Hon PETER DUNNE (Minister of Revenue) : I move, That the Taxation (Consequential Rate Alignment and Remedial Matters) Bill be now read a first time. Later on I intend to move that the bill be considered by the Finance and Expenditure Committee, that the committee report finally to the House on or before 16 November 2009, and that the committee have the authority to meet at any time when the House is sitting, except during oral questions, and during any evening on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 187 and 190(1)(b) and (c).

The purpose of this motion is to bring forward the report back of the bill to ensure that the bill can be enacted before Christmas. The reason for that is to ensure that financial institutions that are affected by measures contained in the legislation will have the time they need in order to implement the changes by 1 April next year.

At the outset I tell the House that this bill will not be as complex in its size as the similar bill that I introduced last July 2008. In the future we will have two tax bills a year if required. One will be, essentially, a remedial matters bill, and the other will be a major policy bill. The Taxation (Consequential Rate Alignment and Remedial Matters) Bill comes into the former category.

Although most of the changes and updates it proposes are in the nature of good housekeeping, together those changes and updates are designed to give clarity and certainty for taxpayers, particularly when dealing with the recent changes to the personal tax rates. With this in mind, the main feature of the bill is the alignment of the resident withholding tax rates on interest and portfolio investment entity tax rates with the personal tax rates as they currently apply, and the 30 percent company tax rates introduced in 2008.

The alignment of resident withholding tax and portfolio investment entity tax rates with the new personal and company tax rates was deliberately delayed to allow time to consult with the financial institutions that have to implement changes to their systems as a consequence. The resulting application dates that are contained in the bill reflect the outcome of the consultation process and are designed to give banks and other financial institutions enough time to update their systems.

The new resident withholding tax rates on interest paid to individuals, as introduced in the bill, are 12.5 percent, 21 percent, 33 percent, and 38 percent, depending on a person’s income. The bill also introduces a new default rate of 38 percent for people who do not choose a rate with their bank. This new default rate will apply to accounts that are opened on or after 1 April 2010. For those who already have a bank account at 1 April 2010 and who are on the current default rate of 19.5 percent, the default rate will move to 21 percent from 1 April 2010 in line with the new personal tax rates. Those people will then be given 1 year in which to contact their bank to confirm that 21 percent is their correct rate, or, if it is not correct, to choose another resident withholding rate. If they fail to confirm either the 21 percent rate or to choose another rate, their resident withholding rate will automatically go up to the 38 percent default rate from 1 April 2011.

The idea behind setting the default rate at the highest personal tax rate is to motivate people to contact their bank or financial institution and to choose a resident withholding tax rate for their interest income that aligns with their correct personal tax rate. Using the highest rate as the default rate is the same approach we have used for investors’ portfolio investment entity tax rates since 2007. It has worked well for investors and for managed funds, and I am confident it will work equally well in this instance.

In a tandem measure, the bill also introduces a new 30 percent resident withholding tax rate on interest for companies that invest in financial institutions, again to reflect the 30 percent rate for companies introduced in April 2008. This new rate will be optional for financial institutions for 1 year from 1 April 2010, and after that time the 30 percent rate will become compulsory.

Similarly, the bill brings the portfolio investment entity tax rates into line with the new personal tax rates so that investors in portfolio investment entities are not disadvantaged compared with those who invest directly. Those rates will also apply from April 2010. Again, this is designed to give portfolio investment entities sufficient time to update their systems.

To complete this suite of changes, a new 12.5 percent secondary tax code and a new 12.5 percent withholding tax rate for extra pays are being introduced to be consistent with the new personal tax rates structure. These changes are the cornerstones of the bill. Together they will give greater certainty both for earners and for payers of interest income, and will ensure that the correct amount of tax is paid on that income.

As I mentioned earlier, the bill also introduces several measures of a housekeeping, or technical, nature. The first of those measures is designed to support the Inland Revenue Department’s drive towards greater administrative efficiencies by moving much of its current paper-based communications with taxpayers to electronic means. Under the current tax rules, taxpayers must consent for the department to provide a communication electronically. The bill introduces changes that will allow notices to be sent electronically to taxpayers if the department has reasonable grounds to believe that the communication will be received by the taxpayer. That will clearly allow better communication between the department and the taxpayers involved.

Another measure will give the department the discretion to allow taxpayers who have made a minor error in their return that involves $500 or less in tax to correct that error in a subsequent return. This taxpayer-friendly change will result in lower compliance costs for taxpayers and will certainly reduce their exposure to use-of-money interest.

Reducing compliance and administrative costs for taxpayers and the Inland Revenue Department is also behind a new measure to give the department more flexibility when it comes to issuing personal tax summaries. Currently, the department is required to automatically issue end-of-year personal tax summaries to several categories of taxpayer, including those with more than $200 of employment income withheld using certain tax codes. Changes proposed in the bill will remove this requirement so that the department will not have to issue as many personal tax summaries.

Again, in the interests of smoothing the administrative functions between the department and taxpayers, the bill addresses a longstanding difficulty for tax agents in the timing of distributing income to the beneficiaries of trusts. Under current law, trustees have a fixed 6-month period after the balance date to allocate income to beneficiaries. For tax agents, this timing requirement can create undue pressure at a time when their client’s business tax requirements must also be met. To help alleviate this pressure, the bill introduces changes that will allow tax agents more time to allocate beneficiary income.

The remaining measures in the bill cover a range of technical changes to clarify the rules for taxpayers and to correct minor errors in the Income Tax Act 2007, as recommended by the Rewrite Advisory Panel. Among these measures is a change to clarify the tax treatment of expenses incurred by participants in the climate change - related Permanent Forest Sink Initiative so that they receive the same tax treatment as other foresters. A further technical change clarifies the GST treatment of the new waste disposal levy that was introduced on 1 July this year.

Those and other changes in the bill are described in detail in the separate commentary on the bill, which I understand has been distributed to all members. On that basis I commend the Taxation (Consequential Rate Alignment and Remedial Matters) Bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn) : We thank the Minister who has just resumed his seat, and wish the House to note that Labour will be supporting the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. The bill contains consequential changes to tax rates in line with recent tax rate and threshold adjustments, and it includes a number of other remedial and technical measures that are sensible and that in some part follow from work streams initiated by the previous Government. Indeed, the previous Minister was much better than the current one, which just shows that it is how one holds the pen that counts.

Of course, this is also an opportunity to reflect upon the context within which these changes are being made, and the broad shape of the Government’s tax package introduced on 1 April this year. The context for that discussion is the deep recession that the country now finds itself in, and the fact that we can expect between another 60,000 and 79,000 job losses and that 1,300 New Zealanders are joining the dole queue every week—1,300 every week. In other words, the expected jobs created by the cycleway account for 1 day’s worth of new unemployment. I will say that again. The cycleway provides 1 day’s offset against the wave of unemployment we face.

This is a serious situation, and it causes us to reflect upon the changes to the tax system that saw incentives removed from KiwiSaver and from research and development tax credits in order to fund the lowering of the top personal income tax rate to 38c in the dollar, and to reflect upon the threshold changes, which overwhelmingly provided benefit to upper-income earners.

It has been a matter of debate in this House that across the whole of the Government’s proposed tax reforms, one-third of the tax cuts would go to only 3 percent of taxpayers. It is on record in this House that the Opposition has criticised that on two principal grounds. One ground is that at a time of recession and stress in the homes of ordinary, hard-working New Zealanders, making sure that 97 percent of the population does not benefit from a third of the tax remission is hardly appropriate, on social equity grounds.

But, secondly, at a time when every penny of fiscal stimulus counts and when we are getting lectures about how scarce the Government’s access to capital is, it is essential that every cent is effective and well spent. Sadly, the tax changes that require this consequential legislation are not effective. The truth is that National has delivered $120 a week to somebody on, say, the Prime Minister’s salary, and nothing to someone with children who is on the median income. That can be neither fair, nor good economics. You can bet your bottom dollar that people with kids, who are on the median income, will be spending every cent of tax remission they get, and someone who is on the Prime Minister’s salary can probably afford to squirrel some of it away, thus taking it out of circulation.

Let us spend a minute talking about KiwiSaver, in the context of the Prime Minister last Wednesday giving a major signature speech on economic policy to show us the plan, and, on Thursday, Fitch Ratings putting us on negative watch. The timing was probably not accidental, because Fitch Ratings, like the rest of us, had been waiting with bated breath to see what the plan actually was. It was like an old Holden that, when we lifted the bonnet, we found had no engine. There was no “There!”, and that is why Fitch Ratings decided to place us on negative watch. Fitch Ratings, like Moody’s and Standard and Poor’s, the other two rating agencies, drew particular attention to two deficits—the savings deficit and the external deficit. It was in order to cover the savings deficit that they have insisted that the Government either run surpluses or limited deficits on its books. But that is a patch, not a resolution of the fundamental problem.

In that context, it really does beggar belief, for all the reasons that we have discussed, that the Government would withdraw half of the value of the incentives in the KiwSaver programme—the single most successful programme in our history for getting New Zealand’s savings rate up—and use those funds to give a tax break to upper income earners. It beggars belief, and it will not have done anything to encourage Fitch Ratings, Standard and Poor’s, or Moody’s, as they keep this economy under review. It is just simply not sensible economics, and I think the Minister of Revenue knows that.

If that was true of KiwiSaver, is it not also, perhaps, even more true of the issue of innovation? We know that we are a primary-producing country with an external deficit. We are not paying our way in the world. It is really quite simple. What we make from our exports, plus New Zealanders’ investments overseas, is less than we pay for our imports and the returns we have to give to foreigners who have invested here. That is the current account deficit—both the trade balance and the financial balance. It is simple. Moody’s, in particular, stressed in their review of the New Zealand economy that New Zealand will never get out of the hole it is in unless it produces and exports more. There is an element of communality between the Government and the Opposition on that issue. We both think productivity matters, and I think we both think the export balance matters. What we disagree on is that the Opposition believes that in order to improve those things we need to get innovation up, and in order to get innovation up it has to pay for businesses to innovate.

Businesses respond to incentives. I think even Roger Douglas would agree with that point. One of the strongest incentives is the tax system. There was almost universal support within the business community—the “Mood of the Boardroom” survey stated it was well above 80 percent, if I recall correctly—for the research and development tax credits, and it is a real shame that they were scrapped to fund these tax write-offs for upper income earners. We do not need to be cushioning upper income earners at a time of recessionary crisis. We need to be fuelling the engines of exporting and productivity, and we do that by innovating, by creating a competitive business environment, and by the Government lending some sense of direction and strategy so that private investors can make their capital investment decisions, their hiring decisions, and their production decisions alongside those of the Government. It is, therefore, in that context that this bill is important.

There are some supplementary measures in this bill—not only the tax rate changes, but also the threshold changes and in particular the PIE, or portfolio investment entity, rates. No, that is not a new Government initiative for healthy food in schools; far from it. We have had enough of that today. They are the rates that prevent New Zealand savers from being overtaxed. It is an initiative of the previous Government that has been, I am pleased to say, adopted by the new Government. It is designed to avoid the prior situation where people’s savings were taxed at the top marginal rate in the savings institution, regardless of their own personal rate. We are pleased that the Government has adopted the far-sighted proposal to look through the savings rate of the institution to the tax rate of the beneficiary, and adopt vehicles like portfolio investment entities that allow that to flow through.

Having said that, the devil is always in the detail. It is very important, as the Finance and Expenditure Committee members know, that the structure of the tax law surrounding portfolio investment entities is simple, it is principled, it is difficult to rort, it is not too complex, and it does not create undue compliance costs. We need to monitor the application of these rules to ensure that the original policy intent, which is shared across the House, is, in fact, borne out in its application to day-to-day policy.

There are other changes in this bill. There is the correction of some errors and some remedial matters to do with the permanent forest sinks initiative, the beneficiary income rules, and so forth. But for the public listening to this debate today, although it is true that the Opposition is supporting the bill and although it is true that it makes important and sensible consequential changes without which the tax system would be a mess, it is also true that the context within which we are debating this is, in our view, an inappropriate one. The context is that two-thirds of the money goes to people in the 97 percent of the population who are in the middle and the lower income brackets, and one-third of the money goes to the top 3 percent. That is not a good idea when capital is starved, and it is especially a bad idea when we have to wind back KiwiSaver to do it.

CRAIG FOSS (National—Tukituki) : Tēnā koutou, tēnā koutou, tēnā koutou katoa. Surprisingly, I find myself in agreement with a couple of the last comments made by the previous speaker, David Cunliffe, about the need for clarity and a robust framework around taxation issues. I appreciate those sentiments. I think he is right in that across the House generally, in the precincts of this place, and across the community there is a general acceptance of the need in our taxation system for clarity, modernisation, and alignment in order to make it as simple as possible and to make compliance as easy as possible.

I say one big “Kia ora” to the Minister of Revenue, who in his speech noted that this bill is nothing like the bill introduced in July last year by the previous Minister of Finance. That bill was about 850 pages long, and I think we have about 50 pages here, and, again, do I look forward to that structure. Because of that process we have discovered that there will be maybe two bills per year—there is bound to be an exception to that along the way, I am sure—on policy and remedial matters. At least the professionals downtown will appreciate that we are trying to provide some structure around our legislative programme, and provide some certainty. I acknowledge the previous Minister for the intent there.

The Taxation (Consequential Rate Alignment and Remedial Matters) Bill is very similar to this ambitious National Government in that it is taxpayer-friendly, and I will come back to some of those matters in a moment. But, to feed off the previous speaker, I say it is very important to note for those listening the hundreds of millions of dollars of taxpayer assistance, tax relief, and fiscal benefits that this new National Government has brought in after only 9 months in office, as opposed to 9 years for the previous administration. It is very important to note—because it sometimes seems to be forgotten in the speeches made by members on the other side of the House—that this policy was laid out before the election. So the New Zealand public very heavily endorsed the policies and processes of this new National Government.

This bill clarifies, modernises, and tidies up many, many matters. It aligns certain investment tax rates with income tax rates, bringing clarity, certainty, and simplification to all facets of our tax system. This bill is not contentious—at least, not at this stage. I do not think anyone has raised any contentious issues during the first reading, but some issues may arise during the select committee process.

Stuart Nash: It’s another Labour bill!

CRAIG FOSS: That member has found something contentious in it, and we look forward to discussing the contentious issues he is thinking of. We can discuss those issues at the Finance and Expenditure Committee if we vote to send the bill there this afternoon. I am sure the hard-working members of the Finance and Expenditure Committee will discuss those matters and, hopefully, come to an arrangement whereby, hopefully, this bill can be reported back as scheduled, as the Minister alluded to in his speech.

I appreciate the Labour member Mr Cunliffe noting that Labour is supporting this bill—other members on that side may want to note that as they write their speeches—and I freely acknowledge the professionalism with which the member is approaching issues in and around tax. There is politics, but the intent to have a better tax system is generally accepted across the House, and I am grateful for that. I look forward to the continuing professionalism and cooperation of all members of the select committee as we facilitate the bill through, and if we look at the dates, we see that there is a pretty tight report-back time. As chairperson of that select committee, I am sure we will have some discussions in and around that. Hopefully we can facilitate that, and, again, it is noted that the previous member said that Labour would be supporting this bill and will also be in discussion with other parties.

The main features of this bill, as the Minister of Revenue outlined, are the alignment of resident withholding tax rates—they are the tax rates paid on interest income—with the new primary rates that this Government brought in in previous legislation prior to Christmas. It goes without saying that those rates should be the same. We are trying to make the tax system as neutral as possible and to disincentivise any one particular form of investment over another, to allow our economy to grow.

Most important, the bill brings in one new rate. The current marginal income tax rates and the present resident withholding rates of 19.5 percent, 33 percent, and 38 or 39 percent will become 12.5 percent, 21 percent, 30 percent, 33 percent, and 38 percent, and the application dates on those are all 1 April 2010. However, there is a caveat to the 30 percent rate, and taxpayers can opt in earlier. That is being taxpayer-friendly, and that is recognising their circumstances. Taxpayers can take advantage of new and lower tax rates, which were voted for the last election and are now being brought in by this very ambitious National Government.

On that note, I will end, and I look forward to the next speakers as they continue the endorsement of this very good bill. Thank you.

Hon DAVID PARKER (Labour) : The previous speaker, Craig Foss, is correct in saying that the Labour Party will be supporting the technical provisions of the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. I will deal with a couple of the specific changes to the legislation proposed by this bill before dealing with what is not in the bill, which I also think should be highlighted.

First of all, the previous speaker was correct in saying that the default resident withholding tax rates are being changed. When people earn interest in this country, it has tax deducted from it before it is paid to them by the person who is paying the interest. The rate at which interest is deducted is set out in law, and that is the resident withholding tax rate. This bill adjusts the resident withholding tax rates to update them for recent changes in income tax rates, so that the amount paid by way of a deduction from the interest one earns corresponds with the amount of tax one is likely to pay as a taxpayer. One of the most major changes in recent years has been to the corporate tax rate; it was reduced from 33c in the dollar to 30c in the dollar. This bill adjusts the resident withholding tax rate, the default rate at which tax is deducted from interest payments that are earned by companies. It decreases the resident withholding tax rate for companies from 33 percent to 30 percent.

It is worth reflecting on why that is necessary. It is because the previous Labour Government cut the corporate tax rate. At times we have heard from National Party members that they are the party of business. They like to pretend that they are the ones who know how to grow the economy, when in reality many people in New Zealand know that it was the previous Labour Government that had the better handle on economic policy, as reflected in the fact that we cut the corporate tax rate from 33c in the dollar to 30c in the dollar.

By way of contrast, I say the effect on resident withholding tax rates being changed in this bill as a consequence of National Party policy is, in the main, to change the top personal tax resident withholding tax rate from 39 percent down to 38 percent. Rather than giving a leg-up to the most productive parts of our economy—encouraging companies to save more so they have more to invest, having a lower tax burden so that companies have more money to reinvest in productive enterprises, and improving the productivity of our companies, which is what the previous Labour Government was achieving through reducing the corporate tax rate—the National Government has focused its tax cuts on those who already earn the most in a personal sense in New Zealand, by reducing their tax rate at the margin from 39c in the dollar to 38c in the dollar.

The effect was that the highest-earning people in New Zealand, who were already in a better position economically than everyone else in New Zealand, were given another tax break in order to make them even better off. Whereas a middle-income family with children, a family that might be struggling to pay a mortgage, rising power prices, and other costs, got nothing from the Government’s tax package, those who were the highest earners had a tax reduction, and that tax reduction is now being reflected in this consequential bill, which changes their resident withholding tax rate.

Therein lies one of the differences between Labour and National. We understand it is important to have a strong, productive economy. In order to encourage that we do not need to reduce the tax rate for the highest earning people in the country, but we do need to make things easier for companies.

Peseta Sam Lotu-Iiga: What happened to exports in the last 5 years?

Hon DAVID PARKER: I had an interjection there from someone who was saying Labour never reduces taxes, but of course we did reduce the corporate tax rate. It is an interesting fact of history to reflect on which Government before the previous Labour Government reduced the corporate tax rate. Does the member know the answer to that question?

Peseta Sam Lotu-Iiga: We’re talking about exports.

Hon DAVID PARKER: Oh, he is talking about exports, but he does not know the answer to that question. It was actually a prior Labour Government that last reduced the corporate tax rate before we did it again in the last term in Government. That is somewhat ironic—[Interruption]. The National Party voted against the Budget that reduced the tax rate for companies from 33c to 30c in the dollar.

It is also time to reflect on what has happened since the election. Of course, by the time of the last election the writing was already on the wall as to the effect of the downturn in the world economy on the New Zealand economy, and the fourth estate was already on to it. During the last election campaign, the media asked the then National Opposition how it could promise its tax cuts, given that the world economy was declining so sharply. By that time the IMF was warning that a very sharp international contraction was already occurring, and New Zealand was already in recession, as the Hon Bill English continually reminds us from day to day. Yet at the time of the election he was willing to ignore those realities when he was promising unaffordable tax cuts. Not only was the IMF issuing those warnings and New Zealand already in recession but also, by that time, one of the big international banks, Lehman Brothers, had failed. We had an IMF warning, New Zealand was in recession, and Lehman Brothers had failed, yet at the time of the election the National Party pretended that these things would not have any material effect on its ability to fund its election promises.

Well, we all know now that that was untrue. Since the election we have seen the National Government resile from some of its tax cuts. It left tax cuts in place for the most wealthy in New Zealand, whose personal tax rate it cut, as is reflected today in the cuts in the resident withholding tax rate for those highest income earners, but it cut most of the other tax relief it had planned for low and middle income people. That left a terrible disparity whereby most of the tax relief was given to the people who needed it the least. In addition, because of National’s reckless promises in the election and its belief that it had to keep at least some of its promises to cut taxes—and, as I have said, it did that for the most well-off—the Government had less money in the kitty than it would have, had it not made those rash promises. That is why the Government had to cut the pre-funding of the New Zealand Superannuation Fund. One consequence of those changes to the tax rates for the highest-paid people in New Zealand was the inability, in the Government’s view, to properly pre-fund New Zealand superannuation.

Currently about 500,000 people in New Zealand are reliant on superannuation. That number doubles over the next decade or so, or it may be over the next 2 decades. I am unsure of the exact number—forgive me for that failure of memory—but over the next period that figure doubles from 500,000 to 1 million people. That figure as a proportion of the workforce changes, as well. The proportion of people who are reliant on Government finances for their superannuation as a percentage of the labour force increases very substantially. It is a real challenge for future Governments to fund that, and that is why there appeared to be at the time of the last election virtual unanimity across the major parties that there was a need to pre-fund some of the cost of that through the New Zealand Superannuation Fund. This was to avoid an intergenerational inequity. Subsequent generations would otherwise be carrying the burden of paying superannuation to an increased pool of superannuitants, despite a relatively smaller proportion of working-age population in employment. That is why there was, apparently, almost universal approval for the New Zealand Superannuation Fund across both the National and Labour parties. But of course we all know that was a fraud. In reality that was not the case, and when National came into Government it sacrificed the pre-funding of superannuation in order to fund its tax cuts for those who were already the best off.

Further, the National Government did away with the research and development tax credit, and I absolutely agree with my colleague David Cunliffe in saying that change was inappropriate. New Zealand has to invest in more high-value products for export if we are to overcome our current account deficit and become wealthier as a country. There are two essential ingredients to that. One is encouraging savings, which I will come to, but the other is providing appropriate incentives for business to invest. One of the ways that most countries in the world incentivise investment in the appropriate capital equipment and new products is through a research and development tax credit. We need only to look across the ditch at our closest economy and our biggest economic competitor in these areas, Australia, to see that Australia has a research and development tax credit. It is also clear that at one stage the Australian Government cut its research and development tax credit, and, lo and behold, the research and development spend by its corporates went down. The Australian Government addressed that by introducing another variant of its research and development tax credit.

New Zealand has neither of those provisions. We do not have any research and development tax credit. We are a glaring anomaly when we compare ourselves with most OECD countries, and that anomaly coincides with our under-investment in research and development and, therefore, our poor performance relative to a lot of overseas countries in lifting our productivity so as to improve the wealth of our nation and improve our ability to fund health services and responses to environmental things like climate change, etc. Abandoning the research and development tax credit was a real mistake by the National Government, and this bill does not fix that.

Similarly, if we have a deficit in savings—and New Zealand certainly does—we must have appropriate interventions like KiwiSaver, which was also cut.

Dr RUSSEL NORMAN (Co-Leader—Green) : I rise to speak to the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. The Green Party will not be supporting this bill. We did not support the original set of tax changes. These consequential changes flow out of that original set, so we continue not to support them.

The reason we do not support them is that they are bad policy and they are wrong policy. They are bad policy for a number of reasons. If we are to try to deliver a stimulus package, giving very large tax cuts to the very well-off is not the best way to deliver it. In fact, it is the worst way to deliver a stimulus package. If we were to design a tax system for a recession and we wished to deliver a stimulus to our economy to try to keep people in jobs, giving large tax cuts to the well-off would be exactly the wrong thing to do. That is why we are not voting for this bill, and why we did not vote for the original changes. It is bad policy.

It is also wrong policy. It is ethically wrong. It is wrong to give tax cuts to those who are already the wealthiest. That is just wrong. There are no two ways about it and there is no other way to look at it. We have a society that is racked by inequality. New Zealand is a society that has gone through enormous inequality as a result of the changes started in the 1980s that have made us more and more unequal. In fact, we are a world leader in inequality. Thanks to the policies of the 1980s and 1990s, New Zealand is a world leader in inequality. We have become unequal faster than any other country on the planet, and that is something we should be ashamed of.

Carol Beaumont: It is a great shame.

Dr RUSSEL NORMAN: It is a shameful thing. In one of the most unequal countries in the OECD, to give very large tax cuts to the well-off, while giving absolutely zero—nothing—to those who earn under $40,000, is immoral. It is not just poor tax policy; it is immoral. It is not compassionate conservatism or God-fearing conservatism; it is wrong and immoral. To give very large tax cuts to the very well-off is the wrong thing to do. It is the unethical thing to do, and that is why we will not vote for it. I call on Labour not to vote for it, either. Why would Labour vote for this bill? It does not even support it.

The bill is also bad policy because it means that the stimulus package we are delivering now has to be borrowed from future generations. The tax cuts, one way or another, have to be paid for by borrowing. We are taking from future generations to pay for the stimulus package or to pay for the tax cuts, whichever way one cares to look at it. Our Government borrowing will be much higher, by the order of maybe $10 billion over the next 10 years or more, as a result of these tax cuts. Because of the tax cuts we are giving to the very wealthy, we have to borrow more from future generations to fund either those tax cuts or the stimulus package, whichever way one looks at it. It means that future taxpayers have to carry a higher level of debt as a result of these stupid tax cuts—tax cuts that are bad policy.

Mr Cunliffe quite rightly said earlier that when we give tax cuts to the very wealthy they tend to save them. If we give tax cuts to those at the bottom end of the income spectrum, they simply spend them. That is why tax cuts targeted towards those at the bottom actually have a much greater stimulatory effect than tax cuts delivered to those at the top. So it is not only wrong policy because it is immoral and unethical and it is not only bad policy because it means that future generations will have a higher level of Government debt as a result of this but also it does not even give us the stimulus we want.

This is dumb policy not only because of what it is but also because of what is not there. What are not there are measures to address the fundamental problems in the New Zealand economy, such as the housing bubble. We all know that the housing bubble and the misappropriation of investment funds into investment properties in New Zealand is a major problem. Everyone talks about it. Everyone says it is a major problem, but no other party in this Parliament has the guts to stand up and ask what we are going to do about it.

We know what we have to do about it: we have to change taxation rules so that they target investment properties. Currently, taxation rules favour investment properties. The taxation rules say to people with a bit of extra money to throw their money into investment properties because it is a great thing to do. Accountants from the top of the country to the bottom are telling people on middle to high incomes that they should put their money into investment properties. That is what they advise people day in and day out. The reason they do that is that the tax system rewards people for doing it. We are stupid. We have a tax system that rewards people for doing exactly the thing we know is the wrong thing to do in our economy, which is to throw billions of dollars into investment houses.

If we are to address this major problem, we need to change the tax laws. We know what has to be done. We have to ring-fence the losses around investment properties and we have to introduce a capital gains tax excluding the family home so that we start to target the capital gains that come out of investment properties, so that investment properties are no longer as tax-friendly as they are currently. That law change will provide a disincentive for all of those billions of dollars to get thrown into investment properties. None of the other parties in the House are willing to grasp that nettle, because they are frightened of telling the people of New Zealand the truth, which is that we have to change our tax system if we want to save our economy. It is a simple truth. We all know it is true but no one, aside from the Greens, is willing to stand up and say it. Gutless! So we need to change the tax rules.

One of the of the other impacts of the current policy is that as the Reserve Bank does its damnedest to try to target the housing bubble, it wrecks the entire rest of the economy, in particular the tradable sector, because it increases interest rates in order to try to suppress the housing bubble. That is what it is trying to do in order to try to stop inflation, but all it does in the process is increase interest rates and increase the New Zealand dollar right across the board so that the entire tradable sector is at a disadvantage against imports. Because we will not adopt the basic policy measures that we should adopt to target the housing bubble, the entire New Zealand productive sector has to suffer.

We say we will have a high - interest rate, high - exchange rate policy in order to try to suppress inflation coming out of the housing bubble. What a brilliant policy! We will wipe out the entire productive sector. What a brilliant economic strategy! We will have a high-currency, high - interest rate policy in order to try to suppress the inflation coming out of the housing bubble. We could not possibly have policies that target the housing bubble—no, that would be too smart! We do not like doing stuff like that! We want to have the dumb policy that suppresses the entire productive sector rather than target the housing bubble, which is the cause of the inflationary pressure in the New Zealand economy! Everyone says it; everyone knows it is true. We cannot possibly have a policy that targets the cause of the inflationary pressure in the New Zealand economy—no! We have to have a high - interest rate, high - New Zealand exchange rate policy that suppresses the entire productive sector! So we have a trade deficit. It is a brilliant strategy! We have a trade deficit, we add it to our current account deficit—it gets incorporated every year—and we are doing a great job adding to our debt.

When we say to the people who had just been laid off from the sawmill in Gisborne that the reason they are getting laid off is we will not have a capital gains tax, they might scratch their heads and wonder what on earth we are talking about. But, of course, the connection is quite straightforward. One of the reasons the New Zealand productive sector is doing so poorly is that we have a high New Zealand dollar. One of the reasons we have a high New Zealand dollar is that we have high interest rates in this country so we are an attractive place for money to come. It is a stupid policy. Right now as a result of that policy people in our country are being laid off, and we should change it.

I want to touch on just a couple of other things that should be in this tax policy but are not. The thing is, whether or not we like it, tax is not just about raising money for Governments to spend; it also influences behaviour. Not only does it influence behaviour in the housing market and investment properties but also it needs to move our economy in a more sustainable direction. We need to adopt policies around taxation that explicitly say we have to move our economy in a more sustainable direction—that is, tax policy that targets waste, pollution, and resource use. Only by changing relative prices will we transform our economy to be much more sustainable. The way we change relative prices is using targeted taxation. That is just a simple economic fact, and we need to incorporate that fact in our taxation system. If we are serious about making the economic transformation, then we need to make our economy a sustainable one—that is, sustainable environmentally, let alone sustainable economically. Currently we do not have an economically sustainable economy, which is why our current account deficit is 8 percent of our GDP and is completely out of control. Our overseas debt is completely out of control. Our overseas debt is the second worst in the world, after Iceland. Well, I say to wake up, guys, because Iceland just went under. We will be next unless we do something about our overseas debt and our current account deficit. That is called a sustainable economy.

So we will not be voting for this bill, because it does not address any of the core issues. It is a bad bill, it is an unfair bill, and it does not address any of the key problems in the New Zealand economy.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā koe, Mr Assistant Speaker. Kia ora tātau katoa i tēnei Wiki o te Reo Māori.

[Greetings to you, Mr Assistant Speaker, and to all of us in this Māori Language Week.]

Franklin D Roosevelt once said that “Taxes, after all, are dues that we pay for the privileges of membership in an organized society.” Koinā tana kōrero. Mā te pire nei, e whakahouhia ai ngā paearu whai tūranga, i runga i ngā rerenga kētanga ki te Income Tax Act 2007. He pire tēnei ki te whakatika i ngā ture e hāngai ana ki ngā reanga tāke e puritia ana, kia ōrite ki ngā reanga tāke o nāianei. Ko te pire nei, he hāngai ki ngā rerekētanga i mahia ai i mua; he whakahou hoki i ngā ture tāke.

[That is what he said. With this bill, the membership form is updated, and the organised society gets a facelift, as consequential changes are made to the Income Tax Act 2007. This is a catch-up bill, one that makes the necessary changes to certain withholding tax rates to ensure they align with recent tax rates and threshold adjustments. The bill catches up with earlier tax changes, as well as making changes to update tax law.]

So amendments are made to the Income Tax Act 2007, and also to the Income Tax Act 2004, the Goods and Services Tax Act 1985, the Tax Administration Act 1994, the Income Tax Act 1994, and the Māori Trustee Amendment Act 2009.

E hoa mā, e toru ngā wāhanga motuhake nei o tēnei pire hei aro tahitanga mā te Paati Māori. Tuatahi, ko te whakamāramatanga o tēnei mea te pākihi ngāherehere, kia tapirihia ko ngā mahi permanent forest sink initiative me kī ko te permanent forest sink initiative, āe kia ōrite tonu te utu tāke ki ngā kaimahi ngāhere katoa. Kei roto nei te kupu whakamāhukihuki kia āhei ai te hunga permanent forest sink initiative ki te tuhi i āna utu hei “utu pākihi” i roto i te kaupapa tāke. Kei te mōhio tātou o te whare nei, ko tēnei mea te permanent forest sink initiative he mahi tiaki i te taiao. Mā te whakatipu anō i te ngahere e whiwhi ai te tangata i ngā piro whai-ao. E ai ki ngā ture tāke o nāianei, ahakoa e riro mai ai te kamupene ngā piro whai-ao, ehara i te mea ka whai mana hei pākihi ngahere. Ko te raru ia, he pai ake ngā hua tāke o ngā pākihi ngāhere i ō ērā atu pākihi. Nō reira, ko te rāwekeweketanga e kitea ana i roto i tēnei pire, he whakaae kia noho ai ngā permanent forest sink initiative hei pākihi ngahere i raro i ture. Nā te mea e tika ana kia ōrite te utu tāke o ngā permanent forest sink initiative ki tā ngā pākihi ngahere, kua tīnihia te tautahi o te “pākihi ngahere” i roto i te wāhanga YA 1 o te Ture Taake 2007, kia noho tau ai te permanent forest sink initiative i roto. Koinā te āhuatanga tuatahi.

Ko te āhuatanga tuarua, ko ngā rāwekeweketanga ki te ture Tāke Hokohoko 1985, kia utuhia te tāke hokohoko o te kaupapa paranga i raro te ture Whakakore Parahanga 2008. He kaupapa nui tēnei e whakatumeke mai i a mātou na te mea 27 rā noa iho tōna pakeke, ā, kei te rāwekewekehia anō. Kei te hiahia ki te whakarongo ki ngā kōrero o te Minitā mo ngā tāke e whakamārama mai ana he aha i kore ai ia i aro atu ki ngā āhuatanga GST i mua i te whakamana i te Waste Minimisation Act hei ture.

Hei kupu whakamutunga, ko te take tino whakaharahara, ko ngā rerekētanga e pā ana ki te tāke pupuritanga. Nā te uaua ki te whai i ngā tohutohu maha o te tāke, i ētahi wā he ngāwari ake te mahi moni tūturu i te whakakīkī i ngā tono tāke. Kei roto i tēnei pire ngā reanga tāke pupuri hou, i runga ake i tērā, ka utua ki ia tāngata kia ōrite ki ngā rerekētanga ki ngā tāke ake ā-tāngata. Hei tā te pire nei, ki te kore te tangata e whāki i te utu tāke tika ki te pēke, ka 38 pai hēneti te rahi o te tāke e utua. E ai ki ētahi, he huarahi nanakia tēnei ki te akiaki i te tangata ki te tuku i te utu tāke tika mō te huamoni ka riro mai i ngā pēke.

He pai tonu ki a au ngā kōrero a te māngai tāke o te Deloitte ki Ōtepoti, a Peter Truman. E ai ki a ia, ki te whakaturehia tēnei pire hou, ka nui atu te utu tāke ki runga i te pūtea tuku. Hei tā Mr Truman i tātari ai, kei te patua-ā-pūkoro e te Kāwanatanga te hunga e ngoikore ana ki te tuku i te reanga tāke tika ki ngā pēke, anā ko ihu māngere rāua ko ihu wareware tērā. E ai ki ngā whēako o tēnei mātanga tāke o Te Tai Tonga, ko te rahinga o te tangata kāore i te tuku i te reanga tāke tika ki ō rātou pēke, ā, ko tērā te hunga ka patua e te pire nei. Nā runga i tērā, me noho whakahirahira te rautaki whakatairanga o te Tari Taake, kia tae mārama, kia tae tika ngā tohutohu ki te hunga mahi huri noa i Aotearoa. Nō reira, kei te tautokona e mātou te pānuitanga tuatahi o te pire nei i runga i te mōhio, hei te wā komiti whāiti e puta mai ai te mātauranga me te māramatanga.

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

[There are three features of this bill in particular that the Māori Party wants to comment on. The first aspect is the new definition of forestry business to include permanent forest sink initiative activities, so that all foresters receive the same tax treatment. Basically it clarifies the state of play, so that the expenses of participants in the permanent forest sink initiative can now be treated as forestry business expenses for tax purposes. The permanent forest sink initiative, as the House will be aware, is a climate change initiative in which a person intending to reforest can, in exchange for meeting certain conditions, receive emission units. Under current practice, the earning of these emission units may not always constitute a forestry business under the Income Tax Acts, whereas forestry businesses are entitled under the Act to more favourable tax treatment than other businesses. So the simple change introduced in this bill is that the reference to forestry business is now amended to include initiatives under the permanent forest sink initiative. Since permanent forest sink initiative foresters should receive the same treatment as foresters who carry on a forestry business, the amendment defines “forestry business” in section YA 1 of the Income Tax Act 2007 to include permanent forest sink activities.

The second area of interest relates to the proposed a mendments to the Goods and Services Tax Act 1985 to provide that GST is payable on the waste levy imposed by the Waste Minimisation Act 2008. This is particularly of interest, in that it has been only 27 days since the new waste disposal levy was introduced and already we are changing it. It would be interesting to hear from the revenue Minister how the Waste Minimisation Act 2008 could have been passed into law without the necessary adjustments such as GST being taken into account.

Finally, the last—and probably the most significant—of all the changes is that related to the resident withholding tax. Sometimes it appears as if more brain and effort are required in understanding all the tax compliance requirements in order to complete the income tax form than is required to make the income in the first place. The bill introduces new resident withholding tax rates on interest paid to individuals, to bring them into line with recent changes to personal tax rates. In particular, the bill introduces a new default rate of 38 percent for people who do not notify their bank of their correct tax rate. The changes to the default rate are being described as a type of perverse incentive to motivate people to use the correct tax rate for the interest they receive from their financial institution.

I was interested to read the analysis of Dunedin Deloitte associate tax director Peter Truman. It was his opinion that the tax changes being proposed by the Government would catch investors unaware, leaving them paying more tax on their investment income. According to the analysis by Mr Truman, the Government is increasing its tax take from those who are not motivated or organised enough to advise financial institutions of their correct tax rate. In the experience of this Te Tai Tonga tax director, many New Zealanders did not get around to notifying their financial institutions of their correct tax rate and so may be unfairly penalised by the change in law. It is for this reason that we think it is really essential that the Inland Revenue Department plan out a top-notch communications strategy to ensure the message gets through to all New Zealanders. We will support this bill at the first reading, and look forward to views about how effective the proposed changes will be, at the point of select committee .]

AMY ADAMS (National—Selwyn) : He mihi tēnei ki te tangata whenua, ā, e tautoko ana i tēnei reo o Aotearoa.

[This acknowledgment is to the people of the land, and I endorse this language of New Zealand.]

I am pleased to rise today and take a call in support of the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. As speakers before me have already discussed, it is appropriate in this debate to take a moment to reflect on the wider tax basis and the reason for this bill, because we all accept that this bill brings into place consequential and necessary steps as a part of that tax programme.

It is worth reflecting back to the state of the economy that this Government inherited when we came into power on 8 November last year.

Chris Hipkins: Here comes a piece of fiction!

AMY ADAMS: Whether or not the Labour Opposition wants to acknowledge it—its members had their heads in the sand for 9 years, and we are not expecting that to change—we had an economy of declining growth. Our export sector, which will lead us out of this recession, had been in recession for 5 years under the previous Government. We had a rising current account deficit, high inflation, and rising unemployment. The very simple reason for that situation is that the Labour Government was absolutely, fundamentally incapable of celebrating success. It could not bring itself to do it. It refused point-blank to do anything that would incentivise hard-working New Zealanders and that would reward people for hard work. It was anti-profit and anti-business. That is a big part of the reason we inherited the economy we did, after that Labour Government squandered 9 years of lost opportunities.

The National-led Government will not make that mistake. This Government understands that it is the hard-working, taxpaying New Zealanders who keep this economy going, and that they deserve to be supported. That is why this Government delivered personal income tax cuts after a mere 6 months in Government, not after the 9 long years that the Labour ex-Government—and I emphasise “ex-Government”—made hard-working New Zealanders wait for their tax cuts. It could not accept that people should be incentivised for being productive or rewarded for getting off their backsides and going out and helping to build an economy, create jobs, and create wealth. Members opposite think that “profit” is a dirty word, but we do not, and we will support taxpaying New Zealanders. That concept might seem radical to the Labour caucus, but the National Government supports people who work hard, create wealth, and create the standard of living that New Zealanders aspire to. In a nutshell, that is why this Government acted quickly to bring in personal tax cuts, and why we now have before us the Taxation (Consequential Rate Alignment and Remedial Matters) Bill.

As we have already heard, the major policy item in the bill simply aligns various tax rates with the new primary rates for active income that were recently set for personal and company taxpayers. The main areas that that change applies to are the resident withholding tax area and the portfolio investment entity area. We are ensuring that we do not allow overtaxation where the appropriate rate for personal income has been reduced, and that those taxpayers are able to elect an appropriate equivalent rate for both their resident withholding tax and their portfolio investment entity income. Similarly, we see consequential changes in the retirement scheme contribution rates and secondary employment rates, among others. Just looking at the portfolio investment entity rate for a moment, we see that it is important that those who choose to invest through a vehicle like that are not put at a relative disadvantage to taxpayers who invest directly.

The other things I want to touch on briefly are some of the consequential matters that have not, perhaps, received as much discussion time. They are obviously not the main focus of the bill but are worthy of mention. I want to mention one in particular, because I have had some involvement with it in a past life—that is, the change to the beneficiary income allocation rules. Put very simply, the beneficiary income allocation rules require that for trust income there is an election as to whether that income can be retained within the trust or allocated to the beneficiary, who would then pay tax on that income at his or her own rate. Up till now, the income must be allocated within 6 months of balance date. This bill will enable those trustees to make a decision to allocate the income to the beneficiary not within an arbitrary 6-month time frame but at any time up until the tax return for that trust is required to be filed. It may not be a world-moving tax change, but members should believe that it is a very sensible and practical change that will enable trusts properly to allocate their income as they work through their trust return processing. They can see what their returns for the year were and they can work out the most beneficial way of setting out their incomes. I definitely support that change.

Another taxpayer-friendly change is very simple. It enables taxpayers to make minor corrections in their returns. Again, that is very simple and taxpayer-friendly. There is every reason to support the bill, and I am very pleased to see that support across the House.

I have gone over some of the main parts of the bill. The bill is worthwhile, it is necessary, and it aids the general overriding tax policies of clarity and consistency. For that reason, I am very pleased to support this bill. I commend it to the House.

STUART NASH (Labour) : I stand in support of the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. I support the bill because I recognise we need a tax system that is simple and easy to understand by as many people as possible. I also support the need to align rates across investment class, because that is very important. I also support the bill because it is a Labour bill. Like the vast majority of good bills passed by the House, it is a Labour bill, but we all know that the Labour Party is the party of tax efficiency, without a question of doubt. After all, what party last cut the company tax rate?

Dr Cam Calder: Labour.

STUART NASH: Who?

Dr Cam Calder: Labour.

STUART NASH: I tell you what, what was the party before that?

Dr Cam Calder: Labour.

STUART NASH: The last time that Labour cut the company tax rate, the Nats voted against it. Those guys voted against cutting the company tax rate. That is unbelievable. National calls itself the party of business, but it is not. The vast majority of good bills that have been passed by the House since I have been here, in my limited time, have all been Labour bills. When we look at the big National bills, they are bills to build thermal power plants, the 90-day “fire at will” bill, the Auckland governance legislation, and the Budget, which has cut adult community education and the training incentive allowance. That is hardly building a productive economy, I must admit. The irony is that the training incentive allowance was cut by a Minister who, by her own admission, dug her way out of adversity through education by accessing the training incentive allowance, and adult community education was cut by a Minister who was an adult community education tutor in Napier. That irony has not been lost on many New Zealanders. It is dreadful.

Peseta Sam Lotu-Iiga: Tell us which classes.

STUART NASH: I was in a class last night where the ages ranged between post-retirement to just-left-school. That was a night class that will be cut and they could not believe it. They were learning a very important skill. They were socialising. For a lot of them the class was the highlight of their week. The government is getting rid of it; it is cutting it. We tried to find a logical argument. We could not find any logical argument for cutting it. This is a Government of cut; it is cutting it all. But do not worry; if people are wealthy enough to send their children to a private school, then they did get a boost. They got a $35 million boost, because that is what the Government gave to private education. That is unbelievable. In fact, people who are lucky enough to send their children to private education were probably in the top 3 percent who got 33 percent of the tax cuts. I repeat: 3 percent of taxpayers got 33 percent of the tax cuts. Is that fair?

Kelvin Davis: No way!

STUART NASH: That is not is fair at all. It is a travesty. [Interruption] Talking of equitable, I challenge the ACT member Mr Boscawen, who holds himself out to be a people’s person in the financial regulation area, the man who will solve it all, to come on board for Labour’s investigation of the banking sector. He has done it for the finance sector; he should come across and help us be part of this. He wants to do it; he is an independent MP within the ACT Party, he acts independently, he should come across and be part of the banking inquiry that ordinary New Zealanders want to see happen because they are hurting. I tell Mr Boscawen to come across—no, do not come across, be independent, voice your will; you are one of us, I know that. When it comes to the banking sector, Mr Boscawen wants to know what is going on with the banks.

But let me tell members a little bit about this. I think the Nats find it quite confusing, because they keep talking about “stimulus”. Let me tell you about stimulus. There is something called Keynesian economic theory. Sam Lotu-Iiga might have studied this at Cambridge; I am not too sure. He is on the wrong side of the Chamber, and he knows it. He should come across here. Keynesian economics is mirrored by such philosophers as Hyman Minsky, for example, and echoed by Paul Krugman, for example—he was the winner of the 2008 Nobel Prize for economics—and by Ben Bernanke in the United States. Do you know what they said? What one needs to do is stimulate supply by creating demand! How do we do that? How do we create demand? We give money to those who spend it, to those who desperately need it. What should not be done is to give money to those who have a whole lot of money—the top 3 percent of taxpayers—because they tend to save it or they tend to retire debt. At this stage of the economic cycle, what we do not want is people taking this so-called stimulus package, and taking the money out of circulation by sticking it in the bank. That is called supply-side, or Friedmanite economic, theory—what used to be known as the trickle-down theory. And it does not work.

Peseta Sam Lotu-Iiga: Neoclassical!

STUART NASH: Sam knows that. You sat around that National caucus table when they announced these tax cuts, and you must have been shaking your head thinking: “The people in Maungakiekie will crucify me when they see this.” I feel sorry for you, mate. If you are a New Zealander and you earn under $40,000, and you are a taxpayer, you received nothing.

Jo Goodhew: I raise a point of order, Mr Speaker. I just wish to raise with you that it seems rather often that you find yourself drawn into this debate, at the moment. I wonder whether you might remind the member that the use of the word “you” brings the Speaker into the debate.

The ASSISTANT SPEAKER (Hon Rick Barker): The member is quite correct. The member is making reference to “you” and “your”. The Speaker in the Chair is not responsible for Keynesian economics or a range of other things, and the reference should be indirect. I invite the member to continue.

STUART NASH: Mr Assistant Speaker is right, of course, because he is a believer in Keynesian economic theory, as is anyone who has a social conscience in this country, which I do not think many people on the other side of the House have. But that does not matter, because hard-working, tax-paying New Zealanders who earn under $40,000 a year did not get a tax cut. In fact, one would have to be in the top 3 percent to get 33 percent. But it does not matter. John Key received $120 a week in his tax cut. Someone on a medium income with children received nothing. At the Finance and Expenditure Committee—Sam was there—we asked Mr English—

Jo Goodhew: I raise a point of order, Mr Speaker. On the first occasion that I noted that the member was using only part of one of the member’s names, we let it go. But the member is still using the member Sam Lotu-Iiga’s name incorrectly. I ask you to remind the member of the convention of the House.

The ASSISTANT SPEAKER (Hon Rick Barker): The member’s point of order is quite correct. Members are to be addressed correctly, and their names are to be used in full. There are no short-cuts in this matter. Although we like to be familiar on occasions, this is not one of those occasions.

STUART NASH: As I was saying, at the Finance and Expenditure Committee we asked Mr English whether, given the state of the current economic climate, which all the financial commentators from around the world are saying is getting more dire by the day, he will implement the tax cuts. Mr English said yes, he will, because it is what the people of New Zealand voted for. I wonder whether the 190 people on the East Coast who lost their jobs today voted for that. I very much doubt it. Seventy-five percent of people in the Napier electorate did not receive a tax cut. I wonder whether they voted for that.

It is bad luck for the owners of high-tech businesses. National cut the research and development tax credit to fund tax cuts. What is the vision? Where is the aspiration? The New Zealand biotechnology and agricultural sectors have been left behind. We pass free-trade agreements in this House, yet we do not support our businesses with research and development in order that they may take up the opportunities and optimise their potential.

I will give members some startling figures. The National members talk about aspiration, research, and driving growth. Let me tell members that, as a percentage of GDP, Australia’s spend on research and development is 1.15 percent, Japan’s spend is 2.62 percent, the UK’s spend is 1.1 percent, and the US’s spend is 1.89 percent. The OECD average spend on research and development is 1.56 percent of GDP. New Zealand’s spend is 0.51 percent of GDP. We talk about productivity. I wonder what Dr Brash had to say about that when he cut the research and development tax credits.

The KiwiSaver incentives have been cut for workers. Now a worker has to earn over $50,000 or contribute more than the current 4 percent before he or she gets the maximum Government allowance. This is a time when savings rates are shocking. There is a dilemma: we want people to save and we need people to spend in order to stimulate demand. However, the National Government gave no money to those who need to save, and not a dime, penny, or cent to those who would have spent it. It is a backward step. It is unbelievable. Where is the logic? Where is the plan?

Another 60,000 to 80,000 job losses is the prediction. About 1,300 people per week are joining the dole queue these days. Businesses are struggling and families are stretched. So what will this Government do to help people? It failed to deliver when it mattered. It failed the people of New Zealand. During the 2008 election people turned blue whilst holding their breath, waiting for a vision promised by the Nats. But now people are turning red with rage. Like Mr Key I cannot wait for the 2011 general election either. Thank you.

JOHN BOSCAWEN (ACT) : I was not intending to take part in the debate on the first reading of the Taxation (Consequential Rate Alignment and Remedial Matters) Bill, but I will answer the challenge of Mr Nash. Mr Nash said to come and join the debate, to go and join his side of the House because I am one of them.

We have two classes of citizens in this country: the privileged and the underprivileged, the haves and have-nots. Once upon a time the Labour Party would stand up and fight for the underprivileged. What did we hear from Mr Nash? We heard criticisms of the amount of funding that is going into independent schools and education. A very small number of people have the privilege of an independent education, which is an education that is paid for by parents. An independent education is an education that the privileged in society can afford. This country needs a form of funding where the funding follows the child. The Government needs to put funding into the hands of parents who live in South Auckland to give children the capacity to go to independent schools. Let us give the people in South Auckland and the underprivileged access to quality independent education. When I hear the Labour members standing up for the rights of children in South Auckland to go to the best-quality schools we have and to give them the best chance in life, that is when I will consider supporting Labour.

We have also heard a lot about savings. I give credit to the Hon David Cunliffe. He had the courage to say last week that this country needs to recognise the fact that we cannot afford to continue to provide superannuation to people at the age of 65. Mr Cunliffe had the courage to say that we need to look at raising the age-limit to 67. He was not talking about people who are 64 right now; he was talking about people who are 54, giving them 10 years’ notice to plan for the future. The reality is that we have a two-class society. We have the privileged and underprivileged; we have the haves and have-nots. We have the people who can look forward to their retirement with sufficient money saved and not depend upon the Government. But we also have two-thirds of society who retire fully dependent upon the Government and upon politicians providing their miserable pension. How can we expect a family to live on $20,000 a year? That is the pension for a family.

I support savings, and another thing I give credit to the Labour Party for is KiwiSaver. Mr Nash talked about KiwiSaver incentives. Who is saving in KiwiSaver?

Stuart Nash: Hard-working Kiwis.

JOHN BOSCAWEN: I tell Mr Nash that the well-off are saving. Once again, incentives for people to save are giving money from people who cannot afford to save but still have to pay taxes to those on higher incomes who are in a position to save. If Mr Nash is concerned about shifting resources from low-income people to people on higher incomes who are in a better position to save, then he should not provide incentives to save. I congratulate Labour on setting up KiwiSaver. It was set up with an incentive of 4c in the dollar. That incentive has been reduced to 2c in the dollar and it should probably be 0c in the dollar. If I had my way saving would be compulsory. I said that before in my maiden speech.

I conclude my comments here, but I come back to the fact that we have a two-tier society. We have two classes of citizens: we have the privileged and the underprivileged, the haves and have-nots. When the Labour Party is prepared to consider ways of funding education that will allow people on low incomes with low wealth to get the best in education, then I will consider its offer seriously. Thank you, Mr Assistant Speaker Barker.

DAVID BENNETT (National—Hamilton East) : Following that speech about—

Chris Hipkins: Remind us what he said about tax cuts.

DAVID BENNETT: Labour members are yelling out something about tax cuts. We had an economics lesson earlier from the social conscience of the Labour Party, Stuart Nash. He was telling us that the Labour Party’s agenda is that it will give money to people who will spend it. Labour thinks that for New Zealand to get out of the economic recession, the Government should give money to people who will spend it. How about giving money to people who will invest it? Why do we not actually support the productive side of the economy rather than the spending side of the economy?

The whole reason our economy is in the position it is in now—of having a high current account deficit—is that we spend more than we earn. That is the fundamental problem. The Labour Party wants to see more spending and less investment. It does not want to see a productive economy that will deliver the results we want; it just wants to live for now and give money to people so they can spend it. The Labour Party sees one great big money-go-round. That is what Labour has always seen, and that is what it saw when it was in Government for 9 years. The previous Labour Government thought that if it just put the money in the economy, it would come back around and everything would be fine. Well, the chickens are coming home to roost in Labour. People are realising that we need a productive economy. We need an economy that can resist the world challenges out there and deliver some results. That is what the National Government will build: a productive economy that delivers a firm and secure economic base for New Zealand.

I think that the Taxation (Consequential Rate Alignment and Remedial Matters) Bill is a good stepping stone. It aligns some of those rates in investment with what we have in our taxation system. If we want our people to invest, then we want people to save, and to have tax rates that respect those savings. This legislation aligns those tax rates with the tax cuts that were brought in earlier.

Labour talks about how it is a party of taxation, and how it is a party of tax cuts. The reality is that it had 9 years and did not give any tax cuts to hard-working New Zealanders. Labour had its chance in the best economic conditions for a commodity-producing country but it did not deliver. It is a bit rich for those members to come into Parliament now and try to be seen as the most taxpayer-friendly party in this Parliament, when the reality is that New Zealanders understood that that was not that case.

This legislation is a matter of aligning tax rates with the rates that were given in the tax cuts earlier in the year, and deals with things around the interest rates. The resident withholding rates will be consequentially amended to reflect those changes in tax rates. The change is good for investors, it is good for the New Zealand economy, and it is good for delivering a stronger future for New Zealanders. Labour cannot understand that and will never understand it. It still votes for legislation because it wants to be seen as being politically correct, as it has been doing for the last 9 years. Thank you.

RAYMOND HUO (Labour) : The Taxation (Consequential Rate Alignment and Remedial Matters) Bill is a technical bill that continues one of Labour’s work streams and makes some necessary changes. Tax cuts have been made to the individual and company tax rates. The bill introduces new resident withholding tax rates on interest income to align them with the new tax rates. The new rates for individuals will be 12.5 percent, 21 percent, 33 percent, and 38 percent, depending on their income. The bill introduces a new default rate of 38 percent for people who do not notify the bank of their correct tax rate. The new default rate will apply to accounts opened from 1 April 2010. That change has raised some concerns, and I will come back to that matter later.

Other changes in the bill include, firstly, aligning tax rates on portfolio investment entities with the new personal tax rates. Secondly, the bill introduces a new 12.5 percent secondary code and a new 12.5 percent withholding tax rate for extra pays. That brings the withholding rates on employment income into alignment with new personal tax rates. Thirdly, there are other changes concerning forestry and climate change, and tax returns and trusts.

It interests me that this bill is a good reminder of some important issues. The first issue is in relation to the magic words “tax cuts”. The National-led Government came into office with grand promises of a tax-cut programme that would benefit everyone. Many will recall that, at the end of last year, this honourable House was put into urgency to pass legislation to enable the National-led Government to implement tax cuts. Not long ago, this honourable House was put into urgency again so that the Government could cancel those tax cuts. In other words, in its very first Budget in May the National-led Government broke its No. 1 election promise, which it campaigned on tirelessly, and cancelled the next two runs of tax cuts. Sure, it did pass a tax cut package, but that gave one-third of the tax cuts to only the top 3 percent of taxpayers, or to borrow Mr John Boscawen’s word, to the top 3 percent of the “privileged” taxpayers. The April 2009 changes to personal taxation affect only people earning $40,000 or more, so 71 percent of taxpayers, or, again to borrow Mr Boscawen’s words, those who are “underprivileged”, received no tax cuts at all. It is regrettable, particularly at this time of the economic downturn, because there would otherwise be ample opportunity for the Government to redirect its tax plan to ensure that the tax cuts would benefit those who needed them the most and who would have spent them. This would also have served to boost the economy and save jobs.

Secondly, another magic word, or I should say, magic name, is Dr Don Brash, who has recently been appointed by the National-led Government to lead the productivity task force. This naturally brings us to the issue of productivity. It is deeply regrettable that the research and development tax credits were scrapped by the National-led Government. It appears that the sole reason the National-led Government scrapped the research and development tax credits was to fund its tax package. It is illogical because, as I said earlier, the No. 1 grand promise of a tax cut programme benefiting everyone was broken. Moreover, to fund the No. 1 election promise—which was broken anyway—at the cost of innovation and productivity recalls the ancient Chinese idiom “killing the hen to get the eggs”. New Zealand business expenditure on research and development is one-third of the OECD average, namely 0.51 percent of GDP. Treasury considered that figure a drag on New Zealand’s productivity growth and competitiveness, and advised the Government to retain the tax credit. That advice was given on the basis that the credit offered a more effective means of incentivising business research and development than discretionary grants, as the credit was more driven by business and could reach many more firms.

The main disparity between New Zealand and other countries is in the low research and development spending from business as a percentage of GDP. Total research and development spending in New Zealand, as mentioned by my colleague Stuart Nash, is only 0.51 percent. That is low compared with spending in Australia of 1.15 percent, in Japan of 2.62 percent, in the UK of 1.1 percent, in the US of 1.89 percent, and the OECD average of 1.56 percent. International evidence shows that well-designed research and development tax credits can, and will, have a positive impact on productivity growth. Treasury advised the incoming Government that the research and development tax credit should be retained. Therefore, a sensible move by Dr Don Brash would be to advise the National-led Government to reinstate the research and development tax credits.

Furthermore, it is equally regrettable that, by cutting the incentives for KiwiSaver, the National Government is decreasing the amount that New Zealanders will save. The low savings rates and the spending habits of New Zealanders are two obvious reasons behind the KiwiSaver scheme. The Government’s move has created huge uncertainty for the over 1.1 million New Zealanders who have already signed up, and it takes opportunities away from future generations.

The fourth issue is related to the changes made to the default rate. The bill introduces a new default rate of 38 percent for people who do no notify the bank of their correct tax rate. We have heard concerns that those tax changes being proposed will catch investors unaware and may see them pay more tax on their investment income. Mr Peter Truman was quoted in the Otago Daily Times as saying: “many New Zealanders did not get around to notifying their financial institutions of their correct tax rate, … Therefore, we have the Government increasing its tax take from those who are not motivated or organised enough to advise financial institutions of their correct tax rate.”

As a member of the Finance and Expenditure Committee, I look forward to submissions on this bill. Thank you very much.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : Tēnā koe, Mr Assistant Speaker. Ka whakanui au i te reo o te tangata whenua, ka whakanui au i te reo o Aotearoa. Tihei mauri ora.

[Greetings to you, Mr Assistant Speaker. I celebrate the language of the people of the land and of New Zealand. Behold the sneeze of life.]

I acknowledge that this is Māori language awareness week, and it is pleasing to me personally that people have made an effort to acknowledge one of our official languages in this country of Aotearoa New Zealand.

I rise to support the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. I will not get into the detail of the bill. It is, really, a bill that is about aligning certain tax rates, and it is, as many of the prior speakers have alluded to, part of the wider tax package that this Government is putting in place. Suffice to say that the major policy item in the bill is the alignment of those various tax rates with the new primary rates that the Government has set out in its tax cut policy.

Many of the prior speakers have alluded to the fact that this measure is part of a wider initiative to increase the productivity of our country. Increasing New Zealand’s productivity, of course, increases job opportunities and increases the standard of living that we are used to in this country, and it is certainly something that all parties in this Chamber support. Of course, taxation reform is part of a wider programme of regulatory reform that aims to remove red tape and other such regulatory compliance, as well as to remove other barriers to increasing productivity. It is also part of the Government’s programme of investment in infrastructure. That infrastructure is not just physical infrastructure, as in roads, schools, and other buildings and the like, but also infrastructure like broadband, which the Government will roll out in the next few years. The Government also sets out to improve productivity within the public services. We have been quite clear, in our direction and policy setting, that the public services need to be improved. We are also setting out an agenda on education, and upskilling those who want to upskill themselves in order to produce the jobs—the value-added jobs of tomorrow—that will improve the productivity of this country. Many prior speakers touched on innovation, and having a world-class taxation system is just the icing on the cake.

Many of the speakers opposite me referred to productivity, yet, despite the very favourable economic conditions in the last 9 years, all that the previous Government had to show for that was an annual productivity growth rate of 1.1 percent between 2000 and 2008.

Dr Cam Calder: 1.1 percent?

PESETA SAM LOTU-IIGA: The figure is 1.1 percent, I say to Mr Calder. That is staggering, given the favourable economic conditions. The biggest show in town was Government spending—not the productive sector, not the export sector, but Government spending.

This Government inherited quite a mess. We inherited rising unemployment, high inflation, a rising current account deficit, and an export sector that has declined for 5 years in succession. That is right; the export sector has declined for 5 years in succession. But guess what! This Government has a plan. This Government is about improving productivity. This Government is about delivering $1.68 billion to be spent on education. What are we doing that for? To increase the productivity of our economy. What is that needed for? To increase job opportunities in this country. Yes, this Government has a plan. It is spending over $1 billion extra over 3 years on the State highway network. Guess what! Business confidence has remained positive. Guess what! We have had an upgrade in our credit rating, which will save the taxpayers of this country in respect of interest rate increases. It will save us money on our mortgages; it will save us money on our borrowing costs. I am glad that the Leader of the Opposition is here to listen to this, because he does not listen during question time. But he will listen to a colleague—a colleague from the central Auckland region.

So I speak in support of this bill. It is part of a wider package of reform that this Government is pushing forward with. I say we should look out for productivity in the future, look out for increased job opportunities, and look out for stability. I reiterate that I speak in support of this bill. It is only a minor part of our reform, but it is an important part. Thank you, Mr Assistant Speaker.

Hon Dr WAYNE MAPP (Minister of Defence) on behalf of the Minister of Revenue: I move, That the Finance and Expenditure Committee consider the Taxation (Consequential Rate Alignment and Remedial Matters) Bill, that the committee report finally to the House on or before 16 November 2009, and that the committee have authority to meet at any time while the House is sitting (except during questions for oral answer), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 187 and 190(1)(b) and (c).

• Motion agreed to.

Hon GEORGINA TE HEUHEU (Minister for Disarmament and Arms Control) : I move, That the Cluster Munitions (Prohibition) Bill be now read a first time. The Cluster Munitions (Prohibition) Bill implements New Zealand’s obligations under the Convention on Cluster Munitions that require legislative implementation to enable New Zealand to ratify the convention. The convention was adopted in Dublin on 30 May 2008 and was signed by New Zealand, in the company of 93 other States, in Oslo on 3 December 2008. It establishes a wide-ranging prohibition on the use of cluster munitions that cause unacceptable humanitarian harm.

Cluster munitions are canister-like weapons that encase a large number of smaller explosive devices that are dispersed over an area. They are designed to explode on impact, but many fail to do so and remain on the land, killing and maiming civilians for years following their use. This can be witnessed at present in the Lao People’s Democratic Republic, where people are still dying as a result of cluster munitions used decades ago.

Clause 11 of the Cluster Munitions (Prohibition) Bill is the key provision of the bill. It prohibits the use of cluster munitions, and other activity including the development, production, acquisition, possession, retention, stockpiling, and transfer of such munitions. Clause 11 also prohibits any person from assisting, encouraging, or inducing the prohibited conduct I have just described. The maximum penalty on conviction of a clause 11 offence is a prison term not exceeding 7 years or a fine of up to $500,000, or both. This penalty is in line with similar existing legislation.

Further, and in line with the convention, clause 11 of the bill prohibits certain additional conduct involving cluster munitions by members of the New Zealand armed forces when engaged in operations, exercises, or other military activities with the armed forces of a State that is not a party to the convention. This specific prohibition, combined with the general prohibitions outlined earlier, implements article 21 of the convention, which was one of the more contentious issues during its negotiation. That important article outlines the obligations on State parties to promote the norms that the convention establishes. They must also make best efforts to discourage States that are not party to the convention from using cluster munitions. The armed forces of States party to the convention are not barred from engaging in operations, exercises, or other military activities with the armed forces of States that are not party to the convention. However, they may do so only if, while so engaged, they do not undertake any of the specified prohibited conduct.

Clause 9 of the bill extends the reach of the clause 11 prohibitions to certain acts or omissions outside New Zealand, in line with the intent of the convention. This means that in certain circumstances a person can be prosecuted in New Zealand even when he or she commits these offences abroad.

Clauses 12 and 15 provide a limited set of exceptions to the general prohibitions. These exceptions include where a decision is taken by the Minister for Disarmament and Arms Control to allow the importation of the minimum number of cluster munitions that will suffice for the purpose of developing and training New Zealand Defence Force personnel in cluster munitions detection, clearance, and destruction techniques. Members of our armed forces have certainly been involved in that activity, particularly in Lebanon, in recent times.

Clause 17 of the Cluster Munitions (Prohibition) Bill requires people who acquire, possess, retain, or transfer cluster munitions to provide information and keep records as specified, and it creates applicable offences for failing to comply and for false disclosures. Clause 17 is required so that New Zealand can meet its reporting obligations under the convention.

New Zealand has a profile on disarmament and arms control issues far above our size and place in the world. We have taken a strong position on the humanitarian impact of cluster munitions, and I am extremely pleased to continue that tradition with this bill. The convention is an excellent example of what New Zealand can achieve on the international stage. New Zealand took a central role in the development of the convention, as a member of the core group of countries—along with Austria, Ireland, Mexico, Norway, the Holy See, and Peru—that led the negotiations. New Zealand also hosted the penultimate round of negotiations in Wellington in February last year, and I acknowledge the Hon Phil Goff, who is in the House this afternoon, who, no doubt, was influential in those negotiations, as well. It is fitting that we now work to ratify the convention and take our place among the first 30 State parties required to bring the convention into force.

I also pay tribute to the non-governmental organisations that have had an active role in the negotiation of the treaty. Their commitment to this convention continues and they are now also working to bring the convention into force. I know they will be pleased to see that this bill is having its first reading here this afternoon.

I note that the Foreign Affairs, Defence and Trade Committee, during its examination of the convention earlier this year, called for the House to progress this bill expeditiously. The Convention on Cluster Munitions represents a significant development in international disarmament and humanitarian measures. I, too, urge swift passage of the Cluster Munitions (Prohibition) Bill to enable New Zealand’s ratification of this important convention. This urging is entirely consistent with our country’s reputation as a strong proponent of international disarmament and of arms control more broadly. Most important, a well-supported convention has the greatest potential to help prevent the unacceptable and unspeakable humanitarian harm caused by the use of these weapons, for which there is no place at all.

I move that the bill be referred to the Foreign Affairs, Defence and Trade Committee for consideration, and I commend this bill to the House.

Hon PHIL GOFF (Leader of the Opposition) : The Labour Party supports and warmly welcomes the introduction and passage of the Cluster Munitions (Prohibition) Bill. As the Minister for Disarmament and Arms Control has acknowledged, this legislation implements the outcome of an international process in which New Zealand played a pivotal role under the previous Labour Government, and in which I, as Minister for Disarmament and Arms Control, had the privilege to be involved. I thank Georgina te Heuheu for acknowledging that fact.

I in turn, pay particular tribute to the enormous and effective role played by New Zealand’s ambassador for disarmament in Geneva, Don MacKay. Don is one of the finest civil servants whom I have had the pleasure of working with. He is held in such respect that he was appointed to chair the critical committees during the negotiations that took place both in the Wellington conference and in the Dublin conference.

I also acknowledge the critical role played by non-governmental organisations in this. They worked under the umbrella of the Cluster Munition Coalition. In particular, I acknowledge the role played by Mary Wareham of Oxfam as the convenor of this process. I believe that the non-governmental organisations helped give real momentum to it. I was hugely impressed with the determination and enthusiasm they showed worldwide in pushing this cause forward at a time when countries around the world, through the United Nations process, were incredibly reluctant to move forward on it.

Cluster munitions, as the Minister has pointed out, are, effectively, unexploded sub-munitions that act in very much the same way as landmines. There is a high rate of failure to detonate on impact, they then lie dormant in the soil, and they can lie there for decades, still causing a threat to civilian life, long after the conflict in which they were fired. In that sense they are very similar to landmines, and, indeed, this treaty that we are moving to ratify by legislation today is the biggest advance in the area of disarmament since the Ottawa Convention on landmines.

The tragedy of lost lives and horrific injuries is evident right across the world, in the Balkans, South-east Asia, Africa, and the Middle East. But the event perhaps more than any other that stimulated us to move against cluster munitions was the conflict in south Lebanon between Hezbollah and the Israel Defense Forces. It is estimated that a million sub-munitions lay in the soils of south Lebanon after that conflict, resulting in casualties of more than 200 maimed and killed; a very high percentage of those casualties were children.

I was enormously proud of the role played by the New Zealand Defence Force in helping to clear those sub-munitions. We made the decision to send it up to Lebanon. It did an excellent job, as indeed, I had witnessed it doing beforehand, in places as diverse as Laos, Cambodia, and Mozambique. But it occurs to anybody who watches the painstaking clearance, metre by metre, of those sorts of munitions that it is far better to have the fence at the top of the cliff than the ambulance at the bottom. We saw the need to deal effectively with the phenomenon of cluster munitions.

For 5 years in Geneva the countries of the world failed to effectively solve this problem. We worked through the Convention on Certain Conventional Weapons. Countries with vested interests that controlled, used, and stockpiled cluster munitions blocked the consensus process. We were getting nowhere. A group of seven countries, all of them small nations, came together to find an alternative path forward. They were Norway, New Zealand, Ireland, Austria, Peru, Mexico, and, to its credit, the Vatican. We set up what was called the Oslo process, and we set out to create a treaty that would outlaw the use of cluster munitions, which have such an unacceptable effect on civilian life. That Oslo process was significantly advanced when New Zealand itself, early in 2008, hosted the Wellington conference. I had the pleasure of hosting delegates in the Grand Hall next to this Chamber. That conference laid the framework for creating an agreement that in Dublin would lead to a treaty to outlaw cluster munitions that would bind the signatories to it. Again, I pay tribute to the role of Don MacKay in Ireland in playing an integral part in that process.

What we achieved was a huge number of countries, I think in excess of 90, signing up to the Dublin convention, which bans cluster munitions causing harm to civilians, and 99 percent of all sub-munitions - based weapon systems. It requires stockpiles of cluster munitions to be destroyed within 8 years. It requires contaminated sites to be cleared within 10 years. It sets out clearly the rights of cluster munitions victims, and with the obligations that States have towards them. It requires States to provide international cooperation with, and assistance to, those countries affected by cluster munitions, where they are in a position to do so.

In Oslo in December of last year 93 countries signed the Convention on Cluster Munitions. They did not include countries such as the United States, Russia, China, Israel, India, and Pakistan, which have used and do stockpile cluster munitions. But I believe that the impact of this treaty will be very much the parallel of the Ottawa Convention. It will create a stigma around the use of cluster munitions, which will mean that even those countries that have not signed this treaty will feel constrained from using the weapons. Therein lies the importance of this treaty and this convention that this legislation will enable us to ratify.

We need to pass this legislation to implement certain obligations under the treaty. I think that will be relatively straightforward for New Zealand. We do not have, we do not use, and we do not stockpile cluster munitions. We have no plans to acquire them, though there is a provision in this legislation that allows cluster munitions for the purpose of training our Defence Force, which may be again deployed to disarm those munitions in countries around the world. That makes sense. Nor are there any areas under our jurisdiction and control where we have the obligation to clear such munitions. There are interoperability provisions that would enable us still to work with countries like the United States that possess cluster munitions. The treaty, nevertheless, puts us under an obligation to encourage non-State parties to sign up to the treaty, and to use our best efforts to discourage countries that have not signed up from using cluster munitions. I see no difficulties in New Zealand fulfilling those obligations.

I support this legislation as a necessary step for New Zealand to ratify the cluster munitions treaty and convention. This is a step forward for disarmament and for humanity. It is a clear sign of the world moving forward in an area in which, for the last decade, far too little progress has been made. This treaty will protect tens of thousands of people whose lives would otherwise have been constrained or blighted by the future use of such weapons. New Zealand can be truly proud of the role it has played again in the field of disarmament. I feel personally privileged to have been able to play a part in helping to achieve a ban on the use of these weapons. The world will be a better place in the absence of cluster munitions.

Hon Dr WAYNE MAPP (Minister of Defence) : As Minister of Defence, I specifically asked to speak in this debate. I acknowledge today that the Leader of the Opposition, Mr Goff, in his former role as Minister of Disarmament and Arms Control and also as Minister of Defence was, as we heard in his speech, fully and passionately committed to the effort by New Zealand to lead in the banning of cluster munitions.

It is important that Parliament, on behalf of the people of New Zealand, reinforces not just for our own country but, much more important, for other countries the need to reduce the terrible effects of war. This is a moral issue, and it has impelled New Zealanders across the political spectrum and, most important, amongst non-governmental institutions, in particular the Cluster Munitions Coalition. They lobbied individual members of Parliament intensely, and ensured that when this issue came to Parliament all parties were part of it. I recall full well the negotiations that were held in Wellington at that time, under the leadership of Mr Goff. New Zealand took a leading role in this issue, which conformed to the position we had taken previously on the landmines convention as well. As has been noted by both the Minister for Disarmament and Arms Control and Mr Goff, the Cluster Munitions (Prohibition) Bill follows directly from those negotiations.

As was also noted, the use of cluster munitions in Lebanon in 2006, primarily by Israel, was the spur for action. More than 1 million sub-munitions were used. Many of those were used in areas occupied by civilians, and it has taken years and years to clear them. Even now, fewer than half have been actually cleared: 195,000 have been cleared to date in one-third of the area. Even today, civilians continue to be killed and maimed by those munitions, and those civilians particularly include children. They are amongst the principal victims of those munitions. As with the Ottawa Convention, that fact compels an urgency of action by us.

I note that, as Mr Goff acknowledged, the New Zealand Defence Force was deployed for 12 months during 2007 when he was Minister of Defence. In fact, he answered a question in Parliament on this deployment. The New Zealand Defence Force, which is highly trained in this area, cleared 1,800 sub-munitions. I should also say that this treaty was negotiated in such a way that it tried to embrace the concerns and interests of the States that have cluster munitions. It is worth noting that parties that sign up to it will want to put pressure on States that use and have stockpiles of cluster munitions to sign up to it; their concerns are specifically addressed within the convention. I, for one, certainly hope that the United States will be able to see its way clear to accede in due course to the convention.

It is hardly worth stating that the 20th century, perhaps more than any other, was beset by war that affected civilians, most particularly in the latter half of the century. Much of that damage was caused by landmines and cluster munitions that were specifically aimed at people, whether they were in uniform or were civilians. Because of the persistent effects of both landmines and cluster munitions, civilians become a particular target—not necessarily because people intend that to be the outcome, but because of the nature of the weapons themselves. The weapons remain in the place of conflict long after the conflict has ended. Many parts of the world, decades and decades after the conflict has ceased, still have live minefields. There are still cluster munitions in southern Lebanon and it will take decades to clear them. The objective in the convention to clear all of those cluster munitions in 10 years can, perhaps, be achieved, but I suspect it is something of an aspirational goal. It will take a great deal of effort to achieve it.

I specifically acknowledge the members of the New Zealand Defence Force who make clearing munitions their profession. We can hardly imagine a more dangerous thing to do than to clear cluster munitions or landmines. People put themselves at literally daily risk. New Zealanders have been deployed for two decades now to clear out munitions, which are the after-effects of war. In the Balkans, Kosovo, and Afghanistan in the 1990s, and, in relation to landmines, in Lebanon in the 1980s, this has been an enduring commitment. The New Zealand Defence Force has made it part of its kaupapa to build its skills in this area. In a contemporary era when people are looking to defence forces to assist civil society, this is greatly valued.

I want to speak on that point in particular. The modern ethos of the New Zealand Defence Force is to assist States in trouble. There is much less inter-State conflict and there are many more States in internal turmoil. Of course, some of that internal turmoil can then spill over to the rest of the world. We only have to look at the effects of al-Qaeda basing itself in Afghanistan to understand that. It is worth noting that eight New Zealanders have been killed in terrorist incidents that had their direct origins in al-Qaeda. Three New Zealanders were killed on September 11, three in Bali, one in London, and now, most recently, one in Jakarta. Each occasion was directly sourced to al-Qaeda. That is why New Zealanders are engaged in assisting those troubled countries: because it is in our interests to do so.

I think New Zealanders across this House have expectations that the New Zealand Defence Force will undertake this kind of work. Our Defence Force has gone through enormous training in the understanding of failed States, their peoples, the populations, and their cultures in order to be able to play our part in doing this work. One particular facet of that training is our expertise in de-mining. The convention makes provisions to ensure that our skills are maintained in that area, but that they are maintained ultimately to assist other peoples so they can build their societies and live life as we would wish to live ours. Thank you.

H V ROSS ROBERTSON (Labour—Manukau East) : Kia ora tātou. Nō reira e te Whare, e ngā iwi, e ngā reo, e ngā hau whā, tēnā koutou, tēnā koutou, tēnā koutou katoa. It is both a privilege and a pleasure to be able to stand in this House this evening to discuss and promote the issue of disarmament, as that is what we are doing. First of all, I want to acknowledge those who played a part in the Cluster Munitions (Prohibition) Bill: people such as the Hon Phil Goff, of course, when he was the Minister for Disarmament and Arms Control. I want to acknowledge his contribution and dedication in pursuing this issue for New Zealand. Also, I acknowledge Don MacKay, who was our ambassador for disarmament in Geneva, and the leadership he provided in putting our case on this issue. Also there is Mary Wareham, and I acknowledge the work she did with the Aotearoa New Zealand Cluster Munition Coalition. Then there are the many luminaries, far too many to name here, who have been involved in this whole issue.

Cluster munitions cause unacceptable harm to humanity, and often those who are harmed are innocent civilians: people who are going about their everyday business, whether it is walking across a field or going to see a friend. Those are the people who often end up being mutilated. There are too many deaths, disfigurements, and lives destroyed because of the indiscriminate use of cluster munitions. As a senior member of the international council of Parliamentarians for Global Action, which is an international non-governmental organisation based in New York that works with the United Nations, and as a former chair of the council of that organisation, I take a great interest in this issue. We held a number of forums in places as diverse as Georgia, in the former Soviet Union, and the Philippines, and cluster munitions were high on the agenda. Having come back from there, we had a forum here last year, and I remember Alyn Ware being there. That was to do with the Aotearoa New Zealand Cluster Munition Coalition, and there I met up with a colleague from Sierra Leone, member of Parliament the Hon Ibrahim Sorie. He related to me stories of cluster bombs, the damage they have done, and the economies they have wrecked in Africa.

It is unacceptable that the major producers and buyers of cluster bombs, the United States, Israel, Russia, and China, continue to wage war by using these maiming cluster bombs. Of course, they are not the only ones. Another 76 countries are major holders of cluster bombs, and it is time that there was a change. The United Nations has estimated that 40 percent of the victims are children, and that, in anyone’s language, is abhorrent and unacceptable, because the innocents suffer. There is an old saying that when the elephants rumble, the little people get hurt, but far too many little people are being hurt by these types of munitions. It is also estimated that between 10 and 40 percent of the bomblets released by cluster bombs just above the ground fail to detonate. That is a major concern, because it poses a threat to civilians in the area, potentially killing or maiming civilians for years following their use. These munitions are totally unacceptable in the 21st century, and it is time that people recognised that peace is the only way to go.

During the last Parliament I was fortunate to be involved with the Foreign Affairs, Defence and Trade Committee. We conducted an international treaty examination of the Convention on Cluster Munitions, and appended to the report was the national interest analysis prepared by the Ministry of Foreign Affairs and Trade. The executive summary of that statement stated: “The Convention on Cluster Munitions … which bans the use of cluster munitions by States Parties, is a significant development in international disarmament and humanitarian measures. The Convention was concluded in Dublin on 30 May 2008, and opened for signature at a ceremony held in Oslo on 3 December 2008. New Zealand was one of the 94 states to sign the Convention in Oslo.” As a nation we can hold our head high.

I remember reading about that great Liberal legislator William Pember Reeves. He said that New Zealand was an edifice for radical experiments for the rest of the world. I guess this bill is not a radical experiment, but we are leading when it comes to the elimination of cluster munitions. We continue to lead with countries like Norway, Austria, Peru, and Mexico, as well as the Holy See and Ireland. We determined that it was necessary to take the process outside the United Nations inhumane weapons convention because no progress was being made. Again we stood up for what we believed in.

The national interest analysis goes on to say “The new Convention’s central purpose is to prohibit the use of all cluster munitions, which are canister-like munitions that encase a large number of smaller explosive devices.” It adds “The Convention also prohibits the development, production, acquisition, stockpiling, retention and transfer … of cluster munitions;”, and clarifies that the convention includes a provision on interoperability. It goes on to say: “There are strong reasons for New Zealand to proceed to ratify the Convention. Most important among these is that a well supported Convention will have the greatest potential to help prevent the unacceptable humanitarian harm caused by the use of cluster munitions. This National Interest Analysis concludes that the benefits to New Zealand from ratifying the Convention outweigh any associated costs. There are no significant risks or disadvantages identified that would argue against New Zealand becoming party to the Convention.” I commend the Government for continuing to take forward this legislation.

When the Hon Phil Goff was in Oslo to sign the Convention on Cluster Munitions, which bans the manufacture, possession, and use of such weapons, he had this to say: “Cluster munitions have left a deadly legacy, maiming and killing thousands of civilians, a great many of them children, often long after the war in which they were deployed was over … The tragic consequences of a million unexploded bomblets in Lebanon as a result of the Hezbollah-Israeli conflict spurred us to tackling the issue of munitions which have unacceptable consequences for civilians … It is essential to bring the use of cluster munitions to an end.” That is important.

I support our ratification of this important convention to reduce the incidence of this weapon of destruction, for it is the biggest advance since the Ottawa Convention on landmines. It is a step towards disarmament, democracy, freedom, peace, and the rule of law. As a member of the international council of Parliamentarians for Global Action, I welcome this bill, for it is something we have long campaigned on. It is always important that I carry with me the views of New Zealand in attending such meetings, for we are recognised for the contribution that we make as a small nation State to disarmament, the rule of law, better Government, and democracy. Kia ora. Tihei mauri ora!

Dr KENNEDY GRAHAM (Green) : Let me state from the outset that the Green Party supports the general thrust of this proposed legislation to ban cluster munitions, and we will be voting for the referral of the Cluster Munitions (Prohibition) Bill to the select committee. We have some views that we should like to share with this House, and we encourage the Government to consider amending the draft as it proceeds through the House to adoption. We look forward to the opportunity for discussion in select committee, but in this first reading it is appropriate, I believe, to advance a few broader reflective points.

The ban on cluster munitions, as with the ban on landmines, is an important part of humankind’s move towards making military conflict more civilised, or at least a less uncivilised activity than before. The treaties on these two types of munitions strengthen the normative framework to that end. The treaties are the twins of two parents in positivist humanitarian law: the Hague convention of a century ago, which addressed the possession of certain weaponry, and the Geneva Convention of half a century ago, which addressed the treatment of combatants. Both treaties broke new ground in this respect. A quarter of a century ago, another convention within the same normative framework banned the use of certain conventional weapons that might be excessively injurious, or might have indiscriminate effects. By the 1980s we were getting more serious and specific about what was permissible and what was not. Nonetheless, the corollary is that in the area of armed conflict certain other weapons that are selective in their application, and whose injurious effects are not excessive, but simply lethal, grace our contemporary level of civilisation. So our relatively enlightened world of international law co-exists with our relatively benighted world of armed conflict.

Be that as it may, we painstakingly plough our way towards a more humane means of controlled carnage among nations. In force since 1983, the Convention on Certain Conventional Weapons banned five categories of weapons, but failure to reach universal agreement on banning all landmines prompted some countries to take an alternative negotiating route, resulting in the seminal agreement on landmines at the initiative of Canada. This latest treaty banning cluster munitions followed the same route, this time on the initiative of Norway. The political significance of these two treaties goes beyond their own subject focus, for the means through which they came into existence reflects the new trend in international relations and the strengthening of global security. This involved the perhaps unprecedented phenomenon of the formulation of international law on the initiative and through the leadership of the middle powers, leaving some of the major powers ensnared in the 19th century mindset of following when they are ready.

This is novel. It used not to be this way. That trend will reach its apotheosis when a nuclear weapons convention is negotiated and brought into force by the non-nuclear weapon States, thereby introducing a new norm of international relations that will be accepted and respected by the pariah nuclear weapons States themselves. When that happens, it will be not only the meek who inherit the Earth, but also the enlightened, presuming there is a tolerable Earth to inherit.

The process of negotiating the Cluster Munitions Convention was purposeful and swift. Following their indiscriminate and, indeed, irresponsible use in the Middle East in 2006, negotiations commenced in February 2007 and were completed in May 2008. I commend our New Zealand diplomats, and in particular Ambassador Don MacKay, for their skill and devotion in sharing the leadership with Norway, Ireland, and others in this complex and sensitive process. That included the successful fourth negotiating session in Wellington in February 2008. Now we must move expeditiously to implement the convention in domestic law. The convention was signed by some 100 States and will enter into force when ratified by 30. Some 15 have ratified already and it is important and appropriate that New Zealand ratify as one of the 30 to bring it into effect.

I ask the House to allow me also to advance a point pertaining to the international treaty on which the bill rests. It is our conviction that there is no place in the 21st century for withdrawal clauses in contemporary disarmament treaties. The international community of States is slowly but surely transforming into a global community of peoples. It is they who are demanding progress and making the global community safer, more secure, and more predictable. That is not achieved by allowing States’ parties to withdraw from treaties that ban inhumane weapons at will. The days of untrammelled national sovereignty of the Westphalian kind, when States could enter and withdraw from any treaty on a whim or pretext, are gone. Today we have a hybrid system of international relations where the vital interests of all countries, and the vital interests of humanity, are inextricably married.

Weapons of this inhumane kind are now regarded as unacceptable in customary international law. Prohibition of such inhumane weapons may perhaps be seen today as a peremptory norm of the global community. The social fabric of the global community today imposes natural obligations upon States that cannot be shed. Such obligations derive purely from membership of the global community and they cannot be revoked. When acknowledged in treaty form in the 21st century there should be no pretence of any right of reservation or of withdrawal.

There are a number of questions and possible suggestions for improvement pertaining to the bill that in the Green Party’s judgment it may stand to benefit from. These include issues of transit, divestment, definition, training, and interoperability. It is our intention to pursue these in the select committee and we look forward to cooperating with colleagues in the Government and other parties to that end. We support this bill being sent to a select committee for consideration.

JOHN HAYES (National—Wairarapa) : It is a great pleasure to be in the House this afternoon engaged in a dialogue between parties in which everyone agrees on the issue and on the direction in which we are headed. I think that is because everybody in this House shares a vision for a just, secure, and sustainable world. They also know that cluster munitions have inflicted unacceptable harm on civilian populations, and many, many countries have seen their deadly effects.

The legacy of contamination resulting from cluster munitions failing to detonate is huge, and it is civilians who are killed and injured by unexploded cluster munitions. For a period, brightly coloured cluster munitions were dropped, and these bright colours were attractive to children, who fiddled with them and then lost their lives. Decades after the use of cluster munitions in battle, people are still being killed and maimed by them. The tragedy of lost lives and of horrific injuries is evident right across the world from South-east Asia to the Balkans, and from Africa to the Middle East. Unexploded munitions also represent a huge obstacle to post-conflict communities seeking to rebuild their lives. Economic reconstruction and social recovery cannot take place until the explosive ordnance is cleared and destroyed; the task of clearance is a huge and daunting challenge.

In relation to New Zealand’s involvement in this exercise I particularly commend the Leader of the Opposition, Phil Goff, for his work in this process when he was the Minister for Disarmament and Arms Control, because the reality is that if the Minister is not pushing an issue, the resources will not flow to deliver this sort of outcome. I commend the team of people—because it will have been a team of people—in the ministry in which I used to work, the Ministry of Foreign Affairs and Trade, for its excellent work. The whole ministry, engaged at all posts across the globe and in many of the divisions in Wellington, will have pushed this issue to the outcome that has now been achieved.

I think this exercise shows that New Zealand’s commitment to working with others to stop the human cost of cluster munitions has not been inhibited either by our size or by our remoteness from the problem. Out in the field New Zealand has sent teams of clearance experts from our Defence Force to help clear the estimated 1 million cluster sub-munitions that littered southern Lebanon after the 2006 conflict. Earlier our Defence Force personnel worked for many years in Laos, Cambodia, Mozambique, Angola, and Afghanistan clearing landmines and unexploded ordnance. The aid agency NZAID has provided support to rehabilitation programmes to assist the victims of unexploded ordnance, including unexploded cluster sub-munitions, in affected countries in South-east Asia.

But now in this House we are putting a fence at the top of the cliff by referring the Cluster Munitions (Prohibition) Bill to the Foreign Affairs, Defence and Trade Committee, which I chair, and by the fact that we have signed up to the Convention on Cluster Munitions. The committee looks forward to receiving this legislation; it will process it as quickly as it can. We are doing so to put a fence at the top of the cliff, not an ambulance at the bottom.

We need to eliminate the use of cluster munitions where they have an unacceptable effect on civilian communities. When these bombs are dropped—and people tend to overlook this—they have a very wide spread. A cluster bomb can cover an area the size of roughly two to three football fields. That can cause a huge amount of damage. They cause particular damage to civilian communities, first, because of that big spread, and, second, because the unexploded bomblets remain dangerous for decades after the end of a conflict. Nobody in this House will support the sort of damage that these weapons do; in today’s 21st century the damage is just unacceptable. We have to stop the production of these weapons, the spread of these weapons, and the use of these weapons.

I think that this legislation will progress very quickly through our Parliament and through the select committee process, and as the chair of the select committee I look forward to pursuing that objective. Thank you, Mr Deputy Speaker.

Dr PAUL HUTCHISON (National—Hunua) : Thank you, Mr Deputy Speaker, for the opportunity to speak on this very sobering Cluster Munitions (Prohibition) Bill. Cluster munitions have dealt a horrific toll on many people in many countries, especially over the last 30 years.

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

Dr PAUL HUTCHISON: Prior to the dinner break I was saying how excellent it is that the House is unanimous in supporting this very important and sobering bill, known as the Cluster Munitions (Prohibition) Bill. It is appropriate to acknowledge the part played by the Hon Phil Goff in the proceedings leading up to this bill. I understand that prior to both the Dublin and the Oslo conventions a large international meeting was held here in Wellington, and that was very useful in ensuring that the technical aspects of this bill were worked out.

I think it is important, and possibly salient, to think back as far as the First World War, the famous “war to end all wars”, when mustard gas was used indiscriminately. One might say that, undoubtedly, these cluster munitions indeed have an indiscriminate effect on the population, not only immediately but for many years to come. It is almost ironic to think that it was during the First World War that that famous novel All Quiet on the Western Front was written, a novel that was one of the first to deglorify war as a way of sorting out humankind’s differences. It was only after that war, during the Second World War, that the spectre of bacterial warfare and other forms of equally horrific ways to hurt humanity arose.

Of course, the antecedents of cluster bombs occurred as far back as the Second World War. It does not say much for the evolution of our species to sort things out if this is the way that we have gone, although I think we can celebrate the very fact that today Parliament is unanimously supporting this bill. It will indeed enable New Zealand’s ratification of the Cluster Munition Convention, which was adopted in Dublin on 30 May 2008. The bill establishes a wide-ranging prohibition on the use of cluster munitions that cause unacceptable humanitarian harm.

As has been pointed out, these cluster munitions usually go with aircraft, and there is a whole spectrum of size. I understand that they can cover up to 18 square miles of area. The whole of Wellington could be covered in a particularly indiscriminate way. But the Convention on Cluster Munitions is a new international treaty that bans the use of these munitions that cause this unacceptable harm. In addition, it prohibits the development, production, acquisition, stockpiling, retention, and transfer of the munitions. It requires stockpiles of the munitions to be destroyed within 8 years, although there are certain exceptions, and it requires State parties in a position to do so to provide international cooperation and assistance to State parties affected by these munitions.

I think it is important to point out that, on being ejected from the aircraft or the missiles, they can scatter into literally hundreds of smaller bombs—sometimes the size of lemonade bottles—and create incredible damage. The International Movement of the Red Cross and the Red Crescent has called it a “persistent humanitarian problem”. Most of the cluster bombs’ bomblets are meant to explode on impact, but, again, a credible estimation of the proportion that does not do so comes to about 30 or 40 percent—again, according to the international Red Cross movement. That means unexploded bomblets lie scattered across the target area, often exploding only when handled or disturbed. Again, I understand that one of the widest areas of use was in Laos, after the Viet Nam War, and that today it is extraordinarily difficult to travel through a huge area in that country without fear of losing limb or life because of these cluster bombs.

In early 2008 a US State Department representative called it “an absolute moral obligation” to rid a battlefield of unexploded ordnance after the battle. I note that that was one of the points that my colleague the Hon Wayne Mapp made—that in many respects this is a very important moral issue. In rebuttal, the Acting Assistant Secretary for Political Military Affairs for the United States Department of State, Stephen Mull, said that the US was attempting to solve the problem through a disarmament body called the Convention on Certain Conventional Weapons—or the CCW—which meets in Geneva and comprises major military powers and military trade producers. Unfortunately, at this stage of events I understand it has not made any significant progress. He defends the United States’ position by saying that at this stage cluster munitions are regarded as an important part of its defence strategy. But, undoubtedly, as other speakers have mentioned, these munitions were used in the 34-day war in Lebanon in 2006, where it is estimated that Israel dropped in the order of 4 million bomblets—1 million of which have probably not exploded.

I will end by saying that New Zealand has a very strong record in terms of similar complementary legislation that it has supported. On the other hand, with regard to this convention, we are supporting many countries like Australia, Canada, the United Kingdom, and many of the NATO countries, but notably, at this stage, the United States, Russia, China, India, Pakistan, and Israel have not yet signed up. Today’s bill is the start of a process that does need to be completed, hopefully, by the full international community signing up sooner rather than later. Thank you, Mr Assistant Speaker.

PHIL TWYFORD (Labour) : I rise to speak on the first reading of the Cluster Munitions (Prohibition) Bill. Labour supports the bill because it will save lives, because it will prevent civilians from being maimed, and because it will add another valuable international humanitarian law. It will set the rules of war that protect civilians, and make war a less barbaric thing than it otherwise is. We support the bill with pride, because it was New Zealand that played a leading role amongst a group of nations that spearheaded the Convention on Cluster Munitions. It was the Hon Phil Goff, the then Minister for Disarmament and Arms Control, who led that effort.

Cluster munitions are blights on the planet. When used in populated areas they do not discriminate between civilians and military, and their unexploded spawn lie on the ground for decades, maiming and killing thousands of civilians. According to the UN, 40 percent of the victims are children. Consider a firsthand account of a young man in Laos: “One day in 2003 I took my two boys down to the river to go fishing. I found a cluster bomb in the water and picked it up because I wanted to use it as an explosive, to blow up in the river so that we could catch more fish. But it went off in my hands and blew off my arms. Now we are getting poorer because I lost both my arms and I can’t work to support my family. I’m lucky at least, because they sorted me out with one artificial arm. My right arm was blown right off by the explosion and they had to amputate my left arm twice, because it was infected after the first amputation …. The bomb also blew up right in my face and eyes. I couldn’t see anything. My sight was blurry until I went to hospital again in 2005, when my relatives had saved up enough money again to pay for the operation. My wife and the family earn all the money to support us now. One of my sons had to leave school so that he could help my wife. He’s only 15. I help as I can. I look after the vegetables and sweep the house. I help my wife in the fields a bit but I am not much use.”

What are cluster munitions? They are weapons that scatter explosive submunitions across a wide area. Concerns have been raised about cluster munitions since the 1960s and 1970s when, in the space of a decade, the United States dropped millions of cluster bombs on Viet Nam, Cambodia, and Laos. In Laos over 260 million cluster submunitions were dropped. An estimated 80 million of them remain active and continue to claim victims four decades later.

Since World War II, cluster munitions have been used in 33 conflicts—most recently by the Russians and Georgians in South Ossetia. Large numbers of cluster munitions were used by France, the US, and the UK in the first Gulf War, and by the US and the UK in the 2003 invasion of Iraq. In 2006 Israel dropped more than 4 million sub-munitions into southern Lebanon in the course of a few days.

I do not propose to reiterate the effect of this bill and its various clauses; colleagues who have spoken before on the bill have done that. I think it is interesting to ask whether the bill will make a difference and whether the Convention on Cluster Munitions will make a difference. Cynics might say that the convention is just a bit of paper, that war is war, and they might ask how the convention can make a difference. But I believe that there is reason to think that the convention, and the bill, will make a difference. Already, 96 countries have signed up to the convention, 35 of which are countries that have used, produced, stockpiled, or exported cluster munitions. Of 28 NATO members, 20 have signed up. Fourteen of the signatories are countries that themselves are affected by cluster munitions.

The convention is off to a good start, and there is every reason to believe that, like the Ottawa Mine Ban Treaty, the Convention on Cluster Munitions will significantly reduce the use of cluster munitions. It will stigmatise their use so that, over time, this development in international law will lead to the complete elimination of cluster munitions.

Over the past decade, under the Mine Ban Treaty, the use of landmines has dwindled to use by a handful of non-State actors, rebel groups, and one nation State, Burma, which continues to use landmines against its own people. When, as activists, we began to campaign for an international treaty to ban landmines in the mid-1990s, that kind of success was unthinkable.

It is sometimes said that politics is war without weapons. The inverse is probably true, too. War is intensely political, especially so in the modern era when wars are fought and broadcast on live TV. The power of international law rests as much on its ability to articulate the ethics and morality that guide human behaviour as its ability to provide an enforceable code.

During the Israel and Hezbollah conflict in southern Lebanon in 2006, my colleague David Shearer was the UN humanitarian coordinator in Lebanon. David recalls the political storm that broke out when the United Nations emergency relief coordinator Mr Jan Egeland publicly referred to Israel’s use of cluster munitions and its indiscriminate bombing of southern Lebanon as “amoral”. The Government of Israel was outraged, and the world was outraged by the deed being referred to.

We talk too much, perhaps wishfully, of New Zealand’s ability to punch above its weight when it comes to foreign policy, but New Zealand’s contribution to the Convention on Cluster Munitions is an example of a small nation working strategically with others, both nations and civil society, to achieve its ends.

Under the leadership of the Hon Phil Goff, New Zealand was an early supporter of diplomatic efforts to achieve a ban on cluster munitions. When the UN’s consensus approach failed the idea, New Zealand and 25 other nations called for an international agreement to outlaw cluster munitions. Norway led the charge, hence the Oslo process, and New Zealand was one of seven nations in the core group that led a series of negotiating conferences. One of those conferences was hosted right here in Wellington in February 2008, and 106 countries took part. It was the last, and the most contentious, of the diplomatic conferences leading up to the Dublin negotiations. The Hon Phil Goff and Ambassador Don MacKay stared down a group of recalcitrant nations, including the US and the UK, our former allies, who wanted to water down the text. Finally, all views were incorporated in a compendium text, and, over 2 months, between Wellington and Dublin, a clear consensus emerged in favour of a strong and comprehensive prohibition on cluster munitions.

One of the features of the Oslo process, like the Ottawa Mine Ban Treaty, was the active partnership between civil society and like-minded Governments. The Aotearoa New Zealand Cluster Munition Coalition brought cluster bomb survivors and de-mining experts to Wellington to take part in the events around the negotiations. They injected real-life experience into the process. Civil society brought the conscience of global public opinion into the diplomatic negotiations. They helped to make it happen.

Labour looks forward to discussing the bill at the select committee. There are several textual matters we would like to address. We would also like to see a provision inserted in the bill to prohibit investment in the manufacture and sale of cluster munitions, in line with the decision of the New Zealand Superannuation Fund. But those are relatively minor matters in the scheme of this bill, which Labour supports unreservedly.

Finally, I acknowledge the Hon Phil Goff for his leadership in this matter; my friend Marian Hobbs, former MP and a former Minister for Disarmament and Arms Control; the work of Ambassador Don MacKay and the officials of the Ministry of Foreign Affairs and Trade; Mary Wareham, who is in the gallery today—a New Zealander, a campaigner, and an activist for Human Rights Watch, Oxfam New Zealand, and other organisations—and who coordinated the work of the Aotearoa New Zealand Cluster Munition Coalition; and the Minister for Disarmament and Arms Control, the Hon Georgina te Heuheu, for her commitment to bringing the bill expeditiously to the House. Nō reira, tēnā koutou, tēnā koutou, kia ora mai anō tātau.

TE URUROA FLAVELL (Māori Party—Waiariki) :Tēnā koe, Mr Assistant Speaker, tātau katoa kua hui mai i roto i te Whare kia ora tātau katoa. Tātau mā mō era o tātau kei te rapa haere i tētahi kaupapa kia taea ai e rātau te pōti mō tēnei pire, ko tāku ki a rātau me korero rātau ki ngā mōrehu, arā, ko ērā kua noho ā-kiri mate, kua noho ā-whānau pani rānei nā te pakūtanga o te matā, ko ērā ka noho i raro i te kākahu o māuiui, o mamae mō te wā roa kia tae atu ki te ora, kō ērā ahakoa kei te ora, he rahi nga mate taumaha ā-kikokiko, ā-hinengaro hoki kei runga i a rātau. I te tau 2007, nā te Rōpū Hauā o te Ao i tohu nā te pakūtanga o ngā matā whakawhāiti e 13,306 ngā tāngata i mate kia hemo. E hoa mā kātahi nei te kino mai o ēnei momo pahū. Ka pakaru mai ngā kongakonga maitai, ka werohia ko te tinana o te tangata, ngā ringaringa, ngā waewae, ngā whatu inā te kino o te weriweri. Ka ngaro te kaimahi o te whānau. Ka noho ngoikore te hapori i te mea e kore taea e te hunga whara, te whai wāhi ki te mahi i tāna mahi i mua. Nā, i tua atu i tēnā ka pirau haere te whenua, te wai hoki nā ēnei momo mate. Nā, ko ngā pahū kāre anō kia pakū mai, ka noho huna i te ākau, ā, ka kitea e te tamariki. Ko tōna mutu mai, ko mate.

Ko tā Te Pāti Māori, he titiro, he wānanga he aha te pai, te kino rānei ka tau ki runga i a tātau te tangata. Koinei te take i puta tā mātau tono kia whakaiti ngā whenua katoa i ō rātau utunga ā-pūtea nei mō ngā mahi hōia. Ko tētahi o ngā tohu whakahē pakanga i mau ki runga i ngā kākahu he kupu nā Lyndon Johnson. Kātahi te tangata nei. Koia tērā ko te Perihitini i Amerika i te wā i piki haere te kaute o te hunga i haere ki Whitināmu.

Ā kāti, ka hāngai te titiro o tēnei pire ki te tohu takanga hē o te tangata o tēnei whakatipuranga. Me kī, ko tā tātau i ngā whāinga ki te Convention on Cluster Munitions i tohungia ai i tērā Tīhema. E 94 ngā motu i haina i taua tiriti. Ko tā ngā whenua, ka kore rātau e āwhina i tetahi ake hai whakapakū ēnei momo pahū, ko tā rātau ko te akiaki kia kore ai tētahi e tuku kia pahū ai ēnei pahū. I roto i tērā kāhui, ko Tiamana, ko Wīwī, ko Hāpani, ā, me Afghanistan. He mea miharo tonu tēnei. Nā David Miliband, te hekeretari o te Manatū Aorere o Ingarangi, i whakatakoto he kaupapa hou ao whānui mō te tiriti. E hoa mā, he tino ariā tēnei. Ko te pai i tēnei wā ko te tautoko a Niu Tīreni i tēnei kaupapa hou mō te ao whānui.

Ka maumahara tātau ki te marama o Hepetema i te tau 2007. I taua wa e 137 ngā whenua o te ao i haina i te whakapuakitanga o nga iwi taketake o te ao. Mai i taua wa, he nui noa atu ngā whenua kua whakatinana i taua kaupapa. Kua hanga hanganga ture wētahi. E tūmanako ana mātau kei te haere mai te wā ka whai kaha a Niu Tīreni te haina i taua Whakapuakitanga kia Ōrite ki te Nuinga o ngā Whenua o te Ao, kia tutuki hoki ngā whakaritenga mō te ao. Ko tā mātau o te Pāti Māori kia kaua e herehere i te mea nei, tukua kia haere. Kei te whakaae ake mātau kia kōrero tahi ngā hoa haere o te Tiriti o Waitangi, mō ngā o te whakapuakitanga. Ā tēnā, koinei tētahi o ngā kaupapa o te whakapuakitanga. Me tika te whakapuakitanga i roto i te āhuatanga o ngā mātāpono o te tika, o te manapori, o te mana taurite, o te pono, o te mana kāwanatanga, o te whakaiti me te rangatiratanga mō ngā ritena o te tangata. Koinei te āhuatanga o ngā ritenga o te ao. He taumata tēnei e whakaaea ai tātau katoa o te ao. Kua whakaae mai ngā whenua nei kia mutu katoa te whakamahi i ngā taonga patu tangata nei.

He mea whakahīhī ki a mātau ko Aotearoa tētahi i para te ara kia puāwai tēnei kawenata. Ko tāku noa he whakanui i ngā mahi i tīmatahia ki Aotearoa nei i te hui i tū ki Pōneke i tērā Hui-tanguru ki te wānanga i tēnei take. Neke atu i te 120 ngā whenua i tae mai, ā, 137 ngā rōpū ā-iwi hoki i tae mai. E ai ki ngā kōrero, he pekanga tino whai tikanga te hui rā, he painga i roto mō ngā whakahaerenga mō te Tiriti o Waitangi. I whakanuia ngā mahi a John Vernon Head i te hui rā, koia tētahi i kōkiri i te kaupapa nei. I mate a John i te marama o Pēpuere i te tau 2007. I whakarewahia e John Head te kauhanga kore-pahū, tōna kaha ki te akiaki kia kore ai ngā Motu o te Moana Nui a Kiwa e whakaae ki aua pahū whenua. Nāna anō i whakahau ki te whakakore i te matā pahū whakawhāiti. Nā ka haere a Deborah Morris-Travers rāua ko Thomas Nash ki te akiaki i te Minita o te Manatū Aorere. I muri mai i tērā i kōrero rāua i mua i te komiti Manatū Aorere me te komiti o te Manatu Kaupapa waonga, i whakarite i ētahi hui mō te motu kia kōrero te tohunga a John Rodsted. He tangata matatau a John ki te kaupapa nei. I te tau 2007 ka whakatūria te rōpū e karangahia nei ko te Rōpū Whakawhāiti Pahū, matā, hei tautoko i te karanga o te ao ki te whakakore i aua mea weriweri rawa atu i patu nei i te tangata.

Ā kāti e te Whare, kua roa tonu nei taku whakamārama i te ara i takahia ki Oslo, kia mōhio mai tātau, nā ngā mahi, nā ngā kōkiritanga o Aotearoa kua kitea ai, nā tātau nā Aotearoa ngā wawata i whakatinana. Mai rānō mātau o te Pāti Māori e whakahīhī ana mō te tū o Aotearoa, inā a Aotearoa Karihi-Kau. Kei te kite mātau, ka whai mana tēnei Kawenata, ā, kia pānuihia ko tā tātau he kōkiri kia āiō te noho i tēnei ao. Engari, i tua atu i tērā, he whakahīhī nō mātou, anei a Aotearoa e kī nei kua whakamanahia e rātau te kaupapa hou mō te ao whānui. Nā, i muri mai, kia mutu motuhake ngā mamae o ēnei matā, pahū, taonga weriweri. Nga mamae ka noho ki runga tangata i te wa ka maringi mai i te rangi, ka whakarerea ranei ka noho huna i ro, i runga whenua i mua o te pahutanga hei patu tangata. Ahakoa kāre a mātau matā whakawhāiti, kai te hari koa mātau ki te whakapuaki i ō mātau whakaaro. Nō reira e te Whare, koinei te tautoko o te Pāti Māori ki tēnei o ngā pire. Tēnā koutou, kia ora tātou.

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

[Greetings to you, Mr Assistant Speaker, and to us all gathered here in the House. Greetings to us all. I say to those of us searching for a reason to vote for this bill, talk to those who survived cluster munitions incidents—those who remain victims of skin ailments, who have lost a loved one due to mine explosions, those destined to a life of long-term treatment and rehabilitation and who live with severe physical injury and psychological trauma. In 2007, Handicap International confirmed 13,306 deaths and injuries due to cluster munitions. The devastation created by the cluster bomblets was lethal. Fragments of jagged steel released were impaled in the body of the person and caused injuries to hands, feet, and eyes, with the outcome being severe disabilities, and families deprived of their breadwinner. Communities become vulnerable as surviving victims are unable to play the role they formerly played. If that is not enough, farmland and water sources can deteriorate due to submunition contamination. Unexploded bomblets become hidden killers, submerged around coastlines just waiting for innocent children to discover. Death is the outcome in the end.

The Māori Party’s role is to examine and debate what good or evil tidings will come upon us as people. This, in essence, was the rationale behind our call for nations to decrease their expenditure of GDP on military activity. One of the anti-war badges that seems to say it all highlights a quote from Lyndon Johnson: “The guns and the bombs, the rockets and the warships, are all symbols of human frailty.” Lyndon Johnson, of course, was speaking from a position of authority. It was during his watch as US President that the numbers of Americans enlisted in the Vietnam War escalated.

This bill, then, seeks to target the latest symbol of human failure, in implementing New Zealand’s obligations to the Convention on Cluster Munitions signed last December. Ninety-four countries signed that treaty and vowed not to assist others to use cluster munitions but rather to discourage their use. In that cluster of countries were Germany, France, Japan, and Afghanistan. That, indeed, is quite remarkable. At its signing, the British Foreign Secretary, David Miliband, set the treaty a new global norm. This is a great concept, made better this time by New Zealand stepping up to support a new global norm.

We well remember another time, in September 2007, when 137 countries agreed to set a global norm to advance the human rights of indigenous peoples. Since that time many Governments around the world have engaged with indigenous peoples to bring the vision to life. Some countries have gone as far as to introduce legislation. We are hopeful, however, that the time is approaching when New Zealand can rightfully step up to the mark, and sign up to the Declaration on the Rights of Indigenous Peoples, to meet the global norm. We of the Māori Party urge that this signing will be without caveat, without qualification. Of course we accept that discussions between the partners of Te Tiriti o Waitangi will be required about many aspects of the declaration. Fortunately, the declaration itself anticipates this process. Every provision must be interpreted in accordance with the principles of justice, democracy, respect for human rights, equality, non-discrimination, good governance, and good faith. Global norms are exactly that. This is an acceptable benchmark for global norms. These countries have agreed to a prohibition on the use of cluster munitions, which cause unacceptable humanitarian harm.

We are proud that New Zealand has played such a key role in the work relating to cluster munitions. I want to particularly acknowledge the work spearheaded here in Aotearoa, particularly the conference on cluster munitions that took place here in Wellington last February. That conference attracted delegates from more than 120 countries and 137 civil society representatives. The conference was described as a critical crossroads in getting through the treaty process, as the draft text was the basis for discussion. During the conference the legacy of long-time disarmament campaigner, John Vernon Head, who had passed away in February 2007 was honoured. John Head had founded the New Zealand Campaign Against Landmines. He lobbied tirelessly for the 1997 Mine Ban Treaty to be accepted across the Pacific region. And significantly, he initiated the campaign for cluster munitions to be banned. The campaign convenor, former MP Deborah Morris-Travers, and Cluster Munitions Coalition coordinator Thomas Nash, then went on to lobby the disarmament Minister . Their next step was to appear before the Foreign Affairs, Defence and Trade Committee, and to organise a speaking tour of a cluster munitions expert, John Rodsted. The Aotearoa New Zealand Cluster Munition Coalition, a group of New Zealand non-governmental organisations, was subsequently established in 2007 in support of the international call to stop cluster munitions from harming civilians.

And so to the House, I have taken some time to outline the steps that led to Oslo, because I think it is so important that we take time to celebrate the difference that Aotearoa is making on the international stage. The Māori Party has always been proud of the distinctive position we have taken, globally, in being proud to be a nuclear-free Aotearoa. We see this latest legislation, in ratifying the convention, as promoting a peacekeeping role for New Zealand defence personnel in the world. But, most important, we are proud that Aotearoa is able to meet a global norm, to put an end, for all time, to the suffering caused by cluster munitions. And although we, ourselves, do not hold stocks of cluster munitions, we are proud that we have been active in the debate. And so to the House, this is the Māori Party’s support of this bill. Greetings, and thank you. ]

Hon CHRIS CARTER (Labour—Te Atatū) : Kia ora koutou katoa. As Labour’s foreign affairs spokesperson it is my pleasure to rise in support of the Cluster Munitions (Prohibition) Bill. It is rare indeed in this House to have consensus from all political parties over a piece of legislation. The viewers and listeners of Parliament today will have heard representatives from all political parties rising to support this legislation. That is a statement about New Zealand and how New Zealanders across the political spectrum feel about the impact of these perfidious weapons on people.

Somebody just tuning into Parliament TV would wonder why, in the midst of an economic recession and the many great affairs of State that a country a faces, all of New Zealand’s politicians are rising, regardless of their political party, to support this bill and are taking every one of the speaking spots available. The reason is that New Zealanders care passionately about peace and about the protection and safety of people, particularly children. We have a long tradition of being a country that has a moral foreign policy. In this particular area of the banning of cluster munitions, New Zealand has a proud record.

Like my friend Phil Twyford from the Labour Party, who was speaking a few minutes ago, I want to acknowledge some people in this Parliament, and people who have recently been here who have played a very important role in the passage of this legislation and this international agreement. First of all, I acknowledge Labour Party leader Phil Goff, who as Minister of Foreign Affairs and Trade was a very active campaigner for international action on cluster munitions. I particularly want to acknowledge my old friend and now departed colleague Marian Hobbs, the former member for Wellington Central. The Hon Marian Hobbs was a passionate advocate for this issue. She spoke about it often in this House and she played a very important role in the conference that was held in February last year, which several speakers have made reference to. That conference was attended by representatives of over 100 countries and it had over 500 delegates. It was very important in terms of setting the scene for the Oslo conference, which led to the establishment of this international agreement.

I will take a few minutes to read a motion that Marian Hobbs put to this House on 8 November 2006. She moved that the House “acknowledge the unacceptable toll on civilian lives caused by cluster munitions, and the lasting legacy of these weapons in postwar situations;”. Phil Twyford, who spoke a short while ago, read an account of an individual who had suffered personal loss through these weapons. Marian Hobbs also moved that the House “denounce the indiscriminate use of cluster munitions and their use in areas where civilians are likely to suffer disproportionate casualties, and call upon the international community to set binding standards of reliability to decrease the persistent threat to civilians caused by unexploded bomblets;”. She also moved that the House “confirm that New Zealand does not currently maintain stocks of cluster munitions, has no intention to do so …”. Sadly, that is not the case internationally. As Mary Wareham, who is sitting up in the gallery and who has been a passionate advocate and crusader for this issue, would no doubt be able to tell us, there are 56 nations in the world at the moment that stockpile these weapons and another 33 that produce them.

What do these weapons do? A number of speakers, including Te Ururoa Flavell, have talked about the effects of these bomblets. The bomblets do three different things. The steel fragments, which are at the core of the small bombs, target people and can kill them at up to 152 metres from the impact. The shaped charge inside the small bomb fires a molten slug that can penetrate 5 inches, or 13 centimetres, of steel. Members can imagine what that does to the body of an individual. Finally, the other part of the bomb, a zircon wafer, has an incendiary function that spreads little burning particles, which not only burn trucks and vehicles but do terrible things to people’s bodies.

These weapons, with their three different destructive mechanisms, are incredibly dangerous. They have quite a history. They were first used towards the end of World War II when the fishing port of Grimsby in Yorkshire was bombed by the German Luftwaffe with the first cluster bombs ever used. Interestingly enough, those first cluster bombs were a forerunner of the issues and dangers we face with these munitions. They caused chaos for weeks after the bombing raid. Some 76 people had been killed in the bombing raid, but more were killed clearing the new German-designed cluster bombs from the streets and buildings of Grimsby. It was a sign of things to come.

As Mr Twyford talked about in his presentation, cluster bombs have been used in a lot of places since the bombing of Grimsby in the 1940s. The Viet Nam War was when the cluster munitions were used in absolutely great quantities, and new and more effective designs—looking at it from a bomber’s view—were developed. Laos is a really interesting country to look at to see the long-term effects of these bombs. Laos was probably bombed as part of the so-called Ho Chi Minh Trail—the Assistant Speaker Rick Barker and I well remember protesting about that bombing in our youth. Some 80 million bomblets were dropped on Laos to try to stop the flow of supplies reaching South Viet Nam from North Viet Nam.

Today, some 40 years later, some of those unexploded bombs are still going off and killing people in Laos. That is the great danger of these munitions. They do not cause just mayhem and havoc when they are first used; they have an insidious legacy. For example, 40 years later in Laos, the bomblets are still going off periodically as children go to look at a shiny object that a monsoon has revealed in the muddy rice fields or that has been washed up on the river bank. Of those young people and people who do not know what these bombs represent—and I imagine many Laotians do—there will always be some who will be attracted to this. These bombs are still going off, still killing people, still blowing up limbs, and crippling and blinding people.

The Gulf War, the war in Kosovo, the Russian use of these weapons in Chechnya, the conflict between Eritrea and Ethiopia, the war in Afghanistan, Lebanon—in all of those conflicts, cluster bombs and cluster munitions have been used, with a lasting legacy of death, destruction, and chaos.

The international community is to be absolutely commended for showing initiative in this area. New Zealand is to be commended. We are a country with a proud nuclear-free heritage. We have held our heads high internationally. We have played a responsible role in many international conflicts, and in the great issues of peace, disarmament, and being nuclear-free. These are all things that New Zealand can be proud of. We are a small country of just over 4 million people. We are in many ways the most remote land from the world’s great land masses of Eurasia, North America and South America, and Africa. But, because of the tradition this country has held for over 100 years in terms of having a population and a society that really cares about issues that affect all of mankind—all of humanity—this legislation, and the leading role that our country has played in its development, is something that all Kiwis can be very proud of.

If we could only reach a consensus on a carbon trading system, we could show leadership on climate change, as well. I will just finish my speech today by making an appeal to all parties in this House. This issue is an important one in terms of its impact on people. Nothing could be more important for all of humanity on our planet than global climate change. Let us see whether we can reach a consensus on that, as well.

MICHAEL WOODHOUSE (National) : I am delighted to rise in very strong support of the Cluster Munitions (Prohibition) Bill, which, when signed, will add this country’s name to the list of those that have ratified the Convention on Cluster Munitions. Hopefully, if the bill has a speedy passage through the House, we will be one of the 30 nations that will bring the convention into force. New Zealand was one of the 94 nations that signed up to the convention in early 2008.

As many others have mentioned, the bill, when passed, will provide for sanctions on those who develop, use, distribute, or possess cluster munitions, and also for reporting requirements in record-keeping obligations. I do not want to get into a history spat with my colleague Chris Carter, but my information tells me that cluster munitions actually pre-date World War II. They have been around for a long time, but the Soviet Union in the 1930s deployed what were then known as “Molotov breadbaskets”, which scattered incendiary bomblets around Finland. The cylinder of the main bomb was really large—it was probably over 2 metres long—and it contained more than 100 incendiary bombs. The main bomb itself did not have an incendiary device, but it had a very large tailfin, which, when dropped through the air, caused the bomb to spin, thus spraying the smaller incendiary devices right around the Finnish continent.

In 1939 the Soviet Foreign Minister, Mr Molotov, claimed that the Soviet Union was not dropping bombs but merely airlifting food to starving Finns—hence the nickname “Molotov breadbaskets”. The Finns, being a resourceful bunch, developed improvised incendiary devices used to counter Soviet tanks that were invading their land, and called it after a drink to go with the food—hence the famous term “Molotov cocktail” was born.

Dr Cam Calder: Thank you, sir. Thank you—very erudite.

MICHAEL WOODHOUSE: The member is most welcome. The Leader of the Opposition, Dr Mapp, and others have talked about configurations where munitions devices have been used. Certainly, Lebanon in 2006 was a nadir in that respect. But the sad fact is that there have been a large number of conflicts where cluster munitions have been used. The list is a long and sad one, going back to Viet Nam and Korea, the first and second Chechen wars, Yugoslavia, Afghanistan, Georgia, and Sri Lanka—the list goes on.

Between World War II and the end of the 20th century, the technology of cluster munitions has become extremely advanced in terms of the volume of the devices and the width of the field across which the devices can be spread. The capacity to cause death and injury is increasing. Sadly, although necessity is widely credited as being the mother of invention, so too is war. The world, sadly, has become pretty damn good at its ability to kill and maim.

One of the other things that has happened over the last 20 years is the influence of television on war. As a younger man watching the first Gulf War in 1991, I well remember how visible and visual the conflict became. I recall General Colin Powell saying at a press conference in respect of certain intelligence information that CNN had acquired the information as quickly as he did.

Then in subsequent wars we followed munitions as they flew through the air and landed on buildings and so on. The result of that is that we in peaceful nations that are not normally exposed to the horror that war generally, and these munitions particularly, can inflict on people were exposed successively to news footage and documentaries following people like Princess Diana, other celebrities, and also aid workers doing great work, bringing the horror of what these munitions can do into our living rooms.

The passage of this legislation will not in and of itself eliminate the scourge of cluster munitions, but when a group of civilised, peace-loving nations with one voice says that even when belligerent nations come into conflict there are rules around that conflict and that those rules preclude such indiscriminative weapons, then the world might just be a bit safer. Fewer innocent civilians, particularly our young innocents, will end up disfigured, dismembered, or dead from these devices.

I applaud and congratulate those on both sides of the House who have worked on behalf of New Zealanders to achieve the progress we have made so far. But I particularly applaud those groups, individuals, and non-governmental organisations who have worked so tirelessly for many years to draw the world’s attention to the evil that cluster munitions bring. I also applaud those brave men and women of our military, and others around the world, who risk their lives to disarm these weapons. The number of these munitions is simply incalculable, and they will be around for many, many years after the effect of the convention is brought into play, if ceasing the use of these munitions is even possible. I congratulate those who are involved in the bill. I thank them for bringing it to the House. I support the bill.

• Bill read a first time.

• Bill referred to the Foreign Affairs, Defence and Trade Committee.

LOUISE UPSTON (National—Taupō) : E te Manatū o te Whare. Ka whakanui au i te reo o te tangata whenua, ka whakanui au i te reo o Aotearoa. Tihei mauri ora.

[Mr Speaker of the House, I celebrate the language of the people of the land and of New Zealand. Behold the sneeze of life.]

I rise to continue my speech on the third reading of the Building Amendment Bill (No 2). It is good to see that the theme of the day is one of speaking about bills that are supported across the House, and this bill is another one of those bills. The intention of this bill is, obviously, to simplify and speed up the processing of multi-use building consents, to reduce unnecessary red tape, and to make housing more affordable and, therefore, more accessible for hard-working New Zealanders. This bill is similar to the Parliamentary Rugby Team, which played so successfully on Sunday, as the bill was initiated by the Hon Shane Jones, but it was picked up and will be taken over the line by the Hon Maurice Williamson. This legislation is a vital part of the Government’s programme, and I am pleased to commend it to the House.

Dr CAM CALDER (National) : Tēnā koe, Mr Assistant Speaker Barker. E ngā reo, e ngā mana, e ngā rangatira, tēnā koutou, tēnā koutou katoa. It is with unalloyed delight that I rise to speak in support of the Building Amendment Bill (No 2).

Hon Dr Wayne Mapp: Unalloyed.

Dr CAM CALDER: Unalloyed delight. At this juncture I acknowledge the excellent work done by members from all sides of the House to progress this bill both through the Local Government and Environment Committee and the House. This bill has risen like a phoenix from the ashes of the legislative wasteland of the final days of the lost, limping, listless, lethargic last Labour administration. Initially having been nurtured by the Hon Shane Jones—who was sorely missed in the tight five of the Parliamentary Rugby Team on Sunday—and more recently passing through the select committee helmed by Chris Auchinvole, this bill is of benefit to all New Zealanders. This principled, pragmatic National-led Government wants New Zealanders to have a decent wage packet so as to have real choice in their lives and a genuine sense of opportunity. We are working towards a New Zealand where all New Zealanders are inspired, share a sense of purpose and a feeling of belonging, and are drenched with exhilaration at the opportunities and possibilities open to all of us through hard work and commitment.

As Prime Minister John Key observed in a speech recently, “As a nation, the income we generate enables us all to enjoy world-class public services—like health care and education”, protect the vulnerable in our society, and “strengthen our national institutions.” Simply put, if we imagine the Government is New Zealand’s baker, then we must grow the economic cake bigger so that there are enough slices to go around. This is even more crucial in these times of global financial turmoil. This humble bill, the Building Amendment Bill (No 2)—some may say it is small, but it is perfectly formed—will help us to do just that.

In an earlier speech to the House I alluded to the fact that any growth in GDP New Zealand experienced under the leaden hand of the previous introspective, torpid Labour administration was built on an increase in consumption, a debt-fuelled housing boom, and large, often spectacularly ill-directed increases in Government spending. It was these influences, along with working longer, that drove GDP growth—not real improvement in productivity of high value, internationally desired goods in the tradable sector. The tradable sector, of course, includes agriculture, fisheries, manufacturing, tourism, and forestry—the tight five for New Zealand’s future prosperity.

The Building Amendment Bill (No 2), by reducing costs associated with constructing new plant in all these sectors, will directly aid our competitiveness on the world stage and help us grow the all-important economic cake. This bill is yet another example of this principled administration keeping its promises and honouring a pledge that we made at the last election. The pledge was to cut burdensome compliance costs and red tape. This Government’s scalpel is finely honed for extirpation of further burdensome legislative verbiage where required. I urge the House to support this bill. Thank you.

Hon SHANE JONES (Labour) : Kia ora anō tātou. Firstly, I offer my greetings to Te Ururoa Flavell. I share his concern about the absence of the relation of the great Peter Jones from Awanui on the rugby field at Rotorua. That will be rectified in future games.

The Building Amendment Bill (No 2) was something that was driven as a consequence of the effective working relationship between the Labour Government’s Minister for Building and Construction and the building sector. In fact, I recall members of the sector threatening to create statues, not of clay or bronze, but of gold as a consequence of the good work done in this particular bill. We know that prior to coming into this House the member Cam Calder, who has just resumed his seat, has created a career around optical illusion. The rhetoric, if not the CV, reflects that he has a long way to go before he can emulate the deeds of the previous Government in working effectively to maintain unparalleled economic growth until such time when a side wind of international character blew us off course.

Let us look at what we have done. We have enabled the rats and mice that have bedevilled everyday applicants going to the council to be put aside, because a schedule in the new Building Act includes a host of usages that people want to be able to proceed with without being bedevilled by bureaucracy in local government. That is now law. Secondly, those people who are investing in housing will be able to gain national multiple-use approvals. There is very little investment by the State in State housing at the moment. Despite the best efforts of my colleague from Whangarei, he is actually shrinking the number of State houses that are being created. But those houses that will be created, if they are of a uniform character, will be able to gain a national multiple-use approval. This bill provides a chance for people who are on a limited income or who have been beaten down by the largely rightist-oriented local government bodies, which have let local government bureaucracy flourish. This bill strikes it down. This bill reminds local government bodies that their writ would not be permitted to carry on in that unfettered manner.

I look forward to the seeds in this bill being advanced. It may annoy a few of my colleagues that there is a bipartisan spirit in this regard, but at the end of the day, the people out there in the sector realise that this bill enjoyed its beginnings and support from members on this side of the House. The underlying message is that the building industry will spend less time ensnarled in red tape and bureaucracy, none of which has been reduced as a consequence either of Mr Hide’s rhetoric or of Mr Williamson and his colleagues’ loud voices. It is only when one passes legislation that that is achieved. To the newer members opposite, I say that they should study this bill. I will not take all the credit, but this is how one gets it done. Thank you very much.

TIM MACINDOE (National—Hamilton West) : Tēnā koe, Mr Assistant Speaker. Kia ora e te Whare. I welcome this opportunity to add my voice in support of the third reading of the Building Amendment Bill (No 2), although my voice is not as reliable tonight as I would like it to be.

Hon Clayton Cosgrove: Feel free to lose it.

TIM MACINDOE: I thank Mr Cosgrove. I appreciate his advice, but, as in all things, I will not be taking it.

I especially welcome the knowledge that there is multiparty support in this House for the bill’s progression through to enactment. As has been noted, there were 17 submissions to the Local Government and Environment Committee on this bill. Submitters were overwhelmingly supportive of what is proposed, as a result of which only minor changes were required. As the Minister for Building and Construction did in earlier stages, I acknowledge the preliminary work on this measure that was undertaken by the former Minister for Building and Construction, the Hon Shane Jones.

Katrina Shanks: Which one? There were 11 of them.

TIM MACINDOE: Well, I am particularly acknowledging the Hon Shane Jones. He is paying me the compliment of sitting there and listening attentively to what I am saying—

Hon Shane Jones: I raise a point of order, Mr Speaker. I can assure the House that there is only one Shane Jones, not 10 of them.

TIM MACINDOE: What an outstanding point of order that was; I am positively stopped in my tracks. As I say, it is good to have the former Minister, the Hon Shane Jones, sitting and listening attentively and appreciatively to this speech tonight, and it is good to follow him in this third reading.

As I understand, I am the final speaker in this debate. I simply want to reiterate and endorse the main purposes and expected benefits of this bill. In fact, I gather there may even be one more speaker, which is exciting beyond measure. I want to endorse the main purposes of this bill, which will be widely welcomed by representatives of the construction industry, developers, property owners, and, one would hope, local authority officials who are charged with processing building consent applications. At a time when New Zealanders are crying out for action to cut unnecessary red tape and compliance costs, it is heartening to debate a measure in this House that should substantially realise those objectives. My only regret is that it did not happen a long time ago.

Last week the Hon Maryan Street lamented a perceived lack of focus in speeches made by members on this side of the House on the issue of housing affordability. That is more than a little surprising, given that this Government has identified that as a priority issue, and that I am standing here tonight beside the Minister of Housing, who is working outstandingly hard and with tremendous and inspiring success on these measures. He is working very constructively, if the Minister will excuse the pun, to promote tangible measures that will achieve that goal. I simply say to the Hon Maryan Street to watch this space. It seems to me that Ms Street was struggling to find controversy where it does not exist—

Hon Phil Heatley: And Maurice Williamson.

TIM MACINDOE: —and, as the Minister of Housing so rightly observes, the Hon Maurice Williamson.

The initiatives in the bill may have only a modest impact—it has to be admitted—on the total cost of building. However, and this is what is important, they are also expected to reduce the time and transaction costs that the building consent process involves for homeowners, developers, and builders, and for building consent authorities. The bill will also make the building consent process more responsive to different levels of risk, and this, of course, is something that the industry is really looking for.

As has been noted, the bill addresses, in particular, low-risk building work, such as building designs that are replicated on scale. Given the way things have developed in the construction industry in New Zealand in recent times, we are probably seeing more and more construction projects of that type. This is certainly true in my own city of Hamilton, where affordable housing is very important but also where there is considerable development. There is great growth and great demand as a result of our population increase. Hamilton is, after all, the most vibrant and exciting city in New Zealand in which to live, as a result of which everybody is migrating to our fine and delightfully weather-reliable city, which is totally free of fog and all sorts of other impediments. It is a very noticeable feature that these scale projects, replica projects, are becoming more and more apparent, and it therefore makes abundant sense, obviously, to ensure that they can be constructed with the minimum of bureaucracy, the minimum of red tape—

Katrina Shanks: The minimum of regulation.

TIM MACINDOE: Absolutely; as my fine colleague Katrina Shanks has mentioned, reducing regulation will enable people to get on with the job, to construct these properties. This is what our city is crying out for. This is what we can do as one of the measures to promote housing affordability to ensure that more New Zealanders can realise the aspiration of homeownership that we as New Zealanders see almost as our birthright.

The bill also addresses the important need to be able to make changes to building consents that do not affect compliance with the New Zealand building code. Finally, the bill addresses the issue of building projects that do not benefit from the information provided in a project information memorandum.

These are welcome and worthy objectives. I am sure they will be broadly welcomed, and before my throat gives out altogether, I have great pleasure in commending the bill to the House.

CAROL BEAUMONT (Labour) : Tēnā koe, Mr Assistant Speaker. It gives me great pleasure to rise to speak on this bill for the third time. First of all, let me start by acknowledging my colleague the Hon Shane Jones for his work on this bill and, of course, for the very fine contribution he made just a few minutes ago.

When I and my colleague Maryan Street spoke on this bill previously we talked about it in the context of its being one of a range of initiatives about affordable housing under the previous Labour Government. Affordable housing is a key challenge for us all. Mr Macindoe mentioned the aspiration of New Zealanders to have their own homes. We need to focus on this issue. It is a very difficult one for us. Housing affordability is very, very difficult for many New Zealanders.

The previous Government put in place a wide range of initiatives to try to help people to get into their own homes. Those initiatives included provisions in KiwiSaver to help people to save for a deposit for their first home, enhanced first-home buyers provisions in the Welcome Home Loan programme, and shared-equity schemes. We looked at the rentals charged for State houses. We looked at a whole range of initiatives around finding places where we could have affordable housing built.

The previous Labour Government had many, many initiatives in place, because for Labour, housing has always been a very important policy plank. That is because housing is not just about houses. Housing is about providing people with homes. Having a home is about having a place where people can live with their families, a place where they can get a sense of community and identity, a place that provides them with security, a place where they can ensure they are warm and safe, and a place that gives them some sense of ownership in their community. Housing is not just about houses. In fact, housing is about people and their homes, and I think that is important to realise.

Housing is an important issue, and affordable housing has become an increasing challenge in recent times. As Maryan Street noted in her contribution a couple of weeks ago, it became a particular challenge for the last Government, with the massive increase in housing prices. Houses became a lot less affordable. I believe that the last Government rose to the challenge, and I am very keen to see what the current Government has planned in this space. I acknowledge to members that it is a challenge. It is not an easy thing to do, and the Government needs to rise to the challenge.

I will reinforce the main provisions of the bill we are talking about. This bill addresses three main areas of concern. It looks at national multiple-use consents, and that is because 40 percent of all new homes in New Zealand are built by volume builders. It talks about achieving efficiencies by providing a system of national multiple-use consenting. But I stress at this point that the bill is very much associated not only with those efficiencies but also with retaining quality in this regard, and that is very important.

There are some who seem to think that regulation always gets in the way of efficiency and productivity. Regulation is often in place for very good reasons, and in the housing area I do not imagine anybody in this House could fail to recognise what happens when there is an inadequate regulation. First of all, the bill looks at national multiple-use consents. Secondly, it covers how we deal with amendments to building consents and the types of small variations that occur during the building process, and so on. The third area concerns the project information memorandum, or “PIM”, which is intended to provide a one-stop shop for all information regarding building work requiring a building consent. Only a minority of project information memoranda were being applied for prior to a building consent application being made, and, consequently, the full benefit of that was not being realised in most cases. Those are the main areas covered by this bill.

The Local Government and Environment Committee received 17 submissions on the bill, and a number of the issues that were raised were incorporated in the bill we now have before us. A couple of areas that were not able to be covered included submissions made by the Historic Places Trust, which raised particular difficulties around the fact that making project information memoranda voluntary may make it more difficult to monitor building projects that adversely affected historic places.

I will finish by focusing on some recent comments made by the Minister for Building and Construction, Maurice Williamson. He was talking about this bill recently at the annual general meeting of the Building Industry Federation in Auckland on 16 July. He said that the Government is committed to cutting red tape in the sector and getting rid of unnecessary rules and regulations, and that this bill will speed up the consent process and reduce costs. Hopefully, that is something we are all in agreement on, and, hopefully, that will be a very positive outcome of this bill. But he did go on to say that he thought it was a start and that it did not go far enough in addressing compliance issues.

As I mentioned earlier in this speech, for some people the whole issue of regulation seems to be a negative thing from start to finish. I hope that that is not what the Minister is saying in this case, because we need to ensure that our buildings in this country are of good quality and that we do not have a repeat of some of the dreadful experiences people have had. Mr Williamson talked about the fact that the Government will be reviewing the Building Act 2004 to drive down the regulatory costs associated with building. To give him credit, he did go on to say that the Government wanted to do that without compromising building quality, and that the terms of reference are currently being finalised.

I read the Minister’s comments with interest, and one of the things I thought was very interesting was the risk and liability framework in the sector and what concerns he was raising about the behaviour of councils. I know that this gets us into the territory of the Resource Management Act and other things that are going on around council regulation. He also talked about a number of other non-regulatory ways to improve performance, and I think that is an interesting area to focus on. The area that really jumped out at me is around getting better outcomes from the increased investment in trade training, and I think that is a good thing. The Minister talked about the proliferation of qualifications, the absence of good qualifications for some lower-level trade skills, and the different funding and assessment models for apprenticeship training.

I doubt that anybody in this House would have a problem with those issues per se, but I thought it was a little bit rich for a National Minister to be talking about trade training when trade training took a nose dive under the previous National Government. In fact, the current National Government has got off to a very poor start in this area. We are finding that the investment in adult education, industry training, and tertiary education generally is either flat lining or, in some cases, being severely cut. So I thought it was a little bit interesting that the Minister was talking about the desire to get better outcomes from increased investment in trade training, and I am looking forward to finding out what that increased investment is, because I do not think we saw it in the current Budget. Clearly, we would have to agree that increasing investment in trade training would indeed be a good thing. With that, I commend this bill to the House, and I again acknowledge the work of the previous Government in getting this bill into the House. Thank you.

• Bill read a third time.

CHRIS HIPKINS (Labour—Rimutaka) : I am very happy to take a call on the Inquiries Bill, another bill that was introduced by the previous Labour Government that now seems to have attracted support from both sides of the House. I suspect that at some stage in the next 2½ years the Government, having been elected at the last election, will work out that it has a responsibility to write some legislation of its own, but there does not appear to be any risk of that happening anytime soon. The House continues to debate bills introduced by the previous Labour Government.

It is probably fair to say that although this is a Labour bill and we support it, it is not something we would be debating in the House had Labour been re-elected. A re-elected Labour Government would have been focusing on the major issues of the day. It would have been focused on what Kiwis are really concerned about, which is jobs. We would have been looking at what the Government could do to create jobs and save jobs. Unfortunately, this Government does not seem at all interested in people’s jobs.

The Inquiries Bill aims to reform and modernise the law relating to inquiries. It is another good example of some of the excellent work the Law Commission is doing to modernise some of our laws. It creates some new forms of inquiry that are less formal than, for example, a royal commission of inquiry. That is a good thing. In the modern era there is more pressure for us to be open and transparent, and to look into a variety of issues. The creation of additional forms of inquiry is very welcome.

I thought about some of the inquiries that have come before the House in the past. Perhaps the most famous and notable inquiry that I am aware of that Parliament was ever involved in was the wine-box inquiry. It was investigated by Winston Peters. I was much younger back then, and I recall watching on TV Winston Peters coming into the House. He was blocked several times from tabling all those documents in Parliament, but finally he managed to table the documents that triggered the wine-box inquiry. Of course, it was not Winston Peters who carried all of those documents into Parliament. He had a very loyal servant following behind him carrying those documents. Who was following Winston Peters with all of the wine-box inquiry documents? It was none other than Tau Henare. I know that was probably three or four political parties ago, and he cannot remember as far back as that, but it was Tau Henare who was carrying the wine-box inquiry documents into Parliament—one of the biggest inquiries we have had.

A more recent inquiry was the Royal Commission on Auckland Governance. The commissioners produced a very substantive volume of reports on governance in Auckland. A large number of the recommendations produced after all the hearing of submissions and all the scanning of research—a whole chunk of those recommendations—were simply ignored by the National Government. Rodney Hide, John Key, and Bill English said “No, we will do whatever we like. We will come up with something completely different that bears no resemblance to what the royal commission recommended, because we are the Government and, hey, we can do whatever we like now.” They basically ignored the recommendations of the Royal Commission on Auckland Governance and simply came up with what they had wanted to do in the first place. When one comes to discuss the Inquiries Bill, it begs the question as to what is the point of an inquiry if the Government will just turn round, completely ignore the recommendations, and do whatever it wanted to do in the first place. What is the point of having an inquiry where people can come in, make submissions, and have their voices heard, if they will be completely ignored by the Government? That is what this Government seems very willing to do.

I thought that by way of illustration we might consider some of the things that could be considered by one of the new forms of inquiry: a public inquiry or a Government inquiry. Those are slightly further down the pecking order than a royal commission of inquiry, but none the less they are important.

I think we could have an inquiry into Paula Bennett’s clumsy and vindictive release of the personal information of individual beneficiaries in order to silence her critics. That is the disgraceful behaviour that we have seen in the past few days, and it was appalling to watch the Minister try to justify it in the House today. She admitted at question time that she took no advice before releasing that personal information. She looked at a website. She did not check out the legal ramifications of releasing the information. She did not consider the Privacy Act. That is why we should have an inquiry into why Paula Bennett did that, using the new forms of inquiry in this bill, so that people can have their say on it. They can come along and say to Paula Bennett “Actually, we do not think you should be abusing your position as a Minister to get people’s personal information and release it to the news media.” That was exactly what Paula Bennett did. She should not be using that information without the consent of the individuals involved. That is also why we should be having an inquiry into that matter. It is extremely poor judgment on the part of the Minister to do such a thing, and to completely compromise the individual privacy of the people concerned.

We could have an inquiry into the Government’s lack of action on jobs, because 1,200 extra New Zealanders—that is a net increase of New Zealanders—are joining the dole queue every week. That means the dole queue is growing by 1,200 more people per week, and the Government is not doing anything about it. We should have an inquiry into that, and we could have an inquiry using the new powers provided by the Inquiries Bill. In that inquiry we could ask why the Government’s Job Summit did not come up with anything more than a few very small initiatives, which are creating very few jobs. John Key promised the people of New Zealand that his Job Summit would be a “do-fest”, not a talkfest. In fact, we have seen very little evidence of that, because 1,200 New Zealanders are still signing up for the dole queue each and every week. The Government is doing very little to help those people, or to keep people in jobs. We could have an inquiry into that issue, and I think that would be a very useful thing for this Government to initiate, because it certainly does not to seem to have any ideas of its own about how to deal with that particular problem.

We could have an inquiry into tax. That has happened before. We could start with the National Party’s pre-election promise to give New Zealanders tax cuts, could we not? Did the National Government deliver on that promise? No, it did not. It legislated for the tax cuts, and then took them away again. That is a reason why an inquiry on tax could well be a very useful thing. It would also highlight the fact that the National Government’s tax cuts took tax relief away from the New Zealanders on the lowest incomes, and gave it to those on the highest incomes. It was a disgraceful move by the National Government to do that. We could remind National members of some of the comments they made when they passed tax cut legislation in this House in November. They talked about giving people certainty when it came to personal income. Well, people do not have certainty any more, because increasing numbers of New Zealanders—40,000, I think it is—do not even have jobs now. They had jobs when National became the Government, and now they have lost those jobs. We could have an inquiry into the National Government’s lack of action on jobs, its broken promise on tax, and all of the other broken promises on the National Party’s pledge card. For example, the National Party spread a massive hoax around the country, saying it would cap, not cut the Public Service, yet 1,500 public servants have found themselves out of jobs already. We could have an inquiry into National’s other big hoax at the last election: that people could have all of the things that National was promising them, with no cuts to social services. We know that is not true.

This is a good bill. I commend it to the House, but I would like to see something from the Government that focuses on the things that really matter to Kiwis at the moment.

JOHN HAYES (National—Wairarapa) : We have just heard 10 minutes of drivel. Maybe we could have an inquiry into why it is possible for this Parliament to be held up by such a lot of absolute, arrant nonsense. I point out to the member who has just resumed his seat, Chris Hipkins, the motto of the New York Yacht Club is that youth and enthusiasm will always be outfoxed by old age and treachery.

Let us have some inquiries. Let the first inquiry be into why that member’s Government last year paid $200 million more than it should have for KiwiRail. Let us have an inquiry into why we bought a lease of St James Station for $40 million, when it was valued at less than $15 million. When we buy a lease, we buy only the value of the improvements on the property. The State already owned it. That was outrageous, and there should be an inquiry about it. We could have another inquiry into why we found a black hole of $200 million in the budget of the Accident Compensation Corporation (ACC) following Labour’s stewardship. What about the mum and dad investors who lost heaps of money because of the way you managed Auckland Airport? If you want some inquiries—

Chris Hipkins: I raise a point of order, Mr Speaker.

Mr DEPUTY SPEAKER: I know what the member is going to say. I just remind members that they cannot bring the Chair into the debate, so “yours”, and “your”, and “you” are out of order.

JOHN HAYES: That member who spoke previously could face quite a number of inquiries.

Let us come back to the purpose of the Inquiries Bill. The intent of this bill is to modernise and reform the law, while providing for flexible, effective, efficient, and fair inquiries. We need to do that because the legislation has been in place since 1908. The previous Government had 9 years to change this legislation, and it did nothing. The current law that governs these inquiries is the Commissions of Inquiry Act 1908.

In 2006 the Law Commission—and it always does a good job—was invited to review the law relating to public inquiries. The review focused on commissions of inquiry as well as royal commissions and non-statutory ministerial inquiries. The report that the commission produced, which people listening to this debate can find at www.lawcom.govt.nz, identified quite a number of problems with the 1908 Act.

Hon Clayton Cosgrove: Come on, spice it up a bit.

JOHN HAYES: First of all, like that member’s hair, it is over 100 years old. Some parts of the Act are seen as antiquated, and some provisions are outdated. The amendments made over time have generally been in response to circumstances of a particular inquiry. This means they may resolve a very specific part of the existing Act without taking the whole context into account.

Other problems identified included the cost and duration of commissions of inquiry and royal commissions, normally assigned to the legalistic process those commissions often adopt. This resulted in very high costs and long delays in getting work completed. There was also a lack of a flexible statutory inquiry for Ministers. For example, a flexible inquiry might have been made into former Labour MP Taito Phillip Field and his actions in the immigration area. Inquiries appointed outside the statutory framework lack the powers of protection of those appointed within the statutory framework.

This bill is designed to replace, for the most part, the 1908 Act. There will be two types of inquiry. We will retain the royal commission, and there will also be public inquiries. These will be appointed by the Governor-General on major issues of concern to the public or the Government, and they will be a substitute for the commissions of inquiry. The reports from public inquiries will be tabled in Parliament. The bill also provides for Government inquiries. These will be appointed by and report directly to Ministers. They will deal with smaller and more immediate issues where a quick and authoritative response is required. The Law Commission also recommended that the ability to appoint royal commissions should be removed, but the previous Government decided to retain them as the public views them as very important where matters of significant public interest are involved. All the provisions of the public inquiry will apply to royal commissions.

Other provisions will include an express power for inquiries to be postponed or suspended where an investigation into circumstances may be undertaken, or where the inquiry may prejudice the investigation of interested parties. It will also provide improved powers for obtaining evidence and information for the inquiry, and it will allow a maximum fine of $10,000 if a document, order, or information is refused to be given to the inquiry. The legislation will also formalise the role of the Department of Internal Affairs in administering all types of inquiries.

With those words, I thoroughly support this legislation and commend the Minister for his actions in promoting it here in this House.

DARIEN FENTON (Labour) : Tēnā koe, Mr Deputy Speaker. Tēnā tātou katoa. I am pleased to take a call in the first reading of the Inquiries Bill. In doing so I note that once again we are debating a Labour bill. This bill was introduced just prior to the election by a Minister in the previous Government who is now an Assistant Speaker, Mr Rick Barker. So Labour did the work on this bill, and it is pleasing that the National Government has had the sense to pick it up. It is fascinating that this bright, shiny new National Government—although it is now starting to look a bit faded after 9 months—appears to have struggled to come up with new legislation of any substance, especially after it had to own up to the inconvenient truth that tax cuts are not the answer to everything. In National’s case tax cuts are the answer to nothing except more money for the better-off.

The bill reforms and modernises the inquiries law and follows a Law Commission review. The new forms of inquiry will replace commissions of inquiry, but royal commissions will be retained under the new law, recognising that the public sees those commissions as having, I suppose, more mana. The Inquiries Bill establishes two types of new inquiry. Public inquiries will be appointed by the Governor-General to inquire into matters of significant public importance. Government inquiries will be appointed by, and report directly to, a Minister and will be used for smaller and more immediate issues. Public and Government inquiries will have the same legal powers and protections. Royal commissions of inquiry are retained as a necessary measure to provide assurance to the public that a matter is being given serious independent consideration. The bill sets out the criteria for public access to inquiries and documentation. It provides for funding for legal representation for those participating in inquiries if this is seen as warranted by an inquiry and its overseeing department. It provides a range of sanctions to improve the ability to control behaviour surrounding inquiries and to avoid abuses of process.

As I said, Labour obviously supports this bill. We support the opportunity to modernise the Commissions of Inquiry Act 1908, which is outdated and has been amended many times, thus making it confusing and difficult to administer. We support the chance for the bill to go to a select committee for consideration and have public input, because that process is an important part of our democracy. It makes a nice change from some of the bills we have seen this Government ram through the House under urgency. We support this bill because public inquiries are an important and vital part of our democracy. After all, New Zealand is recognised as one of the most corruption-free nations in the world, and long may that continue. We support the bill because it creates more avenues for official inquiries, particularly into the undemocratic behaviour of this National-ACT Government.

I think the bill is particularly relevant at this time for the people of Auckland. I find it ironic that the Government is seeking to reform and modernise a law relating to inquiries when clearly it has little regard for the process. As my colleague Mr Hipkins has mentioned, the most recent inquiry we have had is the Royal Commission on Auckland Governance. The Government might as well have, and probably has, shredded the months and months of work and the millions of dollars spent on careful analysis of what needs to happen to take my city, Auckland, forward. The Auckland governance reform is the biggest change in the history of local government in Auckland, and probably in our country. It is important that we get it right, but, as Labour has said on other occasions, it is equally important that the people of Auckland have a say on their future. I do not think the select committee process substitutes for that. The process the Government has followed is undemocratic, especially when the people of New Zealand were led to believe by the National Party in its manifesto at the last election that National would consult with Aucklanders once the royal commission’s findings were known. I ask again, as we have time and time again in the debate over Auckland governance, what the rush is. Why could the people of Auckland not have a say? We were only 3 months into the term of this Government when the report of the royal commission came out but National ignored what it promised in its manifesto. I find that incredible only 3 months into the Government.

Everybody in this House knows that for consultation to be meaningful and genuine it must happen before the key decisions are made. But what happened? The Government came out with a very speedy response to the royal commission. It was not prepared to honour its promise to go back to the people across Auckland and acknowledge to them that it is their city, that they need to be involved in the decisions about the restructuring of local government, and that they would be given the opportunity to have a genuine say. That is the most recent example of a royal commission. I hope that in supporting this bill today the Government does not intend to treat other inquiries with the same contempt.

Like my colleague Mr Hipkins, I can think of many inquiries that we could be conducting under this bill. We have talked today about the extraordinary events when the Minister for Social Development and Employment breached the privacy of beneficiaries because they dared to comment on Government policy. I am absolutely gobsmacked by that breach. It is scary, because it says to New Zealanders that if they criticise this Government they will be punished.

Chris Hipkins: Who’s next?

DARIEN FENTON: Exactly. Who is next? There has been an extraordinary turn of events today. A Minister cannot take public criticism of her decisions, so she vindictively sets out to intimidate those who dare cross her path.

Despite all of this, the public are conducting their own inquiries into, for example, the adult and community education funding cuts that are taking place across New Zealand. More than 100 angry people gathered in North Shore City last week—a traditional National stronghold—to oppose these cuts; likewise, 500 people gathered in Christchurch last night, where National MPs at least turned up but embarrassed themselves in the process. Up and down the country the opposition to these stupid cuts is gathering steam.

We could have many other inquiries under this bill. I would like to see an inquiry into the appointment of Dr Don Brash to lead the so-called high-level advisory committee into productivity and closing the income gap with Australia. In fact, I would like Don Brash to be on permanent notice of a public inquiry so that we can keep his radical right-wing agenda under permanent supervision. We do not want a Dr Don Brash prescription. We do not want it. We have had it all before: removing the rights of workers, privatising assets, and slashing the public sector. Did it close the trans-Tasman gap? No, it widened it. It led to wage decline, high unemployment, and social dysfunction. I would like to see an inquiry into the secret privatisation agenda of this Government and the Trojan Horses that have been set up to achieve it: Don Brash, John Whitehead, Mark Weldon, and the Business Roundtable. They are all chiming in and chorusing loudly together about the need to sell off New Zealand.

I would like to see an inquiry into other things, like the cuts to workplace health and safety training under the Health and Safety in Employment Act. How many lives will be lost as a consequence of those cuts? I would like to know that that will not happen. I would like to see an inquiry into the State Sector Act and whether John Whitehead crossed the line last week when he made a speech in which he made threats to the State sector and State sector workers. I would like to see an inquiry into the Maritime Transport Act and the potential consequences of the decisions of this Government to cut funding for safety courses for recreational boaties. Will the Government guarantee that there will not be any more accidents? I do not think so. One can think of so many inquiries that could be held under this bill. How about an inquiry into why so many hundreds of jobs are lost every day while this Government sits on its hands?

Labour supports this bill. It is a good bill; it is a Labour bill. The question in the next months will be whether the National-ACT Government will act on the recommendations of John Whitehead, Mark Weldon, Don Brash, and the Business Roundtable.

KEITH LOCKE (Green) : The Green Party will be supporting the Inquiries Bill; it is important that we update the procedures. The royal commission legislation is about 100 years old and it is good that we are modernising it. The Greens are a little bit concerned that the legislation might not sufficiently guide the public inquiries that are set up under this new legislation. Just going through the bill briefly, clause 3, stating the purpose, is very general regarding what the public inquiry can be about. It basically just says that the bill provides for “the establishment of both public and government inquiries to inquire into matters of public importance;”, which is obviously very broad ranging.There can be two quite different types of inquiry that inform this legislation, and perhaps the select committee will go into this in a bit of detail. One is an inquiry into a more specific incident, where there are clear parties to the incident, such as the inquiry into the sinking of the Mikhail Lermontov a few years back, where we were trying to get at the essence of what exactly happened and who might be responsible. Then there are other inquiries on matters of broad public interest. The 1976 royal commission of inquiry into nuclear power was a case in point, and about 5 years ago there was a royal commission of inquiry into genetic engineering. Those are quite different because they are matters of very broad public interest.

Let us look at the powers of a public inquiry commission under this bill. It has very broad powers to decide whether to conduct interviews; whether to call witnesses, and, if so, whom to call; whether to receive oral or written evidence; and whether to allow restricted cross-examination of witnesses, and, presumably, to decide who does that cross-examination—whether it is the commission or whether other people are allowed to do it. So it has very broad powers, and there should be a bit more guidance in the bill in terms of whom the commission might hear from and whom it might allow to do this cross-examination. Clause 18 of the bill provides for the concept of core participants, who are defined as those who have “played, or may have played, a direct and significant role in relation to the matters to which the inquiry relates:”. Clause 18(2)(b) states that consideration must be given to whether that person “has a significant interest in a substantial aspect of the matters to which the inquiry relates:”. I suppose the first one, about a person having played a direct or significant role, relates more to inquiries that are on a specific thing, like, as I said before, the sinking of the Mikhail Lermontov. Paragraph (b) might relate to a more general inquiry like the one on genetic engineering—that is, parties that have “a significant interest in a substantial aspect of the matters to which the inquiry relates:”.

Possibly that definition needs to be specified a bit more, because it may be that, if it is a bit too loose, certain people who have a genuine interest in a topic like genetic engineering or nuclear power, to use those two previous examples, might not be fully recognised in terms of their role. In fact, there was a lot of contention on the royal commission on genetic engineering about who had standing—I think the term used at the inquiry was “standing”; they could be there permanently. Some of those who were recognised as having standing had certain rights of cross-examination. There was quite a bit of to-ing and fro-ing on who had that standing. So possibly the select committee could give some more specific guidance in respect of these public inquiries so that no one gets left out. Because a position taken by an interested party may not really be an establishment one, for some on the commission it could be a case of: “Oh well, you’re just fringe protesters.”, or whatever. But often these people represent a significant amount of public opinion and should be given full rights, not only to give written and oral submissions and to be subject to cross-examination themselves but it is often very useful for them to be participants in the cross-examination of others—perhaps others with different views. With those few comments I say that the Greens will be supporting this legislation, and we look forward to the select committee consideration.

DAVID GARRETT (ACT) : The ACT Party will also be supporting the nuts-and-bolts, non-controversial Inquiries Bill, arising as it does from a Law Commission report entitled A New Inquiries Act. I will not repeat what others have said; that is a waste of time. The members on the Labour benches, especially Mr Hipkins and Ms Fenton, have come up with a number of mythical, or theoretical, inquiries we could have, but we have actually had a very good example of a non-inquiry that illustrates very neatly the need for a review of this area of the law. That non-inquiry is the Taito Phillip Field inquiry, conducted by Noel Ingram QC, at the behest of the previous Prime Minister, Ms Clark. It was a ministerial inquiry—

Mr DEPUTY SPEAKER: I remind the member that that matter is currently before the court, and what the member says must be taken very, very seriously with that in mind.

DAVID GARRETT: Thank you, Mr Deputy Speaker; I am aware of that. The Taito Phillip Field inquiry highlights the many faults of a ministerial inquiry, as opposed to a more formal inquiry. Ministerial inquiries have narrow terms of reference, and, most crucially, no power to compel testimony. What can result in inquiries of that kind is something stage-managed for political purpose, whereby the motions are gone through to obtain a result.

The bill before us allows for public and Government inquiries. Government inquiries are not ministerial inquiries. Government inquiries will be inquiries in which witnesses can be compelled and can be offered immunity, and, in contrast with non-statutory ministerial inquiries, Government inquiries will be inquiries with real meat.

The changes the Law Commission has recommended are largely contained in the bill. I am a little bit surprised by Mr Hipkins, in the language of his generation, dissing his own party’s bill. It is as if anything that has any sense is supposed to be abandoned the day there is an election. The other implication in his speech was that the only thing that can create jobs and solve economic problems is more laws. We saw that approach in the 1970s with job creation laws of varying kinds, which led to railways being staffed by 90,000 people when 6,000 would have done, at the expense of the rest of us. It is not just laws that create jobs or solve problems.

It is heartening, for me anyway, to see this bill, which is not anything magic or high profile, and probably will not be reported in the newspapers tomorrow. It is a sensible measure, but it is overdue, as my colleague Keith Locke has just said, by 100 years. It is sensible. Yes, it was started by the other side, but so what. I am quite happy to support the bill on behalf of the ACT Party.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā koe, Mr Assistant Speaker. Kia ora tātau katoa. E Te Manatū o te Whare ki te āta titiro ki te Kōmihana Karauna o te tau 1988, kātahi ka kitea atu te hōhonutanga o nga Komihana Pakirehua. Nā tēnei kōmihana i para te ara i ngā tau e rua tekau mā tahi kua taha ake.Nā taua kōmihana i kī me aro ake te Karauna ki ngā kaupapa o te Tiriti o Waitangi. I puta ngā whakatau e toru kaupapa e toru arā , te mahi ngātahi, te kaupapa tiaki, te kaupapa kia whai wāhi te katoa—i reira i whakatūria ai kia noho te Tiriti hei pūtake kōrero mā rua tekau tau neke atu.

Engari, i puta mai tētahi kōrero whakahirahira i taua Kōmihana. Nā te ahorangi nei nā Meihana Durie i whakaputa. E tika ana kia āta tirohia taua kōrero me tāna pānga ki tēnei pire, hei ara putanga, e whai ake nei ngā kōrero rā:

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

[Greetings to you, Mr Assistant Speaker, and to us all.If the 1988 Royal Commission on Social Policy were examined, the significance of commissions of inquiry would be understood better. It was this ground-breaking commission, 21 years ago, that declared that the provisions of the Treaty require that the Crown must respect the principles of the Treaty.

The enunciation of these principles—partnership, protection, and participation—helped set the foundation for the Treaty discourse for the next two decades and more.

But there was a particular statement reported back from the Royal Commission on Social Policy by Professor Mason Durie that is so remarkable that it must be considered in this Inquiries Bill as a model of the quality of outcomes we can expect, and I quote: ]

“The Commission believes that the Treaty is always speaking and that it has relevance to all economic and social policies. Not only must the past be reviewed in light of its principles, but the Treaty’s promise must also be seen as fundamental to those principles which will underline social well-being in years to come.”

He motuhake te noho a te kōmihana mō ngā take ā-iwi a te Karauna nā te whanui me te whāroa o tōna titiro. Mai i taua wā tae noa ki ēnei rā, ka kitea ōna tapuwae i te whānuitanga o ngā kaupapa āhuatanga ā-iwi. Ko te mea mīharo i whakairia ai e taua kōmihana i hāngai tonu te Tiriti o Waitangi ki ngā kaupapa āhuatanga ā-iwi ki ngā kaupapa ohaoha anō hoki. Koia nei tētahi kaupapa kua whakahaerehia, arā, ki te whakarongo ki te whānuitanga o ngā tūmanako o te Māori, ā, kia whakakohatia ki runga pepa.

Engari, ehara i te mea he tauira motuhake taua Komihana Karauna. Arā anō te Royal Commission on the Electoral Systemi whakatūria e te Karauna nāna tonu i whakatakoto i te kōrero kia whai a Aotearoa i te MMP i te tau 1986 i te 11 o Tīhema, arā, o Hakihea. Nō te tau 2001 i puta te pūrongo a te Royal Commission on Genetic Modificationmē wā rātou kupu āwhina, ko tā rātau, me tūpato wā tātau rāweke haere i te whakapapa o te tangata, me āta tātari i ngā raruraru ka puta. Ā ka mutu, e kore e taea e te tangata kotahi i tēnei Whare te āro kore ki te Komihana a te Karauna mō te whakahaeretanga o Tāmaki-makau-rau. Mēnā e pōkaikaha ana koutou e te minenga, e te Whare koutou mā mō ngā kōrero kua whakaputaina e au me hoki pea ngā whakaaro ki te hīkoi i Takaparawhā i te 25 o Haratua i tēnei tau. Ki reira ka kitea te whānui o te whakaoreoretanga o te hinengaro o te tangata whenua.

Nā i runga i tērā, kei te āhua noho tumeke tonu te ngākau ki tā te Aka Matua a te Ture me tana tono kia whakarerekēngia, kia whakahoungia te āhuatanga o te Kōmihana Pakirehua. Ki taku mōhio, ko tāna hiahia ki te whakakore i ngā Kōmihana katoa. Ko tā rātau, kia rua anake ngā momo pakirehua, ko tētahi he pakirehua ā-iwi, ko tētahi mā te Kāwanatanga—mā ngā minita—ā, me whakakorea ngā Komihana a te Karauna me tōna momo. Hoi anō, ko tā te Kāwanatanga whakatau me noho tonu te Kōmihana Motuhake o te Karauna nā te mea, ki tā te Tari Taiwhenua,Te Tari Ture o te Karauna me te Ratonga Tumu Whakarae, me pupuri tonu nā runga i te mea ki tā te titiro o ngā hapori, he painga i reira.

Ahakoa i whakakorengia taua tono, kei te āro tēnei pire ki ētahi ake o ngā whakataunga a te Aka Matua o te Ture. I kitea e rātau, ko te pūtake o tēnei pire—Te Ture o te tau 1908—he hanga tawhito, he rangirua, karekau he hua ō roto, he rahi rawa te utu, ā, ka kūtia ngā mahi pakirehua. Nā, ko te āhua nei ko ngā Komihana ā-Kawana nei, ahakoa ka oti wawe, he ngāwari te utu ko te raruraru kē, karekau he mea tiaki i ngā tāngata ka tū ki mua o te Kōmihana. Kāre pea rātau e mārama i ngā tikanga me ngā whāinga arotake ki te Official Information Act rānei me te pānga ki a rātau.

Ā nō reira, anei te pire hou hei āwhina. Ka tautoko Te Pāti Māori i te tono mō ngā kaupapa papai kua āta whakaarohia. He whakaaro pai tonu. Ka taea e ngā tari kāwanatanga te āwhina ā-pūtea i ngā tāngata kei te hiahia ki te tū ki mua i ngā Kōmihana Pakirehua. Ā, ka tika hoki kia tū motuhake ngā mema, kia ōrite tā rātau whakawā i tēnā, i tena. He whakaaro pai tērā kua whakatakotohia, arā, me whai te Kōmihana Pakirehua i tōna ake ara engari, me whai i te turee mahi engari me mahia i runga i te pono me te tika. Kāre au i te kite i te tika o te kaupapa kia utaina ngā whaina taumaha ki runga i ngā ture kia hangaia e tēnei Whare. Kāre he painga i roto i tēnei. Ko te whiu a te pire, kia piki ngā whaina mai i tōna taumata o te tahi mano taara ki te taumata hou o te tekau mano taara. Ko ētahi o ngā mahi whaina ko ēnei.Tuatahi, mēnā kāre te tangata e hanake ahakoa te tono, kāre a ia e whakaputa ngā whakaaturanga e mōhiotia ana e ia, ā, he mahi tauwhati whakapōrearea i te hui. Ahakoa ēnā taumahatanga, kei roto i te pire tētahi ake āhua ka taea e te rōpū pakirehua te tono, kia noho nama te tangata mēnā i whakaarohia, nā ngā mahi pōrearea, tinihanga rānei kāre e wawe oti ngā hui ā ēnā, ka nui ake te utu. Engari, kia mōhio mai koutou tērā pea me uru mai tētahi kaupapa ki roto i teWhare Pāremata. Kei konei hoki tētahi kaupapa hei mahi whakaroa i ngā ture.Te kaupapa e kīa nei, ko te filibustering

Ko tā mātau mō tēnei pire, he tāpiri atu he mea whakatikatika ā-ture kia mana ai te Tiriti o Waitangi i te wā e whiriwhiria ana ngā Kōmihana Pakirehua. Anei ētahi whakaaro hei tirohanga kia whai mana te Tiriti o Waitangi: kia whai mana ngā rōpū Māori i runga i tā rātau motuhaketanga.Kaua e tatari kia tukuna te tono ki te tangata kotahi; me whakataungia ngā mema Māori i runga i tō rātau ake mātauranga i roto o te ao ā-iwi nei. Kaua e whakatū i runga i te kaupapa he iti noa iho te toto Māori kei roto i a rātau; me titiro anō ngā whakataunga i raro i ngā kaupapa o te Tiriti; me haere ngā mema o ngā Komihana Pakirehua ki ngā hui a te Māori kia mārama mai rātau ki te ao me ngā whakaaro o tēnā iwi, o tēnā iwi.

Hei tā Moana Jackson i a ia e titiro ana ki tēnei kaupapa, ko tāna ko te titiro ki te āhuatanga o te Tiriti o Waitangi, he āhua rite ki ngā kupu e whai ake an exquisite politeness. Ko enei kupu, nā Simon Upton. Nāna i kī “Māori have been listened to with exquisite politeness and cosmic tact and then basically passed by.”Ā nō reira, tērā pea kua rere te wā mō ngā kupu waha huka hei ārai, hei whai mana te Tiriti o Waitangi.

Me kore e tukuna te Tiriti kia noho ngoikore ki tahaki. He tino tikanga hei whai mō te kaupapa ā-ture kei te whatumanawa e titi ana. He kaupapa ā-tangata, ā-ohaoha rānei. Me rangatira te whanaungatanga i waenganui i te Karauna me tō tātau iwi. Nō reira, ko tēnei pire tētahi wāhanga mō te rārangi take ka wānangahia mō te kaupapa ā-ture. Ka tautoko mātau i tēnei pire i tōna haeranga tuatahi, ā, kei mua tonu ngā kōrero hei whakawā i a ia. Kia ora tātau.

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

[The Royal Commission of Inquiry into Social Policy was unique in the breadth of its coverage, and the impact of its scope. The obvious reflection of this is the fact that to this day its conclusions remain of profound influence across the widest social policy settings. In particular, the commission was distinguished by its recognition that Te Tiriti o Waitangi was as relevant to social policy as it is to economic policy. It was also one of the biggest exercises to hear from Maori communities, to listen to the aspirations articulated by Maori, and to have those documented for the record.

Of course that royal commission is not an isolated example. The Royal Commission on the Electoral System, which first recommended New Zealand adopt the mixed-member proportional voting system, was submitted on 11 December 1986. The Royal Commission on Genetic Modification, which reported in 2001, recommended that New Zealand should proceed with caution on genetic modification, minimising and managing risks. And of course no one in this House can ignore the interest provoked by the Royal Commission on Auckland Governance .

If there is any doubt about what I am saying, I would suggest that the hīkoi that took place on 25 May, Bastion Point Day, gave a pretty sharp steer as to whether that particular royal commission has generated much interest for the people of the land.

Given this background, it is rather surprising to learn that the Law Commission proposed to reform and modernise inquiries law by doing away with royal commissions of inquiry. Its recommendation was that there should be only two types of inquiries: public and Government—ministerial—and do away with the third type, royal commissions, as a distinct form of inquiry. Against this recommendation, the Government has instead decided to maintain the royal commission, concluding upon advice from the Department of Internal Affairs, Crown Law, and the Cabinet Office that they should be retained as they are perceived by the public as having added gravitas.

Notwithstanding the rejection of this key recommendation, the Inquiries Bill does respond to most of the other important findings of the Law Commission. The commission found that the very foundations of this bill—the 1908 Act—was in itself antiquated, confusing, and brought unnecessary and costly constraints to the process of inquiries. It also considered that ministerial inquiries, while they are often quick and cost-effective, have little protection in place for those taking part, or even help in understanding how processes such as judicial review or the Official Information Act apply to them.

So now we have this new bill, to make the difference. The Māori Party supports the commitment to what seem to be common-sense improvements. It makes good sense that relevant departments can grant legal assistance funding for specified persons to appear before an inquiry. It is a thoroughly sensible expectation that members must act independently, impartially, and fairly. And it is a good idea that unless there are particular terms of reference an inquiry can be conducted as an inquiry sees fit—as long as it complies with rules of natural justice.

I do not see any value in the addition of hefty fines in the laws created by this House. There isno benefit in that. The bill recommends that penalties for disobedience in regard to an inquiry’s orders are pushed up from a maximum of $1,000 to a maximum of $10,000. The various offences that earn this fine include failing to attend or give evidence, or disrupting proceedings. If that is not Draconian enough, the bill now provides that an inquiry may make an order awarding costs against a person if it is thought that person has unduly lengthened or obstructed the inquiry or added undue cost to the inquiry. Mind you, the idea of fining members in this House for the practice of filibustering—that peculiarly parliamentary practice of obstructing legislation by a range of delaying tactics—has some appeal!

During the passage of this bill, we intend to support the intention to modernise and reform inquiries laws by tabling an amendment that will require all inquiries to recognise the Treaty of Waitangi in their deliberations. Some of the considerations that might be reviewed in establishing a Treaty framework could be: Māori collectives should be considered part of the inquiry, as of right, rather than waiting for an individualised invitation; Māori members should be appointed on their knowledge base, not merely by virtue of having whakapapa Māori; the findings of the inquiry should be reviewed from a Treaty perspective; members of inquiries should be required to attend public hui or meetings associated with the inquiry, to assist them in refining their understanding on the views relevant to Māori.

In his paper reflecting on the Royal Commission on Genetic Modification, renowned Māori academic and lawyer Moana Jackson described the way in which the commission responded to Māori views as the redefining of the Treaty of Waitangi as akin to “an exquisite politeness”. This phrase itself came from a comment from former MP Simon Upton that “Māori have been listened to with exquisite politeness and cosmic tact and then basically passed by.” So perhaps the time for politeness—exquisite, cosmic, or otherwise—when it comes to protecting and honouring te Tiriti o Waitangi has run its course.

The Treaty requires more than being passed by. There are critical constitutional issues at heart, as well as social and economic imperatives, that any issues affecting tangata whenua are dealt with in the context of a meaningful Treaty relationship between our people and the Crown. This bill, then, is another component of the constitutional review agenda. We will support it at this, its first reading, and look forward to the subsequent debates. Greetings to us all. ]

LOUISE UPSTON (National—Taupō) : I am pleased to have the opportunity to stand and speak in support of the Inquiries Bill. It is the third bill that has been before the House today that has been supported across the House. I am sure New Zealanders will be pleased to see that this House works together incredibly well in putting forward bills that will benefit all New Zealanders. It is a bit of a recurring theme today. It feels like there should be a group hug by the end of the day, but I am not sure the members over there will be that way inclined.

Let us have a look at this particular bill. The current law that governs inquiries is the Commissions of Inquiry Act 1908. It is a little out of date and needs a bit of work. We all know that public inquiries have always played an important role in New Zealand society for much of our history, but it is interesting that commissions of inquiry have a much earlier history than 1908. Their introduction goes back to the signing of the Domesday Book in the 11th century. The creation of the Domesday Book was the first time the Crown had examined its own workings and modified its powers. The Domesday Book was the result of research and recommendation by agents of the Crown and is referred to as perhaps the first royal commission. That is enough of a history lesson on how commissions of inquiry came about.

In 2006 the Law Commission reviewed the current law regarding public inquiries and published quite a lengthy document in May 2008, which called for and in fact was entitled A New Inquiries Act. It identified some of the issues with the 1908 Act, including its being over 100 years old and antiquated and that many of the provisions are outdated. The need has been to make this legislation come into this century and to look at some of the problems that were identified. One of the issues is the cost and duration of commissions of inquiry and royal commissions. It is important at this time—at any time—that we be looking to be efficient, in terms of both time and money, and commissions of inquiry are not exempt from that. One of the other issues the Law Commission identified was the lack of flexible statutory inquiry for Ministers. Those were a couple of the problems that the report from the Law Commission came out with, with the intention of solving. Many members have spoken on the bill today and given a whole range of examples of inquiries. The one that stood out for me was the Erebus royal commission, which was about Air New Zealand and headed by Justice Mahon. That one stood out for me, of all the list of inquiries I looked into.

The Inquiries Bill will make some important changes so that there is an express power for inquiries to be postponed or suspended where an investigation into the circumstances can be undertaken and where the inquiry may prejudice the investigation or interested parties. There is also the inclusion in the bill of a maximum fine of $10,000 if somebody does not provide the evidence or documentation that he or she is required to by an inquiry. The bill also formalises the role of the Department of Internal Affairs in administering all types of inquiries.

There has been a lot of discussion. There is not a lot more that I will add at this point, but I will just say at the first reading of the Inquiries Bill that I commend it to the House.

CAROL BEAUMONT (Labour) : Tēnā koe, Mr Deputy Speaker. I rise to support the Inquiries Bill. As others have said, this bill is about modernising a very important process in our system—the inquiry process. I will start by acknowledging the Hon Rick Barker and by noting that this legislation is yet another piece of work undertaken by the previous Labour Government.

I want to look at some of the aspects of the bill. First of all, the bill establishes two new types of inquiry: public and Government inquiries. Public inquiries would be appointed by the Governor-General to inquire into matters of significant public importance. Government inquiries would be appointed by, and would report directly to, a Minister, and would be used for smaller and more immediate issues. The bill also reforms and modernises the inquiry law, and, as others have mentioned, follows the Law Commission review. That review recommended replacing royal commissions, but the bill ensures that they are retained under the new law. The bill sets out criteria for public access to inquiries and their documentation. It provides for funding for legal representation for those participating in inquiries, if this is warranted, and provides a range of sanctions to improve the ability to control behaviour surrounding inquiries and to avoid abuses of their process.

As a number of people have commented, the Law Commission report A New Inquiries Act identified three broad problems with the existing inquiry structure. First of all, the current Commissions of Inquiry Act 1908 is antiquated, and has been amended many times, sometimes in response to one-off situations. Some provisions in there are quite confusing. The view was that a thorough re-examination was needed. The report also noted that royal commissions and commissions of inquiry are very costly, with legalistic procedures. Thirdly, it was noted that there has been an increasing preference for non-statutory ministerial inquiries, but those currently take place outside of a statutory framework.

The Law Commission proposed a number of new provisions for a new inquiries Act, and I want to talk a little more about them. One of the things noted in this whole process was the importance of inquiries. I think it is worth noting why they are important. Inquiries play a key role in our democratic system. They provide an independent response to matters of public importance that cannot be adequately dealt with by permanent investigatory or statutory bodies. They can be essential tools for reassuring and obtaining public confidence. I think that is really important. They provide a sense of accountability, find out what happened, and develop new policy proposals. The fact that by nature they are one-off means that they can be adapted to suit unique issues by way of the terms of reference, the composition, the budget, and so on.

I think the debate about royal commissions was a very interesting one, because the Law Commission itself felt that royal commissions should go. It concluded that they were adding an unnecessary complexity to the inquiry landscape. The alternative view, and the one that prevailed, was that the new Act should apply to royal commissions in a similar way to the 1908 Act. As has already been mentioned, a royal commission is seen to give added gravitas. One of the purposes of inquiries—as I have just said—is to assure the public that the matter is being given serious and independent consideration. Probably, there are situations where only the appointment of a royal commission will provide that assurance.

Other speakers have mentioned some royal commissions that have taken place, and it was an interesting process looking through them. I thought I might add a few to the debate, as well. The 1966 Royal Commission on Workers’ Compensation undertaken by Justice Woodhouse was a very important one. I hope it will not be undermined over the course of this term of a National Government. We will wait and see.

The 1975 Royal Commission to Inquire into and Report upon Contraception, Sterilisation, and Abortion was another very significant inquiry in New Zealand’s history. I think Ms Upston has already mentioned that in 1980 there was the Royal Commission to Inquire into and Report upon the Crash on Mount Erebus, Antarctica, which is one that I know many people in this House will remember. They will remember that tragedy. That same year there was the Royal Commission to Inquire into and Report upon the Circumstances of the Convictions of Arthur Allan Thomas for the Murders of David Harvey Crewe and Jeanette Lenore Crewe.

The 1985 Royal Commission on the Electoral System ended up being very important, and it created the system we now have. Most recently, as my colleagues Chris Hipkins and Darien Fenton previously talked about, there was the 2007 Royal Commission on Auckland Governance. It is very interesting to look at some of those royal commissions, and I think probably all members in the House can recall how significant those royal commissions have been in our history.

We are in the middle of seeing what happens as a result of the Royal Commission on Auckland Governance. I would be remiss not to reinforce the fact that, as others have mentioned, that royal commission did a great deal of work over 18 months, and much of it was overturned over a week by the Government. We are now in the process of seeing what the Government will make of the very, very important issue of what governance in Auckland should look like.

My colleagues have talked about areas requiring inquiry, and I thought I might add one, because I feel very strongly that there is an issue that we should be inquiring into immediately. It is the complete and utter disservice that has been done to New Zealand and our people by the Government’s lack of action on lifelong learning and skills development. I will talk about the need for an inquiry in that area.

This afternoon the Prime Minister made various statements in this House about his platform to work with unions and business. He talked about his supposed desire to make New Zealand more productive. Well, that is all very interesting, but there is a complete lack of action to really reinforce that. I am thinking particularly of some very, very sad things going on at the moment in the area of adult education. Let me talk to members about one project called Learning Representatives. It was endorsed by business and supported by Government. It was run by the union movement. It involved the creation of elected worker representatives in an enterprise to play a leadership role in encouraging workplace learning. Those people would be trained in that role that would make sure that their colleagues were aware of training opportunities, looking at possible career paths ahead of them, and dealing with literacy and numeracy problems. They would make sure that the workplace had a lifelong learning culture. That sounds like something that might be in the area of the Prime Minister’s interest in working with unions and business. It might be something in the area of his interest in making us all a bit more productive. It all certainly sounds pretty good. But what did we see in the Budget? We saw that its funding had been slashed. Funding for that programme—a very, very constructive programme—was slashed, so it will not be nearly as successful as it might have been.

Talking about slashing successful initiatives in the learning and skills area, let me mention the issue of adult learning. This surely should be the subject of an inquiry. It seems to me that something as cost-effective as adult and community education, something that makes such a huge difference in people’s lives, and something that gives adults the opportunity to engage with learning in order to develop new skills in areas that are really central to our economy should be the subject of an inquiry.

I have here the programme for the adult learning centre at Onehunga High School and One Tree Hill College. What are the areas we are looking at? Business and careers, computing, English literacy and numeracy, languages, self care and personal development. There are arts and crafts, and various other things, but those are the big-ticket items.

MICHAEL WOODHOUSE (National) : Tēnā koe, Mr Deputy Speaker. I am very happy to take a quick call on the Inquiries Bill.

Before I do, I want to just touch on a few things that young Mr Hipkins said at the start of his speech. In typical Labour fashion, he kicked off by saying that this was a Labour bill, and he took credit for it. But he added another dimension to that theme by saying that if Labour was in power, that would be exactly where the bill would stay—languishing on the Order Paper. Why? Because, according to Mr Hipkins, a Labour Government would introduce more important legislation. He tried to stop himself but he actually used those words. He said that Labour would be focusing on the things that matter. Where have we heard that?

What would those things that matter to Labour be? Perhaps last year’s efforts by the last remnants of the previous Labour Government are a guide to what those members would have done this year. Those members rammed through legislation on electoral finance under urgency, which was described by all commentators as an affront to democracy; passed a completely unworkable emissions trading scheme, which had more than 700 amendments that had never gone near a select committee; delivered a Budget that emptied the coffers in a futile attempt to gain the electorate’s favour on—

Mr DEPUTY SPEAKER: We are on the Inquiries Bill.

MICHAEL WOODHOUSE: Mr Hipkins opened the door. Well, if that is Labour’s idea of focusing on the things that matter, then it is a good thing that the public focused on its members and threw Labour out of office.

Let us talk about inquiries. We heard Darien Fenton talk about what sorts of inquiries she would have liked. There was a long list of others that we could have had in the last 9 years, such as “Doone-gate”, “paintergate”, “Dover-gate”—

Amy Adams: “Speedgate”.

MICHAEL WOODHOUSE: —“speedgate”. There were more gates than on Amy Adams’ farm. But it is important that we focus just for a little bit—

Hon Clayton Cosgrove: That was witty.

MICHAEL WOODHOUSE: The member may feel free to laugh. Mr Deputy Speaker, I am sure that you are chuckling on the inside.

I will touch on a couple of things that Mr Flavell raised in terms of the gravitas of this and the fact that the royal—

Hon Clayton Cosgrove: You wouldn’t know what gravitas is.

MICHAEL WOODHOUSE: I did; I learnt a very good word. The Law Commission mentioned that these inquiries did not need the strength of a royal appointment. The legislation as it was introduced by the previous Government did not agree with the Law Commission on that point, and I support that. Also, I think that the fines that are introduced certainly add to the importance of the commission. Commissions are very costly, and it behoves those who participate in them to take them seriously. I think the fines regime is something that the select committee might work on. But I support the bill and I look forward to it going to a select committee. Thanks.

Hon CLAYTON COSGROVE (Labour—Waimakariri) : I will take a brief call in the dead of night, as it were, as we move to close at 10 o’clock. I will touch on the comments of the previous speaker, Michael Woodhouse, when he said that his Government would focus on the things that matter.

This is an Inquiries Bill. Inquiries are very important to the general public, especially when they do not get their say. There are matters of controversy, whether they be political, criminal, or constitutional, that this bill will address in terms of modernising the inquiry function. Let us focus on one of the things that matter.

Tonight I propose an inquiry. The inquiry would be a very good one on one simple matter: the $2.5 million that has been gutted out of the special-needs budget. This affects mostly children. One in particular called Brittany Graham I will speak about a little later on. [Interruption] That $2.5 million, as National members chip away over there, to children—[Interruption] They do not like it, of course. They do not like it now. Let us focus on the things that matter. That is what that pompous individual over there said. The sum of $114,000 has been taken off Addington School, where there is a group of children some of whom who are able to walk for the first time with the aid of a ladder. They cannot control their bodily functions because they suffer from cerebral palsy.

The mother of one of the children, a constituent of mine, said to me that the previous Government kept her daughter alive for the last 9 years. She was a premature birth. The previous Government kept her daughter alive. It has spent a vast amount of taxpayers’ money helping this child. The funding is now being taken away—$114,000, which is a drop in the bucket in a Government’s Budget—and that will probably force that mum to withdraw that child from school. Those are the mum’s words. The mother said a very interesting thing. She said that if her daughter is withdrawn from school, “All the money that the taxpayers generously spent on my daughter will go down the toilet.”, because the costs—

Amy Adams: How’s this about the bill?

Hon CLAYTON COSGROVE: Because we will have an inquiry on that. That learned lawyer did not even have the intestinal fortitude to turn up at Papanui High School last night to face 500 people whose adult and community education funding she had gutted. She did not turn up there.

Mr DEPUTY SPEAKER: Inquiries Bill.

Hon CLAYTON COSGROVE: We would have had a great time having an inquiry last night.

I say there should be an inquiry with the stature of a royal commission. That mum said that for the amount of money that would be required to deal with her daughter’s health problems, which were being addressed through conductive education funded by the State every year for 9 years—

Hon Members: Talk about the bill.

Hon CLAYTON COSGROVE: I am sure that Julie Baker would relish an inquiry as to why the rug has been pulled out from under her 12-year-old daughter’s feet. Her 12-year-old daughter has been able to walk through therapy. Her mother would love an inquiry. Up until now her daughter has not been able to control her bowels, but as a result of the therapy that she has been getting because of the previous Government’s funding, she now has some dignity. I met that girl last week.

As those members chirp on and bleat over there about the things that do not matter, I say to that pompous member who has been here for 5 minutes that he might want to stand up and answer questions at an inquiry, to be called to give evidence to an inquiry, as to why his Government cut $2.5 million for those children. That would be an interesting inquiry, would it not? I think it would. I think, at the very least, yes, those members won; yes, they have the numbers; and, yes, they have a right to govern, but I think it was John McCain who said that elections have consequences. My word, do elections have consequences!

Louise Upston: “Thank goodness”, the public are saying. Thank goodness we have got the ability to do it!

Hon CLAYTON COSGROVE: I invite that genius from Taupō to go back to her electorate, talk to the parents who are involved in conductive education, and find the—

Mr DEPUTY SPEAKER: This is getting out of hand.

Hon Christopher Finlayson: I raise a point of order, Mr Speaker. Even taking into account “Mini-Mike’s” limitations, this speech is simply too far wide of the mark.

Mr DEPUTY SPEAKER: Although members can give examples of inquiries, and I have given some latitude to all speakers tonight, I ask the member to come back to what the bill is about. I want quietness from the Labour side of the House. Interjections are fine, but that last outrage was unacceptable. The member will confine his comments to the bill, please.

Hon CLAYTON COSGROVE: Absolutely. I will do what every other member has done tonight, and that is refer to a list of inquiries. I take no offence at “Tinkerbell’s” intervention from over on that side of the House. He can call me names.

Mr DEPUTY SPEAKER: When we are referring to members, we refer to them by their names.

Hon CLAYTON COSGROVE: Well, he can do the same to me.

Mr DEPUTY SPEAKER: I am saying to all members that we refer to members by their names.

Hon CLAYTON COSGROVE: Absolutely. You have to be able to take it, I say to Mr Finlayson, if you are going to dish it out.

Hon Christopher Finlayson: I raise a point of order, Mr Speaker. The member has been here long enough to know that, as Mr Hipkins would say on a point of order, one cannot say “you”. The member has his limitations, but he really must sharpen up.

Mr DEPUTY SPEAKER: The point is taken.

Hon CLAYTON COSGROVE: I am indebted to that learned gentleman, who could not even become a Queen’s Counsel, after being a senior partner in a law firm. What a genius that member is.

I really look forward to the passage of this bill. As we go—

Hon Christopher Finlayson: “Mr Comb-over.”

Hon CLAYTON COSGROVE: Oh, there he goes again—old “Tinkerbell”; poor old soul that he is. All he can do is chirp from the sidelines. It would be really nice if Mr Finlayson got up and, as a Cabinet Minister, addressed some of the points I have made about an inquiry into conductive education. It may be that, as a learned lawyer, he in a past life was called upon to represent some of those parents in an inquiry. Maybe he has, perhaps in a court of law, advocated for some of those parents. I doubt it, but maybe he has. If he has, I would be grateful if he would tell us. I would be indebted to him. But it would be very interesting for the Cabinet Minister who made that decision to be on the sharp end of an inquiry—

Hon Member: Go on!

Hon CLAYTON COSGROVE:—it would be a sharp end, too—and to be forced to give an explanation to the people of New Zealand for his actions.

I support this bill. It is very interesting to elicit the colourful responses, because they are called guilt, they are called shame, and that is why those people get so upset. These issues are sharp issues, they are the issues that matter, and I invite some of these very gutsy members to get up, front up to an inquiry or otherwise, and explain how they have cut the parents of this country off at the knees.

ALLAN PEACHEY (National—Tāmaki) : I support the Inquiries Bill and I commend it to the House.

• Bill read a first time.

• Bill referred to the Government Administration Committee.