Hansard (debates)

Daily debates

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24 November 2010
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Volume 669, Week 61 - Wednesday, 24 November 2010


Wednesday, 24 November 2010

Mr Speaker took the Chair at 2 p.m.


Subordinate Legislation (Confirmation and Validation) Bill (No 2)


Hon SIMON POWER (Deputy Leader of the House) : Following discussion in the Business Committee yesterday, I seek leave for the Subordinate Legislation (Confirmation and Validation) Bill (No 2), following its second reading, to be set down for its third reading forthwith, without debate.

Mr SPEAKER: Is there any objection to that course of action being followed? There is none.

Questions to Ministers

Economic Programme—Savings and Investment

1. AARON GILMORE (National) to the Minister of Finance: What does he believe will be the main features of the economic recovery under the Government’s programme to encourage more savings and investment?

Hon BILL ENGLISH (Minister of Finance) : I think it is now obvious that the economic conditions in the years leading up to 2008 were not normal, because we saw excessive consumption and housing speculation, and borrowing to finance both. Looking ahead, New Zealand’s economic growth will need to be considerably different from the growth that occurred during those years. It will need to be based on savings and investment and led by the earning side of our economy, especially the export sector. That is why the Government’s economic policy programme is designed to encourage savings, investment, exports, and new jobs.

Aaron Gilmore: What were the features of the economy’s performance before the 2008 recession?

Hon BILL ENGLISH: In retrospect—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It is a pretty simple one—that is, the question asked about the features of something that occurred before the Minister was responsible. He was not asked about any reports he had; he was asked about something that he has no responsibility for.

Mr SPEAKER: With respect, the Minister of Finance does have a reporting responsibility on what the features were. He should not pass too much comment on them, but he definitely has a reporting responsibility on what the features were.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. If in fact he had been asked that, I would not have taken a point of order, but he was not.

Mr SPEAKER: I believe the Minister was asked what the features were of—[Interruption] He has a reporting responsibility on the economy prior to his time as the Minister of Finance, but he should not be passing too much judgment on the policies of the time. He certainly does have a reporting responsibility on the features of the economy.

Hon BILL ENGLISH: I did not plan to pass any judgment. In retrospect, it is clear that the 5 years to March 2008 were an unusual period. The growth in private consumption was about 4.5 percent a year, which is almost twice its long-run average. House prices doubled, and credit—that is, mortgages, credit cards, and other forms of credit—grew by 83 percent in the 5 years to 2008. By the end of that period, households were borrowing $10 billion a year to finance consumption, and we had record balance of payment deficits.

Aaron Gilmore: What trends have been evident in the New Zealand economy since 2008?

Hon BILL ENGLISH: Since 2008, fortunately, those trends have reversed. Households have become strongly averse to debt. They have lifted their savings and are trying to restore their balance sheets. The housing market and credit demand have stalled; in fact, credit growth is close to zero. The banks realise that they were overextended with too much foreign borrowing, and the balance of payments has dramatically improved. The policy challenge now is to lock in the long-term benefits of this sharp correction.

Hon David Cunliffe: If households have lifted their savings, why is the New Zealand Institute of Economic Research forecasting national savings to collapse to minus 1.2 percent in 2015, compared with a positive 5.2 percent in 2004?

Hon BILL ENGLISH: I have no idea why the New Zealand Institute of Economic Research is forecasting that. The forecasting is, I think, a bit of a mystery even to the forecasters who are doing it. What is pretty clear is that New Zealanders are saving more now and not spending. That is one of the reasons that the economic recovery is a bit flatter than was expected, but that is a good thing. New Zealand needs to have more savings.

Te Ururoa Flavell: Has the Minister seen mention in the report of the Welfare Working Group of a recent review of social services in Masterton that found that many Pākehā preferred Māori-provided services because they offer a more family-based approach, and will he respond to this finding by seeking to encourage more investment and subsequent long-term savings in the Whānau Ora approach?

Hon BILL ENGLISH: We are a Government that prefers people, including those who use social services, to be able to exercise some kind of choice. I am interested to hear that in Masterton, a number of Pākehā families prefer Māori providers because they do a better job. It may well be that as many Māori families prefer non-Māori providers because they believe the same thing. Either way, we want to foster that kind of choice, and, of course, the development of Whānau Ora means there will be considerably more choice for families in need of social support. That is a good thing.

Hon David Cunliffe: Can he confirm that Standard and Poor’s projects that the current account deficit will grow to an average of 5.9 percent over the next 3 years, and that Treasury forecasts it to rise to 7.3 percent in 2014; and does he share Standard and Poor’s disappointment that his policies have failed to make any structural difference to this situation?

Hon BILL ENGLISH: No, I do not share those points of view. There has been a considerable change since the record current account deficits that the previous Government left behind, and that change is driven largely by changes in the behaviour of New Zealand households, which are saving more and spending less. The Government’s tax package is designed to push in the same direction and lock in long term the benefits of those changes in behaviour, and that policy has been effectively endorsed by voters at the recent Mana by-election.

Aaron Gilmore: Mr Speaker—[Interruption]

Mr SPEAKER: I have called Aaron Gilmore.

Aaron Gilmore: What economic trends can we reasonably expect in New Zealand in the years ahead?

Hon BILL ENGLISH: We can expect that the economy will grow by about 2.5 percent to 3 percent a year over the next 2 or 3 years. I believe we will see more savings. I think we will see much less growth in credit, and we will certainly see a much better-run Government and much better-run public services. The Government simply cannot afford to grow at the rapid rate that it did, and the new jobs are more likely to be in the export-orientated part of our economy, rather than jobs in other non-tradable sectors, such as domestic construction.

Hon David Cunliffe: With unemployment staying high at above 6 percent, with tax revenue down by $1.1 billion and business tax collapsing by 22 percent, with real wages falling and the gap with Australia widening, and with Standard and Poor’s now giving him a clear fail in the latest report, will he now admit that the so-called recovery is not happening and that his policies are not working; and will he hand over his portfolio to Steven Joyce, as everybody expects?

Mr SPEAKER: If the Minister can discern a question in that, he is welcome to answer it.

Hon BILL ENGLISH: No, the member is wrong. If anyone believed him, Labour would have had a substantial majority at the Mana by-election; instead, it almost lost it.

Infrastructure Investment Programme—Jobs

2. METIRIA TUREI (Co-Leader—Green) to the Minister of Finance: Does he stand by his statement that “the Government is playing its part by spending billions on infrastructure, which is underpinning the employment of thousands of skilled and unskilled people”?

Hon BILL ENGLISH (Minister of Finance) : Yes, I do. I understand that recent estimates are that, for instance, the programme of building roads of national significance is employing around 8,000 people. A large construction firm told me recently that over 90 percent of its work was Government-funded. I do not think there is any doubt at all that the Government’s multibillion-dollar infrastructure spending programme is well-timed and is employing thousands of people who, in a recession, would otherwise lose their job.

Metiria Turei: Does the Minister accept that the estimated 20,000 people living in caravans, camping grounds, garages, and boarding houses consider housing to be critical infrastructure?

Hon BILL ENGLISH: Yes, they do, and at the beginning of this year the Government put together a group of New Zealanders who are experts in housing to deal with the legacy that was left to this Government, which is a very expensive and inefficient social housing sector that is not helping nearly as many New Zealanders as it should. I am pleased to say that everyone who is interested in social housing broadly supports the Government’s new direction and we will proceed to implement it in the new year.

Metiria Turei: How much money is the Government spending on building enough homes for the 20,000 people in extreme housing need, and how many jobs will be created by that spend?

Hon BILL ENGLISH: For the benefit of the member I point out that the Government owns $15 billion worth of houses. In our view, not enough New Zealanders are being assisted because of the inefficient management of those houses. The Housing Shareholders’ Advisory Group tells us that about 30 percent of those 67,000 houses are the wrong size and in the wrong place, or have the wrong people in them. If we can make a 30 percent improvement, it will easily be enough to help most of the people who have serious housing need, and we are keen to achieve that.

Metiria Turei: Does the Minister agree that with the current level of Government spending for the proposed 1,500 new State homes over 4 years, the Government could expect to fill the current deficit of 70,000 homes in New Zealand in about 200 years’ time?

Hon BILL ENGLISH: We are moving from targeting a fixed number of houses, which was the method of the last 10 years, to targeting needy New Zealanders. That means we will not be focusing as much on some magic number of houses, because, as I said, 30 percent of them are the wrong size and in the wrong place. We believe that we should focus on people rather than houses, and, as we do that, we will be able to help more people with the 67,000 houses that we have.

Metiria Turei: Does the Minister accept that the 375,000 children who live in cold, damp housing at present, which causes them severe illness—at great cost to the health system—could benefit a great deal not from the 1,500 houses over 4 years that his Government proposes but from the 6,000 State homes over 3 years, creating 28,000 new jobs, that the Green Party has proposed in its Mind the Gap package?

Hon BILL ENGLISH: What we do agree on is that insulating houses is a good thing. The Government has allocated $700 million for subsidies to assist houses across New Zealand to be insulated, and I think we might have got to 100,000 houses. We are aiming to ensure that almost all of the State housing stock is properly insulated. I have to say that we were disturbed when we came into Government to find just what bad shape that State housing stock was in, but we are spending considerable money upgrading it and making sure that those children can benefit from warm, dry houses, which will help their health.

Taeaomanino Trust—Inquiry into Activities

3. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister for Social Development and Employment: In light of reports that Taeaomanino Trust, which the Ministry of Social Development has given funding to, is under investigation by police relating to allegations of misappropriation of money, will she undertake a full inquiry into the activities of the trust; if not, why not?

Hon PAULA BENNETT (Minister for Social Development and Employment) : I have been assured that these allegations have been investigated by the trust itself, by Deloitte, and by the ministry’s contracting team. I have also been assured that no Government money was involved in the February 2009 fraud, that the staff member is no longer involved with the trust, and that there is a police investigation under way—I think it should be allowed to continue.

Hon Annette King: When did she become aware that the trust was under investigation by the police for the misappropriation of money dating back to March 2009?

Hon PAULA BENNETT: The fraud was first brought to my attention in February 2009 but the police investigation only recently via the newspaper.

Hon Annette King: Was she aware that there were serious issues of honesty being raised about the trust, before agreeing to half a million dollars for Family Start in May this year?

Hon PAULA BENNETT: As I indicated, in February 2009 it was drawn to the ministry’s attention that there were some allegations. It was followed up by three investigations that I am aware of. At the end of the day, the conclusion that they came to was that no Ministry of Social Development money had been involved in the fraud, and that the person was no long working there. When it came to administering a Family Start contract, the four top tenders were actually investigated by PricewaterhouseCoopers, and the Taeaomanino Trust was one that was allocated in Porirua.

Hon Annette King: Has she read the independent forensic report carried out by Deloitte for the ministry in November last year, which was damning of the trust, found numerous issues relating to honesty; if so, given that many of the same people are still at the trust, can she give an assurance to taxpayers that the money is now being used appropriately?

Hon PAULA BENNETT: I am not involved in the independent report. When I looked at the contract that was being administered via Family Start, my interpretation of it was that there was no need for ministerial intervention, and I felt that the allegations had not been proven—and that is what I did.

Hon Annette King: I raise a point of order, Mr Speaker. I am sure you heard my question. I asked whether she had read the independent forensic report carried out by Deloitte; if so, given that the same people are there, can she give an assurance that taxpayers’ funding is now being used appropriately?

Mr SPEAKER: I think the Minister responded to the second part of the question. Because there were two parts to the question, she did not have to comment on whether she had read the report. But I think she did give the assurance to the House that she is satisfied that this outfit will be utilising taxpayers’ money effectively under the contract involved. But if I have got that wrong the Minister is free to correct me.

Hon Annette King: Did she provide the Deloitte report to the Minister responsible for Whānau Ora before that Minister announced the trust as a whānau ora provider last month, with up to $1 million of taxpayers’ money at stake; if not, why not?

Hon PAULA BENNETT: I do not have the Deloitte report in front of me, but my understanding is that it did not find allegations of fraud—that is in there, just to give some clarification of that. The Minister responsible for Whanau Ora has made decisions about who should do that. I think they will do an outstanding job, as far as initiating those sorts of programmes for Māori, and I welcome them.

Crime Proceeds—Seizures

4. SANDRA GOUDIE (National—Coromandel) to the Minister of Police: What reports has she received on the Government’s efforts to confiscate the proceeds of crime?

Hon JUDITH COLLINS (Minister of Police) : I am very pleased to report that since the Criminal Proceeds (Recovery) Act came into force last December, the police asset recovery unit has investigated 201 cases. That has resulted in an estimated $34.6 million worth of assets being made subject to restraining orders under the Act. Those assets are now in the hands of the official assignee, awaiting further legal orders, with the objective of confiscation. The assets involved in those cases include $6 million in cash and bank accounts; 36 residential and commercial properties worth an estimated $15.8 million; eight farms, orchards, and lifestyle blocks worth an estimated $10.5 million; 44 cars, vans, and four-wheel drives worth an estimated $852,000; and 24 motorcycles worth an estimated $423,000.

Sandra Goudie: How are the funds gained from confiscated assets likely to be used?

Hon JUDITH COLLINS: The Government is planning to put the money to good use. Police are working with other agencies on plans to expand alcohol and drug treatment and extra law enforcement initiatives to fight organised crime groups.

Cancer, Paediatric Services—Wellington

5. Hon RUTH DYSON (Labour—Port Hills) to the Minister of Health: Can he guarantee the provision of child cancer services in Wellington?

Hon TONY RYALL (Minister of Health) : Shortly the National Health Board will release a national child cancer plan, which will incorporate a shared-care agreement for child cancer services in Wellington, as agreed between the Canterbury District Health Board and the Capital and Coast District Health Board. In relation to patients in the Wellington region, I am advised that it is expected that they will receive between 80 and 90 percent of their treatment in Wellington depending on their type of cancer.

Hon Ruth Dyson: Does he stand by his statement that the recommendation for three oncology centres, including Wellington, should be implemented, and that there is no reason to doubt the continued logic of that recommendation?

Hon TONY RYALL: I think it would depend on the context of that statement, if that was in fact what I did say. The point is that the people of Wellington cannot carry on with an on-again off-again service. What is being proposed in the plan and in the shared-care arrangement with Canterbury will provide 80 to 90 percent of the care for kids with cancer in Wellington.

Hon Ruth Dyson: Has he renewed his call for the Health Committee to conduct an urgent inquiry into the provision of child cancer services in Wellington, as he screeched for in 2007?

Hon TONY RYALL: I did more than a select committee inquiry; I have had a committee of some of the best officials in cancer services in New Zealand looking at the issue. That is why we have come up with both the shared-care plan between Christchurch and Wellington and the new national service plan. That is far more certainty and progress than the party opposite ever, ever, ever achieved.

Hon Ruth Dyson: Does he still maintain that it is “appalling” that our capital city is unable to offer the full range of cancer services for its children, as he said in 2007; if he is still appalled, what is he doing about it?

Hon TONY RYALL: It is disappointing that the full range of services cannot be provided. But what is important is that we should have some real action to make sure that we have certainty of the services. That is why the shared-care plan has been put in place between Canterbury and Wellington. It is far more than we had previously. It means that 80 to 90 percent of the children with cancer in Wellington will get their treatment in the capital city. That provides a greater level of certainty for those people than there was previously for the last few years.

Katrina Shanks: What does he say to the parents of children with cancer who have been told that capital child cancer care is in doubt again?

Hon TONY RYALL: I can tell those parents that those reports are incorrect; the agreement reached between the Capital and Coast District Health Board and the Canterbury District Health Board, which was announced in September, has not changed. A national plan for child cancer services will be released, which includes the shared-care agreement between the Capital and Coast District Health Board and the Canterbury District Health Board. It is expected that 80 to 90 percent of cancer treatment for children in the Wellington region will happen in Wellington, depending on the cancer. We all know that this is an incredibly tough time for the parents and families, but I am confident that this plan gives certainty of services in the future, as close as possible to home.

Hon Ruth Dyson: Will he now show those parents some compassion and change his mind about refusing to meet with them, and front up and explain the situation directly to them?

Hon TONY RYALL: I actually met those parents from the cancer group earlier on. I am very happy to meet with them now that the plan has been put in place.

Hon David Cunliffe: Three years ago.

Hon TONY RYALL: The member says they asked me 3 years ago. Actually, I met those parents this year as we began this process. I think that many of them will realise that a very good arrangement has been put in place so that we do not have the on-again off-again service that we have seen for the last half decade here in Wellington.

Emissions Trading Scheme, Deal with Māori Party—Enviroschools / Kura Taiao

6. TE URUROA FLAVELL (Māori Party—Waiariki) to the Minister for the Environment: What progress has there been in building a network of Kura Taiao / Enviroschools as negotiated by the Māori Party in the emissions trading scheme package of concessions announced on 23 November 2009?

Hon Dr NICK SMITH (Minister for the Environment) : The Government and the Māori Party, as part of our broader programme of work, agreed to provide from Te Puni Kōkiri and the Ministry for the Environment funding for the first 6 months of this year, and that has been successfully delivered. We also have work under way as part of the Waste Minimisation Fund for a new programme with Enviroschools in the early childhood sector, to embed a culture of recycling at an early age. I am working with his colleague the Minister of Māori Affairs on that programme, and I am hopeful of being able to make some announcement on that next year.

Te Ururoa Flavell: Has the Minister received any feedback in response to the Māori Party’s advocacy to retain Kura Taiao / Enviroschools, and what is the long-term vision for sustaining such a significant programme?

Hon Dr NICK SMITH: I acknowledge the very strong advocacy by the Māori Party for both Enviroschools and ensuring that it is delivered in te reo. The Ministry for the Environment is to have discussions with Enviroschools on the te reo component of the new programme intended for early childhood centres. I hope to be in a position to make an announcement on that next year.

Hilary Calvert: What is the total cost of the emissions trading scheme’s package of concessions negotiated with the Māori Party, including Kura Taiao / Enviroschools and the handing over of 35,000 hectares of conservation land to five iwi?

Hon Dr NICK SMITH: The member is incorrect in asserting that there has been a handover. There is a proposition, as part of the agreement with the Māori Party, to plant trees on conservation land. I think most members of this House would welcome that initiative, because in partnership with the Māori Party we have been able to reverse a trend of the worst deforestation under the previous Government, and actually get some trees planted in the ground. National and the Māori Party are very proud of that.

Hon Rodney Hide: I raise a point of order, Mr Speaker. The question asked about costs. It may be that the Minister does not know what they are, but he certainly has to address that question. He cannot just say—

Mr SPEAKER: No, the question also inserted a statement about land being handed over to Māori interests, or something, as part of it. The Minister disputed that part of the question. If the questioner wanted to receive an answer on the cost, she should have restricted the question just to that issue.

Hilary Calvert: What does he say to those New Zealanders who complain that the Government gave away taxpayers’ dollars and 35,000 hectares of conservation land, just to secure five votes for its emissions trading scheme legislation?

Hon Dr NICK SMITH: The first point I would make is that the ACT Party has chosen not to take a responsible and reasonable view around climate change policy, but rather has stuck its head in the sand and pretended that climate change is a non-issue. Having said that, I have found a really constructive approach from the Māori Party around environmental issues, and I will tell members why. It is because both the Māori Party and National want to take a balanced approach around both the environment and the economy—something that I think has been an ethos of Māori for a very, very long time.

Charles Chauvel: How is it fair to have made the 73 kura nationwide eligible for Enviroschools funding, while the staff, students, and parents at New Zealand’s other 6,900 schools now have to do all their own fund-raising if they want to run an Enviroschools programme after his Government cut the $19.4 million made available to Enviroschools by the previous Government?

Hon Dr NICK SMITH: It is quite the contrary of that. I do not know where the member gets his information from, but it is grossly inaccurate. The simple point about the representations I have received from the Minister of Māori Affairs is this: the Government, with Enviroschools, is proposing a programme of promoting recycling in our early childhood centres, and the Minister of Māori Affairs has made representations that that programme should be available to kōhanga reo. Which member of this Parliament would stand up and say that a programme should be available only in kindergartens and Pākehā centres, and not in kōhanga reo? [Interruption]

Mr SPEAKER: Is the House quite finished? I allowed a fairly high level of interjection around that question and answer, but I would like the House to come back to order, please.

Police Resourcing—Minister’s Statements

7. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Minister of Police: Does she stand by all of her statements and commitments in relation to resourcing the New Zealand Police?

Hon JUDITH COLLINS (Minister of Police) : If they are reported accurately and in the correct context, yes. In particular, I stand by my statement that New Zealand Police are the finest police in the world.

Hon Clayton Cosgrove: When she said on 11 November 2010 that 384 extra front-line police officers had been deployed since December 2008, how many of those 384 officers were funded by the current Government as opposed to the previous Government?

Hon JUDITH COLLINS: Actually, the numbers that were funded under Budget 2008 were 250, and the member who has just resumed his seat was quite incorrect on that day when he made allegations otherwise.

Shane Ardern: Can she provide an update on the impact of the new police officers on the level of public safety in Counties-Manukau Police District?

Hon JUDITH COLLINS: Yes. Last month I personally welcomed the 300th new officer into Counties-Manukau Police District. This extra resourcing has allowed the police to take a strong proactive approach to policing by setting up six neighbourhood policing teams, a major crime team, and child abuse teams. The focus on prevention is showing its effect with all crime reduction targets being met in the 2010 calendar year to date. For example, burglary is down 13.5 percent in this last month, compared with the year before. Motor vehicle crime is provisionally down 28.8 percent. These are fantastic results because of positive, proactive policing.

Hon Clayton Cosgrove: Was Deputy Commissioner Viv Rickard correct when he confirmed to the Law and Order Committee in public session this morning that as at September 2010 the current Government had contributed just 30 new police officers nationwide since it came into Government?

Hon JUDITH COLLINS: That is not, in fact, what Deputy Commissioner Rickard said.

Hon Clayton Cosgrove: Does she stand by her statement to the House on 11 November 2010 that “this Government is putting in 600 extra police”, given that Deputy Commissioner Viv Rickard confirmed to the Law and Order Committee this morning in public session that not one single officer, as at June 2009, had been funded by the current Government, and therefore 333 of the 600 police she refers to were actually funded by the previous Government?

Hon JUDITH COLLINS: The member is again wrong. National promised that we would deliver 600 extra police by the end of next year, and we will. We have already delivered over 380 police. The member who has just resumed his seat might have promised them, but we delivered them. [Interruption]

Mr SPEAKER: I ask the House to show a little more courtesy.

Hon Clayton Cosgrove: Does she stand by her statement that she is shifting more police to the front line, given that Deputy Commissioner Viv Rickard confirmed to the Law and Order Committee in public session this morning that although constabulary staff have been decreasing in many districts, non-constabulary staff have been increasing, which makes a mockery of her claim to be shifting resources to the front line?

Hon JUDITH COLLINS: Unless the member can give me a direct quote from Deputy Commissioner Rickard, I do not believe for a moment that he said that.

Roading—Waikato Expressway

8. DAVID BENNETT (National—Hamilton East) to the Minister of Transport: What further progress has been made on the Waikato Expressway road of national significance?

Hon STEVEN JOYCE (Minister of Transport) : The New Zealand Transport Agency board has announced that it has approved funding for the $169 million Ngāruawāhia section of the Waikato Expressway. It marks another big step forward in developing this particular road of national significance. The construction contract is now out to tender and is likely to be awarded in April of next year. Construction is likely to begin in 12 months, and will take 3 years.

David Bennett: How does the Ngāruawāhia section fit into progress on the Waikato Expressway overall?

Hon STEVEN JOYCE: Construction of the Ngāruawāhia section will add another 10 kilometres to the expressway, and will create up to 300 jobs directly, with many more jobs in downstream industries. Construction will get under way later next year, meaning that three sections of the Waikato Expressway will be under way next year: Te Rapa, Rangiriri, and Ngāruawāhia. This is excellent progress towards National’s challenging pre-election commitment to improve the Waikato economy by completing the road within 10 years.

Hon Darren Hughes: By what percentage was the benefit-cost ratio of this project increased when the new tool known as wider economic benefits was added to the analysis?

Hon STEVEN JOYCE: The standard benefit-cost ratio for the Waikato projects is 1:4—I do not have the ratio for that particular section with me. Including wider economic benefits it is 1.8 at the 8 percent discount rate. Those figures increase to 1.9 and 2.4 respectively at the 6 percent discount rate.

Tax System—Minister’s Statement

9. METIRIA TUREI (Co-Leader—Green) to the Minister of Finance: Does he stand by his statement that “We want a tax system that tilts the economy towards work, investment and savings and away from the unsustainable borrowing, consumption and over investment in housing of the past decade”?

Hon BILL ENGLISH (Minister of Finance) : Yes, and the tax package announced in the Budget this year and implemented on 1 October and 1 April next year will go some way in that direction.

Metiria Turei: Why, then, did the Minister ignore Treasury’s advice and not bring in a capital gains tax on property excluding the family home, which would have helped to reduce housing speculation?

Hon BILL ENGLISH: I know that the Green Party has advocated for a capital gains tax for some time. The Government decided not to proceed with one, for a couple of reasons. One was the complexity of such a tax. The second was that it would take quite a long time to generate significant revenue compared with the other measures available from the Tax Working Group. Nor did we want to cause too much disruption at a time when many New Zealanders were concerned about their house values and their job security.

Metiria Turei: Why will he not actually do something about both the medium and the long-term effects of unsustainable borrowing to fund housing speculation, and take Treasury’s advice, and the Green Party’s advice in the Mind the Gap package, that a capital gains tax excluding the family home is a critical step towards tilting the economy to meet his intentions?

Hon BILL ENGLISH: I can only give the same answer as I did before. The Government has looked at the option seriously, because it is a serious proposition. A number of countries have capital gains taxes of some sort. We decided in the circumstances earlier this year not to take that option. However, we did increase the effective tax rate on investment housing by abolishing allowances for depreciation.

Early Childhood Education, Limited-attendance Centres—Police Checks on Carers

10. Hon TREVOR MALLARD (Labour—Hutt South) to the Minister of Education: When she said in her reply to question 11 yesterday “the Education Act is not the appropriate place for these types of regulations”, had she considered which legislation would be appropriate to ensure that carers in gyms and shopping mall creches have had a police check; if so, what is that legislation?

Hon ANNE TOLLEY (Minister of Education) : Yes, but there is already a variety of legislation covering gym and shopping centre creches, including normal health and safety requirements, which require all practicable steps be taken to ensure that no action or inaction of any employee harms another person. We are also aware that providers are working to develop good-practice guidelines, and that the best approach is to work with them to ensure that they have the flexibility to provide the best and safest service.

Hon Trevor Mallard: Does she think that convicted paedophiles should be given access to children through employment in gym and shopping centre creches?

Hon ANNE TOLLEY: I think we are talking about paedophile spelt p-a-e-d, not p-e-d as in the member’s press release—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I suggest that the member, if she is going to be offensive, looks at a dictionary, which shows alternative spellings—[Interruption]

Mr SPEAKER: I say all around the House that those interjections will stop. I think the question was in order. It asked for an opinion, and the Minister perhaps should come to the question.

Hon ANNE TOLLEY: I think the member asking the question is getting a bit hysterical, because there are large numbers of situations where parents make the choice to leave their children where it is not required under law to have police checks. Some examples are Sunday schools, which the previous Government exempted. Guides, Scouts, Cubs, Brownies, swimming lessons, pony clubs, rugby practice, netball practice, soccer practice, hockey practice, athletics clubs, au pairs, school camps—the list goes on and on.

Mr SPEAKER: The information is very interesting, but the member asked a very simple question about what the Minister believed. There is no specific answer for what the member believes, but that was a very roundabout way to answer a very simple question. I think we have heard enough.

Hon Trevor Mallard: Can she remember reading in a briefing to her before introducing the Education Amendment Bill (No 2) that an effect of it was to remove police checks from staff at limited-attendance early childhood education centres; if so, why did she then tell the House during the first reading of the bill that that was not her intention?

Hon ANNE TOLLEY: I have had a great deal of advice on this issue. The crux of the issue is, though, whether those centres are educational centres or whether they are part-time babysitting creches. So, having received advice from a variety of places, including from the Ministry of Education, this Government has made the decision that those centres are part-time, temporary, babysitting creches, and, therefore, it is not appropriate to have them covered under the Education Act. That means that they are not covered by the regulations. There is no opportunity, then, to regulate them.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. The core of my question was why she told the House in the first reading of the bill that it was not her intention to do what she has done. She did not address that.

Mr SPEAKER: The dilemma was that that was not the full extent of the question. The question started out about advice to the Minister, if I recollect correctly. The Minister responded to that part of the question, and I do not believe I can, therefore, specifically ask her to respond to the second part of the question.

Hon Trevor Mallard: In light of her answer to the previous question, why did she tell the House during the first reading of the bill that that was not her intention?

Hon ANNE TOLLEY: Originally, it was not. The crux of the matter is that those centres are not providing education. They are not education centres, and, therefore, it is not appropriate for them to be covered by the Education Act. But there is legislation that covers them, and the requirements of the Health and Safety in Employment Act mean that providers are obliged to provide a safe environment for children.

Hon Trevor Mallard: How could the Minister say that it originally was not her intention, when she has received advice from her ministry that said that that would be an effect of the change?

Hon ANNE TOLLEY: As I said in this House to that member, there has been a great deal of discussion, and we have looked at where to draw the line in making provisions for the safety of children. I read out to the House a great long list of times when parents make a choice about where they leave their children for various activities. Those centres are places in gyms, and in shopping centres. They are so defined that parents have to be close at hand and able to be recalled. As the member said himself in the first reading of the bill in this House, more often than not, parents are within sight of those children. So the decision was made to take those centres out of the Education Act, because they are not providing education.

Hon Trevor Mallard: Will she support a minor amendment to the Education Amendment Bill (No 2) to keep police checks in place for carers in gymnasia and shopping centre creches, until such time as an alternative system for ensuring such checks to ensure that paedophiles do not have access to those children is legislated for?

Hon ANNE TOLLEY: We will not support a change that brings under the regulations of the Education Act places like gym creches, shopping centre creches, Sunday schools, Guides, Scouts, Cubs, and the myriad of places that parents choose to leave their children for short amounts of time.

Immigration Legislation—Changes Implemented on 29 November 2010

11. MICHAEL WOODHOUSE (National) to the Minister of Immigration: What major changes in immigration legislation are being implemented on 29 November this year?

Hon Dr JONATHAN COLEMAN (Minister of Immigration) : The Immigration Act 2009 comes into effect on Monday, 29 November. The new Act significantly modernises New Zealand’s immigration laws, and provides us with a robust framework for the future. It will help us improve the efficiency of immigration services and so help encourage the visitors, students, skilled workers, and new residents that New Zealand needs in order to grow our economy.

Michael Woodhouse: What are some of the key aspects of the new Act?

Hon Dr JONATHAN COLEMAN: The key aspects of the new Act include the ability to utilise biometrics, a new refugee and protection system, a strengthened framework for sponsorship, and a universal visa system. It is vital we have immigration legislation that allows us to protect the security of New Zealand’s borders and the integrity of our immigration system. At the same time we must manage immigration in a fair and balanced way. This Act allows us to do all of these things.

Michael Woodhouse: How is Immigration New Zealand assisting employers to meet their requirements under the Immigration Act 2009?

Hon Dr JONATHAN COLEMAN: To assist employers, Immigration New Zealand has developed an online tool, VisaView, that allows employers to check whether employees are entitled to work in New Zealand for that employer. VisaView is a free online service and will help employers meet their immigration obligations without having to grapple with red tape and overly bureaucratic measures. VisaView has been operating since August and already 920 employers have registered. Feedback from employers has been very positive.

Pansy Wong—International Travel

12. Hon PETE HODGSON (Labour—Dunedin North) to the Prime Minister: On how many occasions has he approved overseas travel for Hon Pansy Wong since the last election?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Eleven. The last approval was for a ministerial visit to India, which will no longer take place.

Hon Pete Hodgson: How many of those trips were ministerial trips, and how many were, therefore, private?

Hon BILL ENGLISH: I cannot answer that question. Generally, the Prime Minister would be involved with approving ministerial trips. There may be a private trip in it; I am not sure.

Hon Pete Hodgson: I raise a point of order, Mr Speaker. I concede at the outset that you cannot require a Minister to answer in a certain way; I understand that well. But you have ruled that whereas a primary question must be answered, a supplementary question may be answered to the best of the Minister’s ability. My point of order is this: anyone who has been a Minister—and you and I are two of those people—will know that in preparation for this question, that Minister would have been told how many trips were ministerial trips by Ministerial Services, which advised him. He has chosen not to know that by the time he came to this House. Sooner or later, that is a disorderly act.

Mr SPEAKER: I understand the member’s point of order, because the primary question is very direct, but I did not perceive that the Minister was trying not to answer the question. The Minister, I think, has told the House—and I ask him to correct me if I am wrong—that to the best of his knowledge, they would have been ministerial trips. But if he can help with the answer, I would appreciate it.

Hon BILL ENGLISH: The answer to that question is one.

Hon Pete Hodgson: One ministerial trip, I am assuming?

Mr SPEAKER: Could the Minister please clarify the House’s clear confusion now. Was he saying it was one personal trip?

Hon BILL ENGLISH: That’s right.

Mr SPEAKER: It was one personal trip among those 11 trips.

Hon Pete Hodgson: Ten ministerial trips for the Minister of Women’s Affairs? Hmmm. In exercising his prime ministerial oversight as the Prime Minister lifted his pen to sign off on each trip, did it ever occur to him to ask his Minister why she kept going offshore?

Hon BILL ENGLISH: As I understand the process, Ministers get approval for a trip that is proposed in some detail, and I am sure that that is what happened in this case.

Hon Pete Hodgson: Did it ever occur to him that for the Minister of Women’s Affairs and Minister for Ethnic Affairs to travel in this calendar year to the USA, Hong Kong/China, China, Australia, China, and Japan—and it would have also been to India—was a little on the high side?

Hon BILL ENGLISH: It all depends on relativities. We could easily go through the list of Labour members’ travel. The fact is that among those trips there will be, for instance, several trips to Australia, no doubt—and I have to say they are increasingly regarded as domestic trips as much as international trips. The Prime Minister scrutinises the proposals and signs them off.

Hon Pete Hodgson: Did he, like many of the rest of us, know or hear rumours that the Hon Pansy Wong and/or her husband were mixing private business with public travel, or was he completely and utterly unaware of that?

Mr SPEAKER: The question verges on being out of order. I would have thought that the Prime Minister is not responsible for the private affairs of—

Hon Members: Prime ministerial business.

Mr SPEAKER: But the question asked whether the Prime Minister had heard rumours about whether a member was mixing private business with—I would ask the member to reword his question a little, to make it securely within the Standing Orders.

Hon Pete Hodgson: In respect of any of the Hon Pansy Wong’s ministerial travel, was he aware of many rumours that she and/or her husband were mixing private business as they went along?

Hon BILL ENGLISH: I would recommend that the member waits for a report on the facts of the matter, before proceeding to make any further allegations.

Hon Pete Hodgson: I raise a point of order, Mr Speaker. I would respectfully suggest that the question was not answered. I asked about the Prime Minister’s awareness; he asked me to wait for a report that will not look at the Prime Minister’s awareness.

Mr SPEAKER: I think the Prime Minister is indicating that the facts in respect of this particular former Minister’s travel are a matter that is under investigation. I do not think it is unreasonable for the Prime Minister to refer to that fact and suggest that information will be better available for everyone when that report is available.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Really just following on from my colleague’s point of order, this goes to the question of the contents of the report, and the ability of the person who has ordered and will be presenting the report to look into the issue that my colleague has raised by way of a supplementary question. I would have thought that the state of the Prime Minister’s awareness would have been ultra vires in relation to the report that has been called for.

Mr SPEAKER: I have to confess that the member’s superior legal knowledge has me a bit confused there—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. You are not allowed, as Speaker, to look into the Prime Minister’s mind on these matters—it is not your responsibility.

Mr SPEAKER: That is true, but I am just being reasonable about this. The member asked a question. This is a serious matter; the matter is under investigation. The Hon Bill English, on behalf of the Prime Minister, suggested, in respect of some of the detail of these issues, that more information will be available. That, I think, indicated that he did not necessarily have sufficient information to give a fuller answer, and that is not unreasonable. I just suggest to the House that that is not unreasonable, given that the matter is being looked into. In this House Ministers have to respond on what they are responsible for, and they are not responsible for digging into the private affairs of members. That is very clear. I believe that the Minister’s answer was reasonable.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. One of the things that the Prime Minister is responsible for is the Cabinet Manual and the integrity of that system. If Ministers are doing private business when they are on official ministerial trips, he does not have to dig. If he is aware of that, then he is aware of a breach, and he should have acted.

Mr SPEAKER: We need to be a bit careful around things here, because the Prime Minister is not accountable to this House for the Cabinet Manual. He is not accountable to this House for that. There are issues in respect of whether he retains confidence in his Ministers; absolutely, that is a matter for this House. Matters to do with the Cabinet Manual are not irrelevant. They are relevant matters, but he is not specifically accountable to this House for them. That issue has been looked at on several occasions. The Prime Minister is accountable to this House for whether he has confidence in his Ministers, and certainly issues to do with the Cabinet Manual can have an impact on that. But I just come back to what is reasonable about the question that was asked. I believe that the Minister gave a reasonable answer to the question in the circumstances and, as Speaker, I cannot ask Ministers to do more than that. There are more question days, a report will become available to some extent, and there will be further questioning, I am sure. I believe that I have ruled in a reasonable way on the matter.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think I will ask you to come back with a considered ruling, after looking at the ruling you have just made. Prime Ministers have been repeatedly asked in this House about matters to do with the operation of the Cabinet Manual. My primary question—

Mr SPEAKER: No, I have heard the member, and I have extended some courtesy to him on this question. I repeat what I have said, though: in this House the Prime Minister is accountable for his confidence in his Ministers. The details of how they behave in respect of the Cabinet Manual is a matter that can affect his confidence in Ministers, but he is accountable to this House for his confidence in his Ministers and that is the limit of his accountability in this House.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. The published primary document on the way in which the system of Cabinet Government runs in New Zealand is the Cabinet Office guidelines. The Prime Minister is responsible for their implementation. That goes much further than—

Mr SPEAKER: I have listened to the member. He may be overlooking the fact that he is no longer in Cabinet; he is now back in this House. This is the House of Representatives where members ask Ministers about matters that are their responsibility. The Cabinet Manual is a matter for the Prime Minister in dealing with his Ministers, but the issue for which the Prime Minister is accountable to this House is whether he has confidence in those Ministers.

Hon Trevor Mallard: He’s wrong. It’s much broader than that.

Mr SPEAKER: I see that the member disagrees with me. I am very happy to look into it further, and I will certainly come back to the member if I have erred in the matter. In the meantime we will move on—I am sorry, I call the Hon Pete Hodgson.

Hon Pete Hodgson: I raise a point of order, Mr Speaker. I apologise too, Mr Speaker. I wonder whether I could, through you, ask for clarification of the answer to the first supplementary question about the number of those trips that were ministerial and those that were private. I understand it to be 10:1. Is that—

Mr SPEAKER: The member should not be raising that as a point of order. He heard the Minister’s answer, and I think it was pretty clear. Points of order should not be used to relitigate answers. I do not think there was any doubt about clarity. In fact, the Minister assisted the House by giving further information when there was a question about the answer. The member will recollect that he raised a point of order on the matter, and the Minister assisted the House with further information on the answer. I think that was most reasonable.

Hon Darren Hughes: I raise a point of order, Mr Speaker. In response to the first supplementary question asked by the Hon Pete Hodgson, the Minister standing in for the Prime Minister consulted some prepared notes that were stapled together like a document. If they are official advice I request that he table them, as that is a requirement under the Standing Orders.

Mr SPEAKER: Members are fully aware that notes prepared for Minister’s answers are not official documents. If the Minister was quoting from something beyond that—a more official departmental document—then he would need to table it. But if they are notes prepared for his answer, then that is not the case.

Hon BILL ENGLISH: I am advised that it is information that has already been provided to Mr Hodgson, in response to questions for written answer. He already has the information. [Interruption]

Mr SPEAKER: A point of order is being dealt with; there will be no further interjection. If the Minister is quoting from an official document, then he has been asked to table it. If they are notes prepared to assist him in answering today’s question, he is not obliged to table them.

Hon BILL ENGLISH: It is, yes.

Mr SPEAKER: As they are notes prepared for the Minister, that is the end of that matter.

Hon Pete Hodgson: I raise a point of order, Mr Speaker. As it is a matter of fact that I do not know the answer to the first supplementary question, is it within the bounds of possibility that the Minister has made errors in other answers that he has given—

Mr SPEAKER: No, no, that is not a point of order. Members are stretching my patience. As Speaker I heard the Minister’s answer very clearly, and he assisted the House by providing further information. The member asked a question about how many of the trips were on ministerial business, and the Minister did not give a definitive answer. When a point of order was raised, the Minister gave a definitive answer on that. The member who asked the question has been assisted by the Minister, and that is the end of the matter.

Questions to Members

Marine and Coastal Area (Takutai Moana) Bill—Submissions Received and Requests for Oral Submissions

1. Hon JOHN BOSCAWEN (Deputy Leader—ACT) to the Chairperson of the Māori Affairs Committee: How many submissions have been received on the Marine and Coastal Area (Takutai Moana) Bill, and how many of these submitters have requested to be heard in person?

Hon TAU HENARE (Chairperson of the Māori Affairs Committee): 4,178.

Mr SPEAKER: The question asked for two figures: how many have been received and how many have asked to be heard in person.

Hon TAU HENARE: I raise a point of order, Mr Speaker. There were two questions within that question. As far as I am aware, I have to answer only one.

Mr SPEAKER: Let me make it clear that that is certainly the case with supplementary questions, but this was a primary question on notice. It asked “How many submissions have been received …”, and I presume that was the answer the Minister gave—4,000 and something—and it also asked “how many of these submitters have requested to be heard in person?”. The House has a reasonable expectation to get that figure.

Hon TAU HENARE: 522.

Hon John Boscawen: Will he ensure that, as is required of him under Standing Order 220, the select committee’s examination of submitters is done in a fair way, and that, as per Standing Order 401(t), evidence is given without intimidation from committee members?

Hon TAU HENARE: I take my job as chairman of a select committee very seriously, and I am sure that the other members of my select committee do so, as well. I hope that member does his job as well as we do ours.

General Debate

Hon PETE HODGSON (Labour—Dunedin North) : I move, That the House take note of miscellaneous business. The Prime Minister has an instinct. When anything occurs that has anything to do with lawbreaking or rorts his instinct is to duck, weave, deflect, cover, abuse, evade, and play for time. We have seen that instinct again in the last week or two with Pansy Wong. We have been told that the Prime Minister has instructed his erstwhile Cabinet Minister to go away, say nothing, not show her face here this week or next week, play it out, reach out for Christmas, and wait for some report that should take about 10 minutes to write but is seeming to take longer than that. She has been told not to front, not to explain, not to answer any of the questions that the media reasonably seek answers to. She has been told to keep everyone in the dark and hope it goes away.

The Prime Minister has done this before. He did it with Richard Worth. He said that Richard Worth was not as bad as that, and that Phil Goff was really mean to Richard Worth. He said absolutely nothing for a while, then he sacked him. He did not give a reason. A guy was sacked with no reason given. It was a case of duck, weave, and give no answers—just make sure that plenty of ducking and weaving goes on.

He has another trick. His other trick is to invent new rules. We saw that trick with Bill English. Bill English was caught with his fingers in the till. The Prime Minister did not say: “Bill, you are naughty.”; the Prime Minister said that the rules were wrong. He said the rules were confusing. No other Minister was confused. No Minister in the previous Government, or in the Government before that, was confused. But Mr Key said that Mr English was dealing with confusing rules, so Mr Key was going to change them, and he would save taxpayers money while he did that. A year on, we know that the taxpayers’ money was not saved. We know that ministerial houses cost more, not less. He used deflection to try to get through another problem with a rort.

So too with Pansy Wong. Pansy Wong went offshore, broke international travel rules, and confessed to doing so. Do members know what the Prime Minister said? He said the rules were wrong and therefore we needed to get rid of them. He said we need to gross up those travel perks into salaries and there would be no rules to break. Therefore, Pansy really did not break any rules, because we should not have had any! That is how the Prime Minister works. The Prime Minister has always worked that way. He always decides to rewrite the rules rather than front up to the fact that someone has broken them.

In this case, it is absolutely clear that they have been broken. How do we know? Pansy Wong said so—that is called a confession. There is also a bunch of website evidence—that is called irrefutable evidence. But Mr Key does not think that; Mr Key thinks that the thing to do is to go away, sit down, hide, say nothing, answer no questions, wait for a report, and reach for Christmas. It may be that Pansy Wong herself wanted to leave Parliament. That is certainly what a fellow called Whale Oil Beef Hooked thinks, and he is the son of a former National Party president. It is certainly what a person who wrote to me anonymously yesterday said. He—or she—asked how long it took Pansy Wong to resign after she was asked about her husband’s rorting of the travel scheme, and said that they believed it was 10 minutes. That is what that anonymous person said.

Certainly, at the top of her first press prelease she said she was resigning from Parliament. But then she said that she did not mean that; she was resigning just from Cabinet. I wonder whether the Prime Minister got to her and said that she could not resign from Parliament any time soon because he was going to have a holiday in Hawaii, and he was not having it messed up by some by-election in Botany. I wonder whether he told her to go away, say nothing, play for time, and reach for Christmas. There is an awful lot of holiday period, and they should be able to get themselves well into the new year. He will come back from Hawaii and think about it then.

That is what is going on. That is how the Prime Minister deals with his own rorts. When he said he had a certain number of Tranz Rail shares, and it was then discovered that he had more and that he bought them while he was asking questions about Tranz Rail when he was in Opposition, he said he was sorry. He said he forgot. When it is discovered that his blind trust has 20/20 vision, he says that it has not. He says it is legally, theoretically, absolutely blind. In practice it is true that everyone can see straight through it, but in theory it is blind, so that is OK! Let us not worry about it! The Prime Minister has an instinct, and the instinct is to not tell the truth.

Hon Dr NICK SMITH (Minister for the Environment) : Last night in the House Labour members were gloating about their fantastic success in the Mana by-election. They said: “We won. You lost. Eat that!”. But I think that that arrogance—and, frankly, the speech just made by Pete Hodgson—shows that Labour has learnt absolutely nothing since its defeat in the 2008 election.

I would like to be helpful today, so I will explain to Labour what a 6.6 percent swing to the Government means for that party. With information from the Parliamentary Library, I remind my colleagues that Labour would lose half the constituency seats it currently holds if there were a 6.6 percent swing to National. Let us go through the affected members: Clayton Cosgrove, Chris Hipkins, Nanaia Mahuta, Brendon Burns, Iain Lees-Galloway, Parekura Horomia, Grant Robertson, Ruth Dyson, David Cunliffe, and Trevor Mallard. Every one of those 10 members opposite would be goners if the result in the Mana by-election were translated into a general election.

But it is worse than that. I asked the Parliamentary Library to provide the percentages of the swings in every single by-election during my lifetime, and I managed to get through the 16 by-elections and to compare them with the Mana result. I found out that when National was in Government, in Taranaki - King Country there was a negative swing of 18 percent; in Wellington Central it was minus 3 percent, and it was minus 8 percent in the Selwyn by-election. I went all the way back to Timaru, where there was a 16 percent swing against the Government. I can go back to Christchurch Central in 1979, where there was an 8.5 percent swing against the then Rob Muldoon - led Government. I can even go back to my own constituency of Nelson. There was a by-election there in 1976—a similar time, after Robert Muldoon had been elected—and in that by-election the National Government went backwards. In every single by-election for 35 years the swing has been against the Government. So a 6.6 swing to National is an incredible result for Hekia Parata and the John Key - led Government.

Let us look at the history of Mana. We can go back through the 2008, 2005, 2002, and 1999 elections. I can find no result in seven electoral reports that shows anything less than a 3,500 majority for Labour in that seat, which makes the “1080” result—appropriately named—a truly remarkable result.

It is interesting: what did the president of the Labour Party say about the Mana by-election? He said that Labour supporters have to look a little bit aghast at the result. But what did Phil Goff say? He said it was a resounding victory. I have to say that a resounding victory of a 6.6 percent swing against the Labour Party actually shows just how out of touch members opposite are.

The reality is that that by-election was a ringing endorsement of Hekia Parata as a fantastic candidate and member of this House. But, most important, it was an endorsement of a Prime Minister who is focused on the issues that matter—not the sort of stuff that Pete Hodgson talked about—and a Government that is delivering for New Zealand in some of the most difficult economic times. I simply say to Labour members opposite that rather than the rhetoric we get of “We won. You Lost. Eat That!”, it is time for Labour to learn some lessons, because the Mana by-election was a rejection of the Phil Goff - led Labour Party.

Hon TREVOR MALLARD (Labour—Hutt South) : I will make only two comments in relation to that speech made by Nick Smith. One is a quotation from Hekia Parata: “I don’t do runner up.” Three times out of three she has done runner-up, and she needs to learn that.

The other comment, which leads into the substance of my speech, is to ask what the swing will be in Botany. What will the swing be in Botany? We hear that the Botany committee of the National Party is already meeting to canvass possible candidates.

Hon Dr Nick Smith: If it’s 6.6 percent the Government will be all right.

Hon TREVOR MALLARD: Nick Smith says the swing in Botany at the by-election will be 6.6 percent away from National. That may be true; frankly, if that was the case, it would still be a very safe National seat, so I will not get too anxious about that.

I want to know from the Prime Minister why he is protecting Pansy Wong. Why is he hiding her? Has he approved as the leader of the National Party a trip out of the country for her as opposed to a ministerial trip? I want an assurance that if she is out of the country, she is not out of the country on taxpayers’ funds again. Wherever she is, it is time for Pansy Wong to front up.

I was critical of the reaction of my colleague Chris Carter around this building, but people could not say that he did not front up. He fronted up. He was hounded and he fronted up time and time again. All we are asking is that Pansy Wong fronts up two or three times and answers questions.

Without wanting to reflect too heavily on the independence of the chair of the Parliamentary Service Commission, I say that I do not accept that an independent inquiry has been set up. The Prime Minister undertook that there would be an independent inquiry into this matter, and it is my opinion that no independent inquiry can be headed by someone who is of the same political party as the alleged offender. It is my view that it is time for a Queen’s Counsel—

Mr SPEAKER: I caution the member not to bring the Speaker into this debate, because he risks getting his information incorrect. It is just not done to bring the Speaker into the debate.

Hon TREVOR MALLARD: The chair of the Parliamentary Service Commission, the Speaker, has not yet made public who is doing the inquiry. If an independent Queen’s Counsel, or similar, is looking at this matter, if a proper forensic accountant, independent from a major company, is looking at this matter and doing a public report, then I welcome that. If I have my facts wrong, if I have missed the announcement that this is occurring, then I apologise. But it is important that this matter is seen to be independent. The Prime Minister promised an independent inquiry. I am looking forward to seeing that inquiry and seeing the results.

But in the interim, Pansy Wong should not be protected by the Prime Minister. A true leader would make the MP front up. I well remember one occasion when I was involved in a scuffle in the lobby. I got the very clear advice from the Prime Minister to front up by lunchtime. I think it is fair to say that at lunchtime the following day a press conference was put together fairly rapidly in Taupō. I fronted up and answered the questions. It went on for about an hour outside the baths at Taupō. It gave the public of New Zealand, through the media, an opportunity to question, an opportunity to ask, and an opportunity to get the facts of the matter out.

What is the tendency of the current Prime Minister? He says to go and hide—as he does. He tells Pansy to go and hide, to not front up, to not tell the truth, and to not make it clear to the public of New Zealand that she has been rorting and that he knows about it.

Hon JOHN BOSCAWEN (Deputy Leader—ACT) : Last Friday submissions closed on the Marine and Coastal Area (Takutai Moana) Bill. We heard this afternoon from the chair of the Māori Affairs Committee, which is hearing submissions on the bill, that over 3,000 submissions have been received on the bill and that 521 New Zealanders or organisations have asked to submit personally. I pay tribute to those people who are prepared to engage with parliamentarians, to take their time and to make a submission.

The ACT Party is the only party in this Parliament that opposes this bill. We believe that the consequences of this bill passing will be irreversible and of major constitutional and economic significance. A lot has been said about access to beaches, access to boating, and shipping rights. But what probably few New Zealanders understand is that this bill proposes the potential for a massive transfer of economic wealth to a few select iwi. That transfer will come at the expense of other iwi and other non-Māori New Zealanders.

There is not full awareness of the provisions of this bill among the New Zealand public but that awareness is growing. If there had been full awareness, notwithstanding the 3,000-plus submissions that were received, there would have been many thousands more. I sense growing awareness of the provisions of this bill as I walk around my local electorate—the Tāmaki electorate—as I did on the weekend. I spent some hours walking around Tāmaki, distributing fliers advertising meetings that I was holding in St Heliers and Kohimārama last Monday and next week. When I spoke to people in the streets I said I was delivering a letter about the provisions of the Government’s changed position on the foreshore and seabed legislation. There was a keenness to take that letter from me, a keenness to learn more.

I take this opportunity to address specifically the National members of Parliament in the House, because I want to say to you very clearly that although the emissions trading scheme has done your party some damage, it is absolutely nothing in comparison with the damage that the passing of this bill will do. If you do not understand that, if you do not appreciate that, then you are not actually listening to the constituents.

Mr SPEAKER: The member should not be addressing the Speaker like that. The use of “you” and “your” in this House refers to the Speaker.

Hon JOHN BOSCAWEN: Thank you, Mr Speaker. I apologise.

A number of provisions in the bill are of concern to the ACT Party and to the 3,000-plus submitters on this bill. A cursory analysis of the submissions, which have now been made available publicly, shows that probably in excess of 95 percent, if not 98 percent, of the submitters on this bill oppose all or part of it.

Let us look at some of the issues. As I say, we have discussed and canvassed the issue of free access to fishing and free access to the beach. What concerns the ACT Party is a provision in the existing Foreshore and Seabed Act that prohibits those people who have gained customary title to foreshore and seabed reserves, those who have gained that interest, from charging for the use and occupation of that foreshore and seabed reserve. Let me quote from the provisions of section 40(2). It clearly states that the applicant group or the guardians of a foreshore and seabed reserve are specifically prohibited from charging for the use or occupation of that reserve. Where do we see those provisions in the existing bill? We do not see them.

Let us hope this bill is not passed—let us hope the Government sees sense—but if it is passed, then when it comes before a court, as it surely will, what will the judge say? The judge will look at the preceding legislation and see that a provision that provides for free use and occupation of a reserve has been taken out. The judge can only assume that that has been done deliberately, and that it has been done with the full intention of this Parliament and, certainly, the full intention of the National members of the Government.

What else concerns us? There is a provision in the bill for an iwi or an applicant group to enter into an agreement with the Attorney-General. The Attorney-General tried to be quite cute yesterday about that issue, but there is no other provision that enables an Attorney-General to do a direct agreement, produce an Order in Council, and have it signed into law by the Governor-General. Thank you.

Hon NATHAN GUY (Minister of Internal Affairs) : I wish to make some comments about the Pike River mine explosion. I know that everyone in this House will join with me in expressing very sombre thoughts at this time for both the families of the miners and the miners who are trapped in the Pike River mine near Greymouth. There are 24 New Zealanders, two Australians, two Britons, and one South African. Indeed, a family from my electorate in Foxton have their son trapped in the mine. Tony and Christine Hoggart from Foxton are down there waiting for any news on David, who is a 33-year-old. I have been speaking to them and I know that Parliament will join with me at this very difficult time for all of those families.

We have a very close-knit mining community in New Zealand, and particularly on the West Coast. I am sure that anyone who watched the video footage on TV last night realised it was a very large explosion; it was a very sombre moment. It is amazing to think that Daniel Rockhouse and Russell Smith were able to walk out of that mine, and that gives us a glimmer of hope. Drilling has confirmed, however, that the situation in the mine is very unstable; there is carbon monoxide and methane, and very little oxygen. It is a bit of a bleak outlook and, indeed, I read with interest the comments of the Commissioner of Police, Howard Broad, who was down there yesterday. We are now in our fifth day of this terrible situation. When we think about it, both the Government and all New Zealanders hope for the best, but I guess we need to plan for the worst. Currently, 65 rescuers who have all the expertise and 30 logistical support personnel are on site. Backing up that support we have the multi-agency and organisational support based in Greymouth.

Flowing from this event of course are the thoughts from international shores and also the support given. As we speak, that support is coming from Australia. It has sent a robot, which it is due to arrive shortly or may even be on site. A back-up robot is coming from the United States, as well. So there is very strong international support for what is a very dreadful and awkward situation.

We can only imagine the feeling of those families who wait for any news. Of course, the Prime Minister has been down there a couple of times to support those families and support the community. We have the Minister of Energy and Resources, Gerry Brownlee, down there on site, and we also have the West Coast - Tasman MP, Chris Auchinvole, down there.

It is interesting to note that there is a huge amount of community support in that area. I was interested to hear that students from the local polytech who had just recently passed their certification to become chefs are now churning out 100 meals a day for people involved in this incident. Apparently there is a lot of home baking rolling in, as well.

It is also important to realise that New Zealand has a long, very successful history in the coalmining industry. An incident like this is dreadful for the industry and also for New Zealand, but we will recover and we will learn from it. The Prime Minister has said that there will be an inquiry. There may end up being several inquiries—I do not want to pre-empt those—but it is worthwhile drawing the House’s attention to Government order of the day No. 26 on the Order Paper where there is a bill under my name, the Inquiries Bill, which is intended to replace the current Commissions of Inquiry Act 1908. The bill modernises that Act. It might be that the Government at some point in the near future chooses to make progress on this bill. In conclusion, my heart and thoughts go out to those family members.

SUE MORONEY (Labour) : New Zealand women want some answers. They want some answers, and they want the Prime Minister to help them find those answers. They want to know where Pansy Wong was when she was supposed to be defending the rights and the responsibilities of New Zealand women in her role as the Minister of Women’s Affairs.

We have heard today that since Pansy Wong has been Minister, she has been in China on six occasions. There were six occasions between November 2008 and 10 September 2010. That is how many times she has been in China when she should have been here in New Zealand defending the decision of that National Government to close down the pay and employment equity unit. Where was she when that unit was being closed down? As the Minister, she should have been in Cabinet arguing against that, but perhaps she was over in China aiding and abetting her husband’s private business opportunities, instead. Where was she when her Government decided not long after she went on the private trip—the taxpayer-funded private trip to do private business in November 2008—to stop pay equity audits for school support staff and for social workers? That is another decision she should have been fending off in her role as Minister of Women’s Affairs.

Where was she when her Government decided to scrap the contributions to the New Zealand Superannuation Fund? That move will disproportionately disadvantage women, who we know, because they earn less during their lifetime, are absolutely dependent on superannuation funding for the future. Where was Pansy Wong standing up for New Zealand women when that decision was made? Perhaps that was during one of her six trips to China while she was Minister.

When were those six trips to China? We know about the November 2008 one, because Pansy told the Prime Minister about that. She said she was there, with taxpayer funding—her husband was using taxpayer funding—to aid and abet his private business opportunities. So we know about that November 2008 trip. But she was back in China in April 2009. Then she was back again in August 2009, just a few months later. She was back again in China in June 2010, back again just 1 month later in July 2010, and then again in September 2010.

I think that New Zealand women are looking to the Prime Minister to stop hiding Pansy Wong, and to have her come out and answer questions about why she was in China so many times, and for five of those times on ministerial visits—five of those times were on ministerial visits. I would like to know where she was when her ministry was advising the Government that its bill that extended unfair dismissals to all workplaces was going to disproportionately affect women because of the breaks they have in employment. As for the fourth week of annual leave, which most women will find attractive to cash up because they earn less then men do, where was she when her ministry was trying to convince the Government not to do that, on behalf of New Zealand women workers? Where was she when early childhood education funding was cut by her Government? Was she there advocating for the interests of children and women as the Minister of Women’s Affairs, or was she in China aiding and abetting the private business interests of her husband?

Those are the questions, I say to Mr Key, that New Zealand women need to have answers to. Pansy Wong was supposed to be advocating for New Zealand women in New Zealand to try to make sure that women were not disadvantaged during this recessionary period. She has failed, and we know that she has failed in that because the Global Gender Gap Report, which came out just a few months ago, told us that New Zealand has started to slide backwards internationally in terms of where our women in the workplace stack up in that report. We know that she has failed because the Human Rights Commission recently published a census on women’s participation and, again, we see the slide backwards for New Zealand women, and this was while the Minister of Women’s Affairs was where? Six times she was in China, then she was in Australia, also in the United States, and also in Japan. She needs to front up and tell New Zealand women and the New Zealand public what she was doing on those trips, which were approved by the Prime Minister. The Prime Minister confirmed for us today that he approved on 11 occasions—11 occasions in 2 years—for the Minister of Women’s Affairs to be not in New Zealand defending women’s interests but overseas.

Hon DAVID CARTER (Minister for Biosecurity) : I start by picking up on the contribution of my colleague the Hon Nathan Guy. I take this opportunity to extend my thoughts and my prayers to the West Coast community, particularly the families of the miners in the Pike River Coal tragedy as it continues to unfold. No one can really imagine how frustrating it must be for the families as they wait. It is day 5 today. A number of rescuers have been there right from the start of this tragedy, wanting to do something, yet everyone has had to wait until we ascertain the extent of the situation and ascertain what can be done without further endangering life. It is a difficult time for all, and I extend my thoughts to the community.

I want to comment on the kiwifruit disease, which was in the media over the last couple of weeks prior to the Pike River Coal tragedy. I do not think that its place in the media has been surpassed because of that tragedy; it has been surpassed and the disease is off the pages of the media because we have made progress and have some action under way. First, I commend the maturity and cohesion of the industry that I had to deal with. The fact that we were dealing with such a united industry made the issue of firstly establishing the extent of the incursion relatively easy. Although I know that everybody jumped to conclusions about how the disease got here, it may take us some time to be sure as to when it arrived. I guess at this stage it would seem that the disease has certainly been here for a number of years. We have now found positive testings on pollen dating back to 2007. So it does not look as if it is a recent incursion, which is what the Opposition seemed to be almost gleefully hoping for.

It also means that it is probably going to be easier to deal with the situation in that if the disease has been here for that long, it may not always manifest itself with the severity with which it has manifested itself this year. That seems to suggest to us that in fact the industry as a whole has been managing the disease over other years almost inadvertently because it did not realise it was coping with Pseudomonas syringae pv. Actinidiae at the time. Last week we managed to get an arrangement whereby a $50 million package was delivered, with 50 percent from Government and 50 percent from the industry. That money is being spent as we speak, particularly in the Te Puke region, where there is an aggressive pruning campaign under way in an attempt to contain this disease, contain the amount of bacterium that is associated with the rapid manifestation of the disease, and get things under way so that control into the future is possible.

There has been some nervousness amongst my primary sectors as we have moved to look at the best way we can manage our borders. We have been talking to the industry about the need for a much closer engagement through Government industry agreements, whereby we can facilitate better protection at our border but at the same time ensure that when incursions occur we will have a better way of managing those incursions. The only way we can develop those protocols is by knowing what is important to the industry. I take this opportunity to congratulate the kiwifruit industry. I particularly acknowledge the work of Lain Jager, chief executive of Zespri, Peter Ombler, president of New Zealand Kiwifruit Growers, and Dr Barry O’Neil, who has been the Ministry of Agriculture and Forestry’s leading official in this response. All of them have been superb to work with, and I think that is why we have got the situation to where it is today.

It would be inappropriate if I did not finish this contribution by taking the opportunity in respect of the Mana by-election to congratulate my parliamentary colleague Hekia Parata on a superb campaign.

Chris Hipkins: The runner-up.

Hon DAVID CARTER: She was the runner-up, but I remember the Labour Party saying that the by-election would be a test of the National Government’s policies. We proudly went into the Mana by-election and took the chance to take that test to the voters of Mana, and we saw a 6.6 percent swing in favour of the policies of the National Government. That is why we are pleased with the result, and that is why we are very pleased to come a very close second.

CHRIS HIPKINS (Labour—Rimutaka) : Why is Pansy Wong not taking a call in this debate and fronting up to this House to explain her misuse—

Hon Simon Power: I raise a point of order, Mr Speaker. I have been listening very carefully to this debate. Other speakers have been much more careful when referring to an absence or otherwise of a particular member—

CHRIS HIPKINS: I did not refer to her absence.

Hon Simon Power: Excuse me, this is a point of order. The member referred to her absence from this House. Other members have not made that mistake in their contributions.

Mr SPEAKER: The member’s point of order is quite correct in that it is out of order to refer to the absence of any member from this House. The point has been raised, and I have listened to members skirting around it. Members need to be careful not to talk about the absence of a member from this House.

CHRIS HIPKINS: I raise a point of order, Mr Speaker. Just for clarification, I ask whether you are ruling that it is unacceptable to challenge another member for not taking a call.

Mr SPEAKER: No, it is not out of order to say that a member has not taken a call, but members should not say a member is absent from the House.

CHRIS HIPKINS: I raise a point of order, Mr Speaker. I think if you reflect on what I said, I asked why Pansy Wong had not taken a call in this debate.

Mr SPEAKER: I have not ruled that out. I have just alerted members that they must be careful not to refer to members’ absence from the House. Members can question why a member has not spoken in a debate.

CHRIS HIPKINS: Why is Pansy Wong not taking a call in this debate? Why does she not come here and say why she misused her parliamentary travel allowance? She has not taken a call in this debate, and the public of New Zealand are entitled to know why she is not fronting up and explaining what she has been up to, and why John Key is telling her to duck the questions, not front up to the media, and not answer the media’s questions. The amount of money we are talking about is not insubstantial. I went back and looked at Pansy Wong’s international travel expenses in the time that she has been a Minister. I looked at her 11 overseas trips in the 24-odd months that she was a Minister—that is a trip nearly every 2 months, on average—and she spent over $180,000 taxpayer dollars on her international travel.

The public of New Zealand are entitled to hear her explanation for why that is so. They are entitled to hear whether she was doing business on her husband’s behalf in China and asking the taxpayer to pay the bill for that, yet not fronting up to the public of New Zealand to say why she thinks that is acceptable. That is not good enough. It is not good enough for the Prime Minister to tell her not to front up.

But that is the pattern from this Government. Its Ministers take whatever they can, until they get caught. It is National’s “self-help, help yourself” philosophy to governing. While they are picking on beneficiaries and telling them to go out and get a job, they are busy helping themselves to every possible taxpayer allowance they can get hold of, and when they get caught, what do they do? They duck for cover. What does John Key do? He advises them to duck for cover, to not answer any questions, to not say anything, and, particularly, to not make him look bad. That was John Key’s advice to Pansy Wong. It was: “Stay out of the way; don’t make me look bad.” But that is exactly what Pansy Wong is doing. She is making John Key look bad, because every one of those 11 overseas trips that Pansy Wong took was signed off by John Key. Every single trip that Pansy Wong took as a Minister has John Key’s signature on it. He said it was all right: $180,000 of taxpayer money was spent by Pansy Wong on her overseas travel, and every dollar of it was signed off by John Key.

What is he telling Pansy Wong now? He is saying: “Whatever you do, don’t say anything. Don’t tell the public of New Zealand what you did while you were travelling on their dollar.” I say to Pansy Wong and John Key that that is not good enough. When it is the taxpayer dollar they are travelling on and spending, they have an obligation and a duty to front up and explain what they have been up to. It is not acceptable for Pansy Wong to travel overseas on the taxpayer’s dollar to further her husband’s private business interests. It is simply unacceptable, and it is unacceptable for the Prime Minister to tell her not to front up and explain what she has been up to. But it is the pattern of this Government and its Ministers to help themselves to everything they possibly can—right from the very beginning. In fact, before he was a Minister, Bill English was doing everything he could to extract the maximum dollar out of the taxpayer for his house in Karori. Phil Heatley did everything he could do to extract the dollar out of the taxpayer to pay for wine at National Party functions and to take his family away on holiday. The “self-help, help yourself” philosophy is alive and well in the National Government.

What about Richard Worth? Why did John Key lose confidence in Richard Worth? He never said, did he? Mr Key was the man who would set a new standard for ministerial performance, and new benchmarks, but I ask what happened with Richard Worth. He did not meet the standard, but John Key never said why. He was never willing to front up and say why, and that is what we are seeing in the Pansy Wong saga—the Government: not willing to front up; John Key: not willing to front up; and Pansy Wong: not willing to front up. It is not good enough.

Dr JACKIE BLUE (National) : Tomorrow is 25 November, a day referred to as White Ribbon Day to mark the United Nations International Day for the Elimination of Violence Against Women. Many MPs are wearing the white ribbon today as a personal pledge to always speak out against violence towards women and children.

The story of the white ribbon has its origins in Canada, where in 1991 a group of Canadian men began a campaign to urge men to speak out against violence against women. The White Ribbon campaign was a direct result of a massacre of 14 women by a lone gunman in Montreal, Canada, 2 years previously. The white ribbon gathered momentum in Canada and, in 1999, the United Nations General Assembly declared 25 November the International Day for the Elimination of Violence Against Women.

The white ribbon has become a symbol for that day, but there is much more to the story of the origins of 25 November, a story that is not well known in New Zealand. It is a story of the Mirabal sisters—Minerva, Patria, and Teresa—who were citizens of the Dominican Republic. Their story, which is over 50 years old, needs to be told. The three sisters and their husbands opposed the dictatorship of the day. Minerva became particularly passionate about ending the dictatorship and, with her sisters, formed a group of opponents to the regime, known as the 14th of June Movement. Within that group they were known as “The Butterflies” because that was the underground name that Minerva was given. Two of the sisters, Minerva and Teresa, were incarcerated and tortured on several occasions. While in prison they were repeatedly raped. The sisters, however, persisted in speaking out to end the dictatorship.

On 25 November 1960, when the three sisters were returning from visiting their husbands, who were imprisoned at the time, their car was stopped. The unarmed sisters were beaten to death, and their car was pushed over the side of a mountain to make it look like an accident. After the death of her sisters, the surviving sister, Dedé, became active in politics, fighting for the rights of, and the elimination of violence against, women, and fighting to further democracy in the Dominican Republic. She brought up her sisters’ children and founded a museum and library in the home where the three sisters had been living at the time of their deaths. She was determined that their memory live on.

On 17 December 1999 the United Nations designated 25 November, the anniversary of the murder of the Mirabal sisters, as the annual date for the International Day for the Elimination of Violence Against Women. The date of 25 November is in commemoration of the Mirabal sisters: Minerva, Patria, and Teresa. The day, of course, has become well known as White Ribbon Day, and marks the beginning of 16 days of activism against gender violence. I pay tribute to the three women—Minerva, Patria, and Teresa—who, because of their activism, experienced violence while they were alive and, ultimately, violent deaths.

I heard about these three sisters when I attended a women’s empowerment conference recently in Istanbul, and I met Minerva’s daughter, who is a member of Parliament in the Dominican Republic. I was very moved by the story, and I returned to New Zealand determined that these three sisters and the part they played in 25 November be acknowledged.

Tomorrow New Zealanders from all sections of society will unite against violence in New Zealand. Today I acknowledge also the many cross-party groups in Parliament, where MPs join together in a non-partisan way to work together for a common cause. The newly formed cross-party Commonwealth Women’s Parliamentarians is one such group. I am co-chair of this group, along with Carmel Sepuloni. I know that all members of our group stand with me in acknowledgment of the Mirabal sisters, and in utter condemnation of violence of any form against women and children.

Family violence in New Zealand is far too common, with one in three women reporting being abused by a partner in their lifetime. That is totally unacceptable. Family violence is not limited to any one gender, religion, culture, or income group. I pay tribute to the many individuals and organisations who work in this area. I add that I absolutely support the Violence Intervention Programme operating in our district health boards, where females presenting to hospitals are questioned about family violence. The fact is that many, many women are just waiting to be asked.

CATHERINE DELAHUNTY (Green) : Tēnā koe, Mr Speaker. He mihinui ki te whānau whānui o Te Tai Poutini, tēnā koutou katoa. I give acknowledgment to the West Coast families.

Today is the day that the Government-appointed Welfare Working Group reported, at 2 p.m. this afternoon. The theme of that report is: “Any work will set you free, even if you have a full-time job already as a mother of a one-year old baby.” The Green co-leader Metiria Turei and I were keen to engage with this group, but after registering at its national forum we were told that we had to be deregistered on the grounds that the group was too full, although many people who attended this event said there were empty seats. However, despite being marginalised at this juncture, we have closely engaged with the debate.

Like all citizens of any status, we were more than welcome to participate at the Alternative Welfare Working Group, established by the community. The Alternative Welfare Working Group heard submissions on what it was like to be out of work, poor, and stigmatised, and on what might be done to improve people’s lives and job opportunities.

Meanwhile the Government’s Welfare Working Group, in its new report, suggests that it is not listening to the voices of community advocates who have long-term experience of youth unemployment and other forms of unemployment, the domestic purposes benefit, the sickness benefit and the invalids benefit, and other challenges. Paula Rebstock from the Welfare Working Group has made some strong statements that suggest that cost cutting is driving this agenda. Of course, she has not said that the Government has asked her to cut costs, but she has constantly made statements about how many billions of dollars welfare will cost us if welfare numbers continue to rise.

This working group appears to assume that benefit numbers rise because people become benefit-dependent. Its numbers appear to be based on the nonsensical assumption that no one who goes on welfare benefits ever comes off them. Its unspoken dog whistle is that beneficiaries and the poor are the problem. It fails to recognise what many people who already know they are poor know—that there is a job shortage and that is not their fault. We have up to 60,000 people out of work. That is an increase of up to 44,000 people in the last 2 years. Benefit numbers rise in a recession and they also rise with an ageing population. When one in five people experience disability there will be more people spending some time on a benefit.

However, most people spend less than 1 year on a benefit. Most people would love to have a job that paid more than the benefit and that they could manage as well as their family responsibilities. Nobody feels great on a benefit, because even if they are unwell or doing the best possible job as a sole parent, they are stigmatised, and that is as demoralising as their poverty. The Welfare Working Group is not helping to resolve any of the pressures on those people by making them the problem.

In every recession, as regularly as clockwork, the Government initiates a review of welfare focused on blaming the poor. In the United States it is called the Wisconsin Model, and now David Cameron in the UK is bashing the poor, as well. Both models involve cost cutting and beneficiary bashing. They use sophisticated 21st century language to do so. They involve the Orwellian double-speak of “helping” solo parents into work by cutting food to their children, and sanctioning the sick and the disabled as a burden to society. The role of the Welfare Working Group is to dog whistle the message to the general population that many beneficiaries are the undeserving poor who, through a lack of moral fibre, have fallen into dependency and are staying there by choice. All rigorous socio-economic analysis tells us that this message is trotted out in every recession and that it is nonsense.

The big spin today has been about a small part of the report, which looks at investing in youth. We applaud this approach; we believe in investing in youth, and no one will dispute that. But the solution the Greens have for youth is education, training, and job creation. That is why we in the Greens developed the Green New Deal to help address the recession and create meaningful jobs. In practical terms, the Greens are also keen to restore the training incentive allowance eligibility criteria for tertiary courses, so that solo parents—especially younger ones—can get education and training to help them find quality work, rather than being shunted off the benefit to a lifetime of stacking supermarket shelves. The training incentive allowance worked for Paula Bennett; why can we not have it back?

We would remove all threats against sick and disabled people. We would provide genuine support and encouragement to them to show that they are valued members of society and are entitled to a benefit that supports them.

JONATHAN YOUNG (National—New Plymouth) : I join with my colleague the Hon Nathan Guy. People all over this nation, and without doubt communities around the world, right now are with the miners at Pike River and their families, heart and mind, who are waiting in such difficult and incredibly uncertain times.

New Plymouth mother Natricia Herk has flown down to Greymouth. Her son Daniel, a father of two, is one of the 29 miners. There were 31 men in the mine. Two men, Daniel Rockhouse and Russell Smith, escaped through a service portal, and walked 1.5 kilometres to safety. That leaves 29 other men—24 New Zealanders, two Australians, two Britons and one South African—who have not emerged.

It is certainly in the worst of times, such as this, that the best of communities pulling together is so important. Today we acknowledge the tremendous pressure facing the families of the miners and the people of Greymouth. We are thankful that technical expertise from around the country and around the world is focusing on the effort to bring the men out. A small snippet of hope occurred when a robot was sent into the mine to find out what the conditions were like, and it captured new images, including a miner’s helmet with the light still on. But, in contrast, we can imagine the utter disappointment that everybody at Pike River would have felt this morning that after the bore-hole was completed, the gas samples were off the limit, and it is still not safe to send in rescue teams. We are grateful that expertise from around the nation and around the world is contributing to the effort at Pike River.

We think about the people who are fronting the efforts to launch the search and rescue of the miners: Pike River Coal chief executive, Peter Whittall, and the Tasman area police commander, Superintendent Gary Knowles. These men, who have behind them an army of experts and teams of search and rescue personnel, are working with very anxious and distressed family members to keep them informed of progress. They also have to front up to the questions of the worldwide media every day asking why this happened, whether it could have been stopped, and what went wrong and why. Their No. 1 job right now is gathering data and coordinating the search and rescue efforts. I have been very impressed with their presence of mind in such gruelling circumstances—their expertise and professionalism is evident. We can have confidence in their leadership in such a crisis.

The time will come for all the questions that are being asked to be answered. Undoubtedly, there will be a full inquiry to discover the sequence of events that led to the explosion in the Pike River coalmine and to find out why those events occurred. But right now, we are focused on the most critical matter of being able to launch that search and rescue team at the moment it is deemed safe for those in the mine and for those seeking to save them. It is very important to support the families, friends, and community during this time.

Recently, I was speaking to a group of leaders in the energy exploration sector. There is a sense of affinity amongst prospectors and miners. These people work incredibly hard in demanding situations to harvest the earth’s resources for the benefit of our way of life for all people. New Zealand has a long history of coalmining, and an incident like this is the worst nightmare of those who work in the industry.

Taranaki, which is the energy province of New Zealand, is the centre of New Zealand’s oil, natural gas, and petrochemical industries. Almost 90 percent of the sector’s total nationwide employment is based in the region, which generates $740 million worth of gross national product. All of New Zealand’s producing oilfields and gasfields are located in the Taranaki Basin. They are predominantly located onshore, but there are some significant basins offshore that require offshore processing platforms. On my visit to one of those offshore platforms, I soon saw the teamwork amongst the men. One can soon see that they depend on each other, and one can see the professionalism they employ in maintaining their safety standards. They are a rare breed, just like the miners of the West Coast of the South Island.

Dr RAJEN PRASAD (Labour) : Like the previous speakers, Jonathan Young and others in this House, and elsewhere, I also acknowledge the pain and distress of the miners in Greymouth, and also their families, their community, and those who are working on the rescue. We pray for them, and hope all will turn out well.

I turn my attention to another matter, which is simply to express what a special privilege it is to be a member of a minority ethnic group, and also to be those people’s representative in Parliament—to be here representing their interests. In that capacity, we all know the expectations that our communities make on us, and how often those expectations are quite unreal. Our communities follow our actions, they meet us regularly, and they get quite upset when we cannot manage their expectations, be in two places at the same time, or let them down by taking a position that is different to the one they might have taken. Whenever that happens we are required to front up, to explain, and to be accountable for what we have done or not done.

So I have some understanding of what Pansy Wong might be going through at this time, and what her thoughts might be. But I am also certain that she wants to front up, because she wants to meet the expectations of her communities, and she wants to explain and do what is right because that is what our communities have socialised us to do. I believe it would not take much for Pansy Wong to know how many trips she had, and for what purpose she undertook them. She will know on which trips her partner went along with her, which ones were private and which were not, and which ones were paid for and the way they were paid for. If she is in any doubt, then she can stop and consult her husband, her diary, her chequebook, her bank statement, etc. Within a matter of hours, I imagine—a day at most—it is a fair expectation that she would then understand exactly where she had gone wrong and could have breached the rules, and then she would be able to front up. So it is a fair question to ask why she is not here to explain what that might be.

It is time, really, for Pansy Wong to front up and explain, because in that way she could meet the expectations of her community, as well. But the only explanation we have is that she is not being allowed to do so. She has been asked not to do that by the Prime Minister, and one has to wonder why that might be. Clearly, the Prime Minister has asked Pansy to go to ground, not to make any statements at all, and not to explain. Indeed, in advising her to take that position, the Prime Minister has actually made matters worse for Pansy Wong, and that is doing more damage to a member of an ethnic minority group who is held in high regard by her own people. Matters are being made worse.

The Prime Minister also shows a glaring lack of understanding of minority ethnic groups—ones he visits from time to time—and their cultural expectations and cultural practices. So we are left to wonder why that might be so. Is the Prime Minister playing for time? When the matter was first raised, he ridiculed Pete Hodgson for raising it, and then asked for a report. Now he is questioning the rules, and I wonder what will be the next series of prevarications he might take. This is not leadership; it is not a demonstration of a set of principles by which the country should be run, and by which the Prime Minister and members opposite would like to operate. He is seeking to justify and soften up the public—certainly, soften up what the public feels. There is some kind of softening up of the public going on in his saying that she has paid a heavy price already, and saying that it is not his problem has a ring of repetition from the past, as does talk of high standards being let down.

Pansy Wong should be here explaining, not just her own actions in this particular case but her lack of defence for the position of the Office of Ethnic Affairs, and an explanation of why the Office of Ethnic Affairs is being downgraded. Why has she not raised that with the many communities she has been visiting, week in and week out? It is their view that this is a downgrade, and that the Minister for Ethnic Affairs has not fronted up. Her communities are left feeling that it is OK for her to front up just to sing the praises of these communities. But when she needs to take their interests further, and it is their expectation that she will do that, she has not. So this is a disappointment. Thank you.

  • The debate having concluded, the motion lapsed.

Subordinate Legislation (Confirmation and Validation) Bill (No 2)

Second Reading

Hon SIMON POWER (Deputy Leader of the House) on behalf of the Leader of the House: I move, That the Subordinate Legislation (Confirmation and Validation) Bill (No 2) be now read a second time. This legislation comes before the House each year. This year it confirms or validates 50 orders and regulations made under, I am advised, 10 different Acts. Parliament must confirm all of these orders and regulations, otherwise they will lapse.

The orders and regulations themselves cover a variety of areas, including animals products, civil aviation passenger levies, tariff rates, meat and grape levies, excise and excise-equivalent duties on tobacco and alcohol products, gambling levies, road-user charges, and increases in various benefits, allowances, and war pensions. The bill was referred to the Regulations Review Committee on 13 October this year, and I am grateful for the committee’s prompt and thorough analysis of it. Following some correspondence with the relevant Government agencies, the committee has recommended that the bill be passed without amendment. This bill is routine legislation; the Regulations Review Committee has raised no issues with it. I commend the bill to the House.

CHARLES CHAUVEL (Labour) : As we have heard from the Deputy Leader of the House, these subordinate legislation bills are routine bills. They come before the House every year to confirm and validate items of subordinate legislation. The point I want to make and the reason I am taking a call in what I anticipate will not be a contentious debate—

Hon Trevor Mallard: You never know; I’ve got a copy of the bill.

CHARLES CHAUVEL: —subject to any comments Mr Mallard may want to offer later in the debate—

Hon Trevor Mallard: See that bit about the Chief Justice in it?

CHARLES CHAUVEL: Now, now, we will leave her out of the debate, please. The important point to make arises out of what the Minister said about select committee scrutiny. It is true that the Regulations Review Committee had the Subordinate Legislation (Confirmation and Validation) Bill (No 2) referred to it and that we reported the bill back without any recommendations for amendment, but the language we used in reporting back was carefully chosen. We said: “We asked the eight Government agencies responsible for administering the subordinate legislation to be confirmed and validated by the bill to explain why confirmation or validation was warranted. After considering their responses, we found no reason why confirmation and validation of the regulations and orders contained in the bill should not occur.”

The reason why we put it that way is that these are all very technical measures. The matters that are dealt with in them are important in many ways. There are rates of excise and excise-equivalent duties on tobacco products, a civil aviation order relating to the domestic passenger levy payable by airline operators, increases in benefits under the Social Security Act and the New Zealand Superannuation and Retirement Income Act 2001, orders relating to road user charges, orders implementing free-trade agreements—in one case, the Malaysia - New Zealand Free Trade Agreement—levies imposed under the Biosecurity Act, and some matters relating to fees under the Animal Products Act being dealt with.

There are matters that are dealt with in the legislation that are no doubt important to a wide range of people in the community. The point we made in reporting it back the way we did was that it is very difficult to give this sort of legislation the scrutiny that members in the House might think a select committee should give to technical, detailed legislation. In order to give it proper scrutiny and to have satisfied ourselves that all the things the departments assured us that this legislation would do are being done, we would have had to spend a lot more time and probably engaged an expert adviser to look at each of the measures that are dealt with in the bill. The select committee chose not to take that approach. The Regulations Review Committee has never taken that approach, and it did not differ from that on this occasion.

My point is that we have seen enough examples of the House passing legislation, then having to go back and fix up things. There have to be better ways to deal with routine legislation. There is a proposal in the Legislation Bill that revisions, re-enactments, or simple machinery provisions can be certified to be such, and then go off to a parallel committee and not be subject to the three readings and Committee stage procedure. The process for confirmation and validation bills probably needs to be rethought. The bills probably need to have some sort of procedure attached to them, where the House deals with them in a similar way, and where that particular committee has an adviser available to it to provide sign-off on the validation and confirmation exercise so that Parliament can be assured that it is not making mistakes.

The point to make is that the House today is reliant on the committee’s recommendation that the bill be passed. The committee itself is reliant on the departments having acted, as they no doubt have, in good faith and with care to make sure that the confirmations and validations that are contained in this legislation are actually necessary and do what the explanatory note says they do. The detailed technical scrutiny as to whether the measures have, in fact, done those things was not conducted by the Regulations Review Committee. It has never been conducted by that committee. If it were, the committee would not have time to scrutinise the regulations that, as we know, are required to be looked at every week. In the future either it needs to go off to a select committee—I cannot think which one it would go to—or it needs to go to some other body that this House might choose to create, and obviously there are opportunities coming up to have a think about procedures and other bodies.

As I said, the Legislation Bill will be coming back to the House at some point, and I think it would be useful if the Deputy Leader of the House, in his capacity as the Minister of Justice, were to perhaps have a think about this issue and to reflect on it with officials and one or two of his colleagues. Certainly, members on this side, such as my colleague the shadow Minister of Justice and I, would be very happy to have a discussion as well about what the possibilities might be. I am sure the shadow Leader of the House would be prepared to join in that conversation.

The fundamental point is that scrutiny is one of the important jobs of this Chamber. Some scrutiny of this bill has occurred; it has been the same scrutiny that has occurred in the past. But I am not sure that this is the most satisfactory procedure by which to deal with these bills. I wanted to make the point in this combined second and third reading speech that maybe it is time to look at doing it a different way.

  • Bill read a second time.

Third Reading

Hon SIMON POWER (Deputy Leader of the House) on behalf of the Leader of the House : I move, That the Subordinate Legislation (Confirmation and Validation) Bill (No 2) be now read a third time.

  • Bill read a third time.

Criminal Procedure (Reform and Modernisation) Bill

First Reading

Hon SIMON POWER (Minister of Justice) : I move, That the Criminal Procedure (Reform and Modernisation) Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Justice and Electoral Committee. Over the past 20 years there has been growing criticism of criminal procedure in New Zealand. The historical answer to this problem has been to appoint more judges and to build more courthouses. It is clear that that approach has not worked. It is unacceptable that the median time to dispose of a summary case is 26 weeks, the median time to dispose of a District Court jury case is 52 weeks, and the median time to dispose of a High Court jury trial case is 69 weeks. Nor is it acceptable that according to officials there are at least 43,000 unnecessary court appearances throughout the court system each year.

Our key criminal procedure legislation dates from the 1950s and has become complicated by over 50 years of ad hoc reforms. Criminal procedure in New Zealand has been described as an impenetrable maze. This bill consolidates criminal procedure law and introduces a comprehensive package of reform to ensure that the criminal justice system is more transparent, understandable, and efficient. It represents the biggest reform and modernisation of criminal justice procedure in nearly two generations. It is part of this Government’s commitment to improving the criminal justice system for the benefit of all of those who use it and depend on it.

This package has the potential to free up 16,000 court sitting hours each year. It has the potential to take 5 to 13 weeks off the average time to dispose of a case. It has the potential to reduce costs by approximately $24 million over a 5-year period.

There are a number of significant improvements in the bill. One improvement is that trial procedures will fit the nature and seriousness of the alleged offence. The bill seeks to raise the threshold at which a defendant is able to choose a jury trial from offences carrying a penalty of more than 3 months’ imprisonment to those carrying a penalty of more than 3 years’ imprisonment. This will strike a better balance between the defendant’s rights and ensuring that only cases of significant or sufficient seriousness or public interest are determined by resource-intensive jury trials. This, and other changes, is expected to result in up to 1,400 fewer cases needing to be designated for trial by a jury.

The bill places the onus on parties to progress cases as much as possible outside the courtroom, facilitated by the preparation of case management memoranda. This will result in fewer adjournments, shorter hearings, and reduced time and costs.

The bill requires the defence to identify and disclose issues in dispute before a trial. Focusing only on disputed matters at trial is, I am advised, expected to result in approximately 450 fewer court days.

Further provisions allowing courts to proceed in the absence of a defendant when it would be in the interests of justice will also ensure that trials start on time and proceed in a timely manner. Similarly, changes allowing greater flexibility to continue with a trial when jury numbers fall to 10 will reduce the need for retrials.

The bill’s provisions to encourage court participants to cooperate with one another will help ensure that cases progress in a timely, efficient, and appropriate way. These provisions include an ability for the court to impose cost orders against parties—both defence and prosecution—and to impose bail conditions on a defendant to take the necessary steps for the timely progression of his or her case. It also includes a requirement for the court to take into account a defendant’s compliance with procedural matters as a mitigating, or, indeed, aggravating, factor.

Other provisions in the bill reflect the need to amend existing provisions in the Summary Proceedings Act 1957 and the Crimes Act 1961 in order to simplify and modernise language and to ensure that court processes can take advantage of developing information technology as appropriate.

This package builds on other changes under way to improve the criminal justice system. Those changes include legal aid reforms, initiatives in respect of victims of crime, and the roll-out of audiovisual links in courts and prisons.

Like others in the House, I am sure, I am a strong believer that justice delayed is justice denied. This bill will ensure that timely justice is delivered for victims, witnesses, defendants, and the community. It will benefit those people who are involved in the criminal justice system through no fault of their own, while maintaining the defendant’s fundamental right to a fair trial.

This legislation is a major piece of work and has been in the making for more than 2 years. The bill reflects extensive consultation with the judiciary and lawyers, and a trial of some of the new processes at Tauranga District Court and Manukau District Court. I thank the judiciary and the legal profession for the constructive role they have played in drawing this bill together. I also thank the Law Commission for its significant contribution to this bill. I look forward to the select committee’s consideration of this significant and comprehensive reform of criminal procedure. I commend the bill to the House.

CHARLES CHAUVEL (Labour) : Labour agrees with the Minister of Justice, but only to an extent. Some aspects of our law surrounding criminal procedure are inflexible and out of date and they require reform, so to the extent that the Minister is tackling those issues, we congratulate him. We will support the referral of the Criminal Procedure (Reform and Modernisation) Bill to a select committee, which, I understand, is not a universal position as far as other parties in the House are concerned. But in doing that, we are concerned that some of the changes could have major ramifications for people’s rights. Because of this, we intend to apply very close scrutiny to the bill at the select committee to ensure that if we do achieve greater efficiency, then we will not sacrifice fairness. I see that the Minister is nodding with approval. Presumably, that means he tried for a much more equitable package before the Cabinet process and was knocked back, so we will do what we can to make sure that his original aim of fairness above all is restored in the bill.

I will do a couple of things in this call. The first thing is to talk a bit about why we agree that reform is necessary to some extent, the second is to talk about our hopes for the select committee process, and the third is to raise some of the concerns that lead us to have the reservations that I have expressed.

As to the need for reform, poor quality justice is delivered to many defendants, victims, and other participants in our justice system as a result of excessive costs, excessive complexity, and excessive delays, and we have heard some of those catalogued in the Minister’s speech. The fact that inequitable outcomes were being reached was acknowledged in the 2007 Criminal Procedure (Simplification) Project, and many of the recommendations of that project have made their way into this bill. Some of them are common sense and they merely bring the law into line with modern context—a good example is allowing court documents to be filed electronically—but there are others that could have much more serious consequences.

Achieving efficiency in our justice system should never come at the expense of our basic freedoms, but unfortunately many of the provisions contained in this bill look as if they may curtail some of those freedoms, and the Attorney-General’s comments in the New Zealand Bill of Rights Act vet indicate that those fears are well-founded. One example he gave of a contravention of the bill that cannot be justified is a provision that allows a real risk of letting trials proceed without the presence of the accused. Obviously, when issues as fundamental as that are at stake, this is an occasion for the House to take real care.

In proceeding to the select committee process, I think Labour members would particularly like to use this occasion to ask Government members to do a few things during that process: first, the Government should listen to the experts, and, secondly, it should take their advice seriously. When basic democratic freedoms are at stake, we have a serious justice issue on our hands. If we need any evidence of that, we need only look back at the ACT Party’s “three strikes” legislation when it was being pushed into law, when the police were appointed as advisers because they better matched the tone of the law and order dog whistling than the Ministry of Justice officials, who should rightly have been advising on that bill. Another example was the fiasco over Paul Quinn’s Electoral (Disqualification of Sentenced Prisoners) Amendment Bill, which, as we now know, had completely the opposite effect to the one that its mover intended. Those are the sorts of mistakes that we have to avoid when we deal with this legislation.

The other thing I would ask Government members and Government Ministers in the House today is for them to keep an open mind and remember what they have said in the past on these issues. I remember when I was first elected to this House and Simon Power and Christopher Finlayson were in the Opposition. They were calling for drastic reforms of our justice system and, in particular, our criminal justice system. They must have had more in mind than this reform, which is somewhat far-reaching, but I think it could not be described, even with the most charitable motives, as a thoroughgoing overhaul of the system—it is not.

If this Parliament was serious about really overhauling the justice system, delivering justice to ordinary New Zealanders, and looking at the problem we have with very, very well-resourced superior courts but actually pretty scungy courts at the District Court level, both in the civil and the criminal jurisdictions, then it ought to be dusting off that 2004 Law Commission report on the structure of the courts and looking at the very careful, systematic recommendations in that report. I see that the Minister is smiling. Yes, it ought to have been done earlier than this; it ought to have been done by Labour, but it was not. But here is a great opportunity for him to get a reputation, and a deserved reputation, for being a reformer of the system by going back to those first principles and looking at how we can make justice much more readily accessible to the ordinary users of the system. That 2004 report is by far and away the best starting point that anyone has come up with in recent times in New Zealand. Its title says it all: Delivering Justice for All: A Vision for New Zealand Courts and Tribunals. Some very, very good policy recommendations in there have been lost and should be considered.

There are a number of provisions in the bill that members on this side of the House will not take a final position on until after the select committee process, but I would like to mention a few of the points of concern. The first is the proposed change to the threshold for jury trials as of right. It is serious, at least because it involves an amendment to the New Zealand Bill of Rights Act. My understanding is that there is still some discussion at officials’ level about just how to change the threshold, whether it should be a brightline test moving from 3 months to 3 years’ minimum imprisonment, or whether some other slightly more complex test should be adopted, and I think the select committee will hear more about that. Certainly our preliminary view would be that if there is to be change—if there is compelling evidence that our threshold is outdated and too generous with reference to international experience, then that should be clearly established at the select committee—then there should be a very clear brightline test as to what the new threshold should be. Also, we should take real care in amending the New Zealand Bill of Rights Act. It is not an ordinary statute; it has become an important part of our constitutional arrangements. It is not satisfactory to be able to amend it with just a simple parliamentary majority in the ordinary course. There should at least be a convention around striving for consensus before we touch the provisions of that bill.

Another provision of concern is the provision that would allow jury trials to proceed with only 10 jurors. It has to be said that that is a serious impingement on the right to a fair trial. What happens next?

Hon Simon Power: But they can now.

CHARLES CHAUVEL: The Minister says that they can now, but the reality is, as he would concede, that this bill makes it much easier. It makes it much easier to become the norm in the event that a judge decides that it is fair. We have real concerns about whether that practice will become the norm under the provisions in the bill. It is another question that will have to be addressed, as is the removal of a defendant’s right to be present at his or her own trial. Unlike the previous provision, where a discretion is rested with a judge, here is a provision that says the courts must proceed without a defendant if that defendant does not have a reasonable excuse for their absence. So the discretion of the judge to do justice is curtailed. That is a matter that the select committee will have to look at very carefully.

I am sure my colleagues will raise more concerns about various other aspects of the bill. I hope that the House will note that our concerns are sincere. We will proceed in good faith in the select committee to seek to have them addressed. We are somewhat disappointed that this is not bold reform—the sort of bold reform that the Minister and his colleague the Attorney-General called for in Opposition. They talked about a system in crisis—a system that was broken. This sort of piecemeal reform will not fix it all.

Hon Simon Power: Piecemeal? It’s 500 pages.

CHARLES CHAUVEL: I say to the Minister that we do not weigh reform judging by the number of pages we have been clever enough to come up with in a bill. We need to look at the coherence of the proposals and whether they will be fit for purpose. Until we get principle-based reform, root and branch, from the ground up, in the justice system, my fear is that we will not get that, and this bill certainly does not deliver that.

SIMON BRIDGES (National—Tauranga) : It is very good to speak on the Criminal Procedure (Reform and Modernisation) Bill, and to note some of the things that the member Charles Chauvel has said. I did not hear all of his contribution to this first reading. He made some very sensible contributions. It was good to hear that Labour will be withholding its final position on a number of things. I agree entirely with the member that given the detail we have in this bill, and the myriad things it is doing in our criminal procedure arena, we will, as a select committee, have to be very careful, very measured, and go through the detail with the seriousness it deserves. But I cannot accept what the member says when he calls this bill “piecemeal”. I confess that I have not read all 525 pages yet, but what is very, very clear to me—

Hon Ruth Dyson: What a lazy member.

SIMON BRIDGES: I assure the member that I will read it very soon, but it is a big bill. What I am very clear on, just from what I have read and the summaries I have read, is that it will bring a smarter, more efficient criminal justice procedure. Charles Chauvel is not right when he calls this piecemeal. It is also delivering on a huge raft of measures that criminal lawyers have been asking for, for some time. For example—and I know judges have been calling for this for some time—it includes a measure whereby defence counsel narrow in on the issues they want to argue in a case, rather than a sort of scattergun approach. That is merely one example.

However, because it is such a large body of work, I want to focus on one particular area, and that is the issue that Charles Chauvel has mentioned whereby we are ensuring that trial procedures are appropriate to the nature and seriousness of the alleged offence, and where we are raising the threshold for jury trial from 3 months’ maximum imprisonment term to 3 years. I entirely agree with that. Of course, there are two kinds of hearings in the criminal system. There is a hearing before a judge, then we have trials that can be “judge alone” or by jury. Effectively I am talking about jury trials. An accused or a defendant has had the right to elect trial by jury—and I am simplifying because there are a small number of exceptions—effectively from when there is a maximum 3-months’ imprisonment term.

I say, and I say this from an ex-practitioner’s point of view—and I am sure there are many theoretical reasons as well why this is right—that the 3-month maximum is far too low. It is at these minor trials that go to jury where a young prosecutor learns his or her craft. In my experience, juries would often decide that the Crown was wasting its time bringing these, dare I say it, rats and mice cases to the jury. I can think of one particular case—it was a day-and-a-half jury trial involving the theft of a $300 piece of equipment. Excess breath-alcohol cases can go to jury trial, as can assault cases. The case of a male assaulting a female can be—and I do not want to be glib about this—significant to the people involved, but technically be an exceptionally simple case to prove. The intentional application of force generally comes down to just two things—did it happen and did he or she mean it. As I say, juries sometimes think the Crown is wasting their time, that it is using the jury trial as a hammer to crack a nut in the case of an often minor offence. As I say, because of that, quite often in these smaller cases juries acquit, because, like me, they think jury trials should be used for serious cases, where there is a real jeopardy to the accused, not the rats and mice stuff.

On that score alone, this bill is significant. It actually does dozens more things than that, as I see it, but on this count alone there will be 1,000 to 1,400 fewer designated jury trials per annum. The officials tell us that that means there will be 300 to 600 fewer actual jury trials a year. That will mean huge savings in time and resources for our courts as they do not need to go through the basics when they have a judge alone. They do not need to tell the jury the absolute basics. In fact, generally there will not need to be submissions on the facts, because the judge can take cognisance of them for himself; he does not need submissions. So that is a much quicker process. It does not mean less justice; it just means more efficiency, less delay, less cost, and, I suppose—to coin a phrase that another great Minister has used—better, sooner, more convenient justice.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I wish to speak on the first reading of the Criminal Procedure (Reform and Modernisation) Bill. I will comment on a couple of points that have been made. One is that the size of a bill is not the measure of the depth of its application, or of whether it will, in fact, make a significant difference to the way things are done. I could point to legislation that is large in size but not great in impact; there have been many examples of bills like that. So I do not think that we should be taken with the fact that this bill has some 500 pages. I am very pleased the previous speaker, Simon Bridges, has read every page of it. I am not on the Justice and Electoral Committee, so I did not have the pleasure of going through it with a fine-tooth comb.

Hon Simon Power: Oh, that member would’ve been good.

Hon LIANNE DALZIEL: Well, I have far too many botch-ups to fix in the bills that get referred to the Commerce Committee, so there you go.

Hon Simon Power: The Financial Advisers Bill—are you still fixing that one up? You’ll get there.

Hon LIANNE DALZIEL: Well, we might find some difficulty. But I am sure that Mr Assistant Speaker Roy does not want us discussing another bill during debate on the Criminal Procedure (Reform and Modernisation) Bill.

I will particularly focus on the question of name suppression. This bill proposes some changes. They are probably not changes of substance, because, of course, the precedent has already been established through the court system to allow for a threshold to apply against the presumption that suppression will not be granted. That threshold seems to operate quite universally within the higher jurisdictions, but it appears that there is some discussion as to whether suppression is being appropriately applied at the lower level.

I think this is an incredibly important issue. It was interesting going back to the Law Commission’s report, Suppressing Names and Evidence, because everybody who submitted on that report actually agreed with the starting point, which was that we start with the presumption against the suppression of evidence. Essentially, they were arguing that the principle of open justice and the right to freedom of expression are rights that go to the very existence and health of our political and legal institutions. Everyone accepted that—every single one of the people who submitted on the report agreed with the starting point that suppression should not be granted.

But somewhere deep down inside of me I do not know whether that still should be the case in a society where we have instantaneous communication. That rule was not developed in this environment, at all. That rule was about having courts open, and about people being able to freely come and go and observe the processes of justice. Nowadays people are convicted before they have even had a trial: they are convicted in the court of public opinion before the case even starts. That bothers me—it really bothers me. I wonder whether this is not a good time to reflect on the history of why we have ended up with this presumption operating the other way.

If we are operating from another fundamental principle—that people are innocent until proven guilty—then surely that presumption should exist as a primary protection. Maybe the question around suppression is actually more about consistency than it is about openness. Maybe the consistency should be the other way around: the presumption is that suppression is always granted unless there is a very good reason not to grant it.

I will just explore this. I know of a case in Christchurch where I think there was a travesty of justice, in terms of what actually occurred. It was a case in which name suppression had been granted against a male in, I think, his 40s. The charge that he was facing related to an entrapment case. A police officer had brought a 14-year-old posing as a daughter to make her available for a sexual transaction, which, of course, would be illegal on every level. In fact, nothing happened, but a transaction was to be entered into. He was charged with the offence. Name suppression was granted. There were all sorts of murkiness around the entrapment issue, so it was going to be a very difficult case.

There followed a series of appearances on the Holmes show, essentially, of males in their 40s holding high-profile positions—which actually looked like free advertising to me; they were probably advised by a certain consultant, who seemed to be the same consultant advising all of them—who all came out and said it was not them. Every single one of them appeared on the television saying it was not them.

When the case went back to the court for a review of the suppression order, I felt that the judge was put under enormous public pressure to lift the suppression order, because suspicion was being cast upon so many. I think that was because there is an essential presumption that names will be put out in the media and that somehow we have the right to know who is being charged, when in actual fact we have the right to know who has been convicted. There are only very exceptional cases where name suppression would apply in a case after a conviction, and those cases really relate to the rights of victims.

I know that view has not been adopted, but I would really like us to take the opportunity to reflect on whose rights and what rights we are really protecting with this debate on name suppression. Sometimes I think we forget that our technology has moved on beyond what was available to those who wrote the original rules under which we operate today.

I know that the Minister of Justice has taken some considerable effort on this issue. There is the wider issue of what cannot be suppressed in an environment that has changed, as well. Maybe my plea is too late, because there is no mechanism for protecting that information in the Internet age. I will not describe what Whale Oil calls the Minister, because I know what the acronym stands for, and it would be totally unparliamentary to mention it.

Charles Chauvel: Who cares what he says, anyway?

Hon LIANNE DALZIEL: Well, I do not normally read Whale Oil. I make a point not to, but it does tie up with all of this. I think the issue around suppression cannot be separated from the fact that access to information is now so open.

The Minister has conducted, alongside these changes in our law, a Law Commission review about the adequacy of regulations around how the Internet interacts with the justice system. I support the concept of having that review, but at the same time I acknowledge how hard it will be. There are two media jurisdictions at the moment, the Broadcasting Standards Authority and the Press Council, for those of us who read or view the news. They exist because we have the right to have matters presented with fairness, accuracy, and balance. We will not get that from Whale Oil. We would not expect it from Whale Oil. In fact, he would not be Whale Oil if there was any fairness, accuracy, or balance in anything he said. Actually, when we think about what a blogger does—

Hon Member: For somebody who doesn’t read his blog—you’re the second speaker today.

Hon LIANNE DALZIEL: I am being serious. When we think about what a blogger does, we would not expect fairness or balance, but I do not think it is unreasonable to expect accuracy when someone knows they are deliberately misrepresenting the situation in order to make a particular point.

I look forward to this bill’s referral to the Justice and Electoral Committee, which I am not on, and I look forward to hearing about the debate from my colleagues who are on the committee. I encourage people to make submissions on all of the detailed issues contained in this bill.

Dr KENNEDY GRAHAM (Green) : I have the light-hearted privilege of serving on the Justice and Electoral Committee, and I just cannot wait to look at the Criminal Procedure (Reform and Modernisation) Bill in detail! The stated purpose of the bill is to simplify criminal procedure in New Zealand. It is described, as least by the Minister of Justice, as comprising the most comprehensive overhaul of the New Zealand criminal justice system in half a century.

Specifically, the bill seeks to achieve five goals. We are told they are to reduce unnecessary delay and inefficiency of court processes; to avoid unnecessary stress to victims and others involved in criminal process; to eliminate unnecessary complexity in the legislation governing criminal procedure; to reduce shortcomings arising from piecemeal amendments; and to facilitate the use of new technology in the courts. Simplifying those criminal procedures, the Minister says, will result in 43,000 fewer court events each year, freeing up to 16,000 court sitting hours. It will save up to $24 million over 5 years, averaging $5 million per annum. In short, the legislation will address excessive delay, excessive complexity, excessive cost, and outdated legislation—so we are told. At face value, the Green Party is disposed to support the bill’s overall objective and five stated goals. Who would not, to the extent that the problems are valid?

The next question has to be whether there is any downside to achieving those goals, and, if so, whether that downside prohibits such support being acceptable. Let us analyse the bill, which runs to 526 pages, and which our colleague Mr Bridges has not read.

I will take this opportunity to commend the Minister for his energy and his commitment to criminal law reform. It has taken 2 years, more or less, of his time and I know that he is sincere in his efforts. But such commendation does not persuade us in itself, necessarily, to support the product we have before us. The Green Party will need to be satisfied that the achievements of the bill outweigh any costs it may contain—costs in terms of civil and political rights that might be forfeited.

The bill seeks to implement seven innovations. We simply have not had sufficient time to address them all thoroughly, and on that I will make a point. I respectfully suggest that it is not good enough on the part of the Government to submit a bill of 526 pages and expect it to be dealt with—given due justice—the following week. It was introduced on 15 November. If we add to those 526 pages the 20 pages of fact sheets, the 34 pages of the Attorney-General’s report, and the 33 pages of the regulatory impact statement, we have 613 complex pages to get through in 6 working days. That is no way to run a democracy, even on a bill’s first reading. It is enough to present, for the moment, an identification of our principal concerns, and to indicate that we look forward to exploring them in the select committee.

First, there is the election of a jury trial. This concerns the first set of proposals outlined in the bill, namely the categorisation of offences. The stated aim is to categorise criminal offences in a more simplified way. There are to be four categories of offences. First, those not punishable by prison can be tried by a District Court judge, community magistrate, or a justice of the peace. Second, those with prison sentences up to 3 years would be tried by a District Court judge—one of the controversial issues. Third, for those with prison sentences over 3 years the defendant can elect a jury trial. Finally, some in that third category will automatically be tried in the High Court by a jury. Those are cases of high public or symbolic importance, such as murder, or where the fairness or impartiality of one judge might be in question, such as judicial bribery.

The difference there is that rather than 3 years for the second category of offence, the current law stipulates 3 months. But clauses 6 and 9 of the bill as drafted, and its associated clauses, will result in this being extended to 3 years. We recognise that, as Sir Geoffrey Palmer said when he proposed the shorter term of 3 months, there is nothing sacrosanct about 3 months. Canada has 5 years for this category of offences, and in some Australian states it varies from 2 years to 5 years as well. None the less, we query whether the longer period will result in any efficiencies in the administration of justice, as seems to be claimed, and we query whether there is any other reason for extending the time period. I put it to the Minister that some people—perhaps all people, including the Minister himself—might feel more vulnerable if a sole judge were granted the power of prison sentence for up to 3 years rather than 3 months. Let us have statistics for the select committee on the number of people who have been sentenced to prison terms ranging between 3 months and 3 years, then we can analyse the situation in the select committee.

The second concern is about the right to be present. What we have with the second concern is the right of a defendant to be present at a criminal trial. As currently drafted, the bill violates the New Zealand Bill of Rights Act, section 25, namely the right to be present at a trial and to present a defence. Clause 128(2)(b) of the bill states: “if the court is not satisfied that the defendant has a reasonable excuse for his or her non-attendance, and the prosecutor is ready to proceed, the court must proceed with the hearing in the absence of the defendant:”, as noted by at least one colleague, Charles Chauvel. This remains a concern for us. What might be a reasonable excuse in the view of a defendant might not be so in the view of a judge. This is a clear derogation of an existing right. It is one thing for a defendant to waive one’s right to be present; it is quite another for a judge to pronounce that the defendant lacked a reasonable excuse. Whether the issue can be resolved in the select committee remains to be seen, but let us hope so.

The bill raises other issues, as well. I invite the Minister or any of his National colleagues who are yet to speak in this first reading to address the following: the onus of proof issue. The question of the reverse onus of proof worries many practitioners in the legal profession—that is to say, the plans to shift the burden of proof to defendants in specific fishery and civil aviation offences. Defence lawyer Marie Dyhrberg, for example, has said that the provision was a shift away from the principle of an accused’s right to silence and was a complete turnabout on the burden of proof. She says that at the moment we have the right to silence, and the presumption of innocence, and it is on the Crown to prove its case beyond reasonable doubt. What this provision will do, in her view, is to change the onus of proof. It means that the defendant will have to identify a defence before a trial.

The fourth issue is jury numbers. There is the question of the proposed reduction of jury numbers. Barrister Peter Williams QC said the proposed reduction in jury cases was a whittling down of the justice process, and that will lead to the deterioration of the quality of justice in this country. As Mr Williams has noted, the jury system is at the heart of New Zealand’s democratic justice system, and he says it is a shame to cheapen it just to save money.

By way of general comment on the bill, I note the comments of Christchurch lawyer Nigel Hampton QC. Mr Hampton has said he does not think the proposed changes will solve any problems. The bill’s aim, he observed, is to simplify the justice process, but with 526 pages it is not a simple thing at all. He said the number of pre-trial conferences and out-of-court discussions have been increasing over the past 20 years. New Zealand’s justice system was “clumsy and awkward”. He supports having just one court for all crime cases with specialised judges, which would be far more efficient. I advance this critique not to be oppositional for its own sake, but because in light of our concerns, and not least in light of these comments by respected members of the legal fraternity, there are serious issues that need to be addressed before the bill passes the threshold of acceptability. At the moment, in its current form, it does not appear to do so.

I challenge Government members to explicitly address the concerns stated here by the Green Party and clearly shared by leading legal figures, before this debate concludes today. Because of those concerns, we shall oppose the bill in the first reading. We look forward to seeing whether those problems can be resolved to our satisfaction in the select committee.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) : The Māori Party will be supporting the Criminal Procedure (Reform and Modernisation) Bill at the first reading, but at this stage that support is conditional on the sort of information we are likely to hear when it goes to the Justice and Electoral Committee. We support the notion of reforming the justice system. We support it not because I am saying so but because what the statistics say is true in terms of justice as it applies to Māori on the street. Lawyers in the House will know that when a Māori and a Pākehā are stopped on the street for essentially the same issue, to nobody’s great surprise the Māori is more likely to be arrested. When a Māori and a Pākehā end up going to court on the same kind of issue, to nobody’s great surprise the Māori is more likely to be convicted. When the issue of sentencing comes up for a Māori and a Pākehā who are up on essentially the same charge, to nobody’s great surprise it is more often the Māori who gets sent to jail. In terms of the length of the sentence when a Māori and a Pākehā are being sentenced on essentially the same charge, to nobody’s great surprise the Māori gets sentenced to a longer term in jail.

The Māori Party supports absolutely the need for a reform of the justice system at every level. Although this bill is a big fat report, we do not see anything in it that will affect the statistics I just mentioned. In the Minister of Justice’s opening address, he used the well-known phrase: “Justice delayed is justice denied.” I note that many of the clauses in the bill speed up the process. I also add that, therefore, from knowledge of the system, justice hastened is not necessarily justice confirmed. There is an aim to speed up trials and to have trials without the presence of the accused. I spoke in the debate on the Courts (Remote Participation) Bill, and I remember that the strength of opposition from Labour, in particular, and from the Greens and the Māori Party, convinced the Minister of the need not to be so hasty in going to trial without the accused being in the courtroom. I see that issue raises it head again in this Criminal Procedure (Reform and Modernisation) Bill. The Māori Party is hugely concerned about that issue, as well.

I know from understanding how the system works in a jury trial that it is far easier to convict people we do not need to look in the eye. It is far easier to convict people just on what we hear from others, and it is far easier to convict people when they are not present to give their side of the story. If trials of people who are not in the courtroom are allowed—and I note a comment from Mr Chauvel that the judge will not even have the right to determine whether that goes ahead; it will be the way it happens, simply because the legislation says so—then neither the judge nor defendants will even get a say as to whether defendants will participate in their own defence. Like Mr Chauvel, I also worry that when we talk about changing the nature of a judicial system that for all of its flaws—and Māori more than most know of its flaws—has been in existence for such a long time, there should be far more accountability for those changes than just the fact that the Government and one of its coalition partners can pass legislation that will have such sweeping changes. It will impact on so many people in terms of the law as it will continue in the future.

I also note that in speeding up the process to get people into court and speeding up the process to get people convicted, I have yet to hear whether the Minister of Corrections is about to launch another prison-building programme. I note that when the previous Labour Government began its prison-building programme—due to have been completed next year—the jails were already full because of a rotten judicial system. By 2009 they had already filled them for 2012, before the prison-building programme had been completed. If the process by which people are being sent to prison will be sped up even more, then we need to spend more and more of this Government’s money and more and more of taxpayers’ money building more and more jails for people who we absolutely know will be sent to jail. Unfortunately, most of them will be Māori.

We support the bill going to the select committee so that we can hear what concerns there will be, but I am very clear in stipulating that our support is only to the select committee, to ensure that more people can have their say on this legislation. We reserve the right to change our vote based on what we hear during those select committee hearings. Nō reira, tēnā koutou. Huri rauna, kia ora tātou katoa.

KANWALJIT SINGH BAKSHI (National) : Today we are debating the first reading of the Criminal Procedure (Reform and Modernisation) Bill. This bill will be a big step in reforming criminal procedures, thus reducing unnecessary delays and inefficiencies in our court processes. I congratulate the Minister of Justice, Hon Simon Power, on his thoughtfulness and action on this longstanding issue.

The National-led Government, under the leadership of the Rt Hon John Key, since it came to power, has promoted a number of changes in the justice system so that unnecessary stress to victims, witnesses, jurors, and other people involved in criminal processes can be avoided. The credibility of a Government is determined by an effective and efficient judicial system. We have to ensure that justice is delivered as soon as possible. We cannot keep on building new courtrooms and appointing more judges. We need to remedy the inefficiency in our system. This bill will help in freeing up thousands of sitting hours in the court every year. It will also bring about 43,000 fewer court events. If we talk about the savings in dollar terms, it is estimated that $24.3 million will be saved in the next 5 years.

This bill also has approval to permit courts to proceed in the absence of a defendant if the court is not satisfied that the defendant has a reasonable excuse for his absence. Another important change is to be sure of name suppression. The changes could allow publication of the names of defendants, or other details, or evidence in particular cases. Presently it is not clear why a suppression order is granted. The Government has already introduced a number of provisions so that justice can be delivered sooner rather than later. I am happy to commend this bill to the House, and look forward to participating in the forthcoming select committee process.

LYNNE PILLAY (Labour) : I stand to join my colleagues to speak on the Criminal Procedure (Reform and Modernisation) Bill. It will come as no surprise that along with my colleagues and, indeed, the Māori Party, we are supporting this bill to the Justice and Electoral Committee. I also put on record that we see that process as very important. This bill is a glowing example of how important the select committee process is, if ever there was one. We have heard most of the reasons from the Government side relating to support for this bill, and they are about efficiency and haste. We along with the Māori Party do not accept that haste should be the top priority.

We have some really good examples of haste being used, or a hasty efficiency process being used, in this House that have not seen justice served. If we look at the 90-day sack-at-will bill that was pushed through under urgency then extended under urgency in this House, the cutting of 4 weeks’ holiday, the abolishing of Environment Canterbury, and the Auckland super-city legislation, we could certainly argue how efficient and how quick the process was, but it would be very hard to argue from our point of view and the view of the majority of New Zealanders that justice was served. What is paramount, certainly, is efficiency, and we commend any efficiency in the system, but we also have concerns because what must be paramount is for justice to be served—not just seen to be served, but to be served—and for all New Zealanders to have confidence in New Zealand’s judicial system.

As I said, we will be voting for this bill. We acknowledge that it was the result of the Criminal Procedure (Simplification) Project, which Labour launched while in Government in 2007. It was carried out by the Ministry of Justice, but it also had the Law Commission alongside. The purpose of the bill is to set out the procedure for the conduct of criminal proceedings, allowing for electronic filing and management of the permanent court record, which is obviously very efficient. I have heard other speakers say before me that this bill is some 526 pages. I have to put on record that I have not read all 526 pages, but I know the select committee will be receiving a lot of advice and very detailed submissions. This bill will have to have very careful consideration. From Labour’s point of view, we will have to give careful consideration and have discussion within our caucus about some of our key concerns that my colleagues have already highlighted.

One of our concerns is that the Attorney-General, Christopher Finlayson, has released a scathing report on this bill, saying that it contravenes the New Zealand Bill of Rights Act in many ways. One of the concerns we have is allowing criminal trials to proceed without the accused being present and allowing the courts to order the retrial of an acquitted defendant if new evidence comes to light. I want to put on record that when we undertook the victims’ rights inquiry when Labour was in Government, one of the most compelling parts of the evidence we heard from many victims was about the anguish they were already suffering when they had in many instances lost a very dear member of their family or a friend, whatever the case may be, and the complexity and the delays that happened during the trial. Many of those delays may have been justified, but in many instances it would appear that they were not justified. So we understand from what victims have told us how difficult that can be, but we also want to see that justice is served and that there is a fair process. Delivering a hasty process that causes a defendant to not have a proper trial—a worst-case scenario—is in itself is a real concern.

Other things that we will be carefully looking at include putting the threshold for jury trials to proceed at 10 jurors. This bill will allow jury trials to proceed on a routine basis with as few as 10 jurors. In light of the most recent changes to the threshold for jury trials, which Labour supported, this change is a further curtailment of the right to be tried by jury. We hope that the Government will carefully consider this. We want to put on record in this House that at the select committee we in Labour and the Green Party, which is also opposing the bill, will be listening very carefully to submissions.

Another concern we have is the defence disclosure of issues, which is the requirement for the defence to identify and disclose any issues in dispute before a trial. We know that some in the legal profession have suggested that that would, in effect, be requiring the defence to help the prosecution build its case. We await with interest the views of the legal profession, and other submitters apart from the legal profession, at the select committee. There are the exceptions to the double jeopardy rule, which, as we all know, prevents people being tried again for an offence after being acquitted. The bill now provides that a person can be retried if new evidence comes to light. That is something that has to be carefully weighed up before we decide to overrule a really important current provision.

The bill also provides for proceeding when the defendant is absent. As I spoke about before, and as victims said in the victims’ rights inquiry that was undertaken, we know that delays in court proceedings probably cause the most stress and distress to victims. Without tying Labour into accepting this—there is certainly an understanding where there is no reasonable excuse from a defendant—this bill gives the discretion to proceed in the defendant’s absence where the defendant has a reasonable excuse for not being there. That seems to be grossly unfair, and the important principles of anybody being innocent until proven guilty and the right to have a fair trial are things that we in Labour have very, very serious concerns about.

We would argue that the bill is certainly not inconsistent with the way this Government upgrades or changes legislation, as it is piecemeal again. The Government could have looked in a bigger-picture way. It could start by implementing the Law Commission’s 2004 report Delivering Justice for All: A Vision for New Zealand Courts and Tribunals.

MELISSA LEE (National) : I rise in support of, and to take a short call on, the Criminal Procedure (Reform and Modernisation) Bill. Before I get going, I would like to note that I have just heard very distressing news that there has been a second explosion at the Pike River mine and that there may not be the possibility of the miners coming out alive. How distressing that news is. Technology is a wonderful thing—we can get news so quickly, and that enables us to pay our respects. It is awful to hear that news, and my heart and my prayers go out to those families and the community in Greymouth.

The main provisions of the Criminal Procedure (Reform and Modernisation) Bill work to try to reduce unnecessary delay and inefficiency in court procedures so as to avoid unnecessary stress to victims, witnesses, jurors, and others involved in criminal procedures. Earlier tonight Mr Harawira talked about his belief that justice delayed may not necessarily be justice denied. Let me reiterate an incident I had to deal with for a constituent of mine who had been a victim, and for a witness in the court case. I do not want to go into the details of the court case, but I can say that a victim who had been just standing was punched to a pulp for no known reason, and the witness wanted to appear in court. The witness is still yet to appear. It has taken more than 3 years for the witness to appear before the court to give their story and to get justice for the unprovoked attack.

We need to get our justice system right, so that victims can have their say in court to get justice. I believe that the provisions in the bill will go towards reforming criminal procedures to make the justice system more responsive to the needs of the victims and witnesses, and that has to be good. I have not been here in the House all evening but earlier a member from the Green Party said that this bill will reduce the number of court cases by 43,000. Between 1,000 and 1,400 fewer court cases will need to be designated for a trial by jury, and 300 to 600 fewer cases will proceed to a jury trial, and savings of $24.3 million will be made over a 5-year period.

I speak as someone who has been a victim and has appeared before a court as a witness. Mr Harawira said that not having the face-to-face experience of justice was not right, but for the victims, when the offender’s guilt is being proven, sometimes intimidation by the offender can have a detrimental effect for the court case. I experienced that personally. I feared it so much that I ended up moving my home. I did not want to live where I was attacked.

Perhaps when we get through all of this we will have proper justice and victims will feel safer in New Zealand, where we make sure that victims’ rights are upheld. I commend this bill to the House.

JACINDA ARDERN (Labour) : I am pleased to join my colleagues in commenting on the Criminal Procedure (Reform and Modernisation) Bill. It is a very significant bill, as indicated not necessarily just by the size of the bill itself but by the really weighty issues it addresses, and by the fact that it touches on some of the most sacred elements of our criminal justice system. That is why Labour is very cautiously supporting this bill through to select committee, so that we have the opportunity to give it the really hefty consideration it deserves. From our perspective as a party there will probably be a couple of really key principles we will be keeping in mind when considering the content of this legislation. They are the core principles we take into account when considering most justice bills.

They include, first and foremost, the notion of access to justice, which is the idea that our criminal justice system should keep in mind its interface with both the defendant and the victim. That means that justice should be speedy and efficient without compromising the second core principle, which is the importance of public confidence in our criminal justice system. I would hope that each and every one of us in this House, when approaching justice legislation, would keep in mind the perspective of the victim, and the possibility of being a defendant. We simply cannot side with either party when considering justice legislation; we must ensure that both defendants and victims are kept in mind when considering such weighty legislation. I fear that we may not be doing that in some of the provisions we are seeing early on, so we are approaching this bill very cautiously.

I want to touch on some particular elements of the bill, but before I do I will reflect on some of the context to this bill. It has been developed after some quite hefty consideration. In the past the Ministry of Justice has acknowledged that our current system suffers from excessive cost, complexity, and delays, which of course have an impact on defendants, victims, and other participants. But as my colleague Lynne Pillay mentioned earlier, there have been other opportunities for us in this House to deal with some of those matters through other initiatives that have not been taken up, some of them far less controversial. I believe that a bill relating to Family Court matters gave the option of a Family Court judge using judicial officers to clear some of the caseload they were facing. Of course those cases often involve children, so speed is even more important than usual in those cases. That bill has been passed, yet that power available to them is unable to be used because the Government did not believe that it was something that should be enacted, and I find that disappointing. In fact the Ministry of Justice told us that it was not a priority, yet that provision could have aided in removing some of the excessive delays we are seeing in our court system.

The Ministry of Justice probably would have also made the point about excessive complexity, delays, and cost, if it had been given the privileged opportunity to be the adviser when we considered the “three strikes” legislation, but, as we all know, for some bizarre reason it was the police who advised us on that important criminal legislation.

Hon Ruth Dyson: What? That seems a bit odd.

JACINDA ARDERN: It was extraordinarily odd, and I wager that that was done because the police were part of the very small group in support of that legislation; the Ministry of Justice, I imagine, would have advised against it.

Coming back to this bill, I say that it results from the Criminal Procedure (Simplification) Project, which was established in October 2007, and was a collaborative piece of work between the Ministry of Justice and the Law Commission. We have seen a series of quite controversial recommendations translated from that work into this bill that we are considering. In fact, pointing directly to that is the fact that the Attorney-General, Chris Finlayson, has released quite a scathing report on this bill. He states that in a number of ways, by allowing criminal trials to proceed, particularly without the accused being present, and by allowing the courts to order the retrial of an acquitted defendant if new evidence comes to light, the bill is in contravention of the New Zealand Bill of Rights Act. That is interesting, given that he himself has been one of the individuals calling for drastic reform of our justice system. To have one of the individuals who have promoted reform then come out against some of these provisions points to the fact that we may not have got it right on every element of this bill, and we certainly will be applying very close scrutiny to our consideration of that.

Earlier this year we considered the use of video link technology in our court systems, and Labour spoke very strongly against the idea of having defendants able to access their own court case via a video link. From our perspective that did not hold true to one of the most important elements of our criminal justice system: the ability to attend one’s own trial in a substantive trial, not a procedural hearing. We will continue to hold that principle when considering some of these proposals.

I will touch very quickly on some of the most significant proposals, some of which have been canvassed by my colleagues. One proposal that I have already mentioned goes to the heart of the New Zealand Bill of Rights Act, and that is the change to the threshold for jury trials. I heard one member of the House—I believe it was Simon Bridges—refer to the idea of using a jury hammer to crack a nut. I think he was alluding to the fact that we are perhaps using jury trials for cases that he might consider to be insignificant, relatively speaking. Of course, that is taking the perspective of someone who is not a defendant in a case when considering whether a case is insignificant. When someone is before our criminal justice system, the case is significant. On every occasion, it will be a significant issue, particularly for that individual. Finding an appropriate threshold, where we remove that fundamental right, is a very delicate thing. Labour will be considering that proposal very, very closely, as we will the notion of proceeding with 10 jurors.

It was under, I believe, Phil Goff as the Minister of Justice that we had some considerable reform of the way our juries operated in New Zealand. At that point we probably got the balance right. Moving forward to these proposals, I would like to see some consideration as to whether those we have already gone through have been the success we needed them to be, and whether moving to allow jury trials to proceed on a routine basis with fewer jurors will provide the improvements to our system that the Minister of Justice assumes it will. I hold a bit of a question mark over that.

We then have the defence disclosure of issues—the idea that the defence would have to identify and disclose issues in dispute before a trial. I think, probably, on the face of it, those listening may assume that that sounds like common sense, but we have to be very, very cautious in the way we proceed with that significant change, as well. The same applies to exceptions to the double jeopardy rule. With reference to a court proceeding in a defendant’s absence, this bill gives not only the ability for a court to proceed in the absence of the defendant when there is no reasonable excuse for that absence, but also the power for the court to proceed even if there is a reasonable excuse. I am quite concerned—in the same way that we were concerned about audiovisual technology—that someone not being present when their trial is taking place, even if they have a reasonable excuse, undermines notions of natural justice. I think we should exercise extreme caution, again, with the notion of a reverse onus of proof.

I have touched on some of the key elements of this bill, to which Labour will be paying close attention. Again, that core principle for us will, of course, be access to justice. That includes efficiency, but also public confidence. Whether an individual member of the public is a victim or a defendant at any point in his or her life, our justice system must serve both, and that will be our focus.

HEKIA PARATA (National) : Tēnā koe, e te Mana Whakawā. Huri noa i tō tātou Whare, tēnā koutou, tēnā koutou, tēnā koutou katoa. Kātahi anō tātou ka rongo i te kōrero mai i Te Tai Poutini kua pahū anō. Te āhua nei kāre e ora ngā tāngata, nā reira, koinei te wā tuatahi māku hei tuku aroha ki ngā whānau, ki ngā hapori o tēnā moka o te motu me te tangi o te ngākau hoki ki a rātou i tēnei wā uaua. Nā reira, he whakaaro poto noa iho tēnei hei hoatu aroha ki a rātou katoa i tēnei wā. Hoki mai ki a tātou, tēnā tātou katoa.

[Greetings to you, Mr Deputy Speaker, and to us all throughout the House. We have just heard from the West Coast that there has been another explosion. It seems likely that there are no survivors. This is my first opportunity to extend thoughts of compassion to the families and communities in that part of the country. I grieve for them, as well, in this moment of difficulty. This is but a brief moment at this time to express love to them all, and now it is back to us, so salutations to you all.]

This is the first opportunity I have had to send my support and best wishes to the families of the miners in Te Tai Poutini, and to join with this House in sharing our support for them all.

Turning our attention to the Criminal Procedure (Reform and Modernisation) Bill, I am pleased to stand and take a short call on this legislation. The fact is that our system has been clogged for many years, and needs to be fixed. Over the last 10 to 20 years the law relating to criminal procedure has attracted increasing criticism. The principal statutes governing criminal procedure are out of date and excessively inflexible. It is unacceptable that there are at least 43,000 unnecessary court appearances each year, and that it takes an average of 16 months to complete a jury trial in the High Court, and 12 months in the District Court. National believes that justice delayed is justice denied. This bill will ensure that timely justice is delivered for victims, witnesses, defendants, and all of the community affected.

The key legislation currently in place dates back to the 1950s, and has been subject to years of ad hoc reform. We cannot continue to mask delays and inefficiencies in criminal procedure simply by building more courthouses and appointing more judges. We are committed to improving the criminal justice system, particularly for those who find themselves in it through no fault of their own, while maintaining a defendant’s right to a fair trial. We are confident this bill will achieve both aims. I commend the bill to the House.

Mr DEPUTY SPEAKER: The question is that the motion be agreed to. Those of that opinion will say Aye; to the contrary, No. The Ayes have it.

Hon ANNE TOLLEY (Minister of Education) on behalf of theMinister of Justice : I move that the Criminal Procedure (Reform and Modernisation) Bill be considered by the Justice and Electoral Committee.

Mr DEPUTY SPEAKER: The question is that the motion be agreed to. Those of that opinion will say Aye; to the contrary, No.

Hon SIMON POWER (Deputy Leader of the House) : I raise a point of order, Mr Speaker. I do not have any problem with the motion; I apologise to my colleague. In respect of the vote, and in fairness to my colleague from the Greens, I had extracted him from the House to discuss recent developments that have come to the attention of the media in the last 20 minutes. The Green member was obviously not in the House. The Greens, as I understand it, are not supporting this legislation to go to its first reading, and I wonder whether the House would mind allowing the member to seek leave to alter the Green’s vote.

Mr DEPUTY SPEAKER: Unfortunately, I have already declared the result. The only way forward is for leave to be sought by the member for the vote to be put again. I have already cast the vote and announced it.

Dr KENNEDY GRAHAM (Musterer—Green) : With respect, I would like to put that request because this is an important vote. It is a very important bill, and we are recording the vote in good faith and with sincere intent, and we would like for it to be on the record. I seek leave for a party vote.

Mr DEPUTY SPEAKER: Leave is sought for that purpose. Is there any objection? There is no objection.

A party vote was called for on the question, That the Criminal Procedure (Reform and Modernisation) Bill be now read a first time.

Ayes 110 New Zealand National 58; New Zealand Labour 41; ACT New Zealand 5; Māori Party 4; Progressive 1; United Future 1.
Noes 9 Green Party 9.
Bill read a first time.
  • Bill referred to the Justice and Electoral Committee.

Taxation (GST and Remedial Matters) Bill

Second Reading

Hon PETER DUNNE (Minister of Revenue) : I move, That the Taxation (GST and Remedial Matters) Bill be now read a second time. May I say by way of an aside at the beginning that a debate on arcane matters relating to aspects of the GST system may seem singularly out of place at a time when the nation will be grieving, along with the families of the West Coast, at today’s tragic developments. I am sure everyone’s hearts go out to those people in this hour of their tragedy.

Against that background, I will now make some comments about the Taxation (GST and Remedial Matters) Bill, which we are debating this afternoon. This bill aims to maintain the integrity and the fairness of the GST system by amending the Goods and Services Tax Act 1985 to strengthen the GST rules. The bill proposes significant changes to the GST system, seeking to remove tax-avoidance opportunities and reduce business compliance costs, while at the same time clarifying taxpayers’ obligations.

Specifically, the bill introduces new rules to prevent what have been called phoenix schemes—a fraud arrangement whose purpose is to create a GST refund when no corresponding GST payment has been made by the supplier of the transaction. Schemes of this nature exploit asymmetric aspects of the GST system, between the payment of tax and the entitlement to input tax refunds. The bill addresses this matter by requiring that GST-registered vendors charge GST at a zero rate on most transactions involving land or in which land is a component, if the purchaser is also GST-registered. So the capacity for one to claim the refund is reduced by the introduction of this provision. This provision was the subject of consultation last year, and an issues paper from the Inland Revenue Department called for submissions upon it.

In addition to this particular measure, the bill also aims to reduce compliance costs for businesses by clarifying certain parts of the GST rules to make it easier for taxpayers to understand their GST obligations. The areas that are being clarified include the current, technically complex change-in-use rules that apply when assets are used for both taxable and non-taxable purposes. The bill proposes to replace those rules with rules that will require businesses to apportion the input tax deductions according to the actual use of the goods and services in question. That will simplify the requirements for many GST-registered businesses. The GST boundary between residential accommodation, which is GST-exempt, and commercial accommodation, which is not, is also being clarified, as are the GST rules relating to transactions involving nominees where the purchaser has nominated another person to receive the goods and to settle the transaction.

In its consideration of the bill, the Finance and Expenditure Committee has recommended a number of changes of a technical nature. The select committee’s recommendations include expanding the definition of the term “land” to include shares in flat-owning or office-owning companies, and removing short-term leases from that definition. There are changes allowing the supplier to issue debit and credit notes to correct the GST treatment of the supply where the supply was incorrectly zero-rated or standard-rated, ensuring that the supplier is not responsible for tax if the supplier has chosen a tax treatment based on incorrect information provided by the recipient, and giving suppliers of financial services the option of using an alternative method of apportioning input tax for any non-taxable use when that method has been agreed on with the Commissioner of Inland Revenue.

The committee has also recommended changing the application date of the proposed amendment that clarifies the scope of the tax exemption for fringe benefits provided on the premises of the employer. Originally, this amendment was proposed to apply retrospectively. The select committee has recommended that it apply from the date of the introduction of this bill, which would clarify the effect of the provision going forward, while also allowing any existing disputes to run their course.

In addition, this bill proposes minor, largely remedial, changes in a number of other areas. These include allowing portfolio investment entities a deduction for credit impairment provisions, clarifying the tax treatment of superannuation funds under the National Provident Fund, clarifying the way that emissions units allocated by the Government under the emissions trading scheme are to be recognised for income tax purposes, and clarifying the fringe benefit on-premises exemptions.

Further to those changes, I advise the House that I will be putting forward a Supplementary Order Paper in due course to give effect to measures that were announced in Budget 2010. Chief amongst those measures are proposals to clarify the rules for depreciation of non-residential building fit-outs and the grandparenting of depreciation loading, to improve the fairness of access to social assistance programmes, to prevent loss-attributing qualifying companies from passing on losses to their shareholders, and to introduce new flow-through income tax rules for those closely held companies that choose to use them. All of these matters were announced in the Budget. They have been the subject of consultation subsequently, and they need to be legislated for in time for the provisions to take effect from 1 April next year.

In closing, I thank the members of the committee for their deliberations and for the constructive and cooperative way in which they have progressed this bill. I now have great pleasure in commending the bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn) : I rise on behalf of the Labour Opposition to take a call in support of the Taxation (GST and Remedial Matters) Bill and to commend the work of the Finance and Expenditure Committee, and to note a number of associated matters. Firstly, on the substance of the bill, the Labour Opposition will support this bill through all three readings. Labour has participated fully in the scrutiny of the bill at the select committee. As the Minister of Revenue said, the select committee has made a number of amendments following its usual policy of examination of tax matters, and employing an independent tax adviser to assist it in its discussion with the Inland Revenue Department on technical aspects of the bill.

We should say, for the clarification of those listening or viewing, that this is not a major policy piece of legislation. This is a set of technical amendments to improve the operation of GST and other tax matters, to close down several potential loopholes, most notably in respect of phoenix schemes, and other issues surrounding land transaction, and thereby protect the tax base. I will, therefore, take my remarks in two sections—firstly, in regard to technical matters, and, secondly, in regard to some policy issues that arise out of them.

In respect of technical matters, I note that the bill does zero-rate certain land transactions. This is in an effort to prevent phoenix-type fraud schemes where GST is refunded to a registered purchaser with no corresponding GST payment made by the vendor. Zero-rating GST prevents that shadow transaction from taking place, and, thereby, although it may not sound like it, actually prevents an avoidance opportunity from materialising. So although it is a zero rating, it is actually zero-rating the loophole in the process.

The Finance and Expenditure Committee has recommended a number of technical amendments to aspects of the bill in respect of the zero rating of land transactions, and it was the area of the bill that the select committee spent most of its time and focus on. I am sure that the chairman of the committee, Craig Foss MP, will shortly detail that consideration further. There have been amendments to the definitions of dwellings and commercial buildings, which have gone into some detail to consider definitions around rest homes, student accommodation, and the like. The bill also deals with apportionment rules, seeking to replace existing change-in-use adjustments to deal with goods and services partly used for taxable purposes and partly used for exempt purposes, with a new approach that would apportion the related input tax deductions. That is important because they will, it is hoped, be easier to use and understand, and they will avoid certain unintended consequences in usage, such as in respect of joint bank accounts, where one person could draw on the account without the signature of the other.

These matters are of a technical nature. They go on to include matters in relation to the technical definition of fringe benefit tax, certain matters around the emissions trading scheme definitions, and technical matters in respect of portfolio investment entities. I think all members of the select committee would feel that it has been a good and proper process. The committee has done its job and has made a number of recommendations based on the work of our independent tax adviser and the scrutiny of members, under the chairmanship of Craig Foss MP.

However, in relation to the second half of my remarks, it would be remiss of me not to take the opportunity to say how important it is that bills such as this do protect the tax base. I think we live in interesting times. I certainly echo the words of the Minister—having just received news in recent hours of the second explosion at the Pike River mine—that we would want to join with other members of the House in expressing our sadness at the potential developments there. But these are interesting times for other reasons, too. This has been the most unusual year in respect of tax policy and tax flows that I can remember. It is only in the last few weeks that we have had the extraordinary news that even in relation to forecasts made earlier this year, corporate tax flows are running over 22 percent, nearly a quarter, below 2010 forecasts, and that GST flows are running at over 15 percent, nearly 16 percent, below 2010 forecasts.

The immediate impact of that has been that the Government is $1.1 billion short of its expected revenue in this year alone. Of course, that cascades on top of the billion-dollar tax hole that resulted from Budget 2010. No doubt that $2 billion of revenue loss is one of the factors that has resulted in Standard and Poor’s downgrading its outlook for New Zealand’s sovereign credit rating from neutral to negative earlier this week. It cited three factors, the first of which was a loss of fiscal flexibility. Essentially, in plain English that means that the Government has been irresponsible. It has given tax cuts that it could not afford, principally to people who did not need them and in a way that has not created significant economic stimulus. The Government has done that at the same time that this halting recovery has meant that the underlying tax flows have disappeared off the edge of a cliff.

We are 22 percent down on corporate tax flows from this year’s own forecasts. That is extraordinary. I can remember no other time like it. It just proves the folly of an ideological approach to tax cuts that is reminiscent of Ronald Reagan’s America, where if only the tax rates had been cut far enough, then tax flows would have gone up. Professor Laffer was wrong, President Reagan was wrong, and John Key’s National Government is wrong. Tax flows have collapsed. They have collapsed to the point where Standard and Poor’s has reacted and said that New Zealand’s sovereign credit rating needs to go on negative watch.

Of course, there are several other reasons cited by Standard and Poor’s. One is that our export profile is under-diversified. We are overly reliant on bulk agricultural commodities, principally dairy. Because of that, we stand to be more vulnerable on the price cycles of those commodities. The link between the two points is obvious: if the Government’s capacity to lead change in the economy is undermined because its fiscal flexibility has collapsed, then it is harder for New Zealand to get out of the cul-de-sac that it is in. So Standard and Poor’s, quite rightly, has said that the Government has compounded the problem of a reduced tax base by reducing its ability to make structural change in the economy.

There are certain exemptions in the bill in respect of GST, and it is timely to remind the House and the public that although Labour has long subscribed to the view that a broad-based tax base is efficient and that when GST rates were relatively low it was prudent that there be no exemptions, Labour has changed its mind since the Government has increased the GST rate to 15 percent. We have committed to a GST zero-rated exemption for fresh fruit and vegetables that will deliver a benefit of about $6 a week to the average household of four and encourage healthy eating. The fiscal impact of that is less than one-quarter of the drop-off in tax revenues this year, so it is prudent for us to recall that in relation to the GST aspects of this bill.

The other issue that one cannot gloss over is that this bill makes amendments to the KiwiSaver scheme’s operation, but they pale into insignificance when compared with the amendments previously made by this Government. It has sliced in half the incentives for the public to participate, thereby slowing down the rate of increase in savings in the scheme. That has fed into the third leg of the treble that Standard and Poor’s drew attention to this week, which is that New Zealand’s savings gap is getting wider, not closing up. How bad is it? Our total international indebtedness—that is, the result of us not saving enough is that we have to borrow from foreigners—has climbed to around 88 percent of GDP, and it is heading for 90 percent. That is a critical problem that the Government and the Opposition must work on together to solve. I come back to the substance of this bill. It is a technical bill.

CRAIG FOSS (National—Tukituki) : I acknowledge the points the previous two speakers have made, the Minister who led the second reading, and the first half of David Cunliffe’s speech on the Taxation (GST and Remedial Matters) Bill.

I endorse the comments about the Finance and Expenditure Committee, which dealt with this bill. It was quite early on in the piece that we identified two or three pertinent points that occupied a lot of the committee’s time. We see those points reflected in the bill’s commentary. I may, if time permits, address some of the matters that the previous speaker, David Cunliffe, brought up in the second half of his speech, but we will see how we go for time.

In this second reading speech I will make a quick commentary on what happened at the select committee and what we did. The bill is relatively unchanged from when it was sent to us, but there are a couple of areas with some quite serious changes. As the Minister noted, essentially it is a better bill than what was sent to the select committee.

I summarise by saying that after the bill was sent to our select committee and we opened consideration on it, we had 15 submissions on it. We enjoyed advice and assistance from officials around the table from the Inland Revenue Department, from drafting, and from our independent adviser, Therese Turner, who assists us greatly. I acknowledge them. I think all members acknowledge the assistance and the helpful pointers they give us when we deal with what seem to be many tax bills. They seem to go into one after a while. Even as I was looking through this one, I started to think about another bill.

Anyway, these are all good tax improvements. The select committee honed in on a couple of key points. We started to go down a particular road, but we took ourselves back to ask ourselves what the original intent, the main, primary intent, of this bill was. It was to address the so-called phoenix transactions and structures. As we were wondering about some of the burdens of proof on some of the issues of vendor or supplier of services, etc., and around bank accounts—I will touch on the access to joint bank accounts and things in a minute—the committee went back to the first principles.

If we look at the Minister’s first reading speech, we see that, from memory, it was all about phoenix schemes. Essentially, there has been the ability of two parties to have different GST invoice times. One could be cash and the other could be invoice-based or 6-monthly, or whatever. If in the midst of a transaction—a property transaction, involving land—one of those companies collapses, collapses itself, or is encouraged to collapse and liquidate, and if one entity is left in credit of GST but the entity owing the GST collapses, at the end of the day the taxpayer is at a loss. In these constrained times—in fact, even in the best of times—that is not a fair burden on the rest of the taxpayers. We spent a bit of time on that.

I acknowledge Sir Roger Douglas, in particular, who picked up a couple of points in and around which entity had the burden. I think the other speakers talked about nominee companies that may be involved in land transactions. We spent a lot of time learning about the definition of land. But if an innocent party enters a transaction, there comes a time when it, or its nominees, has to ask the right questions of the vendor or the entity responsible for organising the land—for example, whether or not they have the right paperwork regarding GST being registered, and whether they have gone through the correct hoops. We had quite a bit if discussion about that, and we came to the conclusion that we should put a few more parameters around it. Again, I acknowledge Sir Roger. He picked that up and made an issue of it to the point where members can see the changes in the bill under the supply of goods, the supply of land, in the commentary, and in the various definitions.

Another point that occupied our time a little bit was student accommodation. To cut to the chase, we spent a bit of time defining what student accommodation was. Could it be the hostels up the road, a boarder at home, or one’s own son or daughter boarding? One can see how complex that can get. Again, we went back to the first intent, which was to not add complexity to the situation. We can see what we considered reflected in the commentary of the bill. Very importantly, if members look at the last paragraph in the commentary, they can see that we received assurance—and it is in writing—from the Inland Revenue Department and Treasury that they are monitoring the practical application of the changes to the definitions to guard against inconsistent or unfair treatment of boarding houses and boarders.

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

STUART NASH (Labour) : I rise in support of the Taxation (GST and Remedial Matters) Bill in its second reading. I enjoyed the speech of Peter Dunne, the Minister of Revenue, and I look forward to hearing it again in a couple of years’ time. There are only three things that I wish to talk about tonight. The first point is that Labour will always support good legislation that promotes fairness and equity for all New Zealanders. The second point is that Labour will always support good legislation that clamps down on tax evasion. The third point is to say what a legislative necessity this bill is. I see that Mr Bennett is nodding. He was on the Finance and Expenditure Committee and he knows what important legislation this is.

Labour always supports good tax legislation. We have supported the vast majority of tax bills that have gone through the House in this session. But the types of bills that Labour does not support are the bills that give those 650 New Zealanders who are earning in excess of $1 million a year $1,000 a week in the hand, and that give the majority of New Zealanders who are earning the median wage less than $5 a week. Please be assured that we will never support tax legislation that does not promote fairness and equity.

This bill’s headline provision is amendments to the Goods and Services Tax Act 1985 in order to provide for tax to be charged on supplies of land and transactions between registered persons at the rate of zero, to simplify the method for making adjustments for changes in use, and to streamline transactions involving nominated persons. In essence, this is just another example of zero-rating a GST transaction. What I want to know is where the howls of derision and outrage are from members on that side of the House, similar to those heard when Labour proposed to zero-rate GST on fresh fruit and vegetables, when Labour proposed a tax policy to help New Zealanders lead a healthy lifestyle. Well, there were no howls of derision when policy involved a financial transaction, but there were when there was a healthy lifestyle transaction. It says something sad about priorities, does it not, I say to Sam Lotu-Iiga. There are a number of cases where there are zero-rated provisions in GST legislation. These include export goods, financial services, and duty-free goods. In fact, there are about 17 categories of goods that can be zero-rated in certain circumstances. So when Labour proposed a policy to zero-rate fresh fruit and vegetables, it was not a bastardisation of the Goods and Services Tax Act; it was a policy that promoted healthy choice, a policy that would be better for all New Zealanders.

Other policy and remedial amendments that this bill covers include amendments to the Income Tax 2007, the Income Tax Act 2004, the Tax Administration Act 1994, the Income Tax Act 1994, the KiwiSaver Act 2006, the Stamp and Cheque Duties Act 1971, the Gaming Duties Act 1971, the Local Government (Auckland Transitional Provisions) Act 2010, and other regulations that are also in this bill. It is wide ranging in its scope and reach. Its amendments are part of an ongoing process to improve legislative integrity, which is something that everyone in this House wishes to see and works towards.

One cannot go past a GST bill without bringing to this Parliament the views and feedback from constituents on the implementation of the increase in GST to 15 percent—you know, the increase that Mr Key said that he would not make. It is not good. I have had many unhappy constituents say that this is hurting New Zealanders. It is, quite frankly, a disgrace. It all started when the then Leader of the Opposition, one Mr John Key, stood up in front of the nation and laid our fears to rest by informing New Zealanders in their living rooms that, no, he would not be raising GST if he became the Prime Minister. In answer to a specific question from a reporter—and I quote—“Can you rule out National raising GST to 15 percent?”, Mr Key replied: “National is not going to be raising GST.” If members do not believe me, then they can go on YouTube and have a look. New Zealanders will remember. A large accountancy firm, Ernst and Young, in a press statement stated that “many are realising this is not a modest increase”. Mr Key did raise GST when he said that he would not. We will forget neither those words nor his actions.

My second point is that Labour will always support good legislation. This bill is a remedial matters bill. Remedial matters bills can play an important role in tidying up legislation and closing down the holes or gaps that people and taxpayers may be exploiting. This is certainly the case with this bill. As mentioned, the main provision of interest in the bill clamps down on tax evasion. We are a country that is founded on the principle of fairness and equity, and this certainly applies to tax. This bill promotes these principles. There is something called a phoenix fraud, where GST is refunded to a registered purchaser of land with no corresponding GST payment made by the vendor. As mentioned, this bill essentially zero-rates most transactions involving land if both the purchaser and the vendor are GST-registered. I doubt there will be many in this country who would speak out against closing down a tax loophole that has been taken advantage of by unscrupulous property developers.

This bill makes other changes. These changes will not affect many people, but they are just as important, and those whom they will affect need to understand that the law around these areas will tighten up. They include, for example, the sharing of KiwiSaver member information. This bill amends the KiwiSaver Act 2006—unfortunately, it does not reinstate the provisions that were cut by that Government—and the Tax Administration Act to allow a member’s address, date of birth, and IRD number to be shared between the member’s scheme provider and the Inland Revenue Department.

We debated the on-premises fringe benefit tax exemption at length at the Finance and Expenditure Committee, because the bill as it was presented to the committee wanted to make this provision retrospective. In the committee’s wisdom, we decided that retrospective tax legislation was to be used only in very, very rare circumstances, and this was not one of them. We decided that we would let the courts determine whether people had acted within the law or outside the law.

There are provisions on joint bank accounts, and we argued and debated them at length—for example, the application for overseas donee status. One can now donate money to the Mutima Charitable Trust and the Bougainville Library Trust. We talked about Auckland Council restructuring, the tax treatment of emissions trading units, and a number of other amendments to different bills.

To sum up, I have spoken about two key points. Labour will support any legislation, and especially any tax legislation, that is fair and equitable for all New Zealanders. It will certainly support legislation that closes down tax evasion opportunities, and this bill does that. The second point is that this bill is important, because it makes a series of changes that are necessary to preserve the integrity of the tax system. This is a good bill. The Finance and Expenditure Committee agreed on every aspect of the bill. We made some good changes. It is good law, which is why I am supporting it. Thank you very much.

RAHUI KATENE (Māori Party—Te Tai Tonga) : Before I start my speech I mihi to the whānau of the miners in Greymouth and say what a great tragedy it is. I pass on my aroha and, I am sure, the aroha of other members in the House. Mā te Atua koutou e manaaki, e tiaki.

[God will care for and protect you collectively.]

I am always pleased to speak to a bill, the Taxation (GST and Remedial Matters) Bill, whose purpose is described as to “maintain the integrity and fairness”. I am even more pleased to make the connection between integrity, fairness, and GST because, of course, it suggests to me that this bill may well be the opportunity to promote the groundswell of support that emerged out of my member’s bill, the Goods and Services Tax (Exemption of Healthy Foods) Amendment Bill, which proposes scrapping GST on healthy food. Healthy eating will save millions of dollars in costs associated with poor health. It is an investment in a healthy future and an investment in integrity and fairness if ever I heard one.

I will share with the House the finding from Professor Tony Blakely from Otago University’s public health department. He has been looking into whether price discounts change people’s eating habits. The study found, from a survey of 1,100 shoppers, that a 12.5 percent drop in price increased people’s consumption of healthy food by 11 percent. The exemption of healthy food from GST is therefore designed to give New Zealanders a fair chance to get off fast foods and on to healthy foods. I say sorry to Aaron, but he would have to come off those fast foods and start eating healthily. It would be a real encouragement for him. What better way to do that than to send a clear price signal? The study basically concluded that people ate more healthy food if they were sent the right price signal.

I could, with much pleasure, focus my entire contribution to this debate on the importance of removing GST from food. At this stage it appears that neither the Minister of Revenue nor the Government has seen the wisdom of such a great approach, but hope springs eternal.

The focus, then, of this bill is to create greater clarity around certain parts of the GST rules to make it easier for taxpayers to understand their GST obligations. We fully endorse this approach. We are all for accountability, transparency, and knowing what one’s obligations and responsibilities are. Although the intention of this approach is described as helping to reduce compliance costs for businesses, we also think it is about good government—assisting citizens to appreciate their entitlements and comply with their obligations.

An important initiative in this bill introduces measures by which to prevent so-called phoenix fraud schemes. In essence, this is when a registered purchaser receives a GST refund from the Inland Revenue Department when, in fact, no corresponding GST payment has been made by the supplier of the transaction. The Māori Party supports this measure as a way to close off a loophole to ensure fairness and integrity right across the taxation system.

We are concerned about the proposal to amend the definitions of “commercial dwelling” and “dwelling” within the Goods and Services Tax Act 1985. The definition of “commercial dwelling” is to be redefined to include homestays, farmstays, and serviced apartments. “Dwelling” will also be redefined so as to refer exclusively to a dwelling that is owned and occupied by its residents. In August 2009 Brian Fallow, the economics editor of the New Zealand Herald, suggested that it was time to add GST to rents and mortgages, as currently housing is perceived as a no-go zone for the taxman. This could all change with the bill’s redefining of the term “dwelling” to include only premises that are occupied by their owners. Rental properties will therefore be excluded from the definition of “dwelling”, which could in effect provide for GST to be added to the mortgage payments of New Zealand’s owner-occupier residents, without any effect to rental properties and their tenants.

Another new measure introduced by this bill responds to the unintended timing problem for non-profit bodies accounting for GST when they supply a large asset, such as a house, to a person in need. I commend the Government for continuing to take into account the unique needs of non-profit bodies by amending the Goods and Services Tax Act 1985 in order to reduce the negative impacts and timing problems created when accounting for GST. As a constituent MP representing a Māori electorate, I know that our non-profit bodies, our volunteers, and our voluntary groups are the unsung heroes of our community. In many ways they provide the essential fuel to keep our communities thriving—nowhere more so than Greymouth at this time. We see the Red Cross and civil defence volunteers out there helping as much as they can, the students from the polytech, and, of course, all the people behind the scenes who are providing all of the cups of tea and so on that are helping the families and others to get through this hard time. It is very helpful to see the Government trying to support these volunteers in their mahi.

Non-profit bodies can often be resource-rich but cash-poor—a bit like the Māori Party, actually. This can put real strain on their ability to plan and make good strategic decisions. These bodies work for a public good, and therefore it is important that the Government ease their financial pressure wherever it can.

There are already listed on an Order in Council some special rules for non-profit bodies when it comes to GST. They are eligible to use a payments basis, even if their turnover is over the normal threshold of $2 million. The proposed amendment adds another welcome exemption in this complex area of the law. The legislation normally requires organisations that account on a payments basis to switch to an invoice basis when both the amount payable for a supply of goods or services is $205,000 or more and payment is deferred. This amendment grants an exemption to non-profit bodies. It is a most welcome amendment.

The way the current system works, it is possible that in the case of a large asset, such as a house, the non-profit body would have to account for the GST on the entire purchase price at the outset, creating a significant cost to the non-profit body. Consequently, the operation of the rule may discourage non-profit bodies from providing goods and services over a certain value. The change proposed in this bill will provide a solution to this concern in situations where the tax-base risks are minimal.

Another detail of the bill relates to donee status. Keeping a donee list up to date is key to payroll-giving legislation, which came into effect earlier this year. Again, it is another important means by which communities can keep functioning.

The bill also introduces an interesting set of measures relating to the emissions trading scheme. It aims to clearly define the values of the emission units that will be traded through the scheme, as well as when these values will be applied to the units throughout the calendar year and income tax year time frames, so that these values can be made available for income tax purposes. I will be very interested to learn what consultation the Minister has had with the Iwi Leadership Group about this particular measure.

Brokering a relationship between the Treaty partners was a key feature in the Māori Party’s negotiations over the emissions trading scheme. The negotiations allowed us to bring together the two Treaty partners: iwi and the Government. So Māori values are taken into account not only in this scheme but in this country’s overall legislative approach to addressing climate change issues. It also provided the means by which the Crown would understand its obligation to consult. We look forward to seeing how this relationship will translate into a practical reality throughout the select committee.

The many varied aspects of this bill ensure we will continue to have an active interest in the evolution of the Taxation (GST and Remedial Matters) Bill. At this point in time we will support the bill at its second reading.

AMY ADAMS (National—Selwyn) : I rise tonight to take a call on the Taxation (GST and Remedial Matters) Bill. However, like the member who has just resumed her seat I could not in all good conscience speak about tax in the House tonight without taking a moment to reflect on the tragedy that has happened in the country today. I know it has been mentioned before, but having spent the last 3½ hours now, I guess, watching coverage as it came out of Greymouth, I think everyone in the country is focused on things that are far more important and immediate and real to us than the passing of taxation legislation. Like the member from the Māori Party, can I take just a moment to express my extreme sorrow and heartbreak for all the miners, their families, and the whole community. It is a devastating thing for them to be going through.

We are, however, continuing here in Parliament, and this evening we are in the second reading of the Taxation (GST and Remedial Matters) Bill. As a member of the Finance and Expenditure Committee, I have had a chance to get to know this bill and work on it as it progressed through the select committee. One of the things that has become more apparent to me as I have sat on the committee is that tax—however inherently dull, dry, and unappealing it is to those of us who do not live and breathe it as an occupation—is actually a dynamic, growing, and living organism. One of the things I think we can all say quite safely is that, leaving aside policy changes, we will never have the perfect tax system. I do not think we will ever be able to say “You know what? We have done it now, we have knocked it off, it is sorted, just don’t touch it, it will be fine.” Tax is something that is very biotic, almost. It is growing, it is breathing, and day by day we are learning ways to improve it, to make it better. This bill is a good, although small, example of the things that can happen in that space.

The GST system, which the majority of this bill focuses on—it is not all of it—is widely commented on internationally as being an excellent taxation system. Its simplicity, its ease, and the way it is applied is often the subject of a lot of positive commentary around the world, and that is something we should be very proud of. But, harking back to the comment I just made, that is not to say that we have a perfect system, by any stretch.

This bill sets out to do a couple of things that we should always be mindful of in the tax system. One of the things we must do is to identify and close down areas where people take advantage of tax law. We have heard both Mr Nash and Ms Katene speak of the phoenix transactions that this bill addresses. I have to say that they are not something that I have been aware of in my practice as a property lawyer. I am very pleased to say that I do not think any of my clients would partake in that. I certainly would not have been part of it if I had known it was going on. But clearly it is an issue, and it is one that the Inland Revenue Department has identified, and having identified that loophole it is incumbent on the department and on us to do what we can to shut it down. What we do know is that the vast majority of New Zealanders are working hard, paying their taxes, and contributing. There is not a person in this House who would not support jumping on any New Zealander who seeks to avoid paying taxes and who exploits the tax system for their own financial gain.

So this is a situation where these evasion schemes have been identified. They are nothing more than a way to rort the tax system, to take money from the Crown, from the consolidated account—the wealth that belongs to every New Zealander—that they are not entitled to. So there can be no other response than to support a way to crack down on those practices. Having said that, as a committee, we certainly did not want to say “Good as gold, you’ve got a problem, whatever you think is fine with us.” I think the committee can be righty proud of its work. We certainly worked on a multipartisan basis—there was no politics in this—to ensure that while we addressed what we needed to crack down on, we did not, to the best of our knowledge, and, certainly, the best of our intentions, do it in a way that would create further problems, or perhaps overreach. That has been an issue in the past.

In addition to closing loopholes, the other part of that continual process of evolution of this living, breathing thing that we call the tax system is working out ways to make it a bit simpler, and a bit easier to understand. I know that the Inland Revenue Department is working on the results of Making tax easier: A government discussion document,and I support it in that, because tax is not a simple thing, yet we need it to be simple—so there is a continual tension there. Some of the changes that the department, through the Minister of Revenue, has brought to this House will not set the world alight, but they are commendable, because they do that exact thing—they try to identify areas where there has been a lot of confusion or where it is hard for taxpayers to know what their obligations are. The department has tried to identify and address them and make them clearer.

We have issues around where assets are used for both taxable and non-taxable purposes. We have issues around the definition or a line between the use of residential accommodation and commercial accommodation. One issue that is a bit more meaningful to me in the property law game is around the GST rules, where properties are bought through nominees, and there is a subsequent nomination of an eventual purchaser. This bill makes it very clear from the outset how GST will apply in that situation. This stuff is not about massive policy changes of direction. It is just about making a very simple, clear, easy-to-understand set of rules so that people going into transactions can understand and know what their obligations are up front.

If there is a theme that I am always harping on about at the select committee, it is about the obligation of the department to make the rules as easy to understand, and as up front as it possibly can, rather than an ambulance at the bottom of the cliff approach. I am always very happy to see them working with supporting legislation, which encourages us to clarify areas where there is confusion. I want New Zealanders to get their tax right the first time. I do not want them spending a lot of money on lawyers and tax accountants and disputes with the Inland Revenue Department when they are not deliberately trying to rip off the system. The aspects of this bill that address that are certainly directed in that regard.

The other matter I want to touch on, reasonably briefly in this contribution, is a matter that the select committee spent a bit of time on. It is the issue of the powers of the Inland Revenue Department to take money from joint bank accounts. There is an inevitable tension here. We want the department to have the power to recover tax owed and to stop people from being able to deliberately avoid the payment of their taxes in their contribution to the running of this wonderful country. Equally, though, we have to be certain that we do not allow the department to operate in a way that has unfair consequences to other parties. At the select committee we were very concerned about safeguards and how they would work when we are allowing the Inland Revenue Department to help itself to money from joint bank accounts.

We spent a lot of time discussing that issue, and I acknowledge the Hon Roger Douglas, who was very concerned about this point and was the originator of the concern of the committee. How do we ensure that the department’s authority is appropriately exercised? One of the examples that did concern us was the situation, for example, of a business partnership. A joint bank account can be a lot more than a cheque account for a husband and wife, or for mum and dad. It could easily be, as it was in my case for many, many years, a case of legal partners operating in partnership through a bank account. It did not seem appropriate to us that money could be taken out of that account to satisfy the personal tax liability of one partner without the knowledge of the others, particularly where the extent of that partner’s share of the bank account could be considerably less than their amount of the debt. So they could be a 1 percent partner, yet the whole of the account could be subject to seizure. That was an issue that we put to officials on a number of occasions, and on more than one occasion we asked them to come back to us to make sure we got it right. I pay tribute to them. I think they worked very hard to recognise and satisfy the committee’s concerns in that regard.

As I said at the outset, who would want to be thinking about tax at a time like this, when the country is dealing with what it is dealing with. But, for all that, we do have to carry on in this House, and I think there has been widespread support across the House for the Taxation (GST and Remedial Matters) Bill. That is as I would expect, because it is, in essence, about ensuring that New Zealanders are not ripping off the tax system and ensuring that good New Zealanders find it as easy as possible to get their tax affairs right the first time every time. That is certainly something that we can all support. I commend the bill to the House.

BRENDON BURNS (Labour—Christchurch Central) : I will start tonight by joining with other members in the House in expressing my sympathy to the families of the 29 miners whose lives have been confirmed as lost at Pike River. In Christchurch over the last 3 months we have had our own share of heartbreak, but it is nothing like what those families must be going through tonight on the Coast, and in other parts of the country and other parts of the world. Mercifully and miraculously, no lives at all were lost in the 4 September earthquake in Canterbury, and that was in a city of about 400,000 people and a wider province. So when we have confirmed tonight the loss of those 29 lives in a population on the West Coast of, I would guess, fewer than 30,000 people, it brings it home to us that every Coaster will be touched by this tragedy in some way—in a personal way or in another way. I think that the hearts of all the members of this House will go out to that community tonight. It does, of course, make the job of considering a rather dry, technical tax bill a little harder, but that is the duty of this Parliament tonight.

The Taxation (GST and Remedial Matters) Bill, as has been mentioned, makes some rather technical changes to tax legislation. The timing of it is rather interesting. It came before the House and was referred to the Finance and Expenditure Committee while the Government was considering and then introducing the GST tax changes to take GST to 15 percent. Although this bill is quite a separate matter, it obviously reminds us of the other GST changes. I note the very recent public opinion poll that shows that no less than 53 percent of New Zealanders feel no better off after the tax changes that were at the heart of the increase of GST to 15 percent and allied cuts in personal tax. This bill deals more broadly with taxation.

We note that throughout the earlier part of this year both the Minister of Finance and Prime Minister were talking about how the tax system was a very powerful lever in the economy. In this year’s Budget we saw tax cuts for those on high incomes. The legacy of that Budget has been higher prices across the board, not the impact in terms of the recovery that was expected. The Prime Minister predicted that we would be growing aggressively out of the recession, but in fact the economy recovery has flattened off. In the words of the Reserve Bank, it is now a “tepid” if not “fragile” recovery. So the tax cuts introduced by the Budget are not making any particular impact in respect of the economic recovery.

Coming back to this bill and its amendments, there are a number of technical amendments to the KiwiSaver scheme. It is with some regret that we note the Government did not take the opportunity to use this bill to undo some of the damage that it did under urgency in this House 2 years ago, when it took apart the KiwiSaver regime. It is interesting to note that in the Finance and Expenditure Committee today we heard the Retirement Commissioner talk about the three pillars that are at the heart of how we approach superannuation in this country, with the first being private savings, the second being New Zealand superannuation, and the third leg of it being what KiwiSaver has introduced. Yet we note that KiwiSaver has been gutted under this Government.

KiwiSaver was, in fact, the first real attempt by us as a nation to lift private sector household savings in New Zealand to try to get somewhere close to Australia, where hundreds of billions of dollars in savings is generated through its savings scheme. Australia has a 9 percent employer contribution. It is a much wealthier nation, I acknowledge, and that is why KiwiSaver, as introduced by the previous Labour Government, had a graduated scheme, with a 1 percent employer contribution rising over 4 years to a 4 percent contribution. It was not compulsory; people were able to opt out if they chose to, but the scheme was designed to encourage people to come in. At the last count, I think nearly one and a half million New Zealanders had taken up the KiwiSaver scheme. So its popularity is certainly there, and it is with regret that we saw those cuts.

We thought this bill might be a chance for the Government to acknowledge that, because just as the bill was coming to the select committee, the Government acknowledged to the nation that we needed to do better in savings—we needed to do considerably better in savings. If we needed an underlining of that, it came in the last few days, with the decision of Standard and Poor’s to put this country on negative credit outlook. The reason it did that was our poor savings record as a nation. But there is nothing in this bill in respect of reversing those cuts to KiwiSaver; regrettably, the amendments are technical.

What KiwiSaver had done was to begin the process of turning round our savings problem as a nation. It was allied with the Cullen fund, the New Zealand Superannuation Fund, and also that other pillar—if you like—of our savings, which is our attempt to ensure that the baby boomers amongst us have some more security from New Zealand superannuation when retirement day comes. Of course that fund, like every other superannuation fund in the world, is starting to pick up in terms of the return it is making after it was affected by the vagaries of the world economic crisis in 2008-09.

The thing I note to the House tonight is that the changes this Government has made in respect of savings, both with regard to KiwiSaver and the Superannuation Fund, are, in my view, part of a pattern that goes back for more than 30 years. In 1974 Roger Douglas, who is now Sir Roger—and he is still a member of this House, and I acknowledge that—was working in the Kirk-Rowling Government. He was the architect of its superannuation scheme. It was a contributory scheme. If that scheme had still been in place today, I believe we would have been a wealthy nation.

We look at Australia, and often people point to the minerals of Australia as the basis of its wealth. Sure, that is a very, very good fundamental for the Australian economy. But, in fact, the Australian savings regime, which gave it the power and the clout to withstand some of the shocks that we have seen over the last couple of years, is a very important component of the fundamental strength of the Australian economy. It is a fundamental strength that we do not have, and, regrettably, we could have had it if that superannuation scheme had not been abolished in what was a blatant attempt to buy an election in 1975. It was a blatant attempt, and it did not stop there.

In 1990, after Labour had made some brave changes in office to national superannuation, Jim Bolger, the then National leader, campaigned on returning that scheme, with the “no ifs, no buts, no maybes” promise. He then reversed that promise and made some cuts to the national superannuation scheme.

We have come right up to this day, where we see the cuts to KiwiSaver and to the New Zealand Superannuation Fund. Obviously those—

Amy Adams: I raise a point of order, Mr Speaker. I suggest that the member has drifted somewhat further than the ambit of the bill we are discussing. [Interruption]

The ASSISTANT SPEAKER (Eric Roy): I am on my feet. This is the second reading, and members should look at the Speakers’ rulingsabout speaking to the bill and the principles of the bill. There is tolerance to allow comparisons to be made and drawn, but to get into a general debate that is historical is outside the scope of the bill. The member should make his comparisons and come back to the bill.

BRENDON BURNS: Thank you, Mr Assistant Speaker. That is the history of National’s record on superannuation and savings. There was an opportunity under this bill for it to make some changes, but it has not done that.

What the bill does do is to introduce zero-rated transactions involving land. That is a good thing to see happen, although we think that the select committee might have considered a zero rating for fruit and vegetables to try to take some of the sting out of the increase in GST that has been introduced. Obviously, the Government was very willing to discuss every other aspect of the GST scheme, and some further technical changes to GST were brought in through this bill. Prices are rising pretty strongly, but there is no move in this bill to address GST on fresh fruit and vegetables. The bill goes to the zero-rating of transactions involving land, and that is welcome. Those technical amendments are important. We have these wash-up bills on a fairly regular basis, but nothing in this bill delivers in terms of the rising costs being faced by ordinary New Zealanders.

The final comment I will make in respect of this bill, which is the third or fourth quite complex tax bill in the 2 years that I have been on the Finance and Expenditure Committee, is that we know these bills are necessary. They are there to amend an increasingly complex set of tax laws. We have to have amendments to close the loopholes, because otherwise people are disadvantaged.

DAVID BENNETT (National—Hamilton East) : Before I start on the Taxation (GST and Remedial Matters) Bill I would like to pay tribute to the many people of the West Coast, those in the mining community, their colleagues, and all those involved in that industry. I think at this time all New Zealanders realise what a small country we have, what sacrifices that the good people of this country make to build a strong country, and that whatever role we undertake in our lives in this country, we are all intertwined. It is a very sad day for New Zealanders. Our hearts are with those families involved and also with the people of that area and the wider mining community.

As has been said, taxation bills come before the House quite often. They are necessary as part of the continual upgrade of our taxation system to take into account any movements that taxpayers may be making to avoid or to reduce their taxation payments.

Basically, this bill closes a loophole in regard to phoenix fraud schemes that undermined the integrity of the GST rules. A very simple solution is being proposed in this bill. It is basically the zero rating of transactions involving the sale of land over a certain size. Basically, if both parties agree, then there can be a zero-rated transaction and no GST consequences.

That change will have a large impact on many transactions for land, especially in rural communities, and commercial transactions for land where the GST component has been paid for, and claimed, in the past. I think the Māori Party touched on the fact that some taxpayers have been structuring deals to be on invoice or other bases in order to take advantage of GST rules, and the member touched on the nature of phoenix fraud schemes, where people took one half of the deal but did not actually pay the GST. So the Government was left out of pocket by about $40 million. This bill is an attempt to cover that situation.

In all taxation areas things develop and change, and people try to take advantage of new rules, but that is how it works. This bill is very important and in the best interests of all New Zealanders, as it creates a fairer playing field in the taxation area around GST on these transactions. We support the second reading and look forward to the passage of the bill. Thank you.

RAYMOND HUO (Labour) : It is a pleasure to take a call on the second reading of the Taxation (GST and Remedial Matters) Bill. The bill seeks, in particular, to simplify and clarify GST issues in relation to commercial land. It will bring real advantages for the GST treatment of suppliers of commercial land. No longer will the parties have to determine whether the sale of land was the sale of a going concern. An overriding purpose of the bill is to stop fraudulent schemes known as phoenix schemes, as mentioned by my colleague Stuart Nash, where the Inland Revenue Department refunds GST to a registered purchaser but no corresponding GST payment is made by the vendor to the department, as the vendor is deliberately wound up before such payment is made.

The bill makes a number of tax-related amendments and introduces changes to the KiwiSaver legislation, emissions trading scheme units, portfolio investment entities, and the tax treatment of superannuation funds. Labour supports this bill as it introduces some sensible changes and a number of remedial amendments, but we do have concerns as well.

With regard to the new rules for the change-in-use adjustments option for certain financial service providers, a key concern was the potentially significant compliance costs for financial service organisations, such as banks and life insurers. An adjustment would be required for each asset used for both taxable and non-taxable suppliers. In response to submissions the Finance and Expenditure Committee has recommended a new provision to allow a person who is principally a supplier of financial services to use a different method from the new rules if the method meets certain criteria, including, for example, if the method is fair and reasonable. Some commentators and submitters, however, still remained concerned because it is not clear whether the proposed amendment will achieve reduced compliance costs.

With regard to the definition of land, the Finance and Expenditure Committee has recommended a carve-out for most commercial leases from that definition, following submissions by KPMG and others. This means that most commercial leases will not be subject to the zero rating provisions for land. It is sensible because the inclusion of commercial rentals would have caused an increase in compliance costs for landlords. As KPMG submitted, this was not warranted, given the very low risk of phoenix fraud in those circumstances.

In respect of the zero-rating of land sales, the select committee has recommended amendments to clarify that the test for zero-rating land transactions should be at the time of settlement. This is a departure from the previous principle of testing for zero-rating at the time of supply. However, according to some experts this approach does not appear to be particularly practicable. I look forward to more deliberation on this particular part.

This bill makes a number of amendments to the KiwiSaver scheme. It is regrettable that the Government did not use this bill to undo the damage it did to the scheme in cutting KiwiSaver. After 2 years and two Budgets, the only offer of a National Government savings plan, if any, has so far consisted of gutting the KiwiSaver scheme and cutting contributions to the New Zealand Superannuation Fund. Gutting and cutting, in combination, is representative of the National Government’s savings plan.

New Zealand’s savings history time line is straightforward. In 1974 the Kirk Labour Government introduced a compulsory contributory superannuation scheme. In 1975 the Muldoon Government closed the scheme. In 2001 the Clark Labour Government established the New Zealand Superannuation Fund. In 2007 Labour’s KiwiSaver came into force, and it was expanded in Budget 2007. But in 2008 National halved the effect of KiwiSaver in order to pay for the tax cuts. In 2009 National suspended contributions into the New Zealand Superannuation Fund until 2020 or until the Crown accounts are back in surplus. In 2010 National extended the suspension of contributions to the New Zealand Superannuation Fund until 2018, despite a forecast surplus in 2016. Brian Gaynor, in an article published in the New Zealand Herald on 21 August this year, stated very strongly that National Prime Minister Robert Muldoon’s termination of the superannuation scheme in 1975 was the worst economic decision by any New Zealand Government in the past 50 years.

Let us have a look at the Australian and New Zealand figures, on a per capita basis. Australians have A$56,000 of superannuation funds, whereas Kiwis have just NZ$5,500.

Brendon Burns: How much?

RAYMOND HUO: It is NZ$5,500, versus A$56,000. Australians have A$29,200 of net overseas debt, whereas Kiwis have NZ$35,900. Since mid-2000 Australia’s total superannuation assets have risen nearly threefold, from A$484 billion to A$1,257 billion. Mr Gaynor said in his article that a substantial majority agreed that Muldoon’s decision was a disaster for the country, particularly as the compulsory scheme was replaced by New Zealand superannuation, which costs $8 billion a year and is funded from taxes. If Labour’s scheme had not been abolished it would have been worth an estimated $240 billion - plus in 2007 and it would be worth around $255 billion today, using the same conservative investment refunds projections. This $255 billion, or $58,300 a head, compares with our current superannuation assets of just $24 billion, although the latter does not include the $16 billion held by the New Zealand Superannuation Fund.

How disastrous was it? Prime Minister Muldoon’s decision turned our country from being a potential Switzerland in the southern hemisphere to a low-ranking OECD country that is falling further and further behind its next-door neighbour. I thank Mr Brian Gaynor for his analysis, which is a wake-up call for anyone and everyone who is concerned about our country’s future. If the Minister of Finance, the Hon Bill English, is so worried about the warnings from the ratings agency Standard and Poor’s, he should be worried about our very poor performance in savings, because compounded by our mountain of household debt, it leaves our economy very, very vulnerable to further international shocks.

It is very unfortunate that the National - ACT Government terminated the annual contribution to the New Zealand Superannuation Fund and changed the KiwiSaver contribution formula from 4 percent each from employee and employer to 2 percent respectively. Halting contributions to the Cullen fund has cost the taxpayer millions and millions of dollars and has undermined the certainty and future of the fund. It was a short-term decision, taken for purely ideological reasons, because National has never been committed to the superannuation fund. The core issue is the sustainability problems of New Zealand superannuation as the baby boomers move into retirement.

Muldoon will be judged, and has been judged, by history. I say to the current National Government, in the context of this tax bill, that instead of adjusting its policies based on the latest opinion polls it should be focused on reducing external debt and increasing internal savings. Thank you very much.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : I rise to talk on the Taxation (GST and Remedial Matters) Bill, but, like my colleagues, my thoughts at this time are with the people in the South Island, particularly the families and friends of those who have been confirmed as deceased. It is a tragedy for the families and friends, it is a tragedy for the West Coast community, and it is a tragedy for all of New Zealand. As the representative for Maungakiekie in Auckland, I know that the people of Maungakiekie certainly grieve for them. We mourn with them, and we are sad for them in terms of the loss of life that has been confirmed today. Our thoughts, our prayers, and our hearts go out to the people who have been affected—not just New Zealanders but also the South African, British, and Australian families and friends of the miners lost today.

As has already been stated tonight, this bill is part of a reform package that the National-led Government has put forward to make the GST system fairer, more sustainable, and better for economic growth going forward. I applaud Mr Nash for supporting our Government by asking for a fairer system and supporting the system that we have put in place. So I thank Mr Nash for supporting the National Government.

This bill forms part of our tax reforms. It promotes fairness and integrity across the tax system. As has already been stated tonight, it is an important measure to counter what are called phoenix fraud schemes. These schemes, as has already been described by many speakers tonight, undermine the integrity of our GST rules. These schemes involve the Inland Revenue Department refunding GST to the registered buyer where no corresponding GST payment has been made by the supplier to a transaction. They deliberately wind up such entities in order to avoid paying that GST.

It has been of particular concern. It is an attack on the tax base, and for that reason we as a Government are intent on closing the loophole. We have already heard tonight from my colleagues that we have one of the most efficient and effective taxation systems in the world, and despite the protestations of colleagues across the aisle for exemptions from GST on food and other such items this system is as pure a system as we will get across the world. It is a system that has worked in the past and will continue to work in the future.

Other measures in the bill make it easier for taxpayers to understand their GST obligations and reduce compliance costs, because it is these costs and these obligations and the degree of uncertainty in entering into transactions that are a big handbrake on business and economic growth. The measures clarify parts of the GST rules where taxpayers have experienced difficulties in accounting for GST or interpreting the legislation. I give members an example. The current change-in-use rules that apply when assets are used for both taxable and non-taxable purposes is replaced with an approach that apportions the input tax deductions according to the actual use of those goods and services. This is a common-sense approach, it is a reasonable approach, and it supports the purpose of the bill—to maintain the integrity of our tax system.

One of the other measures is the GST boundary between residential accommodation, which is GST-exempt, and commercial accommodation, which is not. This distinction is clarified within the bill. There are GST rules around transactions involving nominees, where a purchaser has nominated another person to receive the goods and settle the transaction. These are also clarified.

The bill deals with an unintended timing problem for non-profit bodies accounting for GST when they supply large assets, such as a house for a person in need. There are other—as have been described—technical amendments, and the Finance and Expenditure Committee assessed them and made certain tweaks to them before bringing the bill back to the House. These include allowing portfolio investment entities a deduction for credit impairments, and clarifying the tax treatment of superannuation funds under the National Provident Fund. We heard six submissions at the select committee. These were received from a wide range of interest groups and individuals, and the changes that we made are pretty much accepted across the House. I recommend that this bill proceed through to the Committee of whole House.

  • Bill read a second time.

New Zealand Productivity Commission Bill

Second Reading

Hon DAVID CARTER (Minister of Agriculture) on behalf of the Minister of Finance: I move, That the New Zealand Productivity Commission Bill be now read a second time. This bill establishes a new institution to undertake inquiries and research into matters of vital importance to the future prosperity of this country. New Zealand’s overall welfare is dependent on improving our productivity performance in both the private and the public sectors. Improving New Zealand’s long-run productivity requires challenging conventional thinking and requires new ideas. These ideas need to be grounded in evidence and widespread community engagement. The institution that this bill establishes will be given the statutory independence required to think outside the box, and the mandate and resources to provide evidence-based policy and engage widely in the course of carrying out its work.

I would like to thank the chair and members of the Commerce Committee for delivering a timely and unanimous report. The report confirms our shared objective of setting up a New Zealand Productivity Commission that will assist future Governments with the provision of independent advice on productivity-related matters to support the overall well-being of all New Zealanders. I am informed that all submitters supported the establishment of the commission and that they provided useful suggestions and comments. It has always been our objective to ensure that the purpose of the commission is to promote the overall well-being of New Zealanders. The amendment to clause 7 clarifies our objective by ensuring that the commission be open to a wide range of perspectives in undertaking its functions. The committee’s proposed changes to strengthen this objective are, therefore, supported by the Government.

In relation to the focus of the commission, I want to clarify that the intention of this Government is to allow the commission to cover a very broad range of productivity-related matters. Some submitters were concerned that the references to regulation in the functions gave undue emphasis to the commission’s role of considering productivity issues that arise out of how we regulate. Clearly, improving regulatory quality is an important objective of this Government. Regulation that stifles productivity and growth must be reformed, and we expect that the commission will be asked to undertake inquiries into regulatory matters from time to time. However, opportunities to improve New Zealand’s productivity performance will arise in a wide range of areas, and for that reason the Government supports the select committee’s recommendation to specify only the commission’s general inquiry function in clause 9(1)(a) to remove any misconceptions that the commission is primarily focused on regulation.

The Government will determine what inquiries the commission will carry out, although the commission can, on its own resolve, undertake research and promote public understanding of productivity-related matters. Although inquiries are determined by the Government, the commission is independent regarding how it carries them out. That balance, which is the key feature of the Australian Productivity Commission on which the New Zealand Commission is modelled, is seen as a major contributing factor to the success of this type of institution. The committee has proposed some amendments to the bill, in particular a requirement that the responsible Minister consult the commission in the draft terms of reference. We agree with this recommendation, as it reflects what we expect would happen in any event and reinforces the balance that we wish to strike. The committee has also recommended that the bill include an explicit ability for the commission to issue draft reports. Again, we expect that the commission would do that in any event, as the experience with the Australian Productivity Commission is that that is an important part of the inquiry process. We agree that giving the commission an explicit ability reinforces an expectation that it will issue and receive submissions on draft reports wherever practical.

The report of the Commerce Committee clearly demonstrates the widespread community support for the establishment of a New Zealand Productivity Commission. Since the bill was referred to the Commerce Committee, the Government has selected Mr Murray Sherwin as chair designate. In his role as chair designate, Mr Sherwin will be assisting officials with the establishment of the commission and he has chaired the appointment panel for the remaining commissioners. Progressing the appointments process in parallel with the legislation ensures that the commission will be operational on 1 April 2011. Once again, I thank the select committee members for the work they have done on this bill. We look forward to the passage of the bill and the establishment of the Productivity Commission.

Hon DAVID CUNLIFFE (Labour—New Lynn) : I rise to set out Labour’s position on the New Zealand Productivity Commission Bill. Labour will support this bill, despite concerns about the potential for it to adopt a narrow view of productivity, and to move in a direction that is different from that of the cited precedent in the Australian Productivity Commission.

There are two versions of productivity that lie behind this debate. The first is a view of productivity that is broad, deep, and includes all skills, technology, and capital, and the ways in which they contribute to growing output per labour hour. There is another way—a short-term way—that people can contribute to productivity per labour hour and that is simply to reduce the supply of labour, to cut costs, and to sweat the assets harder in the short term, resulting in higher output per input, but mortgaging the future to pay for the present. Labour clearly stands for the former vision, a deeper, richer version of productivity, and for a mandate for the Productivity Commission that gives it the breadth and scope to responsibly address those factors as it must and should.

I am pleased to commend the work of the Commerce Committee in moderating the terms of reference, purposes, and objectives of the commission. It has brought the commission somewhat closer to the Australian model than was proposed in the original draft introduced by the Government. It is on that basis that Labour is prepared to support this bill’s passage through the House and to support the establishment of the commission, but we will do so with a clear reservation. That reservation is that we would have preferred to see in those terms of reference a more explicit mandate for economic and industry development, such as occurs in the Australian case. We hope, nonetheless, that the cooperation between the Australian and New Zealand commissions will be deep, and that the broad mandate of the Australian commission will be reflected in practice in the way that the New Zealand commission discharges its responsibilities. The select committee—

Katrina Shanks: Have you read the commentary? We changed that.

Hon DAVID CUNLIFFE: I am very well aware, I say to Ms Shanks, of the changes that the select committee has made, and if the member would restrain herself, she would hear me say that the select committee has made this a better bill by giving the commission a broader mandate, and amending the functions of the commission to remove the previous dominant focus on investigating the impact of regulation.

This commission should not be a regulatory razor gang. We already have a regulatory impact assessment unit, and a regulatory responsibility process, and it is interesting that the Government has observed that in the breach, with fewer than half of the bills that have gone through in the last year having fulfilled its own criteria for regulatory responsibility. So Labour, frankly, does not need a lecture from the Government benches about regulatory responsibility, because Labour, when it was in Government, had a far stronger record of regulatory impact analysis than the Government has proposed. The last thing New Zealand needs is yet another razor gang pretending that deregulation is a substitute for sound economic development, or that sweating assets is a substitute for real productivity. It is our hope that that will not be the case under the new chair of the commission, Dr Murray Sherwin, who is a high-profile and able public servant but, it must be said, not necessarily the person to whom we would have first looked to be the founding commissioner, although we will work with him and look forward to seeing him chart a course to the future.

This is important work. New Zealand is lagging behind many OECD countries in terms of its productivity growth. Indeed, it was ranked only 22nd out of 30 in terms of economy-wide productivity. After a period of relatively strong productivity growth since the mid-1980s, when productivity growth cycles averaged between 2.5 and 2.9 percent, it began to taper off, and averaged only around 1 to 1.5 percent since 2000. The policy areas that could contribute, therefore, to raising New Zealand’s productivity include increasing incentives for investment—appropriate investment in business growth, not in bidding up each other’s property prices. A productivity commission, I believe, will have to deal with the incentives in our investment environment that are misdirecting capital flows to areas that do not raise skills, enhance tools, or improve output, but, instead, simply increase the costs of housing and building. That is not productivity.

Turning to the issue of stimulating innovation, I say that innovation is the engine room of productivity and the lifeblood of progress. Staying ahead of our competitors and enjoying the benefits of sustainable competitive advantage through intellectual property has to be what gives New Zealand the edge, builds on our fine natural resources, and brings home the bacon of a First World income, with which we can build a First World society. Innovation requires investment, and it requires systems that take a bright idea to a commercialisable development that can then reach a global scale and be marketed to the world. In building New Zealand’s skill base, too often it is the workers themselves who are forgotten in a debate about productivity, as though they are somehow an input cost or a commodity. Yet the most successful companies are the ones that involve their workers in building the best possible processes to create their products and services, that eliminate waste, that think of smarter ways of doing things, and that share the profits. Those are the most innovative and productive companies, and that is what we would like to see more of.

Of course, this theory all rests on a sound macroeconomic and fiscal environment. We could go, as we have in the previous bill, into debates about whether such an environment exists today. I can do no better than to point to Standard and Poor’s verdict that the current Government is on negative watch, no doubt as a result of several rounds of irresponsible tax cuts that the country could not afford. The Australian Productivity Commission provides a useful benchmark for how we can take that debate forward. It has played an incredibly valuable role, in our view, in providing independent review analysis and comment on policies and structures in all of the states and territories of the commonwealth. On top of that, in looking at the impact of reforms, the commission’s work assists its Government to benchmark its performance against other jurisdictions within the commonwealth, and to identify ways of doing better. I think it is fair to say that the commission has a reputation for excellence, and that comes, in part, from its independence.

The Australian Productivity Commission is also well resourced, with upwards of $30 million per annum. It attracts high-quality analysts and researchers. For such a commission to work well here, it will also have to have adequate capacity and funding. There may be some question about whether there is a depth of talent here to staff such a body, or whether some of that talent would need to be brought in from overseas. National has found some funding for the Productivity Commission within existing departmental baselines, and the Labour Opposition will be monitoring whether that funding will be sufficient to fulfil its mandate.

Let me summarise and close by saying that Labour is supporting this bill through all stages. The bill has benefited from the discussions in the select committee that improved it, and broadened its mandate and purpose. We do so with vigilance, and we do so with a warning. The warning is that this commission must not become a regulatory razor gang. The path to productivity is paved not with deregulation but with investment in skills, technology, and capital. The role, function, and mandate at the heart of this bill are charting that pathway, developing our industries, and providing sustainable growth in our economy.

  • Debate interrupted.

Business of the House

Hon SIMON POWER (Deputy Leader of the House) : I apologise to my colleague. As a mark of respect for the victims of the Pike River coalmine tragedy and their families, I seek leave for the House tomorrow, Thursday, 25 November, following prayers to consider a Government motion without notice, relating to the tragedy, and for the House to adjourn immediately following the consideration of that motion, notwithstanding Standing Orders 62 and 65.

The ASSISTANT SPEAKER (Eric Roy): Leave is sought for that purpose. Is there anyone opposed to that course of action? There appears not. Leave is granted.

New Zealand Productivity Commission Bill

Second Reading

  • Debate resumed.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : I rise to speak on the New Zealand Productivity Commission Bill. I thank the previous speaker, Mr Cunliffe, for making that speech. It should have been made at a barbecue at St Marys Bay over the summer. It was a speech full of rhetoric but with little in the way of substance, because that speaker, Mr Cunliffe, was not present at the Commerce Committee hearings. In fact, it looked as though he had not read the bill before he came into the House, as my colleague Ms Shanks kindly pointed out.

This bill will be one of the most important pieces of legislation that our Government will pass in this term. It is one of the most important pieces of legislation because we all know that productivity is a serious problem in this country—productivity leading to prosperity, leading to jobs, leading to opportunities, and leading to a better standard of living in this country. Mr Cunliffe pointed out that throughout the 2000s when he was a Minister of the Crown, and when he and his colleagues controlled the Treasury benches, the productivity rates year on year from 1999 to 2008 were 1 percent per annum. One percent per annum is poor. He and his colleagues have to take some level of responsibility for the lack of productivity, for the lack of growth, and for the stagnant way that our economy went forward in some of the best economic conditions that our country has experienced over time.

The biggest productivity growth rates in this country were in growth in bureaucracies. That is why this bill is very important. It is very important because it will provide the impetus for creating ideas, for providing research, and for looking at ways in which regulation and red tape can be cut. This bill is about inquiring into productivity-related matters and reporting back to the Government in order to formulate policy and formulate laws that will make this country rich and prosperous again.

The roles and functions of the Productivity Commission will be modelled extremely closely on the Australian Productivity Commission. Our select committee had the privilege of hearing from Gary Banks, who is the chairman of the Australian Productivity Commission. We heard about the way that the Australians are running their Productivity Commission, and also about the pitfalls we might encounter in terms of how we proceed. As has already been stated, we have a chairman designate. His name is Murray Sherwin, and he has quite extensive experience in the private and public sectors, particularly as the Director-General of the Ministry of Agriculture and Forestry.

As has been stated, the select committee worked quite closely across party lines in order to refine this bill. We worked closely in order to take the emphasis away from a focus on regulation, and to leave open the types of productivity measures that might be relevant to the Productivity Commission. Independence was seen to be a critical feature of the Australian Productivity Commission. One of the recommendations that came back from the select committee was to explicitly allow for the Productivity Commission to negotiate with the relevant Ministers in terms of the terms of reference for any of the work that they would commission going forward. The other issue we focused on was provision for the functions and the role of the Productivity Commission to be quite wide. It is about reviewing the efficiency and effectiveness of regulatory agencies, looking at and analysing the impact of regulations, but also researching productivity-related matters to build up the institutional knowledge of the commission over time. There is also provision for the commission to work closely, if it is relevant and if it is appropriate, with the Australian Productivity Commission.

The bill that has been presented back to the House has strong support, I believe. Members will hear that from members of the select committee who were actually at the select committee. The bill has strong support across the various parties, and it is a bill that I certainly recommend to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I am very grateful to my colleague David Cunliffe for taking the first call on the New Zealand Productivity Commission Bill due to the fact that I was attending a dinner in the room next door and, unfortunately, did not get the message in time to bring my notes down to the House. I would normally lead in this debate on the basis that I sat on the Commerce Committee, and, in fact, I chair the select committee that heard the submissions on this bill.

I think that the bill has been improved by the work that we have done on the committee. But I place on record my absolute 100 percent support for what my colleague David Cunliffe said, and I made Labour’s position absolutely clear at the select committee, which is that we want a Productivity Commission that successive Governments can support—we want that. We are in a better position to achieve that, but it can be abused. That will be largely dependent on whether the Government of the day, and currently that is the National Government, is prepared to use the Productivity Commission that is established by this legislation in the way that it is intended. I think the select committee has given a very good steer about how we want that to occur.

I make one preliminary point: there were 13 submissions received on this bill—just 13. We have just heard the previous speaker, Peseta Sam Lotu-Iiga, say that this bill was the most important legislation that we have had before the House for some time, and he was overplaying the significance of it. I am a huge supporter of the concept of a Productivity Commission. It is something that I used to muse about when I was Minister of Commerce, having a joint Australia - New Zealand Productivity Commission, so impressed was I with Gary Banks, who has been referred to, as the chair of the Australian Productivity Commission, and, indeed, the commission itself. The work that the commission does has integrity, it has status, and it has incredible levels of buy-in across the whole of Australia within its states, across Government, and across the non-governmental sector, as well. It has developed a way of consulting that I believe we could learn from, and that I hope is implemented by this bill.

But 13 submissions! What on earth is going on when only 13 organisations bother to put pen to paper to say they either support or reject elements of this bill? I was extremely disappointed that Business New Zealand did not even make an oral submission in support of its written submission. In fact, I had spoken to the committee clerk and asked to allow for half an hour for two of the most important submissions. I wanted half an hour for the Business New Zealand submission in order to hear it in detail and really tease out the important things. We had room to move with only 13 submissions received; only seven submitters wanted to be heard. So I said that I would like the other half-hour slot to go to the New Zealand Council of Trade Unions. Business New Zealand and the Council of Trade Unions had been working on productivity in a very unified and collaborative manner with the previous Labour Government. So I felt that that would be a really good way to test a number of these issues and really tease out whether there were any differences and what points and commonality there would be. I felt on this issue that there would be more in common than there would be opposed.

Business New Zealand did not even bother making an oral submission in support of its written submission, and I was disappointed in that. The New Zealand Council of Trade Unions did come and it presented a very in-depth submission. It then provided the committee with some follow-up material on all the work that it had been doing on the development of productivity. It focused on one element of productivity, which was labour market productivity. But the point that it made to the select committee was that if we were to list some elements of productivity, how can we leave that out? How can we have one thing but not the other? So that is why we took out the references to the specific elements of productivity that had been included in the previous functions of the commission. So the whole focus on reviewing existing regulatory regimes and agencies, including their efficiency and effectiveness, and undertaking regulatory impact analyses of specified regulatory proposals, is all gone. The reason it is gone is that there is no need to limit how we view productivity in this way.

The other significant change that we made was to the purpose of the commission. So the purpose of the commission originally read: “The principal purpose of the Commission is to provide advice to the Government on improving productivity in a way that is directed to supporting the overall well-being of New Zealanders.” We have now added the words “… having regard to a wide range of communities of interest and population groups in New Zealand society.” Unless we take that broader view of productivity, we will be stuck in a very narrow frame, probably one promoted by a former leader of the National Opposition as he then was, Dr Don Brash, who is now leading the 2025 Taskforce. I noticed that his productivity was so good that he spent his entire 3-year salary budget in 1 year. So that is productivity from that field. The Council of Trade Unions made some extremely good points, because it was prepared to walk the talk. It was actively involved with the previous Government over the development of productivity.

I will spend a bit of time talking about the hearing of evidence in relation to the Australian Productivity Commission, and I place on record our select committee’s gratitude to Gary Banks for agreeing to travel over from Australia to present to us. We had two meetings with him, one in the public arena and then he spoke with us privately. In terms of the private one, it probably added more flesh to the detail rather than to the bones, which were clearly stated in the public session. So I will talk a little bit about what the relationship between the Australian Productivity Commission and the New Zealand Productivity Commission will be. Gary Banks made very clear that his organisation would do what it could for the New Zealand Productivity Commission, once it is created, to cooperate with it and assist it in various ways. That is an offer we must accept, because the two productivity commissions working collaboratively will strengthen the capacity for an overall lift in productivity on both sides of the Tasman.

What I thought was very interesting, because we have been very much of the view that we want to match as far as we can the Australian Productivity Commission, was when Gary Banks gave the select committee a summary of where the commission had come from. It evolved from a long line of institutions going back a long way—indeed, going back to 1922 with the Tariff Board, which is where the industry focus came from in Australia’s legislation. The summary then talked about the modern form of the organisation created under the Whitlam Government in 1973 with two further incarnations since, the Industry Commission following the Industries Assistance Commission, and then the Productivity Commission following the Industry Commission.

The changes that he identified had occurred under both Labor and Liberal-National administrations in Australia, so the organisation has bipartisan support. He did say that in its earlier history there was often a little bit of tension periodically about the organisation, given the nature of its role.

The process the Australian Productivity Commission uses is simply this: it undertakes its first level of submissions on the original report, it produces a draft report, and then the commission hears submissions on the draft report. That is the strength of Australia’s organisation. Gary Banks said that the Government can sit back and watch how the politics play out when the commission’s draft proposals are debated in public. But that is a real strength, because everyone knows what the debate is about at that point and, as a result, the commission has a high degree of credibility. The result is in the decisions that the successive Governments take on the recommendations of the reports.

I am pleased that as a select committee we were able to make significant changes to the bill. On that basis Labour will be supporting its passage through the House.

DAVID CLENDON (Green) : Kia ora koutou. Before I speak on the matter at hand, I would like to add the Greens’ acknowledgment of the dreadful news we had this afternoon from the West Coast and to offer our manaaki, our aroha, to those most closely affected. My colleague Kevin Hague is returning to his home on the Coast as quickly as he may. We will make proper acknowledgment of that matter with the rest of the House tomorrow afternoon.

The business of the evening is to make some commentary on the New Zealand Productivity Commission Bill. Certainly, it is a better bill that has come from the Commerce Committee than what went to it. That is a credit to the committee, I think, and, indeed, to some of the submitters. Some of the obvious flaws of the original bill have been remedied, some of the gaps filled, and some of the most undesirable parts removed.

The genesis of this bill came from the ACT Party as a support party to the Government. That was revealed in the Minister of Local Government’s first speech on this bill, when he noted that it was part of the confidence and supply agreement with the National Government. I fear that the genesis is perhaps reflected in the aspects of the bill that the Greens will continue to not support through its further stages.

To refer to some of the improvements to the bill, it has been noted that the words added to clause 7: “… having regard to a wide range of communities of interest and population groups in New Zealand society.”, have broadened the scope of the bill and the capacity of the Productivity Commission, which will be established by this bill, to do its work and to give proper consideration, whereas in the original drafting of the bill it was silent on that. It was very much an overly narrow regulatory approach, and it would have led to little more than a witch hunt in the Public Service and a very aggressive assault indeed on the private sector.

It is appropriate and a distinct improvement that the work programme of the commission will be less determined by the Minister and that the Minister will be obliged to consult with the commission about terms of reference. In the original drafting of the bill, those things were very much in the Minister’s control. That would not be a desirable thing. The requirement to consult between the Minister and the commission will certainly aid or at least add a little to the independence of the commission and its tasks.

I reiterate the statement made by the previous speaker, Lianne Dalziel, about the value of the commission being able to publish draft reports, because then it will be possible to see what the commission genuinely thinks—its work processes and its thought processes—before the final report comes out. Any substantial changes between a draft and a final report would give scope for public or political questioning of who or what influenced any dramatic changes. We have already seen that with boards of inquiry such as the Royal Commission on Auckland Governance. The report that was produced by that royal commission was cast aside and we have a very inferior outcome. If this was to occur with the commission, at least we would have a sense of what the commission first thought or where it went.

The point has been made that the chair designate of this commission-to-be has already been appointed. Frankly, the Greens see that as rather an abuse of the parliamentary process. Perhaps I should say that it appears to be treating Parliament with some disdain to appoint the head of an organisation when the very existence, nature, function, and roles of that organisation are still being discussed in a select committee, before the bill has even come back to the House for its second reading, Committee stage, and third reading. In that, there is no explicit or implied criticism of the gentleman chosen to lead the commission. I do not know the fellow. It must be said that his CV is very impressive and he may well be an ideal choice, but it seems remarkable that such an appointment would be made in advance of the proper parliamentary process being completed.

There has been much made of the fact that this commission is modelled—quite closely, some would say—on the Australian Productivity Commission. Indeed, there are references and similarities, but there are also some significant differences both in the model, in the legislation, and in the context within which this commission will work.

It is noted that the New Zealand Productivity Commission will be able to, on its own initiative, undertake and publish research about productivity matters to develop its institutional knowledge, support its inquiry, and promote public understanding of those issues. That is well and good, and it is appropriate that such a body should be able to do independent work, but I seriously doubt whether this commission will have the capacity or the wherewithal to do any such work. We are told it will have a budget of some $5 million a year. That is not a significant sum of money given that the Auckland inquiry consumed some $3 million to make, admittedly, quite a large investigation. Clearly, the requirements are that the first task or tasks of the commission will be to fulfil the roles or tasks given to it by the Minister. It will have very little time, capacity, or resources to do independent work, unlike its Australian equivalent, which works on a much larger stage with a much larger budget available to it and where there can be some genuine self-initiated work done.

We believe it is rather peculiar that within this bill, there is no definition offered of what productivity is or what it means in this context. That is quite unusual given that the word “productivity”, even in the context in which this commission will work, is open to a significant range and diversity of definition or interpretation. It seems strange that this legislation contains no definition, nor does it contain a clear set of directions as to what the commission ought to do or what its broader objectives ought to be. Again, this is a distinct contrast to the Australian example. The Australian legislation says that the commission must strive to improve the productivity and economic performance of the economy to reduce unnecessary regulation and that it ought to encourage the development of efficient and competitive Australian industry.

We note there is very little focus on industry in this bill. The words “workforce” or “workplace” do not appear, as has been noted by a couple of the submitters—I will return to that point. The Australian commission is charged with facilitating adjustment to structural change, which some would see as some way from a definition or a reflection of a focus on productivity. In short, this legislation does not replicate the Australian model sufficiently to give us any hope or confidence that it will replicate the undoubted success of the Australian commission.

The Council of Trade Unions and the Public Service Association both made very substantive, useful, and helpful submissions on this bill. Both regretted that within it there was no focus on the workplace and no intention obvious that the workforce, or those bodies representing the workforce, should be a player in the commission. Lifting productivity, as the Public Service Association pointed out, is clearly not simply a matter for the private sector, given that the Crown expenses account for about 35 percent of the economy. Public as well as private issues are at stake here.

What we could more usefully do than this very narrowly focused, poorly resourced commission is follow the example of the UK and look more towards the development and establishment of a Sustainable Development Commission, as the UK has done with significant success. In its short life, that commission has sought to fulfil its goals of living within environmental limits, achieving a sustainable economy, using sound science responsibly, and promoting good governance. It has already identified savings of many hundreds of millions of dollars for the Government. That would be a model that the Green Party could support. Kia ora koutou.

Hon RODNEY HIDE (Leader—ACT) : I thank parties for their contribution to the New Zealand Productivity Commission Bill, particularly Lianne Dalziel, David Cunliffe, and David Clendon. I also thank the Commerce Committee, which has worked on this bill and improved it.

It is certainly with great pleasure that I rise on behalf of ACT to support the New Zealand Productivity Commission Bill. This bill, as Mr Clendon pointed out, is a direct result of the confidence and supply agreement between ACT and National. When we sat down to negotiate the agreement, we in the ACT Party had a clear vision: a vision for a more prosperous and more cohesive New Zealand. Crucial to that vision’s success was the need for an institution that could help shape excellent public policy for the benefit of the wider community.

This bill establishes a Productivity Commission reflecting Australia’s experiences, as its Productivity Commission has made a substantial contribution to its national well-being. Paul Kelly, the editor-at-large of the Australian newspaper, gave an excellent description of the Australian Productivity Commission: “Its strength lies in its ideas, its analysis and its advancement of the public interest. It needs to be independent but not remote, rigorous but not ideological, constructive but not accommodating. The Commission exists, ultimately, to serve the interests of the Australian people and that defines its value for any intelligent national government … This has made Australia not just a more prosperous country but a country with an ongoing commitment to shared prosperity.” We thought that a Productivity Commission could make this contribution in New Zealand, and I am pleased that the Commerce Committee has also seen the opportunities that this bill presents and has recommended that it be passed.

Again, I briefly acknowledge the work of the Commerce Committee and the committee’s chair, Lianne Dalziel, on this bill. The proposed amendments make sense and add value to the bill. We have always been of the view that the commission should have a wide remit and take a broad view of productivity, so we in the ACT Party are quite comfortable with the committee’s proposed changes to clause 7 and clause 9(1)(a). We also always envisaged that Ministers and the commission would consult on terms of reference, so that any issues can be worked out before an inquiry begins. Having this requirement in law, as proposed by the committee in its changes to clause 12, helpfully clarifies this expectation while protecting the commission’s operational independence.

Finally, I am glad to see that the Commerce Committee has taken the advice of the Australian Productivity Commission chairman, Gary Banks, and has amended clause 13 to encourage the New Zealand Productivity Commission to publish draft reports and consult widely in the course of its work. I know from my own discussions with Mr Banks that he sees this open, consultative approach as lying at the heart of the Australian Productivity Commission’s success and the high levels of public support and respect that the organisation enjoys. We would do well to learn from his experience when setting up our commission. Closing the income gap with Australia and taking our rightful place at the top of the OECD will require action across a wide range of fronts. Having good policy and strong institutions is only one part of this campaign, but it is an important one. A Productivity Commission will help ensure that New Zealand is able to look properly and deeply at the issues that face it, involve the community in the debate, and formulate solutions that serve the national interest. I look forward to seeing this bill passed and the Productivity Commission beginning its work next year. Thank you.

RAHUI KATENE (Māori Party—Te Tai Tonga) : I came across a very simple statement today, which I think sums up what might well be a core operating principle that the Productivity Commission could live by—that is, the simple act of paying positive attention to people has a great deal to do with productivity. It might well be the greatest single factor that could assist the new independent Crown entity in going about its role to carry out inquiries and reviews into productivity-related matters. The commission is intended to fill a gap in the existing institutions for the provision of independent policy advice to the Government, based on community-wide agreement. This is something that we in the Māori Party are absolutely supportive of. We believe that government would be a lot stronger if we chose to empower communities, whānau, and hapū to develop responses to issues impacting on them by trusting them and resourcing them. This is a clear priority for the Māori Party. We want to see more community services and less government bureaucracy for the outcome of whānau restoration. We have a particular passion for a concept that we call “opportunity communities”—that is, we support communities by trusting in their own locally developed solutions.

So we come to the second reading of the New Zealand Productivity Commission Bill, and we are pleased to see community engagement given priority. It is our view that if we placed value on community-wide engagement, then we might be able to ensure that those who have never had the backing to reach their potential will be supported to find new and sustainable opportunities to achieve their goals. The intention of the commission will be to assess how well the current environment supports “the overall well-being of New Zealanders.”, identify areas where improvements could be made, and, where relevant, outline better options or alternative approaches. The Māori Party supports investing in regional research and development programmes that will forecast the long-term opportunities and skills required to increase productivity and economic growth. In order to achieve a prosperous economy, the Māori Party advocates improving quality and performance. It is important that the community receives accurate information about our progress as a nation. To advance this, the Māori Party proposes the adoption of the genuine progress index. We believe that very useful proposals the commission might consider could be Māori productivity and its contribution to the wider economy, focusing on both output and outcome and on social, cultural, and economic development and well-being, including the genuine progress index.

The Māori Party has always promoted a genuine progress index as the standard measure of business success. As the Minister of Finance could no doubt elaborate upon, gross domestic product simply measures a country’s overall economic output, or the market value of all final goods and services made within the borders of a country in a year. We want to stimulate, instead, a debate about productivity based on the general overall well-being of the population. Given the recession and the global collapse, a priority for the Productivity Commission could be to investigate an integrated genuine progress index to measure social, cultural, and environmental costs and benefits as part of economic performance.

Sitting in this House and debating across a huge raft of legislation, we have come too often to receive proposals for tax reform that show a lack of imagination and creative thinking. At a wider level, conventional accounting for the national economy is inadequate. A genuine progress index tool will gather and integrate data on our economic, social, environmental, and cultural performance, and on the heritage that we will be leaving for future generations. At a more detailed level, the genuine progress index takes into account not just the bottom line on consumption but also a broader view, including the implications of climate change and its consequences, the effects of ongoing demand on natural resources such as water and air, the impact on our ecosystems, and the overall challenge of how to create sustainable progress on a finite planet, and it should also include the consequences of our high oil dependency.

Another priority we would like to hear given weight by the Productivity Commission is the drive to achieve sustainable development and to keep the environment healthy, safe, and intact for everyone now and for future generations. At the beginning of this year the Parliamentary Commissioner for the Environment released a report on trying to set in place roles and responsibilities for the regular reporting on the state of the environment to different public entities. Although the Māori Party supports productivity, environmental reporting—such as that outlined in new national environmental reporting legislation proposed by the parliamentary commissioner—should offer tangata whenua an assurance that long-term concerns about the protection of the environment can be addressed.

Although this is not the most appropriate time for a full-scale examination of the issues around mining, I would suggest that consideration be given as to how New Zealand - based mining companies can employ the local community and Māori and still incorporate care for the environment, including marine and local Māori custom, for the benefit of the community and the wider public. Productivity must of course also focus on social and cultural capital. It would be useful to hear from the Minister whether the commission could provide an opportunity to undertake research as it relates to social lending and social enterprise, and the developments in this space. It would be helpful to understand whether the Government has a role in supporting these developments, particularly as it relates to Māori and those in need in communities. The development of social lending investment has been substantial overseas, and has risen in parallel to the rise of social enterprises. It is still relatively undeveloped in New Zealand. Some South Island community trusts have experience in social lending, and some local councils have also offered local groups loans on soft terms. Social enterprises have appeared as a new and distinctive type of entity delivering strong social outcomes. They are similar to commercial businesses and have some form of income from the provision of a service, but they are also similar to charities in having social outcomes as fundamental objectives.

It may well be that the Productivity Commission provides us with the space and reason to focus on such approaches towards increasing productivity. In this light we would hope that investigations should also be undertaken with regard to people or organisations that offer unsecured loans to individuals, at high interest rates. The Māori Party supports the concept of increasing accountability and transparency of such transactions. Recent work in this area suggests there is a close correlation between a high density of liquor outlets, pokie venues, and loan sharks in areas of high deprivation—again, another priority in the debate around productivity.

Finally, it is of note that the New Zealand Productivity Commission that we are considering in this bill is closely modelled on the successful Australian Productivity Commission, as has been referred to by other members. I highlight that the Australian Productivity Commission has reported on Aboriginal affairs in Australia. Similarly, the example could be followed in Aotearoa, so that it is a priority that investigation is undertaken into the social, cultural, and economic development and well-being of tangata whenua. We place considerable interest in the advances of this bill, and we are happy to support it at its second reading.

KATRINA SHANKS (National) : It is my pleasure to take a call tonight on the New Zealand Productivity Commission Bill. It was good to have this bill before the Commerce Committee and to listen to the submitters who came along. Not a huge number of submitters came to the select committee, and that was disappointing because this is quite a significant bill for New Zealand and for productivity in New Zealand moving forward. Not only that, it is also important for our economic development and our growth in New Zealand. We know that New Zealanders want to have a better standard of living. We will achieve that through raising real wages and salaries in New Zealand. The only way we can do that is to be smarter and cleverer with the resources we have and what we do with them.

The Productivity Commission will be looking at ways we can be smarter and much more clever with the resources we have in New Zealand. The Productivity Commission is modelled very closely on the Australian Productivity Commission, which has been operating for more than 10 years. It has been a very successful commission. It is interesting because when we talk about productivity, we do not talk just about the labour force, which is what the unions came and talked about; we talk about a vast range of different activities. I will mention just a couple of the activities that the Australian Productivity Commission is looking at. Currently it is looking at care for older Australians, disability care and support, educating and training the workforce, emissions reduction policies and carbon prices in key economies, an annual review of regulatory burdens on business, and performance benchmarking of Australian business regulation planning, zoning, and development assessments.

As can be seen, the commission looks at a very wide range of topics. I think that is invaluable, because at the end of the day everything adds to our productivity. It will be interesting to see what is selected by our own Productivity Commission and what it begins with, from its own research and in its own projects, and what direction it heads in. I think this is an important initiative for New Zealand. It is a shame that it was not implemented 9 years ago, when we had the best economic times ever, to really uplift our exports, get them going, and get New Zealand’s boat moving a bit quicker. The Productivity Commission is here now, and I think it will provide a great initiative for New Zealand to increase its productivity and to improve its wealth overall. Thank you very much for the opportunity to speak on this bill tonight.

STUART NASH (Labour) : That speech was wonderful!

Sandra Goudie: She doesn’t mince words.

STUART NASH: The previous speaker does not mince words, and there were very few words there to mince.

I stand in support of the New Zealand Productivity Commission Bill and there are two points I would like to make. The first one, and I will make sure it lasts more than 90 seconds because I do have a little bit to say on this, is the importance of an increase in productivity—the importance of productivity growth in driving the economy. The second thing I will do is have a little look at the Government’s track record in driving productivity. We hear these words. We have just heard what the Australian Productivity Commission has done. First, what has this National Government done in education? It has cut education; second, the Government’s increase in GST has disenfranchised the elderly; and, third, the Government has cut services to the disability sector. But that is just a taste of what is to come.

Katrina Shanks: What planet are you on?

STUART NASH: A different one from that member, I am afraid. I am on planet reality.

Who would not support having a Productivity Commission? Anyone who understands economic growth would support having an economic Productivity Commission. But what are we talking about? When it comes to productivity growth we are talking about productivity, but what does it actually mean? Productivity growth is a crucial source of growth in living standards. Productivity growth means more value is added in production, and that means more income is available to be distributed—not just to those 650 New Zealanders who earn over a million dollars a year, who have just received $1,000 a week in tax cuts, whereas someone on the median wage receives less than $5 a week. That is not productivity; that is regression, and it takes the country backwards.

If we are talking about productivity, at the firm or industry level the benefits of productivity growth can be distributed in a number of different ways. They can be distributed to the workforce through better wages and conditions; that would be good. Imagine giving the workers better conditions. I know that is a foreign concept to members on that side of the House. They can be distributed to shareholders and superannuation funds, through increased profits and dividend distributions. Imagine it being distributed to superannuation funds—that is anathema to members on that side of the House. Imagine the benefits being delivered to customers, through lower prices—that does not mean increasing GST—to the environment, through more stringent environmental protection, and to the Government through increases in tax payments, which of course can be used to fund social and environmental programmes. All those five things I have mentioned the Government has cut—amazing!

Productivity growth is important to a company because it means that it can meet its growing obligations to workers, to shareholders, and to Governments through taxes and regulations, and still remain competitive—still remain competitive—or even improve its competitiveness in the market place. Competitive advantage is vital to the growth of the New Zealand economy. What have we seen? We have seen business tax receipts drop by 23 percent over the last quarter. We are talking about a Productivity Commission that will drive competitiveness by a Government that has seen our business competitiveness drop significantly.

There are essentially two ways to promote growth in output. We either bring additional inputs into production or increase productivity. Adding more inputs will not increase the income earned per unit of input, unless increasing returns are discovered, but that is a different argument. In fact, it is likely to mean lower average wages and lower rates of profit. But when there is productivity growth, even the existing commitment of resources generated more output and income—income generated per unit of input increases. Additional resources are also attracted into production, and can be profitably employed.

At a national level productivity growth raises living standards, because more real income improves people’s ability to purchase goods and services, whether they are necessities or luxuries. They can enjoy leisure, improved housing and education, and contribute to social and environmental programmes. These are all positive outputs of productivity growth. Productivity is not everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise output per worker.

Let me give members an example. In America, World War II veterans came home to an economy that doubled its productivity over the next 25 years. As a result, they found themselves achieving living standards that their parents never imagined. Viet Nam veterans returned home to an economy that raised its productivity less that 10 percent in 15 years. As a result, they found themselves living no better, and in many cases worse, than their parents.

Our own Department of Labour has a special productivity section on its website. It states: “workplace productivity is the key to lifting New Zealand’s living standards and wealth. It is about increasing the value of what we produce by working in more effective and efficient ways.” But now, let us inject a dose of reality. The New Zealand Institute’s latest publication is called A goal is not a strategy: Focusing efforts to improve New Zealand’s prosperity. That is an interesting name. Well, it refers to the fact that the Government’s goal of catching up to Australia is not a strategy to increase labour productivity. Let me outline what the report actually says.

Katrina Shanks: Please do.

STUART NASH: OK, I will, for that member—I will. The report states that, in regards to improving productivity, there are basically five things that the country needs to do to increase productivity. It needs to increase entrepreneurship. Hold a second—but this Government has cut funding to education, mainly adult and community education, from where entrepreneurship comes. The second one is innovation. Innovation is hugely important. The report states: “innovation effectiveness is the principal determinant of labour productivity and GDP per capita for advanced economies like New Zealand.” This Government cut the research and development tax credit. In fact, I think it was the first act this Government did. It cut the research and development tax credit.

David Shearer: Guess what Australia’s done.

STUART NASH: What has Australia done?

David Shearer: They have introduced New Zealand’s tax credits.

STUART NASH: They have introduced New Zealand’s tax credits. The second one is skills and talent. Yet what are we doing to our education system? The third one is investment. What have we done to the New Zealand Superannuation Fund—the Cullen fund? We have stopped contributions. A goal is not a strategy.

Jonathan Young: Come on, that was only three. You said six.

STUART NASH: That was five. This document outlines what the Government needs to do in every pillar in increasing productivity. But that Government has in some way, shape, or form pulled down, destroyed, withdrawn funding from, or just got rid of it. It is an absolute travesty.

Hon Rodney Hide: A what?

STUART NASH: A travesty. This Government formed a sort of forerunner to the Productivity Commission. It was called the 2025 Taskforce. I would like to outline a couple of the ideas mooted in its first report. It is probably worth noting that Dr Don Brash headed that commission. He suggested a limitation on some universal benefits. These included industry loans and subsidies for early childhood education. He wanted to get rid of those. Secondly, he recommended that the Government reduce operational spending to 29 percent of gross domestic product by 2012-13, or slash and burn. The third thing he recommended was using the New Zealand Superannuation Fund to pay back borrowing, and changing the age of entitlement. Changing the age of entitlement means increasing the retirement age. Mr Key said: “We campaigned on some core commitments, and we’ll be breaking those commitments if we did that, so we’re not going to.” Well, he said that about increasing GST, and he did it.

A Productivity Commission needs more than words. Words do not provide money for companies involved in innovation. Words do not train entrepreneurs to be skilled managers and leaders. Words will not get our businesses trading overseas. Kooky ideas like the majority of those of the Productivity Commission will do nothing to increase productivity. A goal is not a strategy. I am hoping that the commission will breathe life into productivity, but I will not be holding my breath.

I support this bill because I support the idea of a Productivity Commission. I support the idea of a commission that works along the same lines as the Australian Productivity Commission, but I am fearful that the measures—this just annoys me; it makes my blood boil—that this Government has instigated will make no difference whatsoever.

MELISSA LEE (National) : I will respond to the previous speaker, Stuart Nash, by saying this: 9 long years. The member who has just resumed his seat finished his contribution by saying that words do not actually achieve productivity. I say that that is true. For 9 years we heard words. If productivity was such an important issue for the previous Labour Government, where is it? Why did we not actually get it? It was all words and no action, but we are getting into action and starting it now.

Productivity is the key to lifting New Zealand’s living standards and wealth. Whether we are at work or at home, it is something in which we all must participate to improve our lot. That does not mean we have to work harder or longer hours. We want this country to get ahead and be more productive. We want New Zealanders to take home bigger wages and have brighter futures. The New Zealand Productivity Commission, to be set up by April next year, will look at ways to boost New Zealand’s economic performance across the public and private sectors. We want growth that is based on private sector investment and exports rather than on the unsustainable increases we have had in Government spending and borrowing over the last decade.

Productivity is important in all aspects of our lives. Women used to spend long hours doing household chores before technology caught up and helped them to become efficient, and before our society became more egalitarian and did not scowl at men for doing so-called women’s jobs. We have to improve productivity in all aspects of our lives, and I am very, very pleased that we are starting this commission. Let us hope that better productivity will lead to more opportunities for all of us to spend more quality time with our families.

After the tragic news from Pike River Coal this afternoon, I offer my deepest sympathy and aroha to the families of the 29 miners we have lost and to the wider West Coast community. Thank you.

Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) : Mr Deputy Speaker, tēnei e tū ake ki te tuku aku mihi ki ērā kaiwaro i tanumia kei Te Tai Tonga, ki a rātou nei whānau. Ka nui te mamae kei waenganui i a rātou, kei waenganui i a mātou hoki. Kia tuku te aroha, ngā roimata mō ngā tūāhuatanga ki reira. Pai mārire ki a rātou.

[Mr Deputy Speaker, I rise to express my condolences to the families of those miners entombed in the south. There is much pain amongst them, and us as well. In respect of the circumstances experienced by them over there, I extend love and tears. Let goodness and peace prevail over them.]

In acknowledgment of previous comments that have been made, I too want to join my deepest sympathies with the families of the 29 miners. Coming from Huntly, which is a mining community, having uncles who still work in the mines, and having gone into the mines myself, I can understand just a small part of the despair that families are going through at the moment. I pass on my deepest sympathies to them.

It is my pleasure to join previous comments of the Labour Opposition and add my support to the intent of the New Zealand Productivity Commission Bill. It was quite interesting to listen to the very short submission of the previous speaker, Melissa Lee. She was quick to point out that Labour had been in Government for 9 long years, and she asked what we did. Labour definitely believes that lifting productivity stimulates growth. Three pillars to lifting productivity and stimulating growth were achieved by Labour in those 9 years.

One of those three pillars was skills—lifting the skills of our people. We had a skills strategy. National got rid of that. We invested in adult and community education, because we recognise that there are many rungs on the ladder to ensure that people can go into further education, training, and employment. National got rid of that. We wanted to ensure there was a pathway for our kids from school into education, training, and employment. We had targeted strategies to ensure there was a pathway at every level for kids leaving school, and invested in that. National is making it harder for people to choose to take up education. What is worse is that the place where investment is needed most, in early childhood education—we know that if we give our kids a great start at the front end, productivity is guaranteed—National got rid of that funding, and shame on them.

The second pillar was investing, and getting the priorities for investment right. It is really not clear what National is doing to ensure there is a plan for growth. I ask National members what the plan is for growth. They are quick to talk about it, but no one understands what the plan is for growth. We had a plan.

The third pillar we had was investing in research and development. The tax credits, and the Fast Forward fund was worked out by a Labour Government with the sector, to ensure we were investing in our ideas and in innovation through the tax credit. The Fast Forward fund was something we were very proud of, but National got rid of it.

Over 9 years we were working towards a systematic plan to ensure we addressed all parts of the productivity landscape. It was not a short-term fix. We knew we needed long-term investment for real gains and outcomes. But what National is doing is appealing to short-term sentiments by taking from one and giving to the other, getting priorities completely muddled up.

I will come back to the bill. I sat on the Commerce Committee, and it was interesting listening to comments from submitters. Some of those comments related to the independence of the Productivity Commission. Clause 12, as we know, relates to the terms of reference for the commission. One of the issues raised with the select committee was that the commission should be able to undertake work on its own initiative. As I understood it, the basis for that assertion was to ensure that the independence of the commission helped to establish a high level of credibility in its deliberations. That level of independence would help to achieve that aim. The bill, in clause 12(1), originally stated that “In carrying out its functions under section 9(1)(a), the Commission must act in accordance with the terms of reference set by the referring Ministers for each inquiry, review, and regulatory impact analysis.” Some might have argued that this provision limited the ability of the commission to initiate its own work programme.

We received advice from the Australian Productivity Commission chairman, who said there was a level of negotiation between the commission and the Minister over terms of reference, and it was more a practice than a legislative imperative. Members of the committee were quite warm and open to the ability of a free-flow opportunity to form particular aspects of the bill for review. That is why the committee recommended amending clause 12 and inserting a new subclause to make it clear that the referring Minister is to consult the commission about the terms of reference, so there is a relative balance between the independence of the commission and Government policy. From my perspective, and certainly from listening to the submission of the Australian commissioner, the legislation probably does not go far enough, but it could in time.

The comment was made previously that we were surprised by the low level of interest in the bill, with few submissions made to the select committee. We had expected there would be more. However, of all the submissions that we heard, the presentation from the Australian Productivity Commission chairman was very informative and helpful in the final deliberations that led to the select committee’s suggestions for the bill. We were particularly interested in the process undertaken to identify issues that would be considered for review, which are very wide ranging in their content; the process for determining terms of reference, as I referred to previously; negotiation between the Minister and the commission—significantly, the Treasurer and the relevant Ministers and the way in which public consultation occurred.

From the remarks we heard, it appeared that there was a full level of public consultation through the release of a draft report. We felt that that was a bonus to the process and role of the commission, because once a draft report was released, it would go out for public consultation. Potentially, recommendations could be outlined in that draft report and then a public debate could be had. The Minister would have time to listen to the public debate about recommendations coming from the commission, and could be well apprised of all the various issues that he or she might need to consider in formulating a response.

I am pleased that part of that intent was picked up on in terms of amending clause 13. Again, it did not go far enough. We may have to reflect, in hindsight, on improvements in this area. I can say that we welcomed the Australian Productivity Commission chairman saying that that approach generated positive and informed debate and enabled Ministers to make informed responses. That can only be a good thing if one is trying to look at a sector-wide approach to improve productivity.

I too, like other members of the Labour team, would have hoped for a stronger and greater alignment with the Australian Productivity Commission. However, in saying that, the bill will form the New Zealand Productivity Commission. We can only hope that at an operational level there will be constant and free-flowing dialogue and sharing of skills, experience, and advice between our two commissions. There will be much to gain from that front.

Although Labour supports this bill, we are concerned about the potential for the commission to be narrow in its focus, and capture by Government policy could happen. But if that is not the intention of the Government, then we could only expect that the types of questions coming up for review could be questions such as how a tax switch that shifts real gains to the top 3 percent of income earners will lift productivity, or, how the fire-at-will bill, which will undoubtedly hurt those more vulnerable in the workforce, will lift productivity.

If the true intention of this bill is to ensure that a relative balance of independence is assured through this process, then I am happy to continue to lend my support to this bill, but I certainly look forward to the improvements. Kia ora koutou.

JONATHAN YOUNG (National—New Plymouth) : I am very pleased to stand in support of the New Zealand Productivity Commission Bill. I believe that the intention of the bill is not only to lift productivity but to build institutional knowledge in our country regarding all the factors and elements that make us far more productive and far wealthier as a country. We understand that it is essential that we increase our economic growth if we are to create the jobs, the higher incomes, and the opportunities that New Zealand families deserve and long for.

As anyone knows, when it comes to balancing or even improving a budget, whether it is at home, in business, in an organisation, or in a Government, there are two ends of the pencil that need sharpening: how we earn, but also how we spend. How we earn is critical. The world continues to rapidly change around us. We must adapt, or be subsumed by bigger economies that would utilise us as producers of raw resources while they add the value and earn the wealth that could, and should, be in our pockets instead.

Innovation and technology are an important component of maximising our inputs and efforts, driving efficiencies that will achieve more for that same resource that is available. Lifting our output per worker—the amount of goods and services that each worker produces and the value they add—is critical for the faster economic growth that New Zealand needs. It is not just how we earn but also how we spend that is of equal importance. The public sector, as we know, makes up about a third of the economy. So improving productivity in the public sector is a vital part of sharpening New Zealand’s overall economic performance.

The Productivity Commission, which is to be set up by April next year, will consider ways to boost New Zealand’s economic performance across both the public and the private sectors. The Productivity Commission, which will have a wide-ranging brief, was part of the National and ACT confidence and supply agreement signed after the 2008 election. When we measure ourselves against countries similar to us, it is not good enough just to measure the difference in hourly rates. If those countries pay more, we must understand why they pay more. Why are they able to afford that higher wage?

Just as I conclude, I say that Mr Gary Banks from the Australian Productivity Commission, whose advice we appreciated, reported to the Commerce Committee that there was considerable tension in the early years of establishing the commission, until it settled on the notion that one cannot redistribute what one does not first produce. I am sure that as we establish this, there will be very interesting and lively debate about the philosophies and issues as we become an even more productive country. Thank you.

A party vote was called for on the question, That the New Zealand Productivity Commission Bill be now read a second time.

Ayes 111 New Zealand National 58; New Zealand Labour 41; ACT New Zealand 5; Māori Party 5; Progressive 1; United Future 1.
Noes 9 Green Party 9.
Bill read a second time.

Social Assistance (Living Alone Payments) Amendment Bill

First Reading

Hon PAULA BENNETT (Minister for Social Development and Employment) : I move, That the Social Assistance (Living Alone Payments) Amendment Bill be now read a first time. At the appropriate time I will be moving that the bill be referred to the Social Services Committee, that the committee report back to the House on or before 28 February 2011, and that the committee have the authority to meet at any time that the House is sitting except during oral questions, during any evening on a day in which there has been a sitting of the House, and on the Friday in a week where there has been a sitting of the House, despite Standing Orders 187 and 190(1)(b) and (c).

This bill has two main purposes. The first is to make amendments to the New Zealand Superannuation and Retirement Income Act 2001 and the War Pensions Act 1954, so that single superannuitants and single veterans pensioners who are living alone do not have make a separate application to receive their full entitlement. The living alone payment is a separate, supplementary benefit that recognises that single superannuitants and veterans pensioners who live alone face higher living costs, as they are unable to share the expenses of maintaining a household. A single superannuitant who has been granted a living alone payment receives $25.56 more per week after tax than a single superannuitant who is sharing accommodation.

Because the living alone payment is a separate benefit, superannuitants and veterans pensioners who have become single, usually after the death of a partner or a spouse, are required to make a specific application to receive it. In addition, they need to apply for a living alone payment within a given time period—within 28 days—in order to get it backdated. These requirements can be a real burden on older New Zealanders, particularly if they have just lost a partner. Also, because many are not aware of the payment, they do not apply for it, so they miss out on their full entitlements, which can create unnecessary hardship.

It is important that we amend this legislation so that older New Zealanders who suddenly find themselves alone do not struggle to pay their bills, when they are entitled to that help. The Government is addressing the situation by replacing the living alone payment and the two current rates of New Zealand superannuation and veterans pension with a new single living alone rate and a new single sharing accommodation rate. The two rates will not change the total payment received by single superannuitants and veterans pensioners who are living alone. On top of that change, superannuitants will no longer need to visit a Work and Income office to make an additional application for a payment that they are automatically entitled to. That is onerous for older New Zealanders and could mean some do not apply for their entitlement.

The new single living alone rate will be paid from the day that the superannuitant or veterans pensioner becomes eligible for it. At the date of the enactment, all recipients of the living alone payment will be transferred to the new single living alone rate of New Zealand superannuation or veterans pension. It is important to note that this legislative change will not be retrospective.

The second main purpose of this bill is to amend the New Zealand Superannuation and Retirement Income Act 2001 and the War Pensions Act 1954 to update the definition of “dependent child”. The definition is to be aligned with the provisions of the Social Security Act 1964 and the Income Tax Act 2007. Currently the definition is inconsistent between the Acts. This amendment means single superannuitants and veterans pensioners with dependent children will receive the new single living alone rate until the end of the calendar year in which the child turns 18, and as long as the child is at school or in training. Beyond that, if the child remains in the household, the superannuitant will receive the new single sharing accommodation rate. This amendment will ensure a consistent definition of an 18-year-old dependent child across the social assistance system.

The bill also contains a minor amendment of a technical nature, replacing the term “licensed boarding house” with the term “boarding house” so that it is consistent with a recent amendment to section 66B of the Residential Tenancies Act 1986.

As required by section 73 of the New Zealand Superannuation and Retirement Income Act 2001, the Minister of Finance has tabled a statement to the House on the consultation undertaken with other parties in developing these amendments. I am pleased to note that the Green Party, the Progressive Party, and United Future New Zealand have all indicated that they will support the amendments.

The amendments contained in the bill address two issues with regard to the current living alone payment. I am confident these changes will ensure a fairer and more equitable experience for single superannuitants and single veterans pensioners who live alone. They may seem to be minor changes, but I think they will be significant for the people who use them, and we need to simplify the system. This National Government is adamant that this group of New Zealanders should not face any unnecessary difficulty in obtaining what they are rightfully entitled to. I commend this bill to the House.

CARMEL SEPULONI (Labour) : It is a privilege to stand to speak on the Social Assistance (Living Alone Payments) Amendment Bill. It will come as a nice surprise to anyone who is watching tonight that occasionally we can agree on something. Labour supports this bill, as we agree that it improves the lives of older New Zealanders by reducing the requirement to make an additional application to receive their full entitlement. We agree with the mainly technical changes that it proposes. This bill ensures that single superannuitants and veterans pensioners who are living alone do not have to make a separate application to receive their full entitlement. The provision of the living alone payment as a supplementary benefit was introduced on 26 September 1990. The Government has taken a position, in introducing these changes, to reduce the burden of compliance on single superannuitants to receive the full entitlement, thereby improving the lives of older New Zealanders, and we agree with it.

The bill amends the New Zealand Superannuation and Retirement Income Act 2001 and the War Pensions Act 1954. It replaces the living alone payment and the current rates of New Zealand superannuation and veterans pension for single superannuitants with the new single living alone rate and a new single sharing accommodation rate.

  • Debate interrupted.
  • The House adjourned at 10 p.m.