ANDREW WILLIAMS (NZ First) : When the House rose 3 or 4 weeks ago we were discussing the Taxation (International Investment and Remedial Matters) Bill for its third reading. At that time I was able to start only a couple of minutes before the House rose, so I would like to continue where the House left off.

This bill serves to reduce tax barriers for New Zealand companies operating on the global stage. It allows for income that has a source in New Zealand and for which relief from New Zealand tax under double tax agreement is unavailable. This bill also serves to help improve New Zealand’s economic performance. It means that New Zealand enterprise is able to operate on a level playing field in markets where we trade or have investments. This can only be good for New Zealand commerce, for New Zealand international trade, and to ensure that the New Zealand economy benefits from working on a level playing field with our trading partners and in markets where we have significant economic interests.

New Zealand First supports fairer taxes for all. New Zealand First has been a party, as you all know, that has stood up over many, many years, since the foundation of New Zealand First, to stand for fairer taxes, including taxes on business. We have been the party most known for ensuring that we expose any tax loopholes and rorts that were going on in the past, such as—we all know—the wine-box saga, where there was a deliberate attempt to avoid paying what were taxes due to the New Zealand Crown. Hundreds of millions of dollars potentially could have been lost over the years if such tax situations were not exposed and if the New Zealand Government was not on top of the matter in terms of ensuring such tax rorts were not taking place.

This Taxation (International Investment and Remedial Matters) Bill, in a sense, serves to continue that direction in terms of ensuring that there are common taxation arrangements between different countries, and ensuring that New Zealand interests are seen on that same level footing wherever we have international financial interests. The New Zealand Government has, over the years, worked towards ensuring that New Zealand companies can be more competitive. It has worked to ensure that we are able to play a significant role on the global stage, and this bill serves to do that.

New Zealand First certainly supports this bill through the third reading. We believe it has benefits for the New Zealand economy. We believe that, as a result, it will make this economy more competitive. It will also attract potentially more investment to New Zealand. It has the potential to also attract interest where otherwise there may not have been interest in New Zealand, and to ensure that there are not double taxation standards in New Zealand compared with many of the countries where there are potential investors possibly looking to invest in our economy.

New Zealand First follows this through to the third reading. It has already been covered off, to a great extent, in terms of what this bill offers. Therefore I rise in support. I commend the bill to the House, and we will be supporting this bill.

Hon Dr NICK SMITH (National—Nelson) : I am pleased to join members of the Government and other parties to support the third reading of this Taxation (International Investment and Remedial Matters) Bill, as part of this Government’s broader programme of improving the international competitiveness of New Zealand. The key focus of this Government’s economic programme, whether it is our work in tax, whether it is our work in economic development, or whether it is in employment law—right across the board—is in terms of making New Zealand more competitive. In that context, this Government is very outward-looking. So often we hear speeches from Opposition members who are so almost North Korean in their view of the future of New Zealand. If we are to make the living standards that we desire for New Zealanders, we need to look externally, because we on this side of the House believe that New Zealand can compete internationally, that we can match up and make investments offshore, and that we can, without sort of protectionist, inward-looking legislation, provide those sorts of incomes and jobs for fellow New Zealanders.

Interestingly, the biggest gains in this bill are for New Zealand companies that are investing overseas. For instance, if you are Fonterra, and you have got substantive investments, as Fonterra does, in countries like China, those companies are currently disadvantaged by those tax rules. So it is sensible that this Parliament wants to make those international businesses more competitive internationally. What I find ironic, from the contribution from New Zealand First, is that when it comes to an issue, for instance, of China wanting to invest in New Zealand, it becomes North Korean in its outlook, but when it is the other way around with this tax bill, in terms of wanting to invest overseas, sometimes it changes its tune. The difference, and the real substance, of what this Government is doing in this space is that we are consistent in our view of international outlook, and recognising the change of globalisation, and wanting to make sure that we have got a consistency of tax rules that ensures that we can invest overseas, and that we can have those sorts of global businesses based here in New Zealand.

I want to compliment the work of Peter Dunne. No area of law is as complex and as challenging as tax law, let alone when you are trying to work in the international environment. This is a simple but small and effective part of the incremental plan that this Government has for growing the economy. It is part of that theme of doing everything that makes the boat go faster, and getting good international tax rules around investments is part of what New Zealand needs to do to be competitive, to create jobs, and to grow the wealth of New Zealand.

Hon TREVOR MALLARD (Labour—Hutt South) : I want to acknowledge Nick Smith. I am not sure whether that is the first speech he has made as a backbencher since he became one, and I want to indicate some sympathy for him when he watches in this House the treatment—the preference—that has been given to John Banks in much worse circumstances than that member was in—

Hon Dr Nick Smith: What was this member’s approach when he was convicted of assault?

Hon TREVOR MALLARD: This member has not been convicted of assault.

Hon Dr Nick Smith: With respect to Tau Henare, when you got—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! That is not necessary.

Hon TREVOR MALLARD: There is no doubt that I pled guilty to fighting. I did, and there was a period of time when I was in some pretty serious trouble, and I did not come into this House during that time, but we sorted it out. But the point I am making is that John Banks is getting an easy ride. John Banks is getting a very easy ride, whereas the Prime Minister knew he could rely on Nick Smith. Notwithstanding Judith Collins dumping on him, he knew he could rely on Nick Smith. That meant that Nick Smith goes back, and John Banks keeps, at least for a period of time, his ministerial portfolio. I noted the former Minister also used the expression that “the boat goes faster” under a National Government. I wonder whether he was referring to the cabbage boat going faster, as his friend John Banks has been on regular occasions.

Labour members are supporting this bill, the Taxation (International Investment and Remedial Matters) Bill. It is fair to say that we are doing so not with enormous enthusiasm. It is on balance a bill that we are prepared to support, but there are some concerns around the removal of the approved issuer levy on the payment of interest on securities meeting certain requirements as notified under the Income Tax Act. What we are concerned about is that this is a further erosion of the taxation base associated with financial transactions. It is both an erosion in the amount of total tax, and a narrowing of the systems of collecting tax, when we need at the moment, especially given the Minister’s billion-dollar sudden deficit, all the tax that we can get, and it does not seem wise to be sacrificing tax in this way. I think it is also felt that it is better to have a number of bases to the revenue rather than, as we appear to be doing at the moment, being narrower and narrower in the areas from which we collect tax, with the changes here—the changes to do with gift duty and a number of areas.

It was interesting to look at the submissions and at the way the submitters indicated that the proposals will not help increase liquidity in New Zealand, they will do nothing to reduce interest rates, and they will not add depth to the capital markets. It is fair to say that the Government is, for a National Party Government, in a relatively unusual position to be criticised by submitters on this bill and to be criticised by some people who one would have thought would be their real allies on the sale of State-owned enterprises. The submitters were basically saying that although they agree in principle—and, in fact, I am sure they agree in their pockets—with the sale of State-owned enterprises, they think that the Government is making a mess of that particular exercise.

In addition, something that Labour members are getting more and more concerned about is that the current tax system effectively contains a lower rate of tax on offshore sources of capital relative to the tax on domestic savings, thereby providing what is really an unhealthy incentive for funds to be sourced from offshore rather than from savings in New Zealand. The effect of the taxation system is that returns are more for offshore lenders than they are for onshore lenders in New Zealand. If the returns are more for the funds that are sourced offshore, then the effect of that is that our debt, our capital coming into the country, will increase and our balance of payments will, over time, get worse.

I think that it does not matter which side of the House people are on; there is an understanding that the invisible side of our balance of payments is a major issue. We quite often get into a trade surplus situation—not as often as we should, with the very good commodity prices and terms of trade, but we often get into positive balance there. But it is the invisibles that are mainly associated with overseas ownership of such a high proportion of our economy, and the rents, the profits, the dividends, and the interest that are going offshore as a result of that foreign ownership mean that we have to earn more, and more, and more offshore in order to stay in balance in the current account. That is why members from our side look pretty carefully at any exercise like this one, which, in fact, worsens the situation.

We believe pretty strongly that we do need to have further work to improve the neutrality, at least, of tax treatment across domestic and international sourcing. In fact, I think even to say neutrality might lack ambition. A lot of countries have a preference for sourcing their financing onshore, rather than offshore. One of the things that we need to consider is whether, rather than giving preference to offshore lenders, we should, in fact, focus on building up our own domestic capital and domestic borrowing in order to retain the financing of our businesses onshore as much as possible and thereby reduce the flow offshore.

That, of course, would require more ambition around savings than we currently have. I note that it has been the policy of the Government to not put money into the Cullen fund. I note that it has been the decision of the Government to run down KiwiSaver, to reduce the incentives, and to reduce the flow of payments into the system, and that, of course, is something that works against the development of capital in New Zealand. I think that has been a short-term approach. It is the approach, I think, of people who are more used to playing the markets and to being currency traders, rather than people who have a genuine view on the importance of investment and of productive investment. I am careful as I say this, with the member for Piako or similar—

The ASSISTANT SPEAKER (Lindsay Tisch): Waikato.

Hon TREVOR MALLARD: —Waikato—in the Chair, but it is not only investment in our farms and our traditional productive sector but also investment in some of the smart, new firms that we have around the country. I spent some time over the adjournment going to quite a number in my own electorate, and there are a couple there at least that within 10 or 15 years could be billion-dollar industries—if we can hold them. The key to holding them is making sure that we have the onshore capital in order to have the investment in them and to keep the ownership in New Zealand. What is clear is that all around the world there are people who are bidding for those businesses, and while we are giving them more favourable terms in their purchases and in their financing arrangements than we are giving to local purchasers, that is something that tips the balance towards some of our best businesses going offshore.

In conclusion, the Labour Party will support this bill. We do so because it is not doing massive harm, but we are concerned that there is no plan to do what is right in the financing area.

DAVID BENNETT (National—Hamilton East) : This bill, the Taxation (International Investment and Remedial Matters) Bill, is now coming to its third reading in this Parliament and it is a bill on which it is good to see support from the other main party, the Labour Party, in regard to taxation policy because it is a complex area of policy and it is an area that you need some consistency in. It is really about New Zealand’s international approach in financial matters. Just like we have consistency in our international approach on diplomatic matters, it is quite helpful to also have consistency in our international approach in this Parliament on financial matters. So it is good to see Labour coming to the party on this occasion.

However, through the process it did have some concerns. Essentially this bill extends the active income exemption to offshore subsidiaries, commonly called controlled foreign companies or CFCs, so that it also applies to joint ventures and other significant shareholdings in foreign companies that are not controlled by New Zealanders. It is an extension of that role and rule to non-portfolio foreign investment funds. When we look at that active/passive taxation exemption, there is a big contrast between the earning of active income and passive income. Active income is your typical manufacturing-type business, and passive income is more your interest, dividends, and royalties. This bill is important in that distinction and how we treat income earned by those companies.

Also, there are some changes around the international tax calculation methods—just rationalising those—especially in the case where there is not sufficient information and there needs to be some kind of arbitrary decision on an assumed rate of return. There are also some changes in regard to Australian companies. One of the other areas in this kind of tax area was in regard to having grey list countries, and that has been simplified now with Australian treatment and non-Australian treatment, essentially. That is another change that is in the best interests of tax simplification.

So there are a few other changes in this bill, but essentially it makes it easier for New Zealand businesses to compete in the international theatre. It is important that as a Government we do that and support our businesses so that they have the ability to compete, and the taxation policy of New Zealand is not something that hinders or prohibits their competition. This bill is good for New Zealand business. It is part of that process of helping to grow a stronger economy, and we look forward to it being passed through this House today.

Hon SHANE JONES (Labour) : Thank you for the opportunity. This is a 5-minute call, and it will be followed up by the Green Party, our comrades-in-arms. We actually are supporting the Taxation (International Investment and Remedial Matters) Bill, and, unlike the previous speaker, my contribution will echo something sensible and penetrating, as came from Mr Mallard. Naturally we are aware of how important the application of a rational tax regime is, enabling us to ensure we gain access to international funds, but at all times never lose sight of the fact that one of the maladies confronting our economy is the absence of domestic or indigenous savings. Every step we take in this direction unfortunately proves to be a step away from the orthodoxy that the Government is following.

On many of these large taxation changes, or minor taxation changes, we look for what is best in terms of “New Zealand Inc.”. This is a set of refinements, and indeed some of them follow the work that Michael Cullen did in terms of changes to the international tax regime and a deemed rate of return, so there is some tidying-up that has happened there. But we will always raise questions as to whether or not we are simplifying a process for those who are actually inhibiting the development of a domestic funds industry. Of course, we are seeing the worsening of this situation once this foul policy to do with privatising our State assets goes ahead, and we unfortunately are going to see a drift of opportunity overseas, etc., not the least of which we have seen through the sale of our land, etc.

Dare I say it, as of yesterday a number of us have been participating, with a host of other stakeholders, on what is the future of the dairy industry. I fear, under the parlous leadership of the current Minister for Primary Industries, otherwise known as the Minita o te Atu Matua, of the new Ministry for Primary Industries, it is evident that although it is not directly related to the taxation that we are dealing with here, there is a connection because every opportunity that we produce for investment opportunities to be scooped by people overseas, to the detriment of New Zealand industry or New Zealand funds participants, is something that should be raised in this House as a matter of key economic public policy. It is unfortunate that this bill, along with a host of other measures, has never really represented a coherent response as to how, in the 3 years since the last election, and in particular since John Key and his soon to be departed to Hawaiki nui, Hawaiki roa, Hawaiki pāmamao for redundant politicians, John Banks, you will find then that a great opportunity has been squandered.

We wanted to see in a bill of this nature, included possibly in this bill, further incentives for deepening our reserves of domestic savings through an improved KiwiSaver scheme. We wanted to see something ambitious to do with superannuation policy because that in itself is related to tax, but no, we have seen this ongoing tinkering. So we hope to engage in the debate, because unfortunately, as this policy is implemented, the policy pertaining to the privatisation of our key utilities and our key assets, an impact that they may say on that side of the House is unintended, but an impact that is going to worsen the level of ownership that will come to pass in hands that may not be directed towards the best interests of New Zealand. In that case, we will certainly be borrowing more and more money and will be reliant more and more on overseas funds.

That is not to say that we are islands to ourselves and we should not draw from international capital, but over time all economies and all successful regimes have to have a balance. This Government, this particular Minister of Finance, and his sort of inept helpers have worsened that level of balance and it is disappointing that legislation of this nature has not seized the opportunity to move in the right direction.

The ASSISTANT SPEAKER (Lindsay Tisch): My apology, that was a 4-minute bell. I do not know whether the member was going to go for a 5-minute call. I rang the bell at 4 minutes.

Hon SHANE JONES: I will gladly continue in the Ngāpuhi dialect. Some would say missionary-trained translator, although probably his translation services will be needed somewhere near Coatesville, somewhere near Epsom. In fact, I think I know the word for Epsom and it is ka mate ka ora—ka mate, you die. Anyhow, I will come back and round up: yes, we do support this bill, but the deeper issue, which we will never support, is an erosion and undermining and an absence of policies to actually grow New Zealand’s depth of savings, other than the fact that the current Government believes that by hocking things off, New Zealanders are going to be fantastically rich—by hocking things off that are disproportionately going to disappear overseas—and all we are going to see is the new stakeholders wanting to expand revenue. That is higher costs—higher costs in an area where the competition could definitely be improved.

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry now to interrupt the member. Before I call Dr Kennedy Graham, just to elaborate on the mistake I made, I will ring the bell at 4 minutes, so you will have a minute to go.

Dr KENNEDY GRAHAM (Green) : Just to pick up from the sublime appellation of our colleague Shane Jones earlier, let me greet all 121 comrades-in-arms in the fine art of capitalist taxation tuning. This bill—

Hon Member: I think it’s 120 colleagues you have got.

Dr KENNEDY GRAHAM: It is 120 plus me. [Interruption] Well, I am not the comrade. This bill, the Taxation (International Investment and Remedial Matters) Bill, having ground its way through to the third reading, has really been damned with faint praise. It is clear that it is going to get general, lukewarm support from all parties. I think what it does do is reflect a Government whose ideological conviction largely competes with its rigidity of approach and cautious disposition. That becomes manifest in this bill, along with a whole raft of all the economic and fiscal legislation that it has produced, both in the 49th and 50th Parliaments.

The Green Party, from the beginning, made it clear that it was prepared to support the bill, along with other parties, but, I think, largely on the general understanding shared by all that it is not going to change very much. Let me just use my limited time here, before we indicate that we will finally vote in this third reading of the bill, to identify, I think, probably a syllogism of three propositions that the National Party works on and offer the alternative three that the Green Party works on. This Government, with its ideological view, has the following three propositions: one, that globalisation is good; two, that the economic and tax regime has, therefore, to be more competitive and can be, therefore, more competitive, and that anyone who disagrees comes from North Korea; and, third, that the tax rates must be lowered for the New Zealand economy to become more competitive, and anyone who disagrees comes from North Korea.

In contrast, the Green Party believes that globalisation can and often does cause more harm than good to the public interest—not to the corporate interest, necessarily, but to the public interest—secondly, that New Zealand can indeed become naturally more competitive through fine-tuning of taxation legislation, but not necessarily through the obtuse instrumentation of this kind that we see before us in the current bill; and, thirdly, that, following from that, New Zealand tax rates of this kind must distinguish between certain foreign investment inflows and others, rather than treating them all as one, and that not all will be competitive, as we heard from the Inland Revenue Department briefing.

New Zealand’s economic success is really dependent less on this kind of microeconomic fine-tuning, based on ideological conviction, which misperceives the reality of where we are in the global economy, and more on a broader structural restructuring of our economy pertaining to the value of the dollar, pertaining to the current account deficit, pertaining to the use of our natural resources in an ecologically sustainable way, and also pertaining more to our tax framework rather than to the microeconomic management that is pronounced in this bill. Having damned it with faint praise, I reassure the Government that we shall vote for it. Thank you.

MAGGIE BARRY (National—North Shore) : I rise in support of the third reading of the Taxation (International Investment and Remedial Matters) Bill. It is set down today for its third reading and is sponsored by the Minister of Revenue, Peter Dunne. It is very much in keeping with National’s policies—our fiscal policies. It is a measure that was first outlined in our 2010 Budget: that we would deliver a major tax package that would reform the tax system to make it fairer, more sustainable, and a better support for economic growth. I believe that this bill does that.

The taxation bill is really a natural extension of our earlier international tax reforms, and it builds on and extends those reforms. The active income exemption brings our tax system into line with the policies and practices in other countries, and it really will help New Zealand - based businesses to compete more effectively in foreign markets by freeing them up from a tax cost that similar companies in other countries do not face. So it is a basic fairness issue. One of the examples that is topical, and I think relevant to us today, is that a New Zealand - owned manufacturing plant in China will now generally face the same tax rate as other manufacturers competing in China.

There are a number of measures, of course, in the bill. It rationalises our international tax calculation methods; it also maintains the exemption for investments in Australia. It also removes a tax barrier to non-resident investment in New Zealand corporate bonds, so it will attract investment to New Zealand, and that is pretty much in keeping with the recommendations that were made in 2009 by the Capital Market Development Taskforce. It wanted to see the approved issuer levy be reduced from 2 percent to nil for some public issues of debt by New Zealand residents. That has been done by this bill. There are a number of other messages and elements within it that have been outlined by my other colleagues and by the people on the other side of the House. We are all speaking in support of it. I think that from my point of view, I see it as a consistent and fair bill that promotes the sort of integrity that we need as a nation. So I commend this bill to the House and look forward to it being passed today.

• Bill read a third time.

Hon PAULA BENNETT (Minister for Social Development) on behalf of the Minister of Finance: I move, That the Appropriation (2010/11 Financial Review) Bill be now read a third time.

RAYMOND HUO (Labour) : My last contribution on 28 March has brought me to the fourth issue concerning New Zealand standards, but I am conscious of the time constraint so I would like to touch upon two important issues raised by Mr John Green. The first is the express exclusion of subcontracts in new section 362G(3)(b) in clause 44 of the Building Amendment Bill (No 4). Like Mr Green, I too find it very difficult to understand why subcontracts have been excluded, when one of the most significant objectives of the Building Act review is to improve consumer protection measures. The proposed caveat is completely contrary to the stated objective. It serves to vastly reduce sector accountability and consumer protection measures.

The second is the exclusion of diminution of value as a remedy for default in new section 362P in clause 44. Diminution of value measures the value of something before and after the causative act or omission creating the lost value, in order to calculate compensatory damages. New section 362P needs to be redrafted to account for this possibility in certain circumstances, and the word “completion” in the context of the building work needs to be better defined, to avoid argument and ambiguity.

I thank Mr John Green and look forward to the development of the Building Amendment Bill (No 4). Thank you.

NICKY WAGNER (National—Christchurch Central) : I rise to support this Building Amendment Bill (No 4) at its first reading. It was back in 2009 that the National Government undertook the Building Act review, and that review was driven by the need to improve building quality, to simplify the procedures in construction, to contain costs, and to remove delays in building consent processes. The review confirmed that change was needed, so that builders, contractors, and tradespeople could take full responsibility for the quality of their work, and to make sure that we had professional standards and outcomes. This bill is the second of two bills introduced to implement those Building Act review policy decisions. The Building Amendment Act (No 3) has now passed into law, and we are introducing No. 4 today. Today’s bill introduces the most comprehensive consumer protection measures. For example, it requires that we have written contracts for most residential building work, and ensures that contractors must fix any defect in a building that is reported within 12 months. It also provides processes for the enforcement of warranties. The idea of these measures is to give the consumers much more protection from poor-quality work, and to therefore increase their peace of mind during and after a building project.

The bill also seeks to clarify any exemptions from building consent requirements, and it does this by rewriting and reformatting schedule 1 of the Act. It is of particular interest to me as the MP for Christchurch Central that the bill also introduces a new power for territorial authorities to deal with buildings that are at risk because they are close to other, dangerous buildings. This is an issue that has come out of the Canterbury earthquakes, and it will be really good to have these procedures clarified in legislation. The bill increases the penalties of the offence of doing building work without a consent. The maximum penalty is now $200,000, which is up 100 percent from the previous $100,000, so it makes it a very serious offence indeed.

The bill also makes significant and well-considered changes to the legislation around dams, and considering the amount of work that is going into that area, it is a good thing to see that upgraded.

The building and construction industry is significant in New Zealand. It currently employs about 170,000 people, which means about one in 12 New Zealanders are involved in that industry, but when we think of the future of the $20 billion to $30 billion rebuild that is going to be focused on Christchurch and Canterbury, that number of people involved in this industry can only increase.

So I welcome this bill. I think we must do everything to make sure that we build quality buildings—quality industrial buildings, commercial buildings, and residential buildings—but also at the best possible cost. The 2009 Building Act review developed policies to improve both the quality of building and its cost-effectiveness, and I think the people of New Zealand really need to have confidence in the construction sector and the work it does. This No. 4 bill, I think, will deliver on those policies, so I commend the bill to the House.

PHIL TWYFORD (Labour—Te Atatū) : Labour supports the Building Amendment Bill (No 4) going to the select committee. It is, for the folks at home, the latest instalment in a long-running effort to improve the prospect and the performance of the building and construction industry. Ground zero for this story is the leaky homes catastrophe, which began in the early 1990s, and 14 years later some tens of thousands of New Zealanders had had their lives affected, and some $22 billion worth of homes had been constructed with weathertightness problems. It was a disaster born of deregulation, poor regulation, contracting out building inspections, inadequate product certification—which allowed the use of untreated timber to be used in New Zealand homes—and the abolition of apprenticeships, among other causes.

Thousands and thousands of New Zealanders paid the price for what was a terrible system failure in our building and construction industry. Since 2004, when the fifth Labour Government passed the new Building Act, very few leaky homes have been built, the experts tell us. Since then, there has been something of a cross-party consensus to further fine-tune the regulation of the building and construction industry, to improve the quality and durability of New Zealand homes, to build right first time, to protect the consumer, and to get builders, architects, designers, and other building professionals to be accountable for their work.

The 2004 Building Act reinstalled proper regulation, and since then there has been a lot of work to try to fine-tune building regulation, to lighten the load of compliance, while continually trying to improve quality and accountability. I pay tribute to the work of former Ministers Clayton Cosgrove and Shane Jones, and also to the work of the current Minister for Building and Construction, Maurice Williamson, who has continued with this work.

As I said, there have been, we are advised, very few leaky homes constructed since 2004, but a number of reviews in the intervening period have underlined heavy costs, which are ultimately borne by New Zealand families, who are paying the bill for new homes that are being built, with complexity weighing down the whole process, and long delays in the issuing of building consents.

The main thing on the menu with this bill is a new set of requirements for contracts for residential building. It requires pre-contract information that says a builder must not enter into a residential building contract unless that person has first provided to the client a whole lot of prescribed information. What else does it do? It provides that a residential building contract over a certain price must be set out according to a certain format and methodology, and contain all sorts of particular information.

The other key bit of it is around implied warranties. The bill sets out in some detail a whole lot of implied warranties that will follow as a result of these contracts being put into place—for example, that the building work will be carried out in a proper and competent manner, that all materials to be supplied for use in the building work will be suitable for the purpose, that the building work will be carried out in accordance with all the laws and legal requirements, and so on. There is nothing wrong with this idea. I do not think anybody on this side of the House will dispute the basic intention of this bill, which is to bring clarity and some accountability to residential building contracts.

There are a number of other bits and bobs in the bill. One of them that is probably worth mentioning in this debate is the question of dams. Lord knows how this particular issue got shoehorned into this particular bill, but it is here, nevertheless, and what the bill does is try to focus the requirement for regional councils and their monitoring of dams. It changes the threshold so that, I think, 40 percent fewer dams will be required to be classified for a certain level of monitoring. That will save something like $1.1 million in compliance costs for dam owners. Let us hope that the officials have got the numbers right. Let us hope that this example of risk-based consenting and risk-based management is appropriate.

The main thing I want to say is that even though there is a high level of cross-party consensus for the ongoing process of the Building Act review—and we will be voting to send this bill to a select committee—I do want to note that in the face of the huge challenges that are before the building and construction industry, this bill, like its predecessor, the Building Amendment Bill (No 3), is a masterpiece of incrementalism. To say that it is a modest effort is an understatement.

The challenges facing the building and construction industry are massive. It suffers year in, year out, from a chronic skills deficit that has not been helped by the under-investment by this Government in apprenticeships in the industry. The industry is buffeted by the boom-and-bust cycle, possibly more than any other industry in our economy. Every time the cycle goes down, skilled workers head across the Tasman, and we have seen that time and time again.

In our country’s largest city, the building and construction industry is probably the most glaring example of market failure that we see in the economy today. In Auckland every year we are building more than 10,000 houses fewer than we should be just to keep up with population growth. So the market is failing utterly to meet demand in Auckland, and the consequences are appalling. Year on year, that deficit compounds and the scarcity drives up prices, and as a result we have some of the most unaffordable housing in the Western World.

The building and construction industry is plagued by low productivity. We rank near the bottom of the OECD for productivity of our building and construction industry, and as a result we have very expensive homes—unaffordable homes. And, finally, we are killing people in this country on building sites at more than twice the rate that people are dying at in workplace accidents on building sites in Australia. So something is terribly wrong in the building and construction industry, and in the face of those challenges, what we see in this bill and, I believe, in the bill that came before it, the No. 3 bill, is tinkering by this Government.

Instead of tackling the real issue about accountability by bringing in proportional liability, what does this Government do? It legislates the definition of roles among contractors, clients, designers, builders, and architects. Instead of protecting consumers through a mandatory home warranty scheme backed by insurance, what does this Government do? It writes into a bill screeds and screeds of so-called implied warranties.

Instead of trying to smooth out the boom-and-bust cycle, the Government makes no changes to its procurement policies, and there is no programme of building State houses. But what does it do? It basically gives up in the face of this challenge and brings in overseas workers. This bill is tinkering in the face of massive challenges faced by the industry, but we will support it going to the select committee and see what comes of it.

HOLLY WALKER (Green) : I am pleased to take a call on behalf of the Green Party on this Building Amendment Bill (No 4). I spoke before the adjournment in the Committee stage of the Building Amendment Bill (No 3), which preceded this bill and which has subsequently passed its third reading in this House. That bill, as we have heard, and this one form part of the Government’s response to the Building Act review, which was completed in 2009. Although the Green Party supported the previous bill at its first reading, we were concerned when we heard the submissions at the select committee stage at the piecemeal approach that the Government had taken. And we have just heard from Mr Twyford that the Government is taking a very incremental and tinkering approach to the Building Act review. Those submissions on the previous bill highlighted the shortcomings of that approach. Especially because the previous bill lacked reference to consumer protections, we in the Green Party found ourselves unable to support the previous bill at its final stage. I am therefore pleased to see that this bill, the Building Amendment Bill (No 4), does address the very important issue of consumer protection in the building industry, and the Green Party is therefore pleased to support the bill at its first reading tonight.

Before I talk a little bit more about the provisions in this bill, I want to provide some of the really important context in terms of why we must ensure that the regulatory environment gets it right for building and housing in New Zealand. We have a housing crisis in New Zealand, and it is a crisis both of housing affordability and of housing availability. Nowhere is that more apparent than in Christchurch, where demand for rental housing is out of control. We have seen people needing short-term rentals while they wait for their own homes to be repaired, we have seen people needing long-term rentals if they have had to relocate out of a damaged rental property, we have seen homeowners selling investment properties or moving back into their rental properties and displacing tenants, and we have seen an influx of tradespeople putting extra demands on the rental market in Christchurch. Many State, council, and community houses are damaged and unavailable at the present time, and in that context we need to be thinking about what the building regulations are and what the regulatory environment is going to be as we repair and rebuild Christchurch.

So far the Government has been satisfied in Christchurch to more or less let the market find the solution, but the market will not favour those on the lowest incomes, those in the most need—beneficiaries, sole parents, and people with disabilities. There is a real crisis brewing. There has been some movement, we think, but not enough.

As well as short-term intervention in Christchurch to deal with the housing crisis that we are seeing there and temporary assistance from the Government, we also need, longer term, a better regulatory environment for building and construction, because there has been a similar crisis brewing in Auckland. We heard from the previous speaker about market failure in the building industry in Auckland. The result is that people are finding it extremely difficult to find a home and extremely difficult to afford to either rent or own their own home.

This bill is important because it sets the regulatory context in which the construction and the rebuild of Christchurch will take place, and it puts in place, as we have heard, very important consumer protections, which the Green Party supports. We have heard already in the debate so far that the bill will introduce mandatory written consents for work valued over a prescribed amount. It will introduce mandatory disclosure of certain information by building contractors. It creates new offences for breaches of these requirements. It adds new powers for territorial authorities to deal with buildings that are at risk because they are near or adjacent to dangerous buildings. It increases the maximum penalty for doing building work without a building consent. It clarifies the powers of the Chief Executive of the Department of Building and Housing to review the performance of territorial authorities, regional authorities, and building consent authorities, and, as we have heard, in a rather unrelated clause it makes some amendments to the dam safety scheme, including giving regional authorities the power to investigate and refer dams for classification.

We think that the consumer protections in this bill, particularly around mandatory written contracts for building work over a prescribed amount and mandatory disclosure of certain information by building contractors, are very important. The reason that they are important is because of the vacuum of regulation in the building industry that we have had previously, and that was born out of the deregulation of the industry by subsequent Labour and National Governments in the 1980s and 1990s. As we have heard, it was this vacuum of regulation, this period of deregulation, that allowed for the leaky homes crisis to occur, and we have seen the terrible consequences for homeowners when poor regulation and poor building and construction standards allowed that to take place. So we think, in that context, that these consumer protections absolutely need to be reinstated because what we saw with the leaky homes crisis is that many homeowners were left with very inadequate protections, and when everything went pear-shaped and when their homes were found to be substandard they did not have adequate protections and we have had to legislate to make up for that fact. So in that context it is really important that we get it right when things go wrong for consumers who have taken the plunge to construct or build their own homes. We support the protections in this bill.

However, the Green Party wishes to emphasise that better warranties and better consumer protections, although they are important, are only the ambulance at the bottom of the cliff. When things go bad—God forbid—and a homeowner finds that something drastically has gone wrong with their property and it is no longer habitable, these protections are great for that scenario. But we need also to be thinking about how to regulate to ensure that buildings are constructed to a higher standard before things go wrong and before we need that ambulance at the bottom of the cliff of greater consumer protections. We have not been convinced by the Government’s approach to the Building Act review, in the form of the previous Building Amendment Bill and this bill, that the Government’s approach to the reforms is going to achieve an improved regulatory environment that means it is less likely that buildings will be constructed to poor standards to begin with.

We are looking forward to the contributions in the Local Government and Environment Committee on this bill, but I think we would echo the concerns of the previous speaker that taking such an incremental and tinkering approach when what really is required is a more fundamental review of the building regulation environment in this country means we are unlikely to make the really fundamental changes needed to ensure that we do not have to rely on these consumer protections, although it is important that they are in place when things go wrong.

I do want to thank and acknowledge the Minister for Building and Construction, Maurice Williamson, for the way he has engaged with parties across this House on this legislation and I do look forward to hearing the contributions at the select committee, and particularly hearing from consumers about how the consumer protections will affect them and whether they are adequate to meet the needs of building consumers. The Green Party is pleased to support this bill at first reading, and we look forward to engaging further in the debate.

JACQUI DEAN (National—Waitaki) : The Building Amendment Bill (No 4) represents a fundamental shift in the building industry in New Zealand. It makes you reflect that building a home—or any kind of building, but particularly a home—for anyone is a big undertaking. It might be a person’s most significant asset that they ever have in their life. It is the place where you have your family, where maybe your kids grow up, or where you retire to—whatever. It is a big deal. It would be good to know that that building has been constructed right the first time, and that if there are going to be any issues with the construction of that building, then the consumer has recourse back to the builder who constructed that home.

It is interesting, is it not, watching the television advertisements—and there are a number of ads on at the moment—for home builders. What they are doing in their advertisements is they are signalling that they understand the content of this bill, in that they are now beginning to offer guarantees. They are saying: “We will build on time, at the price we quoted.” The language has subtly shifted, and I think what that shows is that the building industry is picking up what is coming through Parliament here—and, I dare say, welcoming it.

What this bill does is that it will have the happy consequence for the homeowner and the home builder of reducing compliance costs. It will also reduce complexity for the homeowner and the home builder and also delays in the process by reducing reliance on the building consent authorities from the local authority and putting the responsibility on to the builder and on to the building firm. So what will happen is that the person building your home will become much more accountable to the homeowner because they will have to disclose certain things to you when you are contemplating building a house. There will be information that they have to tell you about their company, who it is who is working for them, who is gong to be working on the construction site, and a bit about their track record. Consumers are also going to get a written contract from their building company that says—and which I have just outlined is being picked up by the building industry already—that there will be a written contract for most residential building work.

There will be specific methods for enforcing warranties, and so consumers will know that if something does go wrong, they will have recourse. In fact, building contractors will be expected to fix any defects in their work that are reported within 12 months of the completion of the construction. So you have lived in your home for a year, you have gone through the seasons, and if something is defective and you make a notification of it within 12 months, then you can expect to get a remedy out of that.

Of course, there will be penalties for failing to comply with building consent requirements, and those penalties are doubling. They are going from $100,000 to $200,000. We have got a busy time ahead of us in places like Auckland but also in Christchurch in the construction industry, and within the next few years, particularly in Christchurch, there is going to be a huge number of new builds going on. So rather than loading up the local authority with all those compliance requirements, this bill is enabling the building industry itself to take charge, if you like, of the situation and provide a good service to the people whom they are building new homes for.

You know, it is like I said at the beginning of my contribution: building a home is a big deal. It can be the biggest asset that many people have in their life, and they want it done right. And if it is not done right, then you want to have recourse to have it put right. So this bill carries out those functions.

Of course, this bill and also the Building Amendment Act of 2012 are the result of quite a comprehensive review of the Building Act 2004, which was carried out in the first term of this Government in 2009 and 2010. What that review found was that there was too much of a reliance on your local authority, so responsibility was not so much on the builder but on the local council. That was identified as a result of that review. These changes will enforce in law, once the bill has been through the Local Government and Environment Committee and we have heard submissions on it, what is already best practice in the industry. This is a good bill, I look forward to its consideration in the select committee, and I commend the bill to the House.

ANDREW WILLIAMS (NZ First) : I rise on behalf of New Zealand First as the building and construction spokesperson to speak on the Building Amendment Bill (No 4). New Zealand First has said previously in this House that we will support good policy, but we will oppose bad policy. In this case we are opposing this bill because we believe it contains a certain amount of bad policy that is not in the best interests of New Zealand or New Zealanders.

We seem to not learn by our mistakes of the past and we seem to go full circle and repeat our mistakes. We went through the whole episode of the leaky homes saga in the 1990s and through the 2000s, which has cost this country in excess of $20 billion. As a result of that, this country now has a huge debt hanging over its head that can only get larger, not smaller, and in fact more and more leaky buildings are being found by the day. That does not just mean leaky homes; that includes leaky schools, leaky hospitals, leaky commercial buildings, leaky all sorts of buildings, and leaky buildings of any nature in this country.

What we are basically doing in this bill is now opening the books even wider to allow self-regulation in the sense of the building industry to a great extent. It is basically taking the regulatory side away from the local authorities and the councils, who would, at this point, be overseeing much of this work, and giving it back to the industry to say: “Well, you self-regulate. Here are the rules, this is what you will do, and you must comply with it.” As we all know, rules are there to be broken and that is exactly what has occurred throughout the leaky homes situation, and that is what will occur again through this Building Amendment Bill (No 4). I am sad to say that probably in 10 years’ time we will be looking back on this and there will be amendments required to this bill—significant amendments to this bill—because people will say: “How did we ever allow much of that to go through? Why did we go back to the wild west in New Zealand? Why did we turn New Zealand back into a situation where basically virtually anything could go up without too much oversight by the local authorities?”.

I was a hearing commissioner for 9 years in local government and I sat on many, many, many building consent and resource consent applications. When you have sat as a commissioner and you have heard the applications before you, you do understand why it is necessary to have a regulatory authority that is, at least, having an oversight to much of the building process that is going on. For instance, and I raise the issue of heritage, nowhere in this document do we hear the mention of the word “heritage”, yet much of this work that will be allowed to occur without any consent from any authority could have a great effect on the heritage buildings within this country. For instance, it says here in clause 7 of Part 1 of the schedule: “Repair or replacement of outbuilding—The repair or replacement of all or part of an outbuilding” is permitted. So basically an outbuilding could be there that might be 100 years old, it might be 120 years old, and somebody without a permit can literally just replace it as long as it is within the same footprint, and build a new building on the same footprint. To my mind we could see decimation of heritage buildings throughout New Zealand, based on that clause alone.

It also says here under clause 10 of the schedule that interior alterations to existing non-residential buildings will be a permitted activity, so in other words shops, offices, libraries, factories, warehouses, churches, or schools can be retrofitted internally without a consent. Well, again, we have wonderful buildings throughout New Zealand, heritage buildings, but basically they could be stripped out, gutted, completely removed on the inside and replaced, with no consent from an authority. So again we could have decimation of our heritage buildings. This also allows for things like carports to be put up without a permit. Again, can you imagine what sorts of structures could go up in the form of carports around the country. It also allows for retaining walls to be built as long as they do not exceed 1.5 metres depth in the ground. Well, a lot of retaining walls are right on boundaries with other properties, affecting neighbours, and if there is no consent given for a particular retaining wall you could have a huge impact if it does not have the required drainage put in it, if it does not have the right footings, and if it is not done to a certain standard. But if it is permitted to be done up to 1.5 metres, then this could have a huge impact on property owners and neighbours.

This bill allows for fences and hoardings to be put up up to 2.5 metres in height. Well, most fences in most cities are 1.8 metres and they have discretion usually up to 2 metres in height for most residential areas. This will allow fences to be put up up to 2.5 metres in height. Again this will allow, basically, large fences to go up all over the place without any authority or consent at all. If you carry on through, it allows signs to go up that do not exceed 3 metres in height. Again, large hoardings can be put up. At the moment authorities have control over signage throughout the country and can determine where signs go, how high they are, and that sort of thing. This basically allows for signs to go up that do not exceed 6 square metres and do not go higher than 3 metres. Again, we will have outright large-scale erection of signage around this country with no authority being able to intervene and stop it.

I look through this and I think there are not enough safeguards in here. I have a great impression from working with building inspectors and working with local councils and authorities on the North Shore and in the Greater Auckland area, and I have been very impressed with the work that the building inspection people do. They are the watchdogs for building. They are the ones who go out on site and make sure things are done to a certain standard. They have been the ones, unfortunately, who have been put in the invidious situation of having to approve buildings under the building code that allowed for the kiln-dried timber and the monolithic cladding that ended up in the leaky homes, but they were inspecting buildings to the building code that was passed by the National Government back in the 1990s. So they were approving what was an approved building code. However, in retrospect, many of those same building inspectors would say that the same buildings should never have been allowed to go up in the first place, and the building code should never have been amended back in the 1990s to allow those sorts of buildings to be constructed.

What we are seeing here is basically again a dilution of the building standards. What we are seeing is an opportunity for wholesale erection of all sorts of structures. For instance, pergolas—it will be a permitted activity to put up a pergola anywhere you like. And, again, pergolas do fall down. They do topple. I have personal family experience of a person who has come off a pergola because it was improperly constructed. This allows for tents and marquees to be put up any time you like, as long as they do not exceed 100 square metres in floor area. Again, sometimes in this situation you do have to have somebody controlling it because, again, these structures can be built on all sorts of land situations—slopes, hills, and all sorts of parks and recreational areas that are not really suited.

This is, again, basically an attack by the National Government on local government. It is very clear that National does not like local government. They see this as another way of diluting local government. This is basically kneecapping the whole process of local government in terms of its regulatory role in overseeing building inspections. New Zealand First certainly supports the reduction in fees and the reduction in costs in terms of the building sector. We certainly support the reduction in the cost of inspecting the works and finding cost savings, but we have great concerns that through this, and in years to come, what we will see is a lot of shonky building going on. We will see a lot of what we would call replacement of buildings, and replacement of structures, when in actual fact they will be new structures. We see this as potentially affecting significant heritage buildings throughout New Zealand because people will simply turn a blind eye to what is replaced in an existing situation. So New Zealand First will not be supporting this bill and we will be opposing it through this reading.

NIKKI KAYE (National—Auckland Central) : I am pleased to speak on the Building Amendment Bill (No 4). I want to start by acknowledging the Minister for Building and Construction, the Hon Maurice Williamson, and I also acknowledge Nicky Wagner, the chair of our Local Government and Environment Committee. I think it is really important to acknowledge that we have got support across the House from Labour and the Green Party. I do recognise Andrew Williams and the contribution he has made. I think it is important, as well, to take a step back and look at the history in this area. We know that there was significant reform in 2004, and I want to acknowledge Clayton Cosgrove and Shane Jones for the contributions that they made.

But I do want to address an issue that was raised by Phil Twyford previously in the debate. He said the leaky homes crisis was ground zero. He made a number of comments about the 1990s, but do you know what he never mentioned? He never mentioned that the last Labour Government actually denied that there was a leaky homes crisis. I was a researcher in this building at the time and I watched for a significant period of time when the last Labour Government actually would not even acknowledge that it was an issue. I do want to say that subsequently there was reform in 2004, but I do want to correct that piece of history because I think it is important for this debate.

Hon Lianne Dalziel: We set up the Weathertight Homes Resolution Service. Is that not acknowledging the problem?

NIKKI KAYE: The member opposite is making comments about the Weathertight Homes Resolution Service. What that member does not realise is that I actually was a researcher who helped draft a piece of legislation that went to Michael Cullen and that formed the basis of the Weathertight Homes Resolution Service. So she may not be aware of that.

Secondly, I just want to talk as well about the contribution to the sector that the construction industry does make. It is worth $20 billion, 170,000 people are employed in the construction sector, and it is worth 5 percent of our GDP. So we need to acknowledge this evening how important this sector is to New Zealand.

I also want to touch on some comments that have been made about the Canterbury rebuild and housing affordability in Auckland. We know that it is very important to have this legislation through the House, but also the reform around the Resource Management Act, because we have several significant issues in New Zealand. Part of the issue is around what is the best regulatory environment. The other issue is around the Resource Management Act and whether we have got our consenting provisions right. But the key thing I want to mention, and it is actually mentioned in the regulatory impact statement, is that this has been driven by a number of things that did not happen in 2004. I want to read this statement from the regulatory impact statement: “While consumer support was emphasised in the Building Act 2004, through a purpose statement and implied warranties, no specific measures were included to assist consumers to understand their rights, enforce their rights, or hold practitioners to account other than through the disputes tribunal … and the courts.” So I think that is a very important point, because all of the provisions within this legislation make a number of changes that are targeted to ensure that consumers can enforce their rights, and I want to mention some of those changes.

We are obviously focusing on three things. The first thing is there is going to be a bit of a stick there. So we are going to increase the penalties from $100,000 to $200,000 for failing to comply with building consent requirements. The second thing we are going to do is to ensure that there are written contracts for residential work and that is about, again, protecting the consumer. The third thing we are going to focus on is to ensure that building contractors are more accountable by requiring disclosure of information. That will include information about their company and the people who carry out work and their track record. I think that is a really important point, because we need to ensure that there is greater transparency around those practitioners who are out there.

I am pleased to be supporting this legislation. I think the key and the major change of this legislation is that homeowners are going to be able to better identify the difference between a professional and someone who may be considered as not a professional in this industry. I think we need to recognise the huge contribution that the construction industry makes to New Zealand—5 percent of our GDP. I think we also need to reflect on our history and we need to be honest about that history: the contribution that has been made by the last Labour Government, but also the fact that the reason we are here is that there was not the ability in the 2004 reform to ensure that consumers were adequately protected. That is why I am glad that there is support across the House to be able to address this, and that the bill will go to the Local Government and Environment Committee. I am very pleased to support this legislation in the House. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I thought that was an extraordinary contribution, because the member Nikki Kaye stood to describe what the Building Amendment Bill (No 4) was apparently designed to address, and this is what the member quoted from the regulatory impact statement: “While consumer support was emphasised in the Building Act 2004, through a purpose statement and implied warranties, no specific measures were included to assist consumers to understand their rights, enforce their rights, or hold practitioners to account other than through the disputes tribunal (for small claims) and the courts.” And, actually, nothing that this bill does addresses that issue. There were three things that she said were designed to address the flaws in the original legislation, which was a major reform in 2004 taking over from the 1991 building legislation, which I think National passed in that year, obviously with the contribution of a previous Labour Government having done some of the groundwork. This is not something that I would reflect on with any sort of particular goodwill, actually, because I think we both made terrible mistakes, and, as a result, people have paid for them with their lives and with their livelihoods. So I do not think anyone has anything to reflect on with any particular joy in that regard.

But she talked about penalties going up for building consent issues. Well, that does not improve things for consumers at all. She talked about better information for consumers. Well, that does not actually protect them when the company has got no money when it actually collapses. And I would like to refer her to the particular section of the regulatory impact statement that she has avoided reading to the House: “Officials have also considered arguments for shifting to proportionate liability, which would be a major change to the liability framework. While not without benefit, it would also have drawbacks including likely requiring mandatory surety”.

And that is what this Government cannot stand. It cannot stand anything that provides real protection. It is all smoke and mirrors. We are going to let this bill go to a select committee, but I am saying that we are going to be certainly calling on people—not just consumers, but people in the building industry themselves—to have a real good look at this legislation and ask themselves the question whether it provides protection for anyone. I can speak as somebody from Christchurch who has had the recent experience—not so pleasant experience—of having lived through a series of earthquakes that have caused great damage to our city. I am deeply concerned that the Minister who is responsible for this bill, Maurice Williamson, heads a department that is about to be folded into this new big—

Darien Fenton: MoBIE

Hon LIANNE DALZIEL: MoBIE—what does it stand for? The Ministry of Business, Innovation and Employment. I want the next speaker from the National Government to answer this question: why would you roll in the two departments that are the subject of royal commissions of inquiry before they have reported and before they have made a single recommendation to the Government? Why would you fold them into a single department before that? Well, I have to say that the commission of inquiry into Pike River obviously relates to the Department of Labour practices, and that is why it is so vital that this concept is put on hold in the meantime.

But let me also say that the royal commission into the Canterbury earthquakes and the building failures that occurred there is going to produce some extremely useful information, not just to this current Government, but to Governments in the long term. It is the most resourceful of commissions of inquiry because it has actually managed to bring together in one resource a range of informants and information, people who have made submissions, and people who have been asked to make submissions, and we are gathering the best possible information in relation to building safety that this country will ever have the opportunity to have. And if we are to actually respect those who lost their lives in that earthquake, then to learn the lessons from what that teaches us is the most important thing that we can do. I urge the House to think on this very carefully.

The reason why Labour, unlike New Zealand First, is supporting this bill to select committee is that we want to show good faith to a Minister who has shown good faith to us. He briefed us on this legislation; the Green Party mentioned that he had done so. He has worked, I think, in a very open way with members of this House in ways that perhaps some of his colleagues do not always see as important. But when you are dealing with buildings, which are not just around the safety issue, but people’s lifetime savings are committed to their family homes, you know these issues are important and it is important to engage with all political parties. So that is why we are going to let the bill go to a select committee. But I have to warn this House that unless there are substantial changes to the detail within this legislation, then our support for it will not carry on beyond its report back to this House.

But I believe that we actually have a Minister who has taken the issues of building and construction very seriously and does want to see significant changes in this area of the legal framework, which is so important to our daily lives. We are willing to work with him to get the changes to this legislation that will make it work.

I want to say that the legislation itself does focus very much on residential homes, but we still have major problems with buildings in this city, in Christchurch, and in Auckland that have been built to a standard that is not sufficient to stand up to the seismic activity that—we now know—parts of our country are exposed to. There are buildings in this city where I will not go, and the reason is that I believe they are not safe. I believe it is important that we understand all of these issues very carefully, so that we are able to provide the best possible support to those in the industry who require that support, and also to enable them to speak out without fear of having their reputations destroyed, as it were, by those who want to avoid fronting up to the issues they are raising.

So I think it is very important that we take this bill very, very seriously. But it is not good enough. I am actually quite concerned about the issues that New Zealand First has raised. Members have been talking about self-regulation, but in the environment that we have been in, in respect of Pike River and the collapses in Christchurch, I think one should be very, very careful about going down that track.

Although we are not talking about self-regulation, it does not have to be expensive. It does not have to be difficult. It does not have to be problematic. It actually can be done in a way that is commensurate with the degree of risk that is faced, and it can be risk-based, and it can be proportionate in that regard. We have a real difficulty in Christchurch at the moment. We have detailed engineering evaluations being carried out on buildings on a daily basis at the requirement of the Canterbury Earthquake Recovery Authority. I know there are engineers who are refusing to do those reports. They are refusing to do them, not because they are not competent to do them, but because they are fearful of the consequences of not getting it right, and ending up in front of a royal commission at some time in the future.

I am saying this out loud, because I think we in this Parliament have to be very cautious sometimes about what we do here, and the impact that it has on behaviour out there. I think it is really important that we get the regulatory balance right, so that we offer the protection that needs to be offered in these circumstances but also enable industry to develop in a way that supports the economic growth of our nation. We have got to get that balance right. I think it is really important that we think about this carefully. So we will support the bill’s referral to a select committee, but we really want to see significant change before we support it any further.

MAGGIE BARRY (National—North Shore) : I spoke to the Building Amendment Bill (No 3), which was passed in March 2012. This Building Amendment Bill (No 4), of course, is the companion bill. It is the second of two bills to implement the review of the Building Act 2004. This is all part of the wider picture with National’s Better Building Blueprint for better building, which is designed to make it easier and cheaper for New Zealanders to build good quality homes and buildings.

The cowboys prevailed for too long. Others have documented the human misery and anguish that have resulted from people inadvertently buying homes that were completely unsuitable. This bill in particular addresses some of the issues around consumer protection, and I think it also makes the builders, who are the people who should be accountable, more accountable, and that is partly why I support it. The punishments are more severe, and I think that when you increase penalties for failing to comply with building consents from $100,000 to $200,000, you are going to get people paying attention to that.

The overall situation is that if you are a consumer and you are wanting to buy a property, or to buy land, either to amend a property or to build one from scratch, how do you tell who the cowboys are? How do you know who is the right builder to go to? From now on we are going to be actually getting proper disclosure of information, if this bill goes through. It will include information about the company, about the people who will carry out the work, about the skills they bring to the job, and also about their track record. So it will be a lot harder for the individuals who have been involved with shonky practice or who are not properly set up, and it will be easier for the consumer to not accept them and not have them build their house.

This was difficult in the past because the cowboys were pretty well hidden. For a very long time we were held in their thrall, and I think this bill goes a long way to help consumers understand how to spot the cowboys and make the sort of informed decisions that we need. After all, the rebuild in Canterbury is about to start—$20 billion to $30 billion worth of building—and we have to be extremely careful that we do not get into the situation that has arisen in the past.

I think that on both sides of the House we have all admitted that there have been problems, and as Alan Martin used to say in the old TV ad: “It’s the putting right that counts.” Maurice Williamson is to be commended as the Minister for Building and Construction for working across parties and trying to come up with a piece of legislation that is going to be able to be passed, and the bill’s referral to the select committee, of course, is a very important part of that process.

But this began back in 2009 when we undertook the Building Act review. It was considered at that time that there was too heavy a reliance on building consent authorities for building quality, so that responsibility had been taken away from the builders and the professionals and given to another entity, which often ducked for cover. Change was needed. A culture change and an attitude change were needed of the builders, and I think that the incentives for building professionals and tradespeople to step up to the mark are there. They need to take responsibility for the quality of their work and stand behind it.

So consumers will have the knowledge that they will have mandatory written contracts for work that is valued over a prescribed amount. You will also have mandatory disclosure of this information by building contractors, as I outlined, and there will be these new offences for breaching those requirements. I think that the new provisions that are involved and inherent in this No. 4 bill are going to give more protection for consumers, and I think that is a commendable thing.

I think it is also important that you have the remedy of the defect, and you need to have a time frame, and I do agree that 1 year is a good period of time for all parties concerned. So if, for example, there is a problem with a building and you notify under the residential building contract within a year of completion, there is an onus of responsibility on that builder to put it right. Those are the sorts of provisions in the bill that make it an important part of the overall package that National is bringing through, so I am happy to stand and speak in support of this bill.

Dr MEGAN WOODS (Labour—Wigram) : I am happy to take a call on the Building Amendment Bill (No 4). Labour supports sending this bill to the Local Government and Environment Committee. As many of my colleagues have said, we would like to thank the Minister for Building and Construction for the collaborative approach he has taken with regard to this legislation.

I think that what we are seeing here tonight during this debate is that Labour supports the broad direction of this review but can see that there are some problems that need to be ironed out. My colleagues who have spoken previously have pointed to the fact that New Zealand First has raised some real issues that need consideration. The reason we are supporting this bill at its first reading is so that it can go to the select committee and be heard in this forum.

What it is for us is that we see that this is a piece of legislation that is looking to fix and unpick a period of our history, throughout the 1980s and 1990s, when we removed many of the regulations around our building industry that were there to protect consumers and the people who were living in those buildings. As we have heard tonight many times over, it was the removal of these regulations that gave us the leaky homes situation, and it is also this situation that has made people feel unsafe in terms of the Canterbury earthquake and the surety of a house. Like my colleague beside me, Lianne Dalziel, as someone who lives in Christchurch, the need to have good regulation around housing and home has become more apparent to us in the last 18 months.

This is not about protection just in terms of whether the architraves in your house are right; this is about protections in terms of whether your house is going to hold up and you are going to be safe within the building, and whether you will trust that that building is not going to be part of your demise. So we consider that this really does need to be given a good chance for these issues to be considered. We cannot just think about regulation in terms of building in terms of red tape, and as something that needs to be skirted around. We cannot think of this as something that we have to remove to make an industry more efficient when it comes to something as fundamental as buildings in which people’s lives can be put at risk if we get this wrong. We have heard tonight over and over again that if we as legislators in this house get this regulation wrong, then we do put people’s lives and we do put people’s livelihoods at risk, and we need to ensure that we get this right. This is not consumer protection in terms of whether or not your television is going to work 6 months after you bought it. This is consumer protection in that you are protecting the biggest investment that anyone is going to make in a monetary sense, and an investment that people are making in terms of their safety.

We need to send this bill to the select committee, as my colleagues have said. We need to give people a chance to give their feedback and talk to us about how it is that we can get these regulations right. It is our duty as legislators in this House to do this. We have to get these protections right. So I am happy to stand here in support of Labour sending this bill to the select committee. Thank you.

GARETH HUGHES (Green) : Kia ora, Mr Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to take a call on the Building Amendment Bill (No 4). We have heard countless times in this debating chamber the problems we have seen with deregulation in the sector and the leaky homes crisis. I would just like to kick off by acknowledging the comments by the member Lianne Dalziel. Countless times I have heard in this Chamber this side blaming that side, and that side blaming that side. It was good to have some responsibility, because actually it has been a cultural problem that we have had in our country. I would like to acknowledge that honesty, that frankness. This is what we need to have going forward: a realistic appraisal of the issues facing us.

As many members know, the Green Party opposed the Building Amendment Bill (No 3) because it was piecemeal, because it did not contain consumer protections. That is why we will be voting for this bill, the Building Amendment Bill (No 4), its companion, which came out of the building review of 2009. We have got those new sections 362A and 362S, which relate to consumer protections.

The bill does a number of small things. I think Phil Twyford was bang on the money when he said that it was a masterpiece of incrementalism. It does a few things, such as the enhanced, more comprehensive consumer protection measures. It clarifies exemptions from the building consents, makes some amendments to the dam safety scheme, and increases the maximum penalty. Our problem with the Building Amendment Bill (No 3) was the lack of the consolidated big picture with which we could have gone to the public of New Zealand and said that the Government had looked at the recommendations that came out of the 2009 report and was giving them a consolidated legislative solution. But instead we went down this piecemeal approach, which saw the Labour Party and the Green Party vote against it.

I will take only a short call, but there are a few risks inherent in this approach. It is a deregulation. We are seeing less local body oversight. I could speak about the whole broader context that is the attack on local government, which we heard about from Andrew Williams. This Government is reducing the role of local government. We have heard former Minister Smith trying to limit the functions of local government, blaming its debt problem. The real debt problem facing this country is at Government level; it is not local government, which is borrowing not half as much as central government.

We have some concerns on warranties, like what will happen if you have a fly-by-night company that does go bankrupt, leaving the unfortunate homeowner or business owner in the lurch. One area picked up in the Kensington Swan analysis of the bill, which I would like to see looked at at the select committee, is around the continued responsibility by the original major renovator or builder of a residential property, not by a professional builder, when it is subsequently being sold down the line. Kensington Swan had the scenario where you could see a house having changed hands six times from the time the original homeowner made the major renovation or built the house. They are still responsible. I think the outcome of this is actually that we will see fewer Kiwis doing it themselves and building their own homes. I do not think that is the message this Parliament wants to send those Kiwis. The bill is a masterpiece of incrementalism. It is a bit of tinkering, but we welcome it. We urge the public to make a submission.

The National Party was elected to Government on the pledge of building a brighter future; I guess it is building a future of some measure for Skycity, for Warner Bros, for the frackers, for the drillers. When we are talking about building, we actually need a bigger approach to these issues. Now is not the time for incrementalism. Now is not the time for tinkering. There are huge issues facing us, from the homelessness crisis, the housing affordability crisis in our big cities, the thousands of cold, damp rentals making our kids sick, the lack of State houses, and the myopic solutions, which, from the Government’s perspective, are simply to wipe people off the massive waiting list—at one point it was nearly 10,000 people—for State housing. Coping with the leaky home fallout, the earthquake retrofitting across the country, the lack of apprenticeships—these are huge issues that need serious thought by the Government and by this Parliament, but all we are getting is this bill. Still, we will be voting for it to go to the select committee. We urge the public and the sector to have their say, and we will be going into further votes with an open mind. Kia ora.

PAUL GOLDSMITH (National) : I am very glad to reassure the member who has just resumed his seat, Gareth Hughes, that we are indeed working towards a brighter future for all New Zealanders, not just for the people he mentioned. I am very happy to speak in favour of the Building Amendment Bill (No 4), and I agree with Lianne Dalziel that it is indeed important legislation and worth careful consideration at the select committee. I am looking forward to that opportunity.

This bill is about productivity and consumer protection in particular. We have heard many lamentations about housing affordability, and that is a serious issue for New Zealanders. There are lots or reasons lying behind that. I always find it intriguing, particularly when the Greens are concerned about housing affordability as they are very much on the side of those in councils who are very determined to limit the amount of land that can be used for building houses, which is one of the biggest drivers of housing unaffordability in this country. You cannot have it both ways. But certainly the building sector needs to be more efficient, and that is one element of the costly housing that we have in New Zealand.

This bill does a number of things, and I will not go into everything. Unlike the regulators over there in New Zealand First, I am very pleased to see schedule 1 listing a number of things that do not require consents. I think we should strike a blow for liberty from time to time, and the ability to build a retaining wall up to 1.5 metres on your property without having to go through hoops of fire seems to be a good idea to me.

The mischief that this bill is really focused on trying to deal with is the extremely risk-averse behaviour that is rife throughout the building industry, which is due in large measure to the leaky homes crisis, which has indeed been a terrible blight on many families and many house owners around the country. I have certainly renovated my house a couple of times in recent years and have seen tens of thousands of dollars added to the bill for apparently little benefit, aside from ticking boxes required by local government. I remember joking to one of the builders in my house that I did not actually need to land a helicopter on top, and that all this wood was perhaps not necessary. But that is the kind of—

Hon Member: John Banks might come and visit.

PAUL GOLDSMITH: There was nobody else involved, I am bound to say. This bill focuses on consumer protection. The problem is that frequently there is no formal written contract setting out the nature of the agreement and the rights and obligations of each party. Many consumers and builders are unaware of the implicit warranties. It is difficult and costly for consumers to hold practitioners to account, and the consumer has little leverage over the practitioner once building work has been paid for. There is little incentive for the practitioner to repair defective work or pay compensation. These issues are exacerbated very much by the fact that some developers and designers and builders actively manage or set up shelf companies in order to get around a liability.

So an important part of the bill is implementing the policy decisions about introducing enhanced and more comprehensive consumer protection measures, including mandatory written contracts for work valued over a prescribed amount, and mandatory disclosure of certain information about building contractors, such as what sort of company structure they have in place, and that, I think, will offer a considerable amount of clarity and openness, as consumers are making what is one of the biggest decisions of their lives. They will have much more information available to them.

Where does that get us? Well, I think the bill will support responsible builders and separate the professionals from the cowboys. I hope that further down the line, in the future, the bill will create an environment where greater trust is restored in this industry. Like any industry, I think that trust is the key to having an efficient industry, because you cannot legislate and regulate for every circumstance. You have to rely on trust, and that is what we are trying to rebuild through this legislation. That, I think, ultimately will be the key to having a more efficient sector. This is a complex area, and it is an area where you can make mistakes down the line. So I am looking forward to a careful consideration of this during the select committee consideration.

• Bill read a first time.

• Bill referred to the Local Government and Environment Committee.

Hon DAVID CARTER (Minister for Primary Industries) on behalf of the Minister for Land Information: I move, That the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill be now read a third time. I am particularly pleased and proud to see this bill back before Parliament tonight. I am thankful for the cooperative working relationship I have established with the Hon Maurice Williamson as Minister for Land Information.

Tonight we see the final stage of what has been a very unfair and very unfortunate battle with a relatively small number of highly specialised South Island high country farmers. This battle was started by the former Labour Government for reasons that fail any logical explanation whatsoever. The former Labour Prime Minister Ms Helen Clark did enjoy the high country. She was known to have an affinity for the high country. She was known to go there and spend her time trekking the high country, and her adventures through the high country were well publicised. But if she had an affinity for the high country, she certainly had no affinity at all for the farmers and their families who try to eke out an existence in this very hostile and fragile environment.

What drove Helen Clark’s jealousy and distaste for those high country farmers is something that we will never know for sure. There are lots of rumours around the high country as to what drove this jealousy and this hatred from the former Labour Prime Minister. One rumour was that she had trespassed with her trekking party on to private property. All she had to have done was ask for permission. But, of course, with somebody as arrogant as Helen Clark she did not do that. And, of course, the farmer, aggrieved by the fact of finding somebody on private property, asked her to leave. Whether that was the reason or not, the point I make is that she simply had to ask and that access would certainly have been granted.

Having come up with a dislike of, and hatred for, these farmers, Ms Clark and her Labour Government went out to get these guys. They dramatically increased the rents for the lease that these leasehold farmers would then have to pay to the Government. She was ably assisted in this process by the Hon David Parker, who I have no doubt will make some contribution shortly in this debate, because he had a similar atrocious attitude to these high country farmers. Again, I do not know why he hated these people. It may have been because he came into Parliament as the member for Otago, representing the majority of those people and as constituents they quickly realised that he had no affinity with them, so they dumped him after 3 years as their member of Parliament. I can now say they are very well served by the current member for that area, Jacqui Dean, who has got to know those families and to understand their issues. She has developed an affinity with those high country farmers.

What drove the hateful attitude of Mr Parker and Ms Clark towards the farmers is unknown, but what they did then was march the rents up for those properties by not doubling, not tripling, but in many cases increasing them by 10 times. In cases they drove the rents so high they were higher than the gross income that the farmer received from that property. Mr Parker laughs at this, but that is how stupid his policy was. Mr Parker never realised that the major income for those people was an annual wool cheque. Most of their income came from merino wool. He was expecting the rent to be higher than that wool cheque, absolutely disregarding the fact that it costs money to run these farms. This Government wants to see these farmers with enough money to spend on weed control, wants to see these farmers with enough money to spend on pest control. But Mr Parker wanted to make sure there was no money left for those expenditures.

So what National did in the 2008 election campaign was to campaign to fix this ridiculous policy. We said we would make sure we established rents on the basis of what a farmer can earn from his land. In times when wool prices are good, farmers can afford to pay more to the Government for the rental of that land, but equally in times when wool prices are not good, they cannot. I want those farming families to stay on that country. I want them to be good enough and to have enough money left to sustain themselves and their families, and to improve the property. If they do not improve the properties—and Mr Parker and Ms Clark drove them off the properties, and it all fell back on the taxpayer and on the Department of Conservation. You ask any person who logically knows that country who will look after the high country better: a Government department or those farmers who have been there for generations. I tell Mr Parker that it will not be the Department of Conservation. That is not its skill set.

The responsibility comes back on the Crown if these farmers are not able to physically survive on that land. We have to make sure that we deliver income-related rents, and that is the policy that we have espoused tonight. We progressed the legislation as well as we could through the first term of the National Government. We did not get it passed before the last election, but I gave my word to the high country farmers that we would do it as soon as possible in 2011-12. We are doing that tonight.

The final point I want to make is that when the policy was released on 3 August 2010 the Labour Party, through Damien O’Connor, supported it. Mr O’Connor said on 4 August: “High country rentals based on earning capacity is a good principle on which to base lease payments to the Crown …”. He went on to say: “I am sure farmers will welcome the decision and get on with farming and protecting their leasehold properties,”. I agree with Damien O’Connor. He saw the sense in this policy, yet when the bill finally came back to the House for its first reading Labour opposed it. Damien O’Connor had been completely embarrassed and rolled by his caucus.

Hon David Parker: Rubbish!

Hon DAVID CARTER: Mr Parker says: “Rubbish!”. Why did the Labour Party, through its spokesman at the time, support it when it was announced, yet when the bill came into the House for its first reading the Labour Opposition opposed it? There can be only one answer, Mr Parker, unless you are as illogical about this as you were about your original policy. Damien O’Connor got rolled again. It is because of David Parker leading the debate in their caucus room, because Mr Parker has never understood these families who farm the high country.

In closing, I want to thank the Primary Production Committee, under the superb chairmanship of Shane Ardern, for the work it has done in considering the bill. To all of those who made submissions to help get the bill even better, I express my appreciation. There has been significant support amongst those submissions. The committee did introduce some useful amendments, including the purpose clause. This bill will make the process for setting rents for pastoral leases much more transparent and much more predictable. The process will be less expensive for the Crown and less expensive for the lessees. Crown pastoral leases are a unique form of tenure under which the farmers do carry out their pastoral activities while preserving conservation ability. The Crown gets considerable ecological benefits from having pastoral leases on these unique landscapes of the South Island high country.

Finally, I want to thank officials from Land Information New Zealand and the Ministry for Primary Industries for their help and their work in what has been a complex task of developing this new rental system. The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill will eliminate the huge amount of friction with the Crown that was developed by Mr Parker and Ms Clark. We have restored the lessees’ confidence in Government.

Hon DAVID PARKER (Labour) : What balderdash we just heard from the Minister for Primary Industries for National. The reason that the National Government is passing this bill, the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, is that the practice that it wanted to adopt under the prior law was illegal. That is why it has changed the law. To accuse me and Helen Clark of acting improperly when we were just enforcing the law seems a little bit unusual to me as a legislator.

Hon David Carter: You lost it in court, Mr Parker.

Hon DAVID PARKER: Actually, I will deal with some of the points that you raised, Mr Carter, because your understanding of the issues is obviously flawed. When I became Minister for Land Information the cry of the pastoral lessees was that they wanted the Government not to force them into tenure review and to respect their rights under statutory leases. I was at a meeting just the weekend before last where someone came up to me and said: “Oh, I remember that first meeting with you”—speaking to me—“as then Minister of Land Information, when you had that first meeting with the pastoral lessees.”

I remember them saying to me, on behalf of the Government, to please respect the lessees’ rights under pastoral leases. My response to them was: “Yes, I will.” They said “Please don’t force us into tenure review”, and I said “I agree. I won’t.” And I said: “My duty as the Minister is to enforce the statutory lease on behalf of the lessor, because that is who the Crown is, and I am going to do that, and I am going to only accept tenure review outcomes where I think they are in the Crown’s interest, and I am going to do that.”

That is all I did. I enforced the law. It seems pretty novel to the National Party that one might do that, but that is all I did—that is all I did. It is true that the value of some of these properties has gone up hugely. Actually, when values of properties go up, rents normally follow. That is what happens in the private sector. In fact, I think Mr Carter might own a property or two, and occasionally when the value goes up I think you might put the rent up. Oh, but not when you are the Minister and you have custody of these properties on behalf of the Crown and a voting section of your population. What you do then is you put the rent down for your mates. If this was a point of principle as to why you were doing this, I could understand it, but there are other mechanisms that could be used to address this.

What we in the Labour Party found was that some of these rents were ridiculously low. I will give you one example. We had complaints from someone who had a big station in the Kyeburn area. They said it was worth millions of dollars, that high country runoff grazing, to their lowland farm. How much rent do members think they were paying for this thing that they said was worth millions of dollars to the value of their lowland farm? Less than $1,500 per annum—$1,500 per annum—plus GST. Less than that—I think it was about $1,250 plus GST. It was an absurdly low rent.

When I was Minister and we had some issues that needed to be resolved in the high country, I thought: “Well, I’ll apply the law”. So we got some valuation advice. It turned out that we had inconsistent valuation practice, and some people were getting rents set on one basis and some people were getting rents set on another basis. So I took advice from Crown Law, and I said: “What’s the correct basis to set rents?”. I then instructed the department to assess rents on that basis. These rents are set according to a statutory formula: not 10 percent of the value, not 5 percent of the value, but 2 percent of the land value excluding improvements. Improvements are excluded because they are already the property of the lessee, but the lessor is entitled to rent under the current law, which is changed by this bill, at 2 percent of the land value excluding improvements if paid on time.

When we did that, we found that some of these properties are being purchased by people who are not buying them for pastoral values alone. People are paying sometimes $10 million for these properties, because they are postcard properties. They are picture-postcard properties on the edges of lakes. They are on the edges of Lakes Wakatipu, Wānaka, Hāwea, Tekapō, Ōhau, and Pūkaki. People who are very, very wealthy are on occasions buying these properties as, effectively, giant holiday homes. Sometimes they are being run as time-shares, where a number of wealthy people own fractional interests in these properties and they are effectively using them as a giant holiday home. They purchase them knowing that the rent is 2 percent of the land value excluding improvements.

In respect of those people, I do not think they should get a rent discount. I do not think they should, but there are other people who should. There are some farmers who extract only pastoral values—and Mr Carter has said that they have owned these farms for generation upon generation—and they cannot afford to pay the high rent. I have always acknowledged that. When the Labour Government was in, we acknowledged that. I wrote to every one of those lessees personally. I can remember what a darned boring job it was, signing out 236 letters or whatever it was to these people, and I did it twice. I wrote to each of them and said: “If you cannot afford to pay the rent, please come to us and we will negotiate a discount.” We wrote to every one of them.

We said: “Look, sometimes there are problems of access to adjacent rivers and lakes that we want to sort out.”, because some of these properties surround lakes and there is no decent access for New Zealanders to go through these properties to get to the lakeside. I wanted to regularise access so that New Zealanders could access their lakes and rivers. I also said that there are occasions where we want to stop wilding pines spreading, and we might like some wilding pine control, or at least access on to the land to control the spread of those wilding pines. We also said explicitly in this letter—I still have copies of the letter, and I remember writing them—“If you have an excessive rent that you can’t afford, and we don’t need access to a river or lake, and we don’t need wilding pine control, well, we’ll give you the rent discount anyway, if you can’t afford to pay.”

The lessees chose to say that they would not engage in this debate, because it was coming to the end of our third term and they thought they would take their chances on being able to delay this long enough so that the Government would change and they could go through the back door and see that duke, Mr Carter, who would, in the face of a $13 billion deficit, give up on rents to multimillionaires who paid these prices knowing that the rent was 2 percent of the land—

Hon David Carter: Here’s the envy!

Hon DAVID PARKER: It is not envy. It is not envy; it is a fact. Let us take the example of Shania Twain’s partner, Mutt Lange, who purchased a property up in Central Otago, Mount Soho Station. He has actually done some very good conservation work. He has done some very good work up there and he farms the property very well, but do we really think that we should be giving that person a discount when they paid many millions of dollars for that property, knowing that the rent was 2 percent of the land value excluding improvements?

What Mr Carter says is a bit like saying that the rent for a commercial property in Remuera ought to be the same as the rent for a commercial property in South Auckland. That is the logic that he is using. It is a nonsense, because the two properties are of different values, and the law said that they should be paying rent on the basis of land value excluding improvements.

Mr Carter, the other thing that I would say is I would take you back to that original meeting that I recounted to you where the lessees said they were fearful that the Government would change the law—they actually put this to me. They said: “Please don’t change the law on us. It’s terrible. This is sacrosanct. Don’t change the law.” They were fearful—and this was in the newspapers at the time—that the Labour Government would change the law and that that would be somehow interfering with their private property right. Well, actually, what Mr Carter is doing is opening Pandora’s box here, because he is legislating to interfere with the Crown’s property right in these leases. Once that key is turned and that door is opened, it has consequences in the future, and it will have those consequences.

Mr O’Connor said “Yes, income-related rents are fine for those people who need them.”, and we have said that. I have actually explained the letters that I wrote to similar effect to the lessees. But the people who do not need them, who paid multimillion dollars for these properties knowing that the rent was 2 percent of land value excluding improvements, ought not to be given a discount, particularly when you are running a $13 billion deficit like this Government is, and the deficit is worse as a consequence of this bill.

Finally, can I say that there has never ever been any hatred from this side of the House towards lessees. I value that heritage farming, that historic practice, in the high country. I actually think lessees protect against overdevelopment of the land. I do not think all these leases should be forced into tenure review, but it does flow through to tenure review outcomes in a way that is unjust to the Crown.

SHANE ARDERN (National—Taranaki - King Country) : It is a pleasure to rise tonight and speak in favour of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, and can I say so on this basis. Having listened to the last speaker, David Parker, you would have to really question how the late Howard Paterson got it so wrong, and how the good folk of Otago actually made a mistake—only once, and they soon corrected it and now are well represented by the member of Parliament for Waitaki, Jacqui Dean, who does know this issue well and does represent these people very well.

The concept that we are being asked by the other side to believe is that the Crown’s ownership in this land is such that a massive discount has been given to these folk in the way that the rents are being set. The real irony of that is that it was the last Government that actually said the Crown’s ownership in this land is worth nothing—absolutely nothing. In fact, it could be less than nothing, if it is possible for that to be. The last Government went in and it bought two stations, Birchwood and St James, and it paid a price that your colleague, Mr Deputy Speaker, that good farmer from Southland, tells me was five or six times—I said it was five or six times, and he said it was more than that—more than the value per stock unit of any equivalent merino run anywhere else in New Zealand. So what does that mean? If the Crown owns the land, the Crown goes and buys the lease, and it pays five or six times more than what anyone else would pay for a merino station anywhere in New Zealand, what value does the Crown place on the freehold part of it? What value did the Clark Government place on that? Zero, or even below that, if it is possible to be on the other side of that balance. So to say that the leases are too low, on the basis that 2 percent of the freehold value amounts to X figure—and it will be different for each particular station—is so misleading, and it is the reason why so many of these people have felt so insecure for so long.

Let us just have a look at what exists here. We have got 212 leases, 112 rents in dispute at the Land Valuation Tribunal—so that seems to be a system that is not working too well; something needs to be done to fix that—and $2 million project rents under the new system. So there is an income for the State straight away. Some have suggested doing away with that by charging an amenity value—that is, making the price of the lease such that you cannot make a profit from farming merinos, because merinos that have a lovely view of Lake Wakatipu, Wānaka,or somewhere are obviously going to earn a lot more money from their wool than those that are hidden in the back of my good colleague here Colin King’s Kaikōura electorate or somewhere.

As an aside, I actually was flicking through the channels on television on Saturday night, and Country Calendar was on. I had not seen it for I do not know how long, and I happened to stumble upon it. It was featuring a high country lease 5 hours from a tarsealed road—5 hours. You had to travel in a vehicle for 5 hours before you got to a tarsealed road, and when you got there you had the tearooms and another couple of hours to get to—

Hon Maryan Street: Sounds like Taranaki—your country.

SHANE ARDERN: It was on Country Calendar. I thought that here was a rich farming family driving around in their 15-year-old Toyota Hilux that had done a million kilometres and that they were wealthy, living way in the back country there and farming. They had a daughter who had recently returned from being overseas for many years. She had decided to come back because she was born and bred there and loved the lifestyle, and she brought her family and her husband back. I just looked at that and I wondered how a Government could look upon that family as being vandals to the environment who were ripping off the system and not paying a fair rent and say that they should be taken off the land so that the Crown can take it back. I bet you the Department of Conservation could not find that station, let alone anyone from the Department of Conservation driving 5 hours from the end of a tarsealed road to get to it. So whatever is needed to make that family successful and sustainable on that land is what the State has to do in response to that.

There is something like, I understand, $3 million worth of merino wool out of just the Otago region alone. I am not sure whether that figure is correct—and the member may be able to correct me—but, effectively, if you take that income out of there, it goes completely out of that community. It just takes that money out of that community. The conservation investment that these families make in the sustainable management of this land is such that the Crown would be likely to have that amount of liability to maintain the land in anything like the state it is in now. So to suggest that somehow or other the National Government is doing some sweetheart deal for its rich mates, when you look at the facts is so far from the truth. You may find one or two examples somewhere that you might be able to hold up, and it is interesting to note that those members hold up the foreign investors whom they allowed to buy the land when they were in Government. You know, how did that get past the Overseas Investment Office? If having foreign ownership of the land is such a dreadful thing, how did that happen? I am not saying it is a bad thing. In fact, the previous speaker said what a wonderful job those investors were doing of farming it, and he talked about the amount of money they were investing in conservation values there. The land and the property will be in better condition when they decide to sell it—likely back to a New Zealand owner—at the end of their tenure there. I do not see any downside from that, at all, only upside. So it is with pleasure that I stand tonight in support of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. Thank you.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman) : I would like to acknowledge the previous speaker, Shane Ardern, as the chairman of the Primary Production Committee. I think he did a good job with a difficult bill and one that he, actually, if he is true to himself, will admit does challenge some of the basic tenets around property rights—something he has advocated for so strongly—and the ability of a property owner to get a rightful return on that property.

Before I go any further I would like to acknowledge one person whom I have always respected as a champion of the high country and someone who passed away recently: John Aspinall. He was a gentleman. He was kind. He was generous with his time, with his land, and with access through his land. I would like, having not had the opportunity to go to his funeral, to acknowledge in this House his contribution to the high country and, in particular, to the Walking Access Commission and the good work he did in that area. I would also like to acknowledge Jonathan Wallis, who as a new emerging leader of the high country has put in a lot of time to bring this issue before us in Government and the National Government. I am sure he would be happy with the passage of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill, but I know that, as a smart farmer, deep down he acknowledges that this bill does create some dangerous precedents, and it is the property rights one that I raise.

It was interesting, as Mr Ardern was going on about it, because I think he comes from the dairy industry, and I have yet to find a farmer who in times of difficulty has been able to set aside the charges for grazing, or set aside, reduce, or, in fact, increase the income for a sharemilker, if he needs it. The fact is that solid commercial contracts are written into the dairy industry to ensure protection for both parties, and indeed that is the only way that commerce can go forward. The certainty, which my colleague David Parker referred to, is not, unfortunately, being entrenched by this legislation. In fact, we are opening the long-term situation up to greater uncertainty, because if there is one thing that this Parliament usually does, it is to rectify law that is bad law.

Although I support the high country—I love the high country—I have not had enough opportunity to be there, but I have certainly spent many, many days and weeks there in different ways: skiing, walking, on farms, helping chase a few sheep around, or chase a few deer. It is magical, it is iconic, and it is the true New Zealand. The people who have lived and farmed on these properties have done it hard. As the previous speaker said, there are some properties that are small, that are marginally economic, and where families have battled, through heritage, really, and pride, to stay on those properties. Indeed, when we put up the proposal to implement the law and to actually implement commercial leases on these properties, it was going to cause hardship for some, which is why I personally went to Treble Cone in the summer—I usually like going there in the winter—and faced a whole lot of high country farmers, and passed on that message. They did not all like it, but I said “We as a Government are prepared to sit down and offset the increase in rental.”

The increase in rental was fair and commercial. It did, however, for some create hardship, and that is where we wanted to go. Income-related rentals are something that we have implemented on the basis of reducing hardship for people in their own homes, yet the National Government has opposed that, time and time again. In fact, what it did in the 1990s was to offset the acknowledged hardship, and bring in an accommodation supplement, which was actually a subsidy to the landlord to ensure that people could afford to be there, but it just simply subsidised the landlord. In this case, that is probably unlikely to happen, and the taxpayer will miss out.

If I bring the argument round to the start, it will create uncertainty, and although there may be some joy in the high country from this, I am sure that a future Government—and I am not saying Labour; we have not considered it properly at this point—will see that this is not quite right, in the same way that the National Government in 1997 saw that the situation with Māori reserve lands was not right and adjusted the legislation to allow the owners of the land, Māori, to have a fair, commercial rate of return and rental that was fair from their land. That situation needed to be rectified and I think a future Government will do the same thing here. I hope that does not create hardship for high country property owners or lessees, who have property rights but do not own the land, because they might have capitalised into the price they pay for that lease the deal that this Government has put on the table, because it is a bit of a false deal, and it is one that will not hold up.

If I come back to the minority view and report as stated in the commentary on the bill here, it is quite clear: “Labour supports the continuation of tenure by leaseholders on Crown pastoral lands to ensure sustainable management and productive utilisation of high country leases.” We want them to be farmed well, and for the most part they are. We want farmers to have the money to do the pest control, to do the weed control, and to have a good, fair living and rate of return on their efforts, just as the landowner, the Crown, wants the right for a fair rate of return on its ownership of the land. However, back to this: “this bill challenges the basic tenets of property rights between the land owner and lessee.” That intervention is not right and, as I say, will be rectified.

The calculation of what that rent will be is another dilemma created by this bill, because what is being asked of the valuer is to work out the land value, exclusive of improvements—that is, the land that was there 150 years ago, if you can imagine back that far—and calculate the number of stock that could be run on that piece of land. It is a fairly tall stretch, I would say. I guess we could have modern-day, efficient merinos we have to calculate; none the less, it is a bit of a hard ask. So the valuer has to work out how many stock could have been run on that. There were moa around at that time, of course, as well, or going back a little way, so I am not sure of the grazing impact of the moa versus the sheep, but none the less this is the theoretical calculation that should occur. Then we have to take in stock values. They change every Sunday night, depending on the meat companies ringing up their mates and working out what they should pay for sheep or lamb, and I do not want to go into that. The value of stock is something that is not fair and objective at all times. So the valuer has to calculate those two things, then work out the economic return on that land, and then do a calculation—quite a complex one—around what the rent should be.

It is, quite frankly, ridiculous. It is quite ridiculous because the eyes of everyone on the select committee started to glaze over when they thought of the potential for subjectivity in this whole area, and that is not what we want for people running a commercial enterprise. They need certainty. They need to know what their rent is likely to be. So this bill, although comforting a few people in the short term, is not a good long-term solution. We want to see people on the land, farming it well, protecting the environmental values, and protecting the iconic images that sell this country to the rest of the world. Labour cannot support the bill, but we do support the high country farmers. We do support their efforts, and we want to offer them certainty into the future. What the National Government has done is offer them a lollipop, and unfortunately when the sugar runs out, they will have to face reality.

EUGENIE SAGE (Green) : Tēnā koe. Debate on the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill has been wide ranging, and it has gone up-hill and down-dale, much like the lands that it will set the rentals for. Nothing that we have heard in this debate has convinced the Green Party to change its position of opposing the bill. It is a bad bill, which favours pastoral lessees at the expense of the Crown and the public. Some Government members persist in characterising Green and Labour opposition to the bill as an attack on high country farmers. It is nothing of the sort. It is a debate based on principle, on how rentals should be set for the remaining 200-plus pastoral leases covering 1.61 million hectares of the South Island high country, and on how the Crown should manage and treat its interest in these dramatic and distinctive lands. It is a debate on whether we should set rentals in a way that is fair to both lessees and the Crown, or in the way that this bill does, which benefits the leaseholders at the Crown’s expense. The bill charges lessees a rental for their rights to exclusive pasturage, but not for their rights to exclusive occupation, which they also enjoy. This means that the Crown is giving away a significant share of its interest, and depriving taxpayers of a return on the true value of the Crown’s pastoral lease assets.

The Green Party opposes the bill because it represents the failure by the Crown and by Land Information New Zealand to protect the public interest in pastoral leases. The Land Act 1948, as Mr Parker has mentioned, has provided for pastoral leases to have rentals based on 2 percent of the unimproved value, provided you pay on time. That has been in place for many decades, and it is a very cheap rental. By providing for discounted rents that take no regard of location values, quite unlike the rents for most property values in New Zealand, the bill will decrease the value of the Crown’s interest and increase the capital value of the leaseholder’s interest. That division of value in the pastoral lease between the lessee and the Crown changes in favour of the lessee, and that will further worsen the poor outcomes from tenure review. It will lead to the Crown virtually giving away its interest in Crown pastoral leases during the negotiations, because of the bargain-basement price per hectare put on the value of the Crown’s share.

Research by Lincoln University’s Dr Ann Brower analyses the returns to pastoral lessees and to the Crown from tenure review settlements between 1992 and 2012. That research highlights the inability of Land Information New Zealand to advocate for and represent the interests of the Crown. Dr Brower’s work is rigorous, though it is unpopular with National members because they do not want the facts. It shows that since 2007 lessees, on average, have received more than double the per hectare payment from the Crown for land that is retired from grazing and restored to full Crown ownership as conservation land that they received prior to 2007. In tenure review settlements prior to 2007 the Crown paid lessees an average of $159 per hectare to relinquish pastoral lease land. Post 2007 the average jumped to $343 a hectare, yet on the other hand lessees paid the Crown an average of only $67 per hectare to freehold prior to 2007 and an average of $65 per hectare—

Shane Ardern: What did they buy from them?

EUGENIE SAGE: —after 2007. National members are interjecting because they do not like the results of this research. It has been an objective analysis, going through the returns.

Dr Ann Brower’s analysis—

Hon David Carter: She provided the conclusion before she did the work.

EUGENIE SAGE: —no—shows that the Crown paid runholders around $22.6 million more to buy the option to graze unforgiving high country land, and often land that was deemed unsuitable for farming use, than runholders paid the Crown for the option to subdivide and develop pastoral lease land. Dr Brower’s research also shows that between 1992 and 2008, 46 percent of the land the Crown sold for $6.9 million has since been onsold for $135 million. So pastoral leaseholders have been able to sell land at between 2,000 and 27,000 times the price at which they purchased the freehold. Land Information New Zealand, representing the Crown, has totally failed to take account of the location and amenity values that are part of the Crown interest. Land Information New Zealand has failed to take account of the option to onsell when it has been negotiating those tenure review outcomes. Lessees have enjoyed windfall gains as a result.

As Dr Brower notes, the fact that the Crown has consistently undervalued the development options in tenure review suggests that the Crown is “pathologically unwilling or politically unable to exercise its power on its side of the table” in tenure review. In just one example, on Rhoboro Downs near Twizel, the former lessee was able to privatise 4,648 hectares for $55,000. Subsequently, 127 hectares of that land was onsold in one parcel for $1.9 million. On Pūkaki Downs the lessee was able to privatise 3,722 hectares for $191,000 and then onsell 582 hectares of that for $4.665 million. National members call this the politics of envy. It is more the politics of stupidity, when we have a $13 billion debt, not to get the full benefits of these assets when they are privatised.

The Green Party’s opposition is also based on the uncertainty in this bill about whether the Valuer-General’s determination of carrying capacity for the purpose of setting a rental will include a thorough ecological assessment of the pastoral lease. Such an assessment should calculate how many stock can graze the land without harming the vegetation cover, such as tussock or native shrublands.

Hon David Carter: It happens already.

EUGENIE SAGE: It does not. The language in new Part 1A inserted by clause 6 of the bill, and its references in clause 23A(2)(b)(ii) to using “scientific evidence” and “information about the land”, is vague and woolly. The Minister in the chair chose not to take a call during the Committee stage to explain whether there was any intention that ecological assessments would be done to help determine carrying capacity. That is really disappointing, because it suggests that the Government is not interested in determining whether high country lands can be better managed to maintain healthy tussock cover, to reduce soil erosion, to control the spread and dominance of Hieracium, to protect wetlands as natural sponges, to safeguard water quality, and to protect the landscapes on which so much tourism marketing depends. So it would be helpful if the Minister did clarify that.

The landforms we see on many pastoral leases, particularly around the southern lakes and elsewhere, show their glacial past, with their smooth hills. They have got a jumble of moraine boulders, and they have got extensive outwash plains. Those landscapes have been millennia in the making. Privatisation through tenure review inevitably leads to more intensive development, whether it is through subdivisions for second homes or for new vineyards, with their tightly clustered rows of vines. The patterns, the colours, and the texture of the landscape change, and it is domesticated. The indigenous vegetation disappears. This bill will exacerbate that. It will provide windfall profits for lessees, and it will provide for unfair rentals and poor ecological outcomes. That is why the Green Party opposes it.

COLIN KING (National—Kaikōura) : It is a pleasure to speak in the third reading of the Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill. To open up, I would have to take strong exception to the position that the Green Party has pitched its arguments at, because when we listen to the arguments, nobody has brought up the Crown’s case at Minaret Station. The farmers took the case against the Crown on the way the rents were set, and the Crown lost. When we listen to Labour members speaking and we listen to the Green members speaking, that fact has never come up—that there was this precedent where the Crown was taken to task at the Land Valuation Tribunal and it lost.

Another point that has not been made adequately is that the principles behind the original Act, the Crown Pastoral Land Act, were always intended to take into consideration the earning value of those properties. So what we can say on this side, the Government side, of the House is that we are restoring those principles so that those farmers can have confidence that they can bank their businesses and they can carry on farming in the successful way they have farmed for the better part of the last 150 years. We hear all those wonderful romantic notions about flora and fauna, but let us not forget that these people have successfully farmed through economic cycles and through climatic cycles, and they have maintained an asset at the very best cost back to the taxpayer of New Zealand.

We hear the word “fear” mentioned. When we were on the Primary Production Committee we heard a lot of fear from those farmers because of the uncertainty that was being created by the culture of what we describe as envy, which we also on this side of the House see as a dislike. I would not use the word “hate”—it could be interpreted as that if it were directed at me—but it was certainly a strong intention of unsettling what had been a very fine process.

When you stop and think about it, the money that is directed at looking after these properties that are tenure reviews or pastoral leases is very much a fine balance. We want the Crown in there as well, because with the introduction of rabbits and Hieracium and things like that, these families, these little communities that are surviving up in some of the most inhospitable country in New Zealand, are quite fragile communities and they do need to be able to have certainty. When we reflect on all that we have heard—we have heard dissertations on academic levels—these families need to be able to front up to their banks. To be able to fund their businesses annually they need to be assured that the way the rent is set is sustainable from a business point of view and that they can have confidence in that direction.

One other thing that has not been touched on is the wonderful job that Rob Davison and the economic service do for New Zealand in valuing and understanding what properties can run and how they function. I have absolute confidence, and I know Rob Davison and his team from the economic service will be eager to get into this situation when this bill becomes law, and those 113 lessees at the moment who are before the Land Valuation Tribunal can opt into this piece of legislation because, in conclusion, it re-establishes the principle that rents should be set based on what a farm can produce. Thank you.

RICHARD PROSSER (NZ First) : I despair of the National Government in some regards, and of the Minister in particular. He appears to have such a profoundly good grasp of the realities of high country farming, as many members on the Government side do, and a very good knowledge of how that farming operation is carried on and of the farming community, yet they have managed to create such a terribly dreadful piece of legislation to address the rate at which rents are set for high country farms.

We have come to the end of the validation process for what is essentially an unnecessary and, in some ways, an onerous piece of legislation. The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill is a bill that sets out to solve a problem that does not exist, and it will very likely create more difficulties than its authors have envisaged at this time. The process by which rents for the high country leasehold land are set was not broken. It did not need to be fixed. It certainly did not need to be fixed in the manner in which this Government is attempting to fix it. We are not going forward with the changes this bill brings; we are going backwards. We are returning to the past, to a system very much akin to the one that was abandoned in favour of the present system in 1979, because it was not working. This bill is a bit like asset sales. It is very much a case of “Well, that didn’t work. Let’s try it again.”

This bill fails to recognise the inputs made to the high country over the last century and a half by six and seven generations of farming families. It fails to recognise the value of those efforts in terms of preserving the iconic value of our most famous landscapes. It fails to recognise the sheer size and cost of the conservation operation that would be needed in order to maintain the high country in the state in which we have all come to recognise it, if it were not for the efforts and inputs of those farmers and their workers. The Department of Conservation would literally need an army of staff in order to carry out the same tasks that the farmers in the high country currently perform at no cost to the taxpayer—quite literally, thousands of workers with vehicles, dogs, horses, helicopters, tractors, sprayers, and guns for pest control; thousands of boots on the ground constantly and tirelessly working to maintain this environment for the benefit of the nation. We are not contemplating, nor could we afford to contemplate, funding the Department of Conservation to carry out this work in their stead.

The Crown would not miss out on anything by leaving the rents as they currently are, nor would the farmers get a free ride. The high country is not off limits to the public under the regime as it stands. As I mentioned in the Committee stage of this bill, in 30 years of hunting and tramping I have never been denied access to a farmer’s land. All you have to do is go and ask. You have to know a little bit about when and where to go and ask, and there are certain times of the year when you do not go and ask—

Shane Ardern: It doesn’t read good, Richard, when you spend your whole speech talking in favour, and then vote against. It’s not a good read.

RICHARD PROSSER: There are good reasons for that, Shane; there are good reasons for that. There would be no disadvantage to the taxpayer in leaving things as they are and no advantage to conservation.

This bill is an attempt to extract more revenue than is reasonably or realistically possible from the tenuous operation of farming what is very marginal land in a very marginal environment. It is driven by ideology, not by any actual need—financial need or economic need—to get more money. It would not cost the Government anything to leave the present rents at, or even below, the levels that the High Country Accord in 2009 determined were, in many cases, already too high. But it would cost the Government plenty in order to replicate what the farmers currently do, if they were to be removed from the equation. In returning to a regime under which rents are set based on the stock-carrying capacity of the land rather than its unimproved value, this bill fails to recognise that in times of downturn farmers will reduce their maintenance of the land, and thus reduce the carrying capacity. The upshot of this will be twofold: the value of the land itself will fall, both in terms of its monetary value as farmland and in terms of its iconic value to the nation; and as the carrying capacity falls along with this reduced maintenance, so the dollar returns to the Crown will also fall, and the Government will have shot itself in both feet.

New Zealand First believes that the Crown should set the rents at a simple low level based on the unimproved value of the land, recognising the contribution made to the nation by the activity of farming. This is a complicated system replacing a simple one, and history will record it as being one that does not work, either. This is a mean and an unnecessary bill, and New Zealand First opposes it in its entirety. Thank you.

JACQUI DEAN (National—Waitaki) : The Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill is just about through its third reading, and I imagine that in homes all around the high country of the South Island there will be farming families watching and listening, only wishing that the third reading was over and this could be passed into law. That would then put to an end the most terrible situation that our high country farmers have faced at the hands of the previous Labour Government.

Do you know, Minister David Carter was absolutely correct: David Parker when he was Minister for Land Information callously and in a calculated way introduced the rent-setting regime in order to force farmers into tenure review. And why did David Parker wish to force farmers into tenure review? It was because the Prime Minister of the day, Helen Clark, wished to have the high country farmers off the high country so that she could form a high country walking track the length of the South Island. It is as simple as that. So the Hon David Parker did the will of the Prime Minister of the day and ratcheted up the rents to the degree where for many of those high country farmers that level of rent was unsustainable. They simply could not afford the level of rent that was being proposed.

The stress that that proposal put on high country farming families should not be underestimated. I will never forget the high country farmer with a proposal for his rent increase coming to see me in Ranfurly. The man was in tears, and it is a really hard thing for a farmer to come in to his member of Parliament and be under such stress from the Minister of the day that he was completely broken up by it, because he simply did not know how he was going to pay that level of rent. And why? So that David Parker could force the high country farmers into tenure review.

Well, the high country farmers lost their respect for the then member for Otago and voted accordingly, and I think there is no love lost between that member and that sector of the community. I was not heartened to hear in the Committee stage of this debate a member of the Opposition referring to high country farmers as the privileged few. That said it all to me. The attitude of the previous Labour Government is that the high country farmers of New Zealand are the privileged few and needed to be rented off the land so that that land could be returned for the pleasure of the then Prime Minister, Helen Clark.

This Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill puts right that terrible wrong. How can it be right for a previous Minister for Land Information, David Parker, to say: “If you don’t like your rent increase, come and see me; we’ll talk about it.”? What kind of law is that? What kind of legislation is it for any Minister to say: “Well, I’m sorry if the rent is too much. Never mind—come and see me.”?

• Debate interrupted.