Questions to Ministers
1. CLAYTON COSGROVE (Labour—Waimakariri) to the
Minister of Finance: Has he received any recent reports on the New Zealand economy?
Hon Dr MICHAEL CULLEN (Minister of Finance)
: With some trepidation, I answer. I have received a number of reports highlighting the strength of the New Zealand economy. Rating agency Standard and Poor’s has today reconfirmed our double AA credit rating, which it states is based on this Government’s sturdy financial management. The National Bank’s
Business Outlook observes: “Good news about our economy seems to be everywhere.” Although the Reserve Bank raised interest rates today, it did so because growth is so strong. [Interruption]
Mr SPEAKER: That is the one warning today.
Clayton Cosgrove: What other reports and analyses has he received in respect of the economy?
Hon Dr MICHAEL CULLEN: I received a report that New Zealand’s legal system, education system, and political environment are so strong that they would support the creation of an offshore banking centre in New Zealand. That came from the Opposition spokesperson on finance. As I am sure he is aware, there are also considerable reputational risks with regard to offshore banking centres.
John Key: Can the Minister confirm for the House that he has just announced, in his answer to the question, the interest rate rise that we assumed the Governor of the Reserve Bank would be announcing tomorrow?
Hon Dr MICHAEL CULLEN: I am following upon all the background from economists, who are all projecting that interest rate tomorrow—[Interruption] All I can say is that if there is not one, I will be very surprised indeed this time.
Paul Adams: Does the Minister accept that, given that 85 percent of businesses in New Zealand are small to medium in size, their worrying rate of failure—as depicted by the fact that only 27.4 percent make it beyond 7 years—is a threat to the economy, and is he willing to commit the Government to reversing this trend?
Hon Dr MICHAEL CULLEN: The member should await a World Bank report that is coming out in the not too distant future that will indicate that this country—without giving the full details—will rank so high in terms of ease of doing business that complaints about compliance costs will look very, very foolish indeed. But it is the nature of small businesses that they often have a relatively short lifespan. That is not peculiar to New Zealand; it is true in almost every developed country in the world that I am aware of.
Rt Hon Winston Peters: Has the Minister received any information at all suggesting that the Governor of the Reserve Bank will put up interest rates; if that is so, how on earth could the governor be complying with this country’s law?
Hon Dr MICHAEL CULLEN: The governor certainly has not told me what his intentions are in terms of the announcement tomorrow. I have had advice from Treasury
that there is 100 percent unanimity amongst bank economists that interest rates are going to rise.
Hon Richard Prebble: As the Minister has been willing to give us his views on the economy and has told us that he is expecting an interest rate, and given that the Australian Finance Minister is quite prepared to publicly indicate prior to a statement by the Reserve Bank whether he considers interest rates should go up, will the Minister advise the House whether he believes an interest rate rise is justified tomorrow; if so, why?
Hon Dr MICHAEL CULLEN: No, there is an enormous difference between Australia and New Zealand in that respect. Apart from anything else, a senior Australian Treasury official sits on the committee that makes the final decision around Australian interest rates. In New Zealand the decision is made by the governor alone.
Peter Brown: If the economy is so strong, can we take it that there will be no need to increase the tax on petrol, as the Government proposes to do later this year?
Hon Dr MICHAEL CULLEN: The increase is due to come into force next year. That is required for increased revenue to be devoted to roading. I note that Standard and Poor’s does give a warning in terms of our fiscal position that it could come under threat from unsustainable spending promises in the run-up to next year’s election.
John Key: Can the Minister clarify whether he has been briefed by the Governor of the Reserve Bank, and whether it is possible that he has made a quite serious breach of the protocol he should be following?
Hon Dr MICHAEL CULLEN: The Governor of the Reserve Bank always briefs the Government in advance of any announcement, but the governor never, in my experience—and I am sure the member could refer to somebody who occasionally flits into this place—actually tells the Government what he is going to do. I am relying, for the first time in my experience, upon a unanimous view of bank economists about not only what will be done, but about what should be done.
Peter Brown: Is the Minister aware of the Allen Consulting Group’s report that advocates Government investment in four roading projects that would return “a total benefit, net of costs, to the New Zealand economy in excess of $1.5 billion annually in 2012”; if he is aware, can we expect him to implement such a report?
Hon Dr MICHAEL CULLEN: A fairly high proportion of the projects that are contained in that report are either done—and if the member reads the report he will notice a rather strange marginal note at one point, which the authors forgot to take out, which notes something has been done—or have already been planned to be done over the next few years.
John Key: What is the point of the Governor of the Reserve Bank announcing a rate increase tomorrow when the Minister of Finance has already told the House 24 hours earlier?
Hon Dr MICHAEL CULLEN: Of course, one could be wrong, but I would be very surprised.
Rt Hon Winston Peters: Will the Deputy Prime Minister admit that there is no difference between the present Government’s and the National Party’s monetary policies, and that there is a belief that if one wants to somehow get on top of consumption and rising house prices, one merely chokes the economy with high interest rates, paid for by provincial New Zealanders?
Hon Dr MICHAEL CULLEN: The policy targets agreement has been revised twice under myself as Minister of Finance. The previous policy targets agreement that was revised was signed by that member.
Gerry Brownlee: I raise a point of order, Mr Speaker. Could you advise me on what would be the best process to ask the Minister of Finance whether he would allow his
Hansard to be made available to the House before the end of question time?
Mr SPEAKER: You can approach him directly.
Sovereign Yachts—Contribution to Economy
RODNEY HIDE (Leader—ACT) to the
Prime Minister: Following her reply yesterday that Mr Lloyd “would not give the information”, has she now been able to find out how many jobs have been created by Sovereign Yachts, and does she stand by her 2001 statement to Parliament that “hundreds more jobs and hundreds of millions of dollars of export earnings” were in prospect through this development?
Rt Hon HELEN CLARK (Prime Minister)
: The company today informed the Ministry of Economic Development that it currently has 75 workers, and that it estimates another 20 to 25 are employed by subcontractors doing Sovereign Yachts work. It repeated its invitation to Mr Hide to visit. As to the second part of the question, while the numbers fall short of the predictions originally made by the Ministry of Economic Development, they still amount to more people in work than if the company had not located there at all. Of course, since this Government came to office, there are 211,000 more jobs in New Zealand than previously.
Rodney Hide: Does she consider it a good deal that Bill Lloyd would get to pick up 10 acres of Auckland real estate right on the waterfront for less than half a million dollars, and in return generate, by her count, only 75 jobs out of the 350 jobs, and in 3 years finish off only one boat and not generate anywhere near the $600 million in export earnings that she promised in her speech?
Rt Hon HELEN CLARK: The member is aware that there was a disposal process that was gone through with the Defence land: to sell it back to the original owners, who then had an arrangement with Mr Lloyd. There may be all sorts of reasons why businesses do not grow as fast as was predicted. What I am confident of is that this Government has a fantastic record of jobs—211,000 more since we came into office.
Katherine Rich: Does she stand by her statement on 4 February 2001 that the Sovereign Yachts development “reflects well on the Government’s commitment to being active in promoting investment, exporting, business, and job growth.”?
Rt Hon HELEN CLARK: Of course, because there are 75 jobs that were not there previously.
Rodney Hide: What is the Prime Minister’s response to Bill Lloyd’s complaint, repeated in today’s
Dominion Post, that the reason the project has not delivered as promised is that the Government has broken its commitment to him and refused to sell him more of the surrounding land for a residential development, as he said he was promised—or does she think Bill Lloyd is not quite what he was cracked up to be?
Rt Hon HELEN CLARK: I do not believe any such promise was ever made to Mr Lloyd.
Sea Lion Deaths—Southern Squid Trawl Fishery
JEANETTE FITZSIMONS (Co-Leader—Green) to the
Minister of Conservation: Does he have any concerns about options proposed by the Ministry of Fisheries to increase the number of rare New Zealand sea lions that are allowed to be killed in the southern squid trawl fishery?
Hon CHRIS CARTER (Minister of Conservation)
: My advice is that the Ministry of Fisheries’ preference is for a fishing-related mortality limit of 115 sea lions in the 2004-05 fishing season. This is less than the 124 sea lion limit established by the Court of Appeal for the previous fishing season. The Ministry of Fisheries states in its initial
position paper that the 598 sea lion limit, developed by one particular model, is inappropriate—a view shared by my department.
Jeanette Fitzsimons: Does the Minister acknowledge that the catch in the last year, to which he refers, is the highest for nearly a decade and was only as high as that because the court overturned the original limit of 62, and why does he think the fishing industry will ever adopt best practice to reduce deaths if the number of permitted mortalities goes up every year?
Hon CHRIS CARTER: I have been dialoguing with the squid fishing industry and I am convinced that it is as committed as the Department of Conservation to see that the by-kill is reduced. We are exploring a population management plan, which is being developed by the department at the moment, which will be released next year.
David Parker: What is the Government’s objective for the future of the New Zealand sea lion?
Hon CHRIS CARTER: The Government’s objective is to see the sea lion removed from the endangered species list. These magnificent animals are unique to New Zealand, and my department is developing, as I said earlier, a population management plan for them, in accordance with the Marine Mammals Protection Act. I am working closely with my good friend the Minister of Fisheries to achieve a sustained reduction in the numbers of marine mammals that are accidentally killed in our fisheries.
Jeanette Fitzsimons: Will the Ministry of Fisheries’ preferred option succeed in restoring sea lions to unthreatened status within 20 years, as he has been required to do since they were gazetted in 1996 as a threatened species under the Marine Mammals Protection Act, and why does he think it is appropriate to leave it to the fishing industry to reduce kill, when it has challenged every decision the Minister of Fisheries has made to try to reduce kill?
Hon CHRIS CARTER: I do not think it is appropriate just to leave it to the fishing industry to manage the conservation measures that are taking place to protect this species. Setting by-kill limits is one of a comprehensive basket of conservation measures we can take to protect this species.
Jeanette Fitzsimons: Has he received any advice from his officials that the use of lights in jigging on squid boats could dramatically reduce sea lion mortality, and will he urge his colleague the Minister of Fisheries to use his powers to regulate, to require those technologies to be used?
Hon CHRIS CARTER: Those technologies are certainly much more marine mammal friendly, but I do understand from my dialogues with the squid fishing industry that the stormy oceans of the southern seas do put at risk certain technologies that can be used safely elsewhere.
Internal Affairs, Department—Grant Investigations
KATHERINE RICH (National) to the
Minister of Internal Affairs: What specific Department of Internal Affairs grants have been investigated in the last 12 months, and what has been the outcome of those investigations?
Hon GEORGE HAWKINS (Minister of Internal Affairs)
: The Department of Internal Affairs administers six separate votes for five separate Ministers. I am advised that over the last year, 19 investigations were undertaken into grants made by the lottery distribution committees. Of these, 10 cases were found to meet requirements, two are in the hands of the police, and seven are still under investigation by the Department of Internal Affairs auditors.
Katherine Rich: Has he received the departmental report, due last month, investigating 32 Auckland groups over a suspected scam to invent community projects
and defraud his taxpayer-funded Community Organisations Grants Scheme of $150,000; if so, what did that report state?
Hon GEORGE HAWKINS: No, I expect that it has been sent to the Hon Rick Barker, as the portfolio for the community and voluntary sector is his.
Steve Chadwick: Has the Minister received any reports on the scale of lottery grants investigations?
Hon GEORGE HAWKINS: The 19 cases being investigated comprise only 0.42 percent of the 4,533 grants made by lotteries distribution committees last year.
Katherine Rich: Is he aware that his department has been conducting an investigation for the last year into “a whole range of fake projects” that have received grants where, according to his own officials, the grant recipients “were just making up projects”; if so, what has he been doing about it?
Hon GEORGE HAWKINS: Obviously these things are being investigated by the Hon Rick Barker, because they fall within his portfolio. I do not know whether the member understands how things work.
Rodney Hide: Would he expect, as a competent and hard-working Minister, to know that his department had a report out uncovering 32 cases of fraud, and the attempt to defraud the Government, particularly when the Opposition knows all about it—and he just sits there with the ministerial limo, the pay, and the perks, and says: “Oh, that’s for Rick Barker to deal with.”?
Hon GEORGE HAWKINS: It is Rick Barker’s to deal with, because he is the Minister in charge.
Mr SPEAKER: A large amount of that question had hypothetical and other comments that were not necessary to the actual sense of the question.
Katherine Rich: Has he read the November 2003 independent report on one of his grant schemes that raises concerns about “the lack of clear and authoritative policies and guidelines within the scheme” and “a lack of clarity in public accountability processes”; and what changes has he made to his grant schemes as a result of that report?
Hon GEORGE HAWKINS: I have made a number of inquiries about those that fall within my portfolio—that is, the Lotteries Commission and the Lottery Grants Board—and, of course, two have been referred to the police.
Gerry Brownlee: I raise a point of order, Mr Speaker. I bring this matter up now, because I think it is relevant to the whole of question time. We have just got out the Schedule of Responsibilities Delegated to Associate Ministers, dated August 2004. This question is set down to the Minister of Internal Affairs and was accepted by the Clerk’s Office as being an appropriate question for the Minister of Internal Affairs. Notwithstanding what Mr Cullen said before, our primary questions are well looked into. The Minister’s answer to the primary question was a range of things about the Lotteries Commission; it had nothing to do with the community grants stuff that was being requested of him. For him simply to say that it is not his problem but that it is the Hon. Rick Barker who is in charge is unacceptable.
When we look at the delegations in the schedule, we see that the only two Ministers who have associate delegations under internal affairs are the Hon Trevor Mallard and the Hon Mark Burton. Where are we to go now? Is a Minister simply able to say: “Well, I don’t know about that. Why don’t you ask X Minister, or so and so?”. Surely we are entitled to expect that the Government will have given the House and the country true information about who is running what portfolio.
Mr SPEAKER: The member made the point twice. He needs to make it only once.
Hon Trevor Mallard: The question was properly accepted by the Clerk’s Office, because the Minister of Internal Affairs does have responsibility for grants by that department. Another Minister has responsibility for the community grants, a subgroup
of this from the department. If members opposite had thought carefully before they lodged their questions and had put them down to the appropriate Minister, they would have received an answer on those particular grants. The fact is that they did not look carefully at what they should have. They did not consider the delegations, and that is quite sad.
Gerry Brownlee: That was a very interesting lecture from Mr Mallard.
Mr SPEAKER: Please come to the point of order.
Gerry Brownlee: The point of order is this: where is the delegation he speaks of, and why is it not lying on the floor of the House so we can all act appropriately? We are being led up the garden path by a Government that does not want to answer questions.
Mr SPEAKER: The last sentence was irrelevant. The member raised a point of order. As far as I am concerned I will have a look at the issue of the delegations. I do not have them in front of me this moment, and those on this schedule may or may not be the most recent ones. I will have a look at the matter and come back to it later.
Katherine Rich: Why was the Minister happy to answer questions about internal affairs grants schemes yesterday but not today, and has he just recently had an explanation of what his portfolio responsibilities are?
Hon GEORGE HAWKINS: The reason I was happy to answer yesterday is that that member did not know what she was on about.
Work and Income New Zealand—Creative Industries Programmes
Hon MARK GOSCHE (Labour—Maungakiekie) to the
Minister for Social Development and Employment: What reports has he received on outcomes of Work and Income programmes assisting clients seeking employment in the creative industries?
Hon STEVE MAHAREY (Minister for Social Development and Employment)
: I have received a report on the Work and Income Pathways to Arts and Cultural Employment programme, or “PACE” as it is known—an employment initiative designed to help job seekers who have skills for employment in creative industries. The programme has now achieved over 2,500 placements into employment. Over 1,000 of these placements occurred in the last 12 months—confirming the ongoing strength and vitality of New Zealand’s creative industries and our healthy general labour market. It also confirms how wrong Opposition members have been when they have consistently condemned this innovative and successful policy.
Hon Mark Gosche: What employment opportunities exist in the creative sector, and how is the Pathways to Arts and Cultural Employment scheme assisting job seekers to take up these opportunities?
Hon STEVE MAHAREY: In 2002 the New Zealand Institute of Economic Research report estimated the economic contribution of the creative industries at 3.1 percent of total GDP and 3.6 percent of total employment, and estimated the jobs growth in the sector at 3.5 percent year on year. The Pathways to Arts and Cultural Employment programme ensures that job seekers are able to take up employment opportunities in the growing creative sector or in general employment. The programme has had significant successes on both measures. It is the kind of programme that the Opposition consistently denies is useful but the rest of the country thinks otherwise.
Question No. 4 to Minister
Mr SPEAKER: Before I move on to question No. 6 I want to say that I have referred to the Clerk and to the Cabinet list, and I should inform members who raised the issue that Rick Barker is the full Minister for the Community and Voluntary Sector.
It is not a delegation at all. He is the full Minister. [Interruption] We all make mistakes and the only person who can interject now is one who never makes one.
Rt Hon Winston Peters: OK.
Mr SPEAKER: That is right! I thought it would be Winston; nevertheless, Winston apart, that applies to everybody else.
Community and Voluntary Sector—Government Assistance
SUE BRADFORD (Green) to the
Minister for the Community and Voluntary Sector: Following a report on the community and voluntary sector showing that “For every one dollar provided to a voluntary agency, between $3 and $5 worth of services are delivered to the community.”, what will he do to further encourage and support that sector?
Hon RICK BARKER (Minister for the Community and Voluntary Sector)
: The community and voluntary sector is greatly valued by this Government. The statement of Government intentions for an improved community-Government relationship signed by the Prime Minister in 2001 clearly sets out the Government’s vision for and commitment to the community and voluntary sector. I am sure the member will be familiar with it. We all recognise that our communities are vastly richer and better off for the work of volunteers.
Sue Bradford: Does the Minister agree that the first step the Government could take to assist the voluntary sector would be to rethink the Charities Bill, which threatens the political autonomy of community groups, will overload them with compliance costs, and will have a chilling effect on the willingness of volunteers to serve on boards; if not, why not?
Hon RICK BARKER: The Charities Bill is the responsibility of the Minister of Commerce, Margaret Wilson, and I draw the member’s attention to a press statement made by Margaret Wilson on 18 August, which states: “I am open to changes in the bill. In light of submissions I have asked officials to work with the select committee to ensure that we get legislation that is workable and does not impose unnecessary costs on charities.”
Sue Bradford: Has the Minister been briefed on the valuable work done by the volunteers of Age Concern in advocating for older New Zealanders, and hence will he listen to and act on Age Concern’s submission on the Charities Bill, which states: “We recommend strongly that the Government does not proceed with this bill.”?
Hon RICK BARKER: The first point I would make to the member is that the bill is not back before the House. The second point I would make is that the Minister has made a commitment—a public commitment—to ensure that the legislation works for charities as well as for the Government.
Jill Pettis: Can the Minister please advise the House what action the Government has taken to date to give effect to the statement of intent with the voluntary sector?
Hon RICK BARKER: Since coming to office this Government has worked closely with the sectors to understand what they need, and to enable them to carry out their work. First, we asked the community to set up a task force to tell us how it wanted to interface with the Government, and at the same time the Government established the Office of the Community and Voluntary Sector. That office takes an across-Government leadership role, and works closely with the sector to develop good relationships between Government departments and non-governmental organisations in the community. I welcome a recent report by the Federation of Voluntary Welfare Organisations. It will take some time to carefully consider the report and its recommendations.
Sue Bradford: Does the Minister agree that one of the valuable services that is performed by the community and voluntary sector is to keep the Government
accountable, and how will it assist organisations to perform that role if, under the Charities Bill, they could be deregistered by the Charities Commission if they engaged in political advocacy?
Hon RICK BARKER: I make the point for the third time that I am not the Minister responsible for the Charities Bill. That is the responsibility of the Minister of Commerce. However, I restate the point I made, as the Minister for the Community and Voluntary Sector, that the Government has a commitment to work with the community and voluntary sector in a mutually respectful way. I am sure the Government will do everything it can to encourage that sector.
Sue Bradford: Is the Minister, nevertheless, aware of a statement made by the Hon Judith Tizard this morning that: “An organisation whose stated purposes include the attainment of a political purpose cannot be a charity.”, and does he not agree that such a statement flies in the face of the capacity of any community group with political goals to register as a charity?
Hon RICK BARKER: No, I was not aware of that until the member read it out, but I am pleased to be able to tell the House that, as an aside to me, the Minister concerned said that she did not say that.
Hon Richard Prebble: Could the Minister clarify the answers that he has just given to the Green MP? Is the House to take it that he does accept the Green Party notion that for every $1 given to the voluntary sector, the community receives $5; if he does, why not give the voluntary sector the whole of the country’s tax revenue, so we can all sit back and be wealthier than the Swiss—or is there something wrong with the Green Party’s Social Credit notions?
Mr SPEAKER: The Minister is not responsible for the Green Party. He can, however, address the question in so far as it affects his portfolio.
Hon RICK BARKER: The figures that the member for the Green Party refers to came out of a briefing—a brief introduction to a report that is under way on the value added by voluntary agencies. The full report will come out on Friday. The second point that I would make is that one of the agreements that the Government has with the voluntary sector is that volunteering is not to be used to replace full-time jobs. So the member’s contention is completely wrong.
Hon Richard Prebble: I raise a point of order, Mr Speaker. This is actually the question that we had this morning. That answer does not address the question. I am well aware of where that statement came from. What I actually asked the Minister was whether he believed that the Social Credit notion that giving $1 to the voluntary sector results in benefits of $5, and if so, why we did not implement it.
Hon RICK BARKER: The member is wrong when he says it is a Social Credit notion; he is completely wrong on that. Secondly, I will wait for the full report to make my own judgment about his contention.
Sue Bradford: I seek leave of the House to table a speech given by the Hon Judith Tizard to the Federation of Voluntary Welfare Organisations in Wellington this morning.
Mr SPEAKER: Leave is sought for that purpose. Is there any objection? There is objection.
Literacy and Numeracy—Initiatives
MARK PECK (Labour—Invercargill) to the
Minister of Education: What reports has he received on the success of the Government’s initiatives in the areas of literacy and numeracy?
Hon TREVOR MALLARD (Minister of Education)
: I have seen a report that indicates that United States’ literacy levels are higher than New Zealand’s, when in fact
Programme for International Student Assessment results show that our 15-year-olds are third in the OECD for literacy and the US is in 16th position. I have also seen a report that concedes that previous Governments did not do enough to address literacy and numeracy issues, and that, after 20 years of arguing, this Government has finally got things on the right track. I welcome that endorsement from Bill English of our work to lift education standards; it contrasts with the comments made by Don Brash running down the New Zealand education system.
Mark Peck: What steps is the Minister taking to ensure that all our students develop essential literacy and numeracy skills?
Hon TREVOR MALLARD: As part of the National Certificate of Educational Achievement, all students are now required to meet basic literacy and numeracy standards. For the first time, we have level 2 literacy requirements for entrance to university. We have raised the standard of education so that all students can develop the skills needed for a modern workforce. However, literacy and numeracy do appear to be a problem for some. For example, I have found no evidence to support the claim that 25 percent of our school leavers are illiterate. I am glad to see that Bill English does not agree with that. It would be good if Don Brash used one of his occasional visits to the House to stop running down New Zealand.
Mr SPEAKER: The last part of the last sentence is not in order.
Simon Power: Is the Minister satisfied with the prioritisation of education spending, when literacy and numeracy projects play second fiddle to pet projects of his Associate Minister whose successful Budget bid for a new polytechnic slush fund was slammed by Treasury, which said it had “no clear funding needs or benefits”, would “create risks of double-dipping”, and would be “low value for money”; if so, why?
Hon TREVOR MALLARD: While I am Associate Minister of Finance, and am always very careful to be respectful of the comments of Treasury, I think that if the member looked at the money that went into the polytech capitalisation fund and into literacy, he would see that an enormous amount more goes into literacy than into the polytech fund. I do not agree with that member, or with Bill English, who say that our schools are awash with cash. It is just not true. [Interruption]
Gerry Brownlee: They’re all losing it.
Mr SPEAKER: And the member is about to lose his place in this House.
Murray Smith: Does the Minister accept the comments made by Kevin Bryant, Chief Executive of the Agriculture Industry Training Organisation, who told a recent principals’ conference that the school system had failed them because of Government underfunding; and in the light of Mr Bryant’s justification of those comments, is he prepared to give priority to the literacy and numeracy needs of secondary and tertiary students, given that the Government’s own research shows that 20 percent of agriculture trainees have major literacy problems, and 25 percent have significant difficulties with numeracy?
Hon TREVOR MALLARD: I think the member has an important point—that is, historically, there have been problems in the literacy area. This Government has put an enormous amount of funding into, mainly, the primary education system but also, more recently, secondary literacy work. I know that my colleague the Associate Minister who looks after tertiary education is doing a lot of work on foundation courses in order to ensure that people who are in industry training and in our polytechnic system get the literacy work that is necessary. However, for some people, especially Don Brash, it is just too late.
Murray Smith: I seek leave to table an article dated 4 September and headed “Underfunding blamed for failure of school system”.
Mr SPEAKER: Leave is sought to table it. Is there any objection? There is objection.
Question No. 1 to Minister
GERRY BROWNLEE (Deputy Leader—National)
: I raise a point of order, Mr Speaker. In respect to the questions that were raised about the actual wording used by the Minister of Finance in answer to question No. 1, we now have a transcript taken from the Sky broadcast tape. In fact, the Minister did say: “The National Business Review Outlook observes good news in the economy seems to be everywhere. And although the Reserve Bank raised interest rates today, it did so because growth is so strong.” In our view, that is quite a breach of the confidentiality that should surround that announcement. We were wondering at what point the Minister might make a ministerial statement. I would suggest that a point of order in a speech that might follow is an inappropriate way to deal with this serious mishap.
Hon Dr MICHAEL CULLEN (Minister of Finance)
: I certainly do not need to make a ministerial statement. I regret the fact I appear to have misread my own notes. If I can read my handwritten version—it is not easy to read my handwriting—it states: “The Reserve Bank has raised interest rates and has done so because growth is so strong.” That is factually correct. The Reserve Bank has raised interest rates on a number of occasions this year because growth is so strong. [Interruption] Wait, little man, wait! Goodness me! The member should quit while he is ahead—OK? He should just calm down. The word “today” was inadvertently used by myself. I certainly regret the fact if I might have caused the Governor of the Reserve Bank—[Interruption] There was no announcement about interest rates today. No announcement is made until tomorrow.
Mr SPEAKER: There is no point of order involved.
Prisoners on Remand—Police Supervision
Hon TONY RYALL (National—Bay of Plenty) to the
Minister of Police: What assurances can he give that the personal safety of police officers will not be jeopardised as inmate overcrowding worsens, and when does he expect this situation to end in light of the warning from a senior police officer that: “The more we have to put in there the more it turns into a powder keg.”?
Hon GEORGE HAWKINS (Minister of Police)
: The personal safety of police officers is always a high priority. The police are trained to protect themselves and the public. I am advised that around 120,000 people are held in police custody annually. The police are working on a daily basis with Department of Corrections staff to manage prisoner levels.
Hon Tony Ryall: Can the Minister confirm that yesterday in the overcrowded cells of the Manukau District Court, remand prisoners near-rioted, smashing their cells, and that it took the intervention of police officers to restore order; and could that risk to the safety of our police officers be another reason why the Prime Minister will not reassure him of his ministerial warrant?
Mr SPEAKER: No, the first question can be answered.
Hon GEORGE HAWKINS: I am not aware of the information the member has, but I will immediately get an answer for him.
Martin Gallagher: Could the Minister explain to the House again some of the reasons that inmate numbers have risen in this country?
Hon GEORGE HAWKINS: The police are doing a magnificent job of catching criminals. Police resolution rates are the highest they have been in 20 years. As well, the
Government has toughened up the sentencing, parole, and bail laws, which means more criminals are being locked up.
Marc Alexander: Has the Minister received any assurances from the Minister of Justice that the safety of police officers will not be jeopardised further by the passage of the Parole (Extended Supervision) Amendment Bill, the Films, Videos, and Publications Classification Amendment Bill, and the Crimes Amendment Bill (No 2), given that all those measures increase custodial sentences and raise the possibility of an even bigger increase in the number of remand and sentenced prisoners being detained in police cells?
Hon GEORGE HAWKINS: I have talked with the Minister of Justice and the Minister of Corrections over the present problem. I have not discussed whether any of those bills will add to the problem, because we think the problem is short term.
Dr Muriel Newman: Why is it that as at 31 July 2004, the Government’s DNA testing agency had not analysed police samples for 21 alleged homicide cases, including two that had been waiting for analysis for over 9 months; and is that delay in investigating those 21 murder-case samples linked in any way at all to the fact that the police know that even if they were to get convictions there may not be any police cells available for the offenders?
Mr SPEAKER: Right at the end of that question the member became relevant. The first part of the question was very, very wide; it was really another question.
Hon GEORGE HAWKINS: I am pleased to tell the House that this Government has put in a lot more money, so we can do DNA tests and palm-print tests—which means that we have found another four rapists whom we would not have found before.
Hon Tony Ryall: In light of the Minister’s answer to a previous supplementary question, has he seen the Ministry of Justice report that indicates that one of the major causes of the current muster crisis is the length of time it is taking to get criminal cases through the clogged courts system; and does he think he is being blamed for the mismanagement of the Minister for Courts?
Hon GEORGE HAWKINS: That report is being looked after by the Hon Rick Barker, who is right on top of it, as Government Ministers work together to make sure that this crisis is fixed.
Mr SPEAKER: I call Stephen Franks. [Interruption] Mr Franks had not started his question, so I will ignore the interjection, but it does lead to riposte.
Stephen Franks: Has the Minister inquired to find out exactly when each of the three new prisons in Northland, Auckland, and south Auckland will open—which, in 1999, were planned to open last year—so that every police officer now tending prisoners can get back to policing; and if he has not asked his seat mate that, why not?
Hon GEORGE HAWKINS: Yes. Even when this crisis is over, there are police officers who will work at guarding prisoners. It is part of police work. However, I must say that I was surprised to read in the
Waikato Times of 18 July that the National Party was telling people to protest against the building of prisons, using
wāhi tapu as a powerful reason for that. Amongst the MPs who were at that meeting were Dr Paul Hutchison, Shane Ardern, and Richard Worth. They do not want prisons in their areas.
Hon Tony Ryall: What responsibility will the Minister take if a police officer is seriously assaulted by a remand prisoner, considering the Manukau District Court cell-trashing, the recent attack on a west Auckland policewoman by a remand inmate, and the potentially tragic placement of an at-risk remand prisoner with dangerous criminals in a police cell; or does the Minister think that in a few weeks this crisis will be someone else’s problem?
Hon GEORGE HAWKINS: The Government is always concerned when criminals attack police. Whether it occurs in a cell or out on the street, we are concerned about
that. We put money in for training, and the commissioner makes sure that safety is a major consideration in all police work. I seek leave to table the news report in the
Waikato Times dated 18 July 2001.
Mr SPEAKER: Leave is sought to table that. Is there any objection? There is.
Hon Dr Nick Smith: I seek leave to table an article in the
Manukau Courier in which George Hawkins, as the local member, objected to prisons in his community.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is.
Trade Negotiations—Jakarta Meeting
LUAMANUVAO WINNIE LABAN (Labour—Mana) to the
Minister for Trade Negotiations: What progress was made in trade negotiations from last weekend’s meeting in Jakarta?
Hon JIM SUTTON (Minister for Trade Negotiations)
: Significant progress has been made. ASEAN Ministers, along with their Australian and New Zealand counterparts, have endorsed a recommendation that their leaders begin negotiations on a trade agreement linking ASEAN and CER. In addition, Malaysia and New Zealand have agreed to begin studies to explore whether to have a bilateral trade agreement.
Luamanuvao Winnie Laban: Are these negotiations consistent with New Zealand’s policy of supporting a comprehensive World Trade Organization arrangement?
Hon JIM SUTTON: Certainly. The Government’s top trade priority is the World Trade Organization’s Doha development agenda. However, we are also working on plan B—a network of comprehensive regional, plurilateral, and bilateral trade agreements to ensure that our exporters have the market access they need for New Zealand as a whole to prosper.
Rod Donald: Does the Minister agree that trade sanctions played a vital role in defeating apartheid in South Africa; if so, why does his Government want to give priority to negotiating a preferential trade deal with Burma—a country ruled by an oppressive, undemocratic regime, which, according to Amnesty International, frequently violates the human rights of ethnic minorities, has locked up over 1,300 political prisoners, and exploits forced labour?
Hon JIM SUTTON: I will answer the first question first. I believe that the sporting boycott of the Springboks, which I regret to say was not supported by all members of this House, had more effect on the South African authorities at the time. In answer to the second question, active engagement between nations and peoples encourages peaceful development, democracy, and human rights. By refusing to trade with people we only thrust them into deeper poverty.
Hon Peter Dunne: Can the Minister explain why, following the decision of the ASEAN States to seek a trade agreement with Australia and New Zealand and to complete those negotiations within 3 years, and the concurrent decision of the ASEAN States at the weekend to conclude a free-trade agreement with China by 2010, New Zealand now needs separately to conclude a free-trade agreement with China?
Hon JIM SUTTON: The rules of origin, which are a feature of every bilateral and plurilateral trade agreement, would mean that we cannot simply take advantage of other countries’ bilateral agreements with third parties, and thereby escape the need to negotiate trade agreements of our own.
Foreshore and Seabed Bill—Treaty Claims, Waikato River / West Coast Harbours
GERRY BROWNLEE (Deputy Leader—National) to the
Māori Affairs: Can he confirm his reported statement that Tainui concerns about whether the Foreshore and Seabed Bill cuts across claims over the Waikato River and west coast
harbours will have to be worked through as it goes through the House; if so, what action has he taken so far to work through
Hon PAREKURA HOROMIA (Minister of
: I can confirm that Tainui has raised the issue of whether their claim over the Waikato River and west coast harbours will be affected by the foreshore and seabed legislation that is currently progressing through the select committee process. I can confirm that the Crown has met with Tainui representatives on several occasions this year, as it has done with other iwi. Assurances were given at these meetings that the foreshore and seabed legislation does not pre-empt any future treaty settlements and negotiations.
Gerry Brownlee: If, as his colleague the Hon John Tamihere stated yesterday, the Minister is part of an “open, robust, and transparent Government”, then why will he not reveal the Government’s intention to negotiate with iwi over the foreshore and seabed, rather than striking backroom deals to grant them ownership interests while telling the public that the Crown will own the foreshore and seabed?
Hon PAREKURA HOROMIA: This Government is very transparent and we are not doing any backroom deals.
Moana Mackey: How does the foreshore and seabed legislation impact on
Tainui’s historical claims?
Hon PAREKURA HOROMIA:
Tainui’s historical claims are not affected by the proposed foreshore and seabed legislation. The legislation provides for a forward-looking regime for the recognition of existing or surviving customary rights and interests. It also addresses any potential effects on existing customary rights and interests resulting from the vesting of full title in the Crown.
Gerry Brownlee: Will the negotiations that he and his fellow Ministers are having with Tainui now result in seabed and foreshore partial ownership being accorded to Tainui?
Hon PAREKURA HOROMIA: As the member will be aware, the Waikato Raupatu Claims Settlement Act 1995 provided for settlement of Waikato
Tainui’s raupatu claims. Their claims to the Waikato River and west coast harbours remain unsettled and we are working on it. That member’s party did all the easy bits; we are doing the tough bits.
Gerry Brownlee: Will the negotiations that the Minister and his fellow Ministers are having with Tainui result in some of the seabed and foreshore of this country passing into some form of ownership for Tainui?
Hon PAREKURA HOROMIA: That matter is the subject of ongoing discussions and it will be resolved when we resolve it.
Hon Dr Michael Cullen: Is the Minister aware of any treaty settlements that have involved the transfer of ownership of the foreshore and seabed to iwi?
Hon PAREKURA HOROMIA: No.
Gerry Brownlee: I raise a point of order, Mr Speaker. I thought that this Minister might be on top of his portfolio, but if he likes to look at the arrangements around Te Waihora in the South Island—
Mr SPEAKER: I declare that a vexatious point of order. It was unnecessary and was made just to make a political point. That was not a point of order and the member knows it.
Police—Offence Report, Auckland
Rt Hon WINSTON PETERS (Leader—NZ First) to the
Minister of Police: With regard to the Prime Minister’s comments in the House yesterday, at what level was the decision made not to prosecute Phillip Layton Edwards for the aggravated
burglary at 8 Rocky Nook Avenue, Auckland, on 12 September 2002, and why was the decision made at that level?
Hon GEORGE HAWKINS (Minister of Police)
: It is not my practice to get involved in specific police investigations. However, given inferences that some have tried to draw from this situation, I have decided, because of public case in this case, to advise the rank of the police officer concerned. Police have advised me that the decision not to prosecute was made by a detective senior sergeant because he was the officer in charge of the investigation, in accordance with police procedure.
Rt Hon Winston Peters: Who is that person—that is, what is his name and in what office does he reside?
Hon GEORGE HAWKINS: Giving out the names of police officers doing their work is something that I do not want to do, because it could damage the safety of the individual or lead to unwarranted political pressure on the police not to do their job without fear or favour.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Yesterday the Prime Minister said that if such a question was put down in writing, it would get an answer. Today we are back to the behaviour of last week and every question until the Prime Minister gave that assurance. The Minister began by saying that he would break from what he has established as his own convention—which is not to be found anywhere else under any previous police Ministers—and give out the detective’s rank. The fact is that a number of the officials engaged in this investigation have spoken and are already known. We are entitled to know this person’s name, and to know what office he operated in at that time. How long do we have to go on in this House putting up with this sort of obfuscation, when the Minister knows that he has had weeks to get ready for this answer, and the Prime Minister promised this House that we would get an answer?
Hon Dr Michael Cullen: I think this is a classic example of the operation of Standing Order 370. The Minister is perfectly entitled to decline to give the name in the matter of the public interest—that is, to protect the police officer, because police officers should be protected from inappropriate pressure that might arise by naming them in connection with certain events.
Mr SPEAKER: The Minister has given his answer. It is over to him how he does so.
Rt Hon Winston Peters: Can I ask the Minister what office the decision maker operated in when the decision was made?
Hon GEORGE HAWKINS: I think that giving those details is not usually very helpful to the safety of police officers, and it adds to the political pressure that can go on to police. It is very easy to find out who the detective senior sergeant is, because there are not very many of them at individual stations. In fact, some stations do not have them.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I do not know whether you are aware of it, but in our law, one may not challenge a police officer’s decision to prosecute. Three years ago there was a famous case in the UK in which the decision not to prosecute was challenged successfully. It was ground-breaking law, and it would apply in this case, as well. There was no case; there was a decision not to prosecute, and no one in this case needs to be protected by Parliament other than anyone who happens to be an innocent victim. So I think I am entitled to know what office made this decision. If I am not entitled to know that, then the public is being shut out and shut down by a cover-up, and this House cannot tolerate that. So I ask again for the Minister to advise this House what office made that decision.
Hon Dr Michael Cullen: The Minister answered that question in the primary answer. He stated that it was the detective senior sergeant who was the officer in charge of the investigation. That is a complete answer to the question.
Rt Hon Winston Peters: No, it is not. Point of order!
Mr SPEAKER: No, I will rule on this. The Minister has given an answer, and he is entitled to do so in the way that he did it, and I judge that he did address the question.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Mr Cullen’s point of order is totally erroneous.
Mr SPEAKER: It was not the member’s point of order. He was speaking to your one.
Rt Hon Winston Peters: So you are telling me that I am not entitled to an answer now.
Mr SPEAKER: I have given the answer. The answer is that the Minister gave an answer, and that is satisfactory as far as I am concerned.
Rt Hon Winston Peters: My point of order is simply this. What we are seeing here is now collusion in a cover-up. Yesterday that Minister was admonished by his own Prime Minister to the extent that she said: “If that question is put down in writing, then the member will get an answer.” Today, 24 hours on, we are being told the reverse. This House—and any self-respecting democracy—is able to hold any other Minister of the Crown to account. Now we are being shut down completely by a Minister who began by saying it is not his practice, but that he would answer the question, and who then gave out a snippet of information and denies this possible fact: if the decision making was shifted to another person of equal rank in some other office, then that is relevant to this case. I want to know what the answer is. That is my point of order.
Mr SPEAKER: The point of order was that the Prime Minister said that the question could be put down. It was put down. The Minister gave an answer, and he is entitled to give that answer.
Rt Hon Winston Peters: Why was it not made known to the jury in the
McNee case that Edwards was not a stranger to
McNee, but had known him for at least 3 years—a failure that obviously led the jury to reduce the verdict from murder to manslaughter—which elicited the comment last night from Bill Hodge, a criminal law specialist at Auckland University, that: “The jury must have started with the presumption that Edwards and
McNee were strangers and it was a one-off, and if the defence were aware of the missing evidence, they would have no choice but to go to murder.”; why was that information not known and made known to the jury?
Mr SPEAKER: The question is out of order, because this matter is still sub judice. I have taken advice on this, and that is the opinion I have been given.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The trial is over. It now awaits the matter of the sentence. I am asking about information that was not given to the jury. It is not sub judice, because the conviction has already been entered by the jury. The decision went against Mr Edwards. What could possibly be brought to bear now on the jury’s mind, as the jury is no longer hearing this case?
Hon Dr Michael Cullen: Even if that point were correct, I suggest that the question is out of order on another ground. The Minister of Police is not responsible for the evidence presented to a court by Crown counsel. Whether that matter was adduced in evidence is a matter for Crown counsel. It is also my understanding that the evidence probably would have been inadmissible, in any case. It is not a matter for the Minister of Police to determine whether Crown counsel presents evidence in a quite separate case.
Mr SPEAKER: Irrespective of that, I refer the member to Standing Order 112(2), which is quite specific. It states that the sub judice rule ceases to have effect when the verdict and sentence are given.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Notwithstanding the Standing Order, I know—as will the Clerk of the House know—that the sub judice rule
is to protect any possible bearing on evidence before the court. The case is over, so how can you assert the sub judice rule, given that there is no longer any trial?
Mr SPEAKER: Because I follow the Standing Orders. If the member reads Standing Order 112(2), he will see that I am bound to follow it. It states that the sub judice rule ceases when the verdict and sentence are given. That is the end of the matter. Supplementary question, Rt Hon Winston Peters.
Smith:I raise a point of order, Mr Speaker. There is a supplementary question that United Future has been trying to ask for some time—
Mr SPEAKER: I beg your pardon, I do acknowledge that. I will allow Mr Peters to continue as he has started his question. The member will get the next one. I am sorry about that.
Rt Hon Winston Peters: Why did the police not make it known to the prosecutor that Edwards’ claim of not knowing Mr
McNee was false, and that they had been seen together frequently before the night of the killing?
Hon Dr Michael Cullen: I raise a point of order, Mr Speaker. That is the same point again. I do not see what responsibility the Minister of Police has for evidence adduced by Crown counsel during a trial.
Rt Hon Winston Peters: It is patently obvious that the prosecutor will rely on the evidence given to him by the police. If the police do not give it to him, and he knows nothing about it, then he will not elicit it in a court of law. That is so absurdly obvious that I cannot believe anybody would rise to make a point of order. I am asking why a critical piece of information that went to the core of whether it should be a murder conviction or a manslaughter conviction was denied to the prosecutor.
Hon Dr Michael Cullen: That is not actually the question the member previously asked. His question was why was evidence not presented to the jury. The question of why it was not presented to the prosecutor is quite a different issue. I invite the member to present evidence that that information was not made available to the prosecutor.
Rt Hon Winston Peters: If we look at the
Hansard, we will see that the last comment I made to distinguish the point of order sought to be made by Dr Cullen was that the police had not made that information known to the prosecutor. That is the responsibility of the Minister of Police. Now I am being asked by the Deputy Prime Minister to provide the evidence to the House, when the person who holds the warrant and the portfolio responsibility for that is the very person who for weeks has been obfuscating on this issue. On this day—about the 12th day of parliamentary questions on this issue—the Minister has decided that the issue is all sub judice. Why was that not raised from day one?
Mr SPEAKER: I say to the member that he is still referring to a case that is pending adjudication, and he should see Standing Order 112(2).
Marc Alexander: Can the Minister give a categoric assurance to the House that the decision that was made not to prosecute Phillip Layton Edwards for the aggravated burglary at 8 Rocky Nook Avenue was not subject to interference from himself or from any of his ministerial colleagues; if not, then which Minister was it?
Hon GEORGE HAWKINS: Yes, I can give that assurance.
Rt Hon Winston Peters: Who gave the assurance to Edwards that his name and the events surrounding this case would never come out in public; who in the police force gave that assurance to Edwards, who had 50 convictions already at the time the assurance was given to him?
Hon GEORGE HAWKINS: I do not read police files. I think it is very wise that Ministers of Police leave the police to get on with the job, instead of trying to do it themselves.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. No one has asked this Minister of Police to get involved in a decision to prosecute or otherwise. I am merely asking this Minister what happened. What is the truth? What went on? For him to give the sort of answer that he did the other day—for which he is giving a different version now—that he does not have the information and does not want the information, shows contempt for this Parliament. He should not be allowed to get away with it, particularly since someone innocent died.
Mr SPEAKER: All I can say is that the member has not raised a valid point of order.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I want to make it very clear to you that I know of no Western democracy where a Minister could get away with this, and be protected and shielded by rulings from the Speaker, in the way that I have witnessed these last few weeks.
Mr SPEAKER: The member is accusing me of bias in this way—
Rt Hon Winston Peters: No, I am not. I am making a comparison—
Mr SPEAKER: Please sit down when I am on my feet. Do not interject when I am on my feet or you will leave straight away. I say to the member that I have been very tolerant and lenient, but he is asking questions to which the Minister has given his answer. The Minister was entitled to give that answer. That is where the matter rests. As I said before, I am not here as a quizmaster to adjudicate.
Rt Hon Winston Peters: No, Mr Speaker, you are here to ensure that, when questions are properly put, this Government, and this Minister in particular, are held to account. If you are not prepared to have someone make a comparison with other Western democracies, then, in my view, you are totally outreaching your authority in this House. I am entitled to make a comparison. I am entitled—
Mr SPEAKER: I have had quite enough. The member will sit down. I will not reply to that. That was a direct challenge to me and I will not have it. The member knows that he is out of order, and he should desist immediately.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker.
Mr SPEAKER: This had better be a new point of order.
Rt Hon Winston Peters: It is a new point of order. I do not know that I am out of order, at all. I say to you that there is no Western democracy where a Minister would get away with this. If you know in which democracy a Minister would get away with it, please tell us. This has come to a disgraceful level. A Minister is involved in a cover-up whereby someone was murdered and the jury never heard the evidence that would have brought that murder conviction. Please tell me where else in the Western World I would witness this.
Mr SPEAKER: I do not have to do that at all. I have made my statement. The member is grossly disorderly. If there are any more comments from him today, I will name him.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. If I hear that threat one more time, it is my intention to leave this House and come back with a motion of no confidence, which I am entitled to put. If any members on this side of the House cannot see the point I am trying to make, then woe be to them.
Mr SPEAKER: All I can say is that the member has now made that comment. He is entitled to do what he likes as far as notices of motion are concerned. I am also entitled to name the member. I name the member and ask that he be suspended.
- Question time interrupted.
International Treaty Examination
Consideration of Report of Health Committee
Agreement between the Government of New Zealand and the Government of Australia for the establishment of a Joint Scheme for the Regulation of Therapeutic Products
STEVE CHADWICK (Labour—Rotorua)
: I move,
That the House take note of the report of the Health Committee on the international treaty examination of the Agreement between the Government of New Zealand and the Government of Australia for the establishment of a Joint Scheme for the Regulation of Therapeutic Products. I think it is valuable to give a bit of background to this, and remind members in the House tonight that this is simply the report back on the treaty. It is not a report back on
the inquiry, and it certainly is not a report back on the implementing legislation, which is still to be tabled in this House. So it is in a rather peculiar position that we are debating tonight, because there is not a lot to debate. We do not have the implementing legislation, where the rigour of the recommendations of the select committee inquiry report, of which there were 34 recommendations, and the discussions between the New Zealand and Australian Governments—through both the therapeutic goods agency and
Medsafe—are now progressing on developing the rules and orders.
But I go back to 2000, when the joint agency was proposed by Ministers of the Crown, which then enabled the New Zealand Government to decide that it was not proceeding with the New Zealand Healthcare and Therapeutic Bill. With the development of talks about a new agency, the need for a New Zealand - only bill to look at regulating complementary medicines became redundant.
After this, a discussion document was put out by
Medsafe, for the Ministry of Health, and I have to say that in that time, from just a discussion document on the joint agency, much misinformation, many fears, and many concerns of those in the complementary health-care medicine sector were stirred up. We would go into places around the country and find people wearing black armbands, saying: “We don’t want this agency.”, but they did not know why. They did not know that the proposal was for an entirely new construct of an agency; not an agency based on the model of Food Standards Australia New Zealand, which is another agency that regulates food safety between Australia and New Zealand. This was an entirely new approach.
They did not understand that at all, but they were told by some in the House to vote against it. They did not understand it, and they were told to vote against it because it was going to restrict their choice to complementary medicines—which was not something that had even been considered. They were told that if they went into a health-care shop, they would pay substantially more for their complementary medicines, which the community believes it has the right to take at its own risk, and we would not argue with that.
So this was just a discussion document, but it did stir the industry up, and it stirred up the Opposition to demand an inquiry, which I think was quite valuable. We held the inquiry in 2002, and it was held at the same time as the process between the two Ministers was continuing. Many on the committee did not understand and felt that because an inquiry had been called for by the Health Committee, the Ministers of both countries should stop the work they were doing on a proposed joint agency. That was patently absurd. No moratorium was ever declared on that work in progress with both ministries.
The treaty examined by the select committee was another interesting bite at the cherry, and another opportunity for those who were opposed to the agency to stir the public up again and come in with the same rhetoric, fears, and prejudices about what was proposed. The treaty covered only the establishment of this unique and innovative arrangement for a new agency. It covered only the structure of the establishment of the agency with a ministerial council, with the Minister of Health of New Zealand and the Federal Minister for Health of Australia on equal footing for establishing the rules and the standards in delegated legislation. We did get—and I think this was very valuable—some sound advice from the Regulations Review Committee, which is forever the watchdog of the development of legislation. Its advice and recommendations will be really valuable in the drafting of any implementing legislation.
The board of the new agency, of which there are five members, will be the operating arm of the agency. It will be led by a managing director with powers consistent with those of a chief executive officer of any State-owned enterprise in New Zealand. They are not unbridled powers. We heard that term all the time—that this managing director
will have unbridled powers. The powers are actually commensurate with those of a chief executive officer.
The agency will have accountability to both countries. The treaty is not the instrument to provide that clarity. During the select committee review process of the treaty, it was frustrating that members who still do not understand the construct of this new agency tried to find the clarity in the treaty. Treaties do not set up the powers and the orders; they are merely the instruments to set up the enabling structure for the powers and orders to be written, and they are only now being written.
We did get advice from the Regulations Review Committee about delegated legislation, and that was something about which we all felt very keenly, and Mr Richard Worth will be very pleased we did. We had very good advice from Debbie Angus and from the Regulations Review Committee that our delegated legislation would need to comply with New Zealand principles.
There was opposition yet again to this model, and it was felt that the matters that were proposed should be covered by rules and should be in primary legislation. What the members who proposed this do not understand, though, is that they do not know how those matters will fit into the implementing legislation. There was a fear that the back-pocket legislation had already been drafted and would be slam-dunked on to the table.
The Regulations Review Committee also highlighted for us that there are different approaches between Australia and New Zealand on the disallowance procedures, and that we had to be aware of those while drafting the legislation. We did not agree with the Regulations Review Committee that rules and orders should be amended by the House. They should be agreed to by both Governments.
A lot of fear was whipped up that we could have less representation, and therefore we would lose our sovereignty. I cannot imagine a Minister of Health—now or in the future—ever signing away the sovereignty of our New Zealand way in a new agency.
We were also concerned about compliance costs. Again everybody who was opposed to this came up with the rhetoric that it would cost more and, yes, for complementary medicines, we did hear that costs of $3.1 million will be transferred to the industry, but nobody who came before us said that we did not need regulation in this field. The main driver of the agency is to protect community safety, and there are risks with those products.
It was amazing to hear the fearmongering on this from the Opposition, in particular from the Greens. I hope they feel happy when they see the implementing legislation, because we are proceeding with this, and it will require the amendment or the revocation of the Medicines Act of 1981, and amendment to the medicines and dietary supplement regulations.
In conclusion, it is sad to see that the bulk of responses came from consumers, health practitioners, and industry players from the complementary medicines sector, who did not appear to be commenting on the proposals in the discussion paper or the treaty, but were reacting to the misinformation being circulated during the consultation period. They claimed there were no risks from, and therefore no need to regulate, complementary medicines. They were fearful of increasing prices and decreasing product choice, and they objected to decisions being made by an Australian bureaucrat about which products they could access.
I am now confident that with the treaty in place, and with the Minister’s oversight and leadership on the development of this unique agency, all those fears will be dispelled.
Dr PAUL HUTCHISON (National—Port Waikato)
: The National Party has for a long time supported closer economic relations with Australia, and for a long time we
have supported encouraging our businesses to enjoy a larger market. In fact, this very afternoon I was with the Hon Hugh Templeton, one of the originators of Closer Economic Relations, who has been a great enthusiast for Australia and New Zealand developing an environment where each other’s businesses can make the most of a larger market. But when we look at the international treaty examination of the agreement between the Government of New Zealand and the Government of Australia for the establishment of a joint scheme for the regulation of therapeutic products, we see a Labour Government that simply has not listened to its own Health Committee or even its own members of the Health Committee, let alone the large number of submitters who are deeply concerned about the compliance costs potentially placed on New Zealand businesses, particularly small and medium-sized businesses, which make up the backbone of our economy. This is very much the hallmark of an arrogant Labour Government that has simply stopped listening. We have had two reports. One was from the select committee, advocating that the Government not go ahead with it. Yet, despite that, it has signed a treaty. It has consistently not listened.
It is worthwhile going through the various aspects of the Health Committee’s report, and the history, indeed, is important. Both
Medsafe and Therapeutic Goods Administration in Australia released a joint discussion paper in 2002, which attracted more than 1,600 responses from various firms and New Zealand businesses. What happened? We learnt that the select committee’s main finding was that the proposal to regulate complementary health-care products jointly with Australia should not proceed. So what did the Government do? It went ahead and signed the treaty. It did not listen to the 1,600 submissions. The report goes on to state: “This option was not supported by the Government in its response to our report. Many of our concerns remain unresolved. … Some of us are concerned that the Government signed the agreement with Australia before we had even tabled the report on our inquiry into how best to regulate dietary supplements.” Well, if ever there were an example of a Government that after 5 long years has simply become arrogant and has simply stopped listening, it must be this Labour Government. It is time it went. It has a maximum of only 12 months. If ever there were a Government that stopped listening, it has to be this Labour Government.
Let us have a look at the scope of the joint agency itself, because it includes medicines, medical devices, and complementary health-care products. Also, in May this year, it was announced that the joint agency would also regulate blood, blood products, and blood components. I personally have no problem with that at all, but I do have great concerns when I see Pharmac in its submission noting considerable worries about the joint agency proposal, including possible increases in the costs of generic drugs, particularly for small-market products, and possible increases in patent terms of medicines. In its written submission, it suggested that the flow-on effect of the free-trade agreement between Australia and the United States of America could amount to between $85 million and $135 million over 3 years. That has to be a very serious submission. It does make one worry greatly when the Government has gone ahead, signed the treaty, and said: “Don’t worry. Trust us. We’ll bring out the legislation.”, and when Pharmac, an organisation that has served New Zealand very well, is bringing up some very serious concerns.
The committee went on and said that Pharmac noted that the increase to the estimated cost in fees and charges incurred by the New Zealand industry would be $20 million. Of the total, we also note that the national interest analysis refers to costs borne by the Crown under New Zealand’s regulatory regime. Of the total $4.2 million currently funded from the Crown revenue, $1.1 million would remain as an ongoing cost to the Crown, but the remaining $3.1 million would, under full cost recovery—the mechanism preferred—transfer to industry as part of the estimated $20 million.
I think it is relevant to look back at that initial report of the committee that inquired into the proposal to establish the trans-Tasman agency in the beginning. It reported back in December 2003. What did it say about compliance of the joint agency proposal with regulatory guidelines? It said that the Government, before it makes any decisions on the proposed trans-Tasman agency to regulate therapeutic products, will ensure that it demonstrates that all its requirements in respect of best regulatory practice have been fully complied with, including the five principles and guidelines—efficiency, effectiveness, transparency, clarity, and equity—set out in the 1997 code of good regulatory practice administered by the Ministry of Economic Development. Has the Government done that? No, it has not. It has not even bothered to follow the code of good regulatory practice and its five principles that must be basic to any legislation that is formulated.
Hon Damien O'Connor: What a load of rubbish!
Dr PAUL HUTCHISON: I hear from across on the Government side that this is a load of bollocks. It is not a load of bollocks. It is absolutely important, if we are to go into a joint agency of this nature, that these basic things of sorting out good regulatory practice are worked out before we enter into it, and the Government has failed in that respect. The report goes on and states that the Cabinet Office and Ministry of Economic Development requirements relating to regulatory impact statements and business compliance cost statements should have been sorted out. They have not been sorted out. In fact, they were very defective, and the select committee drew attention to that in its report.
In terms of the structure of the joint agency, the point is made that the treaty provides for a unique and innovative arrangement between New Zealand and Australia, and we in National are not necessarily opposed to that. We see that compared with the Food Standards Australia New Zealand agreement, on this occasion there is an equal sharing of power at the top of the agency, which is far better than the Australian states totally outweighing New Zealand in terms of the balance of power. However, we are concerned about some of the other arrangements, and we note that the agency is intended to be accountable to both Governments and will be broadly structured on product type. It will be headquartered in Canberra, but there will be offices in both New Zealand and Australia.
Only last Friday I was visiting both
Nutra-life Health and Fitness (NZ) Ltd and
Healtheries, both companies that have paid great attention to good manufacturing practice. They asked why one of the offices—particularly the one to do with complementary medicines and health-care products—could not be in New Zealand to balance the situation. There is a suggestion—and I see the Minister shaking her head. Is she listening? Let us hope she is, because this is a reasonably positive and constructive suggestion to balance the situation.
Then we go on to legal issues, and indeed there are a number of legal issues relating to the joint issues and delegated legislation. I must point out that the report of the Regulations Review Committee raises two key concerns. The first is that some of the matters proposed to be dealt with in the rules are matters of policy and principle and ought to be in primary legislation. I point out that the chairman of that committee, Richard Worth, did an excellent job.
BARBARA STEWART (NZ First)
: On behalf of New Zealand First, I rise to speak to the report of the Health Committee on the international treaty examination of the agreement between the Government of New Zealand and the Government of Australia for the establishment of a joint scheme for the regulation of therapeutic products. As the select committee report states, New Zealand First is opposed to the treaty agreement, particularly as it pertains to therapeutic products. This treaty, and the subsequent
signing of it, has been beset with problems right from the very outset when the main finding of the Health Committee inquiry into the proposal to regulate complementary health-care products jointly with Australia was that it should not proceed.
In the report we note that there are a number of legal issues that relate to the joint agency. The agency will be established and have legal status under Australian legislation, and this raises further questions about how New Zealand’s interests will be protected. I was quite surprised to see that the Government did not support the first report that was issued by the Health Committee. New Zealand First agrees that there needs to be some regulation in the health-care industry. I think that most New Zealanders would be totally unaware that complementary health-care products are currently unregulated. We agree that consumers must have confidence in the products and that the ingredients claimed to be within those particular products are actually contained within those products.
Like my colleague, I was very fortunate to spend some time at the
Healtheries and the
Kordels manufacturing plants in Auckland. I was very pleased and impressed with the rigorous testing regime that occurs before any of their products are manufactured. The continual checks during production and the quality process are a whole part of the entire manufacturing process. These two manufacturers and their consumers can be totally assured of the safety, the quality, and the efficacy of all their products. It was very impressive to see the level of care in all their products.
Hon Annette King: That’s the Australian standards.
BARBARA STEWART: Although it may be an Australian standard, it can be implemented here in New Zealand. New Zealand First believes that this, too, is a sovereignty issue. We do not want to have the New Zealand role in this agency reduced to that of an Australian state, and that was noted in the legal issues part of the report that came back from the Health Committee. It is an insult to New Zealand, particularly when we are not even a state of Australia. It is also an interesting fact that some of the Australian states do not follow the highly prescriptive regime that Australia wants New Zealand to follow as a result of this treaty. So, definitely, some questions need to be asked there. Why should this new agency impose this rigid regulatory regime on New Zealand? People usually have to get their own house in order before they start on someone else’s house. Matters of policy and principle that should be dealt with in the New Zealand Parliament should not be dealt with in an agency that has been set up in Australia. That must undermine our sovereignty, even if we do have a branch set up here in Wellington.
We are also concerned that the complementary health-care products and the dietary supplements actually come under this particular treaty. We in New Zealand First believe that they should be treated as a totally separate category and a totally separate class of product—definitely not to be included as an integral part of the treaty. Natural health-care products should not be controlled in this very same rigid way and by the very same people who control the pharmaceutical products. We know that there is a difference in purpose for pharmaceutical products and for the complementary health-care products. There should also be a separate office for administering the complementary health-care products. After all, the bottom line is that these products are seen as being preventive rather than as a cure for disease. Most people take these products so that they will not contract an ailment, rather than to cure a disease or to relieve the symptoms of an illness.
Our third concern lies with the major impact that this treaty will have on a large number of New Zealand industries already involved in this particular sector. Every impact report that the Health Committee received on this proposed change has highlighted the detrimental effect for New Zealand businesses. So why should we vote
for a treaty that does not recognise the concerns that the entire industry has recognised? It is quite surprising. This industry, like every other industry, requires a level of innovation often brought about by small businesses to stimulate and to grow the entire category. As I said before, innovation is absolutely essential in an industry such as this. I know for a fact that many of these small businesses—a lot of them do tend to be small businesses in this particular area—are already prepared to meet the standard quality requirements, such as ingredient testing, good manufacturing practice guidelines, and labelling to ensure the overall industry integrity. So why not develop a New Zealand - based system? We believe that the increased compliance costs and the additional regulation imposed by this trans-Tasman agency will cause many of these small businesses to close. That is definitely not something that we want to see occur, at all.
As New Zealand is the smaller partner in this treaty, our interests will, we believe, be very much under-represented. The increased cost of products to consumers and the compliance costs for manufacturers will result in the closure of some of these businesses—and we actually heard that from some of the people involved in the Australian industry. When we look at the treaty, we believe that it will definitely lead to higher prices for consumers and higher compliance costs, especially among the smaller New Zealand - based companies that supply only the domestic market. Not everybody exports across to Australia.
Like many other MPs in this House, I have been absolutely overwhelmed by the number of emails I have received that are firmly opposed to this trans-Tasman treaty proceeding. I estimate that I have received well over 50 emails that are opposed to this joint regulation. That number could even be closer to 75. I have not received one solitary email advocating that this joint agency should proceed. I must admit that all these emails are not from one particular area in New Zealand. They have come from throughout New Zealand. There appears to be a total lack of support for this proposal from the complementary health-care industry in New Zealand and from many of the consumers in this particular industry.
I must say in all fairness that I have received one letter in favour. That letter was from a member of the pharmaceutical industry who was concerned that we work with Australia because: “It wants critical mass in its regulatory system for pharmaceuticals.” It appears that this treaty is really being used as the instrument for change in the complementary medicines industry. New Zealand First questions the motives of the Government in agreeing to a treaty that has no tangible benefits for New Zealand. We strongly recommend that the Government explores options for administering a New Zealand - based regulatory framework.
JUDY TURNER (United Future)
: I rise on behalf of United Future to make our comments on the Government’s treaty that was signed on 10 December with the Australian Government in relation to the regulation of therapeutic products, medical devices, pharmaceuticals, and complementary medicines.
The Health Committee looked predominantly at two areas. We looked at how complementary medicines should be regulated and then, with the kinds of conclusions we came to on those matters, we looked at how this proposal affected those outcomes and whether we thought it was a viable option. For instance, the industry was very clear in its dealings with us that it accepted there was a need to strengthen the regulatory framework, which is currently a very weak structure in New Zealand—that is, regulating complementary medicines. However, I guess the area that the industry seemed to feel a bit ripped-off by was the fact that it felt that it had had ripped out of its hands the chance to develop a system of its own that suited the New Zealand - innovation aspect of that industry and to set up a system that would facilitate trade through mutual recognition.
The things that came out when we looked at what a strengthened domestic regulatory system could include are very interesting, and highly relevant to the outcome of this treaty. First of all, any regulatory system would need to be risk based. When one is talking about vitamin pills, and products that, in general, make what we would term “wellness” claims, as opposed to therapeutic claims, then the intention that this treaty has of bringing complementary medicines into the same category as pharmaceuticals—transferring them from their current status of being regulated under foods—United Future agrees with the industry is a complete overkill.
Several other people who have spoken tonight talked about tours they have had through complementary medicine factories. I spent some time with members of the Health Committee at the
Comvita factory in Te Puke. What struck us on entering that factory, which at the time we were there was manufacturing and processing honey, was that on one side of the factory, honey was being processed to put on one’s toast; it was being processed as a food product. Directly over the corridor that same honey was being processed to treat wounds. The difference we saw between one side of the factory and the other was almost the difference one sees between a warehouse and a science fiction movie. Because the standards—the very necessary standards that one needs to have in place for the processing and manufacturing of pharmaceuticals—are extremely rigorous, as they should be. But when one applies these standards to very low-risk products it does start to look rather ridiculous.
One of the things the industry understands it does need is a central register—a simple electronic lodgment. Of course one of the areas that this treaty does not cover, and which came up very strongly in our inquiry, is that we would like to see—and the industry is very keen to see—that complementary health-care products are regulated, based on a negative list. This includes a list of ingredients that are not permitted, as opposed to the white list that focuses on a very substantial list of things that are permitted. The industry is well aware of the need for good labelling practice and better customer information. It is committed to excellence in good manufacturing practice, and that needs to be monitored and enforced properly. But one of the things that has really marked out the New Zealand industry, and set us apart in many ways from other countries, has been the huge development over the last 20 to 30 years of innovative products that started often in very humble beginnings, in people’s garages. They have now developed into amazing products that are well able to move beyond making just “wellness” claims. There is now very clear scientific evidence of their therapeutic efficacy, and they are well able to move into that area because of that evidence.
The next thing the Health Committee did was to have a reality check. We realised that the Government did seem fairly hell-bent on signing this treaty, so we took a very realistic approach and made a series of recommendations to be considered, on the understanding that the Government did intend to go ahead with the treaty. Let us be clear here. This treaty, which was signed on 10 December, was literally signed while the ink was drying on the select committee report that was waiting to be tabled. I think we did have a slight slap in the face sense about an inquiry that had been undertaken very seriously. We had taken a huge amount of time out to listen to the concerns of both consumer groups and those working in the industry. We had listened to their proposals and their fears. The Health Committee also visited the Therapeutic Goods Administration. A huge amount of work had gone into this, only to find suddenly that at the end of the day it did not actually matter—that this proposal was going ahead, without taking any time to pause and reflect on the recommendations of the report.
We have a huge myriad of concerns. When one first reads the Government’s response to the Health Committee’s report, it, seems very much like it is endorsing
many of our recommendations. But there are three recommendations that the Government does not support. As far as I am concerned these are perhaps the most key and the most substantial of our recommendations. If I had to draw a bottom line on this issue for United Future, it is the request from the industry that complementary medicines and products be regulated within their own category. I may be wrong here, but I suspect that the Minister herself would possibly be prepared to consider that option, but is unable to offer it because there is a complete unwillingness on the part of the Australian Government, which is partnering with us in this treaty, to give it even a second consideration.
Also, the Government—and I would probably rank this as my second concern with this treaty—does not make any provisions for the recommendation that a negative list be used because of the fact that it requires a high threshold of harm to be substantiated. So we are disappointed about that. The other thing that concerns us is that there seems to be a dismissing by the Government of our concerns about the impact of this treaty on the small businesses that make up part of our industry here in New Zealand. When we look at the Australian Government’s own response sheet to the treaty, it is spelt out very clearly in black and white, and makes the point that the advantage to the complementary medicines industry is very much on the side of the Australian market. The Australian Government sees that there is huge advantage to the Australian industry, over the New Zealand industry, and obviously that makes it a real plus for Australia. We need to make sure that any treaty we sign gives us at least the same advantage as anybody we are partnering with. United Future is becoming increasingly concerned. We have been lobbied, as have other members of Parliament, by vast numbers of people all expressing their concern. I think we need to remember, too, that there are several groups here. There are consumers, importers, manufacturers, and product developers, that are all seriously expecting to be badly affected by this treaty.
SUE KEDGLEY (Green)
: This international treaty that we are considering today must be one of the most contentious treaties to come before this House. The majority of MPs in this House oppose it, the Health Committee opposed it, most New Zealanders oppose it, and certainly most in the industry oppose it. So how on earth, one might ask, is it that we would be considering in this House today something that the majority of members of Parliament, and of New Zealanders, are opposed to?
Just to recapitulate briefly, in October 2000 Cabinet quietly agreed to establish a joint trans-Tasman agency to regulate dietary supplements and pharmaceuticals. Now it agreed to this in secret, behind closed doors. It did not consult New Zealanders, and it did not consult the industry. The industry thought that Cabinet was busily agreeing on legislation—begun under the previous National Party administration—to set up a New Zealand - based regulatory system. The industry thought that the legislation was well advanced and that Cabinet was happily working on it. Then suddenly, to its astonishment, the industry discovered that, behind its back, the Government had agreed to a treaty that will—and it will, it does not matter what Steve Chadwick says—be a first in the world where an agency based in one country will have total control to regulate an industry in another country.
So then Cabinet put out a discussion document and an overwhelming majority opposed it. Then the Green Party collected 30,000 signatures opposed to the proposed trans-Tasman treaty. That triggered a Health Committee inquiry, as Paul Hutchison has mentioned. Once again, the overwhelming majority of submissions were opposed to it. Then the Health Committee itself unanimously agreed to oppose the idea of harmonisation through a trans-Tasman agency and proposed that instead we should seek mutual recognition and strengthened domestic regulation, which the industry thought would happen through the legislation I spoke about earlier, and that that would be the
most appropriate method of governing complementary health-care products in New Zealand.
Three days before the Health Committee’s unanimous report was to be released, we learnt suddenly that the Government was quietly and sneakily signing the treaty behind closed doors. In that case it was quite open, I must say. It actually invited a few of the media along. The Government signed the treaty and a couple of days later our unanimous Health Committee report came out opposing what it had done, and we had the extraordinary, and indeed probably unprecedented in recent times, occasion when MPs from all of the Opposition parties joined in a press conference to denounce what the Government had done.
Why, as Paul Hutchison asked, is the Government not listening? Why is Steve Chadwick just saying that all we are doing is fearmongering; that all that New Zealanders are opposed to is based on fearmongering? I can assure members that it is not; it is based on rigorous analysis of that treaty through a prolonged Health Committee inquiry and then an examination of the treaty. We have looked at the fine print. The more I look at the fine print the more implacably opposed I am, and the Green Party is, to that treaty. As part of the treaty examination process, the Government had to conduct a national interest analysis of the proposal. Finally, it had to make public its regulatory impact and a statement of the likely impact on New Zealand businesses and consumers from joining it.
Those documents confirmed what we had all predicted. I quote: “There would be significant increases in compliance costs for manufacturers and distributors of complementary medicines, especially smaller New Zealand - based companies, higher prices for consumers, and some brands have been taken off the market and that has led to decreased consumer choice.” That is what the national interest analysis showed. It showed that dietary supplements would be classified and regulated under the same system as medicines and that the new agency would operate basically as an expanded version of the existing Australian therapeutic goods agency. All it would be doing is extending its authority and control to New Zealand. We had been constantly reassured during the Health Committee that it would be quite different. When we looked at and analysed the treaty, it was exactly the same, apart from what I will mention about some of the governance arrangements. There would be 100 percent cost recovery. Manufacturers would have to obtain product licences for every single product they sold, meet good manufacturing practices and so forth, as well as 100 percent cost recovery. The major impact would be on small businesses and importers of products from overseas.
We also had access to the Australian Government’s regulatory impact statement and that was very interesting. It stated that Australian businesses that already had approval in Australia would have “an early competitive advantage over New Zealand firms that have to seek local approval for new products, and Australian businesses would benefit financially from having products on the market earlier than New Zealand firms, with great potential for enhanced profit.” In other words, the Australian businesses sought to benefit enormously by extending their market here, getting an early competitive advantage over New Zealand. The Australian regulatory impact statement also acknowledged the likelihood that companies would shift their operations to Australia as a result of the high compliance costs, which would reduce the New Zealand Government’s tax take.
The other point about the agency is that it will be headquartered in Australia and it will have legal personality in Australian domestic law. The treaty states: “To avoid doubt the agency shall not have international legal personality.” It will not be an international organisation. It will be set up under Australian legislation. Basically, it will
be staffed principally by Australians and will essentially be an extension of the Australian Therapeutic Goods Administration. Most significantly, the agency will not only make all of the decisions and regulations about dietary supplements, it will also monitor and police all of those industries in New Zealand. We will have the spectre of Australian inspectors coming to New Zealand—Australian police, possibly—to enforce and monitor the dietary supplements industry, presumably closing down agencies or small shops that they feel do not comply. That is extraordinary. When I asked where is there another example in the world where an agency in one company has those sorts of powers, they said that there was not one.
The Minister has made great play about the fact that there will be a Minister from New Zealand and a Minister from Australia in a ministerial council, and that unlike the food agency where we have one vote out of 10, we will have those two Ministers at the top. That all sounds great, until one analyses the fact that basically all of the key powers over this industry will be delegated to a managing director who will have complete delegated powers for all regulations. Basically, it will not matter what the Ministers say in their ministerial council, all the key powers are delegated to a managing director who will be able to make rules without any recourse to our Parliament, but which will have an immediate effect in New Zealand.
It is worth remembering that the whole point of pursuing trans-Tasman mutual recognition with Australia was to benefit New Zealand businesses and consumers by eliminating regulatory impediments to trade with Australia. But the effect of this agency will be to burden New Zealand businesses with increased compliance costs and regulatory impediments that will be passed on to consumers, open up competitive trading opportunities for Australian businesses, and hand over control and sovereignty to that other agency. It is not only dietary supplements that will be affected. Pharmac has expressed grave concerns about it. As Paul Hutchison said, this could end up costing the taxpayer between $85 million and $135 million over 3 years. Pharmac says there will be significant increases in the cost of some medicines, resulting in their likely withdrawal from the market and a reduction in the number of generic medicines approved.
The question is, what on earth is the point of this? Where is the benefit to New Zealand? All there is, is downside. That is why New Zealanders, the New Zealand dietary supplements industry, and members of Parliament are completely opposed to this. Hopefully, the Government will find that it will never get the votes to implement this unfortunate treaty into law in this Parliament.
HEATHER ROY (ACT)
: The proposed trans-Tasman agency will see the regulation of therapeutic products in New Zealand and Australia, and that includes three categories: medicines, medical devices, and complementary health-care products. ACT New Zealand was opposed to that treaty for many reasons that I will go into, but I would like to say that, like National MP Mr Paul Hutchison, we have also been great supporters of closer economic relations with Australia. However, that does not mean that New Zealand should find itself in the position of blindly following what our trans-Tasman neighbour wants us to do. There are times when we must stand up and protect what we have here in New Zealand—times when we feel that we have something much more valuable than what our cousins across the ditch want us to look at with regard to closer economic relations.
The history of the treaty is very interesting. It has been described fairly well by most of the other Opposition parties, but I would like to mention briefly the arrogance in which the signing of the treaty was gone about. The signing happened on 10 December 2003, just a couple of days before a lengthy, well-documented, and well-researched report by the Health Committee was tabled in the House.
I think that the arrogance of the Government warrants mention, because the select committee worked very hard on that report. We were very proud of the findings we came up with, and we were all in broad agreement on the recommendations. But it was clear as time went on that the Minister of Health and the Government had made up their minds they would completely ignore the report and its recommendations—well before it was due to be tabled. In fact, we received quite blatant criticism from the Minister of Health for taking far too long to reach our recommendations and table the document in the House. She seemed to forget that the committee had had a pretty heavy workload in relation to her legislation before it—which, of course, gains priority over any inquiry that might be held. So the arrogance of the Government in that move should be noted for the record.
The Health Committee, as I say, went through a fairly exhaustive process in the inquiry and, again, in the examination of the joint agency. We had several submissions, one of which was from Pharmac, and that has been noted in the report.
Pharmac had many concerns, although the officials started their submission to us by stating that they supported the joint agency. But they had many criticisms. Of particular concern was the fact that the full-cost recovery model could mean a significant escalation in the cost of registering medicines in New Zealand. That should be of concern to us, both to small companies and to much larger ones. Pharmac stated that it had reservations about aspects of the proposal but, as I say, it supported the joint agency.
Its other concerns included possible increases in the cost of generic drugs to the country—particularly for small-market products—and possible increases in the patent terms on medicines. Of course, that should be of great concern to Pharmac, because it relies heavily on patents coming off earlier rather than later in order to provide cheaper medication to New Zealanders. In its written submission to us Pharmac noted that unless rules were very carefully drafted, the cost of increases with regard to patents, as a flow-on effect of the free-trade agreement between Australia and the United States, could amount to between $85 and $135 million over a period of 3 years. We note that the estimated cost in fees and charges incurred by the New Zealand industry would be $20 million. Those are not small figures; they are large figures, and they should be taken very seriously.
But the most interesting thing of all, and something I questioned Pharmac on when its officials came before us, was that Pharmac had made a submission as a result of the discussion document in 2002, in which it categorically stated that it opposed the joint agency—for the very same reasons mentioned in the most recent submission—but had then changed its mind and stated that it supported the joint agency. I wondered how that had come about, and I believe that what probably happened was that the Government told Pharmac that it should, in its written submission, support the joint agency, despite its concerns.
One of the things that concerns ACT most is the increased compliance costs that will likely be a result of the joint agency. We have documented that well in the report. There was a general consensus around the committee table about the worry of increased compliance costs, particularly on the complementary health-care industry and on consumers. As I say, we went into a great deal of detail in our inquiry report in that regard.
Many of us considered that perhaps a third category to regulate complementary health-care products as a class in their own right might have been the way to go, and there was also long discussion about the possibility of mutual recognition—each country maintaining its own recognition within the broader band of a joint agency. But that, according to the Government, is a complete no-goer, although I have to say that the
reasons are still completely foreign to me and, I believe, to most other Opposition members. Many committee members were concerned about the adequacy of the regulatory impact assessment. Sue Kedgley previously went into that in detail, so I will not say any more about it.
The Regulations Review Committee had some very pertinent remarks to make. Those were mentioned by Labour member Steve Chadwick in her first speech. She thanked the Regulations Review Committee for the report and the work it had done, but I believe that the points it raised are still very pertinent.
There were two main issues that the committee felt needed to be addressed. The first was that some of the matters proposed to be dealt with in the rules were matters of policy and principle that ought to be in primary legislation. The second was that there were significant differences in the disallowance of regulations in New Zealand compared with Australia, and that rules and orders made by the agency needed to be subject to the same requirements for scrutiny and disallowance that applied to all other delegated legislation in New Zealand. The committee members were concerned that the treaty did not deal with that matter adequately.
We outlined in the report the disadvantages to the treaty, and I want to mention those briefly. The first is a reduced ability to regulate according to the specific conditions and preferences of New Zealand. New Zealand will lose its sovereignty and identity in relation to the registration of medications.
The second disadvantage is the reinforcement of the existing trend for pharmaceutical firms to shift their regulatory activities to Australia as they rationalise those activities. There are probably many members on the other side of the House who think that that is a good thing. There is a very anti - pharmaceutical firm attitude in this country, and we are seeing the repercussions of that now with the mass exodus of such firms. In particular, the Government should be worried about the loss of tax revenue that will result from that exodus.
The third point is that regulation may well lead to higher prices for consumers, and to higher compliance costs falling on manufacturers and suppliers, especially among smaller New Zealand - based companies that supply only the domestic market. Again, what we will see in this country is a loss of innovation—something we have greatly prized in years gone by. But with heavy regulation in place, as we see under the Therapeutic Goods Administration regime in Australia, many of the smaller companies will just not be able to afford, or will lose the time and energy they presently have, to cope with that.
I make, too, a brief mention of medical devices. Similarly, there may be an increase in the price and a reduction in the choice of medical devices, due to those becoming the subject of regulatory controls.
To sum up, I tell members that ACT does not agree that the Government should have ratified the treaty. We feel that the concerns raised by the Health Committee during the inquiry into therapeutic goods, and its subsequent recommendations, were not adequately addressed by the New Zealand Government when it formulated the treaty. We are particularly concerned that a thriving local industry will be harmed and disadvantaged with the imposition of a very heavily regulated and bureaucratic Australian regime, when other more appropriate options are available. I have mentioned what I feel those are. We believe that ratification of the treaty will result in increased compliance costs to those in the industry, and will particularly affect small business. As a smaller partner in the treaty, we also fear that New Zealand interests will be significantly under-represented, and that increased costs and loss of choice for products will be the consequences for New Zealanders. It will be a very sad day for New Zealand.
Hon ANNETTE KING (Minister of Health)
: I thank the Health Committee for its examination of the treaty and for its comments on the important issues of sovereignty, accountability, and the impact of the joint scheme on New Zealand industry and on the health and safety of all New Zealanders. The proposal to establish a joint trans-Tasman therapeutic products agency and regulatory scheme has been developed over a number of years through successive Governments. In fact, when I became the Minister, the joint regulator had already been agreed to in principle by the previous National Government. I looked at the work that had been done by the previous Government and agreed that we should proceed with the agreement that it had made in principle. In fact, this Government announced some time before the select committee inquiry that we would be proceeding.
The proposal had been carefully crafted to provide New Zealand with a new, world-class, sustainable regulatory system through an arrangement of equal partnership with Australia. In fact, it is seen by the Australians and by New Zealand as an extension of CER. When I recently met with the Leader of the Opposition, Don Brash, he gave a commitment that the National Party would work to ensure that the joint regulator became a reality. He said that it was a good deal for New Zealand. It is an innovative arrangement that will preserve and grow New Zealand’s—
Dr Paul Hutchison: You weren’t at the meeting.
Hon ANNETTE KING: I was at the meeting. It is an innovative arrangement that will preserve and grow New Zealand’s influence over the regulation of therapeutic products, and sustain our capability to make sound regulatory decisions that protect public health, at a lower cost to industry than other options. It also has a fair and secure arrangement that will safeguard New Zealand’s sovereignty, and will ensure proper accountability and parliamentary oversight of the agency.
It is important to recognise that maintaining the status quo is not a viable option for the future regulation of therapeutic products in New Zealand. The existing medicine legislation is 20 years old. It is outdated, and no longer provides an appropriate framework for managing the risks associated with the full range of therapeutic products now available. New Zealand’s regulatory scheme is unsustainable in the medium to long term. For example, under existing legislation—and I do not know whether Heather Roy is aware of this—pre-market approval is not required for medical devices in New Zealand, regardless of the level of risk associated with their use. I think New Zealanders would be shocked to know that. Thus, there is no assessment of the safety, quality, or performance of devices such as heart valves or pacemakers before they are placed on the New Zealand market. In contrast, pre-market approval is required for lower-risk products such as anti-dandruff shampoos and fluoride toothpaste. That situation is untenable and cannot be left to continue. The public health and safety of all New Zealanders is far too important for us to ignore that situation any longer.
Through the joint agency, we will build a strong and confident arrangement that is respected internationally. New legislation is therefore required to modernise New Zealand’s regulatory scheme and bring it into line with international norms for the regulation of therapeutic products. On its own, New Zealand will struggle to maintain the capacity and capability to regulate therapeutic products into the future. It will become increasingly difficult for New Zealand to recruit staff with the knowledge and expertise needed to evaluate the increasingly complex and sophisticated therapeutic products now being developed. There is already a worldwide shortage of such expertise. Gaps that exist in New Zealand’s expertise will increasingly diminish the regulator’s ability to adequately assess and manage the risk to public safety arising from the use of medicines and medical devices. There will inevitably be delays in approving products
under the status quo system, so that New Zealanders will be denied timely access to new products that are available in other countries.
If New Zealand were to have its own stand-alone regulatory scheme for therapeutic products, it would first be necessary to develop new legislation to address the current anomalies in regulatory coverage, and to bring New Zealand’s—
Dr Paul Hutchison: I raise a point of order, Madam Speaker. I want to make the point that the Minister is speaking outside the lines of the report. The chairman of the Health Committee made it clear that the debate should be about the report, and not the Government’s agenda. I am deeply concerned that the Hon Annette King is using this debate purely as a vehicle to talk about the Government’s agenda, and not the report. I would ask you to ensure that she sticks to the report.
Hon ANNETTE KING: Speaking to the point of order, I have listened to the whole debate. Members ranged widely over every issue that they wanted to cover, and I think that it is important that I get the opportunity to range over similar issues myself.
Madam DEPUTY SPEAKER: Ruling on the point of order, the Minister was speaking about the report and the matters in the report, and there was nothing that was different from what the last six or seven members have spoken about.
Hon ANNETTE KING: If New Zealand were to have its own stand-alone regulatory scheme for therapeutic products, it would first be necessary to develop new legislation in order to address the current anomalies in the regulatory coverage, and to bring New Zealand’s regulation into line with international best practice in therapeutic product regulation. In order to administer the regulatory scheme, it would be necessary to significantly increase the regulatory capacity and expertise, and to maintain that expertise in therapeutic products as they grow in complexity and sophistication. Even if it were possible to recruit the staff for such a regulator, the cost of regulation would be unacceptably high, given New Zealand’s small population and market size. Going it alone was not a viable option. For the reasons I have given, the current Government and past Governments have recognised that New Zealand’s system for the regulation of therapeutic products is not sustainable, and that the best way to ensure sustainable regulatory capacity and appropriate protection of public safely in the future would be through collaboration with another regulator.
Three possible models of collaboration were considered.
Hon Murray McCully: Stop reading it. She’s reading it.
Hon ANNETTE KING: What is the problem with Murray McCully? I think he is somewhat distressed and upset. I would just like him to listen; this is a serious debate. Three models of collaboration were considered. First, there was the model of unilateral recognition, which meant that New Zealand would have to accept the regulatory decisions of other regulators, which would be regulators outside New Zealand. That would have meant that we would not be able to respond to safety issues, but would be reliant on other regulators’ decisions. Second, there was the model of mutual recognition. If we wanted to have mutual recognition, the New Zealand regulator would have to have another regulator that had confidence in New Zealand’s own decisions. I am afraid to say that New Zealand does not have a lot of legislation in place, and we could not compare ourselves with another regulator. Mutual recognition was declined as an option before we became the Government—not since we became the Government. The third model was the development of a joint therapeutic products regulatory agency, which will retain New Zealand’s voice in decision making. It will allow the pooling of resources with Australia in order to overcome the deficiency in regulatory capacity. It will share the regulatory costs, which will reduce the impact on New Zealand industry, and it will create a single CER market for therapeutic products, and a one-stop shop for those wishing to market products in both countries. It was for those reasons that the
previous Government and this Government agreed that a joint regulator, under the expansion of CER, was the best way to go.
We also looked at compliance costs, and I think they are an important consideration in moving towards the arrangements that we want to have, for the joint-agency cost recovery will be on the same basis as in other industries, and best-practice guidelines for cost recovery will apply. The cost to New Zealand businesses will actually be lower than for a stand-alone agency, because regulatory costs are shared across the larger New Zealand - Australia market. However, in order to protect small businesses, it is intended that under the fees and charges rules that will be developed for the joint scheme, a form of fees relief will be available for small businesses with low sales volumes.
The Health Committee noted—and I would like to read this to the House, because this has been misinterpreted all evening—that: “the Australian Regulatory Impact Statement states that Australian firms may have an early competitive advantage over New Zealand firms seeking approval for new products under the new system.” The committee mistakenly interpreted that statement as support for the view that New Zealand companies would be at a disadvantage under the joint regulatory scheme. In actual fact, that statement was taken out of context. It related to permanently exempting therapeutic goods from the Trans-Tasman Mutual Recognition Arrangement, not from the joint scheme. I ask the members who have raised that point to go back to the agreement between the Governments of Australia and New Zealand, and to read page 11 of the impact statement. When they have read it, I want them to tell me they got it wrong, because they have got it wrong. On governance and sovereignty New Zealand will have an equal voice with Australia. It will become very clear, very soon, that New Zealand’s voice is equal with Australia’s in all respects. It will be equal in terms of what is accountable in this Parliament, and it will be equal in terms of legislation. [Interruption] I am listening to the members of the Opposition because I know that behind the scenes they have also been talking to the Australians about the agency, about CER, about how important the relationship with Australia is, and about how important it is to have a joint regulator. I find it interesting that they are denying that this evening.
KEITH LOCKE (Green)
: I think this issue is a good example of what is wrong with our whole treaty-making process. I had a member’s bill in this Parliament a couple of years ago, which was unfortunately defeated. I think the reasoning behind that bill has been shown to be correct in the debate we have had tonight. One of the problems when treaty making is done only by the executive is that the executive, particularly under our system of MMP Government—and this has happened since the beginning of MMP—represents the minority in Parliament. That is what we see here. The majority of Parliament is against this treaty and against any subsequent implementing legislation. Yet the minority of this Parliament, which constitutes the executive, is signing a treaty against the wishes of Parliament and of the people of this country. That is not democratic. That is why my International Treaties Bill should have been approved by Parliament, and is why the parties that did not support it, such as National, should now rethink their position. Surely we should move one step forward towards true parliamentary democracy in this country, and give treaty approval powers to Parliament.
I think the Health Committee has done very good work in this report. The whole point is that a regulatory situation has been proposed by the select committee. It is not as though anyone is saying we should let everything in on a wholesale basis. The select committee has proposed an appropriate regulatory system, but not one that is based in Australia and is under the control of another country. That is the difference between the two schemes.
I think one of the most telling points was made in Steve Chadwick’s speech. She said that she could not imagine how a future Minister of Health could betray the sovereignty
of New Zealand. I do not have the same illusions that she has about future Governments of New Zealand, future Prime Ministers, and future Ministers of Health. We have had a variety of Governments in this country, and we have had people betray our sovereignty to one degree or another. Even the Labour Party has said that in the past, in relation to wars that New Zealand has gone into, such as the war in Vietnam, etc., Mr Simon Power of the National Party quite recently said, in effect, that where America goes, we go. A Labour member said that future New Zealand Governments can be trusted to be in control in the ministerial council. Surely that contradicts what Labour members say when they criticise National and other parties for going along with another country’s policies, without criticism of those policies.
I think it is very important that we have an appropriate regulatory structure, particularly in the areas of complementary medicine, diet pills, herbs, and all the rest of it. Research has shown that most of those remedies—certainly the overwhelming majority, though whether they have an effect we can debate in any individual case—do not have any serious downsides, compared with pharmaceuticals, in particular, many of which have side effects that we are still investigating. The arguments of the people involved in dietary supplements and those sorts of products are that they should be given the proof that their products cause a lot of harm, and need such strict regulatory control and all the compliance costs—and all that is to be done in Australia—and all the other disadvantages that the other speakers have referred to. That is just not good enough.
It is fortuitous, but very good, that we have had this debate, because it shows the contradiction between the MMP system we have developed in this Parliament and the old-style system of the executive signing treaties, which was appropriate to a pre-MMP era and must be changed.
LINDSAY TISCH (National—Piako)
: This is a very interesting debate. The Government has moved against a select committee report, and, when we come to vote on it, what will happen? Will Government members be supporting a report from the Health Committee that shows quite clearly that the actions they have subsequently taken are incorrect and that the whole country is against exactly what they have done?
We are supporters of CER. We are quite happy to work alongside Australia and have closer economic relations with that country. There is no problem with that. But when we look at the first report that was done in December 2003, we see that it was to decide whether there was any merit whatsoever in having a trans-Tasman agreement. That is what the first report did. Before it was even out there in the marketplace, what did this Government do? It entered into an agreement with Australia before the inquiry into the proposal to establish a trans-Tasman agency to regulate was finalised. The Government moved to do that before this report was tabled. That is a complete abuse of the select committee process, and this Government will pay. When Government members vote on it, will they be voting for this report, which is absolutely damning of what they have done? [Interruption] Here we go. Let us get this one very straight.
Let us look at the next report, which is the one I have in my hand. We have entered into an international treaty. Let us look at one of its recommendations. On page 3, the report states: “We made 34 recommendations to the Government. Our main finding was that the proposal to regulate complementary healthcare products jointly with Australia should not proceed.” That is what it states. This report contains recommendations, on page 9, that throw this Government out to the wind. It is abusing the situation, and every person who takes vitamins is getting up and saying: “Look, this Government is abusing the process. It is abusing the select committee, and it will pay.” The Government will pay at the next election. By gee, it will pay, because I know in my heart of hearts that this report is correct.
Once again, all that Government members are trying to do is to defend themselves in a situation that they know is completely wrong. They will pay the price, because this is the report we will be voting on, next members’ day. It will not happen tonight, because I have a lot more to say yet. When I look at what Pharmac says, I can see that I will probably need more than half an hour on that one. On page 3, the report states: “Pharmac noted a number of concerns about the joint agency proposal, including possible increases in the costs of generic drugs, particularly for small market products …”. This is a nonsense. Government members will pay.