Hon PHIL GOFF (Minister of Foreign Affairs and Trade) : I move, That the Crimes and Misconduct (Overseas Operations) Bill be now read a first time. I will propose that the bill be referred to the Foreign Affairs, Defence and Trade Committee. This bill will allow New Zealand to exercise criminal jurisdiction over New Zealand police personnel and civilians serving as part of a non - United Nations deployment. Although it has particular relevance to the imminent deployment of New Zealand police personnel to the Solomon Islands, it will also apply to police or civilian members involved in any future non - United Nations deployment.

New Zealand, at the request of the Solomon Islands Government, has, as part of a Regional Assistance Mission, joined with Australia and Pacific Island countries to assist the re-establishment of law and order in that country. This action will allow the Solomon Islands to rebuild its Government infrastructure, restore its shattered economy, and provide a better standard of living for its people.

The necessary legal provisions sanctioning the deployment of the Regional Assistance Mission were passed unanimously by the Solomon Islands Government on 17 July 2003. That was followed by the signing of a status of forces agreement on 24 July 2003. Under that agreement, members of the visiting contingent, including those from New Zealand, will have full immunity from legal proceedings in the Solomon Islands for any acts or omissions carried out in the course of official duties. In practical as well as legal terms New Zealand, not the Solomon Islands, will have jurisdiction over New Zealand personnel for such acts.

For acts or omissions that fall outside official duties, the situation is different. In that situation, the Solomon Islands will give up jurisdiction only if the sending country can, under its domestic law, exercise jurisdiction over its personnel overseas. Currently, under New Zealand law, we can exercise jurisdiction over our armed forces for offences committed overseas, under the Armed Forces Discipline Act. Similarly, we can exercise jurisdiction over police serving as part of a United Nations force, under the United Nations (Police) Act. However, similar provision does not apply to police personnel or civilians serving in non - United Nations operations. In the absence of such jurisdiction, police and civilian personnel deployed to the Solomon Islands who commit offences outside their official duties could be subject to prosecution and possible imprisonment in the Solomon Islands.

This bill will address the gap in our legislation. It will allow New Zealand to exercise jurisdiction over police and civilians serving in overseas operations, such as that under way in the Solomon Islands, in a similar manner to that exercised over armed forces personnel, and over police serving under United Nations operations. The enactment of this bill not only would minimise possible exposure of the New Zealand police and civilian members to prosecution and imprisonment in the Solomons, but also would have application to any similar non - United Nations type of operation. Enactment of this bill would also ensure that those deployed would not have impunity in respect of offences committed in the course of official operations or outside their official duties.

The bill itself takes the form of a stand-alone statute similar in form and content to the United Nations (Police) Act. Under the bill, it would be an offence for any police or civilian member of an overseas operation to do or omit to do anything outside New Zealand that would have been an offence had it been committed within New Zealand. The bill will also ensure that members of the police engaged in such operations are subject to the disciplinary processes that apply to members of the police in New Zealand. The bill will be retrospective and, once passed, deemed to have come into effect on 24 July 2003. This takes account of the limited time between the establishment by the Solomon Islands Government of the necessary legal framework covering the deployment, including the signing of the status of forces agreement, and the need to pass the necessary legislative amendments proposed by this bill.

Because of the ban on creating retroactive offences, under section 26 of the New Zealand Bill of Rights Act, the bill has also been vetted by the Attorney-General. The Attorney-General has advised that this bill is not considered inconsistent with the rights and freedoms contained in the New Zealand Bill of Rights Act. The retroactive effect of the bill is seen as a justified provision, because the important objective of the bill is to protect New Zealand personnel from possible exposure to a legal system that may be incongruent with the standards applicable in New Zealand. It also ensures that our personnel do not have impunity in respect of offences committed outside their official duties.

The Government wishes that priority be given to the early enactment of this bill, so that our police and civilian personnel serving in the Solomon Islands can enjoy the same protections as the armed services, and as other police personnel serving in United Nations operations, already enjoy under our law, and consistent with international practice for these sorts of operations. I commend the bill to the House.

Dr WAYNE MAPP (NZ National—North Shore) : If there was ever a bill that proved the failure of a State—the Solomons, that is—the Crimes and Misconduct (Overseas Operations) Bill would have to be it. What we are saying, in essence, is that New Zealand will retain jurisdiction over the police and all other persons serving in the peacekeeping operation. Normally, when people—police and so forth—are posted overseas, they are subject to the jurisdiction of the host State. In this case we are saying no, for the very good reason that the Solomons is a failed State.

That raises several concerns, not so much about the bill but about the issue generally. One of them is why we let the situation deteriorate to the point where the State totally failed. We deployed 10 police officers over a period of years, knowing full well right throughout that time, because of the reports that were being received back in New Zealand, that they were unable to reverse the situation. I have heard Mr Goff say time and time again in this House that the Solomon Islands police themselves were part of the criminal enterprise that was running that country. Mr Goff would acknowledge that. We were sending our police officers to work with their police, even though we knew that their police were, effectively, part of a criminal enterprise. This issue had been pointed—

Hon Phil Goff: No, that is not the case. Now the member has got it wrong.

Dr WAYNE MAPP: I am not suggesting our police were part of a criminal enterprise, but that does suggest that we knew, whilst our police officers were there and trying to make a difference, that that was a vain hope. We knew that a long time ago.

So I say to the Government that in the future, particularly in our region where we have special responsibilities, we cannot wait as long as that—to the point that a State has so comprehensively failed that we have to bring in a rushed bill. And this bill is rushed; weeks after the deployment, and after the Government has had plenty of time to think about the issue, we are now faced, in a sense as a matter of urgency, with producing a bill, because we know as a fact that the courts and the police of the Solomons are thoroughly corrupt. They are part of a criminal enterprise, and we could not trust our service people, our police officers, and our civilians to be subject to their jurisdiction. We must retain that jurisdiction.

There has been an extensive series of articles in the New Zealand Herald, which I am sure that many other people have read, about the state of our defence forces. This whole issue in the Solomons brings it to a head. I know that the Government will say that, back in 2000, it did a review that said the defence forces should be reshaped so that they were more focused, more effective, and more able to do their job. That seemed, on the face of it, to have some merit. But over the last 4 years that this Government has been in office, there have been more and more deployments. Admittedly, some of those were not able to be foreseen, but the Government had the example of East Timor, and it knew of the huge stretch that that deployment imposed on our defence forces. Since 11 September 2001—nearly 2 years ago now—our forces have had to be sent to Afghanistan, to Iraq, and now to the Solomons, and who could possibly say that the deployment to the Solomons was not predictable?

We know that our defence forces, based on this Labour-led Government’s deployments, are stretched to excess, and that is now leading to a crisis of confidence within the defence forces themselves. There are huge rates of turnover, complete failure to maintain critical skills, and people leaving through sheer frustration. They are being burnt out. In other countries, something was done about that. Australia increased its defence budget. The United States increased its defence budget. So did Britain, and so did most countries in Europe. Which country has not done that, and which country, almost on a pro rata basis, has been deploying more people overseas than ever before? It is New Zealand, and this Government has a terrible crisis on its hands, which it is ignoring. We have seen the level of funding dropping and dropping while the tempo of deployment is increasing and increasing, until now we have tremendous burnout.

There are some sensible solutions that the Government could take—solutions that would fit within the Government’s own paradigm. For instance, we could have three frigates. After all, the Government sent our only two frigates to the Gulf this year. We have all seen the photographs on television of Te Mana and Te Kaha stationed in the Gulf of Oman at the same time—just yesterday, one of those frigates, the Te Mana, returned. For that time there was not a single combat naval vessel owned by New Zealand, under our sovereignty, anywhere near New Zealand. In fact, our frigates were 6,000 miles away from New Zealand. So, from the evidence of the Government’s own deployments, it needs to understand that it has to change its thinking and increase the spending on things we use. That, after all, was the message that came out of the Inquiry into Defence Beyond 2000. It was to increase spending, increase investment—people, equipment, and so forth—in the things we use most. Well, we have news for the Government: it is using the frigates a hang of a lot, so it should buy more of them. It is as simple as that.

It is a similar case with the Army. We know that East Timor was a huge stretch on the Army. We have sent the Army to Afghanistan, we have sent it to Iraq, we are now sending it to the Solomons, and smaller groups of army personnel are scattered around the world. Again, I urge the Government to make the investment, to recruit more people, pay them more, and equip them more, because we are using them more. It comes back to the Government’s own paradigm. The Government needs to spend money, to make investments in those parts of our defence forces we use most. [Interruption] The junior Government whip will probably be unaware that one-third of New Zealand’s entire helicopter force will now be based in the Solomons. One-third is a huge percentage. What happens if there is another requirement for that force? What will we do? Nothing? I guess that is the Government’s answer.

Again, I say to the Government that by its own paradigm, and by its own experience, which perhaps it did not anticipate before 2001, it has to make the investment in those parts of our defence forces that it is using the most, but it is failing to do that. We are the only country in the Western World that is dropping expenditure and not making those critical investments that are needed right now. I ask Government members whether we would be able to use light armoured vehicles in the Solomons. What is the answer? What will the next speaker for the Government say to that? We are using our helicopters, we are using our soldiers, sailors, and airmen, and they are not being replaced in the way that they should.

In terms of the whole issue of the Solomons, this bill of itself is an indictment on the Government playing catch-up. It rushed this bill in, thinking: “Oh gosh, there’s a gap here. We’ve got to fix it.” Well, that is true, it does have to be fixed, but it is not the only thing that has to be fixed; there is a whole range of things that have to be fixed in relation to our external commitments, and the Government is failing to do that. This bill should be the wake-up call on the much deeper and wider deficiencies that exist within our foreign policies and within our defence forces, and it is time the Government got real.

MURRAY SMITH (United Future) : The United Future party will support this bill for three reasons. Firstly, it makes good common sense, and United Future supports policies that make good common sense. Secondly, it will protect New Zealand citizens who are in a position where they are exposed to huge risk. It is important for us as a country to protect New Zealand citizens who offer their help in international situations. Thirdly, it demonstrates a cooperative approach between the Solomon Islands, New Zealand, and Australia. It is a situation where all three countries are in agreement about the way in which their citizens should be protected. Therefore, this is not something that we are endeavouring to foist on some foreign Government, but something that other Governments welcome and are entirely in agreement with.

Although New Zealand’s current role in the Solomon Islands is not entirely unique, it is certainly an extraordinary position. It is rare for a country or a group of countries to be invited to enter and take control of another country. The fact that the Solomon Islands has asked New Zealand and Australia, principally, to do that is a sign of its respect for, and confidence and trust in, New Zealand and Australia. However, it raises a number of new issues.

It is important for New Zealand that we do not go beyond the mandate that the Solomon Islands has given us. Our job is to help to restore the rule of law. I commend the Government for the cautious approach it has taken throughout the debate on this. It has chosen not to rush into things. It has waited for a formal invitation, for the documentation, the legislation, to be signed off in the Solomon Islands, and for an agreement to be reached and signed off, instead of taking precipitous action.

Further, it is important for us to act speedily but effectively. Conflict situations are notoriously unpredictable, and, in this instance, nobody can predict just how long our people in the Solomon Islands will be committed there. But our job is to work as effectively and speedily as we can, and then to pull out of the Solomon Islands and, hopefully, allow its people to continue to govern their own country for themselves. In that respect, we as a country truly are a catalyst in this instance. We are going to go in, change things, exit, hopefully entirely intact, and bring all our people home again without any loss. When we do exit from the Solomon Islands, we hope we leave a country that is much changed, but that is no longer under the influence of outside powers.

For the personnel involved, it is a difficult job. It is a job with tremendous risk, not just physically but legally. We know that that country is currently subject to lawlessness. We know that the legal authorities have proven untrustworthy, and we have heard reports of backhanders by police and general corruption. The law is being abused. The question for New Zealand has been how to protect our personnel in this situation.

This bill started with the Solomon Islands Facilitation of International Assistance Act, which was passed on 17 July. Originally, under clause 17 of that bill, the Solomon Islands was going to give complete immunity from legal proceedings, both criminal and civil, to personnel involved in the operations of assisting countries. If that had gone ahead, this bill would not have been necessary. However, the Solomon Islands indicated that it was going to amend the draft bill prior to its introduction, to grant immunity only where the offence that had been committed by a person from an assisting country had occurred in the course of the operations, or where the assisting country could exercise jurisdiction over that person. It is the latter provision that has made this bill necessary. I do not agree with National’s comments that this bill could have been brought in a lot earlier; it was only because of the changes to the Solomon Islands Facilitation of International Assistance Bill, prior to its enactment, that New Zealand moved to ensure that it could exercise jurisdiction over its own personnel.

Currently, we have the Armed Forces Discipline Act, which covers our armed forces when they are deployed overseas, and which gives them the necessary protection. The United Nations (Police) Act gives similar protection to our police, but only when they are acting under the auspices of the United Nations. That is not happening in this case, and therefore, without this bill, our police would not be covered. Moreover, because there is a possibility that New Zealand civilians may be involved in the reconstruction of the Solomon Islands, our civilians would also not be covered. Under this bill, police and civilians will be subject to the law of New Zealand with regard to any activities that they undertake whilst in the Solomon Islands.

There are some problems that arise with this legislation. The first is the fact that it brings an inconsistency between Solomon Islands law and New Zealand law, and where there are differences between the two countries’ law, it will inevitably be the case that two people may be treated differently. A New Zealander and a citizen of the Solomon Islands may carry out an activity together, but receive different treatment under the hands of legal authorities. There may be offences in the Solomon Islands that are different or non-existent in New Zealand. So some inconsistency could be caused through this. However, that has to be balanced against the lawlessness and corruption that currently exist in the Solomon Islands. As I said, New Zealanders are considerably at risk, and they need to have confidence that they will not be subject to false arrest or abuse by law enforcement agencies in the Solomon Islands, and that, at least, that aspect of their willingness to go and assist the Solomon Islands will be taken care of by their own Government here. This bill does that. Despite the inconsistency, given the situation we find in the Solomon Islands it is United Future’s view that it is legitimate that, effectively, we take control of, and have jurisdiction over, our own people, despite the fact that they are in a foreign country.

Of course, that is not unusual either. Diplomatic immunity has existed for a huge length of time, and it provides similar protection to diplomats who are in foreign countries. In that case, one hopes that the diplomats will act to a very high moral standard. That does not always happen, as we know, but nevertheless there is an expectation that it will occur. The onus is, therefore, on the New Zealand Police and any civilians who are there to meet a high standard. Because they will not be subject to Solomon Islands law, it is important that they are honourable in all their dealings and do not prove to be an embarrassment to New Zealand.

The second issue is the retrospectivity of the legislation. We know that our people have already been deployed, and the bill is backdated to when they were deployed. However, that has been signalled, and the changes have been signalled, for some time, and United Future does not believe that the fact that there will be some degree of retrospectivity is a factor of concern, because it is minor.

The third issue is the fact that this bill will also cater for future situations—it could cater for a new Bougainville, of course—and there needs to be an exercise of caution that when we get into other situations, we do not find ourselves in a situation where there is inconsistency between New Zealand law and the law of another country, where the other country is in fact in a functioning state. However, the tenor of the law is that the overseas operations by New Zealand contingents involved in the affairs of other countries will occur in situations where they need help in order to regain a lawful state. In that respect it is very likely that, whenever this bill is enforced, similar situations to the one that we find in the Solomon Islands will apply. United Future therefore believes that this is a common-sense measure, and we are pleased to support it.

RON MARK (NZ First) : I indicate New Zealand First will support the passage of this bill through to the select committee for further analysis, but I do have to ask a couple of questions. The first one that comes to mind is this: if we need this law now in order to cater for our non-uniformed and uniformed members of the Defence Force and the police force who are deploying to the Solomons, what have we been operating under for the last year or 18 months, or however long it has been since we have had 10 New Zealand police officers serving in the Solomons—what has the situation been? Is this Government so slack, so lax, and so incompetent that it has not actually considered that issue before today? It would appear so.

I want to come to the issue of why our forces are there, what it is that we intend to do, and the realities of the situation that New Zealand faces right now. I say to the honourable Wayne Mapp that it was good to hear the speech he delivered today. The last time that we discussed the Solomons in this House, I rose for New Zealand First and gave our party’s very strong position on the realities of the deployment and what it means, and on the appalling state of affairs that we have within our Defence Force and our police force. I was labelled as churlish and petulant by the all-knowing Minister of Defence, Mr Mark Burton, who then proceeded to compliment Wayne Mapp on his wonderfully generous speech to the Government. I note with pleasure Mr Mapp’s speech today, which once again focused on the realities that New Zealand First brought to this House.

Richard Worth: Damascus!

RON MARK: He has had a road to Damascus experience, says Mr Worth.

We need to be honest in the House today when talking about the Solomons and the mission that we are giving our Defence Force and police personnel to carry out on our behalf, in our name. The truth of the matter is that this Government is in no position to be sending New Zealanders on such a mission, without first revisiting its commitments in other parts of the world. We all know that this Government has committed Defence Force personnel to Afghanistan and to Iraq, but there are questions that should have been asked before it made that decision, which was clearly motivated by Helen Clark’s desire to shore up flagging relationships in the US as a result of her bad-mouthing the President of the United States. Helen Clark made that decision without any advice, or indeed, if she did get advice, without any recognition of the problems that were pending in the South Pacific—specifically, the problems that still persist in Papua New Guinea and the problems that we have known to exist in the Solomons for years.

Indeed, since this Government has been on the Treasury benches it has known full well, from representations made by Fletcher’s and many other businesses that operate in the Solomons, of the appalling state of lawlessness that has existed there. And what has it done in response to that? It has done absolutely nothing. I have a friend who worked in the Solomons, and who had also soldiered in the Middle East and in Oman with me. He has been telling us of the appalling state of affairs in the Solomons for years, and of the difficulties faced by New Zealanders there. How can we have a situation whereby a business manager in the Solomons—a New Zealand national; a citizen of this nation—was murdered, the police knew who did it, and the police were driving around in stolen cars? That happened 18 months to 2 years ago, and this Government did nothing—not a thing.

Stephen Franks: A New Zealand diplomat died in the Solomons.

RON MARK: A New Zealand diplomat was murdered in the Solomons, yet this Government has only just registered now the need to send some people there to help.

This Government is absolutely pathetically useless when it comes to security issues. This Government takes great credit for buying 105 LAVIIIs that we do not need. That is $750 million down the lav. The Government has bought those for itself against the advice of the Secretary of Defence, against the advice of the Chief of Defence Force, and most notably against my advice, which I tendered to the Government privately long before it signed up to the deal. It went ahead and bought them on the basis of a private discussion between itself and Major General Dodson. Curiously enough, we all know who was advising this Labour Government behind the scenes on its defence policy, do we not? We do not talk about it, but we know it.

Hon Tony Ryall: Who?

RON MARK: Well, the Government certainly spent a lot of time talking to people like Piers Reid and Major General Dodson, did it not? So we have ended up in a situation whereby the Government pats itself on the back for having bought all those wonderful vehicles, while totally ignoring the stresses and strains that it brings on its personnel in terms of receiving them and bringing them into service.

Therein lies the problem. This Government, in deploying these people to the Solomons—police and Defence Force personnel—has absolutely no understanding of the stretch that it is putting our defence forces to. Yes, we will get a little kudos around the world, and maybe that will go some way towards helping Helen Clark, when she finishes leading the Labour Party, to become Kofi Annan’s successor. I think that is what she has her eye on, and she may well get a good reputation in the United Nations for having stretched our Defence Force personnel in order to pander to her political needs. But the reality is that we should take a good, cold, hard look at the staffing levels of our Defence Force.

I ask this Labour Government how many of its members would be prepared to pack up their bags, leave their families behind, go overseas and serve in the Solomons, come back from there, and then 3 months later pack their bags and go to Afghanistan? They do not need an answer to that question, because the truth is that not one of the members of that Government has ever worn a uniform—not one. Government members have no understanding—

Hon Annette King: I did. I had my dental nurses uniform.

RON MARK: I am sorry. The Minister was a dental nurse, and she looked good in that uniform, too. I hear that down in Courtenay Place they all want to see her in her nurses uniform again. But that is by the by. The point is—

Hon Annette King: So what’s wrong with dental nurses?

RON MARK: The Minister was a lovely dental nurse, and she should go back to being one. That is how Labour members treat the issue of the defence forces: with frivolity and humour, and by diverting attention from the issue. The point is that our defence forces are stretched, and not only are they stretched totally—

Jill Pettis: And that is how patronising that member is towards women.

RON MARK: Here we go. Jill Pettis is really on her bike at the moment, is she not? She should read her own papers—the papers given to the Government by the Defence Force—that state that Defence Force personnel are suffering from stress. People are being subjected to burnout, and people are being elevated to levels they have not been trained for. Do I not recall this Government making big about its employment relations, about how it looks after staff, and about how it is worried about people who are subject to stress—except, it would seem, when they are in uniform?

This Government does not give a toss. It hands out medals that may have cost $10 or $15, and attends parades all over the world, in exotic places like Paris, Gallipoli, Turkey, and Cassino. But when it came to the hard-core business of putting up the pay of defence personnel in 1 year, it took this Government 4 years to do so. In the 4-year period that it took this Government to do that, the drift out into civvy street was substantial. This Government is not in a position to recover from that. It has got rid of the air combat capability and watched people leave the Air Force in droves. That is not over. As more disgruntled Air Force people hit the 20-year superannuation mark they will march too, and the problem will be compounded.

I have not even talked about our overstretched, overworked, under-resourced police force that this Government has just totally ignored, even though the Police has more money and more personnel. Given the level of crime in this country and the soft, mealy-mouthed policies of this Government, our police are more overworked than ever. To slice off the most experienced and valuable people and send them to the Solomons, without making commensurate adjustments, is totally irresponsible.

This Government has a lot more to answer for. Many, many more articles, such as those that have appeared in the New Zealand Herald in recent weeks, will appear about our forces all over the world, and those articles will eventually bring this Government to account for its failure to recognise the needs of our Defence Force and our police force. I ask members to mark my words on that.

KEITH LOCKE (Green) : I rise on behalf of the Green Party to support this bill. We support the commitment to the Solomons. This legislation will help to make sure that the people who go over there—the police and other civilians, as part of the Government commitment to the Solomons—abide by the law. There is not a very functioning legal process in the Solomons at the present time, so it is appropriate, in negotiation with the Solomon Islands authorities, to have this application of New Zealand law to the people who serve over there.

However, I see this in practice as only a temporary measure. We do not want to establish a precedent that people who go to work in positions in Government departments, either in the Solomons or anywhere else, are in any long-term, regular, or normal sense responsible only to the law of New Zealand and the courts of New Zealand, rather than the laws and the courts of the country they are in. The quicker that we can move to a situation where there is a proper justice system in the Solomons and where people who have committed offences can be tried there, the better it will be. The situation is somewhat different with the military, which does have its own law. When military personnel go on operations like this they have a State of Forces Agreement, as has been developed with the Solomon Islands, and the military law applies to them under those agreements.

If our main purpose in going to the Solomons is to help the people of the Solomons to gain more control of their own destiny—to create democratic institutions, to truly express their culture and ways of doing things, and to develop their economy and all their social institutions—then we have to be careful not to be too patronising, and not to be the great white fathers or mothers who go over there. There has been much more of a debate in Australia than in New Zealand around this commitment. Under John Howard, the Australian Government has made all sorts of strange statements about the reasons that it is going to the Solomons—that is, it is about combating international terrorism, gunrunning, drug-smuggling, and these sorts of other things that we do not really see in the Solomons. A lot of the stuff that the Australian Government talks about is just mythical, but it fits its world view at the present time to believe that there is a terrorist under every bed and that we have to have military forces, police, new security laws, and everything else. Part of the rationale of the Howard Government for going to the Solomon Islands fits into that. If we start to talk about the situation in that way, and say we have to situate our police and military over there because of the danger of terrorists and the effect they will have on us, and so on, then we are operating from the basis of the self-interest of the bigger powers—in particular, Australia in this case—rather than in terms of helping the Solomons Islands to increase its capacity to determine its own future.

It has been a problem right from the beginning of colonisation in the Solomon Islands that there has been too much domination of that country by outside interests. Even in the period since the Solomons has had its independence, the economic influence of outside powers has increased. The Solomon Islands is very rich in resources, in terms of logging, bauxite, gold, and all kinds of minerals, palm oil plantations, and so on. It is high in terms of natural resources, but many of those natural resources are effectively under the control of foreign companies. The plantation area—the local shareholding—is quite small. During the Asian economic crisis of 1997, the Government in the Solomons at the time was pressured by overseas forces to implement one of those tightening one’s belt approaches, and to sell off more State assets. That put the country into a bit of a downward spiral, and contributed seriously to the problems we see in the Solomon Islands today.

With this commitment and the people covered under this bill, we should increase the capacity of the Solomon Islanders themselves, by helping them to become more skilled and to cover all the functions that they need in the civil service, and in health, education, and elsewhere. One concern I have about the Australia – New Zealand commitment, particularly as it may be applied by the Australians—and obviously there have been some tensions between Australia and New Zealand over the nature of this commitment and its extent—is that I am a bit worried that we could get the balance wrong. A number of Australians and New Zealanders, as part of this operation, will go into ministries like the Treasury. On one level that may help, in terms of making sure that the procedures are there and that there is not the same ability as before for corrupt practices to take place. However, on the other hand, if the Australians and New Zealanders who go into those jobs in the Treasury and other Government departments then start to determine the economic policy of the country, and perhaps apply the Howard approach of much more deregulation, privatisation, and all those sorts of things, that would not be in the long-term interests of the Solomon Islands people.

We have to realise that the Solomon Islands is an extremely diverse country. There are about 120 different tribal groups, and about as many languages as that. We should not see the tribal nature of social life as a problem. Sometimes people look at it from a white Western viewpoint, and see it as a problem. When a country like the Solomons spirals downwards and conflicts develop, and in particular the armed conflict that has developed in the Solomons, that can result in tribal loyalties being expressed in that conflict. However, we have to look at the strong tribal traditions in the Solomons and at the commitment of people to help others in their tribes as being basically their way of doing things, and as something that we should help them build on in a very positive way. It is a positive, not a negative, thing. In so far as we can help through this commitment to establish more law and order and due process, and just encourage that to happen, then we do not want to think of our economic assistance to the Solomons as being just about establishing Western interests and institutions on top of a tribal structure. Instead, we should utilise the tribal structure, which the people want to develop, and help them to develop their tribal economic institutions, as many of the aid organisations do that go from New Zealand to the Solomons. Organisations like the Christian World Service have had people over there recently, working out how to help at the grass roots with their aid work. Under the definitions used in this bill, I hope those non-governmental organisations will not be covered by this legislation, because we would move into quite a grey area if we were to say that non-governmental organisations that are separate from the Government are covered by New Zealand law in the way that this bill proposes.

Another point is that if we are serious about helping the Solomons, we have to look at the trade issue, and provide real markets in New Zealand for Solomon Islands products—for example, the products of cooperatives of Solomon Islanders. The Trade Aid organisation in New Zealand has provided a market for Solomon Islands honey. We have to assist in that way, and not just help the Solomons to restructure its economy in the way that some Western interests may like it to do.

In summary, I think that what we are doing, essentially, is helping the Solomon Islands people to determine their own future, and not trying to dominate the country in any longer-term sense.

STEPHEN FRANKS (ACT NZ) : On behalf of the ACT party I rise to welcome this bill. We will support its referral to the select committee. The Crimes and Misconduct (Overseas Operations) Bill is intended, in a nutshell, to extent New Zealand law to cover not only New Zealand armed services personnel overseas in peacekeeping operations but also police and civilians serving as part of the peacekeeping, or nation building, or whatever other euphemism we give for this gunboatexercise. What we have, of course, is the crumbling of a series of fond beliefs and misconceptions that Mr Keith Locke has simply recited.

The idea, of course, is that supposedly this is some kind of simple restoration of law and order. In the terms of the definition in the bill it is to cover people who are in a group participating in duties involving peacekeeping, the maintenance or restoration of law and order, or functioning Government institutions, or similar activities, whether or not in conjunction with personnel from one or more other countries. In other words, this has been tailored for the purported objectives of the Solomon Islands exercise. It is also said to be general—that is, it will be a standing piece of law that can apply whenever the Government is sending New Zealanders overseas for an exercise like this.

But what concerns me is that the thinking and the care that has gone into this seems to be about as shallow as the care that has characterised our attitude towards the Solomon Islands for the last 10 years. When the Solomon Islands Government, while it was still recognisable as a normal, functioning Government, asked New Zealand for assistance, it asked us, as I understand it, for 20 or 30 policemen. It saw that it had a serious problem and that a threshold point was being crossed where its own police force could descend into the best and most well-equipped tribe of bandits around. It wanted a critical mass of policing assistance.

What did New Zealand do? New Zealand applied the sort of nonsense theory that Mr Keith Locke just expressed—in essence saying: “If you people look at your indigenous institutions and build on them, and work within your conventions, and if the colonial oppressors have gone, the natural peace, order, and good government inherent in your institutions will assert themselves, and therefore we will send you one policeman.” So they sent one poor New Zealand policeman. A very experienced and successful man in New Zealand was sent up there to do an absolutely impossible job, and, as I understand it, came near to a nervous breakdown. He was a diligent and sensible man, he tried to do what he was asked to do, and it was completely beyond him. New Zealand scrimped. We were given the invitation to help, at a time when we could have helped without the expense we are now coming to.

Now the Australians and the New Zealanders between them are going to have 2,000 people in that country. It would be recognisable immediately by one of our 19th century forebears as a colonial operation. Indeed, as I look at this piece of law, I see that it is not very dissimilar to the instructions that Hobson was given when he was sent from Sydney to the Bay of Islands. He was told to go and assert British law over the lawless whalers, sealers, timber merchants, and other settlers. He was told to try to avoid interfering too much with the natives unless he could get the natives to agree that British law would apply across them all.

Here we go again, so-called “nation building”, applying our own law to our own people, getting their agreement that ours is the law that will govern, and that their courts and their institutions will not govern—and we think we are going to go and build a nation on that basis. No exit timetable has been arranged. There is no idea of how we are going to do it without cultural imperialism. Because this is not a simple failure to pay the Government servants. This is not a simple failure to back up a judge or the courts. This is a complete failure of a set of institutions that simply do not cope with the notion of “nation” when there are so many languages and cultures.

It is extremely hard, as we in New Zealand know, to run a nation without grave tension when there are two cultures contending, let alone over 100 cultures contending. The idea that we are going in to bowl in there, write a few instruction manuals, hand over, and walk out, is laughable. We should be looking at this law and asking: “How will our people really interface with locals? What will happen when the locals want to avail themselves of the law we are applying to our own people in that country? What will happen, for example, with the civilian employees, who are locals and an integral part of our operations, and who do not want to be left to the tender mercies of their own non-institutions?”.

Those are the common experiences of people engaged in enterprises like this, where tribalism, nepotism, and the tradition of strongman governing is simply not compatible with the fond ideas this Government is sending our people off with.

I look, for example, at the rather simple and crude mechanism. It simply says that our people over there will be subject to our law if he or she does any act outside New Zealand that if done or committed within New Zealand would constitute an offence—whether or not it constitutes an offence under the laws in force in the place where it occurs. What does that not cover? For example, our people are, presumably, going to be putting up buildings, structures. Do they have to comply with the Resource Management Act? Do they have to worry about getting a certificate of fitness under the Building Act? How can they do it? There is no inspecting structure there.

What about when they are called upon to deal with the people who are breaching the Convention on International Trade in Endangered Species of Wild Fauna and Flora, in relation to those dolphins? Are they going to be liable? Will the “greenies” here in New Zealand pursue New Zealand – law offences against them for having failed, as policing authorities in that area, to stop what is clearly an offence in New Zealand? Who has thought of these issues?

We are in a colonial exercise, and we get this primitive, little piece of law that says: “Let’s pretend it’s a little piece of New Zealand wherever these folk of ours are.” Well, all right, let us pretend, then look at some of the nonsense law that is going to apply. In many respects, these New Zealanders in the Solomons would probably rather live under Solomon Islands law. They would not have to deal with the Privacy Act. How does a body conduct the kind of policing exercise that these folk are going to have to do, the kind of intelligence gathering they are going to have to do, and comply with our nonsense privacy law? Yet that is what this bill says: they will be committing offences if what they are doing would be an offence in New Zealand.

This is a very crude exercise. I wonder whether anyone went back and looked at the much more sophisticated exercises that one would find in colonial office records of 140 years ago—because they would be a better precedent than this primitive little piece.

I look also at some of the other things that might be needed for the benefit of our service people over there, who, in good faith, are doing what needs to be done and is practical at the moment on the ground. For example, they can be arrested without the consent of the Attorney-General. Obviously the Attorney-General’s discretion is seen as the protection for these people against an unwanted prosecution. I would not want to be relying on the protection of the Hon Margaret Wilson. I would not feel that that was much protection when some politically correct offence was being lodged against these folk. However, it is not needed to arrest them. Then, once they are arrested, it appears that no further proceedings may be taken until the consent of the Attorney-General to a proceeding has been taken. What about habeas corpus? What about a bail application? One is not allowed to take any further proceedings until the consent is obtained. Meanwhile they are mouldering up there on what might be some absolutely trifling offence. This is a typical piece of quick knee-jerk reaction—a copy of the four-decades-old facilitation for the United Nations. It has been copied and thrown in without any realisation that this is the very first stage of some very complex redefinition that New Zealanders will need of their relationship with the countries that we are now poking our nose into.

We are not only stretching our legal, conceptual, and foreign policy resources in doing this; as Ron Mark said, we are actually stretching our physical resources. These people are being sent to the Solomons on this exercise while we will have people paying blood money in Iraq to apologise for the Prime Minister’s gaffes.

DARREN HUGHES (NZ Labour—Otaki) : This bill is meant to be about the New Zealand officers deployed in the Solomons. That has not stopped members of the Opposition getting up and using this bill as an opportunity to attack the Government over a deployment in connection with which, when it was originally discussed in this House, the spokesmen on defence, and leaders of parties, were falling over themselves to try to look like the biggest statesmen in this Parliament. Instead, what we have been subject to this afternoon is that member after member has got up and used the opportunity to attack Government defence policies, even though those same parties, when in Government, did nothing to lift the capability of the New Zealand Defence Force.

This Government coming into office in 1999 has been forced to do that, and reverse the cycle of decline in defence spending that the Opposition parties presided over when in office. They would be bleating and complaining that this Government was not involved in the Solomon Islands. Now that our forces are involved in the Solomons we get speeches like that from Mr Franks accusing us of being on some sort of colonial operation. Mr Mark said we had wasted our time and sat on our hands while all these things were going on—despite the fact that we are working in concert with the Australians. He was not accusing the Australian Government’s approach to the Solomons, but he could not wait to bag his own country in terms of the commitment that we have made to the Solomon Islands.

The approach taken by Opposition speakers has been absolutely opportunistic and not about trying to support the men and women who are working in our country’s name in the Solomons right now. That reflects on those members when one considers the way—when this House is packed and the gallery is full—they cannot wait to act as though they are the greatest statesmen ever to have been in this Parliament.

Mr Mark also said that the involvement of the New Zealand Police in the Solomons would cause trouble because New Zealand had rampant crime, and our police numbers here would be affected. That is despite the fact that there is full funding available to replace police officers who will not be in New Zealand as a consequence of the deployment, and establishment numbers and police stations around New Zealand will remain at the same level as they are. This is good legislation. It reaffirms our commitment to the Solomons. I think it is about time we rose above petty politics.

Hon TONY RYALL (NZ National—Bay of Plenty) : During the 10 minutes that Government members were allowed to speak, a car was broken into in Auckland. Every 9 minutes, a car in this country is burgled. Every 20 minutes, a car is stolen. We have a massive shortage of New Zealand police on our streets. We have reports that one can wait 2 days before a police officer will ring one back about a burglary. We had a situation when a man crazed on methamphetamine robbed a pub in south Auckland; the man had to be reported to the police three times. Only when he slaughtered three people at the Returned Services Association in Panmure did the police do anything about it.

That is the crisis of policing in this country today. The human cost is people’s lives. The human cost is the misery and disruption when a car is broken into every 9 minutes in this country under this Labour Government. What is the response of the Labour Government? “Let us send 40 of our most needed public servants to the Solomon Islands.”! I say this: it is all very well to put that as an issue of concern, but let us not forget what is happening here at home. The Solomons is a very dangerous place. One needs the skill and expertise of a military force there; one needs more than the police.

Those police officers should have stayed at home fixing crime and solving crime here in New Zealand. The situation is near crisis point. In Auckland, only a few weeks ago, there were 130 vacancies for front-line staff. What is the consequence of that? It basically means that car crime and much street crime are no longer being investigated. People in west Auckland whose cars have been broken into have been getting letters from the police saying: “Thanks for registering your complaint. We do not have the resources to investigate this complaint any more.” Information that was tabled in this House 2 or 3 weeks ago shows in parts of Auckland one is waiting in excess of 24 hours for a police officer to respond to a burglary complaint. Remember the Minister’s proud boast that someone would be there within half an hour? Well, the reality for most people in Auckland and the rest of the country is that it is a very long time.

In other parts of the country we have lawlessness driven by drug-crazed gangs. What is the Government’s solution? It is going to take police officers from the districts that are under pressure with gangs, and send them to the Solomon Islands! The priority should be here at home. In parts of this country there is the dreadful situation of more and more violent crime coming from methamphetamine—

David Benson-Pope: Is the member saying that the National Party would not help the Solomons?

Hon TONY RYALL: I tell that member that in his city, crime is out of control. The figures the Government will release at the end of this month will show an increase in violent crime in his city. It will show that the reduction in burglary has all but disappeared. It will show an increase in car conversion and car crime in this country. In fact, one of the closest advisers of the Minister of Police told the media that car crime is an epidemic in this country.

What are we going to do about it? Well, the way that one fixes car crime is to have a strong police presence in the community. Sending 40 of our police officers to the Solomon Islands is no way to maintain a strong police presence in this community. That is why I tell this Labour Government that this is the least of its worries. I tell those members that 65,000 New Zealanders have signed a petition that says they do not like the way Helen Clark and the Labour Government are dealing with the seabed and foreshore issue. Half a million New Zealanders will be given the opportunity to vote on whether that Government should be entitled to deal with the seabed and foreshore issue in the appalling way that it is doing. I say that that is the least of Labour members’ worries.

Those police should be here in New Zealand maintaining law and order in our country because we have so many problems here. Let me tell members what the crime statistics will show at the end of August. They will show that violent crime is at its third record level in a row. So that is 3 years of increases in a row. It will show that car crime in parts of New Zealand has risen by up to 25 percent. It will show that in parts of Auckland less than one in 17 burglaries is solved. It will show that in parts of North Shore a car will be broken into every 9 minutes—as in the rest of the country. That is what the stats will show. One way to improve that is to have a much stronger police presence—and sending 40 police officers to the Solomons is not the answer. The Government, though, should be complimented on at least one small piece of consultation—

David Benson-Pope: I raise a point of order, Madam Speaker. It is rather embarrassing to have to listen to this completely irrelevant attack on the Government’s policy on police, when clearly the bill is about intervention in the Solomon Islands. The member should be ruled out of order

Hon TONY RYALL: Probably the best thing to do is ignore that silly little point of order. This bill does cover the police and the various responsibilities they will have under misconduct or neglect of duty, and it is inherent in the bill that it is talking about the police team in the Solomon Islands. So it is quite legitimate for Opposition members to say, about the Solomon Islands, that we do not believe that this is the best use of the New Zealand police. We would rather have those officers here in New Zealand, in this community, reducing crime, because it is out of control. The statistics at the end of this month will show that crime is out of control.

The Government can do all it likes to try to argue that the New Zealand Police has not spent its budget, so it has had plenty of opportunity to get money. That is the wimpiest argument I have ever heard. In fact this Government is underfunding the police. On a per-head of population basis the funding is dropping. There are fewer resources available, and less effort is going into targeting the hot spots, but that is desperately needed. The National Party says this Government cannot be relied upon or trusted to support the police in a way we would expect. If the Government really wanted to support the Solomons community by sending a strong New Zealand Police force, it would not send only 40 officers. We have gang problems all around this country—

David Benson-Pope: Why don’t we hear about National’s policy?

Hon TONY RYALL: We would have cops on the streets focusing on street crime—the stuff the Labour Government has given up on. We think it is unacceptable that in the 1 hour we have been debating this bill, six cars will have been broken into, and only one of those crimes will ever be solved. We think it is outrageous that in the 1 hour we have been debating this bill, three cars will have been stolen, and we will be lucky if one is ever returned to its owner. This is just not good enough, because it is the sort of street crime that is getting out of control under this Labour Government. This side of the House says we need those police in our country, because that is the most pressing concern of the communities that need to be assured there will be appropriate law enforcement for them.

MOANA MACKEY (NZ Labour) : I am going to break with the precedent set by the previous speaker and actually talk about the bill before the House. In case that member wants to know, it is called the Crimes and Misconduct (Overseas Operations) Bill. I admit to being a bit confused about the National Party’s position on this bill, because the speech we have just heard from the Hon Tony Ryall was quite different from that of his colleague Mr Wayne Mapp. Although I understand that there are issues in their caucus at the moment, I suggest that communication is still important, and they should engage in it.

What Mr Ryall did not say, of course, was whether the National Party supported the deployment to the Solomons. I also profess to be a bit confused that whereas the National Party constantly bleats to this Government about the importance of being a responsible member of the international community, it does not seem to want to support operations in our own backyard. New Zealand has always played an important role as a peacekeeper and protector of democracy in its backyard—the Pacific region—and I am proud of that.

This bill will minimise the exposure of the New Zealand Police and civilians to prosecution in the Solomon Islands, but, obviously, it will also apply to any similar non-UN type of operation in the future. Although we hope we will not have to enact the protections this bill provides beyond the deployment to the Solomons, unfortunately there may be occasions when a similar non-UN operation is called for, and these protections will guide that mission as well. I commend this bill to the House.

Hon GEORGINA TE HEUHEU (NZ National) : The member who has just resumed her seat is new in the House, and I will give her a little bit of advice: she should not be so cheeky to senior members of this House, because it is likely that in 18 months she will not be a member anyway.

The Government whip is right about one thing—for a change. He said that this bill is about intervention in the Solomon Islands, and he is right. The bill makes provision for bringing under the purview of New Zealand jurisdiction those officers of ours who have been committed to the Solomon Islands and who are not already covered by the provisions that normally cover members of the Defence Force—namely, the police. I want to commend the speech made by my colleague Tony Ryall, because although it is all very nice that we are sending our police over to the Solomon Islands, at the same time the Government should make sure that we have sufficient police to tackle the problems here in New Zealand. Clearly, they are not doing that.

The issue of intervention in the Solomon Islands throws up the bigger picture, and that is the fact of the matter. Of course it is important for New Zealand to be there. Located as we are in the Pacific, one of our first responsibilities is to ensure our regional security, and that we must do in conjunction with Australia. I am only disappointed that we waited so long to stand up and be counted and show that we do understand our responsibilities in the region, and that if there ever were an area of the world where we should be first in, it is our own region. That is a fact—other countries further afield look to New Zealand and Australia to take the lead in places like the Solomons. My regret, as I said, was that we did not show some leadership earlier, and particularly considering that we have a very fine track record of dealing with similar situations.

Our track record in dealing with the Bougainville issue, under the leadership of the Rt Hon Don McKinnon, was absolutely exemplary. It was done for the right reasons, and in a way that gave us the leadership on that issue, and it is only right and proper that New Zealand shows leadership. What I cannot stand is the sight of lots of photos of Ministers on the other side sending away so many of our young men and women to hot spots overseas, but with so few resources. Those Ministers love photo opportunities; they love waving to the military—and to the police, no doubt. They love to shoot up to Cairns to say: “Bye, bye. Away you go. You’re doing a great job.” But that is not the way to approach those kinds of missions. These things have to be planned. As I say, our first responsibility is to our region, and where that is also possible, then further afield.

But this Government has shown—and there is a lot of public comment, so it is not just my words—that it is not averse to using our Defence Force as its own personal toy, for its spin, and to cover up the gaps in its defence policy. For proof of that one need only look at the New Zealand Herald of Thursday, 31 July: “Ex-chief savages defence policy”. How he managed to keep quiet when he was running the show is a tribute to his integrity. But now that he is not there, he can come out and speak the truth. Air Marshal Carey Adamson says that defence policy is being decided “on the run”. How shameful is that for our men and women in the military? “The Labour-led Government,” says the Herald article, “has sent forces to Afghanistan, committed soldiers to the reconstruction of postwar Iraq, and is assisting an Australian-led mission to end unrest in the Solomon Islands.” “What worries me’’, Carey Adamson states—[Interruption]—“is that we seem to be going pretty heavily on peacekeeping, but we’re not doing a lot of the professional training episodes. If you’re throwing away training just so you can go and do some peacekeeping…then the overall capability starts winding down.”

Minister Burton’s response to that was so weak as to be laughable. Apparently, he said that peacekeeping deployments had “helped to raise capability levels in the Defence Force.” What on earth does that mean? What would a “peacenik” know about it, what would raise capability levels in our Defence Force? Absolutely nothing! It is a tragedy that we have a Minister of Defence who thinks he can tell the former Chief of Defence Force, Air Marshal Carey Adamson, what raises capability levels. [Interruption] Again, on the weekend the New Zealand Herald stated that Labour was “running scared on defence”. It had a major editorial that absolutely underpinned what I said earlier, which was that this Government loves the photo opportunities.

Lindsay Tisch: I raise a point of order, Madam Speaker. I draw your attention to page 51 of Speakers’ Rulings. There has been a barrage of interjections from the senior whip. They are unfounded and just a continual stream of nonsense. Under Speaker’s ruling 51/5, I ask that that member give our speaker a fair go with her speech.

Madam DEPUTY SPEAKER: The member is quite right. The member will be heard in silence.

Hon GEORGINA TE HEUHEU: This Government loves the photo opportunities. Its Ministers love to have photos waving our soldiers, our men and women, bye-bye, and sending them off to hot spots in the Solomons and further afield—dangerous hot spots I might add—and without proper resources. In fact, what resources we have cannot make it there anyway, because the four Hercules are grounded. It is absolutely shameful that this Government treats our military in that way. It uses the military for its own purposes, to fill in the cracks in its defence policy and foreign policy. The Prime Minister made gaffes in relation to Iraq, so what did she do? She sent some personnel over there. Iraq is a highly dangerous spot, and so are Afghanistan and the Solomons.

When we are dealing with that sort of turmoil around the world, we cannot afford to have defence policy being made on the run in the way that this Government is doing, and in the way that Air Marshal Carey Adamson said it was doing. Who, indeed, would know better than him? He headed our military for some years, and kept his integrity. He remained quiet while he headed the organisation, but now he is able to come out and tell the truth for what it is. It is not only the Opposition parties saying that; it is someone who knows.

The Minister of Defence has the temerity to tell Air Marshal Carey Adamson what he thinks raises the capability of the military. What a laugh, coming from a “peacenik” who in his former life protested in peace marches, and now comes here and tells us that. What an insult that he should be running the Defence Force and telling Carey Adamson what his job is. Government members might sit there and laugh and bring these bills to the House, but they cannot run away from those things that are being said, like the newspaper headlines “Ex-chief savages defence policy” and “Labour running scared on defence”. That is the truth of the matter. Those things underpin the bill that now sits before us, so a simple intervention is actually not that, at all. This Government has perpetrated a huge failure in defence policy on this country.

• Bill read a first time, and referred to the Foreign Affairs, Defence and Trade Committee.

Hon PETE HODGSON (Convenor, Ministerial Group on Climate Change) : I move, That the Resource Management (Energy and Climate Change) Amendment Bill be now read a first time. The policy papers that led to this bill were signed both by me as Convenor of the Ministerial Group on Climate Change and by the Minister for the Environment. That partnership has been very important in the development of the bill.

The bill supports the Government’s climate change and energy policy through amendments to the Resource Management Act. It recognises the Government’s preference for national coordination of controls on greenhouse gas emissions, and it gives greater emphasis to climate change in Resource Management Act planning and decision making on energy matters. The bill introduces an explicit requirement for those exercising functions and powers under the Resource Management Act to have particular regard to a series of new matters. They include energy efficiency, the effects of climate change, and the benefits to be derived from the use and development of renewable energy. Accordingly, clause 5 amends the Resource Management Act by inserting the new matters into section 7 of the Act. Whilst some councils are already incorporating such matters in their planning documents and consent decisions, that practice is not consistent across the country.

The bill provides national direction by ensuring that efficient use of energy, the benefits of renewable energy, and the effects of climate change are flagged for the attention of those working with the Resource Management Act. For example, it requires local authorities considering proposed wind-farming projects to have particular regard to the benefits of lower greenhouse gas emissions offered by such an energy source. That does not confer automatic approval on renewable energy proposals, but it requires anyone exercising functions and powers under the Resource Management Act to take those matters into consideration.

With regard to climate change, the bill requires local authorities to consider and plan for associated effects such as changes in typical rainfall patterns, sea-level rises, increased risk of flooding, and coastal erosion. The amendment is consistent with the Resource Management Act principle that local government is usually best placed to make decisions on local matters. However, the bill also reflects the fact that some discharges of greenhouse gases are best dealt with using national mechanisms, rather than localised Resource Management Act decisions. Clauses 6 and 7 insert new sections that specifically provide that when making rules and considering consent applications relating to the discharge of greenhouse gases from industrial or trade premises, a regional council must not have regard to the effects of those discharges on climate change. Those amendments do not indicate a lack of Government concern about greenhouse gas emissions. On the contrary, we propose them because greenhouse gas emissions are so important that they should be managed through national mechanisms—namely, those in our climate-change policies.

There are two exceptions to those exclusion provisions. First, we want regional councils to be able to consider greenhouse gas emissions when implementing national environmental standards that address those matters. A national environmental standard is a potential national mechanism established by regulation under the Resource Management Act. While it is set nationally, it is administered locally by regional councils. Accordingly, the bill provides for regional councils to make rules and consider consent applications addressing those matters, but only to implement a national and environmental standard, and only to an extent that is not more or less restrictive than the standard allows.

The second exception provides that a regional council may have regard to the effects on climate change of an activity involving the use and development of renewable energy, to the extent that it reduces discharges of greenhouse gases. That supports the policies within the National Energy Efficiency and Conservation Strategy, and the amendments to section 7 of the Resource Management Act, which I identified earlier.

The last two clauses of the bill provide transitional provisions. Clause 8 requires that any resource consent application, designation notice, or application to change a consent condition, filed prior to the commencement of the bill, shall be completed to the end of any appeals under the Resource Management Act as if the bill had not been enacted. This provision allows all parties to complete the process under the same rules as they started, and accords with natural justice considerations. This is particularly important under the Resource Management Act, which has significant provisions for public participation throughout these processes. Clause 9 revokes any existing rule in a regional plan that relates solely to the control of the effects on climate change of greenhouse gas emissions from any industrial or trade premises. This is necessary to give proper effect to the provisions within the bill.

Collectively these changes to the Resource Management Act will support existing Government policy on energy efficiency, renewable energy, and climate change. They will provide national leadership, clearer responsibilities, and reduced administration, compliance, and participation costs in respect of energy and climate-change matters. At the appropriate time, I will move that the bill be referred to the Local Government and Environment Committee, and that the committee report the bill finally to the House by Tuesday, 25 November 2003. I commend the bill to the House.

Hon Dr NICK SMITH (NZ National—Nelson) : If there is any Act of Parliament that is in need of reform, it is the Resource Management Act. The National Party will support any legislative vehicle that will give us the opportunity to make sensible changes to that Act, so we will support this bill to a select committee.

If we believe that this bill will deal with any of the logjam that exists in resource management, and deal with any of the energy, roading, or other issues, we are sadly mistaken. This is a Clayton’s bill. We have 240 detailed process provisions, and the Minister wants only to tinker with a few of the provisions in section 7, otherwise known as the other matters.

I want to outline why National believes this is a very poor shot at significant reform of the Resource Management Act. I also want to challenge the Government on its confused policies around climate change. Let us first turn to the sorts of pathetic changes—

Darren Hughes: What does your lawyer think about it?

Hon Dr NICK SMITH: I know that member is such a pathetic constituency member that he is happy to stand up in this House and see me charged with contempt of court for doing my job. I say to the member opposite, and others—

Clayton Cosgrove: You know the rules.

Hon Dr NICK SMITH: That is interesting; Clayton Cosgrove says that I know the rules. Will he support special legislation to save Harry Duynhoven’s neck?

Clayton Cosgrove: You knew the rules, mate.

Hon Dr NICK SMITH: Well, why does that not apply to Harry Duynhoven, I ask the member? [Interruption] The member is interjecting. I want to challenge him and say that if he is standing on a point of principle, and challenging me today for standing by a family in my electorate so they can have custody of their child, but is prepared to pass special legislation to save Harry Duynhoven’s neck, I want to know why. [Interruption] I know members opposite will use every possible dirty trick to try to stop debate in this House, and will even go to the length of the top law enforcement officer trying to kick me out of Parliament for expressing a view. I will stand up and say what I think, and say that this bill is not good enough. [Interruption] I raise a point of order, Mr Speaker. Do I have to put up with those sorts of interjections from Clayton Cosgrove, David Parker, and Pete Hodgson in trying to make a sensible contribution on this bill?

The ASSISTANT SPEAKER (H V Ross Robertson): I just say to the member that I have let this go. It is the first sitting day of the week. I just ask members to be relevant. An irrelevant interjection does not justify a member in dealing with that interjection.

Hon Ken Shirley: I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): I have made a ruling, Mr Shirley.

Hon Ken Shirley: I seek a point of clarification on that ruling, Mr Assistant Speaker. You said it is Tuesday. Am I to understand from that that there is one set of rules for Tuesday and another set of rules for Thursday? If there are, the Opposition parties would like to know.

The ASSISTANT SPEAKER (H V Ross Robertson): No, I tell Mr Shirley that he is not to understand that. I have recognised that there has been a bit of toing and froing during this debate. This is a robust place, and I expect that.

Hon Dr NICK SMITH: I raise a point of order, Mr Assistant Speaker. During the course of Pete Hodgson’s first reading speech there was not one interjection from members on this side of the House. We heard him in silence, and for you to suggest that we were continuously interjecting on this bill is not correct.

The ASSISTANT SPEAKER (H V Ross Robertson): No, I was not suggesting that Opposition members were interjecting. The interjections came from the Government side. I have pulled them up several times. One member who changed his seat has now gone back to where he was sitting. I want to get on with the debate. Members should take note that we need to continue this debate and be relevant to the bill that is before the House.

Lindsay Tisch: I raise a point of order, Mr Speaker. During the last debate we had a barrage of interjections that were not rare and reasonable. I want an assurance that during this debate you will uphold Speaker’s ruling 51/5, which states that interjections in debate are out of order unless they are rare and reasonable. I want an assurance from you that Government members will give our speakers a fair go. The nonsense that went on in the last debate was quite outrageous.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member, and also refer him to Speaker’s ruling 51/4, which states that, strictly speaking, members can be heard without interruption, but members may ask reasonable questions to elicit further information. I expect that is how this debate will be conducted.

Shane Ardern: I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): I have ruled on this, I tell Mr Ardern.

Shane Ardern: It is not to do with the point you have ruled on.

The ASSISTANT SPEAKER (H V Ross Robertson): It had better not be.

Shane Ardern: It is a further point of order, Mr Assistant Speaker. This whole process started because of interjection from the Government benches. I want an assurance that this time will not be taken off Mr Smith’s time, because he knows a lot about the subject of this debate.

The ASSISTANT SPEAKER (H V Ross Robertson): No, the time has not been taken off, and that is a decision of the Speaker.

Hon Dr NICK SMITH: This bill that attempts to make changes to the Resource Management Act is both confused and a Clayton’s provision. I draw the member’s attention to the submissions that were received by major players in the energy sector. This is a year in which we have had an energy crisis, there have been substantive effects on the gross domestic product, and every New Zealander has been asked to save power.

Parliament should be focused on the sorts of provisions that will remove the roadblocks to sensible energy developments. This bill from the Government will do nothing of that sort. The detailed objection provisions, the provisions by which this Government will give legal aid to those who want to block development, and the provisions that allow anybody to object to anything anywhere are not being constrained. We are not seeing any provisions that would amend the provisions of the Resource Management Act that have players in the energy sector saying it will take 7 or 8 years for people to get resource consent for a major development.

I was expecting from this Minister of Energy, who has been so grossly embarrassed by the energy crisis this year, some sensible reforms to the Resource Management Act. [Interruption] Jill Pettis says that he has not been embarrassed. I would like that member to explain why New Zealanders were asked to make such huge power savings this year. Not for just 1 year, but for two periods during the term that he has been Minister, we have had major energy crises. At the core of that debate is a need for new generation and for more sensible laws, with regard to resource management, that will allow for the consents of those important developments. I see confusion in these provisions about resource management law.

I would like to know where the Minister for the Environment is. I would like to know, for instance, why energy but not roading is in clause 7. I know that most New Zealanders think there is a roading crisis. Anybody who goes around Auckland knows that, by good economic estimate, there is nearly $1 billion per year of economic costs because of delays in building roads. Why is it that building renewable energy plants will be a matter of national importance, but dealing with transport issues will not?

The transport issues go to the core of the Resource Management Act. We on this side of the House know that there are dozens of roading projects that are held up for up to 7 years because of the Resource Management Act. Why is it that putting up windmills will be given preferential status, but building an additional railway, port, or roads will not? That makes absolutely no logical sense at all. What we have is piecemeal legislation that makes no attempt at all to deal with the substantive policy issues that are of concern with regard to the Resource Management Act.

Then we come to the climate change issues. If ever I saw a muddle, it is with regard to climate change. Let us look at what the Minister is saying with regard to this bill. If there is a negative climate change effect from a new power station, that is not to be dealt with under the Resource Management Act, but a positive climate change effect is to be dealt with under the Resource Management Act if it is an energy project. If someone applied for resource consent for planting a large area in forestry, that would have a positive climate change effect. Can that be taken into account under the provisions of this bill? No, it cannot. Can the Minister explain to the House why she is going to exclude the positive effect of planting a forest? We know that by planting a forest we absorb substantial amounts of carbon. Why is that not to be taken into account, yet building a windmill is? Can anybody explain that sort of rationale? I say that it cannot be explained.

Then there is this Government’s flatulence tax. The Government is saying that if a farmer has a cow or sheep that emits, the Government will put a special tax on that, but if a giant power station wants to emit huge amounts of carbon with a new coal plant, that is not to be taken into account under the Resource Management Act. Anybody with a small amount of knowledge of climate change would know that the impacts of new coal, gas, and oil generating stations will have a huge effect on this country’s greenhouse gas emissions. They will not be taken into account, but the poor old cocky will have to pay the flatulence tax. I would love a member opposite to explain that sort of logic to the House, because it is truly remarkable.

What we need is a consistent climate change policy that deals right across the board with all the issues, rather than in a piecemeal way that counts a positive here and does not count a negative there, and that has different rules for farmers and for electricity generating stations. We need a consistent approach, and that is not provided for in this legislation.

I also express some concern about the fact that every council in the country will be asked, under the provisions of this bill, to take into account climate change effects. Well! That is like putting the treaty into legislation. Scientists honestly do not know. In fact, it is quite disturbing that the scientific panel from the United Nations dealing with climate change talks about scenarios, but the Government talks about projections. The granddaddy of them all is the Convenor, Ministerial Group on Climate Change saying to the people of New Zealand: “The Government has a responsibility to provide a stable climate.” Anybody with a half a brain knows that the climate over the last 1,000 years has been continuously changing and will continue to change. It will change well into the next 100 and 200 years, and the provisions in this bill are illogical. We will support the bill to the select committee, but we will have to make very substantive changes to make any sense of it.

BERNIE OGILVY (United Future) : I rise on behalf of United Future to support the Resource Management (Energy and Climate Change) Amendment Bill. The first objective of this bill is to give greater weight to the value of renewable energy and clarify that energy efficiencies should be considered, regardless of the energy source. That is primarily achieved in clause 5. Although these measures effectively skew the electricity market in favour of renewables—something akin to picking winners—United Future is comfortable with that because of the natural compatibility between hydroelectricity generation and wind generation. In fact, we will be urging the select committee to investigate whether the bill goes far enough towards removing the obstacles to renewables. However, that does not mean that we are blind to the drawbacks inherent in renewable energy sources.

One of the major problems with wind generation overseas has been its inherent unreliability. For example, if the wind drops suddenly then another generator—usually a coal or gas-fired thermal plant—has to be ready to take over the load straight away. In countries where the bulk electricity generation capacity is provided by thermal plants, that stand-by capacity requires a technique called “spinning”, which is, basically, keeping the necessary thermal plants constantly fired up and ready to go, thereby using up thermal fuels anyway. That is quite inefficient.

In New Zealand, that stand-by capacity can be provided by hydro dams rather than by thermal plants. That means that when the wind is blowing, the dams can conserve their water, but when the wind drops they are capable of taking up the slack quickly. In normal years, such a regime could mean that a large proportion of New Zealand’s electricity needs could be supplied from relatively non-polluting renewable sources—assuming, of course, that we do not take into account the huge amount of land area required for wind farms. However, we must remember that that does not solve the shortages faced during dry years, such as this year and 2001. Because of the short-term inconsistency of most renewables, such as wind power, New Zealand still needs to have enough thermal generation available to take over from hydro generation when the storage lakes are low.

I note also that the second objective of this legislation, as stated in the bill, is to give greater weight to considering the effects of climate change, such as addressing potential increases in flood risk, a rise in average sea levels, and changes in typical rainfall patterns. We believe that clause 3 goes a long way towards achieving that by requiring local authorities to plan for the potential effects of climate change. That is all very well and very good and, on the face of it, can be seen as a strategy for dealing with the potential effects of climate change. However, during the select committee process we will be seeking to ensure that the legislation does not have the unintended consequence of putting a stop to all new development, especially in coastal areas.

I also note that the third objective of this bill is to remove climate change as a consideration for local authorities when they are considering industrial discharges of greenhouse gases, as those emissions are best addressed using a national mechanism. That is also something that we support. Although we believe ratification of the Kyoto Protocol ahead of our major trading partners was a big mistake for both the Government and the country as a whole, we still agree that, now that it has been ratified, it should at least be administered consistently on a nationwide basis. The impact on the economy of the emergence of a range of differing ad hoc regional policies would be even greater than that with which we are already faced.

JIM PETERS (NZ First) : Earlier this year we had before the House the Resource Management Amendment Bill (No 2), and at that time it was the contention of New Zealand First that the bill needed more time and thought, and that the real issues that confront much of the development in our country were not addressed in it. In response, we were told that they would be addressed in the form of this bill, in the various changes that were to come. If that is so, then this legislation is a very, very poor attempt, indeed. It is a pitiful attempt, with unfinished business.

Those of us interested in marine matters—in fishing, the oceans policy, and aquaculture reform—will have seen already a high state of unpreparedness and an unthinking response from the Government with regard to those matters. At this stage, there is a real mess out there in local government in respect of aquaculture reform. The Marine Reserves Bill is being held up for half a year—thankfully—but that reflects, if one likes, the mishmash of Government developmental thinking at the present time. That same lack of real clarity is seen in this bill before us now.

New Zealand First also believes, as others have stated, that the Kyoto Protocol was one on which we should have moved in concert with our trading neighbours and major competitors. To have moved earlier was and is a long-term mistake. I say again that this bill is unfinished business. In local government, when one is doing plans one is asked to do a section 32. In this bill we have a pitiful type of section 32. The benefits and costs are mulled over, and are very lightly discussed, but there is nothing here to convey to any council, or to any would-be applicant, what the legislation actually means. It is a long-winded, discursive discussion about benefits and costs, without any clarity at all. It is all here, and it shows, really, what I have already contended—that this is very much unfinished business.

It should not be, because the Government in 2001, through the Ministry for the Environment, had the document Kyoto Protocol: Ensuring our Future drawn up. Last year, in October, the Government, at the end of its own work, had a preferred policy package, yet, almost 9 months later, we have come along to look at a major issue in the mind of the Government for which there is no certainty at all about national guidelines or about the regional objectives stated in the foreword and preamble. At the end of the day, if this bill ever became law, one would have to go back to a case by case assessment as is done under the present Resource Management Act. Therefore, one must ask whether this bill removes the uncertainty about greenhouse gas emissions, and gives any clarity to those who—unfortunately—may have to administer it in the future. The answer is a very, very clear “No”; it is really not of that shape at all.

Although the Government’s paper in October last year stated that climate change is an international issue, and, therefore, a national issue, this bill does not reflect that concept at all. It does not even get close to that. The bill shows no evidence that the Government has a coordinated or integrated national policy at all, despite what the Minister said. The proof is this: if this House in a fit of legislative urgency passed this bill tonight, would it be able to be implemented tomorrow? The answer is a clear “No”. This bill is unfinished business; it requires so much more, yet we are being asked, in all good conscience, to pass it on to the Local Government and Environment Committee for further thought. On behalf of New Zealand First I am very pleased to say that we will not be voting for this bill’s first reading. The bill needs to give certainty to those people who will have to administer it.

If I look very closely at the bill, and go to clause 3 for an indication of what I am saying, I find that paragraph (b)(i) states: “to plan for the potential effects of climate change;”, but the clause does not state that the impact of discharge is to be considered. What a mixed message that sends to those councils that have to administer it, and what an uncertain impact that will have when it finally gets out in some legislative way in the future, if the Government has its way.

Secondly, section 7 of the principal Act, which is already long enough, will have two long extra bits inserted at the end, making it more lengthy, yet the body of this bill does not give any direction at the present time to anybody who will have to administer the bill. Again, I wonder why a distinction is made between climate change in the future, and the real impact, which the Government already knows about, with regard to discharge from industrial areas at the present time. Whether that is a matter of a cost factor or whatever else, I am not quite sure, but that issue is there.

The Minister stated in his opening speech, with some confidence, that this bill is a bill that can be implemented. Our contention—and I do not wish to take the House any further—is that this bill is unfinished business, that it is reflective of the whole nature, by the way, of where the Government is on climate change, and that it does not deserve to go beyond the first reading. It will not have our support, and we will vigorously pursue the issues that I have raised: first, what the nature of climate change really is; secondly, what the impact will be on the applicant; and, thirdly, and most important of all, whether we will have yet more slight meanderings through a potential Resource Management Act without the Government having the conscience to put together a real Resource Management Act that gives certainty and speed to the applicant, and that requires the minimum amount of compliance from the applicant, so that we can really get on with developing the resources of this country. That should be the aim of the Resource Management Act. These little bits of tinkering are not the substance of sound economic development or of sound law. We will resist them to the hilt.

MARK PECK (NZ Labour—Invercargill) : Let me first of all remind the House that this bill essentially does five things: firstly, it supports the Government’s well-established climate change and energy policies; secondly, it provides a basis for national coordination of controls on greenhouse gas emissions; thirdly, it ensures the efficient use of energy; fourthly, the benefits of renewable energy and the effects of climate change are flagged for the attention of those working with the Resource Management Act; and, finally, it provides national leadership, clarity of roles, and reduced administration, compliance, and participation costs related to energy and climate change matters.

In looking at this bill, there are two matters I wish to address very quickly today. The first is the issue of the debate about climate change and the greenhouse gas emissions from livestock. I want to pass a challenge to the member for Nelson—he should remember that he is actually the member for the Labour seat of Nelson—which is that we take it rather seriously on this side of the House when farmers start resorting to sending cow manure through the mail. Indeed, when my office received a packet of cow manure, my staff took it straight to the police. The police were very interested about where it had come from. I say to the wit who sent me a packet of cow manure, and who did not have the fortitude to put his return address on the back of it, that, far from our being frightened of going to the farmers meetings, we would encourage farmers to take the hard approach of entering into some real debate.

There is debate about those issues. I tell members that there will be debates in Southland this week. How do I know that? Because they have been arranged by the National Party, and by Federated Farmers in conjunction with it. How do I know that? Because the media gave me the list of where the meetings will be held. I can tell those who will be in Winton on Thursday afternoon that they will be meeting when the House is sitting. Had they had the courage to organise a meeting for a time when I was able to attend, I would have been there to debate the policy with them. I say to the member from the Labour seat of Nelson, who preceded me in this debate, that far from members on this side of the House not wanting to enter into the debate, we are quite keen to do so because there are some issues in it.

I also say that the farmersnever let the facts get in the way of a good story on this matter. What is the first thing I know about it? I know that anything that will happen with these emissions will not kick in until 2012. That is the first thing. Is the Minister of Energy nodding his head?

Hon Pete Hodgson: 2008.

MARK PECK: OK, I am 4 years too far out.

The second thing I know is that there is a principle called “polluter pays”, and if we were to adopt that principle, then the farmers would pay the total cost.

Jill Pettis: $60,000 per farmer.

MARK PECK: That cost would be $60,000 per farmer. I will say one other thing, which is something that my colleague Damien O’Connor likes to say from time to time. Here they are, all upset about paying 65c per cattle beast and 9c per sheep, yet when the dairy price dropped from $5.30 to $3.30 they hardly raised a sweat. I just wonder where they are taking the debate. For the price of a few envelopes they send me a packet of cow dung, yet they are not prepared to enter into the debate. They never let the facts get in the way of a good story.

I do not know much about animal husbandry, but I know that the Minister of Energy does, and I imagine that when an animal is not producing waste, it is using its energy to produce stuff like muscle and fibre. In time, there could well be a pay-off to farmers from the research that will go on as a result of this particular levy, but we do not know, because that is what the research is actually about.

Farmers are part of the New Zealand community, as well, and they should front up to their obligation, as part of the climate control situation. There is a final factor that they need to think on, and it goes like this: if ever there was an industry that was reliant on the climate, it is farming. The last thing I want to see in Southland is bananas growing. I want to see our dairy industry going really well, and our sheep industry going very well indeed, and that is all about climate. It is important that we do look at climate change. I am very keen to enter into this debate, but I tell farmers to stop organising it through the National Party and Federated Farmers. Let us have some decent debate. I had a debate with a number of these people before the election.

I have one final thing that I want to say, to a friend of mine in Southland called Mr Affleck. He is all upset about the fact that the Government has finally decided to do something about energy and stand-by generation. He said that the Government has been panicked into providing stand-by generation. Well, about 2 months earlier he was saying that the Government had been derelict in its responsibilities in not providing stand-by generation for exactly these sorts of situations.

Hon Pete Hodgson: We did what he suggested.

MARK PECK: We have done something about stand-by generation, and now we are said to have panicked. I say that Mr Affleck should grow up and come into the real world. He should enter into the debate in a proper manner, and at least have the ability to give some credit to this Government, which is keen on doing something about energy and doing something about climate change, and is promoting them in this bill. At the end of the day, we all live on these stringy little islands together. We are all in this together, and we should all be doing our bit.

SHANE ARDERN (NZ National—Taranaki - King Country) : It gives me great pleasure to rise to speak on this bill. I say at the outset that I had made up my mind while sitting and listening to the debate that I was not going to be drawn into the debate about farmers and the flatulence tax, which has nothing to do with this bill, but the member for Invercargill, Mark Peck, has given me a golden opportunity to stand here, as one of the very few farmers in this House, and lash out at the Government over it. I congratulate him on that; I intend to do so.

When I was farming I used often to ask how far academics would go to make their theses fit the facts, and if ever I needed an example of that, this would be it—both the flatulence tax and the amendment in this bill. During the extensive select committee process on the resource management legislation the National Party brought forward 18 recommended changes, only to have this Government rule out the whole lot. Meridian Energy, a State-owned enterprise—the Government’s own energy company—brought forward 18 recommended changes to the Resource Management Act, only to have all of them ruled out. We are now here in this House debating legislation that will do none of those things. The only reason the National Party is supporting this bill going to the Local Government and Environment Committee is that we want those people to have an opportunity to bring forward again some of those recommendations. We have the naive hope that this time round the Government will take some notice of what those people have to say, but I do not think it will.

That brings me to ratification of the Kyoto Protocol, which we have gone through in recent times. It is nothing more than an opportunity for the No. 1 academic, the Prime Minister of New Zealand, to stand on the world stage and promote her credentials as somebody worthy of employment post her being Prime Minister. I would go as far as to say that being Prime Minister of New Zealand no longer provides her with enough academic stimulation, and she is looking for her next job, which will be an international role somewhere or other.

That brings us to the stupid situation we find ourselves in now, where we have an idiotic tax on farmers being promoted. It is just a pure snatch-and-grab tax. It is put out there under the guise that it somehow will support research and development of ruminant efficiency. What an absolute lot of nonsense! Right at the moment, the primary production sector of this country—and members opposite should listen to this—spends more on research and development of this very topic than anybody else does, including the Government. Farmers are already funding research in this area.

The member for Invercargill, Mark Peck, talked about how the polluters should pay, and he is dead right; the polluters should pay, and we should start right in the place where the problem exists: the city. The city of Invercargill would be a good place to start, where there is total environmental devastation, and more problems than—

Mark Peck: This is great Hansard.

SHANE ARDERN: Maybe the member opposite will take a call and tell me whether the construction and expansion of cities on our rural farmland is devastation of the environment. Perhaps he can tell me that.

In the case of the flatulence tax, does the member opposite believe that polluters should pay? Yes or no? If he does believe that, is he suggesting that the farmers of New Zealand, and the farmers of his electorate, are the polluters? If he is suggesting that, he should turn up at one of those meetings—and he has thrown down the challenge to do so—and tell the farmers that they are the polluters. The very group of people who have provided this Government with the wherewithal to carry out its social engineering policies of the last 4 years are now the victims of this vindictive little tax.

It is interesting to note that the member opposite touched on farmers having a drop in their payouts from $5.30 to $3.62 without making a whimper. That just shows how out of touch he is. He clearly has not been reading the rural newspapers—that is for sure—and he certainly has not been attending any of the meetings that Fonterra has held. If the member had been attending them, he would know how much trouble this Government is going to be in as a result of that drop in farmers’ income—income that this Government has successfully taxed with its 17 new taxes.

Let us come back to the bill for a moment. There are 16 amendments proposed by the National Party, and this legislation addresses none of them. So what is it for? What will it actually achieve? Let us have a look at what is happening out there in the energy sector. We have a situation where there are a large number of proposed hydro developments—sustainable, renewable energy developments—and where are they? They have been held up in the resource consent process, or they are being denied the opportunity to proceed, because the Minister of Conservation says that 200 hectares of gorse is of significant conservation value. The Minister of Energy says the Government is going to put emergency generation in place. Well, that is an interesting concept. What will it use? My understanding is that it is going to burn coal. How does that assist in improving our greenhouse gas emission status? What will that do to decrease greenhouse gases?

Let us have a look at what some of the major industries have to say. Methanex, in the Taranaki - King Country electorate, has said to me: “Apply any more of these stupid taxes on us and we will go off shore. We will go to Australia.” What will that result in, in terms of the Kyoto Protocol? It is most likely that it will produce less methanol, which will mean that China or some such country will meet the vacuum, producing it from coal. How does that contribute to our decreasing our total emissions of greenhouse gases, as a member of the world community? One of the members opposite might take a call and explain to me how that helps matters.

The Minister might take a call and tell us whether this emergency generation capacity is going to be from coal-fired power stations, from oil-fired power stations, from wind power, or from hydro power. I would like to know the answer to that. I bet the Minister will not answer it, because I know that it will be from coal-fired power stations or some other non-renewable energy source.

Hon Pete Hodgson: That’s right.

SHANE ARDERN: There we go. The Minister has admitted that that is the case. At the end of the day, how is that consistent with the Kyoto Protocol and the whole issue that this debate is about? I just ask members opposite to reflect on that.

I also ask members opposite to reflect on the notion that somehow or other the science around methane emission from animals is robust, because I have seen no evidence anywhere that it is robust. For every scientist who says that methane emission from animals provides 50 percent of the problem we have in New Zealand, there are other scientists who argue that that is absolute nonsense. Maybe the member for Invercargill, Mark Peck, will take a call and explain to us where his facts have come from, because the reality is the science is suspect. It does not stand up. There is no real evidence.

I have a question for the Minister, for Mr Peck, for the member for Whanganui, or for whoever wants to take a call: what is the carbon sink value of the increased pasture that we have grown over the last 12 years, since the 1991 convention signing? What is the value of the carbon sinks produced by the farming sector in New Zealand from the increased pasture production that we have had in that time? Somebody could take a call and tell me that. I am sure everybody knows.

David Benson-Pope: That’s why the rural sector doesn’t mind paying its way.

SHANE ARDERN: Do members know what stupid argument is being put up in response to that, from the likes of that urban-based whip over there, who would not know a farm if he fell over one? They say the pasture is grazed off every 30 days. Do we not cut down pine trees every 25 years? What is the basis for that assertion? [Interruption] Why does the member not get up and take a call instead of bellowing out from the other side of the House like a walrus in rut? Why does the member not take a call and tell us how this is substantiated?

The fact is the science is not robust, and there is no evidence to back up this stupid claim. Farmers already invest the highest amount of anyone in research and development of ruminant efficiency. This Government’s argument has no legitimacy at all.

JILL PETTIS (NZ Labour—Whanganui) : National Party members should focus on science for a moment, rather than focusing on the political panic that they find themselves in, because 1 year on from the last general election they are still at 22 percent—the lowest poll rating in National Party history. That is what they are panicking about. They could not care less about the climate. This debate has got nothing to do with the climate from their perspective—this is about saving their own bacon. I am telling Shane Ardern that he is on the hook already—he is hanging up drying. That is what has happened to that party, because it has ignored the serious issues. I want that member to respond—

Shane Ardern: Anywhere, anytime, and I’ll debate it.

JILL PETTIS: The member should zip his lips for a minute and respond to this. Would National repeal New Zealand as being a signatory to the Kyoto Protocol? The National Opposition has gone quiet. It has gone very quiet, because that member, who has been exhibiting a fair amount of exhalation himself, will not commit and say that National, if it ever got back into power again—which it will not—would repeal New Zealand as being a signatory to the Kyoto Protocol. We know you would not. We know that it is all gas and nothing over—

The ASSISTANT SPEAKER (H V Ross Robertson): The member will not bring me into the debate.

JILL PETTIS: Sorry, Mr Assistant Speaker. I most certainly would not bring you into the debate. The National Party knows it is not going to repeal it at all, so it should stop all the bluff and bluster.

The facts are that climate change is incredibly important to our agricultural sector. Responsible farming leaders have already signed up to research.

Mark Peck: Fonterra has.

JILL PETTIS: Fonterra, which is a leader in the industry in this country, has signed up to research. AgResearch and other key organisations, like Crop and Food Research, have signed up to this. Those Luddites opposite want to ignore what is happening in reality. They should do what this Government is trying to do. National members should provide some leadership, show some intestinal fortitude, look to the future, and provide some policy directives—that is the important thing to do—instead of playing politics because they are concerned about their flagging poll rating. Federated Farmers are worried about membership, but we all know that what each farmer will pay for the greenhouse gas emissions equates to a membership of Federated Farmers, anyway.

Mark Peck: Less than.

JILL PETTIS: It is less than the cost of membership of Federated Farmers. People should be members of Federated Farmers. I am a great supporter of people belonging to credible organisations. This debate is too important for members to be preoccupied with party politics and with saving organisations that are under a little bit of threat and pressure themselves. This is an important debate. There has been a bit of argy-bargy in the House this afternoon, but I am absolutely serious when I say that this is an issue that is critical to New Zealand’s future. It is critical to the sustainability of our key industries. I ask the National Party to be responsible about this issue. I think that, in reality, National members know that the agricultural community is looking to them to be responsible. The responsibility to show a bit of get-up-and-go, and to look to the future in any decisions we make about climate change in this country, rests on the National Party’s shoulders.

JEANETTE FITZSIMONS (Co-Leader—Green) : It is extraordinary that a few farmers are setting themselves up as more expert on the science of climate change than the whole of the Intergovernmental Panel on Climate Change, on whose scientific work—the work of hundreds, in fact, thousands of climatologists—the Kyoto Protocol and the International Agreement on Climate Change is based. It is extraordinary, is it not, how farmers know so much more! I point out to the House that this bill is not about methane, it is not about agriculture, and it has nothing whatsoever to say about research levies on methane, about farming, or about agriculture. It is simply being used as a vehicle for the National Party to try to run its latest campaign in the House.

The Green Party welcomes legislation that raises the profile of climate change in the everyday decisions that New Zealanders make. We have been calling for this for a long time, because we will not solve our contribution to climate change unless it becomes part of the thinking of New Zealanders at every step they take in their lives. This measure raises the profile both of the threat of climate change to our economy, our environment, our way of life, our climate, our farming, and of the opportunities we have to take action now to prevent this catastrophe from being as bad as it could be. There is no doubt at all that there will be some climate change as a result of what has already been emitted to the atmosphere and what is still being emitted to the atmosphere. That is unavoidable, and that is why this bill provides for adaptation strategies to be a part of what local government should consider in their activities under the Resource Management Act. We certainly still have the opportunity to prevent a runaway climate-change effect that would in fact end life as we know it—the way of life that we are used to—if it were allowed to continue.

This legislation complements the Energy Efficiency and Conservation Act, passed in 2000, and the National Energy Efficiency and Conservation Strategy, set up under that Act, which provides many mechanisms for controlling our use of energy, moving to more efficient uses of energy, and to renewable resources. It complements it by providing for such measures to be taken into account in the decisions made under the Resource Management Act—which are important decisions that otherwise could not be influenced by the National Energy Efficiency Conservation Strategy.

It is one thing to have overarching policies, international agreements, the Kyoto Protocol, talk of a future carbon tax, and carbon trading, but we need mechanisms by which the day-to-day decisions that people and local authorities take can occur with climate change in mind. That is what this legislation provides. First of all, it raises the status of renewable forms of energy as distinct from fossil fuels. We are at a crisis point in our energy supply. Our largest single fossil fuel reserve, the Maui Gas field, which has provided us with extraordinarily cheap and abundant energy for the last 25 years, is now close to the end of its time. No other source of gas is available at the same price, and no other source of gas is available in the same abundance. That means that we are at a decision point now as to how we will replace a third of our primary energy and a quarter of our electricity supply. It will either be with coal—at which stage we may as well leave the Kyoto Protocol, because we would have little opportunity of meeting our commitments under that protocol if we were to go that way—or it will be a mixture of efficiency, conservation, and renewables, which are the things provided for in this bill.

This measure also raises the status of the efficient use of energy, so that that can be taken account of in all local authority decisions. For the first time legislation mentions the need for adaptation strategies. Local councils are particularly well placed to think ahead to the effects that climate change, particularly rising sea levels and changing rainfall patterns, may have on their communities, and to put in place robust strategies to build some resilience into their local communities to cope with such things when they occur. This means that when a council is looking at building a coastal road only 1 or 2 metres above sea level, it might think again about whether it should be a little higher up. Councils need to be aware of things like sea-water infiltration into sewage, freshwater supplies on the coast, and the effects of the increased biosecurity threat from tropical pests and diseases that, over time, will find New Zealand a more welcoming place than they do at the moment.

The bill establishes that regional councils should not take into account carbon dioxide emissions from power stations and industrial plant when they are giving consents for air discharges. This is because it is easier to deal with those things at a national level than at a local level. I am very glad to see that the removal of carbon dioxide emissions from chimney stacks from the purview of regional councils does not absolve any local authority from taking account of the climate change effects of the other things that they do. The bill specifically provides that councils should still consider the effects on climate change of their other decisions. Those decisions are legion. When a supermarket wants to locate a long way from town, the council has the right to consider how many more vehicle kilometres will have to be travelled for people to get to that supermarket if it is away from where people live and away from public transport routes. A council can take climate change into account in its responsibilities for providing for public transport and in its responsibilities to design more sensible urban form whereby land-use activities are located close to public transport corridors and public transport nodes in order to reduce the need for travel, and also in its provision of facilities for walking and cycling, in order to reduce greenhouse emissions from burning fossil fuels.

A couple of years ago the Local Government and Environment Committee conducted an inquiry into the role of local government in meeting New Zealand’s climate change target. That inquiry drew heavily on the very generous devotion of time by Local Government New Zealand and many of the councils in New Zealand who met with us to discuss how they saw their role and what kind of legislation they needed to facilitate the clear role they have in addressing climate change. Our committee found: “Resource consent has been approved for two major new fossil fuel-burning power stations since we presented our interim report. We have noted above that it is not clear how the RMA should be applied to sources of greenhouse gas emissions.” The report also states: “We agree with the tenure of submissions”—and this came through strongly from regional councils—“that greenhouse gas emissions from the electricity sector should be considered at a national level. It is not possible under the RMA for a regional council to require the retirement of an old electricity plant in one region as a condition on the commissioning of a newer more efficient plant in another region.” Those things, clearly, have to be dealt with at national level.

Since that time we do have the Government announcement of a carbon tax from 2007, which will restrain fossil fuel - fired power stations. However, we still do not know the level of that tax because it will depend on the international price of carbon, and there is still some uncertainty about whether the policy will be followed through 4 years from now. There is enough uncertainty around it that I doubt whether it is acting as a sufficiently strong restraint, at this stage, on the building of new thermal plants. The committee said at the time: “we consider more direct consideration and mitigation of the greenhouse gas emissions of proposed new major electricity plants is necessary, at least until climate change policy instruments have brought about significant pricing signals.”

Hon JUDITH TIZARD (Minister of Consumer Affairs) : I rise to support this excellent bill and to congratulate the Minister on introducing it. The bill will put in place the necessary measures to support the Government’s well-established climate change and energy policies. It will provide a basis for a national coordination of controls on greenhouse gas emissions and make sure the effects of climate change are flagged for the attention of everyone working with the Resource Management Act. The bill will provide national leadership and clarity of roles, and also a reduction in costs for administration, compliance, and participation related to energy and climate change matters. I commend this bill to the House.

Dr PAUL HUTCHISON (NZ National—Port Waikato) : The National Party will support any vehicle that might improve the Resource Management Act. As my colleague the Hon Nick Smith said just a brief while ago, the Act contains something like 240 provisions, and at least 16 of those need major change. This bill is merely tinkering with the Resource Management Act, and, in itself, is highly confused and compounds the extremely complicated situation the Labour Government has got itself into by imposing its original climate change bill on New Zealand.

The only reason we are supporting the bill is its first stated object: “to give greater weight to the value of renewable energy, and clarify that energy efficiency should be a consideration, regardless of the energy source.” It goes on to state the second object: “to give greater weight to considering the effects of climate change, for example, addressing potential increase in flood risk, a rise in average sea level, and changes in typical rainfall patterns.”

It would be very interesting if the Minister could take a call and tell us how local government, with all the scientific expertise behind it, will be able to fulfil those functions of addressing potential increases in flooding risks, rises in average sea level, etc. I put it to the Minister that local government does not have the resources or expertise to do this, and it is absolute bunkum to suggest that it might have that capacity.

The third object of the bill states: “despite the second objective, to remove climate change as a consideration when considering industrial discharges of greenhouse gases, as these emissions are best addressed using a national mechanism.” What a tangled web the Labour Government has woven. It could not help itself; it has introduced the most complicated and unsound law on climate change possibly conceived by personkind. It was described by Professor Joseph as State-sanctioned trespass. New Zealand is the only country in the world that has—

Hon Harry Duynhoven: So what Professor Joseph had to say was very sound?

Dr PAUL HUTCHISON: It was very sound, but the Government has done very little about it. Just yesterday I was sent a note from a variety of owners of glasshouses in the electorate of Port Waikato. These people will be profoundly affected by the Government’s so-called national climate change mechanism, and this is what they sent me: “The true impact of the proposed Kyoto initiative by the Labour Government of New Zealand.” The source of this information came from the Government website www.climatechange.govt.nz. Those people said the proposed emissions tax of $25 per tonne of carbon emissions will collect for the Government in the order of $1.2 billion in additional taxes. They say that ordinary New Zealanders will shoulder most of the new taxes, simply by having to pay more for their energy.

The Government has very cunningly got these so-called negotiated Government agreements with some of the big industries, and, undoubtedly, some of those taxes will fall on small to medium sized businesses, and the average New Zealander. I ask members to listen to what these taxes involve, and these predicted figures were taken from the Government’s own website: “The tax will be collected from New Zealanders in the following increases: petrol, increasing by 6 percent; diesel, increasing by 12 percent; power increasing by 9 percent; gas, increasing by 8 percent; and coal increasing by 19 percent.” These are the predicted taxes brought in by this Labour Government and being imposed on ordinary New Zealanders.

Let us have a look at the increases in taxes for business. The news is far worse: “The tax will be collected as follows: petrol, increasing by 6 percent; diesel, increasing by 12 percent; power, increasing by 16 percent; gas, increasing by 24 percent; and coal increasing by a whopping 44 percent.” They go on and say—this is all based on information from the Government’s own website—that the resulting loss of competitiveness will shut down businesses, both large and small, throughout the country. I understand that the Minister has had something to say about that with regard to the cement industry, for example. He does not seem to care. It goes on to state that cheaper imported manufactured goods sourced from non - Kyoto aligned countries like Australia, USA, and most of Asia will ultimately overrun those that survive the initial shock. Valuable and hard-won export markets will be lost to non-Kyoto countries. Large employers will be forced to re-evaluate and relocate to business-friendly countries like Australia.

Only 3 weeks ago, I was in Australia with the Education and Science Committee and several of the senators said to me: “Why on earth did you guys in New Zealand sign up to Kyoto?”. They said: “We are the biggest exporter of coal in the world, and even if we had signed up we would still be exporting that coal to China.” In other words, the emission of greenhouse gases from their activity would not have changed one iota. I understand that Genesis Power, or Meridian Energy—one of them—has just negotiated an agreement to sell coal to Korea. On the one hand, the Government is imposing this extraordinarily complicated system of tax gathering, and, on the other hand, one of our companies is exporting coal to Korea. That will only add to the accumulation of greenhouse gases. It is quite an extraordinary situation.

Let us look at what the New Zealand Herald had to say, and we see here a picture of a smiling Marian Hobbs on the front. She says: “We are also focusing on the decision-making processes for major projects and reducing time delays.” But just the other day we heard from Beca Carter that under Labour, under the Resource Management Act, it takes, on average, 8 years to plan a road. In Singapore they can do it in 2 weeks, but under this Government it can take 8 years. It is getting worse. Marian Hobbs goes on to say: “On average such projects take about 24 months from the time resource consents are applied for, to the Environment Court ruling.”—inevitably, they end up in the Environment Court. She said that was unacceptable. We are absolutely sure it is unacceptable, but she is in denial as to just how long these processes do take.

Earlier on in the year, Brian Fallow from the New Zealand Herald quoted the Minister for the Environment, Minister Marian Hobbs: “Councils will also be directed to have regard to the local effects of climate change, such as rising sea levels, when planning or making decisions on resource consents.” Well, I want the Minister to tell us what expertise the councils have, in terms of resources, to be able to make rational decisions on the very effects of rising tides, flood levels, etc. As I understand it, climate change science is extremely unpredictable. Even at best, with all the mechanisms in place, we are liable to get a net gain of about 3 percent, but with an uncertainty of about 30 to 40 percent. That is what this Labour Government is reliant on.

National will be looking at this bill very carefully during the select committee process, but we are very concerned about the Labour Government, once again, compounding the difficulties that it has got New Zealand into already.

DAVID BENSON-POPE (NZ Labour—Dunedin South) : I would like to thank the previous speaker for sitting down, as would most members of the New Zealand community and of this Parliament. I do not think there is any area where that tired party has distinguished itself so little with its lacklustre and discredited arguments as the area relating to climate change. I think we could probably characterise the National Party as the party that believes that global warming does not exist, and when we put that alongside National’s discredited friends from ACT, the party that is so often quite appropriately referred to as the “Flat Earth Party” in this Parliament, we see why that is.

This legislation adds to the leadership role that this Government has already played in relation to climate change, by taking steps at least towards halting and, ultimately, towards reversing those undeniable effects on our environment. I am pleased to recommend the bill to the House and to the select committee.

Hon KEN SHIRLEY (Deputy Leader—ACT NZ) : I suppose we should not be surprised that the member who has just resumed his seat, Mr Benson-Pope, did not refer to one aspect of the bill whatsoever, but rather engaged in a somewhat tedious attempt to throw mud at the Opposition side of the House. We have become used to such utterances from that member.

The ACT party is indeed very concerned about this bill, because here again we have the Government bringing to Parliament an amendment to the Resource Management Act. We should think back and follow the path leading to this bill. The Resource Management Act was passed in 1991, and it was obvious by the mid-1990s that there was a need for major reform—there were some fundamental problems with it. Simon Upton engaged in a massive review. Unfortunately, he became too bogged down in the process to get any legislation passed before the 1990 election. But he had introduced a bill with some significant changes. That bill went off to the Foreign Affairs, Defence and Trade Committee in 1999. There was a change of Government, and Jeanette Fitzsimons of the Greens was put in charge of that select committee. That select committee then completely overturned the whole amendment proposal that was designed to streamline the frustrations with that Act, and reported the bill back in March 2001.

What happened then? The Labour Government left the bill languishing on the Order Paper for some 18 months, and then in a sudden rush of blood to the head rammed the No. 2 bill through all stages under urgency, having overturned all of what I think were necessary, but not sufficient, amendments—what I call the “Upton amendments”. The Government rammed through the Fitzsimons stuff, and we had all those things like the reference to cultural landscapes, and the special provision for wāhi tapu—all crazy stuff that the Prime Minister knew about; it had obviously been signed off in Cabinet. Then, if members remember this, the heat became too much for the Prime Minister, and in the Committee stage the Government did a back-down. I thank United Future for playing a key part in that. In propping up the Government United Future pointed out that that was crazy stuff, and the Government backed down.

But the problem we are left with is that a fundamental reform of the Resource Management Act is still required. Here we have the Government coming in with a very specific and very strange little amendment that does not address the fundamental problems with that Act that Minister Swain’s committee identified. Those problems are some of the biggest constraints to investment in this country and some of the biggest frustrations to local bodies and wealth creators in this country alike. Mr Swain’s review has been sidelined, and instead, right at the top of the agenda, we have this Resource Management (Energy and Climate Change) Amendment Bill, because of this Government’s fixation on adherence to the Kyoto Protocol.

The last speaker for National asked a very good question, and we did not get an answer to it. He asked why the Government had signed up to the Kyoto Protocol. I would remind him that it was the previous National Government that signed up the Kyoto Protocol. I would like to know why it did that, because the Kyoto Protocol is an absolutely flawed instrument. Even the scientists who advocate for that protocol recognise that it will not make one jot of difference, even if it is fully implemented. One hundred years out from now the Kyoto Protocol will perhaps buy people 4 or 5 years, at best. And it is greatly unfair, as we all know, because only the annex 1 countries have to take action under it.

But to come back to this bill specifically, I am alarmed that here again the Government has finally told us to address the Resource Management Act, but it does not address the fundamental flaws in that Act. Instead, essentially, we are making some adjustments to section 7, and adding another special provision for energies derived from minerals. The explanatory note of the bill that is before us actually states: “… under the RMA the definition of contaminant includes greenhouse gases.” Well, that is a nonsense in itself. Why not address that nonsense? To say that methane or carbon dioxide, which are naturally occurring substances in large volumes, are somehow a contaminant is nuts. We need carbon dioxide in our atmosphere; photosynthesis depends on it. So for the Government to state, as a starting point, that carbon dioxide is a contaminant is very foolish. But be that as it may, the Government has decided to roar ahead with this amendment.

When we look at the energy crisis we see the Government has not addressed the situation that one of its State-owned enterprises has signed a contract to import 600,000 tonnes of coal from Indonesia. Trucks are pouring over the Kaimai Range as we speak, carting the imported coal from Tauranga to the Huntly power station. How much carbon dioxide emission is involved in (a) the transport of those thousands of tonnes, or (b) the burning of those thousands of tonnes of coal at Huntly? What did we have earlier this year? We had a very sensible proposal to build a hydro station of 65 megawatts on the Arnold River, on the Department of Conservation estate. Government members scoff at 65 megawatts, but it is a very significant block of energy.

Hon Pete Hodgson: How many megawatts in Huntly?

Hon KEN SHIRLEY: Oh, about 1,200 all up. But 65 megawatts are not to be sneered at. That is more than the total consumption of the West Coast, including the future expansion of consumption there. That station would have fed electricity back into the national grid. Government members laugh at those little hydro schemes, but I tell them that they are important. One will get a lot more energy out of those schemes than the Government will get out of its windmills. This Government has a fixation with windmills. That is largely what this bill is all about—to fast track windmills.

Let us look at what the Government said to foresters. If one was really concerned about climate change, greenhouse gas emissions, and the foolishly flawed Kyoto Protocol, one would have put in a market instrument to encourage the planting of forests and the sequestration of carbon. But what was one of the Government’s first steps? It nationalised the property right of the forest owners, thereby removing the incentive for the private sector to keep planting trees and expanding our forestry stock. So the Government is into micromanagement, but messes it up at every turn. On the one hand the Government has taken away the property right of forest owners, who would have planted trees and sequestered that carbon, and on the other hand it then wants to give some sort of special fast-track benefit to what it calls “renewables” like windmills, which will give insignificant power volumes. The Minister will concede that in the medium term, perhaps over a 20-year horizon, if we cannot get more gas we will have to burn a lot of coal in order to maintain our basic energy demands. This bill has not addressed any of that; it is all about political correctness.

One part of the bill I do agree with: the Government has made it clear to local government that it should not be applying itself to discharges from industries, in terms of greenhouse gas, by having a national policy statement in effect. I support that. That is the only part of this bill, to me, that does seem to make sense.

But the Government stands condemned, through not taking the opportunity to do the major review of the principal Act that is required, and which it failed to do earlier this year when it rushed a foolish measure through under urgency, having left it languishing on the Order Paper for 18 months before that. Now the Government comes to the House this evening with this very narrow, very minor, politically correct amendment that fails to address the basically flawed nature of that Act.

Hon PETE HODGSON (Convenor, Ministerial Group on Climate Change) : I move, That the Resource Management (Energy and Climate Change) Amendment Bill be referred to the Local Government and Environment Committee, and that the committee finally report the bill by 25 November 2003.

• Motion agreed to.

Hon Dr MICHAEL CULLEN (Minister of Finance) : I move, That the Reserve Bank of New Zealand Amendment Bill be now read a second time. This bill makes some changes to the corporate governance arrangements for the Reserve Bank and to the financial system oversight provisions administered by the bank. Part III of the principal Act deals with the Government’s arrangements for the Reserve Bank. The proposed changes to Part III arise from the review of monetary policy conducted in 2001, and implement the Government’s decisions arising from that review. The most significant change is the removal of the governor as chairperson of the Reserve Bank board and his or her replacement by a non-executive chairperson. The bill provides that the fellow non-executive directors elect the chairperson. That change brings the Reserve Bank into line with standard governance procedures. Other significant changes comprise the removal of the deputy governor from the board, and requiring the board to publish an annual report setting out its assessment of the performance of the governor and the bank. The amendments are designed to give prominence and focus to the board’s role, and to strengthen the directors’ accountability for the performance of their duties.

Part IV of the principal Act regulates the use of the words “bank”, “banker”, and “banking”. That part of the principal Act has the objective of preventing entities that are not registered banks from passing themselves off as such, and thereby misleading the public as to their nature and financial standing. The current wording of the restrictions on the use of bank names is too narrow, and the scope of the exemption to the restrictions is too wide. The result is that it is relatively easy for entities that are not registered banks to use names that suggest they are banks, or to use the restricted words in advertising in a manner that could give the impression they are registered banks.

Part V of the principal Act deals with the registration of banks, the supervision of banks, and the management of potential or actual bank failures. The objective of that part of the principal Act is to promote the maintenance of a sound and efficient financial system, so as to avoid the significant damage to the financial system that could result from the collapse of a registered bank. A new Part VB inserted by clause 42 of the bill clarifies and makes explicit the Reserve Bank’s oversight interest and responsibility in relation to the payment system in New Zealand. An effective payment system is crucial to the maintenance of a sound financial system, and at present the Reserve Bank has no formal responsibility in that area. The bank’s oversight has been conducted informally.

The bill was reported back from the Finance and Expenditure Committee, which considered a number of submissions and recommended some amendments, including the addition of a new part to the bill. I want to record my thanks to the committee for the valuable work it has done on the bill—of course, assisted in this case by the expert advice of the former Reserve Bank governor! That is an unusual situation on this kind of legislation.

Lindsay Tisch: We need the help.

Hon Dr MICHAEL CULLEN: As long as he remembers that role, the member will do very well.

The submissions received by the committee focused almost entirely on the proposed amendments to Part IV that deal with the use of bank names. The bill as originally drafted provided that financial institutions that are not registered banks could not use trademarks that contained the words “bank”, “banking”, or “banker”. Credit unions, in particular, argued they should be allowed to continue to use such trademarks, as the services they provide are banking services. The committee was sympathetic to that wish, but was also concerned that the proposed provisions allowed less reputable financial institutions to use the restricted words in advertising in a manner that could mislead the public. The committee amended the bill to allow all financial institutions to use the restricted words in advertising, whether as a trademark or in a descriptive statement, provided the advertising material also contains a reasonably prominent statement that the financial institution is not a registered bank.

A new Part VC was added to the bill by the Finance and Expenditure Committee at my request, to deal with designated payment systems. Payment systems provide a mechanism for the transfer of funds between parties—usually banks and other financial institutions. Currently there is a possibility that settlements through a payment system could be unwound if one of the participants becomes insolvent. The new Part VC will provide legal certainty for payments made through designated payment systems, and it will reduce the potential for disruption in those systems. The provisions are designed to cater for a wide variety of different payment systems. The CLS Bank International operates a payment system for the settlement of foreign exchange transactions, and once the new legislation is passed the New Zealand dollar will be eligible for inclusion in that bank’s continuous linked settlement system. That will substantially reduce the foreign exchange settlement risk for New Zealand banks. Designation will be voluntary, and payment systems may choose to operate without being designated. Applications for designation will be made to the Reserve Bank, and designations will be effected by Order in Council on the advice of the Minister, acting in accordance with a recommendation from the Reserve Bank.

The committee also made a number of other amendments to the bill that did not change its substance, but were designed to improve drafting clarity. Supplementary Order Paper 99 has been released and circulated to members. The Supplementary Order Paper proposes minor amendments in order to tidy up and clarify matters in the bill.

It is important, I think, to note the bill does not alter the fundamental provisions of the Reserve Bank Act. This bill improves the Reserve Bank’s ability to carry out its functions in both the monetary policy and banking supervision areas, and formally extends the role of the Reserve Bank into the oversight of the payment system. It is, I think, only the second significant amendment to the 1989 Act that has been made since its passage; the other dealt with the issue of prudential supervision changes. It is, of course, possible that with the IMF coming out to review New Zealand’s financial system oversight mechanisms, recommendations will arise out of that review that may lead to further legislation down the track. But I emphasise that in terms of the key features of the Reserve Bank, which are related to its single focus and its independence from Government control, this bill does not entrench upon those matters at all.

Dr DON BRASH (NZ National) : I am glad to speak in favour of this bill. It was, in fact, introduced into Parliament while I was still the bank’s governor, by a narrow margin. I supported it then, and I support it now. It continues a tradition in this House—running back at least 14 years—of cross-party support for Reserve Bank legislation. The 1989 Reserve Bank bill was introduced by the then Labour Government, and was supported without dissent in the House. It is fair to note that Sir Robert Muldoon was in hospital at the time!

The bill does four main things, as the Minister has pointed out. Firstly, it gives the Reserve Bank a few more powers to deal with a bank distress situation, and those changes are entirely uncontroversial. Secondly, it gives the bank a few more powers to prevent unscrupulous parties from misusing the words “bank”, “banker”, and “banking”. The bill, as amended by the Finance and Expenditure Committee, deals with that situation in an entirely appropriate way. Thirdly, the bill changes the Reserve Bank governance arrangements, in the way described by the Minister.

As the Minister said, that change is a result of the recommendations of Professor Lars Svensson in his report of February 2001. That review found that, with the exception of about 18 months from mid-1997 to early 1999, the Reserve Bank had done a good job in running monetary policy—and modesty prevents my quoting too extensively from Professor Svensson’s report. Certainly, he felt that monetary policy in New Zealand was “currently entirely consistent with the best international practice of flexible inflation targeting, with a medium-term inflation target that avoids unnecessary variability in output, interest rates, and the exchange rate.” That is a pleasing outcome.

But Professor Svensson did suggest, as the Minister notes, some changes in the Reserve Bank’s governance arrangements, and more particularly the removal of the deputy governor from the board and the removal of the governor from the role of chair of the board. I am bound to say that I am not entirely comfortable with removing the deputy governor from the board. I feel uneasy about that, in that it leaves the board somewhat vulnerable to having only a single channel of communication from the institution to the board. If the governor were unscrupulous, it would reduce the prospects of the board discovering that until it was too late. Nevertheless, I accept that the majority view of those looking at the report was in favour of removing the deputy governor, and I will certainly not make an issue of that.

I support the removal of the governor from the role of chair of the board. I think that in all other central banks, the governor of the central bank also chairs the board.

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

Dr DON BRASH: Before the dinner break I was pointing out that one of the four things the bill does is to change the governance arrangements for the Reserve Bank. It removes the deputy governor from the board of the bank, and I mentioned that I was not entirely happy with that. The disadvantage of doing so is that the board of the bank has only a single means of communication from the institution to the board. In my view, that leaves the board somewhat vulnerable if the governor himself or herself has a less than straightforward way of dealing with the board. But that is not an issue on which I would wish to oppose the bill.

The other major change in the governance arrangements for the bank involves removing the governor from the role of chair of the board. In every other reserve bank and central bank that I am aware of, the governor is the chairperson of the board. So it is not surprising, perhaps, that when the 1989 Act was put through, the governor was left in the chair. But the New Zealand Reserve Bank has an unusual governance arrangement. In fact, the governor has all the decision-making authority in the bank. The board has no decision-making authority in the bank, certainly not in respect of monetary policy. The board’s function is to monitor the performance of the governor. It is, indeed, somewhat odd that in those circumstances we have left the governor in the chair. It makes for a rather uncomfortable structure. Indeed, between 1989 and the present time, the bank has tried to deal with that by creating a committee of the non-executive directors, who in turn elect a chair, and that person has acted as a quasi-chairperson of the board in terms of monitoring the governor’s performance. So I strongly support that change. It is worthwhile, and one that should have been unnecessary had we got the 1989 legislation right originally.

The fourth point dealt with by this legislation, as mentioned by the Minister, is the establishment of designated payment systems, designated clearing systems, designed effectively to enable the New Zealand dollar to enter what is called CLS Bank International, as mentioned by the Minister. “CLS” is an acronym for continuous linked settlement. In 1974, almost 30 years ago, a bank called Herstatt Bank in Germany collapsed, and that made the world aware of what has become known as Herstatt risk. It is to deal with Herstatt risk that this bill provides for designated payment systems.

Herstatt risk is the risk that arises in the settlement of foreign exchange transactions across time zones. For example, if a New Zealand bank buys US dollars from a bank in New York, it has to credit the correspondent bank of that New York bank in New Zealand with New Zealand dollars, and it does that, of course, in New Zealand trading hours. It may not receive the US dollars that it is buying for 6, 8, 10, or 12 hours’ time, when the New York banking system opens for business. Should the New York bank collapse between the time the New Zealand bank pays out New Zealand dollars and receives US dollars, the New Zealand bank is very vulnerable, indeed, to that exposure. It is not a minor exposure, as banks have tended to assume, but a very major exposure, and for the last 29 years the central banks of the world, and the banks of the world also, have grappled with dealing with that particular issue. In the end, they created CLS Bank International, which, effectively, enables foreign exchange transactions across time zones to be dealt with with minimal risk, because it enables currencies to be exchanged in real time, rather than with the long time gap that is involved in the present structure.

When I was governor of the bank, I tried to get the New Zealand dollar into CLS Bank International. CLS Bank International has been operating now for about 12 or 18 months. It now has the US dollar, the yen, sterling, the euro, and the Australian dollar in it, but not the New Zealand dollar. It has not got the New Zealand dollar precisely because, until this bill is passed, it is not possible for New Zealand to meet the conditions required by membership of CLS Bank International.

I strongly support all aspects of the bill, including that rather technical issue to significantly reduce the risk to the New Zealand banking system that is inherent in the current arrangements for settling foreign exchange transactions.

GORDON COPELAND (United Future) : I guess it is probably unique in the history of democracy, and probably in the history of the Western World, for me to follow a speaker on the Reserve Bank of New Zealand Amendment Bill who was himself the former Governor of the Reserve Bank. I am not sure whether he was the gamekeeper or the poacher, so I am not sure which way around the analogy should work. However, for the sake of this debate, we will now assume that he has become a gamekeeper. I have some trepidation in following such an expert in these matters; nevertheless, as one would expect, I intend to have my two bob’s worth as well on this particular bill.

Essentially, the bill updates the prudential oversight functions of the Reserve Bank in line with best international practice. Although the Reserve Bank is well known as the organisation that sets the official cash interest rate at quarterly or 6-monthly intervals, the importance of the bank’s less prominent role in relation to the prudential oversight of our whole banking system cannot be overestimated. Banking represents a core service to all New Zealand families, individuals, farms, and businesses. Day in and day out, we rely on banks to transact millions of financial payments and receipts, both within New Zealand and with the rest of the world. In such circumstances, the failure of a bank would have devastating consequences, especially for its depositors.

When one thinks about it, bank deposits and the sometimes quite significant credit balances held in cheque accounts, represent an extraordinary act of faith for thousands of New Zealanders in the stability and longevity of their bank of choice. No formal security is held for those deposits, so in the event of bankruptcy or failure, customers end up amongst the unsecured creditors, with the possibility of losses running into hundreds of millions, or billions, of dollars, depending on the size of the bank concerned. One can argue that the risk for New Zealanders has increased rather than decreased because—with the exception of Kiwibank and the Taranaki savings bank—both relatively small banks, all New Zealand banks are overseas owned. That increases the risk for New Zealand depositors because of the inbuilt tendency those banks would have, in the event of a failure or potential failure, to favour their home base over their overseas-based operations.

As a country, we can never afford to become complacent about those issues. The reality is that the institution that stands between New Zealand depositors and cheque account holders, and the possibility of massive financial failure, is the Reserve Bank of New Zealand. That reality demands that the Reserve Bank remains diligent and unswerving in carrying out its functions of prudential supervision with skill and dedication. The bank must never drift to a position where it becomes reactive; it must always be proactive in identifying problems and taking corrective action in advance to minimise potential risk. In that regard, I am satisfied that under its present governor our bank does a great job. This bill will provide it both with a greater range of tools in the tool box and improve governance and other procedures, with a view to preventing the unthinkable—namely, the collapse of one of our major banks.

One of the other issues the select committee grappled with was the use of the words “bank” “banking” or “banker” by non-bank financial institutions. The original bill—the bill that came through the first reading to the select committee—wanted to outlaw the use of those words by anyone other than a registered bank. However, in the select committee it became clear to me that that would be robbing building societies and credit unions of the specific trademarks they have built up—in some cases over many years—as part of their brand promotion in the marketplace.

When we think about it, such trademarks represent private property and can be immensely valuable. The famous one I always think of is the shell used worldwide by the giant oil company of that name. The value of the brand in that case would be in the billions of dollars category. I give that example simply to illustrate the principle that it would be wrong to strip building societies and credit unions of their brand names and trademarks without full and fair financial compensation. I am pleased, therefore, that in the select committee we were able to modify the bill to allow the use of such trademarks, etc., to continue.

Building societies and credit unions are an important part of the New Zealand financial fabric, and I hope they will thrive and attract additional business in the years ahead. They are Kiwi-owned, grass roots, close to their customer base, and therefore often offer a range of innovative financial services, loans, and the like to families and others in a positive fashion. United Future values and appreciates their role in that regard.

With those few words, I have pleasure in signalling United Future’s support for this bill at its second reading.

CRAIG McNAIR (NZ First) : As I speak to the Reserve Bank of New Zealand Amendment Bill, I note the recommendations in the 2001 Independent Review of the Operation of Monetary Policy in New Zealand by Professor Lars Svensson regarding the management of the Reserve Bank. As mentioned earlier, those recommendations were that the governor be removed from the position of chairperson of the board of directors, and also that the deputy-governor be removed from the board. I note that the balance between the board’s independence and its access to the information necessary to enable effective monitoring can be best achieved by retaining the governor on the board.

Another recommendation was to require the board’s chairperson to be a non-executive director. An independent chairperson is important to the maintenance of a credible and unbiased system of accountability for the bank and the governor. Another recommendation of note was to require the board to report annually on the performance of the bank and the governor. That, it was said, would raise the visibility of the board and strengthen the accountability of the bank. New Zealand First will support any legislation that promotes accountability. We believe in accountability in Government, and in that respect this bill is no different.

Subsequent to the introduction of this bill, I sat on the Finance and Expenditure Committee, and I am glad that a further amendment was proposed to the legislation. The effect of the bill is to widen the restriction on the use of the words “bank”, “banker”, and “banking” to ensure that non-registered banks do not use trademarks in a way that suggests that they are banks. I and the other members of the committee listened to a large number of submissions surrounding the proposed word restrictions. Non-bank financial services, such as credit unions and building societies, argued that it would damage their businesses, as legally they can, and do, offer banking services, including mortgages, loans, Eftpos cards, Internet and phone banking, cheques, and credit services.

It is understandable that Parliament might be concerned that suppliers of banking services that are not registered banks could be using those words indiscriminately and misrepresenting their status. However, the legislation should not prevent such providers from effectively advertising their services. For New Zealand First to vote for this bill, the recommendation that the bill recognise that the terms “bank”, “banker”, and “banking” described the services provided by a variety of non-registered financial services, had to be taken on board, and I am glad it was taken on board. I also note that a disclaimer is required when such a provider uses one of the terms in its advertising, to ensure that the consumer is aware that the provider is not a registered bank.

While we are on the subject of banks, I want to acknowledge the incredible work done by credit unions in our economy, and the specific services they provide. I was a member of a credit union for a long time, and I felt it did a great job. I think we can see that we have had far more problems and complaints in respect of banks than we have ever had with credit unions or building societies. They do a great job in this country and in our economy.

The question that needs to be asked is whether other amendments to this bill strengthen the powers of the Reserve Bank to register banks and supervise registered banks. Other amendments are to allow the Bank to consider extra information when registering banks; to improve the Bank’s powers to investigate and direct banks in financial difficulties or failing to meet disclosure requirements; to improve supervisors’ abilities to obtain information, and to improve the Bank’s ability to deal with bank failure. They also update offence and penalty provisions.

I close by saying that New Zealand First supports this bill. As always, we support good legislation and oppose bad legislation. This is good legislation.

Hon TAITO PHILLIP FIELD (Associate Minister for Social Development and Employment) : Briefly, this is a good bill. It will improve the Reserve Bank’s ability to carry out its functions in both the monetary policy and banking supervision areas. It does not alter the objective of monetary policy, which remains the key area of promoting price stability. The changes will strengthen the board’s role in monitoring the performance of the governor and further enhance the Reserve Bank’s accountability and independence.

Previous speakers touched on the significant changes this bill proposes. One of those changes, which the previous speaker covered to some extent, is the removal of the deputy-governor from the board, and the requirement that the board publish an annual report setting out its assessment of the performance of the governor and the Reserve Bank. Those amendments have been through the select committee process, and are designed to give more prominence and focus to the board’s role, and to strengthen the accountability of the governor in the performance of his or her duties. All of that will contribute to improving the performance of the governor, the directors, and the Bank itself. It is a very good bill, and I am very happy to speak in support of it. I commend it to the House.

RODNEY HIDE (ACT NZ) : We have a remarkable occurrence here in Parliament tonight, because, as I read the situation, every political party is voting—

Dr the Hon Lockwood Smith: Are you sure the Greens will?

RODNEY HIDE: Absolutely the Greens will. Rod Donald has come on in leaps and bounds in the Finance and Expenditure Committee, under the careful tutelage of Dr Don Brash. Here we have a remarkable circumstance under MMP where every political party in this House supports this amendment to the Reserve Bank of New Zealand Act. For members like Craig McNair, who were not born when the original legislation went through this House, I tell them that at the time, and for some years subsequent, the Reserve Bank of New Zealand Act was a hot and highly controversial piece of legislation. It took away politicians’ power to play with the money system in New Zealand for their electoral advantage, and it took it across to an independent Reserve Bank governor. Of course, the politicians in Parliament—the Minister of Finance—could always direct the Governor of the Reserve Bank to loosen monetary policy.

John Carter: Never!

RODNEY HIDE: The Minister could. All the Minister needed to do was write a note. At the time, inflation was running at 13 percent per year, although I cannot remember exactly. So people’s savings were worth less, and the dollars they had in their back pockets were becoming fewer and fewer. But well-off property developers liked that inflationary environment because it favoured them at the expense of savers.

The Government and the Governor of the Reserve Bank tamed inflation in New Zealand, and that is one of the most dramatic post-war financial achievements anywhere in the world. The inflation rate was 10 to 14 percent—and highly erratic it was —and we got it down to the 0 to 2 percent band. Every political ill, social and economic problem, and business that did not succeed particularly well was sheeted home to the Reserve Bank of New Zealand Act, and, in particular, to the Governor of the Reserve Bank for being heartless, uncaring, and unkind.

There were politicians—[Interruption] I am explaining this to Craig McNair because he was not born when that was going on. There were politicians in this House who took the opportunity to lambaste the Reserve Bank of New Zealand Act, lambaste the Governor of the Reserve Bank, and lambaste the Minister of Finance for the loony idea that the purpose of monetary policy was price stability, so that when one went to bed at night with a dollar in one’s pocket and one woke up in the morning with that same dollar, it could still buy a dollar’s worth of goods and services in New Zealand.

John Key: In your pyjama pocket.

RODNEY HIDE: That is where I keep my savings. It is hard to imagine now how controversial that proposition was. There was one man in New Zealand travelling the highways and byways—down every rural lane, to the commercial hearts of the cities of New Zealand, to the rotaries, to the farming groups, and to the women’s groups—explaining the importance of a monetary policy that was sane, rational, and stable, and the benefits that would deliver to New Zealand, not just to business New Zealand but also to household New Zealand, not just to the rich, but also to the poor, not just to the working but also, and especially, to the retired, because the retired—

Hon Taito Phillip Field: What’s that got to do with the bill?

RODNEY HIDE: Mr Field asks what that has to do with the bill. When he spoke earlier, it is very clear that all he did was read the notes that Heather Simpson had prepared for him, but had not read the bill for himself. It has everything to do with the bill, because that one man, Dr Donald Brash, Governor of the Reserve Bank from 1989 to last year—

John Key: Sounds like a eulogy.

RODNEY HIDE: It is a eulogy for his career as Governor of the Reserve Bank, and it is a welcoming of him to this great Parliament. Taking New Zealand from the 1970s, where inflation was accepted, to a new position was a huge achievement. Muldoon used to blame the unions. Nothing has changed—Winston Peters blames the immigrants for causing inflation. Jim Anderton used to blame big business for causing inflation. But the cause of inflation was, always and everywhere, politicians operating sloppy monetary policy, and with the Reserve Bank, the governor, and successive Governments committed to sound monetary policy—[Interruption] Phillip Field is calling out. He cannot spell monetary policy, let alone understand it, and if the man sat there and listened he would learn something.

We come to a time in this House when there is multiparty agreement on the Reserve Bank of New Zealand Act and on monetary policy. We can change Governments and move from first past the post to MMP, and still maintain a sound currency for New Zealanders.

Hon Taito Phillip Field: Thanks to the Labour Government.

RODNEY HIDE: I would love to thank the Labour Government for the Reserve Bank of New Zealand Act, because it was a Labour Government that passed it. I know that Phillip Field is a great admirer of Sir Roger Douglas and the Hon Richard Prebble, who drove that through, and of Ruth Richardson, who stuck to it through the hard years, but I do not remember Phillip Field, at the time, going around the highways and byways of New Zealand and explaining the significance of a sound dollar. Not at all! But we got there.

David Benson-Pope: Tell us about Fiji.

RODNEY HIDE: After all those hard years, we have got to a situation in New Zealand in which even David Benson-Pope supports the Reserve Bank of New Zealand Act, sound monetary policy, a single objective for the Reserve Bank, and inflation targeting. If he had any sense of what it is to be an adult, he would stand up in the House and offer his sincerest apologies to Dr Don Brash and admit he was wrong for all those years, and to Ruth Richardson, because she stuck to the course and said that the Government should get inflation and Government spending down, and he would offer his thanks to Sir Roger Douglas and Richard Prebble for having the strength of political purpose in a time of high inflation to put in place the very legislative framework that could give us the best monetary policy in the world.

I am not holding my breath for Mr David Benson-Pope to do that. I will say that it is enough for members on this side of the House that he supports sensible legislation like this, and after all these years, even Mr Benson-Pope has come around to supporting the Reserve Bank of New Zealand Act and good monetary policy, and the good work of Dr Don Brash as the first governor of the new regime that has achieved so much for New Zealand. I thank Mr David Benson-Pope for his support, although I realise that, given his politics, he cannot say that himself.

DIANNE YATES (NZ Labour—Hamilton East) : I wish to speak in support of the second reading of the Reserve Bank of New Zealand Amendment Bill. Although I was not on the Finance and Expenditure Committee, I have been reading the report and I was very disappointed with Mr Hide’s speech, because he did not really talk about the bill. He talked about personalities, which was disappointing, particularly as the select committee had added a new part to the bill and there was a great opportunity to explain to the House what had been added and why. I was rather disappointed that, as a member of that committee, he did not go into the details of the changes made.

Rodney Hide: I wasn’t there.

DIANNE YATES: He has just said that he was not there, which is probably why he spoke about personalities rather than the bill. I support the Reserve Bank of New Zealand Amendment Bill.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) : As tonight we debate this bill, it is fair to reflect on the remarkable political achievement that this bill, and the principal Act that it amends, represents. I am one of the few members of this Parliament who were here in this very House in 1985 when inflation was running at 15 to 16 percent. I was here in 1987—

Hon Pete Hodgson: Did you vote for it?

Dr the Hon LOCKWOOD SMITH: Yes, I did. I was here in June 1987 when inflation hit 18.9 percent. Admittedly, GST had just been brought in, and that added, perhaps unfairly, to the level of inflation. But what was happening then was that the wealth of ordinary New Zealanders was being eroded week by week—almost day by day—when there was that level of inflation. That had to change, and in many ways New Zealand led the world with central bank legislation, the only focus of which was controlling inflation. It is fair to say that the Labour Party introduced the Reserve Bank of New Zealand Act in 1989—

Rodney Hide: It was a different Labour Party.

Dr the Hon LOCKWOOD SMITH: —and it is true, as my good friend Rodney Hide points out, that it was a different Labour Party. One could well question in this Parliament today whether, had this legislation not been in place today, this Labour Party on the benches opposite would have had the economic vision to have introduced this kind of legislation—the original Reserve Bank of New Zealand Act of 1989. Would it have been prepared to do that today? Not on your life! This Prime Minister is driven by opinion polls and focus groups, and focus groups would not have indicated that New Zealand should bring in world-leading legislation to give the central bank of this country that single focus of controlling inflation. It was interesting that not long after this legislation came in the National Party was elected to govern this country. During difficult times we maintained the focus of the Reserve Bank on that primary target of controlling inflation. I think it is fair to say that in the early days the inflation target for the governor, that outstanding New Zealander and world-renowned, in fact, central bank governor, Don Brash, had a target of 0 to 2 percent.

Rodney Hide: Unlike that third-rate history professor that they have got as finance Minister now.

Dr the Hon LOCKWOOD SMITH: I will not comment on what Mr Hide just said. I do not have to; I think that history speaks for itself. But towards the end of our term in office we extended that range—the policy agreement’s target for controlling inflation—to a 0 to 3 percent range.

It was interesting that following the 1999 election—and I do not know exactly what was going on behind those closed doors—the new Labour-Alliance Government commissioned a review of the Reserve Bank of New Zealand Act. It commissioned another internationally renowned expert, Lars Svensson, to do a review of the operation of monetary policy in New Zealand. It was fascinating that despite the bit of agitation going on within that Labour-Alliance Government—which may have been driven more by Jim Anderton of the Alliance or the extreme left; I do not know—against the Reserve Bank of New Zealand Act, the Government commissioned this review. What did Lars Svensson say in his report? He said that monetary policy in New Zealand was currently entirely consistent with the best international practice of flexible inflation targeting, with a medium-term inflation target that avoided unnecessary variability in output, interest rates, and the exchange rate.

That is not a bad commendation of the operation of monetary policy in New Zealand, headed by my colleague Don Brash. One could hardly get a better report. In fact, Lars Svensson recommended that maybe the target should have been amended to provide a specific medium-term target of 1.5 percent instead of the range of 0 to 3 percent. To make it absolutely specific over the medium term, the target should have been 1.5 percent. Anyhow, in the final analysis, this Labour Government changed the policy targets agreement to shift the target to 1 to 3 percent. It could be argued in many ways that that was a victory for what had been carried on in this country since 1989, because there is not a huge difference between the ranges of 0 to 3 and 1 to 3 percent. So this legislation that we will pass tonight does not change any of the fundamentals of monetary policy in this country, and that is hugely important.

I certainly take pride in the fact that my colleague Don Brash was the Governor of the Reserve Bank right through that period. They were difficult times. Being governor today is not such a difficult thing because inflationary expectations are way down. Inflationary expectations in the mid-1980s were such that business people expected in the next year that the dollar would be 15 percent less than it was in the current year. Consumers expected prices to be 15 percent higher than they were in the current year. There is a huge difference today. People do not expect that today, and one of the greatest challenges in monetary policy is countering those expectations. I salute Don Brash for having the courage to stick to an extraordinarily difficult challenge through the late 1980s and the 1990s, to make sure that New Zealand’s inflationary expectations were brought down to a level by which those involved in productive industries in this country—as compared with speculation—could start to prosper.

This legislation changes some of the governance arrangements for the Reserve Bank, and we totally support those changes. I am sure that the former governor has already told the House tonight that he supports the fact that the governor should not be the chairperson of the board of directors and that the deputy-governor should not be on the board. That has already been covered this evening, and we are all totally supportive of that. As my friend Rodney Hide has mentioned, it is quite remarkable to have such consistency of opinion in this Parliament.

In my remaining minutes, I want to point out that this legislation as it came into this Parliament showed one of the failings of this Labour-Progressive—what is it called—New Zealand coalition—

Rodney Hide: Labour-Progressive-Green.

Dr the Hon LOCKWOOD SMITH: No, the Greens are sitting on the wrong side for that, I tell Mr Hide. I think it is the Labour-Progressive coalition, or something. As it introduced this bill, it sought to control the credit unions in this country, and the building societies. This Government cannot help itself; it wants to control everything. It is bringing in more and more regulation into this country’s economy, and it is bringing more and more taxation by stealth into this economy. More and more it is trying to control what happens in this economy, and I detest that with a passion. I stand for economic freedom and liberty in this country.

With this legislation the Government tried to stop credit unions and building societies from being able to talk about the fact that they were involved in banking. If we look at this bill, we see that what was brought in when Labour introduced it was a restriction on the use of the words “bank”, “banker”, and “banking”. That was the main controversy the Finance and Expenditure Committee had to sort out. Finally, with guidance from people like my friend Rodney Hide, my National colleague Don Brash, and myself on the select committee, we convinced the Labour Government that that was not very smart. Credit unions and building societies are involved in banking. It is only fair that they can talk about what they do, and so, as this bill is reported back, members will see that instead of restriction on the use of the words “bank”, “banker”, and “banking”, there are limits on the use of restricted words in name or title.

The select committee finally convinced the Labour Government to allow credit unions, building societies, and people involved in banking to talk about that fact, and, even in their trademarks, to use the words. But, if institutions are not banks and use the word “bank” in a trademark, they must associate with it a disclaimer so that everyone who hears their advertisements on radio or sees their advertisements in print can hear or see that they are not banks. There is a difference. Banks have certain prudential requirements and certain controls over what they can do, for good reason, whereas building societies, credit unions, and other financial service institutions do not have those same disciplines over them, and therefore do not offer the people of our country the same protections. There is nothing wrong with their talking about what they do. They do bank, and they do provide banking services, but they are not registered banks.

Finally, I say that this legislation as reported back from the select committee is sensible in the way it handles those terms—thanks to the work of the Opposition. It shows that the Government has a bit to learn yet on the restrictive legislation it seeks to introduce into this country.

JILL PETTIS (NZ Labour—Whanganui) : When listening to members on the other side, it does not take very long to learn of the gulf that separates us from them. Dr Lockwood Smith’s comments about how he believes that Government should get out of people’s lives, and about how he believes in a society for the individual, just show the difference between them and us. In reality, those of us who conduct electorate clinics, and who speak to and meet our constituents, understand that one of the reasons that the economy is stable and that things are going well, particularly in provincial New Zealand, is that we have a Government made up of MPs who are very happy to listen and talk to people in ordinary New Zealand.

One of the really interesting things about this bill is the general support for it. I am pleased to see that attitude prevail, because this bill is about improving the bank, improving its investigative and information-gathering powers and abilities, and improving its ability to carry out its functions. It is about strengthening the board’s role in monitoring the performance of the governor, which is also very important for stability and forward-looking initiatives. I agree entirely with what the member who has just resumed his seat has said, in that the bill does not alter the fundamental provisions of the Reserve Bank, but it does most certainly enhance its role.

I am sorry if members opposite took offence when I stated the obvious. If one knows anything about the history of the major political parties in New Zealand, it will of course be obvious that we are different—and thank goodness that we are, otherwise we would not have the strong, robust, and vibrant democracy that we have in this country. Regardless of our personal philosophical differences, I think that both Labour and National will work to preserve that for our country.

This is a bill that is important to the fundamentals of the New Zealand economy. It is good to see that we have a strong economy in this country. It is important that we get this bill through, and progress our legislative timetable. I certainly commend the bill to the House.

ROD DONALD (Co-Leader—Green) : I am pleased to support this bill on behalf of the Green Party, but I am not very happy with Lockwood Smith’s contribution, because I thought it was an extraordinary attempt to rewrite history. It was fascinating to watch Lockwood Smith wax lyrical in his last 2 minutes—and he was doing well until the bell—and to watch Don Brash looking increasingly uncomfortable. Dr Smith tried to claim that National had something to do with restoring the words “bank”, “banking”, and “banker” for the credit unions and the building societies. Lockwood Smith may not have been at the same meeting I was at, where the previous Governor of the Reserve Bank was absolutely adamant that we should stop credit unions and building societies from using those very words. I put my money on the previous Governor of the Reserve Bank having a big hand in drafting the bill in the first place that promoted the idea that credit unions, building societies, and the PSIS lose the right to carry out their lawful business and promote their services to customers.

Dr Smith should reflect again on his outrageous claims that it was National that forced the Labour Government to make that change. It would be more truthful to say it was the previous Governor of the Reserve Bank, Dr Brash, who wanted to have those words taken out of the Act. I think the Government missed an important point there, but that was dealt with very eloquently by all the submissions that we received, particularly from the credit unions, and from the Financial Services Federation representing the building societies and the PSIS.

Tonight has been an interesting case in point, with lots of people trying to claim credit for fixing up that particular aspect of the bill. I am going to join in and make some of my own claims, but I will come back to that in a minute. I will first comment on some of the other significant changes that are in this bill. We are pleased to see there are changes to the governance of the Reserve Bank. It is important to change the balance of power so that the governor is not also the chair of the bank, and to remove the deputy governor from the board. It is also a good thing to require the board to report annually on the performance of the bank and the governor. We support all those changes to the Act.

One of the most interesting and perhaps most powerful changes to the legislation is clause 18, which inserts new section 77A, “Changes of ownership”. It will be very interesting to see how Alan Bollard deals with that provision if Lloyds TSB does proceed with the sale of the National Bank. Section 77A gives the Governor of the Reserve Bank extraordinary powers to influence any change of ownership of a bank in New Zealand. For example, a person—and that is a legal person—must obtain the written consent of the bank before a transaction could result in that person acquiring a significant influence over that registered bank, or increasing the level of significant influence. The bank has the power to impose terms and conditions that it thinks fit, which will create a very interesting situation for the Governor of the Reserve Bank. At the very least, I believe that the governor needs to ensure that any change of ownership of the National Bank should lead to the new bank being a New Zealand - based company, not another branch of an Australian bank, as we put up with at the moment with most of the other commercial banks in New Zealand. Better still, we believe that the governor should require that the new National Bank should have majority New Zealand ownership, so that it would truly be a national bank.

We put a challenge down to the Governor of the Reserve Bank to exercise his new powers under new section 77A wisely and cautiously, but also in the best interests of New Zealand. What could be in the best interests of New Zealand more than New Zealand having a nationwide commercial bank owned and operated by New Zealanders, investing in the New Zealand economy, and returning the profits of that operation to New Zealand shareholders, rather than all those profits continuing to leak off shore?

I will now return to what are relatively minor clauses, but, none the less, critical clauses in respect of building societies and credit unions. As I said earlier, I would like to claim primary credit for the changes that did take place, because despite the credit unions and building societies putting forward what I believed to be compelling and very eloquent arguments in their submissions, the officials still reported back that they did not want any change to the bill. I am sure that other members of the Finance and Expenditure Committee will acknowledge it was at that point that we went through a rather protracted debate, over several weeks, to see how we could indeed allow those organisations to continue to do what they do well.

The process went along these lines. Firstly, the Financial Services Federation, which represents 32 institutions in New Zealand, particularly the building societies and the PSIS, and which has assets of $10.5 billion, pointed out the obvious—namely, that stopping those organisations from using the words “bank”, “banking”, or “banker” in any of their slogans would lead to real economic disadvantage to them. Credit unions followed through by pointing out that such a restriction would be anti-competitive, it would severely disadvantage credit unions, and it would likely have a negative impact on those organisations. Members should bear in mind that credit unions have 183,000 members in New Zealand, and assets of $418 million, so they are not fly-by-night organisations, and they ought to be allowed to use straplines such as “Banking Where You Belong”, and, in the case of building societies, simply “Banking”.

So they put their case, and we listened to it. The National Opposition members were quite happy to dismiss the concerns raised by the credit unions and the building societies, because members opposite are wedded to the big overseas multinational banks and are not particularly interested in the mutuals and cooperatives that the people of New Zealand support when they have the opportunity to do so. The officials stuck with their line, but members such as myself were determined to turn that around. With the support of Graham Kelly, who has been involved in a credit union, Gordon Copeland, Craig McNair from New Zealand First, and David Parker from Labour, we did manage to shift the ground over a period of weeks. It was difficult to find the right balance to ensure that the organisations could promote their services in competition with the big foreign banks that National is so wedded to, at the same time as providing some protection for customers.

I think that we came up with the perfect solution. I certainly recall that it was I who came up with the solution that, on the one hand, any credit unions or other institutions—and not just building societies, but private banks—would have to specify in their advertising that they are not a registered bank, but, on the other hand, we would allow them to continue to use the keywords “bank”, “banking”, and “banker”. That was the happy compromise that the committee was able to reach agreement on, and it was something the Reserve Bank could live with and the Minister could live with.

In echoing what Rodney Hide said earlier, it was very much a case of MMP in action, and before us today we have a bill that gives us the right outcome. The only people who are upset are those in the big banks, who are clearly the ones who had complained to the Reserve Bank about the smaller competitors, but who really did not have any case to put up. Reserve Bank officials admitted to us that none of the complaints against the credit unions and building societies had stood up when they were investigated. So this is a victory for the little people. It is good to see that every party is supporting the bill. Ironically, it is good to see that every party, including the National Party, is claiming credit for helping out the credit unions and the building societies.

GEORGINA BEYER (NZ Labour—Wairarapa) : I would like to take a brief call on the Reserve Bank of New Zealand Amendment Bill’s second reading and just mention, because it is important, that this bill does improve the Reserve Bank’s ability to carry out its functions in both monetary policy and banking supervision areas. The bill does not alter the objective of monetary policy, which remains the promotion of price stability. The third point is that the changes will strengthen the board’s role in monitoring the performance of the Governor of the Reserve Bank and further enhance the Reserve Bank’s accountability and independence. I support the bill.

JOHN KEY (NZ National—Helensville) : I want members to cast their minds back to 1988. Fifteen years ago I was just a young man in shorts and the Speaker of the House, the Rt Hon Jonathan Hunt, had spent only two decades in this House. We were the proud owners of the silverware—the Rugby World Cup. Buck Shelford had progressed to become All Black captain after David Kirk, and a very young and sprightly Donald Brash wandered into the Reserve Bank as governor. How did he get there? I ask that question. I hear the Labour Party members, who are looking at me, ask how did he get there. It was by a remarkable turn of fate.

Tonight for the first time, before this House and the public of New Zealand, I want to unveil the truth of how Donald Brash came to be Governor of the Reserve Bank of New Zealand. He did so with the support of Margaret Wilson, board member of the Reserve Bank. She knew quality when she saw it. She saw the twinkle in a very young Donald Brash’s eyes. She said: “We need him as Governor of the Reserve Bank.” She said: “If you want a good Governor of the Reserve Bank, then you need a man with intelligence and with skill.”, and she looked into Don Brash’s eyes and she melted. She said: “Absolutely, this is a man with skill and intelligence.”

But he was not just a good governor. He could have gone to the next level—that is, a great Governor of the Reserve Bank. But he was not a great Governor of the Reserve Bank. He is a man of courage, commitment, and ability. No, he went right out there on the bell curve, right in the 99th percentile. He was outstanding. He was one of the greatest New Zealanders ever to govern the Reserve Bank, and he did it because Margaret Wilson gave him the opportunity to do so and to this day he is for ever grateful. Whenever the National Party caucus starts in on her, he, for one, always stands and says: “I want to thank Margaret Wilson. I want to thank her for the opportunity she gave me. She is a wonderful woman, and even if she gets a bit confused on other issues I forgive her.” That is what he has said since he came into the House.

In 1989, through the stewardship of a Douglas Labour Government the Reserve Bank of New Zealand Act was passed. From that time, when inflation was 9.1 percent, with the brilliance of that outstanding governor, Don Brash, the country was shepherded through a period of low inflation. In 1991 we were between our targets of 0 to 2 percent, and only for a brief time did we exit up to the top end of the band with 2.6 percent.

It was an outstanding contribution. He is a fine New Zealander, and New Zealanders up and down the country are proud to have called him their governor. We are proud to call him a National Party member. He will be a very fine Minister of Finance. That is what is coming. I look into the eyes of the Labour members opposite and I see Jill Pettis can see exactly what Margaret Wilson saw those many years ago—how to recognise a fine New Zealander and how lucky we are to be in this House today. That is how it happened. But we are not here to talk about the 1989 Act, we are here tonight to talk about the 2003 Reserve Bank of New Zealand Amendment Bill.

Richard Worth: Hurray for Don!

JOHN KEY: Exactly, hurray for Don Brash. So what are some of the specifics of this bill that would be of interest to members of this House?

Hon Lianne Dalziel: When are you taking over from Bill?

JOHN KEY: I am not taking over from anybody at the moment. I do not know whether the Minister has noticed but I am last—26. But, anyway, let us not worry about my career, let us worry about the career of the Governor of the Reserve Bank as he goes forward.

The first thing this bill does is to remove the governor as chairman of the board. Now, that is an unusual thing worldwide. We do not see Alan Greenspan skipping into the Federal Reserve in the mornings thinking “Hello, I’m not’’—

Rodney Hide: Skip?

JOHN KEY: Mr Hide is quite right, he does not skip that much at 77. We do not see him hopping into the Federal Reserve saying: “My goodness, I’m not chairman anymore.” But we have done that in New Zealand, and that is OK; we are setting an international trend. It is one of the things that will happen because of the Reserve Bank of New Zealand Amendment Bill, will be passed in this House in the months ahead.

The second person I want to make a very brief mention of is the poor old deputy governor. He is now being removed from the board. When he picks up the 2003 Reserve Bank of New Zealand Amendment Bill he will read of his departure. It is very sad indeed, but he will still play a very strong role. The Reserve Bank has a very fine deputy governor at the moment, but that position will be gone from the board.

What I do want to talk about for just a moment are the words “bank”, “banker”, and “banking”. Rod Donald stood in this House just a few moments ago and waxed lyrical about why the Green Party supported that provision, why National had challenged the words “bank”, “banker”, and “banking” as they stand in a trademark, and why we were wrong to challenge that. We were not wrong to challenge that. When the people of New Zealand go to a bank and look at a trademark they rely very heavily on those words. Name trading is a significant part of the banking industry in New Zealand. In my opinion, if someone sees a title that has “bank”, “banker”, or “banking” in it as a trademark that person is entitled to understand that it is backed up by strong supervision and that his or her money is safe. People are entitled to expect that they will not be led down a path of deceit, as we have seen from so many financial scams around the world. I stand in this House to protect poor, innocent, hard-working New Zealanders—my constituents—and we were right to be at the select committee and to make that challenge. We were right to challenge that provision, and if Rod Donald is questioning our ethics, then he is wrong, because we were right to do that.

For a moment I want to talk about the Continuous Linked Settlement service, which is a very interesting issue that is covered in the bill. Members will be aware that foreign exchange markets involve the buying of one currency and the selling of another. In a simple transaction, if one were to buy New Zealand dollars and sell US dollars, one would need to make what is called the payments. For instance, one needs to receive into one’s bank account, say, NZ$10 million, and on the very high exchange rate we have at the moment of roughly 59c against the US dollar, pay that $5.9 million into the US bank account. The period of time when those transactions may take place in New Zealand will be within our banking hours of 9 a.m. until 3 or 4 o’clock in the afternoon. However, at that time the bank in the US where one holds one’s account, or “Nostro” as it is known in the industry, is asleep. It lies dormant in the US, because people are no longer at work at that time.

That period of time where people may receive New Zealand dollars and pay away US dollars is known in the industry as the Herstatt Risk. It is named after the German Herstatt Bank, which went into default. It had paid away some transactions and not received others, and that created a huge liability. For years and years the worldwide financial services industry has faced Herstatt Risk in paying away billions of dollars before it has received the counter dollars on the other side.

This legislation will adopt an international trend called Continuous Linked Settlement. It is an international protocol and clearance system that will allow real time exchange for foreign exchange. It will allow the receipt of US dollars at the same time that New Zealand dollars are paid away. That will remove a huge contingent liability on the banking system.

National will support this legislation because we support strong monetary policy. Strong monetary policy must play its role in a strong New Zealand economy. We also support this legislation because Continuous Linked Settlement can provide some real benefits to the financial services industry in New Zealand.

Whenever we get an opportunity we will reflect on the wonderful contribution that the Governor of the Reserve Bank made in that time from 1988 to 2002. We can only hope that the new Governor, Alan Bollard, can follow in the great steps of that wonderful New Zealander Dr Donald Brash.

• Bill read a second time.

Hon PETE HODGSON (Minister for Crown Research Institutes) : I move, That it be an instruction to the Committee of the whole House on the Crown Minerals Amendment Bill that it take the bill part by part and consider any schedules as one question.

• Motion agreed to.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) : It is interesting, in debating this clause tonight, to examine the bill to try to establish its the purpose. One of the important things in debating the title of a bill is to make sure that the title fits its purpose, otherwise the title can be misleading. One of the extraordinary things one finds, if one examines this bill, is that there is no purpose clause, that I can find. We do not often find a bill that has no specified purpose. That is a major deficiency in this legislation, because it makes it difficult to judge the accuracy of the title.

Clause 1 is the title clause, clause 2 is the commencement clause, and then the bill goes on to Part 1, which gets into interpretation and all sorts of things but does not actually spell out a purpose. However, it is quite clear, when one reads through the various provisions, that the main purpose of the bill is to expunge what may be existing property rights.

People who had licences under the old mining legislation, the Mining Act and the Coal Mines Act, had property rights, but if people had to apply for permits under the Crown Minerals Act, the principal Act that this bill amends, they no longer had property rights. What is hugely important about this legislation that we are debating tonight is that it expunges property rights. It makes it very clear, despite court rulings and controversy. In 2000, a mining business, Glenharrow Holdings, took the issue of its right to renew a mining licence to the High Court, under the Mining Act. The Acting Chief Justice held that Glenharrow Holdings had a right to seek to renew that mining licence. That meant Glenharrow Holdings had a right to continue the property right that it had prior to the introduction of the Crown Minerals Act.

Despite that High Court ruling, this Government is moving to expunge those property rights. If that is the case, and it is pretty clear I am right that that is the case—that is what this legislation does, in effect—then the title is quite misleading. For the title simply to be Crown Minerals Amendment Bill it could mean that it is amending anything to do with the Crown Minerals Act, but it does not amend absolutely anything in the Crown Minerals Act. This bill amends one very specific part of it, and that is that if there is any notion that mining businesses may have a property right under the old Mining Act or the Coal Mines Act, this legislation will expunge that property right.

Far from the title Crown Minerals Amendment Bill being an appropriate title, the title should establish what the bill really does. The title should be something like “Mineral Property Rights Bill”. What is the noun of the verb to expunge? Where is a literary expert among my colleagues here? Where is that eminent lawyer Dail Jones? What is the noun of the verb to expunge?

Dail Jones: Extinguish!

Dr the Hon LOCKWOOD SMITH: A more accurate title would be “Mineral Property Rights Extinction Bill”, because that is what it does. It extinguishes any notion that businesses have property rights prior to the courts finally deciding the issue. As I understand it, the issue is currently being taken to the Court of Appeal. In 2000, the High Court decision in the Glenharrow Holdings case, in front of Acting Chief Justice Heron, held that property rights existed. A second High Court judgment may have ruled otherwise and it is now going to appeal, and this Government is legislating over the top.

The CHAIRPERSON (H V Ross Robertson): Before I call the next speaker, who will be the honourable member Pansy Wong, I just remind members of Speaker’s ruling 90/1, which is in the name of Speaker Gray and Deputy Speaker Braybrooke, which states that “the debate on the title clause in committee is limited strictly to the elements of that clause and any amendments proposed to it.”

PANSY WONG (NZ National) : Mr Chairman, I feel that I should take that comment personally. I have not even started my first sentence, and I am getting a warning. I can assure you that my speech will be very relevant to the title. First of all, I congratulate my learned colleague Dr the Hon Lockwood Smith on actually coming up with a title that is a lot more appropriate than the current one. I remember from the first reading of the Crown Minerals Amendment Bill that one reason for the outrage expressed by the industry operators is that they were reassured by the Labour Government that this bill was just a minor bill to make some changes to the administration relating to the Crown office. But somewhere between then and the time when the bill was actually introduced to Parliament, industry operators discovered that the Crown Minerals Amendment Bill was not just to amend some administrative procedure. In fact, major changes were being made to the legislation in order to extinguish the mining licences granted under both the Crown Minerals Act of 1991 and the Mining Act.

I think that the industry operators are absolutely valid in their outrage, because they should, during the initial consultation stage, have been made aware that in effect this amendment bill did not relate to any minor administrative amendment. At the stage they made submissions, they were reassured by the Ministry of Economic Development that they were to be consulted, and they believed that what they were being consulted on was some technical amendment, and nothing major was expected.

I would like to support my colleague Dr the Hon Lockwood Smith and say that the Labour Government should at least be upfront and honest as to the intention of this bill and rename it the “Mineral Property Right Extinction Bill”, or at least call it the “Crown Mineral Major Amendment Bill”. The title should at least reflect the issue of the property rights being legislated away.

I was on the Commerce Committee and had the opportunity to listen to quite a few submitters, and most of them expressed their outrage at not being included in the consultation process. They were totally, totally misled by the bill because of its title. At first all of them thought they were being fully consulted on certain administrative amendments to the bill; then, when the bill was introduced to the House, they all subsequently discovered that in effect their property rights were being legislated away. They actually have not been consulted on this issue.

I wonder what happened to the modern practice of our Parliament being able to say that each piece of legislation should have a title that will inform the public and the industry or the business concerned of the clear intention of a bill. This Labour Government—which is continuing to try to convince the public that it always believes in frank and honest exchange, and would properly include the public during the consultation process—should at least start off by giving a proper name to any piece of legislation, so that the Government ensures that any sector involved would be alert to any major issues affecting its industry.

BRENT CATCHPOLE (NZ First) : The title of this bill is the Crown Minerals Amendment Bill, but this bill does not really amend the Crown Minerals Act. It is in fact the “Crown Minerals High Court Repeal Bill”. This bill tries to cement into place a means of destroying our legal system by closing the loophole that has appeared in the Crown Minerals Act. The issue went to the High Court, and the High Court has come out in a particular way that this Government does not like.

Dail Jones: Again.

BRENT CATCHPOLE: Once again! So this bill is an attempt to shut that down. This Government had problems with this bill in the High Court, and will have them particularly once it gets to the Privy Council. So the Government has tried to circumvent that process. Another alternative for the title is the “Closing the Gaps in the Crown Minerals Act Bill”.

Pansy Wong: Gaps?

BRENT CATCHPOLE: This is trying to close the gaps. There are huge gaps. But, once again, this Government does not like dealing with closing the gaps, does it? That is something that it does not like to hear about. The Government has decided to close those huge gaps in a rather peculiar way—by bringing in a bill that it calls the Crown Minerals Amendment Bill. But, unfortunately, it is all to do with a particular case—the Glenharrow Holdings Ltd case, where that company had the right to mine greenstone. So perhaps the bill should be called the “Crown Minerals (Stop Glenharrow Holdings Mining Greenstone) Amendment Bill”.

Pansy Wong: I want to know what gaps.

BRENT CATCHPOLE: Oh, the member wants to know more about the gaps.

Pansy Wong: What gaps?

BRENT CATCHPOLE: Oh, the member wants more gaps! What about the “Stop Mining Greenstone (Gaps) Bill”? The gaps that the legislation has created have been rather extraordinarily changed; the Government has tried to legislate against them. Glenharrow Holdings tried to exert its property rights, and this bill attempts to take away the right that it had under the legislation. It had the right to vary its licence and its permit. That legislation had a grandfather clause that allowed it to do that, but this bill has changed things. Perhaps another title could be the “Remove all Grandfather Clauses Bill”, because that is what it is doing: it is trying to remove the grandfather clause from both the Crown Minerals Act and the Glenharrow Holdings Ltd case that came up in 2001. This bill is really to try to close those gaps, and I am afraid the attempt just misses the mark. We could give to this bill another title, and that is the “Total Waste of Time Bill”, because that is what it is doing; it is wasting time. The Minister came out and set a date on which everything would stop, so nobody could make any more applications to extend their licences, and he did that by press release. So this is the “Government by Press Release Bill”.

Rodney Hide: It was the “former” member, Harry Duynhoven.

BRENT CATCHPOLE: It was the “former” member Harry Duynhoven who did that—that is right. I thank Mr Hide for that. I had forgotten that it was the “former” member Harry Duynhoven who issued that press release. I certainly hope that by doing so, he has not extinguished all their rights.

JILL PETTIS (Junior Whip—NZ Labour) : I move, That the question be now put.

SHANE ARDERN (NZ National—Taranaki - King Country) : I have a whole lot of new material that I am sure the Committee will be interested in, on the title of this bill, the Crown Minerals Amendment Bill. There is an old cliché that says: “Never judge a book by its cover.” But the problem with that old saying is that it is quite deep and meaningful. There is quite a bit in it. Sometimes it is used to refer to people. But it is actually quite accurate in the case of this socialist Labour Government: “Never judge a bill by its title.” This bill should be described as the “Never Judge a Labour Socialist Bill by its Title Bill”, because it will have no significance whatsoever in terms of what it contains.

If members look at this legislation they will see that that is absolutely so. If one has a look at the fact that this legislation is amending the Mining Act 1971, the Coal Mines Act, and the Crown Minerals Act, one will see that the title has no relevance to what is being achieved. In fact a better title would be the “Jackboots Across All Property Rights Bill”. That would be a good name for this bill. If members look at what happened in the case presided over by Acting Chief Justice Heron in the High Court, they will see that he found that there was an explicitly worded priority right in mining licence providing a built-in protection once mining has started. When one looks at that case, and that finding, and looks at what has been proposed in this bill, one sees that this title has no relevance whatsoever to what this Government is proposing—absolutely none.

Once again Labour is being propped up by the Greens and various machinations of people who come to this Parliament to support it—a whole range of different misguided socialists are propping it up—and once again, through legislation by stealth, the Government is stealing property rights from those who have worked hard, developed an industry, have a successful profit line, will make a contribution to New Zealand, and can contribute to growth, which this Government talks about but it does the opposite. This title bears no relevance whatsoever to the purpose of this legislation.

A further suggested title for this legislation might be the “Hon Paul Swain Misguiding the Mining Industry Bill”. The Hon Paul Swain, in the first reading of this legislation, told Parliament that it would not be retrospective. So perhaps the title should be amended to the “Labour Party Once Again Introducing Retrospective Legislation for its Own Political Expediency Bill”.

There are a range of suggestions, obviously, that would be more apt at describing what this bill actually does. But the most important issue, and I guess the most important title that should be considered, is “Legislating Across Private Property Rights (the State Knows Best) Taking Property Rights from People Bill”. That would be a much fairer description. The title in no way whatsoever represents anything at all of any significance that is in this legislation.

It is interesting to note that the Commerce Committee was very divided. The very good National and ACT members on that select committee put together a minority report. The National member opposite to me, Pansy Wong, was, I believe, part of that select committee—

Pansy Wong: The first part.

SHANE ARDERN: She was present for the first part of that select committee that looked at this legislation, and she made a very worthwhile contribution to the title of the bill. Of course, she will be in a much better position to judge that than most of the members on the other side of the Chamber tonight, who will not have a clue what is in the bill, let alone what the title should be, and clearly I would listen to that member’s comments in relation to what the title of this bill should be, before I listen to Government members. They have a habit of coming to this Parliament—and certainly they have ramped that habit up in recent times—with all sorts of “snatch property rights” pieces of legislation, think nothing of it—and they draw very long faces at my suggestion about that.

DIANNE YATES (NZ Labour—Hamilton East) : I move, That the question be now put.

RODNEY HIDE (ACT NZ) : The ACT party arises to oppose this bill, and I agree with the National Party and Brent Catchpole of New Zealand First that the title of this bill has to be absolutely wrong. Members may not remember the Hon Harry Duynhoven, because under the electoral law of New Zealand he has gone. I am quite pleased to see that he is not sitting in the Chamber, because he is not legally entitled to be here. But this is his first mess-up as a Minister. He put out a press release to tell New Zealanders that they did not have the property rights that they thought they had. They had gone to the courts and won, and the Government was going to turn around and extinguish those property rights, and that is what Harry Duynhoven announced in his press release.

So the title of this bill should be the “Saving Private Harry Bill”, because that is what this bill is about—a Minister not prepared to follow the law of the land. When speaking to the title of this bill—the Crown Minerals Amendment Bill 2001—one gets the sense that this is just a little tidy-up of the legislation rather than the extinguishing of people’s hard-fought property rights. So we hear from a Government that, on the one hand, says: “Oh we can’t legislate here, we can’t legislate there, we can’t make this retrospective, we can’t do that.” But when it comes to this bill the Government is not even prepared to explain in the title to New Zealanders that this Parliament is extinguishing miners’ property rights, over which the Hon Harry Duynhoven—rest in peace—in his brief career, sort of like a moth flittering around a light, as an Associate Minister responsible for mining, got himself caught in the high wire of the legislative and legal processes.

Was that not something to come? This bill, according to the ACT party, should be called the “Saving Private Harry Bill”. Of course, we oppose any suggestion that there should be a second bill—a “Saving Private Harry Bill (No 2)”—in order to save a Minister who, in every decision that he has made, whether it is a member’s bill for his own advantage, or one as Minister, finds himself incapable of following the law of the land—

The CHAIRPERSON (H V Ross Robertson): This is not an opportunity to go on about a Minister. We are talking to the elements of the bill.

RODNEY HIDE: Yes, and I am explaining that the title of this bill is very much wrapped up with the behaviour of the Minister. I am sorry, but it was the Minister who put out the press release, which was the first that miners knew. I know that Shane Ardern will support me in that. I know that Dr Nick Smith will support me in that. You, Mr Chairperson, could have read about it in the Independent newspaper.

The ASSISTANT SPEAKER (H V Ross Robertson): Do not bring me into the debate.

RODNEY HIDE: We certainly heard it in the select committee, and that is my point. This bill is all about the Minister, Harry Duynhoven, who had a brief career in this Parliament.

Jill Pettis: That has nothing to do with it. Speak to the title.

RODNEY HIDE: I am speaking to the title. If Ms Pettis has a point of order she should stand up and take it. If she cleaned her ears out and listened with what brain she has, she would understand that if it were not for Harry Duynhoven, we would not be having a debate on this bill right now. If Harry Duynhoven had not put out that press release, we would not need to be here debating this matter. That is understood by everyone who sat on the select committee and by everyone on this side of the Chamber. Why does Jill Pettis not understand? I guess it is what she said before about the difference between those who sit on that side of the Chamber and those who sit on this side—about 35 points IQ on average. Poor Jill Pettis cannot read what is in this bill. Poor Jill Pettis does not understand the history. Poor Jill Pettis does not mean Harry Duynhoven’s press release—

Hon RICK BARKER (Minister for Courts) : I move, That the question be now put.

The CHAIRPERSON (H V Ross Robertson): I am very tempted but I will hear the Hon Dr Nick Smith.

Hon Dr NICK SMITH (NZ National—Nelson) : Thank you, Mr Chairman. I thank Mr Hide for his contribution and I want to put the case to the Committee that the bill should be titled “Labour Party Double Standards Bill”. I have been listening to the radio a lot on the foreshore and seabed case, and have heard Government Ministers saying—

Jill Pettis: Oh, that’s right!

Hon Dr NICK SMITH: Let me explain to Jill Pettis. I have listened to Ministers, and she has been saying we have to follow the court decisions; if the court decides a particular way, we have to accept that decision. Well, this bill is driven by the fact that some companies went to court, got a positive decision—had a winning—and this bill will unravel it. That seems to me like double standards. The Government cannot say—and have the Minister John Tamihere going around saying—that Māori can go to the courts and if they have a win in the courts, then it is quite wrong for this Parliament to change it, but when we come to this bill we have a different set of rules and say: “No, no. If Pākehā have a win in the courts, we’ve got to legislate across it.” That is why I say that a far more appropriate name for this bill would be “Labour Party Double Standards Bill”, because with that title we get a flavour of the double standards that are exhibited by Government members.

When it comes to impacting on NgāiTahu’s greenstone rights, which this bill is all about, the Government says to forget about what the courts say about people’s mining rights, because the Government will just cut across them; it will get rid of them. It will use the power of the legislation to overrule the decision. But if the table is turned the other way round, and it happens to be Māori contesting their rights, as they see it, for the ownership of the foreshore and seabed, then Government Ministers say the courts have to be able to do their thing, and New Zealanders just have to live with it. That does not seem very consistent to me, nor, as my colleague Shane Ardern, the very capable member for King Country – Taranaki says, does it sound very fair. It is distinctly unfair. That is why I say this bill should be called “Labour Party Double Standards Bill”. The Government wants one set of rules for one group of New Zealanders, but if one happens to be a Labour lackey there is a different set of rules.

I do not think that that is a very fair way for this Parliament to conduct its business. It should be made on the basis of some principled decision-making, and as an Opposition we do not believe that the provisions in this bill are principled. We do not believe that it is fair to be saying to those people who obtained their mining licences through the 1971 Act that, despite their court win, the Government will cut across their mining rights licence. So we say call it the “Double Standards Bill”. Call it what it is—call it for the double standards that we continually see from Ministers, with this piece of legislation and so many others. Members on this side of the Chamber promote one standard of citizenship, because whether or not one is—

David Benson-Pope: The member even gets his own policy wrong.

Hon Dr NICK SMITH: Mr Benson-Pope gets all excited. I would like him to explain—

Opposition Member: Who? “Benson-Dope”?

Hon Dr NICK SMITH: “Benson-Dope” I think—

The CHAIRPERSON (H V Ross Robertson): That is out of order. The member will apologise.

Hon Dr NICK SMITH: Benson-Pope. I would like him to get to his feet to explain why we have heard from Ministers, time and time again, who have the attitude that when Māori win their case in the court, so be it, but when Pākehā win in the court they want to bring in legislation such as this to cut across it. That seems to me, with my basic sense of Kiwi fairness, to be wrong. I would like the Minister in the chair, or Mr Benson-Pope, to get to his feet and explain why Ministers seem to be singing two different tunes. If they cannot, then this bill should be called the “Labour Double Standards Bill”—reflecting Labour’s sets of rules where there is one set of rules for one group of citizens but if one happens to be a group of citizens who support the Labour Party, then there is a different set of rules.

Jill Pettis: Ha, ha!

Hon Dr NICK SMITH: It is not good enough. I would like Jill Pettis, who has so much to say, to get to her feet and answer that basic point.

DAVID BENSON-POPE (Senior Whip—NZ Labour) : I move, That the question be now put.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) : Clause 2 states that the Act comes into force on the day after the date on which it receives the royal assent. There is nothing particularly unusual about the wording of that clause. That is quite common for legislation, but what makes it particular is that this bill in fact extinguishes property rights that are an issue currently before the courts.

In terms of the commencement of legislation that is going to do something as dramatic as extinguish property rights, I think, and National would argue, that the legislation should allow time for the court to sort out what those current property rights are, rather than simply stating that on the day after which this bill receives the royal assent we are going to change those property rights.

Admittedly, the legislation preserves the position of some people, but, of course, this could even come into question, because what the legislation basically says is that it protects the position of those who had applications in prior to the date on which the member Harry Duynhoven announced this legislation would be introduced, which was in 2002, so that their positions will be determined by the court. People who did not lodge applications for variations to their licences, extensions to their licences, or renewals prior to 5 p.m. on 20 September 2002 will be caught by this legislation.

National would argue that this legislation should not commence until the court has decided the issue of those property rights, for two reasons. First, any decision of Mr Duynhoven is open to question right now. If Mr Duynhoven’s position in this Parliament were to be void, then any decisions he made while his position was void would be null and void. That is the first issue. The second issue is that the New Zealand Crown Minerals Agency was busy telling licence holders that they could not apply for renewals under the Crown Minerals Act if they held licences under the old Mining Act, or the Coal Mining Act of the early seventies as well. So a number of people, because of advice that might have been wrong, may not have applied for extensions or renewals to their licences.

If the advice they were given was wrong, and that cannot be determined until the Privy Council considers this issue, then at least they should be given the opportunity to be able to apply for renewals or variations. This legislation prevents that. That is why National will argue that for this Act to commence on the day after which it receives the royal assent is unfair, because some people were advised that they did not have the right to apply for renewals. The court has suggested that they may have had that right. This legislation expunges any such right from the date on which Mr Harry Duynhoven said that it would no longer be available.

Any consideration by this Parliament should suggest that that is unfair. What would be more proper is for this Parliament to allow the court process to sort out whether the right did exist and whether those licence holders had the right to apply for renewals, extensions, or variations, because that matter is currently still before the court, and therefore, this Act should not commence until such time as it has been ruled on by the courts.

SHANE ARDERN (NZ National—Taranaki - King Country) : I also rise to oppose the commencement date. The reasons are quite simple, as my colleague the Hon Lockwood Smith has pointed out. If members look at the press release put out by the Acting Minister at the time, the Hon Harry Duynhoven, at 6.30 p.m. on 20 September 2002, they will see that by doing that, this legislation came into being. Putting out that press release brought into question the whole issue of property rights covered in the body of this legislation, and this legislation came into being.

The question I have for the Minister in the chair, Chris Carter, or any other Labour member who wants to take a call, is: why would the Government proceed with legislation when the Minister himself and his tenure in this Parliament are under question at the moment? Why would the Government allow that process to proceed? This is quite apart from the fact that the legislation rules across what has commonly been strongly defended in this Parliament, by both National and Labour Governments, over the whole history of the Parliament. That is why we have had continuous democracy in this country for longer than most other countries. I think this is the longest-serving continual democracy in the world, but if that is not so, it is one of the longest. One of the reasons it has endured is simply that this Parliament, regardless of what party has been in Government, has upheld the principle of property rights.

For the first time in the history of this country this socialist Government is breaking that rule. I know, Mr Chairperson, that you are quite knowledgeable on this topic, because I see that you were on the select committee. I can tell that the members of the select committee would have studied the ramifications of the submissions put forward very closely and very carefully. Why is it that today this Parliament and this Government are allowing this process to proceed, given the amount of ambiguity around the particular issue, and given the pending court action that will almost certainly follow? We need only go back to what Acting Chief Justice Heron said at the time. We can see that a whole range of political and legal issues needed to be resolved with regard to whether the legislation would stand up and whether it would be robust.

Why are we proceeding with this legislation? Why are the Green Party members of this Parliament supporting this legislation at this point in time? Why is the Labour Party wanting to get this legislation through today, and not defer it until some of the issues where, clearly, there is a huge amount of ambiguity are resolved one way or the other? Why is it not upholding that long-served principle in this Parliament of maintaining property rights? Maybe the Minister of Conservation will take a call to explain. We on this side of the House are absolutely dumbfounded by the fact that this Government is interested in proceeding with this legislation under the current circumstances, and allowing this bill to take effect once it has received the royal assent.

There are a range of areas in this legislation that I am sure will be well thrashed out as we further debate it, but there is one issue that has not been touched on yet, and it certainly is relevant to the commencement date. With regard to mining, why has a different set of rules been applied to a range of other topics that have been canvassed by my colleagues the Hon Nick Smith and the Hon Lockwood Smith in their previous contributions? Why have we suddenly got to the point where those property rights can be extinguished, without compensation, just by passing legislation like this? How is that? That is setting a new precedent. I do not think that has ever happened in the history of the Parliament. One would probably have to go back a long time. I do not see any members shaking their heads to say that I am wrong. Some members who have been here a long time would know. Certainly some members on the other side of the Chamber would know, because they are well practised at it. Are we now setting a new precedent, whereby a Government can legislate like this across property rights, without compensation, and without looking at the ramifications?

BRENT CATCHPOLE (NZ First) : I shall take a very short call on the commencement date. Although the bill states that it will come into effect when it receives the royal assent, in fact it has already come into effect. It came into effect on 19 September 2002, at 5 p.m. That was the date the Associate Minister of Energy, Harry Duynhoven, put out a press release that shut down any possibility of people applying for an extension of their licences. Licence holders who had not applied by 5 p.m. on that date were deprived of their property rights. Those property rights were extinguished with that particular press release. So we are here today, basically, either to confirm that press release, which, effectively, is governing by press release, or to debate a bill that, really, is unnecessary because of that particular press release. The commencement date of the bill should be the date of the press release, and that was 19 September 2002.

PHIL HEATLEY (NZ National—Whangarei) : I would like to contribute to the debate on the commencement date. I am appalled that the Government can, with the words “the day after the date on which it receives the Royal assent.”, put this legislation into force so swiftly and with virtually no consideration for the courts. I remind members who are not familiar with the bill that the Glenharrow Holdings case makes it clear that lots of things around these issues of mining are not included.

In fact, that company went to court. In 2001 there was a case, Glenharrow Holdings Ltd v Attorney-General, where the decision upheld the property rights of miners who had gained licences under the Mining Act. It also made it clear that those licensees were able to continue to apply for extensions to their licences under the Mining Act. The case went on to the Court of Appeal, which has not yet reached its decision. How can this Government move so swiftly, having this bill come into force upon it receiving royal assent, not listening to the courts, and certainly not listening to the miners, who, incidentally, I would have thought were traditionally Labour Party supporters. In fact, are any miners Labour Party supporters? If there are any Labour Party supporters at all on the West Coast, I will be surprised. I am surprised that, in the face of a court decision, in the face of miners—who are traditionally Labour Party supporters—being harmed by this bill, and in the face of the lack of consultation, the Government can bring this legislation into force.

Dr Nick Smith brought up the point earlier that, on the one hand, when it comes to the issue of private property rights in terms of the public ownership—as everyone believes—of the foreshore, seabed, and beaches, there is extensive and endless consultation with Māori, there is recognition of a court decision, and the Government does listen to the only voters it has left, those being radical Māori, but, on the other hand, with this bill it ignores its supporters, the miners. It listens endlessly to radical Māori on the foreshore and seabed issue. With this bill it ignores a court decision, yet on the seabed and foreshore issue it heralds a court decision. With this bill there is no consultation with miners, Labour’s traditional supporters, but on the foreshore, seabed, and beach issue there is endless consultation with Māori on private property rights, behind closed doors, in private, so that New Zealanders who have a stake in our beaches have no idea what deals are being done and what is being sold down the road.

That is what I would like to raise. How can the Government bring in a commencement date that means the bill will be enacted so swiftly, without any consideration of all those things? I would appreciate the new Minister in the chair, Rick Barker—the green Minister—when he has finished reading the bill, responding to my questions. Why has there been no consultation? Why is the Government flying in the face of a court case? And why is it flying in the face of its traditional supporters? That is what I would like to know. I am interested in the Minister in the chair—if he could pause for a moment from reading the legislation and catching up with us here in the Committee—answering those questions for me. Does he have any idea what the Court of Appeal will report back when it finishes its consideration of what is put before it? Does the Minister even care what the Court of Appeal will come up with, or is he too entrenched in this Government, which rides roughshod over the process by legislating retrospectively in virtually 30 percent of the legislation that passes through this House? I could list it all, including the fisheries legislation and the “Harry Bill”. Has he no respect for the courts?

Hon DAVID CUNLIFFE (Minister of State) : I move, That the question be now put.

RODNEY HIDE (ACT NZ) : It is very clear to this side of the Committee that this Labour Government does not have any respect for Parliament. We have had a set of revolving Ministers in the chair; it just depends whose turn it is. It would appear that their attention span is about 10 minutes, because then another one has to be brought in. Not one Minister has stood up to speak to this bill. The bill was brought in by the Hon Harry Duynhoven; he has gone. When members on the Government side get an opportunity to speak, all that they do is move that there be no debate. What sort of Parliament is that?

There are things to debate, because we are discussing the commencement date, which—[Interruption] Jill Pettis is now trying to pick me up for a dinner date. No thanks, I say to her; it would be a cold day in hell before I did that, but I appreciate the offer. I know how sad it must be for her to find a man in her caucus to go out to dinner with her.

Clause 2 states: “This Act comes into force on the day after the date on which it receives the Royal assent.” One would think that when this bill came into force the principal legislation would be changed, but if we read on we discover that, no, it was changed on 19 September 2002. Mr Brent Catchpole of New Zealand First is quite right. Only a Labour Government could think it could legislate away time. It is very interesting that the bill came from the Hon Harry Duynhoven, who thinks he can legislate away the Electoral Act and secure himself a place in history. I say to you, Mr Chairman, that I am speaking to the commencement clause. If you want to wave your arms around, indicating the size of the fish you caught last weekend, or anything else, and bragging to Jill Pettis, that is your business, but I am speaking to the commencement date.

The date of 19 September 2002 is significant because that is when the “former” Minister, the “former” MP for New Plymouth, the Hon Harry Duynhoven, put out the press release. Imagine the significance of that date in terms of our Parliament and our legal process! He announced his legislation before it was written. He announced his legislation before anyone saw it. He announced it before it came to Parliament. He said: “I’m the Minister. Some time in the future, if I’m still an MP, if I’m still a Minister, I will bring a bill to this Parliament and we might pass it, but in the meantime I am the Minister, I am God Almighty, and I’ve changed the law.” And that is what happened, because the real commencement date of this bill, under this Labour Government, is 19 September 2002, not the day after it receives the royal assent.

In fact, what we are doing here is legislating a lie. That is what this Government is doing. It is legislating a lie, because this bill and this decision came into effect last year. It is just that poor old Harry Duynhoven had not caught up with that, just as he had not caught up with a few old minor, technical details in the Electoral Act. The Dutch Minister in the Labour Government announced the commencement date of this bill, and it is not when it passes through the House; it is 19 September 2002. We on this side of the Committee say it is disgusting that the property rights were taken away, it is disgusting that the courts were overturned, it is disgusting that it was done by press release, and it is disgusting that it was done by an MP who, under New Zealand law, cannot sit in this House now.

So we are given a pass-the-parcel approach in terms of Ministers sitting in the chair, and not one of them is prepared to discuss why this legislation “comes into force on the day after the date on which it receives the Royal assent.”, when, if we read further back, we discover that it commenced on 19 September 2002.

DAVID BENSON-POPE (Senior Whip—NZ Labour) : I move, That the question be now put.

PANSY WONG (NZ National) : This is a very serious issue, because today, in this Chamber, the Labour Government has set a new precedent. It has made a mockery and a farce of the commencement date.

This bill was first introduced to the House on 18 December 2001. I remember that, at the time, I asked what sort of Labour Government would introduce legislation at Christmas time that took away people’s property rights. The Labour Government got the gold, and the coal miners and the mining industry operators got shafted.

They were further shafted when this bill was referred to the Commerce Committee, because before the select committee even had time to receive submissions and look at the substantive issue, the Minister in charge of the bill at the time, Harry Duynhoven, introduced a new dimension to the bill. As was pointed out by the ACT party’s Rodney Hide and by my colleague Dr the Hon Lockwood Smith, that Minister introduced another commencement date for a bill that was under consideration by the Commerce Committee. So we have a bill that was introduced on 18 December 2001, and that eventually came to the House for its Committee stage in August 2003, but before that date the Minister in charge of the bill at the time had already announced that, no matter whether Parliament agreed that the legislation should be passed, he was adding a new dimension to the bill, and the date of 20 September 2002, 5 p.m., was inserted in the bill, to be the operative date for the extinction of the right of a mining licence holder to apply for a new mining licence. I wonder whether that is an example of the expression “going Dutch”. As Rodney Hide was saying, Harry Duynhoven was looking after himself and forgetting about the rights of the mining licence holders.

It is an outrage that we now learn that, under a Labour Government, the title of a bill need not even attempt to describe its content. The commencement date has also started to take on the appearance of a farce, because what is the point of Parliament passing this legislation in 2003 when the substantive provisions of it have an operative date of 2002? That indicates the disrespect that the Labour Government showed to the select committee, which hardly had time to deliberate and debate the substantive issues. The Labour Government rode roughshod over the select committee in introducing another commencement date for the substantive provisions of the legislation.

I would like the Minister in the chair, Chris Carter, to take a call and explain to the public why Parliament should take the trouble of sitting through this Committee debate on the commencement clause, which is meaningless. Regardless of whether the bill is passed, it is already in operation. The substantive part has nothing to do with the stated commencement date of the bill, which is the day after it is subject to the royal assent. I would like the Minister to take a call and explain to the public whether those precedents are now being set by the Labour Government: that the title does not reflect the substance of the bill, and that the commencement date is meaningless.

JILL PETTIS (Junior Whip—NZ Labour) : I move, That the question be now put.

Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) : Part 1 of the Crown Minerals Amendment Bill is one of the less controversial parts, because it is mainly technical and relates to issues surrounding permits granted under the Crown Minerals Act. It is Part 2 that is the hugely controversial part of this bill. That said, there are some issues in Part 1 that do relate to the controversial issue, as well. I would like the Minister in the chair, Chris Carter, to advise the Committee whether I am correct on that, so that we can make our voting judgments accordingly, because some of the clauses—3, 4, 5, etc.—relate to quite technical issues in respect of permit-holders.

I have checked through the principal Act, and a number of those issues do not appear to be of great substance; they appear to be more technical. However, clause 9, “Unit development”, provides that section 46(1) of the principal Act be amended “by inserting in paragraph (a), after the words “2 or more permits”, the words “or existing privileges”. The Committee needs to know exactly what that means if we are to vote sensibly on that provision. If we look at Part 2, we will see that certain matters are still to be determined by the court—the Court of Appeal or, ultimately, the Privy Council—in respect of property rights under mining licences issued under the old Mining Act of 1971 or the Coal Mines Act of 1979, where applications have been filed to renew, extend, or vary those licences. I suspect that Part 2 of this legislation will preserve certain privileges for those who happened to get those applications in prior to the Hon Harry Duynhoven making his announcement at 5 o’clock on 20 September 2002. The Committee needs to know whether the reference to “existing privileges” under clause 9 is a reference to the fact that those property rights have not yet been resolved by the court. If I am right in presuming that that is what is meant by those words, it again emphasises the untimely nature of this legislation.

The Hon Pete Hodgson is not an unintelligent Minister. I would like him to cast his mind over the fact that it would be totally unfair if “existing privileges” referred to those who ignored advice and applied for licence renewals, licence extensions, variations, and whatever, prior to 5 p.m. on that fateful day in September 2002. It would be unfair on those who believed a Crown agency that said they did not have the right to do that, when maybe they did have the right to do that, and when in talking about “existing privileges”, this legislation is presuming they might have had the right to do that. It would be patently unfair for this legislation to be saying that those who ignored advice and made such applications prior to that date have existing privileges, but those who took advice from a Crown agency and did not seek to renew such licences do not have existing privileges.

This Parliament cannot consider that to be fair, but in respect of those amendments to Part 1—in particular the amendments under clause 9 to section 46(1) of the principal Act—I would be only too happy for the Minister in the chair to take a call and say: “Lockwood, you’ve got it totally wrong. The existing privileges being referred to have nothing to do with the matters before the court”. I am prepared to accept that if the Minister says that is correct. But if it is not, we need to know.

Hon PETE HODGSON (Minister of Energy) : Lockwood, you’ve got it totally wrong! Nothing in Part 1 has anything to do with Part 2. The issue that the member raises is about unitisation, where rights are being divided between licences and permits.

PANSY WONG (NZ National) : We would encourage the Minister to take a call to expand on his explanation, because we would hang on to every word he says. Mining industry operators had the same experience with officials of the Crown Minerals unit. For a number of years they were told that the 1991 Act extinguished their licence rights. Some of them took that at face value and did not even think about challenging the statements made by the officials. It was only when Glenharrow took the case to court that they started to realise that they were being disadvantaged by taking the officials’ words at face value for all those years.

So instead of giving a brief statement to answer the question raised by the Hon Lockwood Smith, I encourage the Minister to take a call to explain the matter in detail and put the whole issue to rest. [Interruption] Exactly. The question is what are these “existing privileges” if they do not relate to permits, or if they are nothing to do with Part 2. Although Part 1 was, on the surface, only a technical amendment to clarify some administrative procedures, the Minister could understand the anxiety of Opposition members after listening to mining industry submitters to the Commerce Committee. They have taken statements made by officials and Ministers at their face value, only to find subsequently that they have been disadvantaged. I ask the Minister to take another call to explain to us in detail why he believes that these “existing privileges” have nothing to do with the permit at all.

When the Hon Paul Swain introduced the Crown Minerals Amendment Bill, he claimed that Part 1 had gone a long way to simplify the legislation, removing compliance costs. When I looked through the commentary on the bill, I realised that there was absolutely no compliance cost statement attached to Part 1, and I am not too sure how the mining industry can be assured that Part 1 has managed to simplify its compliance costs. All that industry knows is that Part 1 is the part of this bill that seeks to extinguish their licence privileges. I do not think they agree that Part 1 has gone a long way to assure them that compliance costs have been simplified—if indeed there are any—to compensate for the loss of their property rights.

Looking at clause 18, “Reports to Secretary”, it was interesting to find that: “Nothing in subsection (4) or subsection (7) requires the Secretary to send or make available any records, reports, information, or returns relating to the calculation and payment of royalties by permit holders.” What if errors are made? What if the permit-holders do not agree with the calculation and payment of royalties? How do they go about seeking that information?

JEANETTE FITZSIMONS (Co-Leader—Green) : The Green Party supports Part 1 of this bill, as it does the whole bill, which, after all, just seeks to implement the original intent of the Crown Minerals Act, which was later shown by the courts not to have quite the legal effect that was intended at the time. So this is just Parliament picking up where Parliament was more than a decade ago. It is part of a trend over several decades to stop giving mining prior status over all other land uses. It has not quite achieved that yet, and I will come back to that later. There is still some way to go. In replacing the Mining Act, the Crown Minerals Act got rid of the outrageous situation we used to be in, where a landowner could be forced to allow access over his or her land to minerals under that land, completely disrupting other land uses—farming operations, or whatever—and had no right to say no. The landowner’s right was instituted by the Crown Minerals Act in 1991, and that was a step forward.

The notion of rights to perpetual renewal of leases, licences, or permits is inappropriate when dealing with public resources. The perpetual right of renewal—such as has been the case for pastoral leases in the South Island, for example—has effectively led to privatisation of public assets. Those leasehold lands change hands as though they were freehold. It is virtually impossible for the Government to end the lease, even though no capital payment was ever made in the first place for the occupation of the land. The Opposition is talking about property rights, and seems to believe that property rights over the access to public resources should be in perpetuity. The Green Party does not agree with that.

The vesting of pounamu in Ngāi Tahu was part of the Crown’s efforts to honour the Treaty of Waitangi, and we do not believe it is appropriate for a company to try to undermine that effect of the treaty. Pounamu is a very special mineral. Its value in spiritual and cultural terms is at least as great as its economic value. We note that the bill still protects the legal position of Glenharrow Holdings.

We support mineral exploration companies having to relinquish at least 50 percent of the area covered by their exploration permits, should they wish to extend the term of those permits from 5 years up to 10. That should increase the efficiency of mineral exploration. By the time companies have been exploring for 5 years, they should have narrowed down a little bit the area where minerals are likely to be, and where they are not. It will give them an incentive to get on with the job—if they do not use their licence, they will lose it.

This bill, however, misses two opportunities to remedy a couple of defects in the original Act. The first one is the anomaly in the Crown minerals legislation that only national parks created before it was passed in 1991 are covered by the fourth schedule, and so are protected from applications to carry out minerals prospecting, exploration, or extraction. In its 2002 manifesto, Labour said it would ensure that the Conservation Act and the Crown Minerals Act provided adequate protection from mining activities for areas of significant conservation value. It is odd that land of equal status under the Conservation Act is treated differently, depending on whether it got there before or after 1991.

Secondly, the Government has not used the opportunity to further remove the special status of mining. Labour’s policy stated that it would amend the Crown Minerals Act and the Conservation Act to establish an appropriate public process for the consideration of prospecting, exploration, and mining applications on conservation land not covered by the mineral activity ban—as occurs with other commercial activities such as tourism and recreational concessions. There is still no process for the public to be involved when—

Dr the Hon Lockwood Smith: I raise a point of order, Mr Chairperson. It would be helpful for those of us who are following this debate closely if the member speaking could give us some guidance as to which particular clause in Part 1 she is referring to. It sounds like she is reading a second reading speech, and she has not referred to any particular clause in Part 1 at all.

The CHAIRPERSON (H V Ross Robertson): That is a debatable issue.

JEANETTE FITZSIMONS: I am speaking on issues in Part 1 such as clause 4, “Record of permit”; clause 5, “Change to permit”; clause 6, “Revocation of permit”; clause 7, “Surrender of permit”; clause 8, “Transfers and other dealings with permits”; and so on.

Just to finish, because I think I must be almost out of time, I was saying that there is no process—as there is for other sorts of concessions on the conservation estate—for mining to be open to a public process. We believe there should be.

JILL PETTIS (Junior Whip—NZ Labour) : I move, That the question be now put.

Hon KEN SHIRLEY (Deputy Leader—ACT NZ) : After listening to the Green Party spokesperson on this bill I think the Committee could be confused, because it is clear that the Green Party’s policy is a total close-down of mining in this country. Regrettably, that party has had some spectacular success. The whole of the Coromandel Peninsula is closed down to mining, and Jeanette Fitzsimons is proud of that. From her perspective I can understand that, but from New Zealand’s perspective I am appalled. We know from the report prepared by the Institute of Geological and Nuclear Sciences that this country has an estimated $86 billion of mineral wealth under the land.

• Progress reported.