Hon DAVID CUNLIFFE (Minister of Health) on behalf of the Minister for Biosecurity: I move, That the Biosecurity Amendment Bill (No 4) and the Hazardous Substances and New Organisms Amendment Bill (No 2) be now read a third time. The Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill was introduced in response to a December 2007 Court of Appeal judgment concerning an import health standard under the Biosecurity Act that had been issued by the Ministry of Agriculture and Forestry. The court’s judgment was confined to the particular import health standard before it, which was for Australian honey, but the court’s reasoning applied very broadly to most kinds of imported goods. In short, the court stated that all new organisms that might be imported incidentally with imported goods require approval under the Hazardous Substances and New Organisms Act. That created an unworkable legal framework for the management of biosecurity risks at the border. The court’s judgment resulted in legal vulnerability for most, if not all, existing health standards and it made it necessary to suspend issuing any new import health standards or amending any existing ones. This was clearly an untenable state of affairs and made it necessary to respond rapidly with amending legislation. I am pleased that most of the parties represented in this House and those on the Primary Production Committee, which considered the bill, have recognised the need for prompt legislative amendment and support this legislation.

The key change the legislation makes is to confirm that the Biosecurity Act, rather than the Hazardous Substances and New Organisms Act, is the correct statute for making decisions on incidentally imported new organisms. This is the way we understand Parliament intended the two Acts would operate, and this is how we had been operating until the Court of Appeal decision. It is also the way that officials from the relevant agencies agree that the Acts should work. Suggestions have been made from some quarters that this legislation is the result of some kind of turf war between agencies. I can assure members that the Ministry of Agriculture and Forestry, the Ministry for the Environment, and the Environmental Risk Management Authority have worked closely in developing the legislation, and are in full support of it.

Some concerns have also been expressed about the involvement of the Department of Conservation in the development of the legislation. Following the Committee stage of the legislation earlier this week, it should now be clear to all members that the department was closely consulted on the development of the legislation and on the key Cabinet paper. The Biosecurity Act and the Hazardous Substances and New Organisms Act were designed to work in partnership to protect New Zealand from the risks associated with the importation of organisms with risk goods, with the Hazardous Substances and New Organisms Act covering the deliberate importation of new organisms. The amendments will ensure that the Acts can work in partnership more effectively without compromising the level of protection needed for New Zealand.

The legislation was introduced into the House on 12 February this year. It was read for the first time on 19 February, and was referred to the Primary Production Committee for consideration. The committee heard 15 of a total of 53 submissions that were received on the legislation. On behalf of the Minister for Biosecurity I would like to again thank the members of the Primary Production Committee for their valuable work on the bill. They had to tackle an issue arising from the interface between two quite complex Acts in a very tight time frame. The committee worked hard to quickly gain an understanding of the problems created by the Court of Appeal judgment while reviewing the concerns raised by a number of submitters. The select committee did not agree with the proposals from some submitters that substantial amendments should be made to the importation provisions of the Biosecurity Act. This, I believe, was the correct approach to take with legislation that had been developed to do no more and no less than to resolve the problems created by the Court of Appeal judgment and that was being progressed quickly for that purpose.

However, the select committee did amend the legislation to provide for an independent review process that can be used in cases where significant concerns have arisen during consideration or consultation over an import health standard. The Ministry of Agriculture and Forestry develops its import health standards by following a process that includes peer review and consultation. The ministry engages with its various stakeholders in developing import health standards, and most import health standards are developed without substantial disagreements. On some occasions, however, the process for developing an import health standard becomes affected by a protracted dispute over some aspect of the ministry’s risk management decisions. I would like to see the new provision for independent review used as a means of moving forward in those few cases where the import health standard development process has become contentious.

The select committee also grappled with how best to deal with the import health standard for Australian honey. On the one hand, the National Beekeepers’ Association had obtained a court declaration that no honey containing Paenibacillus alvei, a micro-organism, could be imported without an approval under the Hazardous Substances and New Organisms Act. On the other hand, the Hazardous Substances and New Organisms Act was not suited to assessing the risks from passenger new organisms, and the select committee had legal advice confirming that there are no constitutional reasons not to validate the import health standard for Australian honey. I understand that a number of members considered it was essential that there should be no imports of Australian honey until an independent review is completed. The Supplementary Order Paper to make sure that the legislation has this effect has been tabled by the Minister for Biosecurity during the Committee stage and it has been agreed to by the Committee of the whole House.

I endorse the common-sense approach of ensuring that no imports of Australian honey should be permitted until the review is completed. Notwithstanding this, it is important that the review is completed in a timely manner and that it focuses on only the key issues that have previously been disputed by the National Beekeepers’ Association. The process for developing the import health standard for Australian honey goes back a period of some years and has already included extensive consultation and peer review. I would hope that the review can be completed within a period that is close to the 90-day period initially recommended by the select committee, so that final decisions can be made and all parties to the issue can then move on.

In closing, I thank the members of the Primary Production Committee again for their work on the legislation, and I commend the legislation to the House.

SHANE ARDERN (National—Taranaki-King Country) : I thank the Minister David Cunliffe for his comments about the Primary Production Committee, and he was right. The select committee did go about its work in a studious fashion, within a very short time frame. I was one who spoke in the second reading debate on this legislation about the very short time the select committee was given, and at that point my view was that it was an unnecessarily tight time frame. But once we were made aware of the Crown Law Office opinion, which was that all the import health standards that were before officials from the Ministry of Agriculture and Forestry and Biosecurity New Zealand had to cease being developed further from the time of the Court of Appeal case, it became obvious to us fairly quickly that there was a need to move on as sensibly as possible.

This has been an interesting exercise in the sense that one of our country’s smaller export industries has demonstrated overwhelmingly, I think, that if it raises its concerns strongly enough and with enough sensible scientific evidence to back up the issue, then Parliament will take notice, particularly once the industry has won a Court of Appeal case. This legislation came about simply because the Court of Appeal case highlighted the overlap that existed between the Biosecurity Act 1993 and the Hazardous Substances and New Organisms Act 1996. Therefore, the moves today are supported by the National Party because it was necessary to tidy that uncertainty up.

It has also been demonstrated that when a group of New Zealanders who believe in the democratic process come to Parliament to protest and find that their protest is not accepted or not believed, there is a final point of appeal in this land where they can take their case. I congratulate those within the National Beekeepers’ Association on doing that. It demonstrates overwhelmingly that if we are determined enough we can still have success against what seems to be an insurmountable bureaucratic process, so I congratulate the association.

At the end of this process we now have an amended piece of legislation, or two Acts that have been amended, and we also have this independent review panel that the Minister spoke of. It is my sincere hope that this independent review panel will be allowed to carry out its work in the way that was intended by this Parliament. It should be independent, it should be able to attract the international or national—if that is the case—expertise that it can bring together, and at the end the scientific evidence that is brought to the argument, whichever way that may be, is compelling and is accepted. The bee-keeper industry itself said right at the outset that all it ever wanted was to have the opportunity for the science around this import health standard to be tested. This Parliament is today granting it that right. I thank the Minister for his involvement, particularly in clearing up, through the Supplementary Order Paper that was introduced in the Committee stage, the overlap that existed in the process.

I also say that this will not be the last time these issues are debated in this Parliament. I may be in a minority, I am not sure, but I believe there are some unfinished amendments to the Biosecurity Act and potentially the Hazardous Substances and New Organisms Act. I think over time further development will take place in the way that we not only introduce import health standards but in the way that we administer those import health standards, and in the role of the director-general and the new structure of the Ministry of Agriculture and Forestry. We should bear in mind that the structure we have in our Ministry of Agriculture and Forestry at the moment, in regard to this stuff, is relatively new, after the ministry itself went through a major reform not that long ago. As that reform beds in and we are better able to see, in a more transparent way, where there may or may not be weaknesses in the Act, further legislative change will happen.

The debate that is still unresolved I guess to some extent—and it was highlighted in the case of the Paenibacillus alvei importation—is what we do when there is a known passenger organism coming in with a known import that is deliberately being imported. What do we do if the scientific evidence, or the process that we place that organism in or through, is not as robust or not seen to be as robust as that of a deliberate import? What do we do in those circumstances? I think to some extent the independent science-based panel hopefully will answer some of those questions.

Further, I think the argument about our trading partners internationally saying that we are placing legislative roadblocks in the way of further trade will be overcome substantially by the creation of this independent science body. Once the scientists have considered it—and they must be transparent in the way they do that—and their work is peer reviewed internationally and domestically, then I think those who would put up a case at World Trade Organization meetings, or other such, on a sanitary or phytosanitary argument will have their arguments substantially weakened. To that end I think we have achieved not only an outlet for those who feel aggrieved about the process but some transparency in terms of the way we have arrived at whatever decision we arrive at, at the time.

To those in the ministry who have concerns about this process, I say that I think it will be a case of just toughing it out for a while. Certainly, at the end of the day, our cousins across the Tasman, the Australians, whom I know the ministry is in delicate discussions with presently, will have this science body to come back to and discuss these issues with.

I also say that, at the end of the day, if the case of those who are in industries is strong enough, regardless of where those industries are—and I know that we will go through probably a long and serious debate in the meat and wool industries at the moment—they can rest assured that if they come to the Parliament with sensible and substantial legislation, then this Parliament will respond, and that is one of the good things about New Zealand. With those words it is my privilege to stand in the House today in support of the passage of this legislation.

Dr ASHRAF CHOUDHARY (Labour) : Aleikum salaam. I will take this brief call in support of this legislation, because I believe that the amendments to the Biosecurity Act and the Hazardous Substances and New Organisms Act are very important to make sure of and clarify the role of the Hazardous Substances and New Organisms Act as well as the Biosecurity Act. In saying so, I also add that this Labour-led Government is very proud of taking strong leadership in our biosecurity challenge. This country, and the agriculture in this country, depend on exports. Our economy is based on exports, so we take very seriously any issues to do with biosecurity. Our biosecurity people at our airports and other ports are always alert to any of these potentially harmful organisms arriving in New Zealand, whether intentionally imported or entering as passenger organisms. So in this bill we have clarified the role of the Biosecurity Act, as well as the Hazardous Substances and New Organisms Act.

This matter arose from the pathogen Paenibacillus alvei, which comes in honey. As has previously been said by a speaker on the other side, there are a number of issues here. One of the key issues has been the scientific evidence around whether this organism is a potential problem to honey and honey bees. In Australia, scientists have found no problem with this particular organism or its having an adverse effect on honey or honey bees. I understand that a New Zealand scientist made a submission that suggested there are potential problems. We have to be very careful, in scientific terms, about whether something has a clear, defined impact on something else. In this case, the scientist has been suggesting there is a potential problem with this organism. It is very important for us to make sure this organism does not have any problems, so that is why we have this bill and the amendment suggested through the Primary Production Committee that an independent scientific review panel has to be set up. After the bill has been enacted, this panel can look at this issue, if the bee industry wants it to, and hopefully clarify any problems. In the meantime, we have agreed that the honey should not be imported from Australia for 90 days. I think that that is important, to give some confidence to the bee industry. Since it won the case in the Court of Appeal the industry has had some fruits from its victory, if you like, and it will now have the opportunity to present its case and its views about this honey to the panel.

This bill also validates the import health standards relating to honey and honey bee products during this period. I think that that is a very good amendment, and a clarification. Our biosecurity people—the Ministry of Agriculture and Forestry, the Environmental Risk Management Authority, and other agencies—were in a bit of a quandary as to what to do next. But clearly there was advice from the Crown Law Office that this bill had to be put in place to make sure that the issues were clarified, for both the honey bee issue as well as for any other potential problems that could occur—for example, problems in the pork industry, as well. With those few words, I commend this bill to the House.

ERIC ROY (National—Invercargill) : A lot has been said about this legislation. We dealt with most of its stages in the House this week, so I do not intend to take a very long call. National is happy to support the decisions we have got to through the process thus far. I am quite happy about the discussion the other night in the Committee of the whole House when we went through the legislation. The Minister tabled a further amendment on a Supplementary Order Paper that gave greater clarity around a couple of issues, and I am quite happy with the Minister’s response in relation to the process on the import health standard for honey coming from Australia. That process had already commenced in terms of the review, even though technically the review panel will not be set up until after the legislation is enacted. But the day in the sun—the 90 days that was requested—is already under way. I am very comfortable about this process.

This legislation essentially clarifies a demarcation issue as to how the process with regard to passenger organisms is handled at the border. This legislation not only puts us back to the process that has been followed since the enactment of the Hazardous Substances and New Organisms Act in 1996 but also puts in a layer of protection, which is the review panel. I know that we absolutely do not want to have any passenger organisms that propose any kind of risk to New Zealand coming here, at all. I think that that is the desire, the expectation, and the wish of every single person I know. Nevertheless, we live in a world where we import and we trade, so there are risks. It is a matter of minimising those risks to the extent that we have little or no risk.

The only basis upon which we can make decisions about risk is science, because, as an exporting nation, we expect other countries purchasing our goods to be able to believe in a robust system that ensures the security of the product we are selling. Science can be the only basis for that. Therefore, in terms of the review panel, a few elements need to be considered. First, the umbrella organisation of any group makes the application to have the review panel do its work. Secondly, the basis is science. Thirdly, the expectation is that the best possible people who can be sought or gained for that work—and that includes people with international experience—can peer review it. I think that makes the whole process as robust as it can be made.

This legislation, which is now in two bills, does three things. It clears up that demarcation issue, and it puts in place the review panel—the process—for where there are concerns now. Import health standards for honey coming out of Australia are one example. For people in the pig industry, with regard to the porcine endogenous retrovirus issue, we have acknowledged that they have made presentations to the Primary Production Committee and we say that their issue can be handled. There will be further issues down the line. We can expect that to happen, so we have the process in place to deal with them. The other element is retrospectivity. The bee-keeping industry, having won the Court of Appeal situation, deserves to undergo that process of having the review.

All in all, I think this is as fair, just, and robust a resolution to an issue that we could manage in the time frame. As my colleague Shane Ardern said, there will be times in the future when we need to deal to biosecurity issues. It is a matter of utmost importance to New Zealand. We must continue to address and refine rules around anything at all that impacts the security of New Zealand.

I have some sympathy for the bee-keepers. They are pretty bruised at the moment and are suffering probably more under the drought than any other industry in the agricultural sector. They are still getting used to living with varroa mite, and just at this time the issue of tutin poisoning has come up. Even though it is in a very small part of the industry, it has cast something of a slur over it, so bee-keepers are very bruised. I say to them again that we listened to what they had to say to the select committee, and we have ensured that they will be the first case—the test case—in terms of the review process. So with those few words I say that I am happy to support the legislation.

Hon TARIANA TURIA (Co-Leader—Māori Party) : Tēnā koe, Mr Assistant Speaker. Tēnā tātou katoa. At the start of this week, passengers on Air New Zealand flight 21 from Fiji were treated to a surprise—a surprise manual spraying when it was discovered that the aircraft’s biosecurity clearance had expired. Upon touchdown at Auckland, two Ministry of Agriculture and Forestry officers boarded the plane and fumigated everything in sight, leaving one adult with a sore throat and causing a baby to gag and vomit. As the passengers were quarantined, cooped up in a thick blanket of fog, no explanation was given for the unusual drenching. Passengers were left with no answers as to whether Air New Zealand should be held to account or the Ministry of Agriculture and Forestry.

In many ways, there are similarities between this one incident and the purpose of the legislation before the House today, which is to amend the Biosecurity Act 1993 and Hazardous Substances and New Organisms Act 1996 in order to clarify the relationship between these two Acts. As it transpired, Air New Zealand was responsible for the biosecurity clearance of the aircraft having expired, and for emergency procedures being suddenly required at border control. The central connection between the Fiji flight fumigation and these two bills is all to do with the level of information and clarity of roles between two separate organisations.

The Māori Party has taken a keen interest in the progress of this legislation, as we have been concerned that the gap in the current statutory framework, which the court case brought by the National Beekeepers’ Association highlights, has created potential for confusion and conflict. This is a bill that turns that old adage “One standard for all.” on its head. The two older parties—Labour and National—appear to be very happy to oppose this principle, opting instead to give preference to perceived trade benefits over and above the long-term biosecurity of the nation.

The deliberate introduction of a new organism requires an approval under the Hazardous Substances and New Organisms Act, but when that known new organism is a hitchhiker organism it is now able to slip in with only the scrutiny of the Biosecurity Act. The Māori Party is very clear that the essence of the Court of Appeal decision in the National Beekeepers’ Association of New Zealand v the Chief Executive of the Ministry of Agriculture and Forestry case should be upheld. That decision determined that the gazetted new organism Paenibacillus alvei is to first gain approval for import into New Zealand under the Hazardous Substances and New Organisms Act before bee products from Australia can be imported. The House is well aware that the Minister has always maintained that this decision created an unworkable legal framework for the management of biosecurity risks at the border. Yet, as my questions to the House earlier this week revealed, this so-called unworkable regime has actually been working perfectly well for many years.

The 2005 briefing to the incoming Minister advised the new Minister that all new organisms entering New Zealand, whether entering deliberately or unintentionally, were receiving one standard of scrutiny under the Hazardous Substances and New Organisms Act. Accordingly, once an organism has been identified as being new, the Ministry of Agriculture and Forestry is legally prevented from giving it biosecurity clearance until it has been approved under the Act. This approval can be given only by the Environmental Risk Management Authority. There is very little difference between this departmental briefing and what the Court of Appeal said in its judgment. Yet 3 years down the track the nation is suddenly in a spin to amend the law.

The Māori Party has been extremely concerned at the seriously shortened period of time that has been allocated to this issue. We were alarmed that submitters had little more than a week to prepare their submissions, and that the select committee effectively had only a fortnight to consider the bill. I congratulate the select committee on the hard work it put in to this particular legislation.

We have, however, been very appreciative that the changes that have been made throughout this process related to the suspension of powers to give biosecurity clearance. We were concerned that under the bill as it stood, it would have been lawful for the Ministry of Agriculture and Forestry to give clearances to shipments of Australian honey within 90 days of the bills’ getting the Royal Assent, even if the independent review panel set up under the bill had not yet been set up, and even if the import health standard allowing honey imports had not been reviewed. It is a Clayton’s example of policy making.

We submitted a Supplementary Order Paper to this effect at the Committee of the whole House stage, and were pleased to see the issue clarified so that there will be a 90-day period for a review to take place, and the review will be held before any importation of Australian honey is possible. Our proposal in Supplementary Order Paper 189 was to ensure that the 90-day suspension period can come into effect only after the independent review panel has become operational and not before. In effect, we believe that this amendment clarified the intentions of the Primary Production Committee to allow the import health standard for Australian honey to be looked at afresh. Although we are pleased that the changes around clause 7A have been supported, we still remain of the view that this bill amounts to the serious weakening of our biosecurity controls at the border.

The importance of protecting our New Zealand bees from potentially harmful organisms must be understood right across this House as an issue of national importance. Bee pollination is essential for grass, crops, trees, and flowers. The entire infrastructure of our primary industry is dependent upon it. The effect of this legislation on our native flora and fauna has been minimised, the march towards free trade dominating over our biosecurity rights. The irony is, of course, that if our honey bees are indeed compromised, the damage to our future trade might well be unimaginable. Our colleague Jeanette Fitzsimons raised the issue during the second reading debate, and the Department of Conservation official advice had been muzzled following its identifying that there were significant gaps in the analysis leading up to this bill. How rich is it that the agency charged with key responsibility for protecting our natural heritage and our precious indigenous flora and fauna was not consulted on the further iterations of the bill?

Yet again, this bill represents the practice of this Government to listen to those whom it wants to listen to—which, in this case, is Crown Law and the Ministry of Agriculture and Forestry—while ignoring the bulk of submitters who fronted up with their concerns. Those submitters included the pork industry, with its Māori pig farmers; the National Beekeepers’ Association, with its Māori bee-keepers, especially those in Ngāti Porou and Te Whānau-a-Apanui, who specialise in the production of mānuka honey; Federated Farmers, with its Māori farmers; and Meat and Wool New Zealand, with its Māori meat and wool producers. The Government’s selective hearing has been deemed necessary in its shameless pursuit of free trade. The whole point about allowing Australian honey into the country is nothing to do with having robust biosecurity at the borders. It is all about free trade—apples for honey.

As I noted during the second reading debate, the decision to import honey is a consequence of this Government’s penchant for trade agreements with Australia, particularly the desire to export our apples there. So, once again, a divide-and-rule tactic is being applied, playing off the bee-keepers’ interests against those of the apple producers. Māori people and the Māori Party know these tactics only too well. Biosecurity protection has just become another commodity like human rights and slave labour, which the Government has been prepared to sacrifice for trade and the fear of breaching New Zealand’s World Trade Organization obligations. However, the sad upshot of this decision is that by giving priority to the World Trade Organization obligations we open ourselves up to a very real risk of not properly protecting our own flora and fauna, and, in the process, putting at risk of contamination a whole range of primary industries.

We have consistently put before the House our understanding that free-trade agreements compromise our sovereignty by overriding domestic law. We have always argued for fair trade—not free trade—which does not compromise our sovereignty, threaten the status of the Treaty, impact on work standards and wage rates, or make us complicit in other nations’ shameless lack of respect for human rights, indigenous rights, and the environment. Those are arguments that, of course, are uppermost in our minds as all eyes are fixed on China. There is simply too much at stake here, and the Māori Party will not support this bill.

METIRIA TUREI (Green) : Tēnā koe, Mr Assistant Speaker. This Labour-led minority Government has joined in a grand coalition with the National Party to defeat the biosecurity legislation and, as a result, put this country’s economy and the environment on which our economy is built at serious risk. The passage of this legislation is irredeemably tainted by the deceptive information made available to the New Zealand public about the Government’s true policy intent. The legislation has had only the most superficial scrutiny, and it will result in increased threats to our primary production and tourism sectors, which are the two leading economic sectors in New Zealand.

The Greens fully support those ordinary Kiwi businesses, represented by the National Beekeepers’ Association, that fought the Government in the courts to prevent the importation of honey that was highly likely to contain the contaminant Paenibacillus alvei. The Court of Appeal in its judgment said that an unintentionally introduced organism is not necessarily unknown. It can be a known organism, and therefore it should require the approval of the Environmental Risk Management Authority prior to its importation as a passenger organism into New Zealand. This approval should be required even if that introduction is unintentional. The court concluded that biosecurity import health standards for honey are contrary to the Hazardous Substances and New Organisms Act and that therefore the honey cannot be legally imported. The decision did highlight a gap in the law. It is true that the Environmental Risk Management Authority does not have an absolutely clear set of tools to deal with known passenger organisms. Some changes to the Hazardous Substances and New Organisms Act would have been both wise and helpful.

But the Government chose not to make changes to the Act. Instead, it is making changes to biosecurity legislation in order to allow the Ministry of Agriculture and Forestry—and not the Environmental Risk Management Authority—to make the assessments of known passenger organisms. So why is the Government giving the Ministry of Agriculture and Forestry this responsibility, and not the authority? The Environmental Risk Management Authority is responsible for the scientific risk assessment of new organisms—that is its job. The Hazardous Substances and New Organisms Act has the precautionary principle that ensures that New Zealand will have the greatest possible level of protection from contamination from new organisms. The Government is giving the ministry this responsibility because the ministry, through the Biosecurity Act, does not have the same high standards or the same rigorous process. The Ministry of Agriculture and Forestry will let more passenger organisms through. It will do less to protect New Zealand’s economy and the environment.

The Government is giving the ministry the responsibility because—as was highlighted by my colleague Tariana Turia from the Māori Party—the ministry’s concern and the Minister for Biosecurity’s concern is the promotion and protection of trade, in terms of the World Trade Organization and other agreements, and not the protection of New Zealand businesses. Mr Anderton admitted this on Tuesday during the Committee stage. He is primarily concerned about trade, not the protection of our environment and the economy from new organisms that could have devastating effects. In part, as I have mentioned, this is because the Government has signed international trade agreements that prevent New Zealand from having the law that will provide a rigorous system to protect us. And, partly, the other reason is that this Government wants, eventually, to allow genetically modified organisms into New Zealand through the back door.

It is true that this legislation has a definition in it that excludes GMOs—absolutely, that is the case at least for the moment. But the policy behind the legislation clearly shows that the intention of the Ministry of Agriculture and Forestry was to enable GMOs to be imported as passenger organisms. So why has it not done that, now that it has the opportunity of passing the legislation? Well, it is an election year, and this Labour-led minority Government knows that it cannot pass a bill in an election year that will let GMOs into this country. Where is the proof of this policy? Where is the proof of my argument? It is in a Ministry of Agriculture and Forestry document from 2006, called Fixing problems in new organisms, including genetically modified organisms, unintentionally introduced into New Zealand. It is clear from this document that the ministry’s intention is to exclude GMOs from the provisions of the legislation after the election—that is, to enable GMOs to be brought in as known passenger organisms.

The Minister has used the Court of Appeal decision in the honey import case as an opportunity to bring this legislation before the House. We should not forget that this legislation was prepared as early as 2006, when the policy was developed. We have been waiting a long time to be able to do this. We have heard all the excuses and accusations from the Minister against the Greens and our opposition to this legislation, but they cannot hide his culpability in deceiving the public about the real intentions of this legislation—that is, to enable the introduction of GMOs as a passenger organism. This legislation puts our economy at risk, and to see that one needs only to look at who opposed it at the Primary Production Committee: Meat and Wool New Zealand, the deer industry, the pork industry, the Dairy Companies Association of New Zealand, Fonterra, the National Beekeepers’ Association, the Pig Veterinary Society, Retail Meat New Zealand, and even our mates Federated Farmers. They oppose this bill because of the risk it poses to them and to our economy.

One of the organisations that has a responsibility for the protection of our environment is, of course, the Department of Conservation. That department had very serious reservations about this bill. The Ministry of Agriculture and Forestry reported in January of last year that the Department of Conservation did not support the proposal, that it believed there were significant gaps in the analysis, and that the document failed to meet the criteria identified by the working-group for an effective system. In an email from the Department of Conservation to the Ministry for the Environment—which was released under the Official Information Act; officials did not make it available in any other way—the Department of Conservation makes it clear that it has serious concerns; that the proposal is likely to reduce the quality of risk assessment; that it would therefore expose New Zealand to greater risks from new organisms; that it would create an inconsistent system; and that it is unwarranted in relation to the scale of the problem.

Then again we had another email from the Department of Conservation a few weeks ago stating: “DOC also expressed the view in 2006 that the Biosecurity Act should have the minimum standards and a precautionary principle applied within it, as does HSNO Act. The Biosecurity Act currently lacks the transparency and certainty that the principles and such criteria provide in HSNO, and this poses risks. DOC still holds this view as of a few weeks ago and wishes to see it addressed.”

The fact is that this Government, in collusion with National, is putting this country’s economy and the environment at risk. This legislation has been passed through the process with extraordinary speed, avoiding as much public scrutiny as possible. There is even some suggestion in the documents that the Government would have preferred to have no select committee consideration of this legislation. In the meantime our economy and our primary production and tourism sectors are being put at risk.

The concern for the Green Party relates to New Zealand’s own ordinary Kiwi businesses. Ordinary New Zealand Kiwi businesses will now have to deal with a regime that will allow the importation of known risky passenger organisms that could cause them significant economic cost. How are they expected to manage the cost of the Ministry of Agriculture and Forestry’s accepted level of contamination? The cost to Kiwi businesses simply to manage those contaminations, to deal with any publicity issues, and to manage the environmental and business impacts on their work is unknown. What the economic impacts will be is simply unknown. What the economic damage could be to these Kiwi businesses is unquantifiable. This Government, along with National, is allowing that to happen. It is allowing that risk to proceed.

We were very pleased to vote with the Māori Party and to work with it on its Supplementary Order Papers to make changes to the bill. We were pleased to force the Minister to expose his primary problem, which is that he wanted to protect the World Trade Organization agreements, not New Zealand businesses, and to allow for the unintentional but known introduction of passenger organisms. I feel proud that the Green Party has protected, as far as it could, the primary production sector, the tourism sector, our economy, and our environment. Along with our colleagues from the Māori Party, we have been the only ones standing up for the key economic sectors in this country, while National and Labour jointly make efforts to destroy them. It is a disgrace. We will be opposing this legislation and supporting organisations that continue to oppose this legislation in the future.

Hon LIANNE DALZIEL (Minister of Commerce) : I move, That the Securities (Local Authority Exemption) Amendment Bill be now read a third time. The exemption to sections in the Securities Act provided by this bill allows local authorities to meet reduced requirements when offering debt securities to the public. I say “reduced” because although a local authority will be exempt from producing a full prospectus signed by all councillors, it will still have to produce an investment statement containing specific product and provider information.

The broad policy objective of the Securities Act is to promote confidence in the financial markets, and an important aspect in achieving this outcome is to ensure that investors receive full, accurate, and timely disclosure of information material to their investment decisions. By reducing the disclosure requirements under the Securities Act, this exemption will place more reliance on the disclosure requirements of the Local Government Act when making information available. As has been discussed during the Committee of the whole House stage, the exemption provided for in the bill includes requirements relating to the investment statement required under the Securities Act, to make sure that specific additional information not expressly required in the local government reporting regime is readily accessible to investors and prospective investors in a local authority retail debt security. This additional information mainly focuses on the disclosure of current financial reports and on any material adverse circumstances relating to the local authority issuing the security.

The issuer is also required to state in the investment statement that the debt securities being offered are not guaranteed by the Crown, unless, of course, they are being guaranteed under the Public Finance Act 1989. This would normally appear in the prospectus, but without a prospectus it will need to go in the investment statement. As a consequence, the bill will provide for more detail in the investment statement and for the statement to identify information available in other documents. Not only do the added requirements to the investment statement help to ensure the provision of free, timely, and accurate information but they do so via a less onerous approach to that mandated for full disclosure under the Securities Act. They also ensure that there is no reduction in the financial reporting stringency required of local authorities, compared with that of companies.

Access to disclosure information enables investors to make informed decisions on the potential risks and returns of their investment choices, and to take responsibility for their investment decisions. By streamlining this process for local authorities the bill will positively impact the investment market in two ways. Firstly, the availability of local authorities securities on the retail market will provide investors with options to expand their investment portfolios, as well as give residents in a community an alternative means to participate in that community and the development of its infrastructure. I call that a win-win situation. Secondly, this will also be a positive for the local authority issuers. By providing another avenue for them to access capital, the bill will lead to more competitive pricing for local authorities debt, and consequently will create more accurate pricing in the market for debt products. That is another win-win situation.

Although this is a relatively short and streamlined amendment bill, it will nevertheless make an important contribution to the Government’s economic transformation agenda. By providing an alternative to the current funding options for local authorities, it will significantly impact regional and local development at both the business and social levels by contributing to the upgrade of available infrastructure that is necessary to efficiently service these areas. Therefore, the bill will progress the recommendation of the Shand report, which states that in order to spread costs over generations councils should make greater use of borrowing for long-term capital projects. The bill will also provide a valuable source of alternative funding for infrastructure assets, and in so doing it will help to facilitate the growth of New Zealand businesses and encourage innovation, entrepreneurialism, and new product development through access to a well-maintained regional infrastructure.

I again commend the Commerce Committee for its work in fine-tuning the bill. Also, I thank all of those who made submissions on the bill. I also place on record my gratitude to the officials who assisted with the development of this legislation. I am very proud of the fact that this was raised with the Government by local government last year, and now, in the first week of April, we will have the bill passed into law. I am confident that this bill, with the changes made to provide for the availability of more up-to-date financial information, will appropriately achieve the objectives of the disclosure regime of the Securities Act, as well as those of the Local Government Act. I commend the bill to the House.

Dr RICHARD WORTH (National) : In a nicely rounded and well-read speech, the Minister has explained the key elements of the Securities (Local Authority Exemption) Amendment Bill. I do not want to traverse that ground, at all; I would just like to deal with two points. The investment climate at the moment is particularly treacherous. I will come back to that point in a moment, but let me say that the merit of this bill, which National supports, is undoubted.

The bill will enable local authorities to access capital in a way that has been denied to them for a number of years. Effectively, the law, which is now being changed, made it just too onerous for local authorities to access public money, in two ways. First, it increased the issuance cost with the requirement to produce a prospectus. Second, it created an almost insurmountable hurdle, as all councillors are now, in the current legal regime, required to sign a prospectus. So we had the situation of a particular councillor, who had perhaps been elected to office on the basis of reducing council borrowing, who was simply not prepared to sign a prospectus for raising additional debt. What was the consequence? Well, the consequence was pretty much that local authorities stayed away from the retail market—it was all too hard. That is all to be undone, but undone in a way that still provides appropriate protection for the investment public. The Commerce Committee made a number of changes that were intended to strengthen those public rights in what it set out in changes to the bill by way of information disclosure.

It is, as I said, a very treacherous investment climate at the moment that New Zealand faces. One sees, for example, the collapse of Bridgecorp Holdings where 14,000 investors could lose $383 million, which is the latest estimate that we have at the moment. There have been 15 finance companies that have either failed or got into significant difficulty in the last 20 months—that is about $2 billion of investors’ money that has been affected. Earlier this week there was a report out that 2,000 investors in the failed Five Star Consumer Finance may expect even less of their $51 million back than was forecast, and there have been all the difficulties around Nathans Finance. Just today there was a media report indicating that Lombard shares had tumbled after the company had admitted strife, and it has announced a moratorium on payments by its finance company—and I see, just looking at the numbers there, that there will be huge losses again for investors.

So it is our hope—and I am sure it is the hope of both the Government and the National Party—that what we will see associated with the passage of the Securities (Local Authority Exemption) Amendment Bill is that the so-called mum and dad investors will take up local government stock again. That is an excellent outcome, because in the current period, where the quality of debt products has come under closer scrutiny, local authority paper is likely to be received extremely well by retail investors. It provides a broader range of investment grade credit, and that is an important initiative in improving the overall quality of savings products available to New Zealand investors.

The Minister has said, and I endorse what she has said, that when good legislation is before the House the National Party will give it the scrutiny that it deserves. We have seen, in a short time frame, this legislation almost passed into law. What lies ahead after the completion of this third reading is simply the Governor-General’s assent to the legislation—a good outcome, I would say.

Hon DAVID CUNLIFFE (Minister of Health) : It is a pleasure to take a brief call in support of the third reading of the Securities (Local Authority Exemption) Amendment Bill. The labour-led Government is committed to strengthening the way in which councils may operate and serve their constituencies. This bill will reduce compliance costs for local authorities and allow them greater ability to fund long-term investments such as infrastructure. I concur with the member who has just resumed his seat that in these current days long-term paper from local authorities will be an attractive complement to the securities market. The bill will ease the process for local authorities to offer securities to the public, and therefore to fund long-term projects. The Labour-led Government understands that current provisions to raise funds impose unnecessary compliance costs on local authorities and, therefore, prevent them from raising capital in the most effective manner.

The bill amends the Securities Act 1978 to exempt local authorities from the full disclosure requirements of the Act when issuing debt securities. That is because the level of disclosure required from local councils under the original Act was burdening them with unnecessary compliance costs—unnecessary because, of course, the nature of a council; the ownership of a council and its financial and governance structure—is clear from statute and does not need the full repetition that one would typically find in those kinds of disclosure statements. The original Act also, I understand, required all councillors to sign off on a prospectus, essentially requiring unanimous agreement in council for a project, or to issue a debt to fund a project. Changes to an exemption from those provisions will reduce compliance costs by easing the process for local authorities to offer those securities to the public. The bill will therefore provide a valuable source of alternative funding for infrastructure assets and provide investors with options to expand their investment portfolios, which is a positive move for the investment market.

It is worth remembering that in this context the Labour-led Government has taken a very strategic approach to infrastructure development and to partnership with local and regional councils. In my own fair city of Auckland—particularly the west of Auckland—that is nowhere more apparent than in New Lynn, where we currently have a line of cranes digging a large trench through the centre of our town in order to provide an underground railway system complete with a new station. The key point of this is that this is a decades-long investment that will transform the centre of that town, and provide for a completely new urban redevelopment in which some 20,000 additional people are expected to live. It is essential that this is done to the very highest standards of development, with a compelling long-term vision that suits both the transport infrastructure and the broader redevelopment goals, in keeping with the Auckland Regional Council’s regional growth strategy.

To use that one example, it therefore follows that it is essential that local and regional councils like Waitakere City Council, and the Auckland Regional Council and its subsidiary, the Auckland Regional Transport Authority, are able to take a long-term view to issuing debt securities, and to do so with the minimum necessary and appropriate compliance costs. Part of my work as a local MP has been to work with partner agencies to ensure that that long-term vision prevails upon the present, so that we do not make short-term decisions that could impact on the realisation of those long-term gains. It is therefore entirely appropriate that the Securities (Local Authority Exemption) Amendment Bill is in support of those objectives by facilitating lower-cost access to the kind of long-term bond and debt securities that are required to ensure that local authorities can take that type of perspective.

We all know that it is essentially good accounting practice to match the life of debt to the life of assets. That requires councils, which are increasingly under this Government’s Local Government Amendment Act, to be able to take a strategic and proactive approach to development. It requires them to be able to match their financial profiles to suit, and that will probably, over time, result in local authorities taking a somewhat more activist approach in debt markets. Therefore, the value of the potential savings from the bill, which has wide, bipartisan support in the House today, is likely to be magnified over time.

With those few words I repeat that this Government is committed to strengthening the way in which councils operate and serve their constituencies. The bill will reduce compliance costs and facilitate the kind of long-term strategic development that the country longs for, and, in particular, that the people of Auckland and west Auckland long for. Thank you.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā koe, Mr Assistant Speaker. Kia ora tātou, tō tātou tokotoru e noho atu nei. Ka nui te mihi ki a tātou.

[Greetings to you, Mr Assistant Speaker, and to we three seated here. Huge greetings to us.]

The origins of the Securities (Local Authority Exemption) Amendment Bill are an interesting irony. Those who argued that all activities be subject to the rules of business now suggest that the local authorities are being submerged under an avalanche of red tape and bureaucracy, specifically because of the very application of those rules.

We in the Māori Party agree with Local Government New Zealand that our local authorities are indeed subject to a rigorous schedule of planning and accountability regimes. There is an expectation that local government will abide by the commitments in its long-term council community plans, annual plans, and annual reports, all of which are subject to independent audit. Some parties in this House will criticise the level of planning documents in this sector and suggest that the detail is unnecessary, but the point of this bill is that those documents are of sufficient detail to exempt them from rules under the Securities Act when issuing debt securities.

But in considering rules and their proper application, our primary concern is more about whether the opportunities for engagement and cooperation between councils and Māori, as specified in the Local Government Act 2002, are actually taken up. All the best laid plans stand for zip if the intentions are not followed through. We want to see local government honour its statutory responsibilities and build stronger relationships with hapū, iwi, and Māori groups.

One of the most interesting issues set out in the rationale for this bill is the inappropriateness of the corporate governance principle of collective responsibility when applied to local authorities. At the start of this week, the Royal Commission of Inquiry into Auckland Governance offered an interesting perspective on this notion of collective responsibilities. The commission raised concerns that each of the eight councils in the Auckland region dealt with Māori issues in a different way, and that this lack of consistency may cause problems for Māori, particularly for those whose rohe cross a number of different council territories. Although problems with issuing debt securities can be dealt with simply by providing local authorities with an exemption to the current rules, it is the contention of the Māori Party that exempting councils from their obligations to Māori in the Local Government Act because of difficulties and tensions will never be an answer, and that the answer will certainly not be a simple one.

The full effect of this bill will be to provide local authorities with an exemption from the full disclosure requirements of the Securities Act 1978 when issuing debt securities to the public. That means it will no longer be necessary for local authorities to register a prospectus for the issue of debt securities. Currently, as I understand it, all elected members must sign the prospectus to ensure unanimous support for a project, and to ensure the subsequent issuing of debt to fund the project. Although we endorse the value of consensus decision-making as a general principle of best practice, the onus of having to achieve unanimous support has meant that one dissenting vote can prevent a debt security from being issued where one person simply refuses to sign.

Why this is a problem was made absolutely clear by the submission from Local Government New Zealand. It estimated that local authorities are undertaking some $30.8 billion in capital works in the next 10 years. The funding will be required for either network infrastructure, à la roads, sewage disposal, and water schemes, or for community infrastructure, such as libraries, sports grounds, and stadiums. This unprecedented growth spurt in infrastructural development will place considerable pressure on the financing capacity of our local authorities.

In this respect, if, as the bill contends, there are such obvious differences and duplications evident in meeting the disclosure requirements under the Securities Act 1978 and the Local Government Act 2002, then the Māori Party is happy to support any initiative that will assist and create efficiencies. We understand that only one council has been able to raise funds under the current dual disclosure regime—a situation that is obviously undesirable. We believe that the cost of infrastructural assets should be considered as a long-term investment in the well-being of the community. Obviously, borrowing can help to spread the costs over the life of the asset, and as such it is clearly preferable that an asset is able to be funded in that way, rather than have community structures eroded because of a lack of capital.

The Māori Party supports any move that will enable and facilitate affordable local and regional development, but we sound a note of caution around this whole complex issue related to decisions about infrastructure development. The statutory responsibilities are pretty explicit. The Local Government Act 2002 places specific obligations on councils to facilitate participation by Māori in local authorities’ decision-making processes. The Act requires that councils must establish, implement, and maintain opportunities for Māori to contribute to decision-making processes, consider ways in which they can foster the development of Māori capacity to contribute, provide relevant information to Māori, and take into account the relationship of Māori, and their culture and traditions, with their ancestral land, water, cultural sites, wāhi tapu, valued flora and fauna, and other taonga. This is a clear and unambiguous statement of intention to councils to be proactive and responsive in enabling Māori contribution to local decision-making.

In order to do this, councils need to consult mana whenua. They need to have adequate representation on their councils, and they need to be able to understand Māori community values, issues, and aspirations about our economic, social, cultural, and environmental well-being. They also need to commit funding to the building and the workability of these relationships.

I was interested in a keynote address delivered to Local Government New Zealand’s annual conference a couple of years back by the Chief Judge of the Māori Land Court and chairperson of the Waitangi Tribunal, Chief Judge Joe Williams. In his address the Chief Judge said: “Local Government in our small, rapidly changing country could never be easy. It is, I think, where the rubber meets the road. While so much of the so-called race debate is played out in national politics, it is at the local level that communities must resolve the real challenges of growing diversity. And they must do that not via media-driven sound-bites but face to face. This is much harder. It is also far more likely to produce positive outcomes.”

The key issue for the Māori Party, therefore, is not so much about whether councils are to be exempted from disclosing all significant financial information but is more to do with how information about the income to be invested is shared with communities. We would hope that once councils have in place more effective mechanisms to raise income for infrastructure development, they will give ongoing priority to what Chief Judge Joe Williams described as “the real challenges of growing diversity.” We hope that they will invest in the benefits of building good relationships with Māori. We hope they will understand and appreciate that early and meaningful engagement across the community can result in better-informed decision-making, more streamlined processes, and superior outcomes.

The Māori Party will support this bill as a pragmatic step that Parliament can take in assisting local government to plan ahead in terms of its infrastructural development. Our sincere hope is that once the disclosure requirements are sorted out, sufficient investment will go into supporting Māori expectations and aspirations for the well-being of Māori and, indeed, for the well-being of the wider community.

Hon PAUL SWAIN (Labour—Rimutaka) : I rise to speak in this third reading debate—[Interruption] Oh, Mr Roy welcomes me to the podium.

Eric Roy: Absolutely.

Hon PAUL SWAIN: That is great; thank you very much. I hope to enlighten the audience as to why I am speaking on this. The reality is that I was on the select committee for this legislation.

Hon Georgina te Heuheu: The member probably knows something.

Hon PAUL SWAIN: Oh, thank you very much; I am obliged to the member for that. As a result, I am hoping I do not let her down. This is a high expectation that she has now set upon me.

This is good legislation. As a member mentioned before, this is about trying to ensure that it will be easier for local authorities to issue debt securities. There have been some good contributions in the debate up until this moment, particularly during the Committee stage. I thought that some of Richard Worth’s contributions were quite helpful.

Most people—and it depends how old they are, I suppose—and certainly I can remember when local authorities used to issue local authority bonds. There were hospital board bonds and other forms of arrangements whereby people could invest in their local community organisations, like councils and hospitals. The councils and hospitals then used that money to fund pieces of important infrastructure. The rules were changed in the late 1990s in order, I suppose, to deal with some of the concerns that people had that maybe the regime was not robust enough. As a result, lending arrangements were a bit looser than what would have normally been required of ordinary companies that were going out and looking for debt securities on the open market. It is probably fair to say that those arrangements were made at that time for good reason. But as a result, and as local government people tell us, it has now become very, very difficult—virtually impossible—for local authorities to issue debt, because of the huge compliance costs and because the authorities are a slightly different animal from the normal publicly listed company that would be required to follow the full Securities Act regime.

It was also helpfully brought to our attention by the Minister of Commerce that as a result of the dialogue, this excellent Labour-led Government introduced meetings between local government and the Prime Minister. As I recall, meetings occurred every 6 months. I went to a few of them myself, as a Cabinet Minister.

Hon Darren Hughes: In the good old days.

Hon PAUL SWAIN: “Bring them back.”, some people would say.

Hon Darren Hughes: I hear it a lot.

Hon PAUL SWAIN: Yes; we hear it a lot.

Those meetings were co-chaired by the Prime Minister and the head of Local Government New Zealand—Basil Morrison; a fine fellow—and issues were brought forward. I recall a number of very important things coming forward. For example, a lot of the issues to do with some of the funding that now heads towards Auckland transport were addressed at that meeting and it led to a number of really important developments.

As I understand it, an issue that came forward at one of those meetings was the whole issue of local authorities being able to issue debt, and it was pointed out just how difficult that was. This bill has come forward in order to address that issue of local authorities being able to issue debt. What does this mean? Essentially, this means that before a local authority can issue debt, it has to do a number of things. The first one is that it needs to issue an investment statement. It needs to be put forward to the public, and two councillors are needed to sign it off. The reason the signatures of only two councillors are needed is that if the whole council had to sign it, it would take only one councillor to object for the important piece of infrastructure investment to be funded by way of these debt securities to be stopped. That would mean a power of veto of only one, which is hopeless in organisations such as councils.

The problem with having only two councillors sign it is that if only those two councillors were to be held liable, we would never get two councillors signing it. So the legislation now states that as a result of two councillors signing off the investment statement, all the councillors are criminally liable for the accuracy of the content of that investment statement. A councillor could disagree with the proposal, but all councillors would be required to make sure that the investment statement is accurate. If it is not accurate, then all councillors are criminally liable. That means that there is a much greater opportunity for councils to have access to this kind of debt security arrangement.

The issue of criminal liability was obviously really important to consider. I think it was Local Government New Zealand that came forward to the Commerce Committee and said that members of Parliament were applying rules on criminal liability that they do not apply to themselves. Ministers themselves are not criminally liable when the Government issues debt—for example, Government bonds. Representatives of Local Government New Zealand said that if that convention applies to Ministers, then why would Parliament not make councillors exempt from that criminal liability situation, as well. To be fair, it was a reasonable point. But in the end, we decided to keep criminal liability for local authorities, primarily because, as far as central government is concerned, the checks and balances are far greater. A lot more auditing is done in central government and a lot more Government department and agency eyes and hands are all over this type of situation when the Government gets into borrowing. The feeling was that, given that there were more checks and balances and given that central government organisations are much bigger than local government organisations, we should keep criminal liability for local authorities.

The committee looked at the whole issue and thought that as we were making it easier for councils to get debt from the public—and remembering, as a couple of speakers have said earlier, that the reason for this legislation is to be able to fund long-term investment projects, such as water, sewerage upgrades, transport and motorways, and libraries—it is important that this vehicle be made available. Other speakers have mentioned the importance of having what they called intergenerational equity, rather than trying to fund infrastructure straight up front—that is, if we are to have a water pipe that is to be useful over 60 years, then the generation of ratepayers at the end of the life of the water pipe should be contributing as well as the generation of ratepayers at the start of the life of the water pipe. It is not fair to have just the ratepayers at day one paying for it, when ratepayers down the line will also benefit. The idea of debt security is about spreading out that risk and being able to spread out the benefit.

Having done all that, the select committee said that there should be some additional things to make sure that there are some firm rules and that Parliament could rest easy knowing that although we were relaxing some of the rules, there was still some regulation around this situation. One example is that the local authority is required to refer to the most recent audited annual financial statements in the investment statement that is distributed when the council is issuing debt. It is a pretty obvious thing and I suppose that councils would probably do that, but it is important to say it.

Another important issue, which was really interesting, was that we wanted to make it quite clear that when local authorities are issuing debt, this would not be Government-guaranteed. A lot of people would assume that because a council is issuing debt, somehow the Government is guaranteeing it. This could give a false or misleading impression as a result. That aspect needs to be stated as well. We also said—and I think that the previous speaker, Te Ururoa Flavell, said this—that the financial investment statement distributed to investors and potential investors needs to made available on request and free of charge. We thought that that was an important issue to make sure that councils are not trying to ramp up the cost of doing this and are not putting off potential investors.

The summary of it all is that this measure will be an important vehicle for local authorities to be able to raise debt to fund long-term infrastructure projects. Under the chairmanship of Gerry Brownlee, I think that the committee did well. I thank all the members who have contributed in the House to this very important debate.

Hon DARREN HUGHES (Deputy Leader of the House) : I will take a very brief call on the third reading of this bill. I notice that it amends the Securities Act of 1978. I think that that year is a very interesting year, and this is very good legislation. I do not think that things of that age necessarily need amending, but they may be touched up.

Eric Roy: What date in 1978 was that?

Hon DARREN HUGHES: I think that it is the same date that is on the Order Paper today, as it happens. That is very, very interesting. I will leave members to do the research on that.

I think that this Securities—

Eric Roy: Can I wish the member a happy birthday.

Hon DARREN HUGHES: I thank the member.

Hon Paul Swain: I raise a point of order, Mr Speaker. Some members may be struggling with the relationship between the dates. I will just point out that it is Darren Hughes’ birthday today.

The ASSISTANT SPEAKER (H V Ross Robertson): That is hardly a point of order, but all members now know. I call the honourable Minister, on his 30th birthday. We will not sing happy birthday.

Hon DARREN HUGHES: Thank you, Mr Assistant Speaker. On this occasion I say to Mr Swain that that is not a breach of privilege but it comes very close to a breach of mateship, in that particular regard.

The Commerce Committee has done great work on this legislation, which is now coming up for its third reading. The point about the bill that is most attractive and most interesting, I think, is the ability it will give to councils and local authorities to have alternative funding arrangements for some of those long-term projects. I am sure all members have projects in their constituencies where they would like to see things happen, but we know that the ratepayer dollar just does not stretch far enough on a cash, year-by-year basis. That point of the bill is certainly the one that I think provides a tool for local government to be able to address some of those long-term challenges. In my own constituency of Otaki, the Transmission Gully project, which I am a very strong supporter of, needs every possible tool in the tool box in order for us to progress it, so I hope that this is yet another measure that may be available to local government.

But, as Mr Swain said, water is also an expensive project for local councils. This bill provides an ability for councils to be able to fund these projects over a much longer period of time, particularly on the Kapiti coast where the security of water supply is such a big issue, with the coast’s growing population and the pressures that inevitably come with that. I think it will be very important for the Kapiti Coast District Council to have this extra tool; I am certainly in favour of what the bill allows.

I was interested, during the Committee stage, to look at some of the actual technicalities in the bill. The thing that was most interesting to myself, and I know to my parliamentary colleagues in the Labour Party, was the requirements around a disclosure statement. We believe that politicians who are obviously councillors on a territorial local authority should have to be very upfront about disclosure statements. Through amending the Securities Act, we are shifting the exact requirements for them to reduce those compliances, but there is nothing wrong at all with good, full disclosure to the public by elected officials. I think that is very, very important, not only for the security of the money concerned but for the security of the faith and the trust that their electors have in their officials. That is why I think that some of the things that need to be disclosed by elected officials should apply to us here in Parliament, as well.

That is why I am so surprised that the National Opposition will be joining the Government in voting for this legislation. It seems to me that Opposition members are not very big on disclosure. I think that if they are going to vote for this bill tonight, they have to make a commitment that they will disclose far more of the policies that will be in their manifesto than they have done to date. I think there are some real difficulties in terms of the security people can have when they are investing their vote in the future if these policies are not disclosed. So I think that some of the issues we have seen around, such as people paying higher doctors’ fees if National were the Government of this country, for example, are the sorts of things that should be in a party disclosure statement for voting investment purposes, under the legislation before the House this afternoon.

Hon Ruth Dyson: No one would vote for them if they knew their policy.

Hon DARREN HUGHES: Ms Dyson makes a very important point. No one would knowingly vote for higher doctors’ fees, which is why the National Party tried to hide that policy when it brought out its discussion document last year. So one of the issues before us is how we can make disclosure statements cover everything, and not leave out the fact that doctors’ fees may go up. When we think, for example, that we now have 500,000 people in the KiwiSaver scheme making active investments in the New Zealand market, that is a very important point. Those kinds of disclosure statements around the security of superannuation and the pension then become very important as well, especially in a week in which we have celebrated and noted our ninth increase in New Zealand superannuation under the Labour Government and supported by the parties in Parliament—particularly by New Zealand First, which negotiated for 66 percent of the average wage to be paid to married people. I think that is very important, as well. I think disclosure statements are crucial in politics, and I hope that by National giving its support for the third reading of the Securities (Local Authority Exemption) Amendment Bill, it is saying that it will be much more interested in disclosure, particularly around things like State asset sales, the KiwiSaver scheme, pensions, and doctors’ fees. I think that is very, very important to us.

The other interesting provision in the third reading of this bill this afternoon is the change that this bill will make to the original Act in relation to the number of people who will have to sign off the investment statement that goes out to the public for consultation. Up until now there has had to be unanimity—there has had to be the unanimous support of the entire council for that statement to go out. But under this new law only two councillors have to sign it before it goes out to the public for consultation. We think that this is a very good thing from an administrative point of view, but it immediately, to me, raises an issue. Just as a hypothetical example, I ask what would happen if a council, having had a full debate about something, agreed to a policy, and signed up to say, “Yes, we’re going to put this out to the public as our stated position.”, but only two councillors signed it, and then other councillors went around the community and said “You know how the council wants to go to the community about this policy for this disclosure? Well, actually, I don’t really support that myself. I don’t support it. Although I voted for it at the council table, because only two of my colleagues had to sign it, I’m going to say around the community that I don’t believe in that.”

I do not know whether it is possible under the law to prevent that situation, but I think that before Mr Williamson and Dr Lockwood Smith cast their votes for it this afternoon, they might want to check this provision. They have sat around a caucus table and said they agreed with a policy in order to grease up to their new leader, and then they have gone out, around the community, and said “Actually, we don’t believe in it.” I want to know whether this kind of law will become a template for the parliamentary membership of a party. It really worries me that we can say we are in support of something in one place, and then go out around the community and say we are not in support of it. I think that is just getting a little bit too slippery, from a disclosure point of view and in light of the sort of investment that people are trying to make.

So I am cautioning Mr Williamson and Dr Lockwood Smith in the House this afternoon. Their vote is going to be cast on their behalf, collectively, by their whip—in fact, by the acting whips. I see Mr Roy is on the phone at the moment, so he may well be calling the members concerned to ask “Can we cast your vote, or have you now read the fine print in this bill and would prefer to cross the floor?”. We can imagine the situation if they were signing up to something for which they would be criminally liable in saying to private audiences: “Actually, I don’t believe in climate change. I agree with my leader’s former position, which was that it was a hoax and not really happening.” So I think there are some really big issues for Mr Roy. He is on the telephone at the present time—with a furrowed brow, one would have to say—and he is trying to work out whether or not he has the votes of those two members for these things.

Under our local government legislation, our councils already have to go through very thorough and transparent accountabilities to their communities around their long-term council community plans, their district plans, and all those things that make it clear that councils are open. So we are lessening the disclosure requirements in this legislation, because we are confident that councils are pretty upfront about their finances, anyway. We are trying to make this easier for some of those good projects that I mentioned, including some that are in my own constituency.

I wanted to raise those issues around disclosure and people signing up for things that they then do not have to commit to in another field. I think those issues are worthy of the House’s consideration this afternoon, particularly when the week is ending on what we would not call a high note for Her Majesty’s loyal Opposition.

Hon Georgina te Heuheu: It’s your birthday; be charitable!

Hon DARREN HUGHES: I am being charitable! I am trying to be nice about how badly things are going for those members over there. This is me reaching out the hand of aroha and love to the Opposition, in this regard. I am trying to be kind about all this.

I am glad that we are going to get a strong vote in support of the bill. I think it will help the House enormously, and I want to see the bill progress through without any further ado. I will be listening very intently when the Clerk calls for the party votes, to make sure that if there are any other votes, Mr Williamson and Dr Smith get their democratic day on this very important legislation.

• Bill read a third time.

Hon JUDITH TIZARD (Associate Minister of Commerce) : I move, That the Copyright (New Technologies) Amendment Bill be now read a third time. It is with enormous pleasure that I move this, as this bill has taken some time to get through the House’s processes. Indeed, it took some time to get through the consultation process with copyright industries that we chose to go through.

This bill is important legislation, which, as part of the Government’s programme, will update New Zealand’s copyright laws to try to ensure that we keep up to speed with recent advances in digital technology. The bill forms part of the Government’s wide-ranging reform of intellectual property law in general, and the programme of reform has included, and will include, reviews of the Patents Act 1953, the Trade Marks Act 1953, the Plant Variety Rights Act 1987, the Geographical Indications Act 1994, New Zealand’s accession to several key international trademark treaties, the enforcement of criminal offence provisions for counterfeiting registered trademarks and piracy of copyright-protected works, and the Government’s decisions on parallel importing, and the effects of those decisions on creative industries.

We hope that the programme of reform will ensure that New Zealand’s intellectual property law helps to support the Government’s goals of promoting innovation, creativity, and economic growth, and will meet the needs of businesses whilst also promoting efficiency and minimising compliance costs to New Zealanders who are using this material. It will provide greater clarity and certainty over the scope and enforcement of intellectual property rights, for the benefit of creators and innovators, as well as users of intellectual property and investors in the development of intellectual property. The reform also takes account of international practice, and complies with New Zealand’s international obligations.

We require a robust, up-to-date intellectual property rights regime, and that is essential as part of an innovative, growing economy. We have talked much in this House about New Zealand being a knowledge society and a knowledge economy; this legislation is at the heart of that. We need well-defined, enforceable intellectual property rights that provide incentives for creativity by ensuring that creators can derive a financial return for their creative efforts, but that creativity also needs to be made accessible in an affordable way to users and people who will go on innovating that work.

The intellectual property rights system needs to be current and contemporary—a system that promotes development of the economy and New Zealand’s identity by encouraging investment in creativity and innovation, but one that also recognises that New Zealand has a unique take on many aspects of this. Copyright is absolutely an integral part of the system that protects our creative industries and our information and communication technologies, by prohibiting unauthorised reproduction, and by making sure that the work of creators is acknowledged and paid for.

Digital technology presents significant opportunities to open new markets for New Zealanders—creators, owners, and users of intellectual property and copyright material—as well as presenting many risks, because digital technology enables high-quality copies of original material to be very easily made, very easily communicated, and very easily distributed. The ease with which digital material can be copied and communicated increases the risk that unauthorised copies will be made and communicated as well as authorised ones.

The objectives of this bill are to update and clarify how copyright applies to new technology, particularly in today’s—and the future’s—digital environment. It needs to promote a modern legal framework that guides the protection and use of copyright material, and it also ensures the effective operation of the Act in the face of emerging technologies.

We need to ensure that the Copyright Act remains fair, effective, and well understood in the face of the emerging needs of a dynamic and technology-supporting economy and all of the people who use it. The bill maintains the balance between protection, access, and use already established under the Act, and it takes that through into the digital world. The bill creates a flexible framework for technology to operate under, by redefining certain terms contained in the Act to try to make them more technology neutral. I remember that when we reviewed and updated the law in 1994 we spent a great deal of time debating what to call technological works, and we came up with the idea of “multimedia work”. Well, of course, that has been superseded, and I hope that this bill is less prescriptive and more inclusive of whatever change that happens.

The key provisions of this bill are around technology-neutral definitions, and it also tries to create a technology-neutral framework that will go on being useful. It creates a technology-neutral right of communication to the public, and, in a digital world of almost instantaneous communication, the ability to control communication of copyright material is as significant as the ability to control copying. Control over communication is necessary to encourage investment in, and the provision of, the effective online distribution methods that are now demanded by providers and customers. Technology-specific terms such as “broadcasting” and “cable programme service” are replaced with terms such as “communicate” and “communication work”.

The bill clarifies the liability of Internet service providers—ISPs—when it comes to copyright infringement. It introduces a limited exception from copyright infringement where the Internet service provider merely provides the physical facilities to enable a communication to take place. Transient or incidental copies that are made by a computer or a communications process as part of the integral and necessary processes by which, for example, users browse websites on the Internet is not infringing copyright. The bill also provides that there is no liability for the Internet service provider when storing and caching infringing copyright material where the Internet service provider deletes or prevents access to infringing copyright material as soon as possible after it becomes aware that the material is likely to infringe copyright. To facilitate Internet service providers becoming aware of infringing material, the bill provides for a template notice to be used by copyright owners to inform Internet service providers about any infringing material that they may be storing or hosting. This regime is called a “notice and takedown” regime, and is a common feature in many copyright regimes internationally.

Some changes to the Internet service provider liability system were made following the bill’s report back from the Commerce Committee. A requirement for an Internet service provider to have a policy for terminating the accounts of repeat infringers has been reinstated, and the offence of providing misleading notices to Internet service providers has been removed.

The bill updates the permitted acts for fair dealing for educational establishments, libraries, and archives, and it clarifies how these permitted acts should apply to the digital environment. Educational establishments, libraries, and archives can create and store digital copies of works on the Internet or other electronic retrieval systems, provided certain conditions are met. The bill provides a new limited exception for copyright infringement for “educational resource suppliers”—a new term that is about organisations whose principal function is the copying and supplying of communication works to educational establishments for those purposes. This provision will help schools to make greater use of audiovisual copyright material without infringing copyright. It also provides new opportunities, very like those provided by libraries now, for electronic copies to be made.

The bill provides a format-shifting exception for copying sound recordings for personal use, or the personal use of a person’s household. This exemption for format shifting of music aligns the law with the public’s need. The fact is that legally viable technology and legally obtained music have not, by our law, been able to be used together until now. However, the key condition of the format-shifting exception is that the original purchaser must retain both the original version of the sound recording purchased and the copy made. This provision does not legitimise the copying of CDs for friends or online file-sharing. Both of these actions remain an infringement of copyright.

The bill also provides new limited exceptions for decompilation or adaptation of computer programs, in certain circumstances. These conditions include that the decompilation is necessary to obtain information necessary for creating an independent program that can operate with the program decompiled, or the adaptation is necessary to ensure lawful use of a program, such as correcting an error in the program to ensure the proper functioning of the program, when a properly functioning and error-free copy of the program is not made available within a reasonable time at an ordinary commercial price.

The bill provides that a lawful user of a computer program does not infringe copyright by observing, studying, or testing the functions of that program. We also make provisions around the area of technical protection measures, which will be discussed by other speakers. We also introduced a Supplementary Order Paper that extended the 9-month parallel importing ban on films. This ban was due to expire on 31 October 2008, and it now goes out until 31 October 2013.

I thank the Commerce Committee and the submitters on this bill. I particularly thank the copyright industry: Ant Healey from the Australasian Performing Rights Association, and his predecessor Mike Chunn, Tony Eaton from the New Zealand Federation Against Copyright Theft, and Campbell Smith from the Recording Industry Association of New Zealand who did an enormous amount of work to make this bill workable. I thank the officials—Bronwyn Turley and her team—and Lia Haar, Anishka Jelicich, and Erica Gregory in my office, who have done an enormous amount of work on this bill to make it a good bill.

I commend this bill to the House and thank the House for the time it has spent making it a better piece of legislation.

Dr RICHARD WORTH (National) : I would like to find it in my generous nature to say something charitable about the process that the Copyright (New Technologies) Amendment Bill has followed through the House, but I find it difficult to do so because the bill has had a very long legislative history. The bill was introduced on 4 December 2006, then went to the Commerce Committee on 12 December 2006. As a result of substantial issues that emerged in that process, it has languished there.

Hon Judith Tizard: A good thing. It’s a much better bill.

Dr RICHARD WORTH: If I could make a charitable comment I would say, against the background of intervention from the Minister, that one of the good things that happened was that the select committee decided to take specialist advice from outside the ministry. So a foil was presented to the views of the senior staff from the ministry, by two independent experts. Those independent experts were Earl Gray and Geoff McLay.

It is also right to say that if we look through the legislation, we will see that a large number of changes have been made. Nevertheless, as I said the other night, this legislation, at the moment of its enactment, is assuredly somewhat inappropriate. It is somewhat outdated. I expressed the hope on Tuesday night, and I do so again, that it might be possible to include in this type of legislation a review provision similar to what occurred within the Evidence Act—that there would be a review and that the legislation would be brought up to date.

I would like to say something in a general way about copyright. Copyright is a property right that exists in original works. The changes made by the Copyright (New Technologies) Amendment Bill are changes to substantive legislation—the Copyright Act 1994. I am reminded of the seminal work that was done in identifying particular parts of the legislation that were worthy of change. I express a degree of sadness that not all his views were taken up to deal with some of the lacunae that have been identified. The Copyright Act 1994 gives copyright owners exclusive rights that allow them to control certain aspects of a work’s exploitation, while at the same time providing limited exceptions to these rights for users of copyright material. It is in this way that the principal Act—the Copyright Act—seeks to provide incentives to ensure the creation, production, and distribution of new creative works in a manner that meets society’s needs.

This bill amends the Copyright Act 1994 to take into account the impacts of new technology. In my view, it does so imperfectly, but that is what it seeks to do in those areas of digital music and film. It tries to seek a balance between what are often seen as the competing interests of creators, owners, and users of copyright work. It is part of a wider process of reform that was developed to ensure New Zealand’s intellectual property legislation is up to date and takes account of international developments in copyright. It incorporates many aspects of the two treaties—I understand that a member from New Zealand First is going to speak about them in just a few moments—negotiated by members of the World Intellectual Property Organization, or WIPO, as it is called. The organisation’s Copyright Treaty and its Performances and Phonograms Treaty seek to update international copyright standards to take account of developments in digital technologies. In looking at some of the aspects—and I am not going to deal with the detail of this; I can scarcely do so in the time available—we see there are issues around reproduction; communication; Internet service liability; technological protection measures; permitted acts, including format shifting; performers’ rights; and a very subtle issue that is not picked up well, which is the impact of the American Digital Millennium Copyright Act.

I close by making a final comment. I have been starkly critical of the Associate Minister of Commerce in connection with the process of this legislation. On Tuesday, 1 April, in the Committee stage of this bill, we saw Supplementary Order Paper 193. That Government amendment document made major, substantive changes. It is not appropriate, and it will never be appropriate, to propose major law changes on the very day that the Committee looks at legislation on a clause by clause basis.

National supports this bill, but it does so with significant reservation. I express the hope that the Government that will come into office no later than 15 November this year will make an immediate start on producing legislation of which all members of this House can be justly proud.

DAIL JONES (NZ First) : New Zealand First supports this legislation. Copyright is of extreme value to those artists in our society who have the intellectual capacity to come up with original work that we can all enjoy. In our modern society it is a question of how that original work, especially music, can be conveyed. For example, even as I speak, much of that work is being conveyed through radios in many vehicles on motorways around New Zealand. I expect it is being conveyed to Auckland motorists enjoying the extensions to the motorways that have been developed subsequent to the legislation introduced in the 2002-05 term. It ensured the development of motorways in the Auckland area, and improvements to travel are being experienced as a result. I tell those people to enjoy the music.

This legislation is all about copyright. It will encourage writers of music, bands, and suchlike to create more music, so that people can enjoy themselves as they drive a little more quickly on the motorways than they were able to do in the past. Motorists may strike some difficulties around the Esmonde Road turn-off, where hundreds of millions of dollars are being spent as a result of the improvements in the amount of money being spent on motorways thanks to New Zealand First’s involvement, in cooperation with Labour. One has to be most disappointed that that legislation was not supported by the National Party in 2004.

• Debate interrupted.