Hon STEVE MAHAREY (Minister of Broadcasting) : I move, That the Television New Zealand Bill be now read a third time. This legislation demonstrates the Government’s commitment to quality public broadcasting, and its awareness of the key role of public television. The primary value of these broadcasters lies in their contribution to the social and cultural wealth of our nation. This bill is a response not only to the legitimate demands of television-watching citizens but also to the broader expectations of those who recognise the cultural and social importance of television. The bill provides legislative guidance for the operation of TVNZ that is in keeping with the State television broadcaster’s central role. It provides for structural change. That change will support the organisation’s ability to effectively fulfil its new role as a broadcaster, but it will also enable TVNZ to maintain a commercial focus in other broadcasting activities. Television New Zealand currently operates as a State-owned enterprise, and, as such, it must put commercial returns above cultural or social imperatives. The Government has maintained the view that the form and structure of Television New Zealand must be changed if it is to be in a position to deliver on the charter that will guide its operation.

The process of making this change and the decisions about the details of its nature were complicated by the mixture of activities undertaken by the organisation. When we first considered Television New Zealand’s structure, it was recognised that the question of whether the transmission business should be separated from the television business was finely balanced. The main argument against separation was the transaction costs associated with making the split. The main arguments in favour of the separation were to do with increased transparency, accountability, and the need for the two arms to focus on their core business. Cabinet took a decision 20 months ago to defer consideration of a split for 2 years. We have now been able to reconsider that separation in time to incorporate its implementation in this bill, effecting what I personally believe is a sensible and an efficient process of change and a sensible and an efficient structural outcome.

We can see no compelling reason to operate two businesses of different natures and with different objectives in the same company structure. There is to be no overarching TVNZ group overseeing the operations of both TVNZ and the transmission-focused entity, primarily BCL. Rather, there will be a formal separation of those aspects of Television New Zealand, a separation that, given the organisation’s current structure, will be able to be achieved in a relatively straightforward way. TVNZ’s transmission business is to be established as a State-owned enterprise, and its television business will be set up as a Crown-owned company. A decision not to separate the businesses would have meant that the TVNZ group would have been inclined to extract revenues from BCL to fund the television business, at BCL’s expense. That might not have been in the best interests of BCL. Nor do I believe it would have been in the best interests of the television business itself.

Those who argue that BCL should be retained in the ownership of TVNZ appear to be influenced primarily by the effect on TVNZ of the loss of revenue it would suffer as a result of the separation. Clearly, there will be a loss of income to TVNZ if it can no longer extract dividends from BCL, but it will be far more beneficial to have ownership arrangements that maximise BCL’s commercial opportunities and for the Government to consider how, and to what extent, TVNZ should be compensated in order to fulfil its charter. We consider that such funding decisions are more appropriately made by the Government than by TVNZ’s directors.

I would add, given the desire for a change in TVNZ’s focus as a public broadcaster, that it is questionable what benefits might have been derived from distracting members of the board and management of TVNZ on to matters associated with BCL’s operations and development, as would have occurred under the previous structure. Since the original Cabinet decision, the shareholding Ministers have approved BCL’s strategy of expanding its telecommunications operations. That will require a substantial investment and considerable attention from the board. A different mix of skills is needed for the governance of each business, and that can be best achieved by separating the companies.

Under this legislation the board of TVNZ will, therefore, be in a position to focus on its primary objective of implementing the charter, while, of course, maintaining commercial performance. I consider that the achievement of this objective will be significant in the cultural and social life of New Zealanders and of New Zealand. The development of the charter is consistent with this Government’s policies of supporting New Zealand culture and emphasising the importance of a skilled and an educated society. The charter has been developed in the context of cultural recovery. It is informed by our confidence in the cultural distinction and the abilities and aspirations of New Zealanders. Its implementation will mean that the television broadcaster owned by the people of New Zealand will play an enhanced role in supporting the needs of an informed nation. Public broadcasting should clearly provide for the interests of all its audiences, not just the audience preferred by advertisers. New Zealand viewers are not simply consumers, and the charter makes explicit their entitlement to quality television programming across all content and in relation to both channels that has previously not been available.

There are those who purport to detect in the charter an attempt by the Government to direct what New Zealanders can watch, even as their colleagues make accusations about it being vague or having no real meaning. The TVNZ charter is not vague and meaningless. Neither is it a sinister piece of social engineering. Like the charters of other leading broadcasters around the world, and like the Radio New Zealand charter introduced by the previous National Government—but, members may remember, largely written by me—on which it is partly modelled, it is broad and indicative, not prescriptive. Without dictating programmes, it ensures that we will have a full range of interests provided for. Rather than denying choice, it seeks to create the kind of choice that the market alone is incapable of creating.

In my role as Minister I have no greater ability to direct the content of TVNZ programming that I or my predecessors, or the Government in general, have had in the past. The bill, in fact, reinforces the importance of editorial integrity. It does not intrude on independence. It does, however, set up the Government’s expectation that TVNZ will establish meaningful performance measures and report regularly to the Government. The process of developing those measures is already under way, and I know that TVNZ is looking at the best practice of public broadcasters elsewhere. I acknowledge TVNZ’s willingness to do that.

The bill will also, I believe, establish TVNZ in a leadership role within the broadcasting sector, a role that, as the State television broadcaster, it is most appropriate that it should play. Amendments to the legislation have underlined that status, and I look forward to seeing quality and innovation being the hallmarks of the organisation.

In conclusion, I thank United Future for supporting the separation of the television and transmission businesses within TVNZ, and I acknowledge the role played by the Greens in amending the charter, particularly in the area of screen violence. As the Minister of Broadcasting, as a participant in New Zealand society, and as a viewer of public television, I look forward to seeing the public television broadcaster flourish as a Crown-owned entity, no longer restricted to pursuing purely commercial objectives. I look forward to its response to the direction provided by the charter, and to the cultural and social benefits that will result. As a final comment, I thank the Hon Marian Hobbs, the former Minister of Broadcasting, who worked very hard on this bill. It is a pleasure to deliver it, and I acknowledge the hard work that she did in the first place.

KATHERINE RICH (NZ National) : There is a question that has plagued many a previous Minister of Broadcasting over the years, and it is this: how does the Government create a small, publicly funded, publicly owned television business? I have the answer to that: give a big one to Steve Maharey and Marian Hobbs. Over the last few years we have seen the Television New Zealand company becoming a mere shell of its former self. When National left office as the Government, this company was worth $1 billion. It had a terrific capability to fund a large amount of local content. As a result of the last 3 years of dawdling, messing around with the business, vague statements, and poor management, that company is no longer the jewel in the State’s crown. Once valued at $1 billion, I imagine that TVNZ would probably be worth less than that now. It is fast becoming a sad, flat little company.

This bill is a backward step for broadcasting, for a number of reasons. One of the main reasons is that it reintroduces politics into the broadcasting industry, to a level not seen since the 1970s. By making TVNZ a Crown-owned company, we will see political interference in the media on a greater scale than ever before. We have seen 3 years of dawdling to get this far. This is the fourth year that the Government has been talking about the charter, and very little progress was made in the last few years. Average progress was the equivalent of less than one word a day. Marian Hobbs herself confirmed that in the last 3 years there had been little change on screen. Over the last 3 years TVNZ has lost staff. People have become burnt out as a result of some of the interference that we have already seen at TVNZ. The station itself has lost income. Advertisers became fazed by the fact that they could hear there were to be changes made to the business, so that would have affected long-term advertising contracts. Of course, we have seen the decimation of value that I have mentioned before.

But in the meantime we have seen no change in what has been shown on television. Yes, there have been a few shows that have been creatively described as “charter friendly” in the interim, but we have seen no programming. In fact, we have seen a number of arguably non - charter-friendly decisions made—such as the axing of Backchat, the axing of 60 Minutes, and the appointment of a reality television manager, who is charged with making more format shows than were made previously.

How much change will we now see? If one listens to what is said by members on the Government side of the House, one imagines there will be a great sea change in programming. I question how that change can happen, when all that the Government has come up with is $10 million, plus GST. That is not even enough to produce a historic drama; that is not even enough to add many documentaries to those we see on screen. In fact, on the day when the Minister announced that $10 million, plus GST, Annette King came out and described a similar sum as being “a mere trickle”. I think she was probably the Minister who was being more honest about the amount that has been put behind this charter. One simply cannot produce programming with such a small amount of funding. I suspect that most members in this House support a greater level of local content. We all like to turn on the television or the radio and to see or hear stories that reflect our country. But one cannot produce that with nothing. It costs money to make those programmes, and the Government simply has not backed its rhetoric with funding.

There is another reason that we are concerned about this bill. The direct funding of TVNZ totally undermines the contestable funding process that was put in place by National. If Governments want to get involved in the purchasing of local content, that can only be done fairly through a contestable method—that is, by using New Zealand On Air. If the Government is to continue the direct funding of TVNZ, that totally messes up the process of funding good ideas, as opposed to funding individual organisations.

Let us talk a moment about political interference. Over the last 3 years we have already seen an increase in the way that the Government has started to interfere with the programming on television. I have spoken to many people within the industry who tell me there have been many occasions when news stories, in particular, have been pulled because there have been concerns that if TVNZ is critical of the Government, it will not be well received on the ninth floor of the Beehive. I wonder why the John Tamihere story was pulled from the TVNZ news line-up last Friday. That is not a new thing, of course, because there has always been a Government involvement in radio. A particular interview about radio with the then Minister, Marian Hobbs, on Radio New Zealand was suddenly pulled from the schedule because of its close proximity to the last election. That was quite an interesting interview, in itself. Marian Hobbs confirmed a number of things. She confirmed that TVNZ already, in effect, had a charter within its statement of corporate intent—something that I had argued for a long time. She also confirmed that there had been very little change in the programmes scheduled during the previous 3 years, but, more important, she told the country what the real plan for TVNZ was.

The Government’s real plan is to turn TVNZ into the Radio New Zealand of the television world. I remind members that the listenership of Radio New Zealand usually sits at between 5 and 10 percent—10 percent on a good day. At the moment over 70 percent of New Zealand viewers tune into TVNZ programmes. It is a mainstream medium, which serves a wide range of New Zealanders. So increasingly, if there is a move to minority-channel programming, which is the express aim of this charter, we will see a decline in viewership.

The next point is that it is not clear how compliance with the charter is to be measured. The Minister can say that he thinks the charter provides a clear set of objectives, but I question whether he has actually read it. If one reads the charter one learns it is all about motherhood and apple pie—just statements about how we want to see diversity on television, a wide range of programming, and about how we are supposed to have programmes that reflect all sorts of New Zealanders. We know that that was already in TVNZ’s statement of corporate intent. But the question is how that will be measured. The public has an expectation that it will be measured independently, but that is not the case. TVNZ will decide how it will implement the charter, and then it will measure that itself. So if TVNZ decides that one charter objective is to screen one drama and it succeeds in doing that, then it can tick the appropriate box. I do not think that was the intention that the public had when the Government embarked on this process.

I think there were great expectations that we would see a huge amount more of local content on TVNZ. But one simply cannot fund that when one has declining profits, a financial deterioration of the company, and a small amount of funding being handed over by the Government. A further point on political interference is that if TVNZ is to have to go cap in hand to the Government every year to get funding, how will it be really objective about the performance of this Government? The truth is that TVNZ cannot be objective. TVNZ will be so nervous that money will be withheld from it that it will be more than cautious when it comes to developing its programmes.

The other ironic thing in all this is that this legislation has been written and is being implemented by a bunch of people who do not even watch television, who do not even have a love of television, and who, I am sure, think spin doctors are just a subcommittee of the “Burns unit”. Probably they have not sat down and watched what most Kiwis like to watch in a very long time.

Hon Roger Sowry: Do your Kath and Kim impersonation!

KATHERINE RICH: I will not; I will leave that for later. But I would say that members on the Government side of the House probably do not even know who Kath and Kim are. They probably think they are press secretaries for Marian Hobbs!

We all want to see good quality television on screen, but the point is that one cannot continue to produce programming if one does not pay for it, and the Government has not stumped up with the cash for it.

LARRY BALDOCK (United Future) : In rising to speak to the third reading of this bill, I say it is with some pleasure that United Future is able to see the bill come to this point in the House, and that it was able to find a way forward through negotiation with the Government, so that this bill did not sit and languish for ever on the Order Paper. Many people throughout New Zealand have been looking forward to an improvement in their television service and in their television programming, and we believe that this bill will offer something of an improvement to viewers. I want to pay a particular commendation to my colleague Marc Alexander, who has worked very hard through the Commerce Committee and the Committee stage of this House, and has made many positive contributions to the bill. Television plays an important role in the lives of New Zealanders, and we do look forward, as we support the third reading of this bill and its passing into law, to the delivery of some vast improvements for the public of New Zealand.

BARBARA STEWART (NZ First) : New Zealand First is opposing this bill, despite having an amendment to the charter requiring that Television New Zealand reflect programming of a family nature, to promote the development of family life in New Zealand. New Zealand First believes that free and open communication is the foundation of the democratic State, and that the role of the Government in broadcasting should largely be confined to essential regulatory matters, realising that there are issues relating to community standards, access, impartiality, and diversity that necessitate intervention. This bill does not give us that certainty in any way—rather, the reverse.

We are pleased to see an amendment to the charter, put by the Green Party, that focuses on the reduction of violence in television programmes, particularly those for children. New Zealand First supports that amendment wholeheartedly.

New Zealand First believes that this bill is a backward step for broadcasting, rather than forward-looking as we have heard from the other side of the House. New Zealand First has concerns, along with the general public, that the Government will manage the content of what New Zealanders will see on television, and that the Minister of Broadcasting, in spite of the clause on ministerial and editorial independence, will totally manage our television. For example, we saw that with the John Tamihere statement last Friday. It was not played at all. We do not believe that it is the role of any Minister in any Government to manage our television viewing or edit daily events. To have a smoke and mirrors policy such as this is not advantageous to New Zealand.

New Zealand First also has concerns about the charter. Although this charter appears to be very politically correct, we do not believe that it is the role of the State to feature television programming that contributes towards “spiritual and ethical development that reflects the diverse beliefs of New Zealanders,”. New Zealanders have always been free from any interference by the State in their spiritual beliefs, and it is, indeed, a very sad world if we have to expect television to carry out that task. It is interesting to note that this charter is to be reviewed every 5 years, which, while maintaining a flexible approach, means that the emphasis may change with subsequent Governments.

New Zealand First questions the money that will be spent on providing the Māori television programmes mentioned in the charter. Although we appreciate that there should always be some Māori cultural programmes on Television New Zealand, why have many millions of dollars been spent, and why do they continue to be spent, on setting up a Māori television station and programmes, if that kind of programming will also be heavily scheduled on Television New Zealand? Is this acknowledgment that the Māori television channel will not be providing what New Zealanders require or want?

As a new member I am puzzled as to why the Minister has not taken a call during the passage of this bill to explain why Television New Zealand is to be split into two separate companies, separating off the profitable transmission arm, Transmission Holdings Ltd. The separation off of this company and its landholdings—in some cases they are small, and in other cases they are not so small—makes it an asset that could easily be sold off to overseas companies. It appears that it is another one of New Zealand’s assets that we will sell cheaply, and have to buy back at a grossly inflated price when many millions of maintenance dollars are required. Unfortunately, the history of asset selling does not bode well for New Zealand or New Zealanders. New Zealand First believes that strategic asset sales should cease. If considered appropriate, and only where absolutely necessary, management by private contracts, under public ownership, should replace the policy of State asset sales.

This charter states that Television New Zealand will observe a code of ethics that addresses the level and nature of advertising to which children are exposed. The increasing rate of diabetes and obesity among our New Zealand children and young people can be partly attributed to the amount of television advertising of fast foods. New Zealand First is concerned to know whether the health aspect of New Zealanders or advertising revenue will be a priority for Television New Zealand. Thus far, the Minister has not clarified this point in any way. Television New Zealand will have to come to the Government for funding, and of course the commercial aspect of fast food advertising must come into consideration. The fast food industry is a substantial spender on advertising, and it is to be hoped that the health of our nation will be considered.

The charter for Television New Zealand needs to be regularly audited, and the compliance measures need to be developed. I know that the Minister said that there is a company already concerned with this aspect, but we are uncertain as to how this will continue in the future.

Again, we are quite concerned as to why this bill should be passed at all. It is quite surprising that the Minister has not taken a call at all on this aspect, to enlighten us, during the course of the debate. New Zealand First believes that if the Government’s aim is to increase the amount and the quality of local television programming, this could be addressed through increased funding through New Zealand On Air, rather than unnecessary restructuring, which diverts the total funding away from programming. New Zealand First questions this change, particularly in the light of the low operational funding that Television New Zealand has been allocated. We will not be supporting this bill.

JILL PETTIS (NZ Labour—Whanganui) : I am very pleased to support this bill, for a variety of reasons. One of the things that we will be able to experience now, as a consequence of this charter, is to see minority peoples and hear minority voices on our television more often than we have to date. New Zealand is a rich and diverse community, and it is important that we see that reflected on our television. This bill will also enable us to have a platform for informed public debate that is not driven by commercial imperatives. It is important to have a participatory democracy, and our television service, as one of the main mediums of communication, is important to that.

As I listened to the speeches from Opposition members through the Committee stage, it was obvious to me that their knowledge of New Zealand history is only about 5 minutes long. I have said in a number of interjections, when this demon of “State control” has been mentioned by Opposition members, that they want to get into their history books and see what has happened in New Zealand in the past.

Hon Murray McCully: She’s showing her age.

JILL PETTIS: That member says I am showing my age. Does he not even know what happened to Uncle Scrim and “The Friendly Road”? He was taken off radio on the eve of the general election that saw the election of the first Labour Government. Talk about State control! It was a conservative Government that did that, so the member’s own party history is not very pure, either.

Hon Murray McCully: What about Kath and Kim?

JILL PETTIS: As for New Zealanders being able to see themselves on television, there was an interjection from that member: “What about Kath and Kim”? Anybody who has watched that programme knows that it is not a New Zealand programme at all. It is an Australian comedy—a quite good comedy, but it is certainly not about New Zealand at all.

In response to Mrs Stewart’s comment about why we are bothering to have a Māori television channel when we already have Māori programmes broadcast on television today, what about our having Television One, TV2 and TV3? That situation has prevailed for a long time. How come it is OK for one group to have a selection, but not another? So I take issue with the member’s comments about that.

I am pleased to support this bill. It will be good for New Zealanders when we can have informed debate on our television, instead of crass commercialism all the time.

DEBORAH CODDINGTON (ACT NZ) : I rise to speak against this bill in the third reading. I speak both in sorrow and in anger against this bill. What this Government is doing to Television New Zealand is appalling. How did we get to this? How did we get to this stage where we have come up with this sort of clone, this hybrid, which is not public broadcasting and is not commercial enterprise?

Let us go back a bit further than 5 minutes in history. This bill stems from the personal desires of a few of the politically correct members of the Labour Government—the mountain-climbing, tree-hugging, The Sound of Music - watching, socks and sandals wearing yodellers who want to force New Zealanders to watch what they think is good for them: a diet of nature documentaries, endless reruns of films like The Color Purple, John Pilger documentaries, and peace marches. [Interruption]. As that member Jill Pettis said, it is about time that New Zealanders watched on television what was good for them. I look forward to the day that we have a “Breakfast Bill”, where New Zealanders are forced to eat for breakfast what is good for them, too, because that is about where we are going.

As I am on the subject of food, I want to say I cannot believe other members of this House who take no responsibility for their own actions, and who say that if people get diabetes, it is not their fault for drinking Coca-Cola and eating junk food—it is the advertisers’ fault for advertising them on television. Good grief! Whatever happened to taking control over what one eats and drinks? We should stop blaming everyone else. As for children, parents have a responsibility to watch what they eat, too.

On Saturday this charter, apparently, comes into effect. Look at the nebulous, ill-defined nonsense that we have in it! It states TVNZ has to be concerned with Māori interests. TVNZ will have to fulfil the objective of personal development. When, I ask, was the State ever responsible for the personal development of people? The State is responsible for protecting people’s lives and protecting their property, not for directing where they should personally develop. The charter does not even state where they will personally develop; it might be backwards, for all we know. Mass audience programmes must also deal with minority interests. What on earth does this mean? Does this mean that the Holmes show, which is a mass audience programme, must deal with minority interests? What are those minority interests? Does it have to give voice to something like the “Takaka Floral Society” or the “Parliamentary Wimmin’s Knitting Club”? As for spiritual development, this Government callously casts aside the constitutional conventions of the separation of powers.

Be warned, this is coming up again in the Radio New Zealand Amendment Bill The State, I remind members of this House, is meant to be secular.

What was wrong with TVNZ that this Government had to fiddle around with a State-owned enterprise that was making $60 million a year, and, as I said, turn it into a Crown-owned company that has already sucked up $10 million of taxpayers’ money to implement the charter? What was wrong with leaving it to New Zealanders to exercise their right to push the off button?

Labour Governments, and, I am afraid, National ones, too, should hang their heads in shame that over the years they have appointed tame chairs to the board of TVNZ who have used TVNZ as a cash cow—$60 million in 1999. There was nothing in the State-Owned Enterprises Act or in TVNZ’s statement of intent that stated that $60 million had to be returned as a dividend to the Government. TVNZ could have given the Government $1 million and kept $59 million to make good programmes.

And who are we going to see on the TVNZ board now? That will be interesting. What assurance can we have from this Government that there will be no political interference from the board? Can United Future assure us that no deal has been done whereby very, very close friends of United Future are appointed to the board in return for that party’s support for this bill? Will Craig Boyce, the current acting chairman, a director of Industry New Zealand, and a very, very close friend of Jim Anderton be made chairman? Jobs for one’s mates? Cronyism? That is how Governments interfere and manipulate the media, and that is why the State should not own the media. Stephen Franks managed to get an amendment passed, thank goodness, that strengthens the sanctions against political interference. But political interference, I say, has already occurred with the introduction of this charter.

The bill is also a document that sets out this Government’s politics of envy. If we look at the clauses that deal with financial reporting, we see that the remuneration and other benefits of employees must be stated. This type of clause, I say, is the “anti – Paul Holmes” clause. This is the Ross Armstrong influence. He was the Prime Minister’s very, very close friend—not any more—who rollicked into the position of chairman, assisted by his travelling companion, Kristy McDonald, and said that Paul Holmes earned too much money. Paul Holmes gets up at 4 o’clock in the morning and works until 8 o’clock at night, which people on that side of the House probably would not know about. How much is too much money? That is what this clause is about. It is about lopping the heads off tall poppies. Well, Paul Holmes had his revenge when he retaliated by describing the chairmanship of Ross Armstrong as creating a climate of fear, and it was true. What went on when Ross Armstrong was the chair of TVNZ, what he did in terms of morale, was the worst kept secret in town. It shows this Government’s cavalier disregard of the integrity of a once-great media company.

So what should be done? As I said, the State has no business owning television broadcasting. The State does not own newspapers, and neither should it. I would hope there would be an outcry if the Government tried to nationalise the New Zealand Herald or the Dominion Post. How do the employees of TVNZ feel, now that they face a future in which there is a high probability they will be Government employees? Does this Government care about that? Has it even thought about it? I do not hold out huge hopes that TVNZ will continue to be supported solely by advertising revenue, because if I were an advertiser and I read that charter, I would run screaming from the room.

This Government does not like business. It hates private enterprise. It forgets that advertisers are actually private businesses. But does the charter even mention business? No, the charter talks about supporting the arts and featuring sport, educational, and personal development. There is absolutely nothing in that charter that deals with free enterprise and entrepreneurship. What about business programmes? Are they not as important as personal development? What about programmes on capitalism? And before Government members start criticising what I say, I ask them to use their imagination for a moment and imagine if the ACT party were in Government and we drew up the charter. I am sure they would run screaming from the room, too.

The Minister of Broadcasting proudly said that TVNZ is no longer just commercially driven. I say that there is absolutely nothing wrong with media organisations being commercially driven. All that means is giving customers exactly what they want. North and South magazineis hugely successful. It is totally commercially driven and it features serious current affairs articles. For those who believe that television cannot do the same, I have just three letters—CNN.

Hon JUDITH TIZARD (Associate Minister for Arts, Culture and Heritage) : It is a great pleasure to rise in support of this third reading of the Television New Zealand Bill. It is a bill that New Zealanders have been calling for for a long time. We had accusations from the last speaker that this bill is about political interference and the politics of envy, and she immediately stumbled into personal abuse and smearing everybody who disagrees with her politics. That is a perfect example of why politicians should not be running the news media. However, I say to her, and to all of the pathetic, market-driven wonks in the ACT party who believe that the market is everything, that New Zealand has a history of having a mixed economy. There are some things that the State does because the market does not deliver them and because citizens are entitled to services.

Katherine Rich: Don’t you ever watch television?

Hon JUDITH TIZARD: Of course I watch television.

Katherine Rich: What’s your favourite programme?

Hon JUDITH TIZARD: Kath and Kim, actually. It is absolutely ludicrous to suggest that Government members are somehow or other out of touch. We were elected handsomely only 8 months ago because this Government is in touch with what people in New Zealand want. This bill will change the Government’s involvement in public television for the better. It will change from being a purely profit-driven State-owned enterprise to a public broadcaster that balances commercial, social, and cultural values.

As Associate Minister for Arts, Culture and Heritage I would say that I have heard more people in support of this legislation than for many bills. Some people who want to go back to the days when Bill Birch balanced his Budget by sucking TVNZ dry by insisting that TVNZ cater to the lowest common denominator—“And if they want current affairs, let them buy it!”, says Marie Antoinette from the ACT party! For good reason, this legislation is broadly supported in this House and in the country.

SUE KEDGLEY (Green) : First of all, I want to make it clear that, unlike the ACT party, the Green Party passionately supports publicly owned, public service television in New Zealand. In our increasingly globalised world, where our sovereignty, our culture, our identity, and so forth have been steadily eroded, we think it is absolutely crucial that we have a strong, independent, publicly owned television broadcaster that has a very specific mandate and purpose to promote our New Zealand identity, New Zealand programmes, and so forth, on television, which, after all, is the most powerful medium of communication.

Frankly, we think it is disgraceful that on one of our publicly owned channels, TV2—the channel, I might say, that our young people and children watch—there is only 13 percent of New Zealand programmes, and there is 87 percent of foreign programmes. This means that our children are growing up learning more about the values and life and attitudes in Los Angeles than they do about their own communities. That is why we passionately support any move that will give a new direction to TVNZ, and require it to show more New Zealand programmes. It is the reason that we support the transformation of TVNZ from a predominantly commercially focused State-owned enterprise into a Crown-owned company, and why we support the concept of a charter, which we hope will give a new direction for TVNZ so that it is editorially driven, rather than just ratings-driven as it has been for the last decade.

The need for having a strong publicly owned television channel is all the more critical as we enter the digital era, which pundits are predicting will result in increasing fragmentation of television markets into niche channels, with increasing concentration and domination of the broadcasting industry by a small number of large mega-companies that own digital platforms, and an environment that will become increasingly hostile and difficult for commercial free-to-air broadcasters. They will find themselves with increasing fragmentation, declining audiences, and so forth.

If this is the era that we are to enter, it is essential that we try to ensure that TVNZ, in this risky and uncertain environment, is as strong, as financially robust, and as financially independent as possible, with a healthy income stream, the ability to earn revenues from various activities, and as much leverage as possible. That is why, while strongly supporting the charter in this bill, we are totally opposed to the last-minute amendment that arrived like a bolt out of the blue, after the select committee stage had ended, to split off the transmission arm from TVNZ—the revenue-generating arm of BCL that the previousMinister of Broadcasting described as a wonderful golden goose. It was the transmission arm that quietly contributed money and funding over many years. Some of that money went into New Zealand programming.

We believe that to separate off that transmission arm will weaken, and not strengthen, TVNZ. It will shrink the potential revenue base of Television New Zealand, eliminate the option of cross-subsidies from the transmission arm, and, most unfortunate of all, it will make Television New Zealand increasingly reliant on advertising revenue at the very precise moment in its history when we are saying: “We don’t want you to be advertising and ratings-driven. We want you to be editorially driven.”

When looking at this splitting off of the transmission arm, the Government asked the accounting firm, Arthur Andersen and Co., to investigate the case for splitting it off. Arthur Andersen contemplated this for about 6 long months. In the end that company said that there is no compelling case for separating it off, because we could do all of those things that the Minister of Broadcasting said he wanted it to do, under the existing arrangements. The Government wanted the transmission arm to focus on its transmission business and get on with it. That is exactly what the structure in the original bill allowed it to do. That was precisely why it was set up with a separate board to focus on the transmission business.

Some members over here have suggested that the bill has wide support. I want to tell them what the Screen Producers and Directors Association had to say about the prospect of separating off the transmission arm of TVNZ: “We believe the split will have a catastrophic impact in the long term. It will irrevocably damage TVNZ’s potential to remain a strong national presence. We cannot see how such a move will do anything other than hobble TVNZ’s potential to deliver on charter obligations in a meaningful way.” That is what the production industry thinks about this move. The only possible logical explanation for separating it off in this way would be if one were readying it for sale. We can only assume that the hidden agenda of the Government is to ready the transmission arm for sale.

In our view, because of the way the bill has ended up with this last-minute amendment to separate off the transmission arm, we have a bill that sends conflicting and, indeed, schizophrenic messages to Television New Zealand. It is a bill that on one hand gives, and on the other hand, takes away. On the one hand the bill gives Television New Zealand this new mandate that we will now have new programmes—New Zealand, minority, spiritual—and a new direction and requirement to make all those local programmes, and on the other hand we have taken away the revenue base with which to make those programmes. We have shrunk the revenue base of Television New Zealand, and made it more, not less, dependent on advertising revenue.

How can Television New Zealand deliver its mandate, and make more New Zealand programmes, if there is no money to make them? What will happen if the advertising revenue shrinks in the next few years—as is predicted and as all the pundits say? Where will the income come from then? What will happen if a future Government removes the direct subsidy of $10 million that the Government has projected for the next few years? Frankly we, like Katherine Rich, think that $10 million is a tiny amount on which to base the implementation of the charter. It is a pitiful amount. But what will happen if even that pitiful amount is taken away by a future Government—as it most certainly will be if a National Government ever gets back into power? National has already told us that it will be taking away the subsidy, so where will the cash-strapped Television New Zealand turn then to make all of those charter-driven, New Zealand programmes?

The other issue with which we are seriously concerned is the potential that a direct subsidy will inevitably mean political influence. At the back of the mind of the chief executive of Television New Zealand and the board will always be that nagging anxiety about that $10 million direct grant from the Government—if they come up with a programme that the Prime Minister intensely dislikes, or if the Government dislikes the election coverage in an upcoming general election. In the back of their minds will always be the question: “Will we find that our subsidy will be reduced next year?”. We need only cast our minds back to 1975 when Mr Muldoon refused to raise the licence fee, and made it clear that it was a way of punishing broadcasters for expressing independent or dissident views. The Government has a direct grant that we can hold over Television New Zealand—“He who pays the piper, plays the tune.”—and always in the back of those executives’ minds will be that direct grant, their concern about not alienating a current Government, and the effect that that alienation has for the political neutrality of Television New Zealand.

We are absolutely delighted that two of our amendments to the charter have been accepted. One requires Television New Zealand to take a leading role in implementing the code of violence. We have excellent codes on violence; it is just that they are completely ignored and no one has done anything to implement them. So now Television New Zealand has an explicit mandate not to show programmes with gratuitous violence, etc., and we will be watching that very closely. The second amendment supports the independent industry in New Zealand, because already the cash-strapped Television New Zealand, casting around for extra revenue, is looking at independent producers. It is trying to fleece revenue from independent production houses.

Hon PETE HODGSON (Minister of Energy) : I want to speak briefly to this legislation, and to ask Sue Kedgley, who has just resumed her seat, to reflect please on whether Radio New Zealand or Concert FM are subject to political interference, because they have no advertising revenue. Would she please reflect on whether it is possible to have no split between transmission and broadcasting, yet have Television New Zealand as a Crown-owned company. No one, I think, is suggesting that BCL Ltd should be other than a State-owned enterprise. I say about the ACT party contribution that if we have a charter come into place that means that Television One is more different from the other main providers, do we not therefore have better choice? Why might the ACT party argue against that?

Hon MURRAY McCULLY (NZ National—East Coast Bays) : This is a sad day for New Zealand broadcasting. It is a day on which we see in Television New Zealand the era of the bow-tie-and-ballet-tights brigade being ushered in, and the day when we see the framework established for our State broadcaster to become a simpering and compliant player in the New Zealand media.

The third reading stage of a bill is, of course, the opportunity for members to recount the previous consideration of the legislation in its various stages. That is quite a saga because when this bill was originally introduced we had a very different structure in Television New Zealand. We had a structure consisting of a parent board and two subsidiary boards, which was the result of some very considerable work and expense. At that stage, the Prime Minister’s very good friend, Dr Ross Armstrong, was the chairman of Television New Zealand, and he went to very considerable lengths to make sure that the structural change sought by officials was substantially modified in order to give him the position of absolute power he demanded. So, at very considerable expense, a major consulting firm and consultants were wheeled in, and the former chairman’s very good friend, Kristy McDonald QC, was wheeled in, to deliver, at significant expense to Television New Zealand, an opinion about how a format could be devised that would see a parent board and two subsidiaries, and why it would not be too bad an idea for the chairman of Television New Zealand to become the chairman, also, of the two subsidiary companies.

That was a structure that was put in place in the original bill for one reason, and for one reason only—to meet the requirements of the previous chairman, the Prime Minister’s very good friend, Dr Armstrong, to be the chairman of everything that moved in the State broadcaster. This was the “Ross Armstrong structure” in the original bill. Why would it suit the Government so much to accommodate Dr Armstrong’s requirements? Well, members should ask themselves about the answer to that question—it suited the Government very well to have its very good friend in the controlling position of every component of the most powerful medium in the country. Miraculously, Dr Armstrong left us, this bill came back from a select committee, and a Supplementary Order Paper emerged that was very different from the format that was introduced. Miraculously, the United Future party decided that it would accommodate the Government’s wish to see this particular measure through the House.

The Associate Minister for Arts, Culture and Heritage told us that this bill enjoyed broad support in the House. I want to correct her on that; that is very far from the truth. The simple facts of the matter are that the Greens have told us today that they oppose the bill, the ACT party has told us it opposes the bill, the New Zealand First Party has told us it opposes the bill, and the National Party has said it opposes the bill.

I want to ask the question again at this final stage: why is it that the United Future party is the only party prepared to help the Government get this bill, which will distort the media, through the House today? The answer is, because it has been bought.

Mr SPEAKER: The member knows he cannot say that. He will withdraw that comment.

Hon MURRAY McCULLY: I withdraw. The members sitting in the House who represent United Future have another chance today to answer the question I asked them at the Committee stage. Have they been promised any directorships on either of the two entities that are being formulated as a result of this bill? Will any United Future persons miraculously pop up on either of those two boards? [Interruption] Are those two members saying that that will not happen? Is Mr Smith telling me that that will not happen? Mr Smith is not telling me that it will not happen, because Mr Smith knows very well that it will happen. Mr Smith knows that, once this bill has been passed, we will no doubt see an announcement from the Government that shows what the price tag has been to get United Future to vote for this bill. I say to those two members—

Hon Judith Tizard: I raise a point of order, Mr Speaker. You have already pulled up this member for saying that another party’s vote has been bought. He is now saying that we will know the price tag for this vote. I cannot accept that that is within the Standing Orders.

Mr SPEAKER: The first comment was outside the Standing Orders. The second one is right on the edge, but I thought I heard Mr Smith’s comments being made very clearly to the member. I ask the member to continue.

Hon MURRAY McCULLY: I am a quick learner. I have a long enough memory to be able to recall in a week or two’s time, when the board members are announced, the discussion we have had today and on the previous phases of the bill. If there are United Future people—people associated with that party—on either of those two boards, then the members who are sitting in the House today will be held to account for their silence on this matter.

I want to take the opportunity of rehearsing some of the arguments that were made available to the House in the earlier stages of the bill, and in particular I invite members of the public who are interested, and members of the House who are here, to consider some simple arithmetic. We have been told that as a result of this bill we will see the transmission arm of Television New Zealand, BCL, turned into Transmission Holdings Ltd and become a State-owned enterprise. We have separately seen a statement of corporate intent from the Government, which makes it clear that the projection is that the two arms, the transmission and the television arm together, are going to make a profit of $17.9 million next year and $17.8 million in the year after. We have been told that that includes the $12.5 million that is being delivered to cover charter costs from the Government. In effect we have a $5 million profit being forecast by those two entities combined.

It is not rocket science to work out that on those numbers the television arm of Television New Zealand is going to be running significant losses. Look at the profits of the transmission arm over the last few years. The Television New Zealand arm is going to be running very substantial losses. I ask members opposite to tell me how those losses are going to be made up. There is only one answer to that question. Television New Zealand will have to go cap in hand to the Minister of Finance, on an annual basis. It simply cannot survive on any other basis than the goodwill of the Minister. I ask members opposite: do they really expect members to believe that Television New Zealand’s directors and management will not feel under the slightest degree of pressure that they should earn the $30 million or so they will be asking the Government for to survive each year, by appeasing the Government with the quality of their news and current affairs coverage?

Why is it that, in terms of this legislation, we have the weakest possible provision as far as editorial independence is concerned? Have United Future members thought about the reason for that watered-down provision? Do they not understand that we are about to enter an era where our State broadcaster, the most powerful medium in our country, is about to make an annual visit to the Minister of Finance, who will no doubt have a conversation with the Prime Minister about whether it can get the $30 million or so it needs to survive? I have worked it out. Members on this side of the House have worked it out. I am surprised that United Future people tell me they have not worked it out. Members of the public are going to work it out. The result of this legislation being passed today will be a very sad, very compliant, simpering State broadcaster.

DAVID BENSON-POPE (NZ Labour—Dunedin South) : I am pleased to rise in support of this bill. I am very pleased that after a long gestation period the bill is finally having its third reading.

DAIL JONES (NZ First) : On behalf of New Zealand First, I say at the outset that we will be opposing the bill. I immediately take up the point made by David Benson-Pope, the senior Government whip. He talked about a long gestation period for the bill. The gestation period for this bill began on 20 February 2003, barely a week ago. The bill we are being made to pass by the Labour Party, the Progressives, and United Future is a totally different bill from that which was introduced into the House on 11 December 2001. It had its first reading in December 2001, it was reported back from the Commerce Committee on 23 April 2002, and its second reading was on 16 October 2002.

The bill has had no gestation period. I could describe it in many ways that would be totally out of order, but clearly it has not been gestated in any way whatsoever. The bill deserves a gestation period, and when the Supplementary Order Paper was introduced it should have been referred back to the Commerce Committee so that submissions could be heard and we could hear what the public really thought about it. For the Hon Judith Tizard to say that the public support this bill is an absolute nonsense. The public do not know what is in the bill because, largely, it has been here only 7 days. The Hon Judith Tizard has absolutely no idea what is in it. She knows as much about the bill as she does about the people of Auckland and their needs—absolutely nothing. No opportunity has been given to the public to consider this legislation. In fact, I remember the days when if one behaved like that, Geoffrey Palmer would get up and talk about Unbridled Power.

This is a clear example of unbridled power by the Labour Party and the United Future party. In less than a year—almost 6 months—the United Future party has taken part in one of the greatest examples of unbridled power one will ever see. A Supplementary Order Paper was brought in changing the bill dramatically from what the select committee suggested, and the bill has been ripped through the House in 7 days. That is unbridled power. Of course, it is to do with the fourth estate—the most important part of our constitutional process. We would have expected anything to do with control of the fourth estate to go back to a select committee. But, no, Mr Murray Smith—a lawyer in the United Future party—is not concerned about constitutional matters. The United Future party, in general, has no regard for the way in which this minority Labour Government is pushing this bill through the House. We are sure that United Future stands to gain something by passing it through the House.

In fewer than 7 days we have seen a dramatic change in the way in which the bill will operate, and the United Future party and the Labour Party Government do not give two hoots about it. We have gone from the provision of a Television New Zealand Crown entity group consisting of a Crown company holding company with two subsidiaries, one of which conducts a television business and the other a transmission business, to a situation whereby the legislation provides for the existing State enterprise, Television New Zealand, to be split into a Crown entity conducting a television business, and a State enterprise conducting a transmission business. I believe that is a dramatic change in the legislation, and I believe that the people of New Zealand were entitled to make submissions on it. Those people have been deprived, by United Future and by the minority Labour Government, of having the matter properly considered by a select committee. Why was that the case? Were they concerned? I cannot use other words to describe the way in which they might think about it. Were they so greatly concerned that there would be a public uproar about it that they did not want it to go before a select committee? One can only wonder, because that chance will not be given to us now.

One of the interesting things about the bill when it was introduced was that it stated in clause 3(c) that the purpose of the bill was to: “ensure that the subsidiary responsible for the transmission business operates as a successful business:”. That provision has been deleted from the bill. There is no requirement that either part of those new organisations should be commercially successful. Well, we know that the one that will not be getting any funds will not be commercially successful. It is doomed from today. They will be going to the respective Minister and the Prime Minister with their hands out asking for more money.

Someone has mentioned the situation of the Muldoon administration, of which I was a part. It came into power only at the end of 1975. For many, many years the licence fee, through many, many Governments, was a political hot potato: “Oh, no, you haven’t been good to us so I don’t think we’ll increase it this year.” That would go on for ever. Various Governments of various hues were involved in what to do with the licence fee. Finally, of course, it was removed. But whenever a State organisation is dependent in some form or another on the Government for funds, one cannot say that the Government will not have some influence on how the media, the fourth estate, would operate—in this case the television industry.

The minority Labour Government, supported by United Future, is leaving our State television system wide open to Government abuse, based on the facts as we already know them in New Zealand over many, many years. It is an absolute disgrace. Constitutionally it is a disgrace. State television is not meant to be run commercially, and it is leaving itself wide open to Government influence. [Interruption]

During the course of the Committee stage, which the Hon Judith Tizard, who is trying to interject, had little influence upon, New Zealand First supported a catholic range of amendments to the charter. We felt that it was important that all the ideas put forward by members of this House should be incorporated in the charter. Essentially, the charter is just a load of baloney. It will do absolutely nothing. The charter is just a load of baloney. It uses some fancy, fancy words, but at the end of the day it is a load of baloney. The charter contains some very interesting things, but most of it is just absolute rubbish. For example, it states that TVNZ will feature programming that contributes towards intellectual, scientific, cultural, spiritual, and ethical development that reflects the diverse beliefs of New Zealanders, promotes informed and many-sided debate, and stimulates critical thought, thereby enhancing opportunities for citizens to participate in community, national, and international life. That is one of about 25 things that are incorporated in the charter. Another one states that it will include in programming intended for a mass audience, material that deals with minority interests. How does one possibly do something like that in the one programme? It is an absolute nonsense.

One of the things that New Zealand First was very concerned about was that there is nothing in the charter that promotes family life. I am disappointed that United Future, which has made such a feature of family life, when it took so much credit for the new legislation that was introduced last Thursday, and when it took credit for its dealings with Michael Cullen, failed in all of those dealings to ensure that family life was included in the charter. Despite the fact that the charter is baloney, one would have thought that United Future members might have given at least some consideration to having family life included as one of the things that the charter must consider—the promotion and the support of family life.

I moved an amendment stating that the charter would feature programming of a family nature that supports the family and the development of family life in New Zealand. Regrettably that amendment was lost. One can only try.

It was opposed by the Labour Party. Darren Hughes, the new Labour Party member for Otaki, who was the Labour Party whip at the time who voted for the Labour Party, saying, no, he did not support family life. I wonder whether the people of Horowhenua know that their young, new member thinks that family life should not be included in something like this. ACT opposed it and the Green Party opposed it. I raised the matter of family support specifically, because it is something that is dear to my heart, and it has been since 1976 when I first became a member in this House. I supported a Green amendment that included the need to give regard to the environment, which was defeated by all other parties in the House. Only the Greens and New Zealand First supported it. I also supported an amendment from Mr Alexander from United Future, about violence.

We are concerned that those organisations have been set up so that they can be sold off. That really is one of the 15 foundation principles of New Zealand First. The way in which those two entities have been set up and established is a prime way for this New Zealand minority Labour Government to sell off anything that is profitable, as it has done in the past. I did not hear the Minister Mr Maharey deny that point when he spoke. That is our concern as well. I predict that this minority Labour Government will try to do that in the future.

PANSY WONG (NZ National) : I am really pleased to see that there is a change of Minister in the chair for the debate on Part 1. We have the Hon John Tamihere, instead of the Hon Michael Cullen who seemed hell-bent on shutting down the debate, which was interesting last night. Because of that fiasco last night the Committee spent 35 minutes on debating points of order, because the Hon Michael Cullen would not allow the ACT member the Hon Richard Prebble to seek a call on the title of the bill. I find that really interesting.

My understanding is that Part 1, indeed, the whole bill, is supported by all parties in the House. So why is the Labour Government so hell-bent on shutting down debate? One would think that it does not want to pass this legislation that modernises the practice that no person should be disadvantaged—in this case whether, under the Government Superannuation Fund, a widow or widower of a pensioner would continue to receive the benefit if the widow or widower happened to remarry. I am surprised, because last night my colleague Dr the Hon Lockwood Smith believed that the title, Government Superannuation Fund Amendment Bill (No 2), did not clearly bring out the intention that is set out in Part 1. I believe that the Hon Richard Prebble should be entitled to seek a call on that.

The Hon Michael Cullen made an accusation towards my colleague the honourable Dr Lockwood Smith, who has spent 19 years in Parliament and has never been expelled from the Chamber. All he did was politely ask the Chair whether it was democratic to allow the ACT leader, the Hon Richard Prebble, to seek a call, because the title of the bill does not clearly spell out what is set out in Part 1—

The CHAIRPERSON (H V Ross Robertson): Could the member just talk about the bill.

PANSY WONG: The bill is about whether a widow or widower, who is entitled to receive the pension, should not be disadvantaged if he or she chooses to remarry. One would have thought that that was a perfectly reasonable action, but nothing is reasonable according to the minority Labour Government. I am still perplexed and hope that the Labour Minister the Hon John Tamihere is not still under a gagging order. I hope he will seek a call to explain to the public why the title of this legislation, which seems to be well received by the House, does not more clearly spell out the purpose that is set out in clause 3, which might enlighten people listening to this debate.

The National Party is supporting this bill. As it has been 20 years since the passage of the last bill, we think it is about time that society recognises that widows and widowers will remarry and seek another period of happy life. That should not jeopardise their entitlement under this bill to receive the pension. I hope this Minister, who does have a reputation of speaking his mind and making his own decisions, until his arm has been twisted, will take a call to explain further to the public the background that leads to the purpose of the bill.

I hope the Chairperson will also allow a few more calls from the various parties, because we are witnessing one of those rare occasions where most parties—and, I would say, probably all parties—will support this legislation. But it is important that the Minister seeks the call to explain the issue further, because last night some members raised a concern as to whether the investment is being made wisely.

RODNEY HIDE (ACT NZ) : It is very good to see the Hon. John Tamihere given a job in this Parliament by the Government. I know that the Hon. John Tamihere will clearly and comprehensively rebut all claims that he has been muzzled by the Prime Minister, Helen Clark.

We are discussing Part 1, and I have some questions to raise with the Minister. I am hoping that he will dispel all those outrageous claims people have been making that the Prime Minister has jumped down the throat of the second to highest ranking Māori in her caucus, and has muzzled him.

Gordon Copeland: I raise a point of order, Madam Chair. I want to raise a serious point of order. We are speaking on Part 1. The status of various Cabinet Ministers has nothing whatever to do with the subject matter. I sat here last night for 45 minutes, and I believe that the way this Committee behaved itself then—and I have spoken to many people today who listened on the radio—brought Parliament into disrepute. Madam Chair, today I would like you to rule specifically that people stick to the point, that they speak to the wording of the part, and that they do not stray again into extraneous matters.

Rodney Hide: That’s not even a point of order.

The CHAIRPERSON (Ann Hartley): I tell Mr Hide that I am on my feet and ruling on the point of order. Would he please be silent. The member is quite correct. I ask the member now to speak to clauses 2 and 3, and to stick to those clauses.

RODNEY HIDE: Thank you for the ruling. We are discussing clauses 2 and 3. I would like the Minister to take the next call and answer these questions. With regard to clause 3, how many spouses currently have their annuities suspended? Could the Minister take a call when I sit down, prove to the world that he has not been muzzled, and answer the simple question: how many spouses currently have their annuities suspended? Would the Minister do that?

The second question is: what is the fiscal cost of this bill to the Crown? What will this bill cost the Government Superannuation Fund, and what will this bill cost the taxpayer? I would like the Minister in the chair—[Interruption] We now have an interesting situation. I raise a point of order, Madam Chairperson. Mr Copeland, who is very, very big about points of order, is now having a serious conversation right beside where I am trying to give my speech. I would like you to rule as Speakers rule—that that is unacceptable.

The CHAIRPERSON (Ann Hartley): I ask the member to resume his seat. A lot of people were speaking, but the member should not be standing up.

David Benson-Pope: It has to be within the order of the Committee, and it is provided for in the Standing Orders specifically for the whip of one party—in this case, myself—to discuss a procedural matter with a whip of another party. In this case it is Mr Copeland.

Rodney Hide: Speaking to the point of order—

The CHAIRPERSON (Ann Hartley): No, please be seated. What we must ensure is that the conversation is not interfering with the speech of a member, and it was close to the member. Please continue.

RODNEY HIDE: I will recap my questions, which Mr Copeland who has come down to the Chamber does not seem to be interested in. Firstly, how many spouses have their annuities currently suspended? Second, what will be the cost to the taxpayer? Third, what will be the cost to the Government Superannuation Fund? I want the Minister in the chair, who is collecting ministerial pay and pretending he is a Minister, to stand in the Chamber and do his job while he is in the chair—that is, answer some questions.

Also, I would like the Minister in the chair to put these costs into some sort of context. What does the cost of providing for these spouses—which, I hasten to add, the ACT party is supporting—mean in relation to the costs to the Government Superannuation Fund, compared to what the fund has lost in the last 14 months? Under Michael Cullen, the economic wizard of New Zealand, the Government Superannuation Fund has lost $380 million. The Minister, Dr Cullen, says that is not much; that is normal variance. Well, $380 million is a lot of money. Given that this bill has been lying around on the Order Paper for months and months, and now my colleague from United Future wants it to pass without debate it would seem, I would like the Minister, the Hon John Tamihere, who has boldly taken up the chair, to explain the cost of providing for these widows, compared to what Dr Michael Cullen has lost from the fund in that time. I guarantee that we could look after a lot of widows, and a lot of spouses who have remarried, when we compare it to the $380 million that has been lost. We know that the Hon John Tamihere has plenty of ideas. He is bursting with ideas. He is busting with ideas. I want him to take a call and say: “Why don’t we decentralise and devolve the Government Superannuation Fund to Māori?”. Is it a good idea to devolve it to housing for Māori?

I refer to clauses 2 and 3. Did that Minister, when he was at the Cabinet table discussing this provision, talk about his bold initiatives and ideas? Or do we have a case of a Minister who is a lion out in the electorate, well away from the ninth floor, well away from the Cabinet room, but not prepared to speak in this Chamber?

JOHN CARTER (Senior Whip—NZ National) : I raise a point of order, Madam Chairperson. I did not want to interrupt the member’s speech, but there are two points with regard to the point of order exchanges that have occurred that I want to remind the Committee of.

Firstly, Mr Copeland raised a point of order with regard to relevance. I think it is appropriate at this stage to remind the Committee that when members raise points of order of that nature, they must be seen not to challenge the Chair. It is your prerogative alone, as Chair, to decide whether the member is relevant, and it is your prerogative alone to draw that to the attention of the member and the Committee. The second point I want to make is with regard to the issue that was raised by the senior Government whip, and that is the matter of exchange between whips particularly. Although it is true that we must take care to ensure we do not interfere with other speeches as we are carrying out our duties as whips in the Parliament, there is a longstanding convention that whips acting in that capacity are unseen. So it is important that that convention remains, because we do have duties that are peculiar and particular to the Parliament and the running of it.

The CHAIRPERSON (Ann Hartley): I thank the member. I think those points have been covered. The member raised a correct point of order.

CRAIG McNAIR (NZ First) : I take pleasure in speaking to Part 1. Whenever New Zealand First members look at legislation, we look at it in a very balanced and sensible way, as we always have. As I look at the bill and listen to some of the speeches—I listened to Roger Sowry last night, and to Pansy Wong and some others—I have to say that I think they are missing the purpose of the bill. I really have to make that point. This bill is not a massive and controversial piece of legislation that the Government is trying pass under our noses. As we are speaking to Part 1, I would like the read out the purpose clause, but before I do that I do want to remind members that New Zealand First is a strong advocate for the fund to have more investment in New Zealand. Everybody knows that. We have even got a press release about it.

Simon Power: What is the purpose?

CRAIG McNAIR: We have even got a press release about how we should invest more in New Zealand, but this is the purpose of the bill—

Dr the Hon Lockwood Smith: No, it’s not.

CRAIG McNAIR: Dr Lockwood Smith wants to be all smart about it, but if he would just listen to people who want to speak on the bill—[Interruption] Pansy Wong is saying that I should speak to the bill. What did she talk about? Absolutely nothing! That just shows the substance of the National Party.

The CHAIRPERSON (Ann Hartley): The member needs to come back to clauses 2 and 3.

CRAIG McNAIR: Thank you, Madam Chair. As a new member, I do appreciate your guidance. The purpose of the bill is to remove inequities in treatment between members of the old schemes of the Government Superannuation Fund and the new schemes. That is pretty basic. One good point that Pansy Wong did make last night was that time had moved on. [Interruption] If Dr Lockwood Smith is calling for me to speak to the bill, I can tell him that I definitely am speaking on the bill. Pansy Wong, as I remember, was talking about the difference in treatment between the members of the old schemes of the New Zealand Superannuation Fund and the new schemes. The commentary on the bill states: “The purpose of the bill is to remove inequities in the treatment between members of the old schemes of the Government Superannuation Fund (GSF) and the new schemes. The bill seeks to remove an inequity in the treatment of widows and widowers with effect from 1 July 2002.” Time has moved on. There has been a need for us to update the legislation, as it were. I am glad to hear that other parties are supporting this bill. New Zealand First, as I have always said, supports good legislation and opposes bad legislation. We think that this is good legislation.

Simon Power: What’s it about?

CRAIG McNAIR: Does Simon Power think that this is good legislation or bad legislation?

Simon Power: What’s it about?

CRAIG McNAIR: No—I am on my feet. I ask him to tell me whether he thinks that this legislation is good or bad. He does not know. All he has is a question. He probably will not speak on this bill. I do not think that that member heard me when I said what the purpose of the bill is. He is asking me to tell him about the bill. If the member had listened he would have heard what I said about the bill. That just goes to show the substance of the National Party. Simon Power really wants me to spell it out to him—specifically about Part 1. There must be something I do not know because I thought he had been here for at least one term before I was.

GEORGINA BEYER (NZ Labour—Wairarapa) : I move, That the question be now put.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) : I rise with some trepidation to speak on Part 1 because when I was speaking on the title, only last night, I managed to be evicted from this Chamber for the first time ever in 19 years in this Parliament. So I fear this bill may bring me bad luck, but despite that nervousness I will do my best to address Part 1.

Part 1 covers the commencement and the purpose of the bill. The commencement clause is interesting because, normally, the commencement date indicates a little bit about the Government’s legislative programme. What is interesting is that the commencement clause states: “This Act comes into force on the day after the date on which it receives the Royalassent.” What is interesting about that clause is that it shows that the Government’s legislative programme is a shambles. The Government has no idea when this bill is going to come into force—none whatsoever. What is more, the fiscal cost of this bill gets greater every week that it does not come into force because the bill goes back to July 2002. So the estimated cost of the back-pay, shall we say, gets greater with every week that goes by. The Government has no idea when it will get this bill through the Parliament—the bill demonstrates that quite clearly. The Government’s legislative programme is in a shambles. The Government cannot specify a date when the bill is to come into force, so it just says that that will be on the day after the date on which the bill receives the royal assent. That is a way of saying: “We haven’t got a clue, and that’s the only safe way to put it.” That is the first thing I would say in respect of Part 1. Clearly, it demonstrates that the Government’s legislative programme is a shambles.

The other clause in Part 1 is clause 3, “Purpose”, which is, I think, what my colleague from Rodney, Mr McNair from New Zealand First, was trying to describe—

Rodney Hide: I raise a point of order, Madam Chairperson. I do apologise for interrupting the honourable member on his feet, but throughout Craig McNair’s speech, and now during Dr Lockwood Smith’s speech, a conversation has been going on between two MPs. It is not a short conversation; it has gone on for some time, and—

The CHAIRPERSON (Ann Hartley): The member will be seated. The member himself was speaking quite loudly. Indeed, I nearly called for order when Mr McNair was speaking, so I suggest that the member refrain from raising those sorts of points of order.

Rodney Hide: Point of order—

The CHAIRPERSON (Ann Hartley): Would the member be seated. I will not entertain spurious points of order. I am warning the member now.

Rodney Hide: I raise a point of order, Madam Chairperson. What I want you to do is point out to members that if they are going to engage in a long conversation—and successive Speakers have ruled on this—they should go into the lobby. I am not actually complaining, but it is very hard to hear. The conversation has gone on now through two speeches, and I think it is quite within the rules for the Chair to point that out.

The CHAIRPERSON (Ann Hartley): The member will be seated. There were several conversations going on, including his own, as I pointed out.

Dail Jones: I raise a point of order, Madam Chairperson. May I suggest that you ask those members who are having lengthy conversations to have them outside the House.

The CHAIRPERSON (Ann Hartley): Yes, certainly. They are aware of that.

Rodney Hide: I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): Please be seated. If it is a point of order on what I have ruled on—

Rodney Hide: No it is not. It is a point about consistency. I raised precisely that point of order. You did not rule in my favour. I know that Mr Dail Jones is probably more eloquent than I am and probably has more legal training than me, but he raised the point of order and you accepted it. What is going on?

The CHAIRPERSON (Ann Hartley): The member will be seated. The member is raising trifling points of order, and he will desist.

Dr the Hon LOCKWOOD SMITH: Clearly, the purpose clause does change the Government’s fiscal position because it provides the annuity to be paid to spouses after they remarry. It means that the old arrangements under the 1956 Act become consistent with the amendments that were made when the new schemes were brought in in 1985.

I do have a question for the Minister, and I want him to answer the question that my colleague Rodney Hide from ACT asked him. The commentary on the bill has not spelt out the fiscal costs. There clearly is a fiscal cost. Most members support the bill, but we deserve to know what the fiscal cost is. I expect the Minister in the chair, the Hon John Tamihere, to inform us of the fiscal cost. We know that he is in the chair because he is being punished. He is being punished for being a naughty boy and for saying things that the one who is not to be questioned—the Prime Minister, the Rt Hon Helen Clark—does not approve of. We know that.

David Benson-Pope: I raise a point of order, Madam Chairperson. We have already been down that road once this afternoon. Those comments are irrelevant to the part of the bill that is under discussion and need to be ruled out of order.

Rodney Hide: Madam Chair—

The CHAIRPERSON (Ann Hartley): Please be seated. I do not need any assistance. The member will keep to the issues in the part being debated.

Rodney Hide: Madam Chair—

The CHAIRPERSON (Ann Hartley): I do not need any assistance. Please be seated. It is my decision whether to accept a contribution to a point of order, and I am not accepting your contribution to this point of order. Please be seated.

Rodney Hide: I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Ann Hartley): Is it a new point of order?

Rodney Hide: Yes. It is quite appropriate to be asking the Minister in the chair questions when—

The CHAIRPERSON (Ann Hartley): That is not a point of order. Please be seated.

Rodney Hide: Well, what’s your ruling?

The CHAIRPERSON (Ann Hartley): That is not a point of order. The member is continuing to challenge the Chair. The member has been warned. The member will now leave the Chamber.

Rodney Hide: How long for?

The CHAIRPERSON (Ann Hartley): There will be no further comments on rulings I have made. The member will leave the Chamber until 10 to 6.

• Rodney Hide withdrew from the Chamber.

Dr the Hon LOCKWOOD SMITH: If one were to read the purpose of this bill, one would find that it has a fiscal cost associated with it. My colleague whom you have just demanded leave the Chamber asked the Minister, two speeches ago, to tell us what—

The CHAIRPERSON (Ann Hartley): Would the member be seated please. It is against the Standing Orders and Speakers’ Rulings for a member to refer to my ruling that a member withdraw from the Chamber. Please continue.

Dr the Hon LOCKWOOD SMITH: My huge apologies, Madam Chairperson. The fact is that my colleague asked the Minister, two speeches ago, to inform us of the fiscal cost of the purpose of this bill. A closure motion was moved before the Minister had even responded to Rodney Hide. Why is the Minister refusing to answer that question? Is it because the Prime Minister has muzzled him? Does he not have a note from the Prime Minister telling him what he can say on this bill?

If he continues to refuse to answer questions on the bill, the only conclusion we can come to is that he has been muzzled by the Prime Minister and therefore will not answer our questions. When a fiscal cost is associated with the purpose of a bill, we are entitled to have that answer from the Minister in the chair. I want the Hon John Tamihere to tell us whether he is allowed to answer questions on this bill or whether we are just wasting our time. Does he have the Prime Minister’s approval to speak on this matter, or has she forbidden him to speak on this matter? If the Prime Minister does not allow John Tamihere to speak on the Government Superannuation Fund Amendment Bill (No 2), he should get out of the chair and let into the chair a Minister who will answer our questions and does have the approval of the Prime Minister to talk on this issue. It is not within the procedures of this Committee for the Minister to ignore valid questions. Sure, the Minister can ignore stupid questions, but a question about the fiscal cost of the purpose of this bill is a perfectly valid question. The fiscal cost is not mentioned and is not in the commentary on the bill. If members read the commentary on the bill they will see that it tells us how many people might be involved, and how many children might be involved, but there is no estimate of the fiscal cost. It should be in the commentary on the bill. It is a fair and valid question for that Minister to answer.

DAVID PARKER (NZ Labour—Otago) : I move, That the question be now put.

PANSY WONG (NZ National) : Part 2 goes into some depth about the exact changes, the effect of those changes, and the time frame of those changes affecting surviving spouses, and also children. Even though this is a small bill, it is a bill that is supported by all parties in the House. The Government Administration Committee, of which I am a member, received submissions from the Government Superannuitants Association; the Law Society, who provided a very good technical amendment, which we accepted; and also the National Council of Women. I draw members’ attention to the submission made by the council. Although in general it supported the intention of the bill, it raised two very valid questions.

The first question was about when the changes would take place, and the second dealt with an issue that is not answered in the commentary on the bill. The Minister in the chair, the Hon John Tamihere, should take a call and answer that question. The council raised the issue of whether those changes will apply only to children under the age of 16. The council said that sometimes children over the age of 16 are still financially dependent, and asked why they are excluded from the entitlement. The officials told us—and we included the answer in the commentary—that discretions can be made to apply those entitlements to children over 16 years. But what are the criteria? We cannot find the answer anywhere in the commentary.

The National Council of Women has always been very diligent in making good substantial submissions. This submission was made by three joint standing committees of that council, which had a very genuine concern about the welfare of children who may be over the age of 16 but are still financially dependent. We were told by the officials that discretions can be made by the Government Superannuation Fund to ensure that those children get an entitlement under the scheme. But nowhere have we found the criteria. So the Hon John Tamihere, the Minister in the chair, must stand and answer the genuine questions posed by submitters about the criteria for those children who are still dependent. How do they know whether they are entitled to that discretion—that waiver—under the Government Superannuation Fund, which their parent had subscribed to?

The Minister should answer. It will be a sad day when a Minister is in the chair, but simply as a punishment because he somehow upset the Prime Minister, Helen Clark, and then refuses to answer valid questions. Every Minister who earns a salary, as they do, and sits in that chair, has an obligation to answer valid questions raised by members of Opposition parties. In this case the questions have been raised by the public. The National Council of Women spent time making submissions and wanted answers, but the arrogant minority Labour Government puts a Minister in the chair, who knows nothing about the bill, will not consult the officials, and refuses to answer questions from people who might be affected by these changes. How do they know? Where do they go to apply for these discretions? Even if they are over the age of 16 and financially dependent, where do they go and who do they ask? How do they know whether they might fit the criteria for that provision to be uplifted? I do not think it is good enough for the Minister to continue to sit there, not answering genuine questions raised by a member of Parliament, especially when the questions are raised on behalf of a substantial organisation, the National Council of Women.

CRAIG McNAIR (NZ First) : Dr Lockwood Smith had a very good point last night when talking about how only 800 adults and 19 children were affected by this bill. But even though it affects such a small number of people, it is still very important legislation, which is why New Zealand First will support the bill in its entirety. We support the aim of the bill, which is to repeal the provisions of the Government Superannuation Fund Act that suspend the payment of benefits to widows or widowers in the event of remarriage, and provide for the restoration of suspended benefits under those provisions. We also want to put on the record that we support the replacement of the prescribed fixed allowance paid to children of deceased members under the old scheme with the inflation-adjusted allowance provided for in the new scheme.

Once again, we feel this is a very important bill. It does not really matter how many people it affects; it is still very important legislation, and I am very proud, on behalf of my New Zealand First colleagues, to support the bill.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) : We are privileged now to have the Minister of Finance, who has deigned to return to the Chamber to sit in the chair on his bill. Maybe we might now get some answers, now that the muzzled John Tamihere is no longer in the chair.

Part 2 spells out the details of this bill, and there are a couple of issues I would like to ask Dr Cullen about. He will note that during the work of the select committee, clause 4(6)(b) was struck out. The commentary states that the committee struck it out to avoid confusion. I would like the Minister to look at that and satisfy himself that it was the right thing to do. Subclause 6(a) spells out that a person is entitled to an annuity under the provision of the principal Act, but as I read clause 4(6)(b), the amount of that annuity should be as if the person had been in receipt of all the adjustments to the annuity over time. In other words, if those adjustments are not taken into consideration, is the Minister satisfied that the legislative provision for the amount of the annuity is secure? When the bill was originally drafted, it is pretty clear that subclause 6(b) was put in there to make sure that the amount of the annuity that would be paid was clarified—not just that a provision was being made to pay an annuity, but that the amount was to be at a level that included all the adjustments made since the new schemes came into being in 1985. I would be interested in the Minister taking a call to advise us whether he is satisfied that clause 4(6)(a) on its own covers that aspect. I think it is quite important. We do not want to be passing legislation that provides for an annuity but does not actually tell the recipients how much they are entitled to.

During the earlier debate, Opposition members asked a perfectly valid question about the cost of this legislation. It is important because payments under the Government Superannuation Fund are defined benefits, so regardless of what happens to the fund, the benefit will be paid out. It is an important protection to those who receive annuities from such a scheme. Now with the scheme having lost so much money in the last 14 months—what is it, $380 million?—there is an issue about whether taxpayer funds will have to be used to enable the scheme to meet all its commitments. It is a defined-benefit scheme, and commitments have to be met. If they cannot be met from the scheme directly, as I understand the law, they must be made up by the Crown.

Those are the two things I would appreciate the Minister answering in respect of Part 2. The first is whether he is totally satisfied that the omission of clause 4(6)(b) does not leave any loose ends about the amount of an annuity a remarried spouse, or any children, might be entitled to under this bill. The second thing is whether, given the fact that the Government Superannuation Fund has lost a lot of money and is a defined-benefit scheme, there are any fiscal consequences for the Crown from this legislation, as we look ahead.

Those are perfectly reasonable questions to be asking, and I hope the Minister of Finance is in a better position to answer them than the Minister of Youth Affairs, who had been instructed that he was not allowed to make comments on areas outside his own portfolio. I guess he was too muzzled to answer our questions, and somewhat punished by being put in the chair on a bill that was not his. I am sure that if those questions could be answered, there would be a fair bit of satisfaction in the Chamber that Part 2 is in reasonable shape and therefore worthy of the support of the Committee.

Hon Dr MICHAEL CULLEN (Minister of Finance) : I think the member has raised a couple of quite reasonable questions, and I apologise for not having been in the chair. I have been to the dentist, so I apologise if I am slightly incomprehensible; the effect of the injection I had is still wearing off.

I am perfectly satisfied about the consequence of the removal of paragraph (b) in subsection (6) of clause 4. That means that the full amounts will be paid. Certainly, the Government Administration Committee was told that there could be a conflict of interpretation between paragraph (b) and paragraph (c), but, clearly, the full amounts will be paid, backdated to 1 July 2002.

The fiscal issue is quite an interesting point, but it is not affected by the short-term performance of the fund. Indeed, an appropriation had to be made for that particular provision, in any case—obviously in the 2002 Budget—because it comes into force on 1 July. The technical issue surrounding it was whether we had to accrue the full long-term net present value, if one likes, of the change in benefit. That would have been counted—I think it was $25 million—in one lump, which would have been quite difficult to do in any one year. In the end, it was determined that under the accounting rules it could be done on an annual basis—I think between $2 million and $2.5 million. But it is fully an appropriation, because it would not under any circumstances affect the amount to be transferred from the fund, so the additional amount has to be borne by the Crown account.

STEPHEN FRANKS (ACT NZ) : I rise to ask another question about Part 2. I do so aware that the Government Administration Committee may have examined this matter, and that there may be members present in the Chamber who could easily answer the question. However, the Committee stage is the right time to find out about it.

There is a statement that the purpose of the bill is to restore fairness and equity. I am never quite sure, in this context, whether those words mean anything other than the same thing, or, indeed, whether they mean anything at all. They seem to be thrown in when people want to say “this is a good thing”, and it is not clear at all that they had a particular unfairness in mind. But in a bill that is achieving fairness and equity, I am puzzled by the fact that the adjustments are backdated only to 1 July 2002. Surely if it is unfair now, it was unfair before that date. If it was unfair sufficient to justify what, from the perspective of the recipients, must be a windfall—because they will now have an entitlement that they never had before—then why do we limit the redress of unfairness to 1 July 2002?

That is particularly interesting, because one imagines that the Government Superannuation Fund—at least when it was originally established—had some sort of actuarial foundation. There was some kind of relationship between the trade-off members made in their primary salaries and what they saw as the benefit of their pensions. At the time when members were paying into the fund, it was seen as fair that one provided for a spouse, but that spouses who remarried would be provided for by the new partner. Therefore, there was no perceived unfairness at the time. What we are doing now is revisiting history to apply our current ideas of what is fair and unfair across financial arrangements that were made in quite different circumstances.

I am quite prepared to accept that the conscience of the Government sees it as important to change the rules now and apply a new sense of fairness, but why is there no back-payment? What is the justification for choosing 1 July 2002 as a cut-off date and not 1 July 2001, or 1 December, or any other date? If this were not just a matter of politics, if there were some reason that it is fair from 1 July 2002 but not before, I would have expected the select committee to mention the principle on which it made that assumption in its report. Instead, there just seems to be assertion, as though it were absolutely self-evident.

Not having sat on the select committee or been present in the earlier part of the debate, I imagine that that is the sort of thing the Minister in charge of the bill should be able to address very easily in the Committee stage. He should be able to explain exactly what that principle is, how those members’ sense of fairness is not outraged by their loss before the start date, and how they feel assuaged now—to the point where not only is inequity being addressed but also unfairness, whatever the difference between those two is. Perhaps the chairman of the select committee that advised that this bill achieved fairness and equity could help us by explaining what the committee meant. Certainly there are members of the select committee present, including its deputy chairperson. I am sure she would be quite happy to explain, in terms of removing discrimination, just what was significant about the date of 1 July 2002.

Of course, when the word “discrimination” is thrown in, we are all supposed to genuflect and suspend reason, because discrimination of all kinds is inherently wrong—even, according to this Government, discrimination against bad people. We are not to discriminate against criminals.

DAVID BENSON-POPE (Senior Whip—NZ Labour) : I move, That the question be now put.

Hon Dr MICHAEL CULLEN (Minister of Revenue) : I move, That the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill be now read a second time. The Finance and Expenditure Committee has carefully considered the bill, and reported it back in December.

The single most important feature of the bill is the introduction of legislation that modernises the taxation of organisations that manage Māori assets held in communal ownership. These organisations, which are known in tax law as Māori authorities, range in size and functions. They may be trusts that manage a single asset, such as a small block of land that involves only a few owners. At the other end of the spectrum they may be large organisations with diversified holdings that involve hundreds, or even thousands, of individual owners, or they may be organisations that receive treaty settlements assets.

Organisations that manage communally owned assets face problems not encountered by ordinary companies and trusts. Communally owned assets cannot be easily sold, and severe restrictions are often placed on their use by specific legislation or Government process. We have always had specific tax rules designed to deal with the administration of Māori freehold land and other tribal assets, and they will continue to be necessary, just as specific rules for other groups of taxpayers are necessary.

The present rules governing Māori authorities were last revised in the 1950s and are now badly out of date. They have become unwieldy, do not mesh well with other tax laws, such as dividend imputation, and now must apply to a much wider range of activities than envisaged half a century ago. They impose unnecessary complexity on contemporary Māori authorities, create high compliance costs, and in some cases double tax income. The new rules introduced in this bill provide greater flexibility and choice for Māori authorities. If they wish to do so, they will be able to apply the general tax rules instead, which may be more efficient for some of them. The proposed changes will enable them to structure their affairs more efficiently, whichever tax laws they use.

The bill tightens the definition of Māori authorities for tax purposes. They will include only those organisations that manage communally owned assets, and whose ownership and administration are subject to certain statutory restrictions or Government processes. Not all organisations that qualify as Māori authorities under the present definition will do so under the new definition. The committee has recommended clarifying that the definition includes entities that are subject to the legislative restrictions of the Maori Land Act, and bodies that receive and manage Treaty of Waitangi settlement assets, including fisheries assets. The Government agrees with these changes.

The measure that has generated most heat in some quarters is the proposal to introduce a tax rate of 19.5 percent on the income of Māori authorities. Some have claimed that this would introduce favourable tax treatment based on race. This is simply untrue. This measure does not apply to Māori as a group, it does not apply to all businesses run by Māori, and it does not apply to all organisations that manage communally owned Māori assets. To reiterate a point of fundamental importance, the 19.5 percent rate will apply only to organisations that manage communally owned Māori assets that have heavy restrictions on their use and management imposed upon them by legislation or Government process. There is a simple rationale for that rate. It is the rate at which all New Zealanders pay tax on the first $38,000 of their income. Since 90 percent of the owners of tribally owned assets are estimated to earn less than $38,000 a year, 19.5 percent is the statutory rate for that vast majority. Tax from Māori authority income will be paid at the authority level, at the rate that is most sensible for the vast majority of members.

From an administration perspective—which costs taxpayers money—it is much simpler to withhold tax at the statutory rate for most members than to withhold it at a higher rate and require most members to seek tax refunds at the end of the year, particularly because, in this case, many of the individual owners have very small amounts of assets involved, so the level of tax rebate involved in many, many cases will be very small. We are talking in terms of a figure of between 19.5c and 33c of a rebate of $10, $20, $30, or $40, in many cases. It is administrative nonsense to impose that kind of burden, not on the Māori authorities, but on the Inland Revenue Department and the taxpayers who fund the Inland Revenue Department. To accuse that of being racism is simply to get one’s hat on completely upside down and wonder why it is getting full of water.

Let me cite an example of the difficulties a higher tax rate creates in this case. The Māori Trustee, which administers over 2,000 properties, makes distributions to over 50,000 individuals a year. The average size of these distributions is estimated to be about $135; if it were taxed at 33c, the average refund due would be less than $20 for those 50,000 people. That does create real compliance costs.

The estimated 10 percent of owners who are on a higher statutory tax rate will pay the remaining tax on the income at that rate, when the income is distributed by the Māori authority. Individual Māori will not benefit from the 19.5 percent rate if they are higher-income earners, because they will still have to pay tax at 33 or 39 percent when the income is distributed and they put in their annual tax return.

The committee considered the many viewpoints expressed in submissions on the bill. The main change is to remove wholly owned companies from the 19.5 percent rate, because it can be argued that that would give them a competitive advantage against similar companies operating in similar areas of activity. But let me say that is a fine judgment, and there is still a theoretical argument in favour of imposing a 19.5 percent rate. It is a compromise, but a fair compromise.

There are many other important changes in this bill, and, particularly, very many taxpayer-beneficial changes—for example, taking into account taxpayers’ good behaviour when imposing two of the five categories of tax shortfall penalties. The committee also recommended amendments that recognise that taxes paid more frequently, such as GST, offer more room for taxpayer error, so need a more concessionary approach. The Government agrees with those recommended changes. The bill also, of course, provides for the annual approval of the statutory rates of income tax.

An amendment added to the bill after its introduction exempts people visiting New Zealand as crew members of superyachts from paying income tax in New Zealand. It is clear that the present law, if enforced, would simply lead to those people exiting every 6 months to go somewhere else, and we would probably lose some of the maintenance work that we do on those superyachts within New Zealand.

So this is a very important bill. It incorporates an important change. We will hear much huffing and puffing about so-called race-based taxation. It is totally meaningless for that to be said, but that will not stop a number of gums beating together at great length over the coming period of time.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) : This bill obviously contains several elements. I agree with the Minister of Revenue that those relating to compliance costs are positive for taxpayers. The issues relating to penalties being more appropriately adjusted to the crime being committed by a taxpayer, and the effort to improve use-of-money interest arrangements to allow tax pooling, are positive measures. But the bill contains two sets of measures that the National Opposition cannot accept.

The first is that this bill confirms current tax rates and the current tax brackets. I wish Dr Cullen was able to hear this point. The recent OECD analysis showing that New Zealand has the second-highest increase in income tax of any country in the OECD other than the Czech Republic, for an average wage-worker—or production worker as the OECD calls it—relates partly to our tax rate system and the tax bracket system. Over the years in which the OECD has done this analysis, the average wage of a production worker in New Zealand has been right at the cusp of the 19.5c-33c change. If we look at the data that the OECD has been working on, we see that the actual New Zealand dollar average wage of that production worker, which it is all based on, is exactly $38,000 or $39,000. So we have a whole shift in the number of people starting to pay 33c in the dollar instead of 19.5c in the dollar. The Government is collecting far more income tax as a consequence. The OECD has pointed out that this Government is taking more income tax off ordinary, working New Zealanders. The increase is bigger than for any other country in the OECD, other than the Czech Republic—bigger by far than for any other country in the developed world, other than the Czech Republic.

Here, with this bill, we confirm the existing rates and existing tax brackets that are doing that to ordinary, working people in New Zealand—and National opposes that. The Government should not be doing that; it should be thinking about what its tax policy is doing to ordinary, wage-earning people, but, clearly, it just does not care. We hear the rhetoric about this Government caring about ordinary, working families but, clearly, with this bill it does not care a jot. The fact that it is clawing a bigger increase in the income tax take off the ordinary, working family in New Zealand than in any other country in the developed world does not seem to worry it. With this legislation the Government confirms the very rates and the very tax brackets that are doing that to our average family in New Zealand. If it cares to look at the OECD analysis, it will see that our average worker in New Zealand is sitting right on the cusp of the shift from 19.5c to 33c—just over that cusp—and that is one of the reasons this Government is clawing so much more tax off the average worker in New Zealand.

That is the first thing National objects to, and one of the reasons that we oppose this bill—despite the useful compliance measures in it. But the second problem with this bill is one that worries us even more. Dr Cullen tried to write it off as if it were not serious and significant, but it is serious and it is significant. For the first time that I am aware of in this country’s history, a favourable tax rate is being applied on the basis of race. Whatever way one looks at this bill, one cannot reach any other conclusion.

Clayton Cosgrove: Rubbish!

Dr the Hon LOCKWOOD SMITH: Clayton Cosgrove sits over there and says “Rubbish!”. I want him to identify one other racial group in New Zealand—just one, other than Māori—whose businesses will receive this favourable tax rate of 19.5 percent. Is there a Pacific Island business that will receive this favourable 19.5 percent tax rate? Is there one low-income group of European descent that will receive this 19.5 percent tax rate for its business? There is not one. The only businesses in New Zealand that will receive this favourable 19.5 percent tax rate are Māori businesses. It is not good for the future of this country to make our tax law on the basis of race. That is wrong, whatever way one looks at it.

Having said that, I acknowledge there is a problem with the taxation of Māori authorities. I am not being blind to the problem, which a lot of people will not understand, so let me explain it very clearly. At present, if a Māori authority distributes its profits, it is treated like any other business. It pays 33c in the dollar tax, which is imputed so that any persons receiving a share of those profits do not need to pay any more tax than their normal statutory rate. There is a problem, though. A Māori authority that does not distribute its profits is taxed 25c in the dollar—25 percent. If it does not distribute that profit within 4 years, but does distribute it thereafter, that 25 percent tax is not refundable. If the profit is not distributed within 4 years, that 25 percent tax is not refundable. Therefore, if it distributes after 4 years, there is an issue of double taxation. I accept that. Although I say, and although National says, that it is wrong to give special taxation treatment on the basis of race, it is also wrong to have double taxation of some people in this country, and doubly wrong should that double taxation apply only to Māori organisations. So I accept that there is a need to remedy that flaw in our tax law. That is absolutely accepted.

But we do not fix up one inadequate piece of law by replacing it with legislation based purely on race that confers a tax advantage on a race. For Dr Cullen to say that it does not confer advantage is not consistent with what the Finance and Expenditure Committee found. The select committee recommended that wholly owned subsidiaries should not be included. The reason the select committee suggested that—and Clayton Cosgrove was the chair of the committee—was that it could see that if a business was being taxed at a lower rate on profits that it had retained, it had a competitive advantage in being able to invest more money in the future. It paid a lower tax on profits, had more money to invest, and therefore was at a competitive advantage. David Parker, a new Labour member—he is an accountant—accepted very clearly the reality of that competitive advantage. The Government members of the select committee accepted that wholly owned subsidiaries should be excluded from this favourable tax rate.

This is the sharp point. There are among Māori organisations businesses that are not wholly owned subsidiaries but come within the definition of Māori organisations in this bill. Major farming businesses, some of the biggest farming businesses in our country, will be able to compete ahead of other farming businesses, to reinvest more in their business, because they will be taxed at a lower rate. That is wrong. We do not fix up one problem by implementing an even greater wrong. Conferring greater benefit on the basis of race is not right for this country.

I urge Labour to rethink what it is doing here. This will be very divisive. It is not good for New Zealand’s future. It will result in disharmony. It does confirm privilege under our tax laws, purely on the basis of race. We reject that, and I think most sensible, right-thinking New Zealanders will reject that. The Government should go back to the drawing board and remedy the problem around the taxation of Māori authorities with new legislation that does not confer privilege on the basis of race. It is morally wrong to do that.

GORDON COPELAND (United Future) : I rise in support of the second reading of this important bill. Many of the bill’s provisions are non-controversial and are aimed at both reducing compliance costs for taxpayers, particularly businesses, and clarifying areas of uncertainty with regard to the present law. These provisions will be welcomed by all taxpayers.

For example, the provisions relating to charities will, I believe, be welcomed by that important sector. The change made is relatively minor, but it is a precursor to the Government’s announced intention to establish a charities commission that will register and monitor the activity of that sometimes under-appreciated sector of New Zealand society. It is a sector that United Future wants to see strengthened in every way possible, because it is so fundamentally important to the functioning of a robust civil society. For example, research estimates that a dollar of social benefit delivered to families and individuals through charities would cost the taxpayer $2, were it to be delivered through the Government bureaucracy. Peter Drucker, the guru of modern management and organisational excellence, has concluded that charities are the most efficient organisations ever devised.

There is one aspect of this bill, however, that has proved to be controversial, and it relates to the new Māori authority tax regime. That has been signalled already by Dr Cullen, and was well exemplified by the speech we have just heard from the Hon Lockwood Smith. It is a pity that this has become controversial because, from a tax policy point of view, the matter is clear and straightforward. The new rules simply align the rate of tax paid by a Māori authority with the marginal tax of its beneficiaries. In this particular instance, a 19.5c in the dollar rate has been struck, because that is the rate that will be paid by 90 percent of those beneficiaries. This, in my view, is exactly right in principle, just as it would be right for a rate of 39c in the dollar to be struck if 90 percent of the beneficiaries of Māori authorities were in that tax bracket. Business New Zealand and other submitters to the Finance and Expenditure Committee expressed their wholehearted support for the new Māori authority regime and specifically asked the Government to extend its principles into other areas, such as superannuation and life insurance funds, so that there, too, the tax rate paid will coincide with the marginal tax rate of the members of those funds. Dr Cullen has indicated that, at least in principle, he agrees with those submissions.

However, the point I want to emphasise is that Māori authorities, as defined in the bill, are a reality and have their origins in the culture and customary practices of Māori prior to the arrival of other races in Aotearoa New Zealand.

If our history had been different, and the authorities involved were Vietnamese, Chinese, English, or Scottish, then that would not alter one iota the principles involved, and any pretence to the contrary simply does not stand up to the analysis of common sense. In my judgement it is mischievous and shallow to attempt to classify the situation as an example of race-based laws. In that connection, I add that it is also the conclusion of well-known tax commentator by the name of John Shewan of PricewaterhouseCoopers, who has also come out publicly and said that this is not an example of a race-based law.

However, the other discussion on this issue centred on competition—the point dealt with by Dr Lockwood Smith. The argument was that the 19.5 percent rate for Māori authorities would give them a competitive advantage over other types of businesses that may be paying tax at, say, 33c or 39c in the dollar. I felt that argument was put to bed very clearly by Robin Oliver, the general manager of tax policy for the Inland Revenue Department. He pointed out—in my view, entirely correctly—that so long as we have a progressive tax system in New Zealand, determined by income bands, then similar organisations with relatively higher or lower tax would end up paying tax at different rates.

Let us take an example. Let us suppose that there are two sole-trader panel-beating shops operating alongside each other. One shop is not faring too well, and its owners are paying tax at 19.5c in the dollar. For the benefit of Dr Lockwood Smith, I would like to point out that it does not matter whether that panel-beating shop is owned by a Chinese, a Vietnamese, a Scotsman, or an Irishman—it has nothing to do with race. The other shop is a roaring success, and its owners are paying tax at 39c in the dollar. [Interruption] I am responding to the member’s challenge to Clayton Cosgrove to name any business owned by other than Māori that would be paying tax at 19.5c in the dollar. I am saying to him that any sole-trading panel beater of whatever race who is in that income bracket will pay tax at 19.5c in the dollar. In those circumstances, how can we claim that the business paying the higher tax rate is at a competitive disadvantage? In fact it is obvious that it is exactly the other way around, and that the poorer business—the guy who is making less money—is struggling. That exactly parallels the situation here.

Whilst it may be true that profits retained by the Māori authority, at least from a timing point of view, attract tax at a lower rate than income retained by businesses paying, say, 33c in the dollar, that is only one side of the coin. The other side, alluded to in my example of the panel beaters, has to do with the overall wealth of the organisation and, in particular, its access to new capital funding. When it comes to new capital, Māori authorities are in reality at a competitive disadvantage for two reasons. Firstly, as mentioned above, 90 percent of their shareholders or beneficiaries are in the lowest income tax bracket—hardly a fruitful source for new equity. Secondly, lending institutions are sometimes more reluctant to lend, or lend at higher interest rates, because of the communal land ownership structures that are a feature of these organisations. Personally, I am entirely satisfied that when we look at the bigger picture the competitive argument can safely be dismissed.

Perhaps I could conclude by emphasising how important it is for Māori business in New Zealand to flourish. As a nation we have growth aspirations, and that will not happen unless Māori business also lifts its game and becomes more profitable. For that reason I would be very satisfied indeed if I should live to see the day when 90 percent of the beneficiaries of Māori authorities were paying tax at the top end of the bracket rather than at the bottom. United Future will support the second reading of this bill.

Hon DAVID CARTER (NZ National) : I was intrigued by that contribution from the United Future man Mr Gordon Copeland, in which he attempted to argue to justify the special tax rate that has been apportioned to Māori authorities. It seemed to me that his basic tenet for his argument was that Māori were in this country first.

Clayton Cosgrove: You were the finance spokesperson?

Hon DAVID CARTER: I will add to that. I was also the chair of the Finance and Expenditure Committee that the member now chairs. I tell that member that if I had been there chairing the committee on this bill, I would have done a far better job of this legislation than has been done with it.

Clayton Cosgrove: Why did Bill English sack you as finance spokesperson?

Hon DAVID CARTER: I do not know. The member will have to ask him. I tell him though, that I have far more confidence in the man who is now our spokesperson on finance than I have in the person who is the Labour Party spokesperson on finance. I am absolutely sure of that.

I want to speak about the special rate that has been created for Māori organisations. It does mean that there is a competitive advantage. People in business will now have the ability, if they are a Māori authority, to pay tax at a lower rate than a business operating right next door that is carrying out exactly the same business activity.

Hon Tariana Turia: Be a Māori and try to get a loan from a bank.

Hon DAVID CARTER: This legislation has nothing to do with getting a loan. This legislation sets the tax rates, and the tax rates are paid only when that business is operating at a profit. I tell the member that this legislation has nothing to do with getting loans. One of the most successful corporations in the South Island is Ngāi Tahu Holdings Corporation. It has done a superb job, but it will now have a tax advantage. I sat on the Finance and Expenditure Committee briefly when Ngāi Tahu appeared before it arguing in support of this legislation. I asked Ngāi Tahu whether it was in a takeover for Shotover Jets, a business that at that stage was, and I think still is, listed on the Stock Exchange, and it said it was. I said to Ngāi Tahu: “Having then successfully taken over that company, you’re going to argue to the select committee that it should pay a tax rate of 19.5c in the dollar, whereas Kawerau Jets, which operates in opposition to it, would then have to pay tax of 33 cents?”. To be fair to the select committee, as I was on it only for that day, I understand that it has picked up—[Interruption] Mr Chairperson, could I have a little bit of silence to outlay this argument.

The CHAIRPERSON (H V Ross Robertson): I remind members that running commentaries are out of order. If they would like to check that, they can look at Speaker’s ruling 51/5(3).

Hon DAVID CARTER: I pointed that out to the select committee, and, to its credit, it now says that if a business such as Shotover Jets is a wholly owned subsidiary, then it should not be entitled to the special concessionary tax rate. That goes some way to strengthening my argument that it is a concessionary tax rate. Let me tell members that any sharp accountant now has the opportunity to minimise the tax that companies will pay on a successful, wholly owned subsidiary and end up making sure that the tax they have to pay is within the Māori organisation. They will therefore be paying it at 19.5c. If companies cannot employ accountants who can engineer that, then they have a problem with their accountancy company. So they will have a competitive advantage.

Let me take another industry in which Māori are very significantly involved and in which they do a very good job—agriculture. Many of their farms are owned collectively and are Māori organisations. They might exist right next door to a farm that is run, or owned, by Polynesians, Chinese, or Pākehā New Zealanders.

Hon Tariana Turia: Individual choice.

Hon DAVID CARTER: Yes, individuals. Now, under this legislation, they pay substantially different tax rates. I say that is unfair.

Hon Tariana Turia: Most of them are beneficiaries.

Hon DAVID CARTER: Tariana Turia just keeps on interrupting. Because of the state of this economy, most New Zealanders are not paying the top tax rate. Most New Zealanders, who may own a few shares in a company like Air New Zealand, do not pay 33c in the dollar. But do we create a special exemption for them? No, we do not. So members should not come into this House and suggest that this legislation is not racially based, because it is. This legislation is racially based, because it gives one tax rate to people who are Māori, and that tax rate is not available to anybody else.

David Benson-Pope: What’s that member’s solution?

Hon DAVID CARTER: Mr Benson-Pope now wants me to do the tax rate for the Labour Party. I will do it, instantly.

Jill Pettis: How?

Hon DAVID CARTER: By bringing down everybody’s tax rate to 19.5c. That is the answer. It took as long as that to think of the answer. That is the solution. If everybody’s tax rates were brought down, there would not be this problem.

Darren Hughes: Why not 19 percent, like yours?

Hon DAVID CARTER: Mr Hughes does not know my tax rate—he does not know whether I am on 19 percent—and I am not about to tell him what it is.

The other point I want to comment on is that this legislation also cements in the annual tax rates. I do not want to let an opportunity go by without saying that the tax rates in this country are now constraining growth. Helen Clark comes into the House in question time, and time and time again she says there is no relationship between tax rates and growth, and she would be the only informed economist in the world who would argue that. Even Dr Cullen cringes when Helen Clark makes those sorts of stupid remarks.

Darren Hughes: Lindsay Tisch believes that.

Hon DAVID CARTER: Lindsay Tisch can speak for himself, and very shortly he will. He will make a very good speech. Two things are wrong with the current tax rates, and there was an opportunity to do something about them. We had the stupid legislation that increased the envy tax—the 39c in the dollar tax rate—in the year 2000. In fact, as a result of the surpluses, it has been proved that the Government never needed to do that. It created all that inconsistency in tax law and resulted in people having to rush off to their accountant and say: “Corporatise me, because I don’t want to pay 39c.” Thousands of people have done that. Sure, they have complicated their own tax affairs, but they are not paying 39c. It is relatively easy to set oneself up. But the sad thing is that the Government never needed to do it. It gained the Government around $400 million, and that has not been necessary—

David Cunliffe: Robin Hood in reverse.

Hon DAVID CARTER: Robin Hood in reverse? No, no. I come from a different philosophy from David Cunliffe’s. I do not think that because people are successful they should be penalised with more taxes. That is a nonsense point of view, but I acknowledge that some people in the Labour Party feel that people should not be allowed to be successful, and that if they are successful, we should drag them down by putting up tax rates.

My final point is one that Dr Lockwood Smith also made. It is about the recent OECD report that pointed out that it is actually ordinary New Zealanders who, because of the cusp they are finding themselves on—they are moving into the next tax bracket, about $38,000—are paying far more tax now than they were. Lockwood Smith gave some very credible figures from that OECD report—

Hon John Tamihere: Oh, yes! Very credible.

Hon DAVID CARTER: —that is, if members accept the OECD reports. Mr Tamihere might have a “BS” description or a “blankety-blank” description of it, but I do not.

Clayton Cosgrove: I could use one about this member’s speech.

Hon DAVID CARTER: I guarantee that Clayton Cosgrove has not even read the report, which clearly states that people are paying more tax than they need to.

CLAYTON COSGROVE (NZ Labour—Waimakariri) : That was an amazing speech, for a number of reasons. First, for the first time in history David Carter admitted that Bill English did sack him as the Opposition spokesperson on finance—and after that contribution, is it any wonder? The other startling thing in this debate is that the Minister of Finance got up—it is his bill—and spoke, but there was no call from Don Brash, the Opposition spokesperson on finance, the one who blew David Carter away, the one Bill English put in ahead of David Carter. I invite Don Brash, the Opposition spokesperson on finance, to get up and take a call.

We heard some contributions from Dr Lockwood Smith and David Carter that basically dealt with two concepts. The first was the issue of high tax. They rabbited on about how, allegedly, New Zealanders are overtaxed. Dr Lockwood Smith said—I think this was the phrase he used—that these taxes impact on working-class New Zealanders. But he never acknowledged that a significant, positive impact on working people and people down on their luck is what Governments do with their tax revenue. Governments can provide, for example, State housing—which that mob sold off—decent health-care, and social services. That also has, on the revenue side, a positive impact on working people down on their luck.

Lindsay Tisch: There are people living in caravans now.

CLAYTON COSGROVE: The gnome at the end of the garden, who keeps interjecting on me, should actually stop, take a breath, and listen. The other issue that the National Party members raised, in a sort of a race to win the redneck constituency, was that Māori, based on race, are getting a better tax deal. I will make two points about that.

Lindsay Tisch: Well, they are.

CLAYTON COSGROVE: I make two points to “Papa Smurf” over there. One is that a special tax rate for Māori has been around since 1939, and there has been the odd National Government in power since 1939. Why is there a special tax rate? Put simply—and I know that the scales will fall from that member’s eyes—it is because Māori authorities are different from commercial, private sector entities. Why? They have constraints on them that other commercial, private sector entities do not. Mr Tisch says he is a businessman. I say: “Wakey, wakey! Prove it to us.”

What are some of the constraints? Communal ownership is a constraint. Mr Tisch owns a business. If he wants to dispose of his business or his assets—and if his shareholders knew who were running it, they would probably want that to happen—he can sell them. A Māori authority does not have that ability. Yes, it has shareholders, and, yes, it has beneficiaries of those assets, but they are communally owned. I say again to that member: “Wakey, wakey! Get the concept!”. Those authorities cannot dispose of the assets. They have certain commercial constraints on them. They cannot market their assets as that member can, with his estate, or his business, or whatever he has. Therefore there is a disadvantage.

I ask that member this: why, if that policy is so wrong, did his Government and subsequent National Governments since 1939 not correct it? Why did Dr Lockwood Smith, who was in Government when there was a special tax rate, not stand up then and make the lofty, redneck speech he made today? Because deep down he knows that this policy is right. He sat on the Finance and Expenditure Committee, and I was chairman, and he made a positive contribution—more positive than he did today, I have to say. He knows that this is right because of the constraints on Māori authorities. [Interruption]

I say to Mr Tisch, who is interjecting, that I am dumbfounded that we have not heard from Dr Brash. Maybe the reason that he has not taken a call today is that, unlike Mr David Carter, a member of the C team, and unlike Dr Lockwood Smith, he actually deep down believes that this policy is right. Deep down he believes and understands—unlike Mr Tisch, Mr Carter, and Dr Smith—that this is appropriate, because he understands the commercial constraints put on Māori authorities.

I say in conclusion that we have been attacked because of tax rates. The only solution that the National Party put out today, in response to interjections from our side, was a flat tax.

Lindsay Tisch: Lower all taxes.

CLAYTON COSGROVE: Say it again, so that the people can hear! Mr Tisch says: “Lower all taxes.”—a flat tax. That is exactly the policy for which National was done over by the electorate, the policy that the people of New Zealand rejected—not once, but twice. They will do so a third, a fourth, and a fifth time, and for ever more. [Interruption] The ACT party member joins the cry for a flat tax; his leader wants one as well, and that is why he has only seven, or eight and a half, or nine members, or whatever it is.

One fact that the National Party will never stand up and acknowledge is that, regardless of what it says about our tax rates, we have achieved growth of 3.9 percent, one of the best in the OECD—

Lindsay Tisch: Ha, ha!

CLAYTON COSGROVE: Mr Tisch laughs. I thought he was a man with some commercial and economic acumen. Obviously, that notion has been blown away.

We have created 123,000 new jobs. Unemployment is at a 20-year low—4.9 percent. I come back to it: we get criticised by National members for our tax rates, but there is no policy solution from them. They fail to acknowledge that the more important thing is not the tax rate but what a Government does with the tax, what it does to redeploy that revenue to our communities where it is needed—to our working people, through housing, the health system, and social services, and so on. That outfit across the floor—I say “outfit” because it is not really a political party—never did that in 9 years, and that is why—[Interruption]

I can handle “Papa Smurf’s” interjections—no problem. I relish them, because every time he interjects he shows his ignorance, and every time he interjects he puts another nail into the National Party coffin, because he has learnt nothing and his party has learnt nothing. The people told that member twice, in two elections, that they reject a flat tax, that they reject his policy. But, no, National members have nailed their colours to the mast. I, as a Labour Party member, am pleased they have. I really am rapt they have not changed their policy. They have changed their spokesperson on finance three times, and the failed one got up to take the call on this bill. He is the one who spent only 5 minutes on the select committee, the failed one, the one who got sacked. Dr Brash has not got up and taken a call, yet he is the Opposition spokesperson on finance. He may well want to get up and take a call, because I think there is a shred of decency in Dr Brash. Probably, the reason that he has not taken a call is that he actually agrees with this bill.

I commend the bill to the House. I think it is sound legislation. I endorse Mr Copeland’s speech, and he made a fantastic contribution to the select committee. I hope we can get away from the redneck, racist, despicable sorts of antics that we have seen in this House, and actually talk about some solutions and the positive nature of this bill. I endorse the bill.

CRAIG McNAIR (NZ First) : I take pleasure in rising to speak on behalf of the New Zealand First Party, on behalf of my New Zealand First colleagues, on the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill. I had to take a big, deep breath to say that; it is a quite long title. But I am not going to criticise the Government for having a long title; we are not speaking to the title.

• Debate interrupted.