but very little has happened. It is 8 years down the track and we are still looking at reform. When will it finish? When will Labour say that it has finished its plans and put in place what it said in 1999 it would? What we are discussing here—the likes of enabling the Tertiary Education Commission to more effectively guide the contribution of tertiary education organisations—sounds good in theory, but the impact for a lot of universities and polytechs is a huge amount more compliance and many more costs associated with bureaucracy.

I would like to digress slightly for a moment. If this organisation is doing so well, why did it decide to continue to fund Case Boreham Associates, an organisation that is involved in the training of teacher-aides? Members will have heard some of the allegations that have been made about this organisation. It is an organisation that supposedly trains teacher-aides—but that is very much open to debate—and the allegations relating to the company are along the lines that money has been diverted into property deals and a whole wide range of other things. The Tertiary Education Commission supposedly ensures that there is quality within tertiary education provision, and that when we hand money to it as taxpayers we get what we pay for, and we get a quality outcome. I am wondering why we continue to allow the commission to grow when there is no demonstrable value added to the equation.

The final point I will make is there is a concern about academic freedom. If academics happen to work in a certain area that the Government does not like or is not supportive of, it will be very easy to shut them down, simply through the Tertiary Education Commission not funding that particular area of study. I would like to see protections in this bill so that the Government actually demonstrates that it is concerned about academic freedom. We have seen what the Government has done in the early childhood and compulsory sectors; this measure smacks of the Government trying to gain more control of the tertiary sector and to get it to do exactly what the Government wants it to do, as opposed to the Government trying to improve the quality of provision and make sure our graduates get what they pay for and invest in—what we all invest in, as taxpayers, as well.

It will be interesting to see this bill come through the select committee process. I look forward to submissions and to hearing from tertiary providers about what they really think. In particular, I will be asking them whether this bill adds value to what they do, what changes will be made, and whether they will be burdened by additional compliance costs as a result of this legislation. I hope the next Government speaker will explain why, some 8 years later, we are still talking about the same things that Labour said it would do when it first came into office.

Hon BRIAN DONNELLY (NZ First) : New Zealand First will be supporting this bill through its first reading, although we will be scrutinising closely one or two of its elements during the select committee process. We are supporting it because we believe it does simplify the processes currently in use to steer the system. It streamlines the processes for planning, funding, and monitoring the system. At the same time, these reforms will better align the tertiary education sector and its outcomes with the needs of our society—economic, social, and environmental.

New Zealand First sees this bill as an evolutionary step in a process of reform that extends back to the early 1990s. At that time New Zealand had the second-lowest tertiary participation rate in the OECD, which really hampered our economic development at that time. The only country we in fact bettered was Turkey. So the equivalent full-time student funding—the bums on seats approach—was set in place. It was the market philosophy, as it were, and the effect of this was to create dramatic increases in participation rates. That has to be recognised. But there was very poor alignment with society’s needs, particularly labour-market needs, and the situation was exacerbated by the uncapping of the equivalent full-time student funding. Institutions looked after their own interests first and foremost, rather than met the interests of the students or society as a whole.

The Labour-Alliance Government, when it came into power in 1999, had a Minister of Tertiary Education, Steve Maharey, who was certainly able to identify flaws in the system as it was, but he did not necessarily have the solutions. He put the responsibility for finding those solutions to a review panel, the Tertiary Education Advisory Commission. The key elements of the commission’s proposals were the bringing of all tertiary education funding under one set of policy and funding parameters, and the establishment of the Tertiary Education Commission, which was to be a funding agency to exercise a light-handed authority over the funding of courses in line with separate tertiary education strategy and statement of tertiary education priorities documents. There was no doubt the new system improved alignment, but the system, with its charter and profiles, etc., proved to be cumbersome and bureaucratic and the commission needed to take an increasingly heavy-handed approach to achieve its ends, particularly to reign in expenditure.

The tertiary reform legislation in 2002, in fact, specified that the Tertiary Education Commission would be only a secondary source of policy advice to the Minister; the legislation spelt out clearly that the primary policy advice provider would be the Ministry of Education. But it is worthwhile noting that recent accountability tools for the Tertiary Education Commission specify that it is required to be a primary policy adviser to the Minister, a situation that has shades of Fitzgerald associated with it. This legislation makes such policy primary-explicit.

As the Minister has pointed out, the bill moves away from an annually funded, demand-led, input-based tertiary system to a 3-year, controlled, output-based system. The triennial base as a funding regime in itself will cut compliance costs, and provide greater security for institutions as well as for their staff. Such a change will be of particular benefit to smaller regional institutions and many private training establishments, which thus far have been very vulnerable to vagaries in the system.

The Government will periodically issue a tertiary education strategy setting out the long-term strategy and current and medium-term priorities—in other words, doing away with two documents and bringing them into one. The Government, through the Minister, will also set out the design of funding mechanisms and establish funding levels. We all know about blow-outs, for example, in equivalent full-time student funding through private training establishments, and also 5.1 funding largely through polytechs and technical institutions. So the process will be achieved by the responsible Minister in issuing funding mechanisms that the Tertiary Education Commission will implement.

The Tertiary Education Commission will issue guidance on how different tertiary education organisations can contribute towards achieving the tertiary education strategy, in relation to content, requirements of plans, and the criteria under which plans will be assessed, etc. The bill sets out the general requirements for plans, and the Tertiary Education Commission will specify detailed content requirements in the investment guidance documents. The commission will monitor the performance of tertiary education organisations, and work with them to address performance issues and build the capability of the organisations. The important point is that the model is meant to be a collaborative one, in which the Tertiary Education Commission will work constructively with tertiary education organisations. The commission will have some flexibility to amend, review, and replace their plans. The commission will be able to propose amendments, or request that a tertiary education organisation review its plan with a view to amending or replacing it. If required, the commission itself can amend plans—and I want to make that point: the commission is being given the powers to amend the plans of individual institutions.

This is the source of New Zealand First’s concerns. The legislation makes it quite clear that in the event of a disagreement between the Tertiary Education Commission and a tertiary education organisation over a plan, the commission will be the final arbiter—no questions asked. This is potentially problematic where there is the possibility that this part of the legislation may run up against two principles, associated in particular with university education, and those are the principles mentioned before of academic freedom and institutional autonomy.

The complexities of applying those principles to a largely taxpayer-funded system was exquisitely delineated by former MP and university lecturer, Liz Gordon. The Education and Science Committee—I think it was in about 2002—was carrying out a financial review of the Southern Institute of Technology and the institute was asked upon what criteria it determined whether to run a course. The institute responded by saying that it would run a course if it had employment outcomes. Liz then posed a question that had the institute gasping. It was this: “In other words, if Tim Barnett’s bill gets through, you would run courses on prostitution?”.

I think in that question she encapsulated that fundamental conundrum that exists as a result of institutional autonomy, academic freedom and, in fact, the responsibility of Government to taxpayers, in terms of what they will fund and what they will not fund. As far as New Zealand First is concerned, tertiary institutions do not have untrammelled institutional autonomy in which they can demand taxpayer funding for any programme they wish to offer. The idea of academic freedom is more full of fish-hooks. Universities have an important role as society’s conscience and critic. They have an obligation in this respect, and this role is fundamental to the protection of our democratic freedoms. Without them, as I say, we could be in serious trouble. The question is whether the Government should have the power to shut down the teaching within certain courses of holocaust denial or claims of the intellectual inferiority of certain races. However uncomfortable we might be with the assertion, New Zealand First strongly opposes any suggestion that a Government should have such power.

The question that has to be asked is whether this legislation is giving such power to an institution, or to one of its agencies such as the Tertiary Education Commission. That is a question I think we will need to tease out through the select committee process, because if it is allowing those powers to be exercised, then New Zealand First would certainly oppose that part of the bill. We will certainly be looking carefully to see that the absolute powers being established for the commission cannot be used as a means of unacceptable control by Government over what is taught in our tertiary institutions. I thought Marian Hobbs explained it quite well by saying that, in fact, what we are talking about concerns the ideas that are taught within courses. We have no truck with the idea that institutions should be able to demand that taxpayers fund whatever courses they wish to run. However, we also would oppose any mechanisms that could be used to shut down the explorations of ideas simply because they are uncomfortable to the Government.

I just want to make one little point before I finish, which is that it is notable that within this legislation there is no reference, at all, to the principles of the Treaty of Waitangi. If members have a look at the wording that is used, they will see that it is about meeting the development needs of Māori people, which was put in the last bill by Nanaia Mahuta, but it also goes on to mention the needs of other population groups. I take credit for putting in that other part. It seems to me that the issues that need to be addressed through the so-called principles of Treaty of Waitangi clause are very much meant by the clause used within this legislation. Therefore, I reiterate that New Zealand First will support the bill going to the select committee. We will look very carefully at those certain elements of the bill during the select committee process.

METIRIA TUREI (Green) : The Greens will support the Education (Tertiary Reforms) Amendment Bill going to the Education and Science Committee, because we have long been saying that the funding system for tertiary education needs to be reformed. Demand-led funding leads to what we consider to be quite perverse outcomes and significant negative consequences for staff and students.

We were pleased to see that the proposed system is both outcome and evidentiary-based. We were also pleased to hear the recent announcement of extra funding for wānanga, polytechs, and some of the other institutions, because they will need support to deal with some of these changes. A “bums on seats” model—the equivalent full-time student funding, which is what the current system is—follows, in our view, an uncontrolled market-led approach to the provision of courses. It was interesting to hear the issues raised by some people who were concerned about the Government controlling what is taught in universities, and equally concerned—in fact, it is probably more of a concern—about industry making demands as to the provision of courses. I think that is what is happening in the current situation, and I am not sure that that is going to change under this legislation.

Currently, there is a massive increase in marketing by universities, because of the fierce corporate-type competition for individual bums on seats. Millions of dollars go into useless marketing, and those millions of dollars are coming from students, the Government, and taxpayers.

We have seen the situation where institutions offer courses that are most popular to students, and this can lead—and has led—to the elimination of well-established disciplines in some universities. Courses in humanities, women’s studies, religious studies, and Islamic studies have been cut because, comparatively, the student numbers are low in those courses. Many universities require each department to operate as a stand-alone business unit, and place unrealistic funding targets on those departments. The failure to meet those targets leads to the reduction in size of that department or the elimination of courses. It is not that these departments run at a loss; they are paying their own way, but they are just not meeting the profit targets set by the university. It is those kinds of corporate requirements—business-type requirements—on a public tertiary education system that seriously erodes it. The current kind of funding model reduces the range of options for students because of that industry-led approach. It also plays far too heavily towards the job market, rather than developing and maintaining a system that promotes education for public and societal benefit.

There remains, of course, a very large elephant in the room: student fees should be addressed as part of these reforms. The fee maxima system does not manage to control fees as it was promised to do. That is because the institutions have been seriously underfunded for a very long time—well before the time of this Labour Government, but this has continued through its term—and the universities have been managing the shortfall through students and the student loan scheme. Of course, that underfunding has driven student debt to a level now well over $9 billion. So a new funding mechanism and a new management mechanism for the sector is very welcome, as long as it comes with better funding, as well.

That said, we do have some concerns about the bill. Again, we are not so concerned that the tertiary provision is being controlled by Government but, rather, that the industry-led approach is being retained in this bill. The reforms are heavily dependent on the tertiary education strategy. We have criticised this strategy in the past for being too heavily focused on meeting the needs of business, developing commercial opportunities, and achieving economic growth. Those things are all fine and laudable in their place, but they should not be predominant.

We remain concerned that there is no priority goal that would enhance the strength of civil society, enhance the strength of our democracy, or foster environmental sustainability. This is coming at a time when the Prime Minister is publicly promoting her goal of New Zealand being carbon neutral and sustainable, so it is disappointing that the strategy is so weak on the contribution that tertiary education would make in achieving those goals. We believe that every aspect of Government policy must embrace sustainability, but it is perhaps most important that our education sector provides students with the knowledge and the skills that they need to combat the serious environmental challenges we face now and will continue to face well into the future. We need an education system that does not just meet the needs of business but provides for all New Zealanders to have access to public education that benefits the whole community. The needs of business are important, and they do matter. Having a highly skilled workforce is also very important in filling the gaps where they exist. I agree with Michael Cullen that that is an important goal too, but these goals must not come at the expense of a broad and well-funded public tertiary education system.

The strategy is very thin on valuing the role that arts and humanities play in New Zealand. We are concerned that these reforms may further undermine some of those already much-depleted departments—some of which I have already described. A system that is based so closely on this strategy requires that the strategy be of the highest quality. It requires a strategy that prioritises the cultural, social, and environmental goals of the community—and prioritises them at least as highly as the economic ones. Economics and economic growth, and all of those things, are tools for the well-being of the community as a whole, not end goals in themselves. But that is not yet the case in this strategy, and until that changes we will continue to have the same sorts of problems in our tertiary education sector that we are seeing now, despite the reforms.

Secondly, the new role of the Tertiary Education Commission involves it using tertiary education organisations to piece together a jigsaw for fulfilling the strategy. This is a much more important and demanding role for the Tertiary Education Commission, and we have concerns that it will neither be properly resourced nor properly prepared to manage those new demands. We would expect that the adjustment process—presuming that the legislation is passed in some form—will cause real problems as the adjustments are made. We want to investigate, through the select committee process, how that adjustment period will be managed in order to reduce the strain on an already highly strained tertiary education sector.

Finally, the tertiary education organisations that have ballooned under the demanding system are likely to be told to limit places and courses that are deemed by the Tertiary Education Commission to be of lower value in achieving the goals of the strategy. Although in some limited cases this might be a good thing, it will also mean that some students will be denied entry into courses they choose. They will be denied not because their grades are too low for them to manage the content but simply because there will be no places available for them. Some of those students may enrol in a different course of study, but some may decide not to pursue tertiary education, at all. So there needs to be a system that will manage the discrepancy caused by the change in the system and will reduce the risk of the exclusion of students—that needs to be managed very carefully.

Overall, we are very pleased that the bill has finally come before the House. We are very interested in exploring it more, because reform is absolutely necessary. But, again, our concern is not that the Government will control the content of courses but that the continued pursuit of economic growth will, above all else, continue to cause the sector enormous damage. We would like to see some of that reformed, too. Thank you.

TE URUROA FLAVELL (Māori Party—Waiariki) :Tēnā koe, Madam Assistant Speaker. Kia ora tātou katoa e te Whare, a tātou e hui neiiteneipō. If there is one concept that any party would like to support in tertiary education, it would be strategic relevance. Today we are encountering systems upon systems of arrangements to plan, to fund, and to monitor the tertiary education sector. We have the Tertiary Education Commission—the TEC—which is the lead agency to steer the system. We have the tertiary education strategy, known as the TES, and we have the statement of tertiary education priorities, known as STEP, which is two documents that will be cut down to one single document—the tertiary education strategy—by the Education (Tertiary Reforms) Amendment Bill. We have the tertiary education organisations, known as TEOs, which currently submit two types of documents to the Tertiary Education Commission, namely charters and profiles, which this bill proposes to whittle down to a single document called a plan.

A person could get very confused with all the acronyms alone—TEC, TEOs, TES, STEP, and the like. Let me add one more to the mix: EMRG. Or two more: MTEF—Māori tertiary education framework—and the Māori TES. For Māori we have the Tertiary Education Commission’s external Māori reference group, known as the EMRG, whose purpose is to provide the commission with a collective Māori view of all the streams of tertiary education at a strategic level.

In the midst of all these arrangements, the proposal to simplify and streamline the system is obviously really welcome, but simplicity is one thing, cultural competency is quite another. The Māori Party’s key concern in relation to the Education (Tertiary Reforms) Amendment Bill is how tangata whenua will fare within the staged system of reforms of the tertiary system instigated by the Tertiary Education Commission. So we come to the bill knowing that only a society that knows where it comes from, and the forces that shaped it, is in any position to understand itself and know where it is going.

A key point we would make is that there is a huge difference between what Māori see as strategically relevant to the survival of Māori as a people, and what the Crown may see as strategically relevant to the economic growth of the nation—a huge difference. An analysis might be brought to us by way of a statement from Russell Bishop and Ted Glynn in 1998, when they said: “If one lesson is clear from the history of our country, it is that the imposition of a model of change from outside of the experiences, understandings, and aspirations of the community group is doomed to fail—failure, that is, if the objective is other than assimilation or the perpetuation of a situation of dominance and subjection.”

When we turn to the previous tertiary education strategy 2002-07, Māori are positioned first as national citizens rather than as tangata whenua. Although the strategy sought to articulate a vision of “a prosperous and confident nation supported by a unified and connected tertiary education system”, it minimised and relegated the relevance of tangata whenua to sideline roles as players in the marketplace.

In another reversal of strategic relevance, Treaty partnerships were not defined as parties to the Treaty but were instead fashioned as merely one of a number of stakeholder groups, and probably last in the line after partnerships with business and industry.

From looking deeper into the detail of what has gone before, we find that in the Māori chapter, Te RautakiMātaurangaMāori, contribution to the achievement of Māori development aspirations, there was a raft of statements about being accountable to Māori communities, and about governance structures and processes that will meet the expectations of Māori communities. But where does it say that these things have been achieved or that they have even been monitored? Nowhere. That is because these things have not been actioned at all—out of sight, out of mind.

Where does this leave the Treaty, then? Does that mean that if it is not written in, it will somehow be included? It is sort of like the references to the Treaty being deleted from the New Zealand curriculum. In the first instance, whoops, a mistake is made, and back in it goes.

These are the questions I have asked when considering the proposal to consolidate the four tertiary education steerage documents into two. On closer reading of the bill, what I have found is missing is any requirement on tertiary providers to demonstrate a commitment to the principles of the Treaty of Waitangi, as was required in the predecessor documents, charters, and profiles. It does not seem to be around.

Under section 181(b) of the Education Act 1989, this is still a requirement. Unfortunately, the Māori Party is a little bit concerned that the Māori MPs in Labour have sat quietly while the deletion of the Treaty has been put in place here and cut out of the policy. We might add this to the report card on the Treaty deletions this Government is clocking up: the Treaty taken out of the draft school curriculum, done; the Treaty deleted from health specifications, done; the Treaty deleted from legislation, in progress; and the Treaty taken out of charters and profiles, in progress.

Fortunately, the public does not support the “slash in silence” approach of this Government and they have acted in ways that seek to restore optimism for the Treaty-based future. So just as health providers have reacted angrily, and schoolteachers flooded the Ministry of Education with their objections, we will be looking to the select committee process for the voice of New Zealanders to be once again heard in upholding the mana of Te Tiriti o Waitangi. But unfortunately again it shows that our Māori caucus colleagues in Labour may be having their voices suppressed. It also makes us suspicious of the nature of the consultation process that the Ministry of Education and the Tertiary Education Commission have, or, more likely, have not, gone through in order to get to this point.

Have they fulfilled their obligations to consult with Māori, hapū, iwi, staff, students, and communities about how best to support and advance the developmental aspirations of Māori, and is this consultation actually apparent in the bill, in the new tertiary education strategy, or even in the promised but yet to be seen Māori strategy? Or have they succumbed to what the renowned educationist Paulo Freire called domestication—being trained to obey—rather than what he believed education should be doing, which was about liberation, to be able to explore and think freely and to think for oneself?

Our consultation as the Māori Party with Te Mana Akonga, the national Māori tertiary students’ association, tells us that in far too many instances the tertiary education organisations are failing to adequately consult with Māori in developing charters and profiles, despite the legal requirement to do so. In some instances consultation with Māori students has consisted of a letter informing them of what has already been determined. In other instances the content and concerns raised in submissions and hui have been inadequately reflected in charters and profiles, or not reflected at all. But when this lack of consultation has been raised with the Tertiary Education Commission, there has been no evidence of any action having been taken.

I have taken a little bit of time to outline some of the important background to this bill. Whilst we support moves to clarify and simplify procedures, the overriding concern is that the new changes will be beset by the same problems as the parent documents. The key limitation with this new set of reforms is that until there is a clearly outlined and specified relationship between both the tertiary education strategy and the yet to be released Māori tertiary education strategy, particularly in relation to provider compliance and Government monitoring, there is always the risk of disconnection.

We in the Māori Party have a particular reason for concern when I think back to some of the questions I got to put to the Tertiary Education Commission at the Education and Science Committee recently. I asked questions about how one would judge whether courses are relevant, and received the answer: “TEC does not judge cultural relevance.” Further, they do not have any criteria, any systems to assess cultural relevance. Under those conditions, is it likely that courses that are seen by Māori as relevant and about the survival of Māori language and culture are accepted? Probably not. Yet the Tertiary Education Commission is charged with the role of planning, monitoring, and funding the tertiary sector specifically in relation to relevance.

The Māori Party has more questions than it has answers about this bill. We have questions such as whether without a specific Māori focus or Māori chapter in the new tertiary education strategy, will Māori issues fall off the table? When can we expect to see the proposed separate Māori strategy document that was meant to be released at the end of April 2007? What will be the level of connection between the Māori tertiary education strategy and the tertiary education strategy? How willing will the Tertiary Education Commission be to ensure that tertiary education organisations consult with Māori in the development of their plans, particularly given that they do not have a good record of doing so?

We will support this bill, because we support the general concept of simplifying and streamlining an overly complex system. However, we will be keenly watching the select committee process to assess how well this bill responds to the imperative of delivering what Māori see as strategically relevant to the survival and flourishing of Māori as a people.

JUDY TURNER (Deputy Leader—United Future) : I stand to speak on the first reading of the Education (Tertiary Reforms) Amendment Bill 2007. Let me say straight up that United Future will be supporting this bill going to a select committee because we certainly like the intentions of the reform. These intentions are to reform the planning, the funding, and the monitoring of tertiary education and services. The claim by the Government is that this bill will streamline the system—and we all acknowledge that it sure needs that—and that in so doing it will reduce compliance costs for those who are providing tertiary education.

My experience to date—in the last 12 months in particular—has been as a result of the contact I have had with private providers within the tertiary system who have had some real difficulties in gaining certainty around the continuation of the courses they offer and the funding from the Government.

There seems to be three areas in which planning and responsibility will be identified. The first is the Government’s own responsibility. Its responsibility will be to set up a long-term strategy for the delivery of tertiary education services, and it will, obviously, determine the level of Government investment into this area. As well as determining how much money it will be throwing at tertiary education, the Government will also be determining the allocation throughout the sector, including its role in deciding how priorities are set, balancing priorities such as teaching, research, and the organisational development of providers.

Then we have the Tertiary Education Commission. It will be issuing providers with a set of guidelines that outline the Government’s strategy. It will be approving plans for funding, and will be monitoring performance.

The providers themselves, of course, are the third tier and they are required to prepare plans. The difference is that they will now be preparing those plans in consultation with the Tertiary Education Commission. I think this has huge potential for good. Instead of turning up with a plan they hope will get a tick from the commission, providers will be working with staff from the commission from day one, and will be demonstrating how their priorities can integrate with Government priorities. It is in everybody’s interests for that to happen. The plans will clarify what funding is required and how outcomes will be demonstrated to the commission and to the Government, which is a good thing. The collaborative way in which plans will be developed will reduce the risks for providers so that they no longer have to try to second-guess what the Government is looking for.

We are also pleased to see a move towards 3-year planning cycles, which should give a lot more certainty to providers. However, the Tertiary Education Commission is not obliged to approve the full 3-year plan, and United Future will be keen to hear what submitters say in response to that. Will that provision undermine the new promise of certainty? The ministry has stated that this new 3-year cycle will create greater flexibility so that organisations will be able to amend, review, and replace their plans during a cycle without risking funding projections, because, of course, those amendments and changes will be made in consultation with the commission. So it has some potential for flexibility.

The bill also aims to simplify accountability arrangements that improve transparency. We have heard a number of horror stories over the last few years that signal we need to make some changes in this regard. Providers now have a single relationship with the commission. This certainly sounds like an improvement. I have had contact with providers who were selling their tertiary business but the sale was held up because they were waiting for the Minister to rubber-stamp the charter, which had remained unchanged for years and was still in its original form. They could not sell the business and they could not get approval from the commission for the new owners until the charter was re-rubber-stamped. Delays often made for real difficulties, so I am sure providers will appreciate having one relationship, particularly as this relationship is to be collaborative.

United Future, however, would like to signal one caution over this single point of contact with the Tertiary Education Commission. It includes no independent arbitration provisions. So when disagreements arise, the Tertiary Education Commission will be the final arbiter. This is particularly concerning when considering the fact that the commission can suspend or revoke funding. Although the Government says this will be a last resort provision, we would like some reassurance. It concerns us that the Tertiary Education Commission becomes a powerful agent to determine the future of a provider that may have been considered a valued contributor up to that point where a disagreement arose. So although we are happy to see this legislation move to a select committee, we, like other parties, want to hear some feedback from submitters around that particular issue. We wonder and question whether there may be a need for an independent body to arbitrate between the commission and the provider when a disagreement arises, so that there is a fair and equitable outcome. Providers will have negotiated at least a 3-year plan, and to have the funding rug pulled out from underneath them because of a disagreement over some matter seems to be unfair and of great concern.

As with the New Zealand First speaker, Brian Donnelly, United Future agrees that not everyone who wants to be a provider can just put up his or her hand and expect to get Government funding. The Government needs to be wise in the way it allocates money. It needs to make sure that all of the tertiary education sector lines up with things such as the workforce needs within the labour market, and, certainly, that it is future-proofing certain professions. We have some real concerns around the direction that some of the medical sciences have been moving, in regard to future planning. We seem to be exporting a lot of our talent. We are very interested to see the kinds of things that come back from submitters during the select committee process, However, we are very pleased at this stage to support the bill at its first reading.

MOANA MACKEY (Labour) : I am very happy to take a brief call in the first reading of the Education (Tertiary Reforms) Amendment Bill. I think most of the issues have been canvassed very, very well and repeated often during this debate. Certainly, I think members in this House are very aware that this is incredibly significant legislation. An awful lot of work has gone into preparing this bill. The tertiary sector is a sector that, of course, covers many, many varying types of organisations that have different interests. I am sure that it has not been easy throughout the process of working with them on this bill to come up with a model that provides for all the types of institutions that we are talking about and does not treat them unfairly.

I look forward to this bill coming to the Education and Science Committee, which I am on. I am sure it will have much robust debate and I am sure we will get many, many submissions. Knowing the way our select committee works, I can say there will be a genuine will on the part of the committee to make the bill better in any way we can and to ensure that we can get as much support for it in this House as possible.

On that point, there does appear to be genuine consensus in the House, even from parties not supporting the bill, that changes need to be made. Some concerns have been raised that will need to be picked up by the select committee around some of the aspects of the bill in terms of the powers of the Tertiary Education Commission in disagreements. That appears to be a point of concern amongst parties in the House, and I think it will be a point that the select committee will look at. There does seem to be genuine consensus that something needs to be done in this sector, though obviously there is some slight disagreement over whether this bill is the vehicle to do that.

I believe that this bill will go a long way towards addressing many of those concerns and towards ensuring that taxpayer investment in the tertiary education sector is providing outputs of quality and not simply of quantity in terms of students. It is important to acknowledge that we have a lot more students going into the tertiary education sector now. That has had its good and bad points. Students are also now coming out of tertiary study with big debts, which have provided other challenges the Government has had to address in terms of the way we look at student support funding and, of course, interest-free student loans. It has had a lot of spin-offs. I believe this bill will go a long way towards addressing some of those issues, as well.

One of the comments I hear most often from people who come in to discuss tertiary education issues is their concern over the amount of money that appears to be spent by institutions on advertising and on competing with each other, which we have seen in the past, in order to get the students—the bums on seats. If that money was not being spent on advertising, and if we had far better understanding and cooperation within the sector, where could that money go? Could it go towards reducing the cost to students of tertiary study, towards salaries for the staff who work in the institutions, or towards more research and development work in some of those institutions, as well?

We have had an attempt at a market model for a long time in our tertiary education sector, and I guess the problem has been that the right drivers have not been there. Any Government would hope that the drivers in the tertiary education market would be those of economic development, of responding to industry needs, and of responding to the needs and priorities of the Government in terms of growing the economy and providing a skilled workforce.

Unfortunately, I think that in many areas of the tertiary education sector the short-term focus on simply keeping one’s head above water has taken precedence over a long-term focus about what is best in each region and for each regional institution, polytech, or private tertiary education provider in terms of its strategic vision. The long-term has simply not been the focus, and that is why we have seen the proliferation of courses that are cheaper to run, that grab an awful lot of students, but that do not provide the quality for money that taxpayers expect from their investment in the tertiary education sector. After all, we need the right mix of skilled graduates to transform our economy, and at the moment the sector simply is not responsive enough to those needs. We hear that message from employers and from business and industry groups, who tell us they need a tertiary education system that is far more responsive to the needs of the sector and far less focused on simply putting bums on seats and bringing in the equivalent full-time student funding that provides the money for the institution to keep going.

This is certainly something we have seen in our regional polytechs. When I have spoken with regional polytechs, they have been quite candid about the fact that a lot of times they have been focused on their short-term survival. They have had some very good years when they have offered some questionable courses—many of which have been raised in this House. In those years they did very, very well financially. When there is that kind of incentive driving the strategies in the tertiary education sector, it is clear that the model we have is not working.

This bill introduces a law that is needed to give effect to these reforms, and I believe that it will provide the tertiary education sector and organisations with a simpler and more streamlined relationship with Government. I do not believe that anyone would disagree with the need to streamline that relationship. The relationship has developed over time, grown a life of its own, and had add-ons here and there. This complete relooking at the sector is a good thing, particularly for the taxpayers, as well as for the stakeholders in the sector itself.

The bill streamlines the system, it provides a much more simplified set of steering instruments—which I am sure the sector will welcome—and it also provides the Tertiary Education Commission with a broader range of options for guiding the contribution of tertiary education organisations and monitoring their performance. That is something we have had difficulty with in the past. The bill also clarifies the accountability of the tertiary education organisations for the expenditure of public funds. It is only fair to them that we are quite clear at the beginning, when they are doing their 3-year plans, as to what is expected, so they can then have not only the funding security but the security of knowing that what they are doing is feeding into the overall vision of the Government and safeguarding the Crown’s interests in such organisations—which, as previous members have indicated, is not insignificant.

One of the other issues we have seen in some of these institutions is the propensity to move to much cheaper courses. For example, we need a lot more scientists in our workplaces, but, of course, science courses are very expensive to run, because for each student that goes into a science course there are significant costs. If we look at some of the other courses such as humanities courses—and we do not want to constantly pick on the humanities—we see that the same costs can cover hundreds and hundreds of students. It does not matter how many students are brought in; the cost of the overall course remains the same, because we are not dealing with things like labs and all the costs that come with the equipment, the reagents, and everything else that is needed. So we have seen a propensity sometimes to move away from areas like science, which is, in fact, one area where we need a lot more investment and a lot more focus in terms of the needs of our economy over probably the next few decades.

The reforms in the bill introduce a new investment system, and, as the previous speaker from United Future said, planning, funding, and monitoring will be aligned to ensure that the system delivers for all stakeholders. At the end of the day, that is what the bill does.

As I said before, I am sure we will have a very robust debate on this bill in the Education and Science Committee. It is almost hard to stand up and give a speech on the bill now, because I am sure there will be much debate and many changes mooted in the select committee. I look forward to that process. Certainly, we want to encourage anyone to make a submission on this bill. It is of incredible significance. In terms of the economy and economic development in New Zealand it is probably one of the more important bills to go through. We want to ensure that all areas of the tertiary education sector are able to have their say, that this bill advantages as many as possible, and that we are not adversely disadvantaging any areas of the sector. It is a diverse sector and it is a complex sector, and it is not easy writing legislation that covers all of it. This is a very, very good bill, a very, very good first step, and I look forward to the select committee process working on improving it further.

ALLAN PEACHEY (National—Tamaki) : Before I address the particulars of the Education (Tertiary Reforms) Amendment Bill, I will pick up on an admission made by the Minister for Tertiary Education, Dr Michael Cullen, who also happens to be the Minister of Finance and Deputy Prime Minister, in his opening remarks with regard to the bill. He told this House that he was a former university lecturer. He also told the House that the Prime Minister was a former university lecturer, and, what is more, that the Minister of Education himself was a former university lecturer.

Two things occurred to me. One is that that is a pretty thin base of life experience around which to build a Government. The second thing is that it sort of confirmed for me what the good working people of the Panmure and Glen Innes communities of my own electorate of Tamaki tell me when I catch up with them at the weekend. They tell me that the problem is that those Labour jokers in Wellington have lost touch with the working man, and that they do not know what it is like to get a bit of dirt under their fingernails. Maybe that is the problem. The Education (Tertiary Reforms) Amendment Bill is wrongly named. It might perhaps more aptly have been called the “Education (Create More Bureaucracy) Bill”, or, even more accurately, perhaps, the “Michael Cullen Has No Idea (Once Again) How To Clean Up The Mess Bill”. That is what the Government is trying to do with this legislation—to clean up a mess that its own former university lecturers have created in the tertiary sector.

The National Party, on whose behalf I am speaking, is opposed to the bill, just as it is opposed to any extension of bureaucracy, in any form whatsoever. We are certainly opposed to the further bureaucratisation of our universities and of our tertiary sector in general. We know from history the impact that meddling by left-wing Governments has: it is one of mediocrity. That will be the downstream effect of this Government’s continuing interference in our tertiary education system—further Government-encouraged mediocrity.

The Minister, in his first reading speech, made a number of big claims about what this bill will do. Those claims have been supported by subsequent Government speakers. But a couple of questions have not been addressed. For example, how does creating more bureaucracy, as this bill does, improve academic standards? How does creating more bureaucracy, as this bill does, protect and ensure the academic freedom of our universities? For 8 years now we have had a Government whose policy in the tertiary education field has been marked by confusion, by unwise expenditure of taxpayers’ money, and, worst of all, by waste. That, of course, is the problem with left-wing Governments: they waste other people’s money. They spend and tax like there is no tomorrow, and they squander the money of their fellow New Zealanders.

Members should be in no doubt: the big expanded bureaucracy that this bill will create and perpetuate will be expensive, it will be cumbersome, and it will be lethargic. The bureaucracy that has been created will be too cumbersome to be responsive to New Zealand’s changing economic environment, and it will be too lethargic to respond to the changing economic environment in which we find ourselves.

I wonder what happened to those simple times when New Zealand tertiary education policy could be run perfectly competently by half a dozen people sitting around the table and making simple, common-sense decisions. Let me tell the House what has happened. This bill is the work of a Minister appointed after the last general election to clean up the mess left behind by the previous Minister. That, of course, has become the shape of this Government. The Prime Minister reshuffled the deckchairs, and it has fallen to Dr Cullen to clean up the mess left behind by his fellow former university lecturer, Mr Maharey. Talk about a hospital pass! But at least there is some justice in this world. Dr Cullen cleans up after Mr Maharey, and Mr Maharey finds himself cleaning up in education after the mess left behind by Mr Mallard. It is all a bit of a circus, really. Just as Dr Cullen has demonstrated that he has lost control over finance policy and that he has little understanding of the real nature of the New Zealand economy, so he is now demonstrating that he does not know what to do in tertiary education. He actually does not know how to fix up the mess inherited from his predecessor.

So what does he do? Given that he has no idea how to clean up the mess, he falls back on that good old left-wing stand-by: create and expand the bureaucracy. That is how it is for the Government. Look at its history over 8 years—appoint a Minister, create a mess, and then appoint another Minister to clean up the mess. That means an even bigger mess that has to be cleaned up. There is more bureaucracy, there are more bureaucrats, and, most worrying of all in terms of tertiary education, there is more threat to academic freedom and standards and no addressing of the real issues that surround tertiary education in New Zealand today.

How will the huge bureaucratic machine that is being created by this bill produce more of the type of graduates that New Zealand needs? The last Government speaker touched on that. How will this bill help to produce more of the world-class scientists that this country needs if its economy is to grow? How will this enhanced bureaucracy create more of the engineers that we need? Just as important, how will this bill stop youngsters being lured into tertiary courses that sound exciting to them at the moment, but for whom there are insufficient sustainable career opportunities on graduation. This is an expensive waste of an opportunity for those youngsters. It is an expensive waste of an opportunity for our economy, and if there is one thing that we know, it is that increasing and expanding bureaucracy, and the lethargy that that creates, in no way will address those fundamental imbalances.

That is something that this Government just does not understand. How will the proposed massive expansion of bureaucracy that this bill proposes produce world-class universities for New Zealand students? How will the massive expansion of bureaucracy that the bill proposes produce the higher-quality research-based teaching that our students need if they are to be the best in the world and if they are to create the sort of economy that New Zealand will need in order to retain the best and the brightest in the world in this country?

So let us be very, very clear. This is a process of untidy Government. The Education and Science Committee will face a major challenge in working its way through what is really quite a complex, complicated approach to a relatively simple, straightforward challenge. I am looking forward to working on that committee and to receiving submissions, and I live in hope that the quality of submissions that the committee receives and the rigour of thought that members of that committee will bring to that process will produce a bill back here that will be far more significant and straightforward than what is being proposed at the moment. As this bill stands, it will not work, and the National Party opposes it.

DIANNE YATES (Labour) : I rise to speak on the Education (Tertiary Reforms) Amendment Bill. I must say that that was not the most erudite speech on education I have ever heard in this House. In fact, I would say that it was rather devoid of ideas and alternative policy; it was a knee-jerk, negative rant rather than an informed and erudite speech on tertiary education.

Last week the University of Waikato held a stakeholders’ breakfast. That stakeholders’ breakfast is the type of thing this bill is talking about. The university meets with people in the community who are interested in what the university is turning out, the types of courses it is running, the sorts of graduates it will produce, and how it will meet the needs of the community. I congratulate the university on working towards the type of plan that is referred to in this particular legislation.

This morning the Waikato Chamber of Commerce had a meeting, which was addressed by Graham Smith. Graham Smith is the man who is responsible for Katolyst. “Katolyst” is a combination of the words “Waikato” and “catalyst”. It is to do with the Waikato, and is about what actually gets things moving in the Waikato. Katolyst is the economic thinktank, basically, of the Hamilton City Council. One of Graham’s topics was the close relationship that has been built up between the university and its stakeholders. That is an example of what this bill is talking about, how this bill will actually work out in the community, and the types of things that will happen. Employers will come, chamber of commerce members will come, and Export Institute people will come and have a closer relationship with the tertiary institutions—with Wintec, our local polytech, and with the university and other providers—and they will work together. They will provide for the students.

Let me talk about what the bill does, why it does it, and how it does it. This bill will ensure better value for the investment by taxpayers, and contribute to even better education for students. That is what it will do. It will build on our investment in tertiary education. It changes the system for planning, funding, and monitoring the provision of tertiary education. It will put national goals and priorities at the centre of the tertiary sector’s focus. As Michael Cullen has said, that does not mean completely utilitarian tertiary education that teaches only skills, because in order to be a skilful person, one also has to be able to reason. People have to know why they are doing what they are doing, and its purpose. Having been involved in skills teaching in another life, I know that there is research that shows that if people understand why they are doing something, then they are better able to do it and they are better able to cope when things do not go exactly according to the book.

What else will this bill do? It will aim to deliver the right mix of skilled graduates who are needed to transform our economy and to do research that is relevant to businesses, industry, communities, and the country. I know that somebody recently was given a reasonable amount of money to do a PhD on research related to bogans and pop music, as far as I can understand it—heavy metal or whatever—and people asked what on earth that has to do with New Zealand. Well, those people do not understand that music and appreciation of music, at all its various levels, is what New Zealand is particularly good at. I was actually saying in the House that day how bizarre that was, because I was thinking of how much money the song “How Bizarre” had made for New Zealand. It is interesting that New Zealand does have an international reputation in music, and music is an export business.

The bill also introduces a law to give effect to reforms to make things, as has been said by speakers on all sides, simpler and more streamlined.

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

DIANNE YATES: Before the dinner break I was talking about what the bill does, and I will now go on to why it does it. So we have done the what; now the why. Largely it is because of policy and the fact that prior to this there was little cooperation across the system. In the 1990s we had a very competitive model. I heard Alan Peachey talking before the break about how he did not like this bill and preferred the competitive model. He suggested that under this bill there would be waste. My goodness, what a lot of waste there was under the competitive model! There was lots of repetition, lots of small institutions competing against each other, and lots of Government money going into the private profits of the institutions that were set up. There was a tremendous amount of waste and a tremendous amount of duplication. I think Mr Peachey needs to take a really good look at what was there before. As we heard from his speech, he has come up with no alternatives—just a lot of rhetoric about the system.

We know that the system became more homogenous, we know that the research role of universities was placed at risk, we know that competition drove up the cost of providing education, and we know that trades and technical training were placed at risk. In fact, during question time today we had a discussion about apprenticeships, and we know that, at least, we now have the Modern Apprenticeships scheme, which is part of our tertiary system.

We know that in the 1990s National sought to develop a marketplace in education, and that tertiary institutions became competitive. In fact, whenever I put my head in a university I heard that the universities were wasting so much energy on competing against each other. Students were told that education was substantially a private, not a public, good, and that research was undertaken to meet private requirements and was not available publicly. Commercialisation and eventual privatisation of tertiary education were the National Party’s agenda. That is why we have these changes.

One of the changes in this bill that is very, very pleasing to someone who remembers that there was such a thing as a quinquennium at universities—

Darren Hughes: A what?

DIANNE YATES: A quinquennium—a 5-year system of funding, under the University Grants Committee. This bill brings in a 3-year system, rather than a 1-year system, so that people—

Darren Hughes: The good old days were good after all.

DIANNE YATES: Yes, the good old days were good after all. But now we are going to a 3-year system. That means institutions can plan and are required to plan. That means better recruiting of staff, better retention of staff, and more certainty for students. So I thank the Minister for Tertiary Education for introducing this bill and introducing greater stability in the system. As I have said earlier, the stakeholders will be pleased with that as well, especially as they are involved in this planning process. So we thank the Minister for this bill.

We note that 3-year plans will be put into force, and we also note that there will be a greater emphasis on standards, and the Government’s priority is to ensure that there are more students at higher levels—diploma level and university level—which will create people who are far more employable and have the skills that many employers are crying out for.

I totally support this bill. I think it is, perhaps, long overdue, and we look forward to its implementation. I have already praised the University of Waikato for having a stakeholders’ breakfast last week. Our local chamber of commerce had a stakeholders’ breakfast to discuss many of the ideas that are included in this bill. No doubt it will be making submissions, and I will be encouraging it to do so. We look forward to the input of those submissions on the bill. I am sure that most of the submissions will be positive and constructively support the bill. Once again, I note that we have a bill that sets out to simplify and streamline—those two words can never be bad—the tertiary education system, and to bring about tertiary education reforms that will benefit not only students, staff, the institutions themselves, and employers but society as a whole. It is recognition that education is a public good for the benefit of New Zealand.

Hon Dr MICHAEL CULLEN (Minister of Finance) : I move, That the International Finance Agreements Amendment Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Foreign Affairs, Defence and Trade Committee.

The bill will amend the International Finance Agreements Act 1961. This Act allows the Government of New Zealand to meet its obligations as a member of various financial institutions, including the International Monetary Fund and the International Bank for Reconstruction and Development. This bill is the next step towards New Zealand becoming a member of the Multilateral Investment Guarantee Agency, which constitutes one of the five arms of the World Bank Group. At this point, the Multilateral Investment Guarantee Agency is the only arm of the World Bank that New Zealand is not a member of. In order to become a member of the Multilateral Investment Guarantee Agency, New Zealand first has to become a party to the relevant convention, and the Multilateral Investment Guarantee Agency Convention was signed by New Zealand in Seoul on 6 December 2005.

As a member of the World Bank Group, the Multilateral Investment Guarantee Agency contributes to the World Bank’s mission of poverty elimination and the achievement of the Millennium Development Goals. The Multilateral Investment Guarantee Agency seeks to mobilise private sector resources to help in addressing the stark development challenges, such as the provision of services, building infrastructure, and creating new jobs. The core mission of the Multilateral Investment Guarantee Agency is to enhance the flow of capital and technology to developing countries for productive purposes by providing three key services: firstly, political and sovereign risk insurance for foreign investments in developing countries; secondly, technical assistance to improve investment climates, and promote investment opportunities in developing countries; and, thirdly, dispute mediation services to remove possible obstacles to future investment.

The convention has been through a national interest analysis, which concluded as follows. First, New Zealand is fully supportive of the Multilateral Investment Guarantee Agency, as its services are well aligned with our broader development interests and, to a lesser extent, our foreign policy interests. Secondly, the assessment of whether New Zealand should join the Multilateral Investment Guarantee Agency was based on three broad categories: supporting the New Zealand private sector in terms of its assistance, contributing to development goals, and supporting multilateral organisations. Thirdly, by ratifying the Multilateral Investment Guarantee Agency convention, New Zealand is strengthening its commitment towards international efforts to promote development and improve our credibility with the World Bank.

I realise, of course, that this bill comes at a time when the World Bank itself is in a position of some difficulty and strife due to claims of a conflict of interest on the part of the World Bank’s President, Paul Wolfowitz. I might say that New Zealand has taken the position whereby we think that Mr Wolfowitz’s current position is becoming fairly impossible, and that it would be desirable if he were to step aside from it. There is nothing personal about that at all. It is very hard to preach the importance of ensuring that there are no conflicts of interest as part of international development when clearly there is some conflict of interest involved in the chief executive’s position. Nevertheless, the World Bank is crucial to the fulfilment of the millennium development goals, and the Multilateral Investment Guarantee Agency is an important part of its activities.

Assuming that the International Finance Agreements Amendment Bill is passed, we will be required to deposit a copy of the amendment Act with the World Bank. New Zealand will then be required to pay a subscription fee. The subscription that will be involved is the purchase of 513 shares at a cost of approximately US$5.5 million. Of that amount, 10 percent is in cash and 10 percent is via a promissory note. The remaining US$4.4 million will be subject to call by the Multilateral Investment Guarantee Agency. The fund is unlikely to be called upon, as a call would require the agreement of all shareholders—and I am sure members understand that getting the agreement of all shareholders in an organisation like the Multilateral Investment Guarantee Agency is even harder than getting a broad consensus on monetary policy in New Zealand.

I commend the bill to the House. I am sure it will have very widespread support. I hope that the select committee will be able to deal with it fairly expeditiously, as it has already been through the other process in relation to the convention signing itself, and that it will come back to the House and proceed rapidly to its final passage so New Zealand will then be able to implement the select committee’s recommendations.

Dr the Hon LOCKWOOD SMITH (National—Rodney) : Let me make it clear from the outset that National will be supporting the first reading of the International Finance Agreements Amendment Bill. We are supporting it for good reason. New Zealand is a country that is very much dependent on a dynamic international economic environment. The Multilateral Investment Guarantee Agency, which the Minister Dr Cullen has just been referring to, is all about helping to promote investment, and the security of investment, in developing countries. It is in New Zealand’s interests that there is successful investment in developing countries. It is in New Zealand’s interests that the developing countries of the world do well, because it is just so important for a trading nation like ours. We are so dependent on that dynamic international economic environment. In my view, and in National’s view, that is a very powerful reason why we should be supporting this bill.

Obviously, the Multilateral Investment Guarantee Agency does some quite specific things, which the Minister has referred to. One of the very important things it does is risk insurance, if you like, to protect investment in developing countries against some fairly tricky things that can happen. For example, in some places where businesses may want to invest, at times laws can change and it can be difficult to transfer local currency outside the country in question. If the host Government has a turn of mind and suddenly develops an irrational attitude, it can sometimes be difficult to transfer local currency out of there. Investors can therefore lose their investment. So one of the things that the Multilateral Investment Guarantee Agency can help to insure against is that inability to transfer local currency.

Likewise, there is a need to protect against expropriation. If it is possible, the act of a host Government can put at risk the investment of an investor in that county. The Multilateral Investment Guarantee Agency can help with protection against that. It can also help with protection against breach of contract. It is even possible for the agency to insure against war and civil disturbance.

The Multilateral Investment Guarantee Agency ought to—and the experience is that it does—help to promote investment in parts of the world where investment may not flow so readily otherwise. Although some of these places are not the easiest places to invest in, it is in the global interest that investment takes place. It sure is in New Zealand’s interest that investment takes place, because as these countries benefit from that investment they become trading partners for New Zealand.

I do not want to speak for the full 10 minutes, but I just want to comment that the Minister mentioned the fact that New Zealand has to buy shares. We have to subscribe to 513 shares in the Multilateral Investment Guarantee Agency as part of this process. It is interesting to reflect on the number of shares that we have to subscribe to and how New Zealand is treated in that process. New Zealand will become one of 21 category 1 subscribers. It is interesting to look at New Zealand’s position in the developed world in the OECD rankings and see how other countries close to New Zealand in the rankings are treated in subscribing to the Multilateral Investment Guarantee Agency. The countries closest to New Zealand are Spain, which is one place ahead of New Zealand in the OECD rankings in GDP per capita or wealth, and Korea, which is one place behind New Zealand in those rankings.

What is fascinating is that those two countries that surround New Zealand in terms of our standing in the wealth stakes of the world, if you like, are not treated as category 1 countries. It is a measure of the extent to which New Zealand’s wealth or GDP per capita has declined that we are still treated as a category 1 subscriber, yet our GDP per capita has us among countries that are actually treated as developing member countries. Both Spain and Korea are treated as developing member countries in their subscriptions to the Multilateral Investment Guarantee Agency, yet they have a GDP per capita that is right alongside New Zealand’s. That is a measure of the extent to which economic policy in this country is inadequate.

It is not just a problem of economic policy alone; there are other factors. For example, Britain’s joining the EEC, to go way back to 1973, put pressures on New Zealand. But inadequate economic policy has seen us fail to respond to that adequately and has seen us slip down the OECD rankings in terms of the income of our people. This legislation drives it home to us that here we are, subscribing as one of the 21 category 1 subscribers to the Multilateral Investment Guarantee Agency, with 513 shares to be subscribed to, while the two countries next to us—one above: Spain; one below: Korea—are both treated as developing member countries under the Multilateral Investment Guarantee Agency convention of the World Bank.

We have a lot of work to do as a country. With the Budget coming up in the next few days, I hope Dr Michael Cullen in the Labour Government is giving a lot of thought to policy and to how he can stem the decline in our international ranking, because since Labour has been in office we have slipped yet another place or two down the OECD rankings. We are now genuinely among the developing member countries as far as the Multilateral Investment Guarantee Agency convention is concerned. That said, National will be supporting this legislation, because it is in our interests that investment can flow in developing countries and that there can be some protections for those who invest in those countries. It is in our interests that they benefit from international investment. That is why we will be supporting this legislation.

R DOUG WOOLERTON (NZ First) : New Zealand First will likewise be supporting the Multilateral Investment Guarantee Agency. We will also be supporting the International Finance Agreements Amendment Bill going to the select committee, and we look forward to its progress.

As the two previous speakers—Dr Lockwood Smith and Dr Cullen—said, it is important that we participate in agencies such as the Multilateral Investment Guarantee Agency, that we participate in giving aid to developing countries, and that we participate in giving not only monetary aid but also humanitarian and technical aid to countries that have fallen on hard times. Some of those countries are in the Pacific, and we can think of one or two of them—Fiji among them—where we know for sure that something will have to be done in the future. It would be surprising to us all, I am sure, if those countries were to go ahead in their present circumstances. So we will have to come to their aid.

But over and above the aid that other countries will give to those countries is the long-term direct investment that private individuals or corporations put into them. Of course, that is the money those countries really want. This treaty is all about ensuring that there is less risk for private individuals or corporations when they invest in countries—be they countries that are war-torn, countries that have been taken over by perhaps a less than ideal democratic system, or countries that are just developing.

When we read through the papers we see that in those countries things like clean water, good roading, and electricity—all of the absolute basics that we take for granted—are what they want people to invest in, and they are trying to facilitate private investment coming through. We applaud that, because that is the best sort of investment. Those investors will ensure that their money goes into productive enterprises, because it is only from such enterprises that they will get a decent, long-term return.

I think it is important that people understand why we give aid to other countries. I am often called upon to explain this to people. Some people attack me or come to see me on a regular basis and ask me why we are giving all this money to other countries when here in New Zealand hip replacements are needed and hospitals need money, etc. Of course, the answer is to ask them whether they want all those people in the other countries to come to New Zealand. Of course they do not, and New Zealand First makes a bit of an issue about that. So it is in our interests to make sure that we help people in their own country. We say there should be heaps of that help, and that people are better off in their own country. We can help them, and this project ensures that that can happen.

The other area that interests me particularly—because of my interest in primary production—is the exporting area. We simply cannot sell the sorts of products we sell, to countries that are in poverty. It is in our interests—as Dr Lockwood Smith and Dr Cullen said before me—for those countries to have modern-day infrastructures and living standards, and to see them rise up to the standards where they can afford the sorts of things we call primary produce. In countries that are in poverty, primary produce—as far as food items are concerned—is very close to being a luxury item.

New Zealand First absolutely applauds this legislation. We look forward to it going to the select committee and to hearing what the committee has to say about it. I cannot see that the select committee will have too many problems with the legislation, and I am sure it will come out the other side. To those people who object to 10 percent of the subscription being paid in cash, or even to the total of $9 million going towards the entry fee for the Multilateral Investment Guarantee Agency, I say that that is a very, very small price indeed for stability and for emerging markets into which we can sell our produce.

Hon MARIAN HOBBS (Labour—Wellington Central) : I rise with great joy, actually, to support the International Finance Agreements Amendment Bill. I will tell members why I think it is an important bill. We cannot fight world poverty without the support of the whole community. It is true that in New Zealand many, many people give private donations to aid agencies such as Oxfam, Save the Children Fund, and World Vision—you name it; there are a lot of agencies. We are a generous people; we do that individually. But, on its own, that is not enough. Aid agencies are not very good at building airports, roads, and ports. And, yes, the New Zealand Government contributes aid, and I live in hope that that contribution will grow. I presented an argument that it should grow, and we did grow it. But there is still a wee way to go, and I want to see that aid increase as we go forward. I will come later to what we do and how we, as the New Zealand Government, contribute.

But most of all, the countries in the Pacific and around the world that are developing need to have a capital injection—that is, big money to build airports, ports, and roads. The people they would get that money from, the international companies, are very nervous of investing in countries that might actually go kaput or whose police—as once happened in the Solomons, when the police wanted an increase in their pay—surround Parliament with their guns drawn until they get an increase in pay. People have found that if they were investing in a harbour and that money went off to pay the police extra money, there was no stability. They wanted some guarantee and protection against an inability to transfer local currency outside a country that may result from the host Government’s action. Those people want a protection, an insurance, against expropriation—against the loss of an insured investment as a result of the acts of the Government—and against breach of contract. In other words, they want—and they will get it through this bill, by our joining in the Multilateral Investment Guarantee Agency—to get that insurance. That agency will build up a fund to offer insurance to private companies to invest in the developing world.

Why do we need to fight world poverty? People often think about that in terms of the aid agency advertisements we see, which show little children with flies on them. Everyone feels incredibly sorry for them, and the issue is all about us giving to them. But the situation is not quite as simple as that. There is a quid pro quo. Those countries are potential markets. They are places of peace. They are places of good health.

R Doug Woolerton: And fellow humans.

Hon MARIAN HOBBS: They are places where fellow humans live. Left alone, they become places of chaos, poor health, no markets, and no trade.

Let us begin with the markets. When I was a little kid, my mother invariably told me to eat my food or she would parcel it up and send it to China.

R Doug Woolerton: That’s what happened to me.

Hon MARIAN HOBBS: I had that problem. I laid down the fat for a long time. How wrong was that? It was just that China was so poor that we were told it got our left-overs. It never ever got them, actually; my peas never went to China—I think that even then we had food regulations. But the point is that now no one would tell a child that his or her leftover puddings or vegetables will be sent to China, because China has a strong economy that we are trying to do a trade agreement with. It was a country that was economically way behind other countries, but it has now become the place that everyone in the world wants to trade with.

We should apply that thought in terms of what we need to do in order to build up the infrastructure and trading capacity of developing countries. This issue is about the people of those countries, but there is also self-interest in it. When we think about health, we think about the risks to health from AIDS. We have only to look at the number of people affected in Papua New Guinea to understand that AIDS is as fast-growing there as it has been in Africa. When we think about it spreading down Melanesia and through into Polynesia—of which we are part—we know there is a reason to invest in community health in Papua New Guinea. It is about defence as well as about actual human justice and social issues.

There are issues around environmental damage. We know from inside New Zealand that if we deforest, we will eventually have floods. Deforestation has occurred in places—in Papua New Guinea and in Fiji, at Labasa—and then a fast flood comes down and wipes out parts of the town and kills people. The flood may come quickly because of a dam that has built up as a result of deforestation. How do we persuade people, therefore, to develop a different economy: one that is not based on taking out the primary products first, without building a sustainable economy? We can do that only through aid. We are fast realising that we are not a country on our own. We are absolutely interconnected with other countries, and environmental damage in Fiji, Vanuatu, and throughout the Pacific will have its effect on us in New Zealand.

Of course, if we leave countries alone to face AIDS and unsustainable economies without resources, then we know—we see this all the time—that those countries go into militarism, mass uprisings, and tribe fighting against tribe, as we saw in the Solomons. Those issues arise, and then we pay out money to send in our army and our police to sort out the issues. Would it not be much better if we were working to actually support these countries by means of aid? People argue that charity begins at home. I say that home is much more inclusive than just New Zealand. Home includes protecting our borders from AIDS and building markets—there is a self-interest there. It is not just a matter of the cost of a hip operation here versus the work that we do over there.

What difference can we make through supporting that work and through supporting aid? We can build roads. It is utterly ridiculous that in Port Moresby in Papua New Guinea peas, beans, and carrots are imported from Australia for the tourists who stay in hotels. Up in the highlands of Papua New Guinea peas, beans, and carrots grow absolutely magnificently—far better than they grow in Australia. But, you see, there is a plane that flies between Darwin and Brisbane and Port Moresby. There is not a plane—there is not even a road—that goes through the highlands down to Port Moresby, where the market is. That country could be self-sufficient. That country would not need to spend its money importing vegetables if there was actually some decent infrastructure there. The same goes with regard to airports and the tourism that comes through having them. I think it was Pukapuka, an island—I think I have this right—in the Cook Islands, where it took 2 weeks for any boats to get there in the middle of the last cyclone that hit. There was no other way to get there. Small planes and a small airport could have helped. Then we have issues about waste management, education, and community health.

This matter is not about being Goody Two-Shoes—that is what I am really trying to say. This is not about being Goody Two-Shoes. There is an element of self-interest in aid. In fact, naming it as “aid” irritates me now, even though we have an agency called NZAID. Aid is not always about stretching out the hand. There is an element of self-interest, and, as such, we support it. There is a particular kind of self-interest here. This bill is actually about making it easy for international companies and financiers to put their money in and to put it in safely, particularly since it is money that has been invested by ordinary citizens throughout the world.

TIM GROSER (National) : I do not, as was the case with the previous speaker, necessarily rise with great joy to address this topic, but I certainly rise to support the International Finance Agreements Amendment Bill.

Hon Member: You love it!

TIM GROSER: Well, it is a sensible bill. Legislation like this would not have done anything to help New Zealand investors in the only experience I ever had in this area. That was with regard to a $600 million investment in a geothermal plant in Indonesia, where the predator was not the host Government but the IMF. But that is another story. I think the bill does a number of very sensible things. The only mildly partisan comment I make is that I wonder whether, if the roles were reversed in 18 months’ time and my colleagues on the Government side were then in Opposition, they would be rising to support an agent of international capitalism. We will see whether there are recidivist tendencies in the Labour Party in due course.

In the broad sweep of things, this is a sensible bill. I think it is long overdue that we join the Multilateral Investment Guarantee Agency. I see no downside to doing so; the contingent liability is very modest. It is important to try to think—as other speakers have done—about what lies substantively behind what is in fact a highly technical bill before the Parliament. What lies behind it is the process of development and the role of foreign direct investment flows in helping to achieve that historic goal. Just to put that in perspective, I will say that foreign direct investment absolutely dwarfs, by a huge order of magnitude, official development assistance in terms of its importance as a form of development assistance.

I recall reading recently that of the $780 billion dollars, would members believe, of exports from China in 2005—which are powering China’s development and lifting hundreds of millions of people progressively out of poverty, although there is still a huge amount to be done in the west—60 percent of those exports were from foreign multinational enterprises in China. The role of foreign direct investment in the transformation of the Chinese economy—to take by far the most important example—is huge and obvious. Such investment needs some protection, particularly since developing countries often have very poorly organised infrastructure. The court systems, as people generally know—and I have had some experience in Indonesia on this front with regard to New Zealand and Australian companies—are completely unreliable for investors to resort to. So I think the Multilateral Investment Guarantee Agency is really underwriting the process of development.

From time to time we should sit down and reflect a little on how well the development process is going. There is so much nonsense spoken internationally about the poor getting poorer that just occasionally it is useful to sit down and look at some facts. The facts are that if we take what I think is probably the largest single statistic to indicate welfare, life expectancy, we see that there has been an absolutely dramatic increase in average life expectancy in all developing countries in the last 100 years. It has risen from around 34 to about 62, and that includes the countries in sub-Saharan Africa and the most unfortunate other African countries that are going backwards because of the epidemic of HIV/AIDS.

Enormous progress is being made in development. The average rate of economic growth last year for all developing countries, including the countries going backwards, was almost twice as fast as the average rate of growth in all developed countries. As a consequence of that, the numbers in the most disadvantaged segment of the population of the developing world—those who are living on $1 a day or less—has declined by approximately 50 percent in the last 30 years, to about 1.1 billion. That figure is forecast to halve again by 2030. The numbers in the next segment, those who are living on $1 to $2 a day—a little bit under US$1,000 a year—are forecast to drop by about 800 million. What we are seeing—and it is no longer, of course, just in the most obvious countries such as China; these days it is also spreading increasingly to India—is the rise of a huge developing-country middle class. If we use a definition based on purchasing power parity estimates of between $5,000 and $10,000, that middle class is estimated to currently stand at around 400 million people today. It is projected to rise within the next 20 years to about 1.3 billion people. That is a huge measure of human progress—it is a huge measure. Other social statistics are improving, such as infant mortality, as well as the life expectancy becoming higher.

For those who are not moved by any concerns of that nature about the folk in developing countries, I say that of course it also means the emergence of vast new markets for countries like ours. If we look at China, we see there is a linear relationship here between the extraordinary growth of the Chinese economy—averaging about 10 percent since 1978—and the fact that in respect of our principal goods export, dairy products, the compound average rate of growth per year is around 30 percent. New Zealand is the largest single supplier of dairy products, in terms of imports, in the world. So for those members who are not moved by the bigger humanitarian issue—and I certainly am; I think that is the biggest game in town, frankly—there is also a very strong area of self-interest in this for other countries.

Foreign investment is absolutely central to the development process. The ability of foreign investors to lay off their risk through proper international multilateral cooperation of the type we are debating in terms of this bill is part of that picture, and it is for those reasons that the National Party will be supporting this bill.

JEANETTE FITZSIMONS (Co-Leader—Green) : This is one of those bills where Parliament passes legislation in order to give effect in domestic law to treaties that the executive has already signed with other countries, so we can be seen as a bit of a comma after the full stop, in that sense. Normally, these bills go through Parliament with no controversy. But as it happens, the Greens are not going to vote for this bill, and I want to explain why we are not.

I agree strongly with all the causes that Marian Hobbs has just espoused in her speech: international aid enabling developing countries to improve their quality of life, health, infrastructure and all the rest of it, and even that foreign investment is necessary in order for them to do that. But let us look at the track record of the Multilateral Investment Guarantee Agency and see what it has actually done in the past. The agency exists to protect foreign investors from the risks associated with investing in developing countries. So we put up capital, along with other countries, to cover the insurance for those corporations. It seems they do not have to buy their own insurance; it seems we buy it for them. It costs us around $9 million to belong to the agency. This is not the only agency of the World Bank that provides that kind of guarantee and insurance policy, so it is not as though there are no other ways that cover can be provided.

Let us look at this particular agency and see what it has done in the past. Well, it has a set of guidelines for the projects where it will guarantee investment, and it is supposed to cover things such as human rights, the environmental record, and social issues. But a recent investigation by the compliance adviser ombudsman of the agency’s parent body, the World Bank, strongly criticised the agency for projects where it had guaranteed the investor, but been completely negligent about checking on human rights issues, on the environmental record, and on the social effects on the host community. I do not think that our aid money should be going to support an organisation that performs as badly as that.

Let me give members an example. The agency insured investment in a copper and silver mining project in Katanga in the Democratic Republic of the Congo. The audit concluded that the risks to the local communities in terms of the human rights impact of the project were not adequately considered. The mining company that the agency insured apparently provided logistical support to the Congolese army during a violent counter-offensive to suppress a small-scale uprising, and according to the United Nations as many as 100 civilians were killed during that military offensive, supported by the multinational company. The World Bank investigated that. There does not seem to have been any process whereby the agency investigated the effects of the investment projects that it was insuring and guaranteeing, and it seems that they were negative in terms of human rights, and negative in terms of the life and safety of the local people and their social well-being.

Another project, the pulp mill at Fray Bentos in Uruguay, was insured and guaranteed by the agency. That mill made pulp out of eucalypt chip, It was strongly opposed by the local community, because of the concern that it would seriously pollute their river. The bank also found that the agency had neglected to investigate the environmental, human rights, and social impacts of that project.

So here is an organisation that simply doles out our money to foreign investment companies, to guarantee them against the local risks of investing in countries where they make a lot of money, and it cannot even be bothered to investigate whether the projects that it is supporting will be good for the local community. The investigation of that agency was not carried out by a radical Third World monitoring organisation but by an official of the World Bank, who found that the agency was not living up to its responsibilities, and was not taking due care or doing due diligence on projects. It was just there to facilitate investment, regardless of whether that would be good for the local community.

I have been a strong supporter for raising New Zealand’s official development assistance. I think we have a responsibility to countries that are developing to help them more than we currently do. We are way down on the international league table, in terms of the proportion of our GDP—about 0.27 percent—that we devote to official development assistance, and we have signed up, really, to the international agreement that it ought to get to 0.7 percent. Well, we are not getting there very fast; we certainly will not get there in my lifetime. But if our aid is to include guaranteeing multinational investors against local events in the communities where they invest, and if they invest in projects that are damaging to human rights, to the environment, and to the local society, I do not think that is an appropriate use of our money.

The Greens will therefore be voting against this bill. We do not expect that that will prevent it from passing, but we think it is time that somebody stood up and told the truth about what the agency does.

TE URUROA FLAVELL (Māori Party—Waiariki) :Tēnā koe, Mr Deputy Speaker. Kia ora tātou, itēneipō. The legislative schedule before the House today has exceeded itself with the use of acronyms. This bill makes its own contribution—IMF, MIA, and MIGA to name a few—and includes such tantalising terminology as neo-liberalism, multilateral investment, global trade, and investment liberalisation.

In my preparation for debating the bill I came across a new principle that I would like to share in this debate. It is a principle coined by Professor Jane Kelsey on behalf of the Action, Research and Education Network of Aotearoa. Professor Kelsey has introduced me to the “Dracula principle”, which is the destruction of obnoxious agreements by exposing them to the light of day. It is a principle that we in the Māori Party wholly endorse for the International Finance Agreements Amendment Bill.

The context of foreign investment and a nation’s economic relationship with the world is, of course, a key issue for any political party. It is also a context that has been part of the ongoing debate within Māoridom in particular, and within the indigenous global community as well. It is a context probably best explained by the Native American activist who said that neo-liberal globalisation “is just a different version of the same old cavalry”.

Tangata whenua have long wrestled with the notion of foreign investment, from the very first colonial land speculators to the hugely controversial Multilateral Agreement on Investment put forward in 1997 to remove, basically, all restrictions on foreign investment. Māori up and down the length and breadth of Aotearoa attended hui, wrote submissions, and took to the streets to speak out on their belief that such a proposal would open the floodgates to wholesale exploitation and appropriation of our lands and resources, and threaten the very integrity of the nation.

It is an interesting coincidence that today—a day that we, the Māori Party, released a key policy platform in order to ensure that all parties to the Treaty settlements process are on a level playing field—we think back to the way in which earlier foreign investment agreements sought to relate to the Treaty. Signing up to the Multilateral Agreement on Investment would have required the New Zealand Government to speed up and force the pace of Treaty settlements, settling all claims by the year 2000.

We would say to this House that sovereignty was not ceded by Te Tiriti o Waitangi, nor should the Government yield its false claim of sovereignty to anybody else but Māori. The Treaty must stand to continue to protect future Māori generations and to guide Aotearoa’s future. Consistent with this, the Māori Party today announced the establishment of an Independent Settlements Authority. But what do we have here with the International Finance Agreements Bill? We get another agreement signed up to by the Government without the involvement of tangata whenua—without any kind of agreement from Māori as the partner to the Treaty.

In 1997 the Law Commission produced guidelines that I would recommend to this House for background reading to this bill. Its guideline, entitled The Treaty Making Process: Reform and the Role of Parliament, recommends that a treaty impact statement should be prepared for all treaties to which New Zealand proposes to become a party. It states further that the impact statement should set out any consultation undertaken with Māori, and whether the treaty will have an effect upon the rights guaranteed in the Treaty of Waitangi.

The Treaty clauses have been included in recent agreements, such as the 2006 Trans-Pacific Strategic Economic Partnership Agreement, as a result of Māori challenges and pressure. But such clauses are always limited because it is left up to the Government of the day as to how it chooses to fulfil its obligations under the Treaty. The clauses are also meaningless if they lack any prior dialogue or debate between Māori and the Crown as to whether the agreement is a good idea in the first place. The Crown’s fundamental obligations to tangata whenua as guaranteed in Te Tiriti o Waitangi are overridden by this bill to confirm New Zealand’s membership in the Multilateral Investment Guarantee Agency, not least because it has already been signed up to, on 6 September 2005—conveniently, and not surprisingly, I suppose, some 2 weeks out before the general election.

The bill accords with the economic pathway brought in by Labour and National Governments, which instigated then extended a massive programme of corporatisation and privatisation, and between them removed essentially all restrictions on foreign investment. By the mid-1990s there were foreign buy-ups of prime commercial and residential property, overseas ownership of New Zealand companies had increased by 145 percent, and local manufacturing had plummeted and, with it, employment levels and rates of pay.

We stand in this House today to make it quite clear that Māori have strongly resisted foreign investment agreements that willingly give investors rights over lands and resources that right now we are contesting through the Treaty process. We must continue to act locally and think globally. The international trade agreements that successive Governments keep signing are simply another mechanism—along with the Treaty settlements process—that locks us all further into a neo-liberal net. All that the Multilateral Investment Guarantee Agency does is to give more power to the big corporations that dominate the world economy. It is another corporate steal, providing for yet another quantum expansion of corporate power. It is a net in which the market mentality is extended to commodify all aspects of life, including those that were formerly outside its domain: community, iwi, identity—in other words, humanity itself.

Yet we in the Māori Party know that the market exists only because the State allows it to exist; so much so that 85 percent of the world’s wealth is controlled by 20 percent of its population—disciples of the market, who are supported by the State to ensure that the advantages they have are maintained. Is that fair? If it is not, what are we going to do about it? The agreement guarantees that corporations shall be supported to continue and, indeed, grow activity for private profit, rather than guaranteeing investment that actually benefits the country and its people.

No one in this House can overlook the reality that the gaps between the haves and the have-nots have grown dramatically over the last 20 years, with the most vulnerable members of our society—Māori and Pacific people, beneficiaries and low-income families with children—showing significant increases in the proportions of people in severe hardship. The Child Poverty Action Group health spokesperson, the paediatrician Professor Innes Asher, has told us that the vast range of health statistics show that New Zealand’s large income-gap contributes to the poor health of low-income earners and their children. So we are wondering how foreign investment will do anything to improve the income and other resources available to our poorest families with children. How will the Multilateral Investment Guarantee Agency respond to the costliness of the long-term effects of increasing inequality and poverty on children, their families, and society?

The Māori Party will not support this bill. We will stand alongside all of those who have stood previously against successive moves to remove virtually all restrictions on foreign investment. We will stand with Māori, activist unions, students, Grey Power, anti - free-trade groups, and local government. We will oppose any deals done with international corporates that invite foreign investors to come in and remove jobs and businesses, to slash pay rates and work hours, and to take the land and the resources that Māori are already contesting.

Finally, I return to another hīkoi, the great hīkoi against the Foreshore and Seabed Act 2004. That hīkoi mobilised New Zealanders into action. The Hīkoi of Hope in 1998 arose from a call from Anglican bishops for New Zealanders to re-examine the wider choices that we were making as a nation. The bishops challenged the Government to focus on the bigger picture—on jobs, the health system, benefits, wage levels, housing, and education—to respond to the trends of the time, which were described as “deeply disturbing”. So, with that, they launched five planks: poverty, housing, health, education, and job creation.

As we debate yet another item on the Government’s global liberalisation agenda, it is useful to remember the people—the vulnerable and the poor—who are clearly not benefiting from foreign control. As we lead up to Budget day next week, we say the priorities of this Labour Government that are articulated in the International Finance Agreements Amendment Bill are not the priorities that will advance our nation. We will oppose this bill.

DIANNE YATES (Labour) : Those who are listening at home to this debate may have lost all track of what the debate is about—it is about the International Finance Agreements Amendment Bill. This is a bill that amends the International Finance Agreements Act 1961, and it provides for New Zealand to become a member of the Multilateral Investment Guarantee Agency.

As the bill tells us in the explanatory note, the agency is one of five agencies that make up the World Bank Group. The core mission of the agency is to enhance the flow of capital and technology to developing countries for productive purposes by providing investment insurance for member countries against both sovereign and political risk. I am rather surprised at the stance of the last speaker, Te Ururoa Flavell, on this bill, because I thought that he would have been much more philanthropic in his approach to this particular legislation. The legislation is one of those Acts that puts an international agreement into New Zealand law; it is part of our process. There has been a national interest analysis done on this legislation and I would remind people that in September 2005 there was Cabinet approval to sign this Multilateral Investment Guarantee Agency convention.

In September 2005 New Zealand signed the convention. In July 2006, the Cabinet agreed that the text of the convention and the accompanying national interest analysis, which is done on all these types of agreement, should be presented to the Finance and Expenditure Committee for consideration. Now that select committee—

Shane Jones: A very good committee.

DIANNE YATES: Obviously Shane Jones is on the select committee. That select committee considered the national interest analysis—it considered what we were signing up to—and it reported back to the House. It said that there were no matters to bring to the House. That means that the select committee agreed with it. Now we have this bill that is adopting that convention into New Zealand law. So here we have this actual process happening. The national interest analysis is very good and it explains why we should bother doing this.

The Convention Establishing the Multilateral Investment Guarantee Agency was adopted in Washington, DC in 1985, so members cannot say that we are hurrying this through in the dead of night, as people often say in this House. There are already around 170 parties to this convention. As I have said, New Zealand signed up in September 2005 and we are ratifying this convention, through this legislation, in 2007.

In order to become a member of the Multilateral Investment Guarantee Agency, New Zealand must become a party to the Convention Establishing the Multilateral Investment Guarantee Agency. As I have said, this convention was established to do three things—to provide three key services. The first service is political risk insurance for foreign investments in developing countries, and I am surprised that some members of this House do not agree with that. The second service is technical assistance to improve investment climates and to promote investment opportunities in developing countries, and Marian Hobbs has given us very good reasons why we should be doing that. The third service is dispute mediation services to remove possible obstacles to further investment.

I think that some of the concerns of the Green Party can be worked through with that third point. I point out that in these cases we have to be in, to change things. One of the advantages given in the national interest analysis of New Zealand’s joining is that New Zealand will be able to chair an annual meeting of the World Bank Group—it is unable to chair an annual meeting of the World Bank Group unless it is a member of all five institutions in the World Bank Group. Also, following the ratification of this convention, New Zealand will be able to chair an annual meeting outside New Zealand—that is, it could chair the meeting in Washington, DC. So this bill gives us the opportunity to chair that meeting and to have more say, which is really important.

Metiria Turei: Whoopee!

DIANNE YATES: I remind the Green member who is laughing that it is the same as in this House—if members are not in the House they cannot have any say. If we are not at the meeting we cannot have any say or any influence on the meeting; so we should be there. New Zealand has had tremendous influence and we punch above our weight in many of these organisations. Should we choose to entertain this opportunity, it would be likely to lead to an enhancement of our reputation at the bank and to provide a valuable opportunity—and the members who have spoken before me should listen to this, because it is in the national interest analysis—to advance New Zealand’s priorities in the work of the World Bank. If we are not there, we do not have a say. That is a very, very important paragraph—

Hon Ruth Dyson: Who else would advance our interests?

DIANNE YATES: Who else would advance our interests, and who else would advance the interests of many of the smaller countries in the Pacific and the countries we work with? If we are not there, we cannot have our say.

When we talk about a national interest analysis I think we should also be talking about an international responsibility analysis, which is what New Zealand has. I point that out to previous speakers as it is a very, very important part of this. As we have said, the other reasons that the national interest analysis gives, and the assessment as to why New Zealand should join the Multilateral Investment Guarantee Agency, are based on three broad categories, as Michael Cullen has reminded us, including supporting the New Zealand private sector’s contribution to development goals. The New Zealand private sector has a very important role to play, especially in the Pacific, in this regard and in supporting multilateral organisations. Specifically by ratifying the Multilateral Investment Guarantee Convention, New Zealand is strengthening its commitment towards international efforts that promote development and improve our credibility.

We talk about our own national interest improving our credibility at the World Bank. As of October 2005, New Zealand was one of four countries still in the process of fulfilling membership requirements and it is currently the only OECD country that is not a member. As I have said, this is not something we are rushing through in the dead of night. It was originally a convention adopted in Washington, DC in 1985 and it has taken us a considerable amount of time to bring it into our legislation. I thank the Hon Michael Cullen for bringing this legislation, which we are now debating, to the House. Another advantage spelt out in the national interest analysis is New Zealand’s contribution to international efforts to promote development through facilitating foreign direct investment flows—as I have said already—enhancing New Zealand’s credibility.

I commend the bill to the House and I urge those members who are not so interested in it, or who have spoken against it tonight, to read the national interest analysis—it is about 30 pages long with the actual agreement attached to it—and to realise that if New Zealand is not in we cannot have an influence. If New Zealand is not there we cannot chair the organisation at its meetings overseas. Once again I believe that this is one of those occasions when it is really important for us to be inside the tent rather than outside. Thank you, Mr Deputy Speaker.

SHANE JONES (Labour) :Tēnātātou katoa. Firstly to you, Mr Deputy Speaker, tēnā koe. Recently you and I had the pleasure of gracing the screens of television sets around Aotearoa as the descendants of the Dalmatian gumdiggers and of our Māori mothers and grandmothers. So as we would say in our Croatian language: mojepoštovanjedobroveče.

I now go on to discuss this bill. In the unlikely event that people in this House think I am just the chairman of the Māori caucus committee of the Labour Party, I say that I stand as the chair of the Finance and Expenditure Committee, which considered the background material to the bill. I want to unmask some of the problems that lie behind the narratives and rhetoric that have been served up by my whanaunga Te Ururoa Flavell and our friends from the “Greenie” party. I want to dive into the role that private enterprise and investors play in regenerating and rejuvenating the economies of the less developed countries.

Without that capital mobilisation, without people taking risks and seeking profit in very tumultuous circumstances, it is not possible for us to imagine that those economies will grow and develop. People are attracted to take risks in those less developed economies, and for us to become a party to this particular institution, the Multilateral Investment Guarantee Agency, will improve the prospects of success. It is a bleak day when the analysis underlying this bill, or the exclusive source of advice for the Māori Party, should come from that old sparring partner of mine, Jane Kelsey. Jane Kelsey does not believe in capitalism, and she does not believe in economic growth. She constantly looks at the future in terms of a rear-vision mirror. So it is with a great deal of sadness that I say that Te Ururoa Flavell’s comments are reflective of a deep flaw in how the Māori Party approaches economic development. It sees a taniwha lurking everywhere.

All risks involve danger. All risks reward those who seek adventure, but that is a double-edged sword. If we want to see growth and if we want to see less reliance on our country by our near neighbours in Te Moana-nui-a-Kiwa—the Pacific—then the role of institutions like the one that we are affirming this evening is going to be very valuable in terms of growing those economies. People will not go there unless nations like ours are prepared to cover off some of the risks when investors go in at a fragile—or should I say, a very vulnerable—stage in a country’s development. In the case of parties that supposedly represent equity and that supposedly represent the interests of the downtrodden—or the citizens of the emerging economies, who are trapped in “Strugglers’ Gully” and trying to create a greater sense of economic independence—I think it is an abject failure on the part of those parties that they do not come in behind this agency and support the relatively modest contribution that the Crown, on our behalf, will be making to it.

Two examples in recent times come to mind: the money that we have provided in respect of the terrible floods in Fiji, and the money that was applied in terms of tsunami relief—about half a million dollars, as I recall it—in the Solomon Islands.

Why these two groups are unwilling to allow us to take our rightful position in the line of international citizens, under the cloak of our nationality, beggars belief. We cannot continue to hold our heads proud and attract the attention of other leading nations, in either the OECD or the wider world community, unless we are prepared to commit to building a more prosperous world through investing in developing nations and upholding organisations and bilateral relationships. That process requires us to make a commitment. Why should we not make that commitment? Why should we expect small, possibly ill-informed investors who are willing, however, to go into those troubled nations, and to go into environments and economies that suffer substantial handicaps, not to look to the more prosperous nations of the world to hedge—to take some of the responsibility for—the risk?

You see, underlying what we have heard earlier this evening from Mr Flavell is, I think, a mistaken belief that I hear all too often, even from that very close whanaunga of mine Hone Harawira, that somehow all the answers lie simply in the formation of Governments in those countries. Yes, we must support the emergence of representative democracies in those countries, and we should always both provide assistance and lay down boundaries as to the costs if the institution of representative democracy is trivialised. However those democracies and those emerging Governments need assistance in order to grow not only civil society but also the scope and the depth of the economy.

We have a very wide range of skills, talents, and experiences. Not only do we lead the work in relation to our agricultural enterprises, etc., but our people—our human capital endowment—are widely respected all around the world. Indeed, with Mr Wolfowitz’s momentary fall from grace—permanent, perhaps—who do we hear is looked upon to steer the World Bank through this period of turbulence and a rather rocky transition? It is none other than a Treasury-trained—perish the thought—economist in the World Bank. So that is an example of how at different levels we, in our small nation with a broad vision, are willing to provide both talent and an example of what can be done. If we do not stand shoulder to shoulder and uphold our obligations as good international citizens, then how can we expect to enjoy, attract, and sustain either people’s esteem or admiration for what we have sought to do as an example to our near neighbours?

So it was with a great deal of disappointment that I heard what I think was a very facile and disappointing analysis. It was almost informed by a conspiracy that always lurks at the centre of the contributions made by our friends from the Māori Party. It is as if progress is impossible, because at the kernel of progress lies self-destruction. That is the stuff of a conspiracy. Unfortunately, it infects a lot of the dialogue and contributions of Māori Party members to matters of a domestic nature. However, I will speak more about that at a later date.

As the chair of the committee—

Hon Ruth Dyson: Which committee?

SHANE JONES: The Finance and Expenditure Committee—and I must say from time to time we see Mr Hide there, and the frisson actually improves and increases when he is there. We have not seen much of that for a while, but he is welcome back there at any time given that we have agreed today to hold a select committee inquiry into monetary policy. We did that despite the fact that Mr English—breaking the rules of the select committee—raced out without the permission of the select committee, and unilaterally announced that he was not going to support it. He was prepared to support—for want of a better expression—anti-smacking, but he would not support a consensus on anti-inflation. But I have no doubt that once the experts and the legions of people who have already been in contact with us come to the fore and provide their evidence to the committee as to what can be done in relation to the interaction between monetary policy, the establishment and implementation of fiscal policy, and other broader economic considerations, despite Mr English saying that he does not want the National Party to either acquiesce to or endorse the inquiry, the National members will be vigorous participants. That is how it works. As the Māori say: “Kei runga te kōrero, kei raro te rahurahu.”—the lips say one thing; however, the thoughts are elsewhere, and God knows what the hands are doing.

However, we did deal with the International Finance Agreements Amendment Bill at our committee, and I join with earlier speakers on the Government side of the House in commending this bill, which enables us to show the credentials we obviously have in international citizenship. Kia ora tātou.

DARREN HUGHES (Labour—Otaki) : It has been very interesting listening tonight to the debate on the first reading of the International Finance Agreements Amendment Bill and to the various points that have been made by different speakers. What comes through from what everyone has had to say has been the role New Zealand plays in trying to be an honest broker in this area of overseas development assistance and in trying to use international organisations to ensure that we have progress on the things that New Zealand considers important.

This is particularly so around how to bring as much assistance as we can to those in poverty-stricken countries where there are structural problems in the economy so that people do not earn any decent wages to be able to support their families, or where there has been some sort of catastrophic natural event. This could be by way of a tsunami, or a hurricane, or a famine, or an earthquake—something like that—

Hon Rick Barker: Plague of locusts.

DARREN HUGHES: It has been a while since we have seen that, but I suppose we have to be prepared. Only the Minister of Civil Defence, Rick Barker, would think out along that way, but we have to be ready for these things.

Although New Zealanders are very generous individually, and the New Zealand Government is always trying to do its bit as well—although the extent to which we go is an area of debate; I understand that—we have to have strong international institutions in order to make sure that this kind of assistance gets through to where we would like it to go. The concern has always been that when people give money in good faith to different charities or organisations, or see their Government do that as well, we must make sure that the money goes to where those receiving the money say it will go and that a ticket is not clipped along the way.

That point reinforces why this multilateral agreement is needed. We are very late in joining it. It will be 20 years next April since it came into force, and New Zealand is the only OECD country that has not joined it yet. We are not part of the international mainstream in that regard, which is surprising, seeing that we are normally very much in support of multilateral institutions and a rules-based system—and for a small country, we need to be. That is why we support so strongly the World Trade Organization, and why we have looked for UN resolutions before committing ourselves to armed conflict or to armed situations. So we have very much approached our foreign policy and our development policy by looking for strong international institutions to make sure proper effect is given to what the intention of the New Zealand Government has to be.

Our signing this treaty and passing this legislation, which makes us part of this last part of the World Bank Group—the institutions that make up the World Bank—gives New Zealand a much more sure footing when we are contributing in these areas. It was interesting to note that a number of countries in our region are already part of the Multilateral Investment Guarantee Agency. Countries from the Pacific region like Papua New Guinea, Fiji, Samoa, the Solomon Islands, Palau, and Vanuatu are already coming into that agency. As we go through Asia we see other countries that are part of it, as well.

So we have kind of been out of step institutionally, although clearly we have not been out of step in terms of policy, given the way we have behaved in the international community and the way we have tried to play our part and bring a little bit of relief where that has been needed at times—including, quite recently, with the big earthquake that happened in the Solomons, where we put an initial sum of money of about half a million dollars. We went up to the Solomons to try to give some initial relief until we work out, presumably, a package of assistance there.

The Solomons earthquake was a good example of the fact that world attention is sometimes focused in other areas. Sometimes there is a world catastrophe or disaster, and that is the issue of the moment—everyone is focusing on it, looking at it, and keen to support it, and people rally around behind it. Yet at other times when these things happen, people almost turn a blind eye to it. The Solomons earthquake happened at around Easter time, when people were busy getting ready to go away, and for some reason it did not enter the consciousness in the same way that some of these other tragic events can. Obviously, the Boxing Day tsunami happened during a very quiet period, and everyone was immediately focused on that.

One wants to see whether the world can come together in order to ensure that all the goodwill is there, and with the way people dig into their own pockets, that will always happen. We know that it will happen over time, but we want to make sure that the investments are being made properly, because there is always the suspicion that when people give money, what is meant to go east goes west. That has long been a suspicion in this area, so having these strong institutions that have integrity and respect is important.

I pick up on the comments made by the Minister of Finance in moving the first reading tonight. The treaty we are looking to sign—and, by passing this bill, are giving effect to—puts us in the last of the institutions that make up the World Bank. Having the World Bank as a reputable institution is very, very important, and the New Zealand Government has expressed this concern.

The allegations of impropriety, or of a conflict of interest, in the actions of the President of the World Bank, Mr Wolfowitz, in seeking to find employment for his partner when he became the president, has left a number of questions being asked in that institution. A lot of the staff who work in that area and have to go into countries and be seen as being beyond reproach feel that it is a difficulty for them if there are any suggestions hanging over activities at the World Bank. So although presumably the president of the World Bank was acting in good faith, because his partner was already working at the World Bank—he suddenly got appointed and she could not work there any more, so obviously that problem was not of her making—the actions he took by trying to get her a job at the State Department at a higher rate of authority and at a higher rate of pay than she had at the World Bank has led to a bit of a collapse of confidence in his ability.

So I can see the problem there when the World Bank has to be seen as one of the institutions that can go in, negotiate, and set up a framework to channel all these large numbers of donations that come in. New Zealand approaches that problem by saying that now the position has probably become untenable.

I comment on that because by giving effect to this legislation, New Zealand now has the ability to chair the World Bank annual meeting—the group of World Bank institutions—which we have been unable to do until now. The convention came in 20 years ago, and many countries have signed up to it. In fact, as I said before, we are the only OECD country that has not done so. So in a role where New Zealand can often be seen as being a third player, and as being able to bring sides together, this is an example where New Zealand cannot get to that top seat of one of the key arms of the architecture of world diplomacy in the infrastructure of global institutions because we have not passed this law. That is why it is pleasing to hear that there will probably be pretty broad political support for the bill tonight.

I will pick up on just one comment that the New Zealand First speaker Doug Woolerton made. He went to the heart of what the problem often is around international aid. We all know that there is this global target of trying to get rich, modern economies to spend 0.7 percent of their GDP on overseas aid. That is one of those things that one can agree to readily because it sounds like a good idea. But when one’s economy is growing, it is actually a very, very hard target to get to.

The Hon Marian Hobbs, the former development assistance Minister, who spoke before, worked in this area. It was under Marian Hobbs’ watch that we were able to get New Zealand’s contribution up to 0.27 percent—so we got the “7” part right, just with a decimal place removed. But we still have further to go, and I know that the Minister of Foreign Affairs, the Rt Hon Winston Peters, has put a lot of effort into this area and a lot of commitment into overseas aid, particularly around the Pacific.

Doug Woolerton was saying—and he was right—that sometimes constituents come and see members, and they have seen how much has been given to a certain country because hard times have fallen on it. A constituent who wants to see the member because he or she cannot get X, Y, or Z, or because he or she would like to see such and such funded, says: “Here you are, spraying money out around the world.” It is a really difficult thing, because there are so many things in New Zealand that one would like to see money spent on. I guess the point one has to make about overseas aid is to ask those people whether they would rather trade places.

OK, not everything in New Zealand is perfect. A lot of working families struggle to get by—which is why the tax credits are so important. People do not feel rich, yet they see this money being given out overseas, and they wonder why they cannot get any of it. But we have to ask people whether they would trade places. That is where we really have to try to go to the common humanity of where people are around the world.

It is very interesting that members of the public who have travelled to Third World countries and to very poor countries never come home and say that New Zealand should give less in aid. People who go into poverty-stricken countries and see how poverty and corruption is destroying people’s chance of a fair go at life always believe we should be trying to do the best we can in terms of contributing. That can seem like a hard thing to accept for people who are working in a low-paid job and it is difficult to make ends meet, and they would wonder why we would do that.

But what is important, if we can get New Zealanders to give more individually and if we can encourage the Government to step up its contribution from the current 0.27 percent, is that we must ensure that the international framework exists and that the institutions are there to make sure the funding and money get through to the exact area where they are needed. By signing this agreement, and by giving effect to it by passing this legislation, I am sure we can move on to ensure that New Zealand’s reputation as a country that is committed to being a good international citizen can only be enhanced, and that will be promoted by our passing the first reading of this bill. Thank you, Mr Deputy Speaker.

TE URUROA FLAVELL (Māori Party—Waiariki) : I move, That it be an instruction to the Committee of the whole House on the Arbitration Amendment Bill that it have the power to consider and, if it thinks fit, adopt the amendment in my name relating to the arbitration of disputes concerning Māori land.

Firstly, I advise that the proposed amendment of my colleague Hone Harawira has been removed, and replaced by my amendment. Having taken more advice on the wording, I am hopeful that the new wording makes the intent far clearer.

The key issues I wish to flag in presenting this amendment are around the Māori Land Court. The court has been charged with the responsibility to adjudicate on matters relating to Māori land, and it is under these circumstances that where there is a dispute, we put this in its hands. The second key point—just as a part of the preamble to, hopefully, the later discussion—is the more important point that the Arbitration Amendment Bill potentially cuts across the jurisdiction of the Māori Land Court, so it is right for the debate on the amendment to occur at this time. I ask for your consideration on this.

JUDITH COLLINS (National—Clevedon) : Not everything in this bill is bad. In fact, there are a few good provisions, and on the select committee we made our views known about which provisions those are, but the one in particular that we could not like at all, and could not vote for, is in clause 4, where the definition “activity in the community” is put into section 3(1) of the principal Act. Clause 14(1) repeals the definition of “activity in the community” from section 88A of the principal Act. Clause 14(1)(b) omits “an activity in the community or” from the definition of “recognised community activity”. The effect of that is that further on in Part 2, which we will come to later, the term “recognised community activity” will mean voluntary work, and will not include activity in the community.

This is actually all about making sure that activity in the community will no longer be available as an employment intervention for people on the unemployment benefit. I think that that is a real shame. We in the National Party think that that is something we should not, in fact, support. The reasoning given by Government members is that they expect such people will return to work immediately or within a short time. Unfortunately, that is not always true for everybody. Some people have been on the unemployment benefit for many, many years, and those are not the people who will be rushing off back to work. We think it is a shame because it is a really good opportunity to give people the chance to get work experience, to build up their confidence, and to actually see what they can do. We think that is a real shame. It is being driven by an ideological view whose proponents would see the introduction of a work-for-the-dole scheme.

The reality is that at the moment we have low unemployment, but we know that economic times are very cyclical and that at various stages there could be higher or lower unemployment. One of the best times to get people into work is when there is actually work for them to do and when there are jobs out in the commercial sector, in shops, and in factories—the few factories that are left here. The jobs are mostly in the retail sector—mostly in clothes shops, to be frank—but there are jobs there.

Anne Tolley: Shoe shops.

JUDITH COLLINS: That probably says something about Anne Tolley’s downtime. There are jobs there, but the thing is that it is not sensible to expect people who have been out of work for a long time to just cruise in and get a 40-hour-a-week job in an area in which they have no experience, nor is it sensible to expect an employer to just take them on. So we think that for some people, the “activity in the community”, or its variation, is a very good way of easing people into work, but also of building their self-esteem and giving them the work experience that so many people lack.

One of the toughest jobs to get, I have always believed, is the first job. The first job for a teenager is the toughest job that person will ever get. The first job in any career that someone has trained for is the toughest job that person gets. That is because the people taking on someone say that he or she has no experience. They ask about that person’s track record and what he or she can do. They do not know how that person will operate if told he or she cannot do something he or she wants to do. They do not know whether that person will turn up on time, and there is nobody to verify it, because if someone has been to school, we do not always know whether that person has worked as hard as he or she could. If someone has been off to university, well, we all know university hours are distinctly different from those of a full-time job.

I think it is great to have that opportunity open so that when there are people who need it, we actually have it open to them. It is a bit unfortunate that the Government has gone and changed this provision part-way through the bill, because we would have been much more supportive of it if it had been left in. It is a major plank of our policy in welfare that we will have a programme of work experience for people who need it, and we think it would be counter to our own policy to support this part. That is, unfortunately, the bit that really, really annoys us.

The other issue is, of course, that of planning for getting into work when there is no follow-up. We heard a submission from the Rotorua Peoples Advocacy Centre, which made it very plain that the plans that are currently required for domestic purpose benefit beneficiaries once the youngest child is a little older are not always acted on, to the extent that staff at the Rotorua Peoples Advocacy Centre—which, by the way, has prepared a research document for the Families Commission, which, presumably, was paid for by the Families Commission—said that in most cases these plans are not even given to the beneficiaries to take away. When asked, they said that it was because no one does anything with them. They get done every year and no one takes them away. We think that is a bit of a sop. It is a lot of extra hassle for nothing. If one is to have a plan about getting people into work, it should be followed through, be taken seriously, and there should be a genuine expectation that something will happen from it.

Of course, a lot of women, particularly those on the domestic purposes benefit, have found that the in-work payment has meant that it is financially viable for them to get into work, but at the end at the day, the in-work payment—which is what costs us about $400 million a year, as I recall from the last time I looked at the accounts—added to the domestic purposes benefit, as it really should be, means that the numbers are just going up.

Hon DAVID BENSON-POPE (Minister for Social Development and Employment) : I am delighted to have the opportunity to take a call so early in this discussion. I look forward to it being a useful and prolonged discussion, because I think it is very important for the community that some of the fantasy and myth that we have heard from individuals, including from the previous speaker, is well and truly put to rest.

I thank Ms Collins for the clear articulation she made of National Party policy. It is not often that we hear National Party policy. The previous speaker is National’s spokesperson on welfare—and is there not a message in that in itself? The Government does not have a Minister in charge of welfare. The Government has a Minister for Social Development and Employment. The National Party is concerned about welfare, and that language speaks volumes about its attitude to New Zealanders and the sort of support that New Zealanders are entitled to and deserve. But I am very grateful to the member who spoke previously, and who continues to warble so inelegantly when it comes to articulating what very little policy the National Party has.

What Ms Collins just told the Committee, and the people of New Zealand, is that people who are work-ready—ready for work and able to work—should be paid less than the minimum wage. That is exactly the implication of what the National Party spokesperson on welfare has just put into the Hansard. I say to the Committee and to New Zealanders listening that that is not the attitude of this Government. This Government believes that New Zealanders need to be supported to whatever degree we are able to support them as a community.

Much as I disagree with many of the policies that Ms Collins and her friends advocate for this community, I will be pleased to support their eligibility should they ever be unfortunate enough to need a sickness benefit, an unemployment benefit, or an invalids benefit. When Labour remains in Government those supports will be available for them, irrespective of their politics. But to stand up in this Chamber and say it is acceptable, as Ms Collins just did, for people who are work-ready, work-keen, and able to work to be paid less than the minimum wage for doing a real job illustrates the true poverty of that party in Opposition and why it will stay there.

Thanks to the buoyant economy we have presided over for nearly 8 years now, we are able to see the fruits of these advantages for New Zealanders. This Government is focused on helping New Zealanders where they need support—and many do not—and on helping them into real work for real wages. That is the difference, and that is why the sorts of initiatives that have been up until now followed and supported by Work and Income on a voluntary basis have been so extraordinarily successful. Obviously, Ms Collins and her colleagues do not agree with that—but perhaps I should leave her colleagues out of this, because we have seen rather a number of decisions made unilaterally by National Party members lately, without having any discussion with their caucus.

I am sure that most members of the National caucus do not agree with the extraordinary suggestion we have just heard from Ms Collins. But if they do and it is really their policy, they have to support her, and we will see that as tonight, tomorrow, and the rest of the week goes on. But otherwise they need to say to Ms Collins that they do not want to be part of a party, the National Party, that encourages work-able and work-ready, able-bodied New Zealanders to work for less than the minimum wage, because that is the policy it has announced tonight.

Perhaps the National Party has not caught up with the extraordinary change that has happened in the community since it was relegated by New Zealanders to the Opposition benches. For those who do not know about that change—and obviously many members of the National Party themselves do not—let me just give members some detail. In December 1999 the total beneficiary roll—and for the benefit of Ms Collins and her colleagues who have difficulty with large numbers, I point out that that means all benefits, including sickness and invalids beneficiaries—comprised 401,415 New Zealanders. That number is now almost half that at 261,000, and it has actually become less than that in the last month. There has been a 35 percent reduction overall in the number of all benefit recipients since 1999, when National was last on the Treasury benches. That is not a bad change.

The benefit that really affects most people is the unemployment benefit, and to contextualise the importance of this change, let us not forget that in April this year the full effect of the Working for Families package started to strike home, and $1.6 billion per year—actually, not per year, because it is indexed, unlike anything the National Party ever did, so it will be more next year, more in 2009, and so on—will go into the pockets of low and middle income New Zealanders with children. In addition to that, the simultaneous change that relates to the initiatives directly advocated and mandated in this bill is quite extraordinary.

The number of New Zealanders on the unemployment benefit was 161,128 when National was last on the Treasury benches. The number on the unemployment benefit in March, which was the last time that the figures were publicly announced, was around 28,000. I am pleased to announce to the Committee for the first time tonight that the April figure shows a further reduction of nearly 2,000. The current unemployment figure in this country is 26,678. That is a move from 161,000 to 26,678. That reduction comes as a direct result of the initiatives being mandated by the legislation that is in the Chamber tonight, and that is the legislation that those members are not supporting, despite the fact that they voted for it unanimously at the Social Services Committee.

Am I surprised that their spokesperson on “welfare”—their word, not mine—has left the Chamber? I know she does not want to hear these numbers.

The CHAIRPERSON (Ann Hartley): No, no. The member cannot say that. Would the member please withdraw that remark.

Hon DAVID BENSON-POPE: I withdraw. Am I surprised that members of the National Party find it so hard to swallow the fact that this extraordinary shift has happened under their eyes? As we heard over the last couple of days, they are not even prepared to acknowledge that the numbers are a reality. We can forget the issues about the myth they have developed about Government agencies manipulating numbers illegally. We can forget that myth. That myth is now well and truly dead. What I am saying is that as a result of the initiatives introduced by the hard-working, visionary, diligent, professional people on the front line at Work and Income, huge numbers—over 132,000 New Zealanders, who were on the scrap heap when National members were sitting on the wrong side of the House—are now in productive work, earning heaps more money for their families, having a much better lifestyle, and, most important, making a really valued contribution to our New Zealand community.

One of the other subsets of the information is also extremely pleasing, and that is the movement in the number on the domestic purposes benefit. That figure has also consistently trended down since National was consigned to its correct place in Opposition, and that trend will obviously prevail for a long time. Those numbers have decelerated further since the introduction of the in-work payment, which, as we know, was a key part of the Working for Families package.

Later on during this debate, I will share with the National Party some extraordinary figures about the reductions in youth unemployment. For me, and I am sure for most parents and young people in this country, the most important break we can make to the cycle that National supported—and, indeed, accelerated because of its attitude to using working people as pawns for economic growth or business growth, to the advantage of its mates—and the most important change we have seen in this community, is the huge reduction in youth unemployment. I am confident that as a result of the changes that this bill mandates, which are currently operating so successfully because they operate on a voluntary basis at Work and Income—with our front-line case workers who are doing such fantastic work—those numbers will continue to decline even more strongly.

SUE BRADFORD (Green) : As I foreshadowed in the second reading debate last week, I am putting forward several amendments in relation to Part 1 and Part 2 of the Social Security Amendment Bill. The relevant Supplementary Order Paper is available to members at the Table. However, one of these amendments, in relation to a new clause 10A regarding absence of beneficiaries overseas, has just this week been superseded by a Supplementary Order Paper from the honourable Minister David Benson-Pope. I therefore formally state that I wish to withdraw the amendment, set out on Supplementary Order Paper 113 that relates to new clause 10A.

The new clause I proposed was intended to amend section 77 of the Social Security Act, under which the Ministry of Social Development is given the discretion to pay an invalids benefit to a person who is overseas for a period or periods not exceeding 2 years, for the purpose of receiving vocational training or guide dog training, provided that the beneficiary is receiving the benefit on account of blindness.

A submitter on the bill made a compelling presentation to the select committee in our new official language, New Zealand Sign Language, concerning the anomaly that similar overseas training for invalids beneficiaries who receive the benefit on account of being deaf is limited to a period of just 28 days. My amendment intended to rectify what I saw as a historical anomaly in the Act by extending the discretion to permit an absence of up to 2 years to people who are profoundly deaf, as well as to those who are blind. Since then, Mr Benson-Pope has put forward a much better amendment expanding the scope of the new clause so that any invalids beneficiary who meets certain criteria can spend up to 2 years out of the country in order to receive vocational training or disability assistance dog training, if he or she is unable to get the same thing within New Zealand. I think this is great, and I acknowledge the Government for making progress on this matter.

My second amendment in relation to Part 1 of the bill deals with clause 15 and related clauses. It is a much more complex matter and one of significant constitutional importance. Clause 15 proposes to insert two new sections—132H and 132I—in the principal Act. These will provide for rules to be made by Order in Council prescribing the determination of income and deprivation of income or property. Clause 4(2) and clause 9 are consequential upon this.

These proposed amendments give rise to significant constitutional concern. One of the fundamental constitutional principles is that subordinate legislation, such as regulations or rules, should not override a statutory definition. This would result in the subordinate legislation—in this case, rules—effectively amending the statutory definition itself.

“Income” is a concept that is fundamental to the purpose of the Social Security Act 1964. Indeed, much of the Act is concerned with providing assistance to people who have no income or who have insufficient income. The level of most entitlements under the Act is dependent on that definition of income. The Green Party believes that the ability to amend the definition of income in the Act should therefore be reserved for Parliament rather than exist at the whim of the executive. Permitting the definition to be amended by Order in Council is a travesty of democratic process that has the potential to cause outright unfairness. It will, for example, permit the definition to be amended in response to a judicial decision regarding the interpretation that is viewed unfavourably by the executive, without any reference to this Parliament. Beneficiaries or potential beneficiaries should be entitled to a degree of certainty regarding what constitutes income and deprivation of income or property. At a given point in time this can have a major impact on beneficiaries’ entitlements and therefore their lives and those of their families—many months or even years after the receipt of the income or the deprivation of income or property actually occurred.

I am not opposed to clarifying issues around income and deprivation of income; in fact, I support it. The definition of income in the Act is written from the perspective of paid employment and does not adequately address the circumstances of the many New Zealanders who are self-employed. The definition needs amendment. However, if this House is to uphold constitutional propiety, it is imperative that that amendment should be made in a proper manner by way of an amending bill, not through the back-door method of rules made by Order in Council that provide no certainty for current or future beneficiaries. I am therefore proposing to remove the ability for the definition of income, and provisions relating to deprivation of income or property, to be effectively amended by Order in Council, and ask other parties here to consider supporting this amendment.

ANNE TOLLEY (National—East Coast) : I rise to speak on Part 1 of the Social Security Amendment Bill, and start by saying that the Minister David Benson-Pope talks big. He stood up in this Chamber at the start of the Committee stage of the debate and made a great political speech about what wonderful things he has done as Minister—big-noting with figures about how wonderful it all is. But the reality is that this Minister has done nothing. He has done nothing, and his Government has done nothing.

The Government has been the fortunate recipient of good economic times. I agree that the unemployment figures are great. Every New Zealander celebrates the fall in unemployment. But if the Labour Government thinks that the fall in unemployment is anything to do with what it has done, then it is deluding itself, and if this Minister thinks that the fall in unemployment has anything to with what he has done, then he is deluding himself—as he was deluding himself when he announced this bill as being the biggest reform to welfare in 50 years.

Again, it is big talk, but when it comes down to it, when one looks at the details of the bill, one sees that it is a pathetic reform. The bill is not anything that people would ever hold their breath waiting for. It is nothing.

I want to talk about sickness and invalids benefits. The Minister might throw all the figures together and show a decrease in unemployment, but in this House we all know that invalids and sickness beneficiaries are on the increase—

Darren Hughes: Marginally.

ANNE TOLLEY: Marginally! They have been on the increase for some time. This Government talks all the time about doing something, but in actual fact it does nothing more than talk. This bill is nothing more than talk.

Lynne Pillay: We’re getting older, Anne.

ANNE TOLLEY: We are all getting older waiting for this Minister to do something about the increasing numbers of sickness and invalids beneficiaries. I challenge the Minister about this so-called myth that beneficiaries are coming off the unemployment benefit and going on to the sickness benefit. I know that happens; I have seen people in my electorate office whom it has happened to. I had a man come in not long ago in a terrible state—

Hon David Benson-Pope: Give us his name.

ANNE TOLLEY: I am happy to.

Darren Hughes: Oh yeah! That won’t happen.

ANNE TOLLEY: Yes, it will, because this man has a good story. He was in a terrible state when he came to see me. Some time ago he had been asked by his local Work and Income people to go off the unemployment benefit and on to an emergency unemployment benefit, in order to make their figures look good. They were due to report, and wanted to make the figures look good. The man agreed to do that.

Then, after he had been on that emergency benefit for 10 months and we queried why he was still on it, the man was offered the sickness or invalids benefit. He said: “I don’t want to go on to that; I want to go back to work. I am happy to work. I am not sick. I am happy to work.” But from Work and Income’s perspective, in order to make its figures look good, it would be better if the man did a little period of time on the sickness or invalids benefit. So Work and Income sent this man to the doctor. He said to the doctor: “I don’t want to be on that benefit. I am perfectly capable of working. That is what I want to do.”

I am still trying to get this man on the unemployment benefit. He cannot get into the local office—

Darren Hughes: One case.

ANNE TOLLEY: No, I am relaying one case but I have had several cases coming through my office in the last month of people who were asked to go on to the sickness benefit and were sent to the doctor. It is not a myth, and I am happy to provide the Minister with the details of exactly how this is happening. Regardless of all that, the figures themselves show that it is happening. We have heard this Minister himself say that one in five potential sickness or invalids beneficiaries who have been signed up by a doctor are actually fit for work.

When this bill came to the House we looked at it to see how the Minister would tackle this issue. We thought that at last he was going to do something about it. We thought we would see provisions stating that these one in five people would have to go through some form of examination to determine whether they were capable of work.

What do we see in the bill? These people have to prepare a plan. They do not even have to take away a copy of that plan with them. They do not have to do anything other than sit in front of an official and fill out a form that is headed “A Plan”, and then they will be eligible for the benefit. That will not address the issue of the rising number of sick New Zealanders.

RUSSELL FAIRBROTHER (Labour) : Is it not absolutely incredible to sit in this Chamber and see the Tories—knowing what the debate will be about; knowing they will have to meet a sturdy challenge when we are bringing the benefit system into the year 2007; and knowing they have all the time in world, with Government-supplied computers, to compute ones and twos—rise on their hind legs, stand in the Chamber, and make assertions? When challenged to provide the evidence they say: “Yes, I can provide the evidence.” When asked what the number is, they say: “Oh, it’s about one or two.” We get prevarication, evasion, hedging, and rhetoric, and we go from hearing allegations that cannot be proven to grandiose statements that have no substance, at all.

Is it not ironic that the Tory party in this Chamber is saying there should not be some provision to help people who want to work, and who can work, back into work? Is it not absolutely ironic that the Tory party wants to encourage people to stay on benefits?

Of course, the last speaker, Anne Tolley, who represents East Coast, is faced with percentages that are totally embarrassing to her own argument. There has been a 45 percent decrease in the number of unemployment beneficiaries in the East Coast in the 12 months to April 2007—a 45 percent decrease. Now that is a figure she could have looked up very easily on her computer, or found in any other resource. She could have come to the Chamber with that figure and said: “We the Tory party, which likes to encourage work, independence, self-motivation, greed, and great sums of money, think we should celebrate the decrease in the number of people on the unemployment benefit. We think we should be talking about a 45 percent reduction as being something we can boast about.” But, no, National members cower in embarrassment, because the policies of this Government to provide full employment are working so astoundingly well that they can meet that argument only with assertion, prevarication, and evasion.

The simple truth is that if one can find an unemployed youth in Hawke’s Bay, one is very lucky, because in Napier there are just two of them. And they will not be in that position for very long, because it is important that our youth get to work. The bill we are discussing today does just that. It changes the mindset demonstrated to us by the last speaker, who whinged about someone who seems to have fallen through the cracks. That member has the expectation that people will forever be beneficiaries of the State rather than take advantage of the work opportunities available to them.

The Social Security Amendment Bill is a bill for the year 2007. This bill will take us through this century, starting with the high times of high employment. We will encourage people who have not previously had a mindset to work, to get out and work. But the bill is not sanction-based, as such; the whole work idea starts with a plan. It is a plan that is discussed with the person applying for a benefit. As soon as people walk into Work and Income for a benefit, the director-general will immediately be able to say that suitable work is available for them right now that they can do. So without delay, without prevarication, and without finding excuses to avoid work, a person who comes in for help from the State can be directed to a position of gainful and profitable employment. And who can be unhappy with that? Who indeed?

This sort of philosophy was envisaged way back in 1972 by a royal commission in a breathtakingly large report—the Royal Commission on Social Security in New Zealand, which examined in some detail the purposes of New Zealand’s statutory scheme for social security. It concluded at paragraph 3.42(f): “Social security cash benefits are only one aspect of the total problem in maintaining incomes and raising living standards.” The commission went on to refer to a number of factors, such as taxation, wages, employment, health, housing, and cultural policies.

This Government is right on the ball, as laid down by the royal commission. This is a Government that is attacking the need for employment. It is attacking health, housing, and cultural policies that have been inhibitions to full employment. So I find it exceedingly ironic—in fact, if it were not so tragic it would be funny—that the Tory party is standing up and having to defend the idea of keeping people on a benefit in this year, 2007.

Dr PAUL HUTCHISON (National—Port Waikato) : I rise to speak to the Social Security Amendment Bill. It was a revelation to me to hear my colleague say that the Minister said that this legislation is the biggest reform to welfare in 50 years. Also, we have just heard Mr Fairbrother say that this will take us through this century. What an extraordinary clanger! And what an underwhelming bill it is, because it promises only bureaucracy and complexity.

Although the bill contains some positive things—and I think we have recognised this—there are very few. The bill contains very few substantial differences that will help people into work. That is absolutely obvious when we look at clause 15, which relates to executive control over rules determining income and income deprivation. IHC New Zealand says that this is something it absolutely opposes. Here we have the Labour Government, in its usual form, bringing in little exceptions to the basic principles, and saying: “Oh no, the chief executive can make exemptions and we can decide when we feel it is right.”

Clause 15 raises serious constitutional issues around giving the executive branch of Government the power to override statutory provisions—and that is what the Minister is happy to do. It goes on to say that income is central to determining benefit entitlement and that therefore control of the definition must stay with Parliament, and the suggestion itself of regulations that specify rules for determining income highlights an intention to override the provisions contained in the principal Act. It goes on to say that an existing principle underpinning social welfare is that assistance goes only to those who need it and that efficiency of administration and putting the least pressure on the public purse are concepts already implicit in how income support is delivered.

So here we have the Labour Government again coming into direct conflict with one of its largest providers. I would be interested to hear the Minister explain to the Committee why it is so important that the chief executive officer of the Ministry of Social Development has those powers that are laid out in Part 1.

We also know, as my colleague Judith Collins said, that clause 4 inserts a definition of “activity in the community” and that now it has been taken away. I think it would be very useful to get the Minister to tell us why it has been taken away. Why did the Government put it there in the first place? What was it dreaming about? It looks as though what it was dreaming about in the first place was that it did not like the idea of people working for the dole.

I might say to the Minister that when I went down to Raglan one afternoon a few years ago I met a group of young Māori guys at one of the streams that goes into the Whāīngaroa harbour. They were planting out native trees along the banks of this particular stream. I asked them what they were up to and they said, with a quiver of pride in their voices, that this was the first job they had ever had. They said they had enjoyed watching those trees grow, watching the clarity of the stream, and watching the whitebait come up—and receiving money for doing so. This was the first time they had got up regularly in the morning and had actually done something constructive and positive. It was, indeed, a work-for-the-dole scheme. They had had no work at all prior to that, and they said it was one of the best things that had ever happened to them.

This Labour-led Government always wants to bring in some artificial mechanism to get someone who cannot get a meaningful job to do something pretty silly, and that is exactly what it has done. We have had this Minister go on and on about how unemployment has gone down. Of course, it has come down despite him, not because of him—and we have seen a 50 percent increase in invalids and sickness benefits in New Zealand over the last 7 years.

JUDY TURNER (Deputy Leader—United Future) : I want to take a brief call on Part 1 of the Social Security Amendment Bill, because I really am extremely puzzled. Normally at the Committee stage of a bill I would be calling on the Government to address concerns I have about some aspect of the bill, but in this case I am calling on National to explain why it is not supporting it. I have to say that when I first read this bill, when it first turned up in my office, I was quite surprised that it was coming from a centre-left Government. I was not at all surprised during the submission process to see groups who normally would be considered Labour supporters coming in and throwing some real questions and doubts over whether this was a centre-left bill from a centre-left Government.

I personally welcome some of the provisions. I think it is extremely positive that we are starting to see a work focus underpin the way we approach beneficiaries; it is a good thing. I am pleased that there is not a one-size-fits-all approach, that we recognise that some people are on benefits because they genuinely are unable to work, and are unlikely to be able to work in the future, and therefore their income needs to be secured and also their ability to participate in the wider community needs to be assisted.

Those discretions are easily catered for. But I really do feel that National members, in terms of supporting their voting base, need to come up with some better reasons than I have heard so far as to why they cannot support this bill. They admit there are provisions in the bill that they like. They use glib terms like “there is quite a bit that we don’t like”, and it is very hard to get specifics from them. I really do think that they owe their voters some clear reasons why they cannot vote for this bill. I believe that the bill is in many ways a closer reflection of the ideological position that National is known to represent than that of the Government that is putting it up. In that case I think National members do need to come up with some seriously good reasons why they would oppose a bill that shifts the focus so that when beneficiaries have lost a good job, or have given up a good job, or are out of work—and are not entitled to a sickness or invalids benefit or are not on the domestic purposes benefit—they are immediately required to do some pre-benefit activities before they can even get an unemployment benefit.

There is a new edge that this bill introduces into the way Work and Income will handle people on the unemployment benefit, taking advantage of our current record-low figures, which I think is a good thing. This means we can now focus really clearly on those who are currently unemployed and who represent long-term unemployed people who genuinely have skill sets that are missing. Now there will be increasing pressure put on them to start to take advantage of all that is on offer so that they can gain the skills they need and become work-ready.

United Future is very pleased with most of the provisions in the bill. There are one or two things that if we were writing the bill we would have written differently. I agree with National in that we were disappointed that involvement in community activities is removed from the sanctions provision. As I mentioned last night in my second reading speech, I fully intended to put up a Supplementary Order Paper to try to correct that. However, I have had numerous discussions with officials, because I kept hitting some very big walls in my efforts, and I discovered that what I was likely to do was to put sanctions on beneficiaries for whom I did not think they were appropriate—for instance people on the invalids benefit. I also hit a snag when I realised that if one is going to use community agencies to provide activities for which there can be sanctions then imposed, one does actually require some real buy-in from the community agencies themselves. They need to feel comfortable about whom they are having working for them and what the implications are should these people not follow through on their commitments.

As I said last night, I believe there is a real opportunity for community agencies to be better utilised, and I think some ongoing work needs to be done, but I am very happy at this stage for us to continue to support the bill even with these reservations. I call on National to think really, really seriously about how it will look to its voters if it continues not to support this bill.

LYNNE PILLAY (Labour—Waitakere) : It is a pleasure to speak to the Committee stage of this bill—the Social Security Amendment Bill. I commend Judy Turner for a really honest and good speech, and I would love to see that same degree of—certainly not goodness; that would be going too far—honesty from the Opposition. I looked before at the report, and I want to take this opportunity to commend Russell Fairbrother for fantastic chairing of the Social Services Committee; we worked very constructively together. I was quite impressed with the National members on the committee; I thought at last they were trying to work quite constructively.

When I look at the bill I see there are a lot of recommendations—we recommend this and that, and we recommend that the bill provides for retrospective substitution for a more appropriate benefit. The select committee made all sorts of recommendations. The minority report contributed to by the National members was very small and they did not really grizzle in it very much at all, not half as much as the Nats are inclined to do. Then, surprise, surprise, they are not supporting it. It really is confusing, and they are confusing. Of course, with all the flip-flops that that party is inclined to do, it is very hard to keep up with what its members should be doing. It would not surprise me if they got back to their leader today and he said: “Look you’ve got it wrong. We’re supposed to be supporting this bill.” Anyway, at the moment they are opposing it and I think that is very, very sad.

This bill builds on what this Government is about. It is about assisting people to get back into work. What do we need for that? We need a recipe—a whole package. The first things we need are a buoyant economy, a supportive climate, and support for our business and our industry. We need the opportunities that we have provided in skills and training through the Gateway programme when kids are at school, through apprenticeships, through industry training, through tertiary reform, and through interest-free loans for our students in universities and polytechs. They are just the first things that are under way.

For people to re-enter or to remain in the workforce we need good-quality, affordable, early childhood education, and, my goodness, the initiatives in our early childhood field that we hear a number of people from the Opposition speaking about are assisting people into the workforce and assisting our statistics. We need great schools and we need good after-school care so that when parents are in the workforce they can be comfortable knowing that their children are being cared for. And, of course, we need Working for Families.

Working for Families has assisted good people into work. I can see Paula Bennett over there, who often talks about her experience as a single mother. I acknowledge the single mothers whom I spoke to a few years ago who told me they wanted to be back in work, but it was really difficult. It was difficult with the cost of childcare, with transport, and really it was just too hard to get back in. It was not that there was not a will to do it; it was just that there was not much of a way. Now the in-work payment and family credits through the Working for Families package have enabled mothers to get back into the workforce if they want to, with early childhood support. It has made the return to their career a reality and that is a really, really good thing.

I also want to talk about some people from within my electorate whom I have talked to. I want to talk about Teresa, who went to Work and Income to seek job assistance before applying for a benefit in March 2007. She attended a Work and Income job search service—a planning and assessment module—and was referred to the Straight 2 Work school of business hospitality course. As a result of attendance at that course she is now working in a restaurant in the city.

Anne Tolley: I raise a point of order, Madam Chairperson. We have waited for almost the entire speech from this member for some relation to this bill. We have had Working for Families. Now we have a story about someone coming into her office and applying for some benefit. That really has nothing to do with the bill. Could I ask that you direct the member back to the bill.

The CHAIRPERSON (Ann Hartley): I listened to what the member said and she was certainly talking about the domestic purposes benefit. I have looked it up. I remind the member that we are on clauses 4 to 21.

LYNNE PILLAY: If we look at the bill, it talks about the initiatives that have ensured we get people in work.

KATRINA SHANKS (National) : I rise to speak to the Committee stage of the Social Security Amendment Bill. National supported this bill at its first reading in order to get it to the Social Services Committee. We did this because we believe in work first, and we thought that this bill supported work first. The current system emphasises getting a client settled into the benefit system first and then considering whether he or she should work. This mentality of benefit first and work second only undermines those who want to work first and use the benefit as a last resort. Not only is the current system flawed in the “benefit first” mentality; it also creates a perception that only Work and Income can provide work. In effect we support the idea that work should be the first focus and that the individual is also responsible for obtaining that work.

The welfare system in New Zealand was designed originally to be a safety net. No one disagrees that this safety net is important for those who are down on their luck and vulnerable. The system gives these people a helping hand. Our welfare system was never intended to be a lifestyle choice for those who can work. Welfare before work was never its intention. Now we have people who are able to work who are on both the unemployment benefit and the sickness benefit. The mentality of many is that they do not have to work, regardless of their ability to contribute to the workforce.

Some of the proposed changes were hotly debated in the select committee. There was concern in relation to the phrase “activity in the community”—an example is in clause 29. A new subsection (3A)(b) in section 60Q was inserted to provide that a beneficiary “cannot be required … to undertake activity in the community (whether or not it is included in his or her personal development and employment plan).” He or she cannot be sanctioned for not demonstrating commitment to the plan if the work is not done.

During the select committee process the beneficiary advocates implied that having activity in the community is allowing the introduction of work for the dole. In effect this subsection was included so that the new amendment could not be called “work for the dole”. However, the implications of the subsection are great. Let me give an example. A client lives in a rural town and wishes to pursue a career in childcare. The only childcare provider in that town is run by the local church. Therefore, the client puts in his or her personal development and employment plan that he or she will undertake work experience at the church creche. It is a community organisation, so the client does not need to turn up for work and there are no consequences for him or her for not fulfilling his or her personal development and employment plan. The client has breached the agreement made with Work and Income, but Work and Income can do nothing to correct the situation or make the client actually fulfil the agreed terms of the personal development and employment plan.

This, in my view, is poor lawmaking. We are producing legislation that one could drive a truck through. Work experience is invaluable in assisting people into employment. Whether that work experience is received in the community is irrelevant; it is still work experience and it is all valuable in getting a first job. We need inspirational change to free people from the welfare trap. This bill just does not cut it.

Hon DAVID BENSON-POPE (Minister for Social Development and Employment) : Well, that was a really interesting contribution. What my colleagues and I have been waiting for is for any member of the Committee to explain why the National members on the Social Services Committee supported this legislation while they were in the select committee, but voted against it when it got to this Committee of the whole House. Can I just explain for those members who talked about their so-called concern for youth a little while ago—their crocodile concern—that when National was last in Government, the number of 18 and 19-year-olds on the unemployment benefit was 17,500. That number is now 1,424. The National Party in Government presided over 17,500 18 and 19-year-olds not in work, on the unemployment benefit, and National members fail to acknowledge that, now that number is an extraordinary 1,424.

• Progress reported.

• Report adopted.