CHESTER BORROWS (National—Whanganui) : I rise to speak against this bill, not because there are not a number of valid provisions within the bill but because there are some that actually detract from it, quite significantly. I am pleased to see notifications of abuse included. When children disclose abuse, there should be a fast track for those matters to be investigated and to be exposed. The fact is that when children disclose abuse they disclose it to an adult because they want to make it stop, but for years and years we have seen the professionals working in the area do everything they can to move away from a position where they have to take action seriously on the disclosure of abuse, hiding behind some perceived relationship they may have with the child, or with the parents of that child, and failing to take concrete action. Unfortunately, the abuse has gone on from there.

I am also pleased to see a provision where family group conferences for care and protection matters have a 30-day time limit. I have to say that I do not see any need for there to be legislation around this particular concern, as it is one that goes on and on, time and time again. I am reminded of the last time that I was sitting in the Youth Court in South Auckland, at Manukau, and watching a number of matters come before the court. For five of the matters called before the court—in fact, for the first five matters called before the court—the young person was not available nor were their parents. The reason was that they had not been served any notice by Child, Youth and Family social workers to say that the matter was going ahead.

I have attended two family group conferences in recent weeks and on one occasion the proposals for resolution put before the family group conference—for endorsement as a proposed resolution of the conference—did not stack up, because the positions that were possibly available and open as a resolution had not been confirmed by the providers. So those present at the family group conference were asked to endorse a proposal that had no end to it.

I am also pleased to see in the bill the removal of the requirement of consent from young persons before they can be given a sentence of community work or supervision with activity. I think it is absolutely ridiculous that this legislation, which had its genesis in 1989 and in which the young person has the option as to whether they are going to be engaged in community work or be sentenced to a term of supervision with activity, has lasted so long. It is no surprise to me that high-end offenders who are sentenced to these sorts of programmes, such as supervision with activity or supervision with residence, may choose, in effect, to go to jail. There are a hell of a lot more brownie points amongst their associates on their having done what they perceive to be a lag than there are on their going on a course of supervision with activity that involves them being in unfamiliar territory, on their own without their mates, and without any way of connecting with street gang affiliations, for instance.

I am also pleased to see within this legislation the provision that young persons who are aged as young as 14 will now be able to be commuted to the District Court when the charge is a purely indictable charge. The problem with that is that it addresses only the very, very high-end offences, which are the purely indictable offences such as arson, rape, aggravated robbery, and suchlike, but it does not address those offences young people are engaging in that we are becoming more and more concerned about.

In the last 9 years we have seen an escalation of youth violence by 47 percent—that is, a 47 percent escalation in youth violence. Yet, for instance, if a person beats someone up on the street and uses extreme violence, and is charged with robbery as a 14 or 15-year-old, then that person cannot go through to the District Court for sentence because it is not a purely indictable offence. If a young person beats someone up with a baseball bat and is charged with assault with a weapon, then he or she cannot go through to the District Court for sentencing. That seems to me to be a ridiculous situation, when cases of extreme violence are those that are of most concern within the jurisdiction at the moment. The escalation in youth offending in violent offences is higher than in any other class of offences young people are appearing before the court for at the moment.

In a similar vein, a young person who has committed, for instance, sexual offences that do not amount to rape or unlawful sexual connection will not be able to appear before the District Court, either. A young offender could commit a series of offences that amount to indecent assault and may have a well-discerned problem with those offences—and may well even have been previously sentenced for those offences—yet he or she still cannot appear before the District Court for sentence, or access the programmes available through the District Court. I think that that is ridiculous.

The reason why National will not support this legislation lies principally around three points that the bill does not address. For instance, the bill seeks to raise the age of a young person who can appear before and be dealt with by the Youth Court from 17 to 18. Currently, the situation is that if a person is under the age of 17, then he or she will be dealt with in the Youth Court. This legislation raises that level so that if a young person is under the age of 18, then he or she will be dealt with by the Youth Court. I wonder whether members can consider what they were doing when they were 18, because I know that a number of us at the age of 18 were working in adult jobs and being treated as adults with adult responsibilities. There are people in this House, I think, who were parents at 18.

The other day there was a photograph on the front page of the Taranaki Daily News showing two young people who had been encouraged by the Ministry of Social Development to set up home together. They are still at high school, so they have decided that that is what they will do. There is a lovey-dovey story and a big colour photograph of them, having become engaged, setting up home together. They have made a decision to shack up. This Government would say to them that they are still children, yet at the same time it has encouraged them with a series of benefits whereby they can carry on living as children.

The youth justice accommodation as it is at the moment, the supervision with activity, is absolutely filled to the brim. For instance, on a recent visit to the Rolleston youth justice facility we met a 15-year-old who was serving his fifth term of supervision with residence. It is his fifth term of 3 months’ duration. In fact, most of the people we spoke to on that day had served multiple terms of supervision. At the last family group conference that I attended, which was in the last couple of weeks, the 15-year-old—

Jill Pettis: Name dropper.

CHESTER BORROWS: There are no names involved. The 15-year-old offender who had broken into a house while armed and had stolen a vehicle, along with his 17-year-old brother who was on parole, was being dealt with before the family group conference. The 17-year-old of course, under this legislation, would still be appearing before the Youth Court.

National believes that Labour has spent its time trying to minimise the effect of youth offending. We note, for instance, within the graffiti bill, which is currently before the Law and Order Committee, that it is an offence to sell a spray-can to a youth under 18 years of age, but there are no possessory offences for the under-18-year-old to be caught red-handed with the can, about to spray it on a clean fence. It seems ridiculous to me that there is no possessory offence for the person who is going to do the tagging, but there is a $1,500 fine open to the person who sells the spray-can.

National believes we need to be holding these young people to account. National believes that if someone is between 17 and 18 years of age, then that person should be treated for the adult that he or she is. National will not be supporting this legislation.

JILL PETTIS (Labour) : That was a classic case of “that was then and this is now”. I have every newspaper clipping in which Mr Borrows, the member speaking previously, has ever been quoted. I keep the lot of them. I have newspapers that go right back to 1935, and sometimes that member looks as if he were born in 1935. I remember when that member was acting as a 5-minute lawyer. There he was, defending somebody who was found guilty of breaking the law. Now, here he is, in this environment, defending that very slippery behaviour of Mr Key—the very shonky behaviour of Mr Key. There he is, up there like a faithful little minion, defending him, when we are actually here to discuss the Children, Young Persons, and Their Families Amendment Bill (No 6), which is a far-sighted bill about reducing the incidence of young peoples’ reoffending.

Anybody who has spent 5 minutes with any young person who may have gone a little bit astray knows that applying punitive punishment measures does not work in the long term. That member, Mr Borrows, sat with me on the select committee considering Ron Mark’s bill for 2½ years, and I have to say in his defence that he said some very sensible things. He said some very sensible things when we were listening to submissions on that bill. He voted against Mr Mark’s bill, and so did we in Labour. But Mr Mark has worked with this Government to help bring this present bill about. However, because it is election year now, and because Mr Key is saying different things to different audiences, that junior member of the National Party over there is following on like a little minion, saying “Yes, Mr Key; no, Mr Key; whatever you say, Mr Key.” It is very slippery behaviour indeed, and very inconsistent.

It will catch the member out. I have a memory like an elephant and I will remember this speech during the election campaign; I will be sitting in an audience next time and I will be interjecting during the campaign trail. I will be saying “But what about your speech on the Children, Young Persons, and Their Families Amendment Bill (No 6), Mr Borrows? That is not what you said then, when you were speaking to the good people like Presbyterian Support and all of those other agencies that support youth.” When Mr Borrows is being soft and saying “Oh yes, I’ve got a very good social conscience.”, I will remind him of the speech that he gave today. I will take photocopies of the Hansard record and I will remind people of what National members are saying to this audience compared with what they will say to audiences in a few months’ time. I can assure this House today that the message people are hearing today will not be the message they will be hearing from National out on the campaign trail.

Hon Member: Same old story.

JILL PETTIS: That is right. We cannot put money on what they are going to say, because it changes. At least when we put a bet on a goori at the trots or the races we put an estimated, intelligent dollar down, based on what we think that animal might do.

Chris Tremain: I raise a point of order, Mr Speaker. I refer to Standing Order 107 in respect of relevance. The speaker is not even anywhere near the Children, Young Persons, and Their Families Amendment Bill (No 6). I ask that she shows some relevance.

The ASSISTANT SPEAKER (H V Ross Robertson): The member has not been speaking for long.

JILL PETTIS: I am galloping towards it right now, I say to Mr Tremain. I have to say that the inconsistencies that National members are showing at the moment about a whole range of matters are actually not in this country’s interests, and their inconsistency on this bill is not in the long-term interests of young people in New Zealand.

I admit that I have had a bit of fun with the speech I have been giving so far—

Jacqui Dean: We haven’t.

JILL PETTIS: I have thoroughly enjoyed myself. I am sorry the member does not have a sense of humour, but some of us have.

This is actually a very serious matter. This is about young people and the best options for their long-term future. I ask members in this House to put up their hands if they have never made a mistake. Yes, every person who gets to our age has made a mistake. Young people make mistakes, too. They should not have to pay for the rest of their lives when they do something silly, foolish, unpremeditated, and basically just downright stupid. Is it not a far better investment in them and an investment in our society to work with them to make sure they do not repeat those mistakes? That is what this bill is all about. It is about working with young people who may have offended, and with their families, so that those young people get on to the right track and become worthwhile and productive citizens. Labour has a plan for the future youth of New Zealand. That is why we support this bill; this is about young people, not politics.

• A party vote was called for on the question that the Children, Young Persons, and Their Families Amendment Bill (No 6) be now read a first time.

Ayes 57

New Zealand Labour 49; Green Party 6; Progressive 1; Independent: Field.

Noes 58

New Zealand National 48; New Zealand First 7; Māori Party 2; Independent: Copeland.

• Motion not agreed to.

Hon TREVOR MALLARD (Minister for the Environment) : Could we please have repeated to us the votes, because I think there was a misunderstanding as to the votes of the Māori Party. We understood that party to have voted in favour and its votes may not have been counted. I seek leave to have the vote taken again.

The ASSISTANT SPEAKER (H V Ross Robertson): We can seek leave to take the vote again if there has been a misunderstanding.

TE URUROA FLAVELL (Whip—Māori Party) : It was my mistake. I seek leave to correct the Māori Party vote.

The ASSISTANT SPEAKER (H V Ross Robertson): Is there any objection to that course of action being taken? There is none. Perhaps we should take the whole vote again.

Hon TREVOR MALLARD (Acting Minister of Commerce) : I move, That the Limited Partnerships Bill be now read a second time. This bill was considered by the Commerce Committee. The objectives of the bill are to facilitate the development of a local capital investment industry and to encourage foreign venture capital investment. The bill aims to do this by establishing in New Zealand the legal form of limited partnership, which is an internationally preferred structure for investing in venture capital. The value of venture capital is clear: venture capital plays an important role in helping innovative and developing businesses to grow. It is an important source of funding for new businesses and early stage expansion, and it can sometimes assist growing firms by providing access to new contacts, and new managerial and technical expertise. Since the first reading the Commerce Committee has recommended a number of amendments to strengthen the bill, which will help it achieve its objectives.

I will start by discussing some of the more important changes recommended by the committee to Parts 1 to 4 of the bill, which establish the legal form of limited partnership. One of the most important of these recommended changes is the inclusion of safe harbours in the bill rather than in regulations. Safe harbours are those activities a limited partner may participate in without being held to have participated in the management of the limited partnership and potentially losing limited liability. The safe harbours recommended by the committee are based on international best practice and cover such matters as involvement in strategic decision-making, contract work, and the provision of consultation or advice to the limited partnership. These safe harbours provide the sort of clarity, certainty, and consistency with international approaches that are needed to encourage investment in limited partnerships.

Another important amendment to the bill, as recommended by the committee, is the requirement that details of limited partners provided to the registrar are kept confidential. Two competing factors need to be balanced when considering this. One is the principle of transparency, and the other is the fact that the anecdotal evidence of having limited partner details available on a public register shows that it may discourage some venture capital investors from putting money into New Zealand limited partnerships—and, of course, these people have a lot of choice. Limited partner details are not publicly available in some other jurisdictions, and the committee has decided that the details on limited partners on the register should be kept confidential. I consider that this is a sound approach, which also needs to be seen in light of the objectives of the bill in its broader context. A key objective of the bill is to attract venture capital investment. The international market for venture capital is highly competitive and we do not want to disadvantage our market.

The committee has also proposed some changes to provide more flexibility in the operation of limited partnerships—in particular, that the earlier prohibition on limited partnerships being involved in banking and insurance business can be removed because the generic legislation rules applying in those areas will address governance risk associated with limited partnerships in those areas. Limited partnerships will also be able to apply to the registrar to be deregistered on broadly the same basis as a company. This will ensure that a limited partnership that has ceased operating and has paid its debts can deregister in a simple and cost-effective way without needing to have a liquidator.

Several other amendments recommended by the committee will help ensure good governance. In particular, an obligation has been added to the bill for limited partnerships to prepare financial statements. This will encourage appropriate transparency in relation to the limited partners and to third parties dealing with those partnerships. Partnership agreements must also contain certain specified matters, including the entitlement of partners to distributions, the times when meetings must be held, the ways in which meetings are to be conducted, and the manner in which partners may enter or leave a partnership. This is an important measure to ensure the quality of partnership agreements.

The select committee has recommended three other noteworthy amendments to Parts 1 to 4 of the bill, and I will draw these to the attention of the House. Firstly, limited partnerships may use the new voluntary administration provisions that came into force last year. Secondly, third parties can be protected by applying Companies Act rules around the validity of actions taken by limited partnerships, which means that third parties will be able to transact with a limited partnership without having to go behind the transaction to check whether, for example, the general partner they have been dealing with has been properly appointed. Thirdly, with the leave of the court, partners will have the power to bring derivative actions on behalf of the limited partnership. This is consistent with the approach taken in several other jurisdictions.

I will now say a few words about Parts 5 and 6, which contain the new tax rules for limited partnerships and update the tax rules for general partnerships. Under the bill, limited partnerships will receive flow-through tax status, which means they will be taxed in the same way as general partnerships, with partners being taxed individually in proportion to their personal share of the partnership income.

Limited partners will be subject to new tax loss limitation rules, to ensure that the losses they claim reflect the level of their economic loss. The Commerce Committee also recommended a number of technical amendments to the bill that will be useful and make tax rules easier.

In summing up, I am confident that the amendments made both to the regulatory and tax provisions of the bill will help it achieve its twin objectives of facilitating the development of the local venture capital industry and encouraging foreign venture capital investment. I thank the members of the Commerce Committee and the officials from both the Ministry of Economic Development and the Inland Revenue Department for their work on the bill, and I acknowledge the contributions of those who provided submissions on it. As someone acting for the Minister, and as I was personally quite involved in the venture capital industry through my Ministry of Economic Development responsibilities for a period of time, I would like to say that this is a complex area. It is a very, very important area for New Zealand and I think the Minister of Commerce has handled it very well. Thank you.

SIMON POWER (National—Rangitikei) : I follow on from the Minister’s opening remarks. Although he had some colour return to his face by the end of his speech, he did not have much colour at the start of it after the vote on that last bill.

National will be supporting the second reading of the Limited Partnerships Bill. I think this is one of those pieces of legislation that actually shows how the select committee process is so valuable in an MMP Parliament. The Commerce Committee managed to make substantial amendments to this bill. Although the Minister covered a number of those amendments in his opening remarks, he undervalued in some respects just how comprehensive those changes made by the select committee were. I am pleased to hear him confirm that those changes added value to the Limited Partnerships Bill and I am also pleased to note that matters around revenue collection and tax streams were clarified to the advantage of those seeking to use this particular format for investment. The Limited Partnerships Bill introduces to New Zealand law a new limited partnership vehicle, which is intended to encourage investment in New Zealand, as the Minister said. The legislation is an attempt to catch up with overseas practice to ensure that experience and positioning for New Zealand does not leave us behind close competitors such as Australia when trying to attract venture capital.

Although I would normally sit full time on the Commerce Committee, I was required to sit on the Justice and Electoral Committee during much of the time this bill was considered. In the Justice and Electoral Committee at that time we were dealing with a piece of legislation called the Electoral Finance Bill, so I was unable to participate in the lengthy discussions that the commentary on the report back from the Commerce Committee on the Limited Partnership Bill indicates must have occurred. When one takes the opportunity to read through the report back, one finds it is clear that the amount of deletion and amendment was substantial—not just the odd part or clause on the way through but right down to the insertion of a new clause 2 detailing the commencement date of the Act. The committee believed that partnerships should have some sort of certainty about the commencement date and noted that it was disappointed that the explanatory note to the bill failed to provide any reason for deferring commencement of the bill.

The deletion of clause 11 and the insertion of an entirely new clause 11 by the select committee made explicit the powers and the capacity of a limited partnership in according full rights and powers—as one would expect. More than that, fiduciary duties and obligations of a general partner were inserted by way of a new clause 43—the original clause 43 was deleted—and the insertion of a new clause 43A, which provides that a limited partner does not have a fiduciary obligation to the limited partnership or any partner, something that again it appears was in need of clarification in the original bill.

It is interesting that with respect to confidentiality of information clause 99 was removed and a new clause inserted to require the registrar to treat limited partner information as confidential and not make it available to the public—the removal of, in fact, the ability for the purview or scope of the Official Information Act to apply. This is not without controversy and may well be the sort of thing that is detailed or looked at more carefully during the Committee stage.

The safe harbour mechanism originally recommended in clause 27 had to be amended and, as far as derivative actions were concerned, new clauses 74A to 74D had to be inserted to provide a process for a partner to take proceedings against a limited partnership.

Clause 13 was deleted and further amendments were made. Clause 14 was deleted as well. With respect to the method of contracting contained in the bill, new clause 15A was inserted and a further amendment made to allow a limited partnership to amend a partnership agreement either by means of a written document or in accordance with the procedures set out in the limited partnership agreement.

A new clause 9A was inserted—as stated—and the deletion of subclause 17(2) and insertion of new subclause 17(2) was also recommended. The insertion of new clause 18A, which sets out when a person becomes a general partner, and a new parallel clause 18B were also included. These amendments tell us two things. The first thing it tells us is that the original bill was not up to scratch. The second thing it tells us is that the select committee process can work, on occasion, reasonably constructively to fix up legislation that is referred to the committee in the first instance. So far over the last couple of years I have worked with Lianne Dalziel on a number of issues in the commerce area and I have to say she is by and large willing to listen to suggestions for changes and amendment. Although National will be supporting this bill at its second reading, for the obvious reasons I have outlined, it was quite clear that the Government needed to have its ears well and truly opened, given the substantial number of major amendments, deletions, and insertions that the select committee saw fit to apply in order that this legislation could actually work in a constructive setting.

I think we will be able to have a more detailed discussion about these clauses at the Committee of the whole House stage. Some of those matters I have mentioned are not without controversy; the confidentiality and non-application of the Official Information Act are matters that will require a little further examination. I know that Paul Swain will be anxious to share with the Committee of the whole House his knowledge of the tax laws that apply once moneys are withdrawn or change hands from different accounts under this new limited partnerships regime. It is known that his knowledge of these revenue stream matters will add substantially to the discussion in the Committee of the whole House. I say to the Hon Paul Swain that National would look closely at any Supplementary Order Paper or amendment that he might like to table in his own name in order to clarify some of those issues.

National looks forward to discussing further matters relating to this bill in the Committee stage and supports the second reading of this bill.

Hon PAUL SWAIN (Labour—Rimutaka) : Firstly, can I say that I am extremely flattered by Simon Power’s acknowledgment of my tax knowledge. I usually try to hide that under a bushel.

Simon Power: A very modest bushel.

Hon PAUL SWAIN: Yes, a very modest bushel. It is clear that the member has identified some of my expertise, and I will be going through the legislation and taking up the challenge the member has laid down.

Mr Power, at the start of his speech, mentioned Trevor Mallard’s demeanour and slight paleness when there was, potentially, a slight legislative blip in the bill beforehand. It is probably quite fitting that Trevor Mallard had that demeanour, because there has not been a legislative blip such as that since 1990, when he was a whip, and it turned out to be a legislative catastrophe. That is probably why he was a little pale—it was the thought of history repeating itself on his own watch.

Before I get into the legislation, I will respond to some issues raised by Simon Power. He raised the issue of the legislation, the select committee process, and how there has been a number of changes. It really is a case of the glass half full and the glass half empty. I was not sure whether he was going to rave on about the constitutional outrage it was that the bill had not had much attention before it came to the Commerce Committee, or whether he was going to praise the committee for doing extremely good work. Having been a Minister of Commerce, my view is that these issues are always complex.

The truth is that officials never really get it right the first time, notwithstanding the discussion that goes on with the industry prior to the introduction of legislation. What happens is that good submissions come along, and on a committee like that, where it is quite technical, the committee is very intent on listening. There were a couple of things in there that I think the chair, Gerry Brownlee, was keen to see moved through. I think one was the partnership share rule, which he persisted with, and he got some changes through, which was good.

Much has been said about the importance of this legislation. Essentially, the guts of this issue is that we have an outdated system of attracting venture capital. International best practice is around some form of limited partnership arrangement, and this legislation brings us into international best practice with the sole intent of ensuring that venture capital can be attracted to New Zealand. Limited partnership is a form of partnership involving two groups—general partners—who are liable for debts and liabilities of the partnership. But limited partners are liable only to the extent of the contribution in the partnership, and that is the important thing—liability is related to contribution.

As I have said, the current arrangement we have goes back to 1908. The Government is trying to promote economic transformation, to try to attract venture capital in an area where we need it, so this measure is important. New Zealand’s venture capital market is still relatively thin compared to the rest of the world. It is important that we have venture capital, particularly for those small businesses that are looking to step off and expand at a time of high risk. So this is critical.

Simon Power raised two or three issues that are worth mentioning quickly. The first is transparency. We had a lot of discussion about that on the select committee, and it is a bit of a line call. On the one hand, we want to make sure that a register is transparent so that everybody can see who the limited partners are, but, on the other hand, it has been shown overseas that if we make it too transparent and everybody knows who is in, then that acts as a bit of a deterrent for people to put their money into an arrangement. On balance, we have come down on the side of saying that this can be a confidential register, and I think that is something that maybe we will have another look at when we come to the Committee stage. It was an issue that the select committee spent some time thinking about, because it is one of those line-call decisions. In the end, I think we made the right decision, but I am sure there will be people who want to raise that matter later on.

The other issue is the safe harbour arrangement. Activities that a limited partner can participate in without being held to have participated in the management of the limited partnership, and potentially losing their limited liability, are important too, because people will want to retain their limited liability status.

The issue about the Official Information Act linked into the transparency question, and I remember having quite a long and lengthy debate about that. By and large, members of the committee would be keen on transparency and on everything being under the Official Information Act. With some advice from officials, it was felt that if we make this kind of area too open and transparent, it means that people do not put forward their money, and that means, then, that small businesses suffer. There are interesting parallels with other legislation that deals with transparency. In the end we made those calls. As I said, Gerry Brownlee pushed for a matter that, I think, is around the partnership share rule. I cannot quite remember whether that was it, but he beavered away on one particular issue, and, as I recall, he had some success.

This legislation has had a lot of attention. There are some difficult and complex things in it. It is quite technical. The New Zealand Law Society says in a leaflet it has put out, which is part of an exercise to attract people to come and learn about these things, that the passing of the limited partnerships legislation will be one of the most significant developments in corporate law since the Companies Act 1993. So this is important legislation. It has had a good, thorough going-over at the Commerce Committee. A number of significant changes were made at the committee as a result of the good work under the chairmanship of Gerry Brownlee. I commend this bill to the House and to further consideration during the Committee stage.

GERRY BROWNLEE (National—Ilam) : I thank the previous speaker, the Hon Paul Swain, for his generous comments about the way in which the Commerce Committee worked on the Limited Partnerships Bill. It is significant legislation, as he mentioned, because it brings arrangements in New Zealand into line with other international jurisdictions. It has the effect of making sure that venture capital flowing into New Zealand can be used here for the development of our economy, with investors knowing that the regime that operates inside New Zealand is a safe one, that there is good law, and that for those who make investments there is reasonable protection from a failure of the system to look after the interests they have.

Is it not a little bit interesting, though, that we have a bill here, effectively made workable by the National Party but promoted by the Government, to encourage foreign investment in New Zealand? Here in Parliament we are discussing it just a day after the current Government embarked on yet another nationalisation of a business inside New Zealand. I will say no more than that but there is simply a certain irony in that, which I think should not escape the attention of those who understand these matters.

I also think it is interesting that we are talking about encouraging this foreign investment. For example, when we look at the forestry industry in New Zealand, we see we could do with significant amounts of foreign investment because it has such a long life cycle. The end product takes 25 or 30 years to mature, and therefore cash flows are pushed out for a long number of years. At the same time we have a Government in New Zealand making sure that such investment is very, very unattractive, because of its failure to ascertain the same opportunities for New Zealand foresters as the Australians managed to obtain for Australian foresters in negotiations around the Kyoto Protocol.

I do not want to talk for a long time about a bill that is essentially well-supported in the House and that has gone through a very good process at the select committee. People have a view that Parliament is a very adversarial place and that we are just out there to knock each other over all the time. A lot of legislation goes through the House every year and I think everybody who was part of the select committee for this bill made a fair effort to get good information. We most certainly had very good advisors at various points, and I can only commend the colleagues who were on the select committee with me for the work they did. I think we have managed to deliver up for the Minister of Commerce a much improved version of the bill that was originally sent to us. With that, I tell the House that the National Party will be supporting the bill this afternoon, and I will end my comments.

DAIL JONES (NZ First) : This bill is supported by New Zealand First and is an excellent piece of legislation. I take the point that has been made about the Law Society’s reports and its suggestion for lawyers to attend seminars on this bill. I wholeheartedly support the need for that. The suggestion that this bill will change New Zealand commercial law to a much greater extent than the 1993 Companies Act would be very fair, because, after all, the 1993 Companies Act was a consolidation of earlier legislation—tidying it up and bringing it up to date—whereas this legislation is a new type of concept. Of course, we used to have special partnerships in the old law under the Partnership Act of 1908. I think they were abolished at some stage and we do not do them very often these days. But this is an excellent piece of legislation.

The previous speaker, Gerry Brownlee, raised the point about foreign investment in New Zealand. Of course, as is well known, New Zealand First supports, and insists upon, New Zealanders retaining the ownership of strategic assets in New Zealand. This bill is something different, because it should encourage foreign investment in new developments in New Zealand. I think also of the new tax incentives that will arise from 1 April this year, and one would hope that we may be able to see some big companies coming to New Zealand, indulging in research and development, and taking advantage of the tax incentives that relate to research and development as part of the special partnership venture that is proposed in this legislation. New Zealand First is keen on seeing more research and development being done by the private sector in New Zealand. Currently, most research and development is done by the Government, and there needs to be greater expansion by the private sector.

One aspect of the bill that concerns me—I have to confess I have looked at it for the first time only today since my recent return to Parliament—is the question of the penalties for the misuse of the name of the partnership. I just wonder whether, in clause 28, which is entitled “Name of limited partnership must include words limited partnership”, the penalty is severe enough. It might be that people use a name and do not make it clear that it is a limited partnership. Someone might get involved with the limited partnership not realising the limitations of limited partnerships on the liability of certain members of that partnership. He or she might think that the members are fully liable but, in fact, because of the nature of the partnership they may not be fully liable, such as under clause 27. A penalty of only $5,000 seems to be hopelessly insignificant to me when many hundreds of thousands, if not millions, of dollars might be involved in this type of venture.

New Zealand First, being strong on law and order, is keen on making sure that not only rogues and villains who beat up people and damage property, and such like, suffer severe penalties but people who might be engaged in what might turn out to be white-collar crime suffer severe penalties, as well. I wonder whether the penalty set out in this bill for what would be white-collar crime is insufficient. I would hope that the officials might have another look at that and increase the penalties that might be available, including, if the name is not used properly, making all members totally liable rather than limiting some of their liability.

Overall, though, this is a wonderful new concept for New Zealand. Lawyers will have to specialise in this law as it will be a very difficult area. Speaking as a lawyer, I recommend that any lawyer who wants to be known as a commercial lawyer attends the Law Society’s seminar, because this will be something totally new—and hopefully very profitable for lawyers, as well, in due course.

LINDSAY TISCH (National—Piako) : As previous speakers on the National team have said, we will be supporting the Limited Partnerships Bill. It is important legislation. Although the bill is of a technical nature, it has certainly been interesting to sit on the Commerce Committee and hear the submissions that came through. They were very informative submissions, and out of that we made a number of changes. Many amendments were made during the select committee process and that is significant in getting legislation that we believe is important for New Zealand.

If we were to just look and recap on what the Limited Partnerships Bill does, it introduces a new limited partnership vehicle, which is intended to encourage investment in New Zealand. There are three real key features to the bill. The first feature is that liability for limited partners will be limited to the amount of their contribution to the partnership, which is certainly an important piece in the bill. It protects the partners so that their liability is not open-ended. The second major feature is that the bill establishes safe harbours that allow limited partnerships to participate in the management of the investment partnership without tainting their limited liability status. The third important feature is that the bill makes limited partnerships a separate legal entity. As opposed to being just a trading entity or a business entity, they will actually be a legal entity. Significant tax changes are also included in this legislation, and I will mention a couple of them very shortly.

The primary vehicle for venture capital in New Zealand is the New Zealand Venture Investment Fund. I think it is appropriate, first, to make just a few comments and talk about how important this is to the New Zealand economy. I quote from a Harvard professor by the name of Josh Lerner, an expert in venture capital at the Harvard Business School. He suggests that market failures have resulted in Government support being a factor in the initial development of all future venture capital markets.

Josh Lerner identifies three potential market failures: first, a heightened risk of research and development spillover to competitors when small innovative firms have scarce resources to defend their intellectual property; second, the increasing returns nature of a developing venture capital market, whereby the development of specialised venture capital skills and a soft infrastructure involving lawyers, accountants, and business advisers with a deep understanding of venture capital processes means that the 100th investment is considerably easier than the first investment made; and, third, severe information gaps between venture capital firms and potential investors leads to the requirement that the size of the investment must be significantly large to justify the considerable due diligence costs involved in making the investment.

If we apply that to young venture capital funds, we find that they have yet to develop a track record of success and, therefore, they have difficulty in securing funds from institutional investors. Josh Lerner states: “In this context the Government’s initiative in 2002 of establishing the New Zealand Venture Investment Fund on an arm’s length basis from political interference and as a co-investor with private sector investors should be recognised as having been a catalyst for the developing of a professional venture capital industry in New Zealand.”

So we have the New Zealand Venture Investment Fund, which is responsible for managing two early-stage investment programmes on behalf of the New Zealand Government. These two investment programmes are, first, the VIF Venture Capital Programme of $160 million, established as a funder of funds. Second, there is the Seed Co-investment Fund programme, which is a $40 million co-investment programme.

The team from the New Zealand Venture Investment Fund came to the select committee and made these points, and I think they are significant, because, hopefully, this bill will address some of the issues they identified. They said that the New Zealand venture capital market is small and undeveloped by international comparisons. The reported total investment value for New Zealand private equity in venture capital investment in 2004 was $158 million, which represents only 0.11 percent of GDP. So in this measure New Zealand is lagging well behind other OECD countries. In fact, the size of the New Zealand venture capital sector would need to increase by at least fivefold to approach the levels comparable with Ireland, the United Kingdom, and Singapore.

In 2004, the fund surveyed 15 offshore funds that might invest their venture capital into private equity funds globally and into New Zealand. Twelve of those 15 responded, representing in excess of $50 billion of private equity and venture capital funds under management. All but one of those parties said they would consider investing private equity and venture capital funds in New Zealand. However, the prerequisites for investing were the presence of a world-class investment structure in the form of a limited partnership and flow-through taxation treatment. This is what this bill actually provides for. This bill addresses those concerns that have been identified as a major challenge by the Venture Investment Fund.

I move now to another point that has been made by many submitters and it has also been mentioned in the debate this evening—that is, the safe harbour provisions. The original legislation made provisions for safe harbours to be in regulations, but they will now be part of the bill. I will quote from one of the submissions about what the safe harbours do: “The bill provides the power to set out in regulations safe harbours or activities that do not constitute taking part in the management of the business of a limited partnership. This is important because limited partners are not permitted to take part in the management of the limited partnership. If they do, they may be jointly and severally liable with the limited partnership and general partners in the same way as a general partner would be.” This bill actually protects them from that, and that is a significant change.

The Ministry of Economic Development came out with a discussion document on safe harbours for limited partnerships. It is interesting that it has made about 15 recommendations that would add value to the safe harbour position.

I will make just a final point concerning clause 116 in the original bill, which related to the tax treatment where a partner’s right to a partnership income is different from his or her share in the partnership assets. That was one of the major concerns that submitters picked up on, because there needed to be some clarity as to what it actually meant. This concern was raised by members of the committee as well, and it is very clear now that this has been sorted out. To give an example in a farming situation, in some farming operations it is possible for a partner’s proportional entitlement to income from the partnership to be different from his or her share in the partnership assets. For example, a father and son might each own 50 percent of the farm’s land and buildings, but for family reasons, one partner has rights to 90 percent of the income from the farm.

This situation can also occur in professional services firms, such as accounting and law firms, where it is common for each partner’s rights to the profit from the partnership to fluctuate from year to year based on individual performances, but each partner’s share of the partnership assets remains the same. For example, 10 partners in a firm each have a share of 10 percent in the assets of the firm. However, the partnership agreement may provide that their right to income from the partnership is partly dependent on their performance during the year. Therefore, a partner who performs particularly well may be allocated 15 percent of the partnership profits from that year, and a partner who performs poorly may be allocated 5 percent of the profits. Although one partner may have 10 percent of the assets overall in this case, in terms of the income distribution, it could be treated on that partner’s performance. The bill clears up that issue, which was a major concern raised by a number of submitters.

That is important, because if we are to proceed with this legislation—and National supports this bill—then these technical aspects of the bill are the sorts of things that need to be sorted out and need to be very clear if we are to get investment. National will support this bill and we look forward to its Committee stage.

• Bill read a second time.

Hon JIM ANDERTON (Associate Minister of Health) : I move, That the Misuse of Drugs (Classification of BZP) Amendment Bill be now read a second time. This bill removes the legal market for what are called party pills. I am pleased that after looking at the bill the Health Committee has recommended it should proceed without amendment. The Health Committee has worked hard in its consideration of this legislation and I would like to thank all members of the committee for their valuable work.

It is helpful to go back to the origins of this bill to explain what this amendment legislation does. In June 2005 the House passed a Misuse of Drugs Amendment Act that made it an offence to supply benzylpiperazine (BZP) to anyone under the age of 18, to give away products containing BZP, or to advertise BZP. Those controls were introduced so that there were some controls on BZP while research, which I commissioned, was carried out into this drug. The fear was that it could be harmful, and Parliament took a precautionary approach while we sorted out the facts. Parliament should always, in my view, make decisions in this area on the basis of the best evidence available. Last year the Ministry of Health received more evidence and it brought us to this bill today. The Expert Advisory Committee on Drugs advised that the independent research, which the Government had commissioned, showed BZP and related substances pose a moderate risk of harm to users. This is not the assessment of politicians; it is the assessment of experts on the panel that we appoint to give us the benefit of their expertise.

Once this House has been advised that there is a risk of harm, what is it going to do with that information? Just over a year ago, on 20 December 2006, I publicly released the committee’s advice and began a consultation process on classification. The consultation process closed in March and the submissions were then analysed. The expert committee met again in May with more up-to-date evidence and again advised a majority view of the members of Expert Advisory Committee on Drugs that BZP posed a moderate risk of harm. This bill puts the committee’s recommendations to me into effect. It will classify BZP and related substances as class C1 controlled drugs under the Misuse of Drugs Act 1975. It will set a threshold for presuming possession for supply of 5 grams or 100 BZP tablets or pills each containing some quantity of BZP and related substances. It will remove BZP from schedule 4 of the Misuse of Drugs Amendment Act 2005 so that it can no longer be sold as a restricted substance. It also provides for an amnesty period of 6 months for possession and/or use of less than the presumption for supply amount of 5 grams or 100 tablets. That is to give users the time to get used to the fact that this is now an illegal substance.

I will deal briefly with some of the issues raised at the select committee. Some submitters claimed that the expert committee relied on incomplete or non - peer-reviewed information when it made its recommendation that BZP poses a moderate risk of harm. Their claims, in my view, do not stand up to scrutiny. After the expert committee provided its advice to me the Ministry of Health arranged for key studies to be peer reviewed. These peer reviews, and researchers’ responses to these peer reviews, were considered by the Expert Advisory Committee on Drugs in May last year before it reaffirmed its recommendations to me to classify BZP as a class C1 drug. I have thought very carefully about other concerns that were raised—especially the concerns that a classification of BZP might lead some people to other more potentially harmful drugs. These sorts of choices are always, of course, to some extent influenced by both personal and environmental factors. But I am convinced that a large number of people use BZP because it is legal and it is readily available. There is an analogy with alcohol. Alcohol is easily New Zealand’s most damaging drug. That is not because it is the most intrinsically harmful drug; it is because alcohol is both legal and easily available. If we remove the legal market for BZP-based party pills, large numbers of users will stop using the substances they are made from. That is the evidence we have from previous classifications of other drugs.

These are substances that experts consider pose a moderate risk of harm. I know this issue is a concern to the Green Party. However, I find it extraordinary that a party that campaigns against some breakfast cereals and Coca-Cola wants to liberalise the availability of something that experts say poses a moderate risk of harm, particularly to young people. When it comes to genetically modified organisms the Greens advocate a precautionary principle. When it comes to fisheries protection the Greens advocate a precautionary approach, and I agree with them. When it comes to a drug assessed by experts as harmful, suddenly the Green Party seems to throw precaution to the wind. How can one be against Coca-Cola and in favour of party pills—even the regulated kinds of party pills? How can one be against fishing companies, chicken farmers, and pig farmers, and in favour of psychoactive drug manufacturers and suppliers? Unfortunately, where there is money to be made some people will take their opportunities, and party pills are no exception. This is a $30 million industry. The existence of party pills did not stop the manufacturers trying to find other products to bring to market, just as apples do not keep oranges off the market.

The only responsible and precautionary approach for the Ministry of Health, and for this House, is to monitor substances and weigh up the facts as they become available. Already the ministry has advised that any product that contains substances it believes are controlled drug analogues is illegal. Police have already taken action against one such product, and it has since been withdrawn from sale. In other words, the law is working as it was meant to do. Not only that, but the Ministry of Health is working with the Law Commission to develop a reverse onus of proof to ensure controls around substances entering the market are tightened up. It is my view that psychoactive drugs should have to be proved safe by their manufacturers before they are put on sale, not by Government agencies after they are put on sale.

I acknowledge concern about the potential to criminalise party pill users. It is to avoid punishing people unfairly that the bill has a 6-month amnesty period for possession of less than 5 grams, or 100 tablets. The amnesty ensures that there is enough time between the bill taking effect and users of party pills facing prosecution. However, no such amnesty exists for the suppliers and manufacturers of BZP; they are given 7 days from the day the Misuse of Drugs (Classification of BZP) Amendment Bill comes into effect. Manufacturers and retailers of the drug will—under a Supplementary Order Paper drafted to amend the original enactment date of 18 December 2007, which was not able to be met—have 7 days after this bill receives the Royal assent to stop making and selling BZP and related substances. As most of them, if they had any common sense at all, anticipated that this bill would come into force in December, I do not see any problems in that regard.

I know the Green Party and the Māori Party believe that regulation of BZP is preferable to classification. I have considered this point carefully, but the advice of the expert committee to this House is clear. These substances are harmful enough to warrant classification. They are the experts in this; I would not claim to be one. Ignoring clear evidence-based expert advice is tantamount to voting for more harm to be caused to more people. I suggest to those parties that their support for an approach that experts say will harm people is morally indefensible. We are presented in this House with evidence, and when we can help prevent harm, that is what we should do. Let us be clear about the people those parties are saying they want to harm. One in five New Zealanders aged between 13 and 45 are who we are talking about. We are talking about New Zealanders as young as 13, even when the drug is regulated for those over 18 years old. As long as the drug is lawfully distributed, 13, 14, and 15-year-olds are going to get it far too easily. They will have no trouble getting these pills when their friends and brothers and sisters can go into gas stations and dairies and buy them—as they are, and were, doing. When people take BZP it has an effect on them similar to amphetamine. That is why experts consider it to have a moderate risk of harm.

I believe party pills will virtually disappear from New Zealand as a result of this classification. New Zealand now has an extensive body of evidence on BZP and related substances. The evidence shows that it would be a good thing for the drug to disappear from New Zealand. This legislation will remove legal access to BZP and related substances. It will allow the police and the Customs Service to prevent these substances from being imported and marketed, and prevent them from causing the moderate risk of harm that experts have identified. For that reason I commend this bill to the House, and support its passage through all its stages as quickly as this House can manage.

JACQUI DEAN (National—Otago) : I am happy to speak in support of the Misuse of Drugs (Classification of BZP) Amendment Bill. My only regret is that it is, in my view, 2 years too late, if not 3 or 4 years too late.

The Misuse of Drugs (Classification of BZP) Amendment Bill is a short bill. It simply has the effect of changing the classification of benzylpiperazine (BZP) and related substances from a class D to a class C drug, the same as cannabis. BZP is an ingredient used in the majority of party pills, which are used recreationally to enhance confidence, to induce feelings of well-being, and to work for long periods of time without a break. BZP is also used by a number of people to self-medicate out of situations in which they feel unhappy—situations such as mental illness. I have heard of sufferers of mental illness taking BZP because it makes them feel better than their prescribed drugs do, and of young people in troubled circumstances who, again, have self-medicated with BZP because it makes them feel happy and takes them out of their difficult circumstances. I have been told that there are truckdrivers and taxi drivers who use BZP because it helps them to stay awake. Research has shown that a certain dosage of BZP enhances driving. Unfortunately the effects of BZP are so random and unable to be calculated that I suggest that would be a very dicey way to go.

As a class D drug, BZP could legally be sold to those aged over 18, but under the legislation, restrictions were placed on advertising and free giveaways. By changing the classification to class C it will become illegal to sell, possess, or consume BZP party pills, but there will be a 6-month amnesty period for personal use.

The problem with this bill being held over from last year’s parliamentary sitting to this year’s parliamentary sitting is that a number of sellers and consumers, but mostly sellers, of BZP have had a golden opportunity to stockpile stocks of BZP, and although in the 6-month period following the passage of this bill they will not be able to sell BZP legally, an awful lot of BZP is stockpiled out there, so I fear we will have the presence of this psychoactive drug in our society for some considerable time—that is, until the next psychoactive drug comes on the scene. This bill introduces a 6-month amnesty period for personal use. This allows individuals with leftover BZP pills to avoid prosecution immediately after the bill comes into force, given BZP’s previous status as a legal drug.

This bill is a long time coming. In my view it has been too long in coming. In the 2½ years I have been a member of Parliament the Minister has talked about getting tough on drugs, yet here we are in March 2008 only at the second reading stage of this bill. I fear that the amount of warning the Minister has given this $30 million a year industry by saying he is really going to do something about this issue, and by saying how strongly he feels about this issue, has given the industry any amount of time to establish BZP markets, networks, and a clientele in practically every little town, not to mention city, the length and breadth of New Zealand. I hold the Minister responsible for that.

This has been a very public issue. I first became aware of BZP in party pills back in October 2005 when a party pill shop opened in my home town of Ōāmaru. I have lobbied the Minister for the subsequent 2½ years, and we are only just now debating this issue in the House. I will talk about some of the medical effects of BZP. BZP—or benzylpiperazine—is the key ingredient in these so-called party pills. The popularity of the pills has increased markedly in recent years due—and I agree with the Minister over this—to their legal status and the perception of their safety. BZP mimics the effects of methamphetamine, giving users a high with exaggerated blood pressure, heart rate, and metabolism. Other side effects can include anxiety, collapse, agitation, nausea, and seizures. Advocates of BZP, who are of course making a good deal of money out of the sale of it, claim it offers users of illegal drugs a safer alternative and therefore would displace illegal drug use. However, a Victoria University study disputes this myth, showing that party pill users are 10 times more likely to be users of LSD, Ecstasy, and Ritalin. The report’s author, Kate Bryson, concluded: “party pills are not fulfilling their purpose of reducing illegal drug use—for drug users, they’re just another item on the menu.” This conclusion is shared by Theron et al, who noted that an increase in BZP presentations to Auckland City Hospital did not reduce amphetamine presentations.

The danger of BZP is compounded by its potential status as a gateway drug to harder drugs such as LSD, Ecstasy, and methamphetamine, in the same way that cannabis is. Current research offers an unclear picture of the interaction between BZP and illegal drugs because of BZP’s recent entry into New Zealand society. That is a study by Dr Chris Wilkins. But research increasingly reports that faith in BZP’s safety is in fact misplaced. Emergency departments around New Zealand have noted a worrying rise in admissions of BZP users, and the Expert Advisory Committee on Drugs stated in its advice to the Associate Minister of Health: “Severe adverse effects appear to be uncommon but occur unpredictably and have been reported at apparently low doses.” It goes on to state: “Toxic effects, including hyponatraemia and BZP related grand mal seizures that have been described even at relatively low doses, while very rare, have the potential to lead to death.”

So that begs the question, why have we waited? Why have we waited to recognise the dangers to our kids posed by BZP? To me it is right and sensible to rely on an evidence base for decision making, but I say to Minister Jim Anderton that I think as politicians we also have a responsibility to our communities and to those young people in our societies who are not able to make a good, sound decision about drug use. Although we currently have a limit of 18 years, much younger kids have taken BZP. We cannot expect our young children to make good decisions about drugs of any kind, particularly when we see party pills for sale next to jelly beans in the local dairy.

In closing, I support the passage of this bill but I regret that it has taken so long, and I regret that we now have in our society the expectation that chemicals are part of a good time.

LESLEY SOPER (Labour) : I rise to support the passage of the Misuse of Drugs (Classification of BZP) Amendment Bill. This bill had lengthy and intensive consideration in the Health Committee. There were 52 submitters on the bill, many of them passionately in support of the reclassification of benzylpiperazine (BZP) and some equally passionately opposed to that. We heard from submitters as wide ranging as the Salvation Army, the pill manufacturers, and many individuals with many stories.

We heard wide-ranging opinions about the need, or otherwise, for reclassification of BZP. We heard stories of the harm that ithas already done, and we heard of its side effects. We heard that banning BZP would merely force young people on to harder drugs. We heard that BZP had beneficial effects, but we did not hear any substantiation of that. In fact, the Expert Advisory Committee on Drugs informed us that there are no approved therapeutic uses for BZP. We heard that many young people had already given up on BZP because of the unpleasant side effects, and the implication seemed to be that therefore we did not need to reclassify it. We heard stories of BZP acting as a gateway drug to harder drugs. We heard of BZP’s ready availability—of the many shops that sell it. And we heard the argument that if we did not ban alcohol and tobacco, we should not be banning BZP. So we heard a very wide-ranging set of submissions on this amendment bill.

At the end of the submissions, and after very hard thinking and consideration, the Health Committee has recommended the bill should proceed without amendment. The bill amends the Misuse of Drugs Act by removing BZP from its current scheduling as a restricted substance and adding it to the schedule 3, Part 1, class C classification of that Act. The effect of that classification will be to make the sale and use of BZP, and of related substances commonly included in currently legal party pills, illegal from the passing of this bill. Once this bill is enacted the penalties for the supply of BZP and related substances will be up to 8 years’ imprisonment, consistent with those applying to other class C1 drugs, such as cannabis. With such a tough penalty, we obviously gave a great deal of consideration to that hard-thought-out recommendation.

However, an amnesty period for possession and use is proposed in the bill for 6 months after the legislation comes into effect, whereby possession of less than 5 grams or 100 tablets of BZP for personal use, unless otherwise proven to be for supply, will not be a criminal offence. When that amnesty expires, the normal penalties for possession and use of a class C1 drug of up to 3 months’ imprisonment or a $500 fine, or both, will apply.

The purpose of the principal Act is to prevent the misuse of drugs by imposing legislative controls over harmful substances. It provides a mechanism for the classification of drugs.

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

LESLEY SOPER: When we broke for dinner, I was pointing out that the Misuse of Drugs Act 1975 and the amendment bill that we are discussing tonight have a primary purpose: to prevent the misuse of drugs, through legislative controls over harmful substances. The legislation provides a mechanism for the classification of drugs according to their degree of harmfulness, and sets out legitimate access to these drugs, including licensing, prescribing, storage, and import and export controls. It also establishes when the New Zealand Police and New Zealand Customs Service can take action to control the supply of illicit drugs. Under a 2005 amendment to the Act, it was already an offence to supply BZP to anyone under the age of 18, to give away BZP-containing products, and to advertise BZP. Unfortunately, there was ample evidence that under-18-year-olds were obtaining BZP and related substances quite easily and legally, through the legal access of older friends and family members, who were doing the purchasing at a range of legal outlets.

The Expert Advisory Committee on Drugs is a statutory body established under the principal Act and is responsible for advising the Minister of Health on drug classification issues. It is made up of experts from the fields of pharmacology, toxicology, psychology, drug and alcohol treatment, community medicine, pharmaceuticals, public health, police, the Ministry of Justice, and a representative of consumers of drug treatment services. The committee is expected to work with evidence-based research. The expert committee had looked at the classification of BZP and related substances more than once. In 2006, with new research available, it made a further assessment and concluded that BZP and related substances posed a moderate risk of harm. It recommended the removal of its status as a restricted substance from the Act and its classification as a class C1 controlled drug. The Associate Minister of Health the Hon Jim Anderton quite rightly publicly released the committee’s advice in December 2006 and began a consultation process on the classification of BZP. In May 2007 the expert committee met again, with even more up-to-date evidence, and again advised a majority view that BZP and related substances posed a moderate risk of harm.

I need to point out several things here. To those who say we are legislating too late, I say that our expert advisers needed to have the full evidence-based backing for their advice. To those who say the research was not robust enough and not peer reviewed, I say that by the time of the reconfirmed advice in May 2007 it was both robust and peer reviewed, and that the Health Committee explored those issues quite fully. To those who say that stricter regulation and enforcement would have been enough, I say that once BZP and related substances were assessed by our expert advisers, on the evidence, as posing a moderate risk of harm, then they ceased to be able to just stay as restricted and regulated substances under schedule 4 of the Act. To those who say that no one has yet died, I say it is better to take a precautionary and protective approach to public health now, based on evidence and expert advice, than to wait for one or more deaths to occur. To those who say that we are not legislating in the same way for alcohol and tobacco as for BZP, I would remind them that alcohol and tobacco have their own legislative frameworks. In this case we were dealing with the Misuse of Drugs Act and with these particular substances. To those who say that we are criminalising party-pill users by this amendment, I say that I believe the 6-month amnesty is a reasonable answer.

For all those reasons, I am comfortable to support the passage of this amendment bill, and to commend it to the House. Thank you.

Dr JONATHAN COLEMAN (National—Northcote) : I think members have outlined pretty succinctly what this bill will do. It will simply change the classification of benzylpiperazine (BZP), or party pills, from being a class D drug to a class C drug. So BZP will become an illegal substance to sell, consume, or possess. As the previous speaker Lesley Soper observed in her scintillating speech, there will be a 6-month amnesty period for personal use, which will allow individuals with left-over party pills to avoid prosecution immediately after the bill becomes law.

I think the best contribution I can make now to this debate is to read out the executive summary of advice to the Associate Minister of Health from the Expert Advisory Committee on Drugs. So members should brace themselves! The executive summary states: “The Expert Advisory Committee on Drugs (EACD) considered benzylpiperazine (BZP) and related substances at its meeting of 19 March 2004. The EACD considered evidence provided by the Ministry of Health’s secretariat, the New Zealand drug enforcement agencies and others. The EACD considered the information before it in the terms of the criteria the EACD must apply before making a recommendation to the Minister. It concluded that there was insufficient information available on which to base a recommendation to classify these substances in the schedules of the Misuse of Drugs Act 1975. However, the EACD brings to your attention some matters the committee members considered important and which, if acted on, may form the basis for reconsideration by the EACD. The committee considers that: more information on the health effects of BZP and similar substances should be obtained; the prevalence of BZP use should be investigated, possibly through routine toxicological screening through community laboratories; it is inappropriate for BZP to be marketed as a dietary supplement; regulatory options should be explored which could provide additional classifications in the Act allowing partial control, eg putting conditions on the promotion or sale of products, particularly to young people; there is reason to be concerned that evidence indicates that BZP can create adverse reactions when taken with prescription medicines, such as Selective Serotonin Re-uptake Inhibitors (SSRI’s); restricting access to the products that contain BZP may lead to users of these products seeking more harmful controlled drugs as substitutes for BZP; papers provided to the Committee included proposed moves by the industry to develop ‘self-regulation’ covering issues such as advertising, age-of-use, labelling and retailing. The EACD is not recommending industry self-regulation as the preferred long-term regulatory option.” It goes on to state: “This paper presents evidence on the risk of harm associated with Benzylpiperazine (BZP) and similar substances. They are stimulant-type substances that produce effects similar to known amphetamines and hallucinogens. The information presented addresses the criteria that the Expert Advisory Committee on Drugs (EACD), must take into account when considering the appropriate classification of a substance under section 4B of the Act. There is some concern over the increase in supply of these products, which are marketed and distributed independently over the internet, through counter-culture retailers, and more recently in liquor outlets, service stations and dairies. Advertising of these products has occurred in a manner that appears to take no account of the impact on younger people. A significant industry has developed, with at least 1.5 million doses having been manufactured in New Zealand last year. The base substance benzylpiperazine (BZP) has legitimate therapeutic uses as a treatment for internal parasites in cattle.”

Peter Brown: Why don’t you just table the report and we can all read it.

Dr JONATHAN COLEMAN: This is not a Dad’s Army issue, I say to Peter Brown. The report continues: “Although it has been clinically trialled in some countries as an antidepressant medication for humans, there is no known human therapeutic use of BZP.”

The recommendations of the Expert Advisory Committee on Drugs were the following: “After considering all of the information put to the Committee and the classification criteria in the Misuse of Drugs Act 1975, the EACD makes the following recommendations to the Associate Minister of Health: After considering the evidence the EACD believes that there is no current schedule of the Misuse of Drugs Act 1975 under which BZP could reasonably be placed. The Minister of Food Safety should be requested to consider the appropriateness of permitting the chemical, BZP, to be sold as a dietary supplement in New Zealand when it has known no nutritional value. The EACD recommends that the Minister direct the Ministry of Health to conduct further research into the potential harms associated with the use of BZP. The EACD recommends that the Minister direct the Ministry of Health to investigate the possibility of gathering prevalence data on BZP via the introduction of routine toxicology screening via community laboratories. The EACD recommends that the Minister direct the Ministry of Health to examine options for new categories of classification that can incorporate some levels of control and regulation, such as an 18 plus age limit, without prohibiting access to these substances completely. This paper should be made publicly available (eg, posted on the National Drug Policy website www.ndp.govt.nz) as soon as practicable.” There is a little bit there about media enquiries, which I do not think we need to go into further. So that is a summary of the recommendations.

As we have heard, the National Party is supporting this bill. In conclusion, I tell members that I have a copy of this report available for tabling.

BARBARA STEWART (NZ First) : On behalf of New Zealand First, I rise to support the second reading of the Misuse of Drugs (Classification of BZP) Amendment Bill. It is a very important bill and one that we should have seen earlier. In fact, we should have seen this legislation when the Misuse of Drugs Act was talked about in the last Parliament. I remember New Zealand First being the only party to put forward a Supplementary Order Paper seeking to ban benzylpiperazine (BZP) at that point in time, because we were unsure of the long-term effects of this particular substance. Needless to say, the Supplementary Order Paper was voted down, because New Zealand First was the only party that supported it—and perhaps United Future. So we are very pleased to see that this bill has returned from the Health Committee, as we believe that this is an issue that needs to be progressed, and progressed quite quickly, particularly as the Expert Advisory Committee on Drugs has issued a report—which we have heard at length—and has advised against BZP being freely available. We need to take notice of those committee members; after all is said and done, they are the experts.

There have been no long-term studies into the effects of BZP on young people, and although we have some people who say there are no ill effects, it has never been scientifically proven. The substance, basically, has not been around long enough to have been fully studied, and, quite honestly, we do not want our young people here to be the case studies for other countries around the world where BZP is banned. The substance cannot be guaranteed to be harmless. It is a concern, particularly when we see the large quantities that some young New Zealanders have consumed and are consuming. We believe that a precautionary approach to substances such as this should always be taken; we cannot afford to test the water with both feet. This is a whole generation of young people that we are actually experimenting with. We in New Zealand First do not want our young people to be unwittingly part of a huge health experiment—something that has not been done on this scale before. Being a lab rat, particularly unwittingly, is basically not good enough, even though our young people appear quite happy to take these drugs, regardless of the risks that surround them.

We have had reports from emergency departments that indicate a lot of concern by those in the medical profession for the young people who have had bad reactions from exposure to this drug. Unfortunately, this has not deterred most young people. When one is young, consequences always happen to somebody else, never to oneself. Young people drink alcohol and pop party pills, even though there is a warning on the pack that these two substances should not be mixed. We know that it is very difficult for some people even to follow the instructions of their doctors and pharmacists when taking prescription drugs, so it is no surprise that when young people go and buy these party pills from dairies, garages, and other outlets, they do not follow the instructions on the packs of party pills, particularly when they are very keen to get into the party mood.

I know that some parties in this House say that the health effects of alcohol and tobacco are just as bad, if not worse, than BZP—and we will hear from those speakers later on—so in New Zealand First we ask why we have to add another substance, like BZP, to this list. Enough grief is caused by alcohol and tobacco. Have we learnt absolutely nothing? I do not believe that we have. We are trying to do something here, and New Zealand First definitely supports this bill. We believe that we cannot afford to gamble with the lives of young people and have future health problems of massive proportions on our hands. We already have more health problems than the district health boards can cope with, so why should we add extra challenges?

We realise that this legislation will not actually stop the party pill culture or the widespread consumption of some other substance promising to offer the same type of buzz or high. No doubt the second generation of party pill is already well on the way, and we can only hope that a precautionary approach by the expert advisory committee will be followed on those particular substances, because we know that boundaries will be pushed on every substance.

It never ceases to amaze me, and perhaps others in this House, that manufacturers never have to prove that party pills are safe before they are actually put on sale, yet manufacturers of food, drugs, and medicines have to do so. It seems rather ironic that a loophole in the Misuse of Drugs Act can be exploited. We know that it is there, but we have taken no action to rectify it. Only last year we read of a person who took part in a trial of non-BZP pills and was hospitalised when he found himself with problems like being unable to breathe, going numb, and having his blood pressure almost doubling. So there are challenges ahead, we say. There are lots of issues ahead with party pills; in New Zealand First we look forward to dealing with them. We will have to add all of the new substances to this legislation, or even enact other legislation, as these new substances become available.

Another great concern we have with party pills is that manufacturing standards cannot be guaranteed under the current voluntary regulations that operate. We have to acknowledge the Social Tonics Association, and its attempt to have a voluntary code for the manufacture of party pills in order to try to limit the amount of BZP in a tablet, to place warnings on these coloured and highly emotive sounding packets, and to restrict sales to people aged over 18. But of course we know that that code is only voluntary and there is no follow-up to ensure that these manufacturers are actually following this code in any way, whatsoever. It is a big concern.

One of the most urgent problems is the continued supply of BZP in excessive and sometimes dangerous doses by irresponsible operators. To buy it in a paper bag is not really good enough, and we know that that has been a particular problem in the Christchurch area.

New Zealand First is very pleased to see this legislation come before the House. We know that something has needed to be done. We are pleased that at long last it is being done, and we look forward to the speedy passage of this legislation through the House.

METIRIA TUREI (Green) : The Green Party policy on these matters is about reducing harm. We believe that a drug-free lifestyle—and that includes that unlike the lifestyle of all the drinkers out there—is the healthiest, and that all drug use, regardless of whether legal or illegal, can cause harm. But it is also a fact that not all drug use is problematic, and that many of the Government policies in this area exacerbate harm rather than reduce it. Unfortunately, with the Government having failed to learn any lessons in the past, this bill is a classic example of that failed policy.

The Green Party favours strict regulation of party pills, not prohibition—regulation, such as heavily enforced age restrictions, restrictions on sites where outlets can be placed, mandatory health information, quality and quantity controls of the drug itself, severe restrictions on advertising, and severe penalties for breaching such regulations. This approach would much more effectively address the problems that have been raised by members in this House, rather than criminalising users and putting the control of these drugs into the hands of organised crime. We supported the Manukau City Council’s ban on party pills being sold at bottle stores, for exactly this reason. The council made a very good decision. This legislation will be a disaster for this country and for young people, who often are the ones who tend to take party pills more than older people.

Jim Anderton’s crusade against the Green Party, which again he launched into this evening, includes wrongly blaming us for his Government’s failure to prioritise his bill, which therefore made him look ridiculous. He promised the bill would be passed before Christmas and failed to make sure that it would happen. He cannot disguise the fact that this is politically expedient, knee-jerk legislation that will increase harm, rather than reduce it. Some MPs—some have done it tonight—and some media will be able to thump the table about being harsh on drugs, but this bill will result in many people switching from party pills to more harmful illegal drugs, such as methamphetamines, and the new generations of illegal pharmaceutical drugs that are coming through all the time. There is good evidence—and Barbara Stewart talked about it—of new generations of party pills being developed that may cause increased harm. The Government is giving away its ability to control that. So, rather than reducing harm and offering less harmful options to consumers, we are back to driving this recreational substance underground and boosting the illegal market for some wealthy drug dealers.

We have long deplored the widespread uncontrolled availability of party pills, including the fact that we can get them in dairies and gas stations, and the fact that the Government and Jim Anderton have made no attempt at all to reduce their availability through the regulations that Jim Anderton has available to him right now. There has not even been any real enforcement of the age restrictions on the access to party pills. It is absurd that Parliament is making a legal substance illegal before it has used any of its regulatory powers to control the access to, and the sale of, that substance. The 2005 change to the Misuse of Drugs Act provided that regulations could be made to restrict where party pills could be sold, and the manufacturing, dosage, packaging, and marketing of them. These are regulatory powers that the Government and Jim Anderton have in their hands right now. But they have not been used at all. The Health Committee was informed by submitters that there has been virtually no monitoring or enforcement of the party pill industry by enforcement authorities. So the Government has allowed this ready access to these drugs; it has not done a thing about it. There is little wonder that the status quo is not working, and party pills are widely available because the Government has allowed it to continue.

The select committee was told that the Expert Advisory Committee on Drugs initially recommended that party pills be controlled by regulation but later changed its mind and opted for prohibition on the basis of two reports that were not peer reviewed until the middle of last year. Several submitters to the select committee criticised the key research paper that was prepared by the Medical Research Institute. All of the reviews, including the ministry’s review, concluded that the study was so flawed that its findings had no scientific credibility. Given that the science on which this legislation is based is utterly flawed and there is no scientific basis for it, what is the heinous evil that this Government is trying to remedy? The Expert Advisory Committee on Drugs described benzylpiperazine (BZP) as a moderate risk and agreed that there is no evidence of aggressive behaviour, sexual assault, or date rape type behaviours from its use. There have been no recorded deaths solely as a result of BZP use. Should BZP be made illegal, this will discourage people who continue to use it from seeking medical advice. We have seen that same kind of research come out around other drugs that are illegal as well. It stops people getting help when they need it. There is no guarantee that scheduling a substance will reduce its availability or its potential risk of harm, so making it illegal is not going to change anything. Why do the MPs in this House, and this Government, not understand and learn from the experiences of the past. We cannot control a substance if we prohibit it and put it into the hands of an underground industry over which there is no control or regulation.

This legislation puts our people at risk, directly and clearly, when the alternative is to regulate and therefore be able to control how our kids might get access to these drugs. About 20 percent of New Zealanders have used party pills. They have been used for a number of years by around 400,000 New Zealanders, consuming about 26 million pills covering 10 million different occasions. All of the available research shows that simply banning BZP will send those people into the dangerous, illegal markets where they will be able to access other street drugs, including P. Mr Anderton cited the fact that young people can buy party pills from dairies and gas stations; he was talking about that earlier. But, again, I reiterate that he is responsible for that easy access, because he refused to use his powers to control it. It does beg the question of why he decided to do that. He had the option of making regulations but he chose not to because he was pursuing a prohibition approach. Does it serve his interests that our 13-year-olds have been able to access these drugs? Does it serve his interests that there has been no monitoring or enforcement, and therefore there is a proliferation of the sale of these drugs in easy places such as gas stations and dairies? What was Jim Anderton’s motivation behind failing to use his powers to properly control and regulate these drugs, when this was the legislation he wanted to bring to the House to put in place prohibition and give these drugs back to the illegal drug markets, over which he has no control?

People have spoken about the dangers of BZP, and all drugs have dangers. Last night Jo Goodhew spoke in the debate on the Alcohol Advisory Council Amendment Bill and talked about the police, who deal with over 250 alcohol-related incidents every night of every day of the year. That is a terrible record for the police, and a terrible indictment on the harm that alcohol causes to our society. The select committee was told that the recorded adverse effects from party pills included things like anxiety, headaches, nausea, vomiting—they sound quite familiar, do they not, to anyone who has ever had a hangover—and heart palpitations. We know that so many other legally sold pharmaceutical drugs have these effects, and often far worse ones that cause psychosis and adverse health effects, but there are no moves to remove them from sale—nor alcohol, which we know causes so much damage, nor tobacco, which we know kills 5,000 New Zealanders a year. Five thousand New Zealanders a year are killed by the use of tobacco, and 1,000 are killed from alcohol abuse. They are killed by these drugs. Where is this Government’s commitment to protecting those young people, those families, from these drugs? It does not exist, because those drugs are accepted by this Government as being justifiably usable in this community. But when young people are finding alternatives to these drugs—alternatives that do not kill them—their choices are being taken from them and they are being driven to the illegal underground drug markets instead. They are being put in the hands of people who have no consideration or care for their health or well-being.

It is a disgrace that this Government chooses to criminalise and threaten those young people, while protecting other drug industries, such as the alcohol industry and tobacco industries, because those are the kinds of drugs that the members of this Government prefer to use. Those are the choices that are being made here. It is disgraceful that this legislation is before the House. The Green Party opposes it and will continue to do so until we can try to get some sensible, rational, evidence-based legislation around drug use in this country. Thank you.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) : Kia ora, Madam Assistant Speaker. Kia ora tātou e te Whare. It seems to me that all of the pump and preaching, the moralising, the ranting, the pontificating, and the sermonising around this Misuse of Drugs (Classification of BZP) Amendment Bill is nothing but a wall of noise to hide the lack of information and the dearth of quality research about the use and effects of benzylpiperazine (BZP).

When I was able finally to peel back the noise, what I saw reminded me of a court case I was involved in back in 1981 where the prosecution had spent more than 2 years trying to stitch me up with what amounted to nothing more than insinuation and innuendo—minimum facts and maximum allusion. The prosecution case was so bloody flimsy that I described its efforts in my summing up to the jury with the well-worn cliché: “It seems to me that if you cannot dazzle them with brilliance, then you bamboozle them with bullshit.”

That is what this bill is all about—bamboozling people with bullshit to cover up a lack of proper research. Well, I won my case back in 1983—it started in 1981, but went for 2 years. But I won it, and so should all the poor kids whose health and well-being is being shamelessly trotted out as the basis for banning party pills. What this bill does do, though, is confirm the view that even when all the best advice says one thing if the Government is set on another course of action, then the Government wins out every time. It is like the Foreshore and Seabed Bill, for example, which had 2,171 submissions, 186 presentations, 10 consultation hui, and some 45,000 people marching on Parliament. It was an unprecedented rejection of this Government’s theft and extinguishment of Māori rights, and what did the Government go and do? It ploughed ahead, anyway. This bill is pretty much the same situation—80 percent of submissions opposed it and the Government is going ahead with it anyway. Go figure!

If that is not bad enough, even the opinions of the supposed jewel in the crown of youth development, the much-vaunted and widely promoted Youth Parliament of 2007, have been completely ignored. The Youth Parliament received submissions on the status of benzylpiperazine (BZP) from the Ministry of Health, the New Zealand Social Tonics Association, the New Zealand Drug Foundation, Care NZ, and the University of Otago. The Youth Parliament’s report, tabled in this House on 11 July 2007, stated: “The Health Committee has come to the conclusion that [BZP] should become legal with strong regulations surrounding party pills. We have decided on this because, due to little research having been done, there is insufficient evidence proving the long-term effects of this drug. … The Health Committee recommends to the Government that party pills should become legally available with heavy restrictions on advertising, on the age that people can purchase and use these party pills, and on who can sell the party pills and where.” Yet, despite the majority of submissions opposing the bill, and despite the strong recommendations of the Youth Parliament, this bill is still before this House for approval.

So what do we do about it? Well, back in the 1980s and 1990s Nancy Reagan of the National Party proposed the “Just Say No” campaign against drug use, which later shifted over to “just say no” to premarital sex and a list of other vices that America was trying to steer its young people away from. [Interruption] Oh, the Republican Party, was it? I am sorry. But that campaign was a failure, because it tried to oversimplify the scope and the nature of the problem, and it did not deal with the realities of drug abuse. What we need to do is to start looking at more comprehensive and meaningful approaches rather than merely focusing on users.

Let me be quite clear: the Māori Party is opposed to harmful drugs, including alcohol and tobacco, and we are equally committed to stopping substance abuse. But we also want the best information available to make our decisions, and we have found out that over the last 5 years our society has popped some 20 million party pills, with no recorded deaths. That is not to downplay any of the harmful effects of BZP—the nausea, the headaches, the hot and cold flushes, the poor appetite, the tremors, and the shakes. Mind you, those are the same symptoms that Parekura tells me him and his mates in the Labour Party Māori caucus have been suffering since the last Marae DigiPoll came out.

It is still a matter for concern that party pills have become such an entrenched part of youth culture, particularly given the young age of the Māori population and the high risk of substance abuse. But prohibiting the manufacture, sale, supply, and use of party pills will not solve the problem at all, because party pills, like alcohol, dak, and assorted other drugs, are drugs that people want to keep taking. When drugs are made illegal what actually happens is that people keep taking them, but the price jumps through the roof, and drug use becomes unregulated, unrestricted, uncontrolled, and unmanageable as the black market takes over. Of course, everybody is thinking: “And what about cigarettes, Hone?”. Well, unlike all those other drugs that people like taking, 80 percent of smokers actually want to stop, so banning the manufacture, supply, and sale of tobacco products simply does not have the same effect.

The most effective way to deal with party pills is not prohibition, but a properly enforced, strongly regulated harm minimisation approach, and the evidence shows that when drugs are effectively regulated, drug use and drug harm drops. Tighter regulation, health warning labels, controlled access, and quality and quantity controls have proven to be way more successful than prohibition. Youthline told the select committee that banning would not change anything, and other submitters also confirmed what we already know—that prohibition has no effect on the demand for drugs at all.

In conclusion, let me again say how hypocritical it is that this House can put all this energy into getting tough on BZP, while alcohol and tobacco abuse continues to maim and kill Kiwis in their thousands. Members should remember what I said before: that over the last 5 years more than 20 million party pills have been popped with no recorded deaths. Can we say that about alcohol and tobacco, though? Hell, no; hell, no! Alcohol and tobacco use and abuse have been researched to death, and we know, this House knows, the people know, and indeed the whole world knows, that alcohol and tobacco are directly responsible for the deaths of thousands upon thousands of New Zealanders every single year. Yet—I will say it again, because it is as important as that—alcohol and tobacco are directly responsible for the deaths of thousands upon thousands of New Zealanders every year, and what do we do about it? We do nothing; nothing at all.

Where do we get off on banning the drugs that kids like, while condoning the drugs that our generation goes for? Is that what we call showing leadership? It sounds like pretty gutless and petty jealousy to me. It sounds like we do not want young people to have fun, because we are too old for it. I have no issue with trying to come up with a decent answer on party pills, but let us not kid ourselves that we are banning party pills for the good of our youth, while turning a blind eye to the alcohol and cigarettes that are killing them in their thousands every single year. They tell me that I cannot use the word “hypocrite” to describe members in this House, so I will not. But let me tell members that it would take a great dose of duplicitous, deceitful, and dishonest double-dealing for anyone to allow this bill to go any further in this House. The Māori Party agrees wholeheartedly with the Green Party on this. Let us kill this bill and get on with reality. Kia ora tātou.

RODNEY HIDE (Leader—ACT) : I agree with my colleague from the Māori Party that this legislation is hypocritical. The ACT party will be joining the Green Party and the Māori Party to oppose this bill. Normally, I always listen to Barbara Stewart’s speeches most carefully, because I have come to admire her contribution to this Parliament, but I have to say that I think Mrs Stewart is wrong on this issue. She said we should look to ban things because they might cause harm. I just want to dissect that thought a little bit.

Hone Harawira: Let’s ban Māoris, then.

RODNEY HIDE: Well, we should certainly ban Hone Harawira if that is the case!

Is that really what we think Parliament is about—banning things because they might be bad? It seems to me that risk and danger are part of life. I think we make the same mistakes with sports and accidents. Parliament is trying to create in a world where we cocoon everyone from the risks and realities of living in the world—and that would be the direct consequence of what Barbara Stewart was saying here today.

I go a bit further and pick up the point that the Green Party and the Māori Party have made. I think we overestimate what this Parliament can and cannot do. We sit in this House and pontificate as though all the young people who might be taking party pills are listening to us say that party pills are bad and as though, on a certain day in a certain year, they will therefore suddenly stop taking them. It is as though we think that these young people will know this legislation has been passed and that—oh my goodness—the police might come, and that will make them stop. That will not happen, and anyone in this House who thinks it will happen needs to get out more.

Barbara Stewart: We don’t think it will.

RODNEY HIDE: Barbara Stewart says New Zealand First does not think it will happen. So are we passing this legislation for looks? For the signal it sends? So we can stand up in the town halls and tell the mums and dads that we stood firm against party pills?

None of us are asking the real question: why is it that our young people want to get blotto? Is that not the question? Why is it that so many of young people, with all their lives ahead of them and with all the opportunities that they have in this great country, want to get blotto? I would have liked to hear Barbara Stewart address that question, because I think New Zealand First has some experience of this, actually.

Barbara Stewart: No, I haven’t taken party pills.

RODNEY HIDE: Well, party pills are no laughing matter. I do not think they are fun. I actually do think they are dangerous. I think any chemical one puts in one’s body is potentially dangerous, so it is not a laughing matter.

We sit around in this House and make a great joke about drinking alcohol, yet the risks with alcohol are not perceived risks—the abuse of alcohol is seriously risky. Alcohol is killing people and destroying lives and families. I do not hear New Zealand First jumping up to ban alcohol because of the risk. I will not name names, but there are people in New Zealand First who are finely acquainted with that drug of choice and very experienced in getting blotto on that drug of choice. But I do not see New Zealand First members standing up and wanting alcohol banned. Indeed, New Zealand First has seen the effects of that drug, sometimes on a daily basis—and the long-term effects. There is also nicotine, the most addictive substance that people can take.

Barbara Stewart: That’s right.

RODNEY HIDE: Barbara Stewart says that is right. Again, New Zealand First has some experience of that drug and the ravages it can cause young people. But do we hear New Zealand First explaining why people are taking these drugs?

Why is it that we are in here banning party pills—which, as far as we can tell, have not killed anyone—when nicotine is killing New Zealanders in their thousands and alcohol is destroying lives left, right, and centre? This legislation is steeped in hypocrisy—not the members voting for it, but the legislation itself.

Another problem with the legislation is that we will just add to the mystique of the drug culture. Funnily enough, we will attract more people into taking drugs, because it will be somehow naughty, just like it was in our day—if Mr Clarkson can remember. In our day we would get a half-g and head down to the riverbed on a cold night and drink it, thinking we were terribly naughty. Now it is party pills and other drugs. By passing this legislation we will put serious drugs up there with party pills. People will try party pills and say: “Oh, that wasn’t so bad. What about the other drugs that are available?”. Also, there will be no regulation on party pills and the other drugs we prohibit, so they will be freely available 24/7 everywhere one goes. That is a grim reality of passing this legislation.

Here is the next thing that will happen. The legislation will empower the gangs and make them rich and powerful. New Zealand First talks about the gang culture in New Zealand and thinks it can deal to the gang culture by getting rid of patches and fortifications. Actually, the way to get rid of the gangs is to get rid of prohibition, because it is actually the prohibition that enriches the gangs, gives them the money, and leads to the violence that we see so much of in New Zealand. The slayings that we are seeing are related to money made from drugs. We will not deal with that by making another drug illegal.

I ask members of Parliament to think a bit harder before we run to the legislative pen to make ourselves feel good and somehow moral because we are stopping a scourge. By adding more drugs and more prohibition, and bringing in more police, we are making matters worse. We are powering up the gangs, we are deregulating drugs, we are encouraging people to join the underground drug culture, and we are adding to the violence and misery in society. And we are not even doing it in a way that is consistent or principled. If we are to deal to the drug culture in New Zealand, it will be through the lessening and the ultimate removal of prohibition, and through a real inquiry by us and others into the dark corners of our society in order to question why, with the wonderful God-given mind each of us has, and our wonderful bodies and wonderful opportunities, so many of us, so often, want to get blotto and call that fun.

Dr PAUL HUTCHISON (National—Port Waikato) : I rise to speak on the Misuse of Drugs (Classification of BZP) Amendment Bill. I certainly take very seriously the points that have been made that alcohol and tobacco morbidity and mortality are the most significant effects of drug usage in New Zealand. There is no doubt about that, but I think it is also salutary to remember that it was not until 1963 that Sir Richard Doll clearly discovered the connection between the use of tobacco and lung cancer.

One of the remarkable things about party pills is that they are extremely new on the scene in New Zealand. In fact, I can refer to a very interesting article by Carroll du Chateau in the New Zealand Herald in May last year where she puts out a fact file that says that party pills, often advertised as herbal highs, have been available since late 2000. That is very, very recent in the history of personkind, given that alcohol and tobacco have been used for many, many centuries.

Hon Trevor Mallard: That’s a bit PC. What’s this “personkind” business?

Dr PAUL HUTCHISON: “Humankind”, if you like, I say to Mr Mallard. Carroll du Chateau also says that although legal, party pills are chemically designed to mimic the effects of ecstasy and P, which we all know have extremely serious effects. She goes on to say that users become more sociable and wakeful and that adverse effects include insomnia, seizures, nausea, vomiting, and headaches. She also says that experts argue that criminalisation may drive pills underground, which is, indeed, a very serious argument.

The article brings up the trial that Professor Richard Beasley conducted in Wellington over a few years. I must say that the professor is someone who is highly regarded for conducting international clinical trials. It was pretty unusual for him to decide to abandon the trial because of the bad reactions from those who were taking the benzylpiperazine. He basically said: “We were concerned about the nature and severity of the adverse events range of side effects from anxiety to panic attacks, headaches and migraines, through to vomiting.” Consequently, the first-ever clinical trial of benzylpiperazine was abandoned. That gives us some context to the fact that this is a very contemporary phenomenon and that the first-ever clinical trial was abandoned because of the concerns. One might say that the clinical trialist has an incentive to carry on, because he is paid to carry on and complete such a trial. He gave up because of the concerns he had regarding it.

Obviously there has been huge—as Hone Harawira would put it—pump, preaching, cant, and moralising around the country on this issue. It is very important that we try to keep things as evidence-based as possible. There is no doubt that right throughout New Zealand we have had emergency service specialists comment on how concerned they are about the new phenomenon of admitting people—from age 7 to 93 in one instance at the Waikato Hospital emergency department—who have taken benzylpiperazine and its derivatives. The difficulty in getting an evidence base behind their effects is that so often they are mixed with other compounds—whether it be tobacco, alcohol, other party pills, or more serious ones such as Ecstasy, it is very hard to tell. But we do know that there are some pretty serious side effects, even if, as yet, deaths have not been recorded.

The other great concern is whether benzylpiperazine is one of the many gateway drugs. Again, the evidence is actually not very clear, although here at Victoria University a study believes that party pills users are 10 times more likely to be users of LSD, Ecstasy, and Ritalin. The report author, Kate Bryson, concluded that “party pills aren’t fulfilling their purpose of reducing illegal drug use—for drug users, they’re just another item on the menu.” This conclusion is shared by a further study from Auckland City Hospital.

One of the things we have relied on in New Zealand has been the Expert Advisory Committee on Drugs. Its mandate is to ensure that drug classification decisions are evidence-based, appropriate for our domestic situation, and consistent with international obligations. It has quite a wide spectrum of duties to fulfil. I vividly remember its report from 2004 when I was on the Health Committee; I think both Katherine Rich and I were on it. At the time the recommendations were very clear that, firstly, at that stage of events it was not appropriate to reclassify benzylpiperazine. In fact, the recommendation said that there was no current need for rescheduling the Misuse of Drugs Act. Secondly, it said that the Minister for Food Safety should be requested to consider the appropriateness of permitting the chemical benzylpiperazine to be sold as a dietary supplement, because at that stage it was. It seems pretty bizarre to think that was the fact and that indeed young New Zealand children could buy it next to the jelly beans in outlets throughout the country. The report of the Expert Advisory Committee on Drugs went on to recommend that the Ministry of Health conduct further research into potential harms and that the Minister direct the ministry to examine options for new categories of classification, levels of control, and regulations such as an 18-plus age limit, without prohibiting access to these substances completely.

That was in 2004. Since then a further report in 2006 was carried out by the Expert Advisory Committee on Drugs and another in May 2007, that were quite conclusive. There is no doubt that there have been divergent opinions, and it was not a unanimous view by that committee, but it did recommend that benzylpiperazine be reclassified into class C, that the classifications class C1 drug covers all known analogues, and that benzylpiperazine be removed from schedule 4 in order that it no longer be a restricted substance. They also said that work should continue to further develop the regulatory framework and enforcement capacity that would support the restricted substances provisions of the Misuse of Drugs Amendment Act. I would like to add that if one looks at schedule 1 and schedule 2 of this new amendment, one can see that it includes not only benzylpiperazine but many of its derivatives, such as—as stated in schedule 1—“(3) The isomers of the substances mentioned in clause 2”, “(4) The esters and ethers of the substances mentioned in clause 2”, and “(5) The salts of the substances mentioned in clause 2”. Back in 2003 somewhat radical legislation was brought into this Parliament by the rapid scheduling mechanisms, because we know that those dealing in drugs, the gangs involved, and the big money people behind them are extremely keen to re-alter the chemical composition of the drugs so that they do not fit in with the legislative descriptions. That is very important if one is going to schedule them and make sure that they are well covered.

I would finally like to say that I intend to bring up an amendment that would require monitoring of this legislation, if it is passed, and a report to the relevant parliamentary select committee in 2½ years’ time on the effects of having rescheduled these substances, because I believe that if there are adverse effects then Parliament should be made formally aware of them.

Hon TREVOR MALLARD (Minister of Broadcasting) : I move, That the Broadcasting Amendment Bill be now read a second time. First of all, Madam Assistant Speaker, in the first opportunity that I have been allowed with you in the Chair, can I congratulate you on your elevation. We are old friends, and I am pleased there is a reasonable distance between us so that your normal approach to sorting me out cannot be used. In fact, it is relatively close to another member’s approach to sorting me out, for which I got into some trouble! Also, I know that broadcasting is an area you are interested in, and for which you had responsibility for some time.

I am pleased to note that the Commerce Committee has reported the Broadcasting Amendment Bill back to the House. It examined the bill and recommends that it be passed without amendment. I express my appreciation to the select committee. Only two submissions were received on the bill. I take this as a very positive sign that the changes suggested by the bill are timely and relevant. I would like to emphasise also that the broadcasting funding agencies affected by the bill have been closely involved with its development, and are in accord with its purpose and form.

I would like to remind the House briefly of the bill’s content, purpose, and scope. The object of the bill is to bring New Zealand’s broadcasting funding agencies—New Zealand On Air and Te Māngai Pāho—into line with the digital age. Analog transmission will be obsolete within a number of years, both in a number of overseas countries and here in New Zealand. At the same time broadcasting light content is appearing on a variety of media devices or platforms, such as the Internet or on mobile phones. Those new platforms are being used by broadcasters and content creators to retain and expand their audiences and to serve them better. Under the Broadcasting Act 1989, however, the broadcasting funding agencies do not have the ability to provide funding for the content on those platforms.

Figures from the last census show that in 2006 just over 60 percent of households had access to the Internet, and 74.2 percent had access to a mobile phone. I expect that those figures would have increased substantially since that time. There is a whole generation today—the digital native generation—who take digital technology for granted. They speak a different language, and it is fair to say that the group is not confined to one generation. I think there are a number of notable people, including senior members of this Parliament, who are renowned for their texting, sometimes in a full, short, and frank manner. Some people of the younger generation, though, have grown up texting their friends and using the Internet, and it is vital that they have access to quality local content as they use these new programmes.

To summarise, the bill has three main effects on the Broadcasting Act 1989. First, it amends Part 4 of the Act, relating to the functions of the funding agencies. It permits them to fund the production, transmission, and archiving of new forms of digital content, such as via the Internet or mobile phones. The bill extends to these new areas the Act’s existing provisions relating to the promotion of New Zealand content and the requirement for agencies to consult various interests when making their funding decisions. The bill also carries over the Act’s existing protections against ministerial interference in such decisions, and the requirement for funding proposals to be consistent with the standards of section 4(1) of the Broadcasting Act 1989.

Content on other platforms will be subject to the same set of rules that govern various non-broadcast media under the Films, Videos, and Publications Classification Act 1993. These extend into content viewed on the Internet.

Sandra Goudie: Mumble, mumble.

Hon TREVOR MALLARD: Who’s that? Oh, it is Sandra Goudie. She is here. It is wonderful; the member is back again. That is the best contribution that Sandra Goudie has made in this House for at least 1½ years.

Hon Paul Swain: It must be pay week.

Hon TREVOR MALLARD: Well, it is pay day—she has turned up. The only time Sandra Goudie comes to the House to make a noise is when it is pay day and she has been out to dinner.

The functions are presented as supplementing and enhancing the delivery of the agencies’ existing objectives, which the bill deems to be primary. The essential role of the agencies—

Sandra Goudie: You can’t even speak properly.

Hon TREVOR MALLARD: The member says that she wants to speak, but they will not let her. Well, I am with National’s whips; I would not let Sandra Goudie speak, either.

The essential role of the agencies, to subsidise content where it would not otherwise be produced and is not considered to be commercially viable, is not altered by the bill.

Secondly, the member opposite will be pleased to know that the bill adds two new terms, or definitions, to section 2(1) of the Act—the interpretation part. These definitions are “content” and “transmit on demand”. Seeing that the member has no content and that there is not much demand for her, I think it will not mean much to her. But these terms encompass types of content or producers of content intended for digital platforms that currently fall outside the Broadcasting Act’s definitions of broadcasting and programmes, because when the legislation went through in 1989, people were not thinking about digital content. The existing definitions, which also apply elsewhere in the Act, will be retained, but for the purposes of the two funding agencies, they will be supplemented by the new terms. They will allow the Act’s concepts to extend over the increasing array of interactive and on-demand forms of distribution made possible by technology.

I say to members that there is a very interesting discussion document out at the moment, which I would recommend to people. This area is pretty agreed and, one might even say, dry. There is not much debate about this area. But the discussion to be had about the question of convergence and what that means for our regulatory environment is something that is very important going forward. If we do not look at it, then we do not look at it at our peril.

Dr Jonathan Coleman: If we don’t look at it, we don’t look at it.

Hon TREVOR MALLARD: We do not look at it at our peril. The member knows a bit about peril—the member got a bit of peril when he smoked a cigar, I think. [Interruption] Shall we go back to that? I am happy to have that debate anytime.

Chris Tremain: You’re happy to hop into that ring, aren’t you?

Hon TREVOR MALLARD: Well, I am happy to compare myself with Nick Smith, who, of course, dropped John Carter; and with David Carter, who hit Roger Sowry—shall we go through the list of National Party members?

The ASSISTANT SPEAKER (Hon Marian Hobbs): No, I think we would prefer to be getting on with the speech.

Hon TREVOR MALLARD: Well, I—[Interruption] Is it? None of it was recorded. None of it was recorded at the time, I think—thank goodness!

Third, and finally, there is an important change to allow Te Māngai Pāho to fund the archiving of Māori language and culture programmes in general. Of course, this is something that should have happened originally.

To sum up, it is vital that our broadcasting infrastructure and ways of supporting local content remain relevant and effective in the digital era.

Dr Jonathan Coleman: That’s what the officials are telling us, anyway.

Hon TREVOR MALLARD: Well, some of us are slightly ahead of officials on digital matters, and some of us—I think it was Mr Swain, back in about 2000—had quite a lot to do with this area of work, working closely with the then Minister. I am not sure what has happened in the interim, but I am glad that we have made some real progress now.

Dr JONATHAN COLEMAN (National—Northcote) : Members will notice that the Minister was rather flat when he was talking about broadcasting. He picked up a bit when he got into the personality stuff, and was back to the old Trevor Mallard that we have all come to love and admire. It was getting a bit quiet there when Trevor was trying this reform stuff. But now that he is back to his old ways I must say it returns that interesting dynamic to the Parliament.

He said in his speech that there is not going to be much debate on broadcasting. Well, he might think that, but what he is doing is going around the sector saying: “Look I’m very busy, I’ve been dumped with this portfolio, Steve Maharey is going, and actually I don’t know anything about broadcasting.” Unfortunately he cannot interject now because he is not in his seat, and he is leaving the House. The new seat that he has moved to is not his usual seat, so he cannot interject from there either. He cannot go around the sector and be credible if he is telling people that he does not actually know anything about broadcasting because, as we have heard, and as the officials have told him, we are actually facing some very complex issues in the digital broadcasting arena. National will be supporting this bill. The Minister did get this bit right—the bill will update the funding arrangements to bring them in line with new digital technology. Up until now New Zealand On Air and Te Māngai Pāho, the Māori broadcasting agency, have been able to fund radio and television programmes only. That dates back to when this Act was instituted, when we had only radio and television.

When one looks at the new environment with the Internet, mobiles, podcasting, and video on demand, it is quite clear that broadcasting material is going to be delivered on a lot of new platforms. This means that those broadcasting agencies are going to be able to fund content that is specifically made for these new platforms. So no one could really object to this bill, because it is just bringing the funding arrangements into line with the new technology.

Additionally, it will allow New Zealand On Air to archive Māori culture and language programming; Te Māngai Pāho is going to be able to fund the archiving of Māori language and culture programmes. With the increasing amount of content we have in that area that is a logical and desirable development, and National certainly will support it.

The Commerce Committee heard just two submissions on this bill, and the Ministry for Culture and Heritage recommended no actual change to the content of the bill. But one thing I think the public will need reassurance on is that if Government funds are to be used to fund programming, that programming has to be available on a free-to-air platform and that is something we will have to look at. We would not want that publicly funded content to be available only on a pay-to-view basis. That is something we need to look at in the Committee stage.

Trevor Mallard said that there is not a lot of debate in this area. The fact is that when we look at what has happened under Labour, in terms of broadcasting policy, it is quite clear that it has been a complete failure. We had a Minister of Broadcasting, Steve Maharey, who basically saddled Television New Zealand (TVNZ) with this dual remit. It is supposed to be a commercial broadcaster and it has to return a dividend for the Government, and at the same time it is shackled by the charter, and we saw what the result of that was last year. The 2007 financial result was that TVNZ, for the first time in its history, managed to make a loss of $4.5 million on $375 million of revenue. That is really quite amazing. How on earth can $375 million of revenue be turned into a loss? It almost defies belief. But we cannot actually blame the executives and management at TVNZ; it comes back to the problems with the Government’s broadcasting policy that is making TVNZ produce this charter programming and at the same time it is insisting on a commercial return.

There is this problem at TVNZ because now with digital television we have these two channels, TV6 and TV7, that have been funded with $79 million of taxpayers’ money and an extra $25 million on top of that—$104 million in total—and which, if they are going to be successful, will suck audiences away from TVNZ’s Television One and TV2 channels. That will further decrease the audiences of those channels, which will further decrease advertising revenue. If TV6 and TV7 are successful, it is really going to hit Television One and TV2. Then again, if they are a failure, well they are a failure and they will have been a waste of taxpayers’ money.

So at TVNZ, as a result of this Government policy, we have developed almost the perfect storm for destroying revenue. If we talk to people from TVNZ in select committee hearings, they cannot reassure us that the situation will improve because the whole platform is fragmenting: there are audiences viewing stuff on the Internet, and there are things that can be downloaded in terms of on-demand television programming—if people have access to the right software and the right websites. The old model of people being glued to just one channel to see all their television content has been outdated. It creates a problem for TVNZ, and the people there do not know how they will manage to improve things from here. It will be pretty tough for them; they have launched TVNZ ondemand but they say they do not know whether it will be successful. They are putting a big punt on digital television, and this is where this digital review of regulation, which the Minister was so keen to refer to, comes into play.

When we look at it, it is a pretty big document; it is three volumes—about 300 pages. I am sure no one other than officials, broadcasters, and academics have read it. This is the plan of the Government and the Minister for back-door regulation in broadcasting. They are delaying this thing because they do not want it to be discussed before the election; it is 4 months behind schedule already. But it will mean that if the Government is going to make FreeView a success, it will end up having to regulate in some way. That is something it knows will be unpopular with New Zealanders. The Government has just dressed this up in the guise of consultation, it is laying out the options, but at the end of the day Labour has a secret agenda to regulate broadcasting.

Mr Mallard is smiling, but he would love to do that. He has taken over Mr Maharey’s portfolio and it is well known that Mr Maharey, from the hard left of the Labour Party, would love to completely socialise broadcasting—there is no question about that—and this is the danger that the public has to be aware of.

The charter is one of the roots of the problem at TVNZ. Basically the charter is a pretty meaningless document, but TVNZ is saddled with it and it has to deliver on it. But it shows what a farce Labour’s broadcasting policy has been. Steve Maharey said that when we got the charter things would be much, much better.

Russell Fairbrother: Turn the volume up a bit!

Dr JONATHAN COLEMAN: I ask the burnt-out former member for Napier, Russell Fairbrother: is the content on television, after the charter, any different from what it was before the charter—yes or no?

Russell Fairbrother: Far better—it’s far better. It’s a working man’s channel; a working man’s culture.

Dr JONATHAN COLEMAN: There we go. I think that is the measure of Russell Fairbrother. We essentially have this dilemma that TVNZ has been placed in, by this failed, tired, burnt-out Government of failed academics, old unionists, and party hacks. This Government has shackled TVNZ with a charter, which means it has to deliver so-called public service broadcasting and at the same time return a dividend. That has created tension, together with the whole way TVNZ has set up its digital broadcasting service. It means that this Government has set up TVNZ to fail. It is getting desperate for them and those at FreeView, because unless it switches off the analog signal, or gets some compelling content on those FreeView channels, it knows they will fail. This is Labour’s secret agenda in broadcasting. It knows that unless it can regulate through this digital review of broadcasting, FreeView will fall over.

Trevor Mallard has announced that in 2012 he will make a decision on an actual, final analog switch-off date. But he has not announced any plan for what will happen to the 800,000 people who will not have digital television.

Hon Member: He won’t be here.

Dr JONATHAN COLEMAN: Of course, that is quite likely. Trevor Mallard may well have taken the honourable option of retirement by that point, and then the whole problem—[Interruption]—Oh, no; he is not retiring. He has nowhere to go.

Hon Trevor Mallard: What! You’re joking!

Dr JONATHAN COLEMAN: No, I would not joke. OK, we are going to be entertained by the Minister, as the previous Minister, for many years to come.

But to summarise, National supports this legislation because it is going to bring the funding arrangements into line with technology. It has some sensible new arrangements for the archiving of Māori broadcasting content, and National supports that. We have great concerns about Labour Party broadcasting policy; it has just about been the ruin of TVNZ. I can tell members that the next Government will have to come in and sort out this situation, because the failed left-wing policies of Steve Maharey, cobbled together with some bizarre commercial theory that he has had about broadcasting, have just not worked. TVNZ is on its knees. The charter has delivered only job cuts and financial failure. I can tell members that in broadcasting, as in every other portfolio, it is definitely time for a change of Government.

Hon PAUL SWAIN (Labour—Rimutaka) : I rise to support the Broadcasting Amendment Bill, which everyone agrees with. It says that the Broadcasting Commission can fund programming that appears not just on television but in a wide range of formats, and everybody knows that is a sensible thing to do. I will ignore the slightly uncharitable comments that the Minister of Broadcasting made about my time as Minister of Communications, and say that this is just a little nibble at a much bigger issue that will in time come back to this Parliament.

One of the sensible things the Minister said was about convergence. It is a huge issue around the world, and it is something that I hope the continued Labour-led Government can grapple with. It is a problem that only a Labour-led Government can grapple with, because it is so complex and so difficult. If it was left to members of a Tory Government, I am sure they would not get the concept to start with, and if they did, I am sure they would want to compartmentalise it.

The real issue is that in this century we have a number of regulatory models. We have a Broadcasting Commission and other institutions that regulate broadcasting and television. We have a Telecommunications Commissioner, who regulates telecommunications, and we have an Electricity Commission, which regulates electricity, but potentially there will be a time when telecommunications go down electricity lines. It will interesting to see whether the Telecommunications Commissioner or the Electricity Commission will regulate that.

Then we have the Internet. There is a strong international push to ensure that it is not regulated. The nature of the Internet is such that people want it to be unregulated and free of international intervention, to keep the spirit of it. Net neutrality is one of the big issues in the United States and also Europe, to ensure that content is not restricted by, for example, telecommunications network providers, which may want to put their own content down at the expense of someone else’s.

So we have a huge number of issues where a number of regulatory regimes are all trying to deal with a problem, and that raises the issue of whether broadcasting can be regulated at all. When we start to see different types of broadcasting formats, whether they be cellphone, the Internet, television, or potentially, as I said, down an electricity line, it raises huge issues about how Governments will deal with the issue of convergence. Although it goes without saying that the Broadcasting Amendment Bill slowly brings Parliament into the 21st century—

Hon Trevor Mallard: It’s more the late 20th!

Hon PAUL SWAIN: Well, the late 20th, yes—we are probably at least 10 years behind, but that is often the way of this place when it comes to new technology.

The real issue that Parliament will have in the future is how it deals with the range of mediums and how they will be regulated. Parliament will have to decide whether to have a single regulator, which some countries are trying to head toward—one regulator that deals with all these formats—or whether there will continue to be a range of different types of regulatory regimes, and, in the end, whether one can ultimately regulate things like the Internet, which people are saying the Government should keep its sticky hands out of.

This tiny little bill is pretty simple, and I imagine everybody will support it because it legislates for a necessity. It raises a huge issue about convergence. It is an issue that all international agencies, in my experience from having travelled around the world, are grappling with. No one has the answer. Everyone is trying to deal with it in a different way. Given the nature of the Internet and telecommunications, its internationalisation and its ability to flow across borders, there will have to be a way to deal with this issue. It will be a huge issue. It will be something that Parliament has to deal with in the future. To future Ministers of Broadcasting, Ministers of Communications, and Ministers of Energy, I say that these are matters that will tax their minds as we move into a much more complex broadcasting arrangement.

I support this legislation, but I think this will not be the last time that we deal with the simple little issue in this bill. The next bills that will potentially come back will be much more complex for Parliament to deliver. During that period I will be watching from the sideline, urging members on, and I will possibly be thankful that this issue, which I grappled with in 2001, is left to finer minds than mine.

LINDSAY TISCH (National—Piako) : As Jonathan Coleman has said, National will support this bill. It is not a big bill; it has only 16 clauses. If we take out the title clause, the commencement clause, and clause 3, “Principal Act amended”, which are three clauses out of 16, the substance of this bill is very, very small. As the previous speaker, Paul Swain, has said, the bill is needed at this stage, but it is probably 10 years behind the times, and we accept that. However, National supports this bill as it is a move in the right direction.

The Commerce Committee received only two submissions on the bill, and we received advice from the Ministry for Culture and Heritage, which did not recommend any changes to the bill as presented at the first reading. It said that the bill stood as it was and that there were no changes to be made. Subsequently, we see at the second reading stage the bill that was first introduced back in September of last year.

The bill provides that funding will be available for a much larger range of digital programming, including programming on the Internet, mobile phones, and video on demand. That is important because we need to keep up to speed with funding for Māori television, and this is one way in which that will be achieved. It also allows for funding for the archiving of Māori culture and language programming. Currently, the Broadcasting Act allows for Te Māngai Pāho and New Zealand On Air to fund only programmes for television, and this is where the change comes. With other media and the way in which technology has moved over the years, this bill will move in the right space. It will allow for rapid advancements in technology, and that is what we support. However, we want to ensure that the funding content will be available to all of the public and not just to certain sections.

One question we will ask during the Committee stage is how widely this funding will be available. It needs to be available to all of the public, no matter where they live, whether it is through analog television, the Internet, or FreeView. We would, of course, be concerned if this funding was used for programming that could be viewed through only, say, pay-per-view or cellphone platforms, and we would hold the Government to account on that issue. So that is one of the questions we will be asking in the Committee stage. We want to make sure that everybody will have access to this funding and that it is not available just through pay-per-view or cellphone platforms.

Another thing that does not help Television New Zealand is its charter, and Jonathan Coleman mentioned this earlier on. What has it achieved over the years? It is meaningless. Its objectives cannot be measured. What will come out of the charter review? We will want to see what happens with regard to these questions. It has been mentioned that there are programmes that would meet the criteria for Māori television. It was mentioned, for example, at the Māori Affairs Committee last year that programmes like Location Location Location and Police Ten 7 satisfy the requirements for Māori programming. I was not on the Māori Affairs Committee, so I do not know, but I wonder whether the old programmes I used to watch, such as I Love Lucy, Mister Ed, and Bonanza, might be suitable programmes. [Interruption] I am sure that there are plenty of programmes that we could identify with.

The public should be worried about all the taxpayer money going into FreeView and Television New Zealand’s new channels. What is the Minister’s plan to make these channels succeed? Those are the questions we will be asking during the Committee of the whole House. It is interesting that although Television New Zealand has had its challenges over a number of years—and Jonathan Coleman mentioned that revenues have fallen, viewership has fallen, and those sorts of things—in the area that I represent, in Matamata, we have a television station, and members of this House have been on its programmes. In fact, this channel, which is now known as tvCentral, has been so successful that it has expanded to take in the whole of the Waikato, into Rotorua, Hamilton, and parts of the Bay of Plenty.

Now, there is lesson there that the Minister might like to pick up on. We have seen that a private enterprise, which has had to go out there and source its funding, has been able to expand over the last few years, and has been very successful in doing so. Yet here we have a Government agency that has great difficulty with funding, with improving its viewership, and with achieving the credibility that a Government-funded television station should have. Once again, we will be asking a lot of questions during the Committee stage.

National supports this bill. We believe that it is a move in the right direction, even though it has been a long time coming. It is a unique opportunity for us to fund those important things in Māori television, and also the cultural side. During the bill’s next stage our side of the House will be asking a lot of questions to make sure we are satisfied in our own minds that this will be money well spent. We really want to know what the Government’s intention will be in terms of broadcasting, because at this stage it certainly has fallen very short of what one’s expectations and the public’s expectations should be of publicly funded television.

DAIL JONES (NZ First) : I was not going to say very much on the Broadcasting Amendment Bill, because everything has been said. It is very simple legislation. No amendments were made at the Commerce Committee, and only one amendment seems to be proposed for the Committee stage. Perhaps there is something else on its way in a minor fashion.

But I listened to Dr Coleman’s speech when he was talking about Labour’s secret agenda on this matter. It made me think, as a member of New Zealand First, about what National’s secret agenda might be for Television New Zealand. I am sure that National’s secret agenda for Television New Zealand is to flog it off to the first foreign buyer it can find. It is such a secret agenda that Dr Coleman does not know about it yet. But everyone else in the country knows about it, and I say to Dr Coleman that if we are going to talk about secret agendas, and if he wants to widen the debate on an issue, he has to expect someone to respond in a similar way. If he wants to be so inexperienced as to allow someone to take advantage of doing that, I will respond to his comments briefly.

There is a difference between New Zealand First and the National Party. We support the retention of New Zealand assets for New Zealanders. We support the retention of Television New Zealand for the benefit of New Zealanders. We oppose the National Party’s secret agenda of flogging off Television New Zealand.

Hon Trevor Mallard: It’s not that secret.

DAIL JONES: Well, it is not very secret. Dr Coleman seems to be surprised, though.

Hon Trevor Mallard: Any intelligent person knows about it.

DAIL JONES: Dr Coleman is an intelligent person, and I am sure that he will now grasp the fact that it is the National Party’s policy to flog off Television New Zealand, along with Auckland International Airport and the few things that are still left in the ownership of New Zealanders, if it becomes the Government. But I can assure the House that New Zealand First will do everything possible to prevent that from happening in the next parliamentary session, when it is also returned to Parliament.

This is a simple bill. I just took the opportunity to respond to Dr Coleman’s comments. Thank you very much.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) : Kia ora tātou katoa e te Whare.

Hon Shane Jones: Oh, again!

HONE HARAWIRA: Tēnā hoki rā koe e te whanaunga.

[And to you especially, the relative, greetings.]

I am sorry that the member was not here during my speech on the last bill. I had some very complimentary comments to make about the Labour Party Māori caucus.

Hoi anō, the broadcasting assets case was a watershed moment in Māori broadcasting, when the High Court ruled that the Government was obligated to protect te reo Māori me ōna tikanga. The decision was affirmed by the Court of Appeal in 1992, and that led to the formation of Te Reo Whakapuaki Irirangi in order to “reflect and develop New Zealand identity and culture by promoting Māori language and culture”. The rest, of course, is history—and this Broadcasting Amendment Bill today addresses both the historical framework and the future strategic priorities for Māori broadcasting.

The Māori Party welcomes the amendments intended to ensure that Te Reo Whakapuaki Irirangi—or Te Māngai Pāho, as it is most well known—can fund the archiving of Māori language and culture programmes, in the same way that Māoridom welcomes the challenge that the Māori Party has put before this House to introduce simultaneous translation so that Māori can truly be a living language in this Chamber, as it should be, and indeed as it can be in every house in Aotearoa. We also welcome the amendments to enable Te Māngai Pāho to fund video on demand, interactivity projects, and the re-versioning of content for non-broadcast platforms like the Internet and mobile phones.

But I was particularly interested in the comments from Te Maumako August, manager of Moana AM and Tahi FM, and chairperson of Te Whakaruruhau o Ngā Reo Irirangi Māori o Aotearoa, the federation of Māori radio stations, who asked the Commerce Committee whether these new digital, non-broadcast platforms would also be subject to the same Māori language benchmarks already laid down by Te Māngai Pāho. It is a very interesting thought that I doubt has been given much consideration, and a proposition that I would love to hear the Minister’s thoughts on later.

But what we will not find in this bill is a clear commitment to the ongoing funding of Māori radio broadcasting or a clear commitment to the ongoing funding of Māori programming, despite a clear statutory direction to funding te reo Māori. And this is from a Government that boasts of an operating surplus of billions of dollars. How come, despite years of budgetary surpluses, operational funding for Māori radio has had only one increase in 20 years—with that increase being a one-off—and there is still no firm commitment to fund Māori language programming as directed by the Act?

While we are considering amendments to the Broadcasting Act, we wonder whether perhaps we should also be considering the ways in which Te Māngai Pāho and Te Taura Whiri i te Reo Māori are appointed. Last night the debate raged over the Māori Trustee and Māori Development Amendment Bill. There was particular concern over the political nature of appointments to that role, with Dr Sharples challenging the Government to reconsider the way in which the Māori Trustee is appointed, because the office can never be truly independent if the Government’s hand is firmly attached. That is a useful point to consider when one thinks of the ministerial appointments to Te Māngai Pāho and Te Taura Whiri i te Reo Māori.

An alternative model was set up for the oversight of the Māori Television Service, in which the power is shared between ministerial appointments and those chosen by Te Pūtahi Paoho, an independent Māori electoral college. It is a model that has been copied in other areas as well—including the fisheries—and I am interested to see whether the Minister will take a call to share his views about the appropriate time for the Government to allow both Te Māngai Pāho and Te Taura Whiri i te Reo Māori to break free from the suffocation of Crown control. Tena koe, Mr Deputy Speaker. Huri rauna. Kia ora tātou katoa.

Dr RICHARD WORTH (National) : This is a heady time in the broadcasting sector, and I express regret on behalf of the National Party that the opportunity was not taken in the context of the Broadcasting Amendment Bill to touch on some of the issues that the previous speaker referred to. Quite clearly, in an environment that is hugely uncertain, the certainty of funding flows to enable broadcasting activity to continue on a broad, rich basis has not been seized upon.

This is a tricky time in the sector, and no one would dispute that. I think we saw that most recently in a discussion that took place on the Copyright (New Technologies and Performers’ Rights) Amendment Bill. One aspect of that legislation is relevant to the issues that confront the House on this second reading of the Broadcasting Amendment Bill. That is because in that copyright legislation the Government seized on two issues to advance. Those two issues related, first, to amending the existing rights to broadcast, or to include a work in a cable programme service, in order to provide a technology-neutral right of communication to the public, and also to extend copyright protection to a technology-neutral category of communication works. The second, and highly controversial, aspect in that legislation was the proposal to repeal section 88 of the Copyright Act, which allows cable programme services to retransmit free-to-air television broadcasts without the permission of the broadcaster.

A number of speakers before me have spoken about the Television New Zealand charter, and I wish to talk about that, albeit only briefly. It is an interesting document in a number of respects. The legal position is that under section 12(4) of the Television New Zealand Act 2003 the charter, or, if one likes, the base or governing document of Television New Zealand, is required to be reviewed by this House at 5-yearly intervals. The first review was due to commence before the end of February 2008. We are now beyond the end of February 2008, and the review has not commenced yet. There are a number of deficiencies in the current charter. Other members have spoken about that, but the current charter has been the subject already of revision, submission, and, now, a redraft.

The charter is structured under a number of headings, and they include “An Informed Society”, and “National Identity and Citizenship”. There is a section on Māori interests. There are sections on “Diversity”, “High Standards”, “Innovation”, “New Zealand Talent”, and “Presenting New Zealand Overseas”. All of that is captured in some four pages of material. In looking at the charter, I think one is struck that there is something in it for everyone. It contains lofty aspirational sentiment, without any measurable goals, at all. I think that is a significant shame, because for charter documents to have any meaning at all there should always be appropriate evaluative criteria.

I will take, as an example, just the first chunk of that material. It is headed “An Informed Society”, and it states that the goal is “To provide impartial and comprehensive New Zealand and international programmes that are essential to having an informed and educated society …”. How will Television New Zealand achieve that? Well, under that heading it proposes to provide a range of programmes; strive for the highest standards of quality; provide independent, comprehensive, impartial, and in-depth news and current affairs; promote democratic participation; provide programmes of an educational nature; and provide programmes that extend the range of ideas and experiences available to New Zealanders.

All of that significantly reinforces the proposition I have advanced that just in looking at that section on “An Informed Society” one sees there is something for everyone. It is meaningless material in the context of meeting charter obligations. So it will never be possible for Television New Zealand to say it has fulfilled the charter obligations. They are, in themselves, not capable of fulfilment. All that can be said is that Television New Zealand thinks it has fulfilled the charter obligations. What a pity that is. Why do we not put some hard goals in the charter, so that those who have a responsibility in terms of putting much-valued data into society can say they have achieved their goals and fulfilled the aspirations set out in the charter?

So we come to look at this bill, which, as I have said, is supported by National. It gives effect to the Government’s decision to enable the broadcasting funding agencies to be able to support the production, transmission, and archiving of digital content, with the development of digital broadcasting in New Zealand and internationally. The funding agencies are the Broadcasting Commission, known as NZ On Air, and Te Reo Whakapuaki Irirangi, known as Te Māngai Pāho. If one looks at the two annual reports—those of NZ On Air and Te Māngai Pāho—one sees there is not a great deal to be gleaned from them, except in respect of the financial information that is contained within their covers. But there is interesting comment in the annual report of NZ On Air, touching on the very critical issue of funding for archiving. The point is made there by NZ On Air that it funds the New Zealand Film Archive to provide television programme archiving services, and funds Sound Archives to provide radio programmes and archiving services.

Not a great deal of money is spent on that significant task. This year, apparently, $1.26 million was spent on radio and television archiving services. The New Zealand Film Archive archived 1,440 hours of television programmes and carried out preservation work on another 210 hours of programmes. The Sound Archives archived 1,983 hours of radio programmes and carried out preservation work on another 2,003 hours. Those who have written the annual report note that as well, NZ On Air supported the New Zealand Film Archive to purchase digitising equipment so it could move forward with its strategy. There is reference to “options explored arising from opportunities offered by digital developments.”

In looking at the issues, though, we see that apart from the question of archiving digital content, what this bill does is to amend the Broadcasting Act 1989 in order to enable the broadcasting funding agencies to fund some types of content and transmission likely to be integral to digital radio and television platforms. Of course, the bill allows the broadcasting funding agencies to fund those types of activities to supplement and enhance the delivery of their primary functions. There are significant philosophical issues that touch the broadcasting sector generally, but what can be said about this bill, I would say, is that the amendments it proposes will permit the broadcasting funding agencies to fund such developments as video on demand, interactivity between broadcaster and audience, and the re-versioning of content for non-broadcast platforms, such as the Internet or mobile phones. I have already commented on the amendment in the legislation in respect of the archiving of Māori language and culture programmes.

So here this legislation now sits, ready to pass to the Committee stage in this House. National supports the bill. The bill could have gone further; it could have been better.

MARTIN GALLAGHER (Labour—Hamilton West) : I listened with interest to the previous speaker, Richard Worth, and also to his colleague Lindsay Tisch, along with other speakers in the House. I have to say I found Mr Worth’s contribution very interesting, thought-provoking, and concise. Certainly, I think there are challenges for all of us in terms of this bill.

I am not in any way being uncharitable about Mr Worth’s comments about the Television New Zealand charter, but one of the most important aspects of the charter would be to have some guarantee that a future Government would never sell off Television New Zealand. One has to say that given the prevarication that was shown by the leader of the National Party in the last day or two in terms of Auckland airport, I think all bets are off. It is a bit of a worry, because if he is so inconcise about that strategic asset, I would imagine that if National becomes the Government—if, shock, horror, National and its allies get a majority of seats in this House—it would be like Howard winning the Senate and the House of Representatives. It would be a shock-horror doomsday scenario for this country. Believe you me, all bets would be off, and I would say that hocking off Television New Zealand would definitely be up for consideration.

But I will move on, because I do think, in fairness, that Mr Worth and others have made some very constructive and very positive comments. I know that Mr Worth would be one of those who would be absolutely defending the right of Television New Zealand to remain a public entity, but I think he would be rolled in his caucus.

Believe it or not, I think this bill is quite exciting because it is the legislative means by which we recognise, through the means of public funding and community funding, that broadcasting is moving beyond the traditional analog transmission—through the air to a TV with an aerial on the roof—and that there are other means by which people are now receiving information and entertainment.

I want to take this opportunity, because I have not been able to do so before, to congratulate a former Minister of Broadcasting, the Hon Marian Hobbs, on her appointment as an Assistant Speaker. So far, in the short time she has been in the Chair, she has been doing a very, very good job. I know that she, particularly, in terms of her previous involvement with that portfolio, along with the current Minister, will certainly be very enthusiastic about this bill, in that it takes us forward to the next step. Indeed, it means that the funding agencies can now start to look and do a critical and calm assessment of the changes in broadcasting, and adjust their own funding policies in a flexible and considered way. I make the point that the agencies are not required to fund digital content; the bill merely allows them to do so if and when the need arises. I think, personally, that it will be a case of when the need arises.

The bill also introduces new definitions of content and transmission on demand that fall outside the current definitions of broadcasting and programmes. I want to mention two Waikato developments. First of all, I noted that Lindsay Tisch—and I am sorry that I did not hear the complete content of his speech—was talking about tvCentral, which is a Matamata based enterprise. It has done fantastic, wonderful work, and he is correct—it has been very much a labour of love, energy, and passion. As far as I am aware, that enterprise has not had public funding to do that. It was my pleasure, as a Waikato Government member of Parliament, to personally launch a while ago the Hamilton studios and the Hamilton broadcast for tvCentral, so that it now truly is covering the greater Waikato, and parts of the Bay of Plenty as well.

Again, as I read this bill, I would say that as an organisation like tvCentral starts to develop, say, web content and video on demand, and starts to look at the other means by which it can transmit its whole range of very, very good local programming, indeed it means that the funding agencies could consider it. I have a personal message for the funding agencies, particularly NZ On Air. I think that, historically, regional television in this country has had a really hard row to hoe in terms of accessing and attracting adequate NZ On Air funding.

Certainly, I acknowledge that there has been assistance with Stratos, and I think that the group of regional broadcasters that has now come onto the platform is a very good development. I think that we are now seeing a movement towards much greater involvement in and much greater assistance for regional broadcasting, which I know the Minister is very enthusiastic and keen about. I think that there is the ability to reflect and talk to local communities and regional communities, and they are a very important strata of broadcasters.

On a much more localised level, I will also talk about this bill and the implications for community Access Radio. It is my pleasure to be involved with Community Radio Hamilton, and I believe that this bill will assist that. I acknowledge and give a big bouquet to NZ On Air for all the funding it gives to community Access Radio around the country. My good colleague Barbara Stewart is nodding, because she is involved with the station as well, along with all the Waikato MPs. Again, I think that this bill opens up the opportunity for extra funding in that area.

So without further ado—and I know I have the firm support of my good colleague Jill Pettis—I say that we are enthusiastically supporting this bill in its second reading. It is good that we have multiparty support on this bill. I am looking forward to the Committee stage, and I think we will get a very good piece of legislation out of it. We will do our bit to assist the ongoing development and evolution of broadcasting and new technologies in our country.

• Bill read a second time.

JOHN CARTER (National—Northland) : Madam Chair, I take this opportunity to congratulate you on your election to your high office, and I hope you continue to beaver away in that position. I am sure you will do well in giving us the leadership we require.

Jill Pettis: Whether or not she remembers your name.

JOHN CARTER: In regard to this legislation—

Hon Trevor Mallard: He doesn’t remember his own name some of the time—eh, Hone?

JOHN CARTER: That is all right; I know when to punch and when not to.

Hon Trevor Mallard: Did Nick Smith hurt you when he hit you?

JOHN CARTER: I beg your pardon?

Hon Trevor Mallard: Did Nick Smith hurt you when he hit you?

JOHN CARTER: I raise a point of order, Madam Chairperson. I heard the member make that statement in the Chamber earlier, and I take strong exception to it. Never has the member Nick Smith struck me or made any action towards me, at all, that I would take offence at; nor has he made any gesture to me in anger, at all. I take strong offence at that member misleading the Committee. Nick Smith is an honourable member and, indeed, should be treated as such. I ask the member to withdraw that statement, because it is absolutely incorrect.

The CHAIRPERSON (Hon Marian Hobbs): Would the member consider withdrawing the statement.

Hon Trevor Mallard: He can’t do that on behalf of another member.

The CHAIRPERSON (Hon Marian Hobbs): No, the member took exception to that statement being made. I ask the member to withdraw it.

Hon Trevor Mallard: You are asking me to withdraw it?

The CHAIRPERSON (Hon Marian Hobbs): Yes.

Hon Trevor Mallard: I withdraw.

The CHAIRPERSON (Hon Marian Hobbs): Thank you.

JOHN CARTER: The unfortunate thing with this bill, and with the Minister who is in the chair, the Hon Shane Jones, is that we are on Part 2, where clause 92(1) states: “For the purpose of determining the calculation of any relevant levy on building work, the principal Act must be read”, and it goes on and on. Subclause (2) states: “In this section, relevant levy means a levy—”, etc. If that Minister were on this side of the Chamber, he would be berating us, because this bill is just more words, more bureaucracy, and more costs, and more bureaucrats will be needed to deliver it. In his heart of hearts, the Minister in the chair knows that this bill will put more costs on to local government, more costs on to the building industry, and more costs on to homeowners themselves. This bill will do nothing to reduce compliance, it will do nothing to reduce regulation, and it will do nothing to reduce costs. Indeed, it will do the very reverse of all those things.

The Minister knows that the department he administers, the Department of Building and Housing, is out of control. This is the department that in 1999 had 31½ equivalent people employed in it. Today it has in excess of 385. Since that member has become the Minister it has grown by about 20 staff, and it grows daily. The Minister knows that all that the department is doing is to create rules and regulations, to the extent that they are having a seriously important effect. The Minister is having a meeting—I am not sure whether it is this Friday or next Friday—and he will hear all the stuff he has heard before. The Minister, my colleague from Northland, knows that people are going to be exiting the building industry because of these rules and regulations. Good, competent builders have got to the stage where the rules and regulations are beyond their ability to meet them. There are local government bodies across the country that cannot meet the demands—the rules and regulations—of the Department of Building and Housing. This Minister knows that, and so does his Government. This Government has imposed so many rules and regulations like this on to the building industry, on to the country, and on to homeowners that local government bodies are not able to keep up. They are bogged down in compliance. They are bogged down in red tape.

This Minister has come from a background where things are straightforward and simple. When we hear this Minister speak he says it straight, he says it as it is, yet this legislation in his name is so crooked that we cannot even follow it. It is all upside down and back to front, with silly words in it, and it is doing nothing to help the problem. This Minister knows that we have a leaky homes problem in this country. This Minister knows that his Government was meant to address the leaky homes problem. This Minister knows that although the Department of Building and Housing was meant to address the leaky homes syndrome, we are building more leaky homes.

I turn to clause 92, and clauses 93 to 95, the transitional clauses. I want the Minister to tell me one thing that is going to stop the building of a leaky home in this country. There can be over 600 components in any home, and the Minister’s department was meant to certify materials. The Minister and his “perma-colleagues” have been in charge of this department since 1999—nearly 10 years now. There can be 600 materials in a home. Does anybody want to guess how many materials the department has certified? Does the Minister know how many materials his department has certified? Who wants to have a guess? Of the 600, how many has it certified? Who wants to have a guess?

Hon Member: Three?

JOHN CARTER: It is four. The department has certified four.

Hon Member: Three!

JOHN CARTER: Well, it has gone up one. Four materials is an absolute disgrace.

I had someone come to my office the other day and say: “Here are three copper pipes.” [Interruption] I am talking about transitional copper pipes, Mr Chair! The point is that this gentleman came to me and said: “Tell me which of these pipes can be used in New Zealand homes.” We could use the whole three. He said “You tell me which one will fail.” I said: “I don’t know.” He said: “I’ll give you $50,000 if you can guess.”, so I tried but I could not tell him. He said “This pipe is from Australia and it’s certified for a life of 50 years minimum. This pipe is from England and it’s certified for a life of 60 years. This pipe is from Asia. It’s got no certification at all. We’ve tested it and it’s likely to last 7 years.” Those copper pipes are being put in homes in New Zealand right now. If this Minister thinks that he and his Government have presided over the end of leaky homes, they should just wait for the future. We are going to reach the stage in another 10 years where someone will have bought a “spec” home, the husband will flush the toilet, and the wife will get a shower in the kitchen. The copper pipes are going to burst. It is this sort of thing that I would have expected this Minister to start addressing. Unfortunately and sadly, it is not addressed in this bill, at all. All we talk about is things like transitional provisions for the content of project information memorandum.

I ask members what that is going to do to help us solve the leaky homes problem. What is that going to do to stop the rules and regulations that are pouring cost after cost, ratepayer dollar after ratepayer dollar, and taxpayer dollar after taxpayer dollar into the leaky homes problem that we have in this country? This Government put a bill before the House not so long ago entitled Affordable Housing: Enabling Territorial Authorities Bill. Well, that is an absolute joke; not one local authority has given its support.

The point is that the Government is trying to suggest that it is doing something about the whole issue of compliance, regulation, and the building industry, and then this Minister comes along with this bill. It is probably the first bill in his name; I am not sure, but I suspect it is. It is going to go through, because the Government will support it. [Interruption] Oh no, it is actually in the name of Clayton Cosgrove. I wonder whether that will change. I do not know.

Colin King: A hospital pass.

JOHN CARTER: That is right. It is just as well he plays rugby. He knows how to take those.

Chris Tremain: I never gave him a hospital pass.

JOHN CARTER: No, but he gave us plenty, and he is sure giving the country a hospital pass on this one. The sad thing is that this bill is going to go through under his guidance. It will be the first bill that he puts through this House. All that people will remember and say is that he was the Minister who employed more bureaucrats in the Department of Building and Housing, added more costs, more regulation, and more compliance, and did nothing to address the building problem that we have. This Minister knows in his heart of hearts that this bill is not going to do anything to address the serious problem that we have in this country in regard to the whole issue of the failure in the building industry.

I want to talk about the transitional provisions in this bill. The other day I had to apply for certification. I had to get a building certified.

Chris Tremain: A building consent.

JOHN CARTER: No, not a building consent. I had to get my home signed off.

Sandra Goudie: A compliance certificate.

JOHN CARTER: It was a compliance certificate; that is the phrase I was looking for. I had to get a compliance certificate for the extension of my deck. The building inspector came along and said it all looked great. The rails were right, the floor was right, everything was tidy, and the foundations were where the retaining wall is. The Minister knows the house I am talking about. But it did not get a compliance certificate. Do members know why this outside deck did not get a compliance certificate? [Interruption] No, no; because it did not have a fire alarm.

Hon SHANE JONES (Minister for Building and Construction) : It is necessary for me to follow my colleague from Northland. Unlike the previous speaker, the content of my speech will be inversely related to the length of the delivery. It will be very short, and it will remind our friends on the Opposition benches that Part 2 is a very modest part. It contains a slender number of clauses. I would encourage you, Mr Chairman, to dedicate your not inconsiderable powers of attention in the direction of those members, to ensure that they stick to the script. It is important that their commentary is related to levies, project information memoranda, and also certificates of compliance.

Part 2 is a simple set of transitional provisions. It is not necessary to have the wild, florid flights of fancy that we are hearing from Mr Carter, aided by two formerly friendly members of the rugby team. I would encourage those members, and I would encourage you, Mr Chairman—not that I would ever say or do anything for fear of offending the longstanding Tararā relationship between us—to dedicate in those members’ direction a bit of supervision in order to ensure that they stick to the technical nature of the provisions. Opposition members should not try to relitigate the purpose of the reforms. That is a fair debating point, but not at this very wearisome hour in the evening, when there is no real reason as to why this legislation should not shoot forward like water going out of the well-constructed pipe referred to by the man from Ninety Mile Beach. Thank you very much.

SANDRA GOUDIE (National—Coromandel) : I am delighted to be able to speak to Part 2 of the Building Amendment Bill. I was very disappointed to not hear anything from the Minister in the chair, the Hon Shane Jones, on Part 2 other than the fact that he was exhorting everybody else to stick to Part 2 in his speech, but then he did not provide any content as to what is in Part 2. But here I am, talking all about Part 2 and the omission on the part of the Minister to say anything about it.

If members look at Part 2, they will see that it is about validation and transitional provisions, including clause 92, “Validation in respect of levies on estimated value of building work”. We can relate Part 2 to the commentary at the beginning of the bill, which I will now do, because these two are interactive. Hopefully, the Minister might like to take a bit of instruction from this. He could have taken some time to elucidate on what his understanding of Part 2 is. One would have to question whether he understood anything about Part 2 when he did not share any of that information with us but just exhorted us to talk about Part 2. I wonder whether I could say that for another 4 minutes in different ways. But I shall now connect Part 2 to the commentary. The commentary states: “The bill makes minor adjustments to the Building Act 2004 to improve its clarity,”. We would have to ask ourselves whether anything would improve the clarity of the Building Act—certainly anything that is being introduced by the current Government. If members look at clause 92 in Part 2, “Validation and transitional provisions”, we see that “relevant levy means a levy …”, which I find really interesting.

Colin King: A heavy levy.

SANDRA GOUDIE: Well, it is rather a heavy levy, with the way in which it is written—a relevant levy means a levy, and it is imposed under section 53 of the principal Act. I am at a bit of a loss to understand how that definition improves the clarity of the Act. So the Minister might like to take a call to share that with members and to give them a bit more of an outline of his understanding of it. I would have to agree with my most excellent colleague John Carter about the cost impositions and the further onus placed on ratepayers as a consequence of the impact on councils.

Hon Shane Jones: Part 2?

SANDRA GOUDIE: If I could instruct the Minister to look at Part 2, “Validation and transitional provisions”, he would see the definition of levy in clause 92 and provisions about territorial authorities. In clause 93 there is a cost imposition on a territorial authority as a consequence of the provisions of this bill and the Act itself. If the Minister cares to look at clause 93, then he would see that transitional provision for the content of project information memoranda. I have to say that the Minister did make some reference to project information memoranda, so there was a very brief referral to the content of Part 2 from the Minister. He might like to recall that.

In looking at what territorial authorities are required to do under the Act and also under this bill, we can see that there is a very definite onus of added regulation and added cost. It is all transferred to the applicant and the ratepayers. I would say that there is also a component shared by the ratepayers, but the burden of responsibility on local authorities to meet the provisions of both this bill and the Act is quite considerable. Local authorities face an incredible amount of stress and cost, and I just wonder what this Government is thinking when it puts this stuff together. Does it even consider the process of implementation of any of this legislation? I do not think it does. I do not think it actually goes through the practical steps, and it should. It should understand what these parts mean. Members should look at the transitional provision for refusal of application for a code of compliance certificate. This current Government really has no idea of the practical application of anything, in my view. It does not do any proper fiscal analysis of some of its projects. It does not look at what its regulations will actually mean or at the cost the red tape will put on to the territorial authorities. Of course, as members know, if information is on a project information memorandum, then it is deemed to be accurate information. It will be very interesting to see how that pans out in the future.

Hon Shane Jones: What about the mangroves?

SANDRA GOUDIE: I note that the Minister is making some call on mangroves.

RUSSELL FAIRBROTHER (Labour) : Having listened to the speeches on the Building Amendment Bill since we started tonight, I was delighted when the Minister Shane Jones rose to his feet and exhorted those of us in the Chamber to pause from our florid rhetoric and take a moment to dwell, albeit briefly, on Part 2 of this major construction, the bill. The Minister demonstrated such a sound grasp of the issues involved in Part 2, and I noted that as he dealt with Part 2, he left clause 92 for me to deal with because of the finely tuned legal terms and astute wording of that clause.

As I move to clause 92, I note that all of the speakers on the other side of the Chamber have studiously avoided it. I wonder why? Perhaps it could be that the clause seems to be circular. I think clause 92 might mean something like this: it “provides for the validation at all times of the current practice of calculating the relevant levy, as defined in clause 92, on building work as if the definition of estimated value were as amended by clause 6.”

Chris Tremain: Of course!

RUSSELL FAIRBROTHER: You see, Mr Tremain understands that, because that is where one makes one’s money. The levy had previously been required to be calculated on the basis of an estimated aggregate of values other than—as is the current practice and the intended definition of “estimated values” as stated in clause 6—the estimated aggregate of the consideration. Where value is determined in accordance with section 10 of the Goods and Services Tax Act 1985, “consideration” has the meaning given to that term in section 21 of that Act. Do members understand that? This is quite an important change. We are moving from “values” to “consideration”.

Just so we can follow this train of thought, I will take the Committee to clause 6 of the bill—which, of course, is in Part 1, but we have to go there because Part 2 requires us to in subclause 92(2), which defines “values” as in clause 6. Clause 6 states: “the definition of estimated value in section 7 is amended by omitting “values” and substituting “consideration”.” What does that really mean? To put it briefly, it means one pays GST. It means that when one calculates the amount of the levy, one calculates it including GST. This is a novel thought to the people on the other side of the Chamber. They, who claim to have invented GST and to have administered our financial system and our collection of monies, had a Governor of the Reserve Bank temporarily parading around the bedrooms of New Zealand and the leadership of the party. They, who do not understand the GST, will not understand clause 92. Quite simply, the clause directs the members opposite to appreciate that when one calculates the costs, they are GST inclusive.

This is not a new idea. This is not a new idea at all. But there has been some uncertainty in this House, and there have been those who have tried to avoid their moral obligation to the public good, and to lessen the taxation burden by trying to interpret the word “values” as excluding GST. Since 1991 it has been intended to be GST inclusive. The purpose of clause 92 in Part 2 is to make it crystal clear to all of us, even those who have trouble reading the bill and legislation, that the costs include GST. That is why there is the important movement away from “values” to “consideration”. Why is that? Value, of course, can be argued successfully as being what someone actually paid for something. So if one swapped something, one could say that was the value of it. But, of course, consideration is the actual fee that was paid, and if one pays an actual fee, an actual quantum, in that nature GST is inherently part of it.

The change from values to consideration may, at first blush, confuse many people. I trust this speech tonight has eased that confusion somewhat, because the whole point of clause 92 is to make it crystal clear. I do not want to bore members with repetition. I am sure that my earlier explanation of this, as provided in the commentary to the bill, is crystal clear—that value no longer means value but means consideration.

Hon Shane Jones: Totally lucid.

RUSSELL FAIRBROTHER: I thank the Minister very much. So the purpose of clause 92, I think we can briefly say, is to include GST.

KATRINA SHANKS (National) : It is my pleasure to talk to the Building Amendment Bill tonight. Firstly I thank the officials who are sitting here tonight at 10 to 10. They have been very dedicated officials to the Social Services Committee. They have done an absolutely great job, once again, of informing the committee of the views on, and concerns about, this bill. They articulated them in such a way that we could sit there and understand very easily the issues of the submitters and how they impact on the bill for us. So I thank the officials, and I thank them for coming in tonight, because we do appreciate the effort that officials put into our select committees in the making of law.

While I am standing here I would like to congratulate Shane Jones on being the Minister for Building and Construction. We all know that when one becomes the Minister for Building and Construction, it is the gateway to Cabinet. Since 1999, 10 Ministers have gone through the gateway into Cabinet by being the Minister for Building and Construction. In fact, Mr Jones has some pretty impressive shoes to fill, including those of George Hawkins, Rick Barker, Lianne Dalziel, John Tamihere, Margaret Wilson, Chris Carter, Clayton Cosgrove, and Mark Burton. Now Shane Jones is the Minister, so I welcome him. Let us hope Mr Jones can make more of an impact on the building industry than his predecessors have made, because this portfolio is obviously the gateway to greater things and greater portfolios. I congratulate Mr Jones, because he has made the first step into Cabinet and he may be in transition.

We are speaking to Part 2 of the bill tonight, but the thing about this bill is that it has come about through the Building Act 2004. That came in, then the Building Amendment Bill came in to make the 2004 Act more workable—so people could understand it. That is actually a shame, because we would like to think that legislation is not out of date within 2 years of its enactment. Part 2 of this bill talks about “Validation in respect of levies on estimated value of building work”, “Transitional provision for content of project information memorandum”, “Transitional provision for refusal of application for code compliance certificate”, and “Transitional provision for refusal of application for certificate of acceptance”. Obviously it is a very, very narrow part of the bill, but it is one that has had to be reworked since 2004. The need for that came out in the Weathertight Homes Resolution Service, and this is the fifth bill relating to the building industry since 2002. That is a fair bit of legislation to change for an industry in such a short period of time—it is really 5 years, since this is a 2007 bill. Let us hope that we are making the legislation a bit better for the industry, because we are here to make good legislation for it and to give it a good framework to work within.

The leaky homes issue has impacted severely on the building industry, and it has caused a lot of litigation in this country—and not good litigation. Many, many thousands of homeowners out there are very, very unhappy with the homes they have had built. That issue goes back to many things, such as the legislation we have put in place, how we have tried to protect the homeowner previously, the consents, and a lot of other things such as materials. The sad thing is that we continue to make homes that are not at par, and we will continue to have leaky homes. This legislation is not meant to address that problem, and it does not address it. It is an outstanding problem in our community. I could talk about copper pipes and the new ones coming in that are guaranteed only to go for 7 years before they burst, as opposed to ones certified to last for 50 years. But that is not what this bill is about; it does not address that issue. That is addressed in the weathertight homes resolution services legislation, which has been revised three times.

It was interesting for me to sit on the select committee, because we had many submitters come in to talk to us about this bill.

Hon Dr NICK SMITH (National—Nelson) : I am dumbfounded. The Prime Minister came into the Parliament at the beginning of the year and said that this Government was going to deal with the problem that it had created of huge compliance costs in the building industry. Now we have the Minister introducing to the House and advancing before the Committee the Building Amendment Bill, which does exactly the opposite of that.

I want to firstly deal with clause 92, which the Minister referred to.

• Progress reported.

• Report adopted.