CATHERINE DELAHUNTY (Green) : Art is important to life, and the art of political rhetoric has been quite big in this House lately. Unfortunately, we lack minimalists and we have a lot of surrealists. But let me get away from those surrealists, because the Greens are naturalists and we would like an extremely natural way of dealing with a very important restructuring issue. Restructuring of the Arts Council in this second reading is very interesting. Like all restructuring, we have to ask the question whether it will make things better. We have looked at the bill and unfortunately we are not yet convinced.

The Arts Council of New Zealand Toi Aotearoa Bill presents some major challenges to us. We voted in the first reading for it to go to the Government Administration Committee because we were hoping to get clarity on the views of the arts communities from around the motu. There were 15 submissions, and three were presented. Unfortunately, these did not really clarify our position. We had to then talk to a number of artists from the Māori and Pasifika communities, and they expressed serious concerns about the need for this particular change. Although we do believe there are some good changes in the bill, unfortunately we cannot fully support it.

Former Green MP Nandor Tanczos, who is on the arts board, gave us considerable assistance. He is in favour of these changes because he believes they come to grips with some of the issues. But the possibilities around arts development in business, which are excellent in the bill and which Nandor drew our attention to, are not our central concern. We do think it is a good thing that artists, through this bill, will receive more opportunity to understand the business side of arts development because, as we all know, the artist struggles with business. It is not a natural synergy. So this bill does a good job on that. But our major question is, like all restructuring, is this really justifiable in terms of equity? Unfortunately the feedback remains extremely mixed, and there is strong proof that Māori artists and Pasifika artists do think that subsuming Te Waka Toi and the South Pacific Arts Committee will not necessarily be a positive step for them. So there is a question of the principles at play. The principle of mainstreaming to get to the table and get more share of the pie is one principle in terms of those cultures, versus the other option of strengthening and improving the functionality of Te Waka Toi and the Pasifika arts committee.

Senior Māori artists have expressed concern to us that this process was a fait accompli, and although they agreed Te Waka Toi needed to be changed, they did not support mainstreaming. In fact, their desire was for a Māori arts council. That is what they felt manifested the Treaty most effectively, and in the absence of strong evidence otherwise, we continue to support that Te Tiriti perspective from those Māori artists. The history of mainstreaming, even in a strong, dynamic, and established Māori arts lobby, has not been great. A minority voice does remain a minority voice at the table. But equally we recognise the effect of being sidelined, and this is the question that we must consider in terms of the benefits to Māori and Pasifika artists.

Pasifika artists were even more concerned than Māori artists about the loss of the Pasifika committee, because it is quite difficult for many Pasifika communities to get engaged around funding for Pasifika arts, and although the committee existed, and even though there will be two members on the restructured board, should this bill go through, the Pasifika artists whom we spoke to already find it an unfamiliar and alienating process. To lose an identifiable committee where they feel that they can identify with the people on it, to be replaced by those two positions on the main committee, is not seen by them to be a step forward. So, again, that issue of mainstreaming versus an independent voice is a difficult issue. We do not believe that the bill is a disaster, but we are concerned it may be a Eurocentric approach to restructuring. It may be Eurocentric in terms of who actually gets heard and who actually gets their funding.

There are some other really important issues in the bill—community arts providers. This issue of community arts is very important in terms of maintaining rural involvement and community engagement, and I agree with some points that Tracey Martin made about this. We do need community arts funding, and although I do believe that there are some good aspects in the bill in terms of practical restructuring, there are some fundamental flaws around the loss of a strategic plan. So if we do not have strategic direction, if it is completely controlled through a central body and you do not get that feedback from the flax-roots and the grassroots, and if you do not have those two committees representing groups that have been marginalised in the past, it is difficult to give the bill our wholehearted support. The Green Party would very much like to be able to do that. At this stage we do think that possibly this restructuring, which may go through, will then be changed in a few years and we will have those committees set up again, because humans often do this. We often think that what we need to do is restructure the structure and everything will be OK. But the Green Party stands with the Māori artists and the Pasifika artists who said to us that they wanted this not to happen. So at this point we still are unable to support the bill. Thank you.

SIMON O’CONNOR (National—Tāmaki) : I acknowledge the natural display of art there. I think as a New Zealander, as someone who enjoys art, I want to celebrate all forms of art. It does not matter where it comes from within our community; it is about supporting all parts of art. I want to take just a short call on this in support of the Arts Council of New Zealand Toi Aotearoa Bill. Really, this comes back to simple principles. We can put all sorts of suffixes like “-centricity” and so forth at the end of our comments, but this is a bill of a simple principle, which is streamlining and making more effective the systems we have in place within New Zealand to support our arts and culture. It is moving from a board of about 28 people down to 13 to make the decisions on behalf of 4 million Kiwis who enjoy a range of arts. The board, as it is to be devised, is representative of that and of those New Zealand people in its forms across all the various cultures and peoples and interests.

I want to turn my attention to two of the objections we have heard a little bit here today and certainly the last time the House sat. The first one is about this whole need to keep the arts area divided. Well, I always thought about art as actually bringing things together. If you think of the analogy, you know, we bring the canvas and the paint together. We bring the various people together in a symphony to bring about that orchestral work, if you like. It is about bringing things together. And so I do not really understand the logic, artistic or otherwise, of wanting to continue this separation within our artistic community. The second one, and it was not raised immediately today but it needs to be engaged with—

Chris Hipkins: Is South Park art?

SIMON O’CONNOR: Well, my peaches, indeed it is, you see, with great words like that. The second one is that there were lots of objections that artists were afraid to speak out. I find this a bit odd. It may be within Labour and the left that artists are afraid to speak out because they will be punished, but that is not the National way. See, in National we understand that, actually, artists do speak. That is what their art is about. It is about speaking to the public. And from my time working with people in the artist community, I have found that they are not afraid to say what they think, to give their opinion, and to paint that boldly.

I acknowledge those who have spoken beforehand. I acknowledge the art that is South Park; in some speeches it can be used there. And I acknowledge the importance of this bill. Thank you very much.

Hon KATE WILKINSON (Minister of Conservation) on behalf of the Minister of State Services: I move, That the Crown Entities Reform Bill be now read a second time. I would like to thank members of the Government Administration Committee for their prompt consideration of this bill. The bill is an omnibus bill that seeks to make changes to machinery of government arrangements in the health and charitable sectors. The proposals contained in the bill, which I will now briefly recap, are designed to reduce State sector fragmentation, bring together complementary functions and expertise, and create efficiencies by having stand-alone functions carried out by larger, more resilient agencies.

The bill provides for the following structural changes. Part 1 establishes as a Crown agent a new Health Promotion Agency to carry out the health promotion functions currently being carried out by a number of agencies across the health sector. The bill disestablishes the Alcohol Advisory Council of New Zealand (ALAC) and the Health Sponsorship Council, and transfers their functions to the new Health Promotion Agency. It is also intended that the new agency will carry out other health promotion work, including programmes currently delivered by the Ministry of Health. Part 1 also disestablishes the Crown Health Financing Agency. It is intended that some of the agency’s present functions will transfer to the Ministry of Health, while others will continue to be carried out by Treasury’s New Zealand Debt Management Office.

Part 2 brings forward the disestablishment date for the Mental Health Commission to 30 June 2012, superseding the current date of 5 p.m. on 31 August 2015. Part 2 also establishes a new Mental Health Commissioner as a deputy commissioner to the Health and Disability Commissioner, and gives the Health and Disability Commissioner the new functions of monitoring addiction services and mental health services and advocating for improvements to those services.

Part 3 disestablishes the Charities Commission and transfers its functions, duties, and powers to the Department of Internal Affairs, except for decisions on the registration and deregistration of charities. The bill assigns these decisions to an independent board of three persons, which will be supported by the Department of Internal Affairs. This independent board may make registration decisions itself or delegate responsibility for them, in whole or part, to the Chief Executive of the Department of Internal Affairs. However, if the board chooses to so delegate, the chief executive will also not be responsible to the Minister for registration decisions, but must act independently.

The select committee process showed a high level of support amongst submitters for some aspects of the bill, particularly the establishment of the Health Promotion Agency, and also some concerns about the implementation of the changes to the Mental Health Commission and the Charities Commission. I will address these concerns during the course of this speech.

The bill’s intention with the Health Promotion Agency is to create an agency that is viable in the long term, resilient, and able to deliver better public health outcomes. It will lead to greater integration of health promotion across a range of public health issues, encompassing not just the work currently carried out by ALAC and the Health Sponsorship Council but other health promotion work, as well. There are significant opportunities to improve the delivery of health promotion programmes. These include taking advantage of shared expertise when developing or delivering programmes, and reflecting the fact that a number of health promotion programmes focus on the same individuals, communities, or groups. The bill was intentionally drafted to reflect the Ottawa Charter, recognising that effective health promotion relies on multiple agencies carrying out complementary functions. The Health Promotion Agency will be able to draw upon wider expertise, utilise a fuller range of existing relationships, and lead the health sector on health promotion issues.

The bill ensures that the Health Promotion Agency will continue to exercise ALAC’s current autonomous advisory functions, because these are well established and have proven effective for alcohol matters. The bill also preserves ALAC’s current alcohol levy, and ensures it will be spent only on the Health Promotion Agency’s alcohol-related activities.

It is worth briefly setting out some of the history of the Mental Health Commission. The commission was always intended to have a limited lifespan. There is a section in the Mental Health Commission Act 1998 that was to disestablish the commission at 5 p.m. on 31 August 2015. This bill brings forward the commission’s disestablishment date to 1 July this year. Originally the Mental Health Commission was established in response to the Mason inquiry of 1996. It worked as a committee for 2 years, and then was established as a Crown entity in 1998, with a sunset clause that would disestablish it after 3 years. That date for disestablishment was extended in 2000, in 2004, and again in 2007. The time has come to stop the uncertainty created by these continuous extensions. By transferring the Mental Health Commission’s functions to the Office of the Health and Disability Commissioner and creating the office of the Mental Health Commissioner within that agency, we will secure a permanent home for the functions in an independent, resilient, and well-established Crown entity.

There was some concern amongst submitters that transferring the Mental Health Commission’s functions to the Office of the Health and Disability Commissioner would compromise the independence of the functions and the commission’s current focus on mental health advocacy and monitoring. However, the functions’ independence from the Crown will, in fact, be increased. This is because the Office of the Health and Disability Commissioner is an independent Crown entity, unlike the current Mental Health Commission, which is an autonomous Crown entity. The bill also specifically provides for a Mental Health Commissioner who will function as a deputy commissioner within the Office of the Health and Disability Commissioner. This will be the only deputy commissioner specifically identified and provided for in the Health and Disability Commissioner Act 1994. This identification of the new Mental Health Commissioner in statute is intended to ensure that focus is maintained on the important mental health monitoring and advocacy work of the commissioner.

Furthermore, there are alignments between the new mental health functions and the current work of the Health and Disability Commissioner. The Office of the Health and Disability Commissioner has a well-known complaints resolution function, but it also advocates for service improvement once problems have been brought to its attention. The Health and Disability Commissioner’s current service improvement activities align well with the new mental health monitoring and advocacy functions provided for in the bill. Transferring the Mental Health Commission’s mental health functions to the Office of the Health and Disability Commissioner will also provide the opportunity for efficiencies to be achieved by integrating back-office functions.

In relation to the Charities Commission, firstly, some minor amendments to Part 3 of the bill are necessary as a consequence of the recently enacted Charities Amendment Act 2012. I propose to address these by way of a Supplementary Order Paper. There are three different issues that I will speak about in relation to the Charities Act amendments. They are the continued independence of the commission’s functions of registration and deregistration of charities, the continuation of the commission’s education function, and the request to delay this process until after the review of the Charities Act is complete.

The bill provides for an independent board of three members to make registration and deregistration decisions. The bill has been carefully drafted to ensure the continued independence of this board when exercising its professional judgment on registration and deregistration decisions. The Minister will not be able to direct the board. Likewise, if the board chooses to delegate some or all of its functions to the Chief Executive of the Department of Internal Affairs, then the chief executive will also not be responsible to the Minister for registration and deregistration decisions, but will have to act independently. The board will be statutorily independent from the Crown, but will be supported by the Department of Internal Affairs. The bill therefore strikes an appropriate balance between important independence considerations and achieving administrative efficiency.

The Department of Internal Affairs has extensive experience in supporting independent boards and offices of the kind provided for in the bill. These include the Gambling Commission, the Local Government Commission, the Registrar-General of Births, Deaths and Marriages, and the Chief Archivist. To take the example of the Gambling Commission, it has been successfully supported by the Department of Internal Affairs since 2003, and has demonstrated its independence on numerous occasions by overturning Department of Internal Affairs decisions. I expect the board established by this bill to operate just as successfully as the Gambling Commission, and any of the other independent entities supported by the Department of Internal Affairs, for that matter, in terms of exercising its statutory independence.

The bill elevates the Charities Commission’s current functions of promoting public trust and confidence, and encouraging and promoting the effective use of charitable resources to the Charities Act’s purpose section. This is a clear and explicit statement on the continued importance of the charities’ education functions. The bill also retains all the Charities Commission’s other education functions: issuing guidance and rules, providing information to charities about their rights, duties, and obligations under the Charities Act, and stimulating and promoting research into charities matters. The Department of Internal Affairs will be accountable to the House for the performance of these functions as normal. It is intended that these measures will help ensure the long-term viability of the charities functions and make them better equipped to respond to challenging financial circumstances than they would be in a stand-alone agency. It is precisely these considerations that have driven the Government’s approach when developing the changes proposed in this bill. This is a good bill, and I commend it to the House.

Hon TREVOR MALLARD (Labour—Hutt South) : The Labour Opposition will support this bill, the Crown Entities Reform Bill, through its second reading, but we are giving notice that at the Committee stage there is a part of the bill, Part 3, that we will be vigorously opposing. There has been, I think, quite a lot of discussion amongst members on this, and I think this bill is a mixture. Part 1, I think, is generally very well supported and might be regarded as good legislation, and towards Part 2 I think there is a feeling of ambivalence on this side of the House and maybe a variety of views, but Part 3 is an area that we are opposed to because of the loss of the autonomy that is currently enjoyed by the Charities Commission when it goes to, effectively, being a board subject to being run out of and through the Department of Internal Affairs.

We will not speak much at this stage of the bill on the ongoing question of the mess that has been made of State sector restructuring by this Government. I think it is a little bit unfair to blame Jonathan Coleman for the mess that Tony Ryall has made and for the extra work that Murray McCully has caused the State Services Commission, and I think it is probably important, therefore, to focus on this legislation.

There is a review of the Charities Act 2005 that is due to take place on the completion of the current review of the Incorporated Societies Act 1908, and I think most of us would accept that a review of a 1908 Act probably has some priority over the 2005 Act. But what the Government has decided to do is to anticipate the results of that review by transferring functions to the Department of Internal Affairs, and members on this side of the House think that that is a premature thing to do. We think currently there is a robust agency, normally resilient, and we think it generally gets its decisions right, although I am one of the people who know that every now and again there have been some decisions that have been made that would not exactly cover the Charities Commission in glory. One that has been quoted to me has to do with the Anglican Church apparently not being allowed to be registered as a charity, and the reason was the lack of a wind-up clause in the church’s constitution. Apparently that was a requirement of some of the bureaucrats at the—[Interruption] Well, I suppose it would be possible to have, one might say, a second coming clause as part of the wind-up. But I think that was taking bureaucracy too far on the part of the Charities Commission, and there certainly has been some work in the past. But the feedback I have had has been that in the last few years the Charities Commission has been working in a way that has been much more positive and has been working closely with charities. There is a general satisfaction with its work and especially with its autonomy, and you do get to the point of asking the question why, if it is not broken, we should be fixing it. That appears to be the case with the Charities Commission.

The other thing is that it has, over time, built up a good reputation for independence and integrity. That is something that is very important; there is always suspicion around a Government department that it is more subject to a bit of a nudge from the Minister. I do not even know who the current Minister of Internal Affairs is. Can someone enlighten me?

Hon Members: Tremain.

Hon TREVOR MALLARD: Is it Tremain? Chris Tremain is the current Minister. I am sure he would act in a totally proper way and would not ever try to influence it, but if, for example, Murray McCully was the Minister, could anyone believe that he would not be giving a nudge, nudge, elbow, or kick to the Department of Internal Affairs?

Jami-Lee Ross: Wasn’t Shane Jones internal affairs Minister?

Hon TREVOR MALLARD: There he goes again. The poor man’s Paul Quinn is interjecting again. Jami-Lee Ross is interjecting yet again. He can never ever get anything right.

But let us work back to the report of the select committee, where the committee did make it clear that many of the members were convinced that the legislative safeguards in the bill were not sufficient to maintain the degree of integrity and independence that the current Charities Commission provides. We think that the charities-related functions will be much less accessible to the public and that the charity sector work will be carried out in a much less transparent manner if these functions become just another part of the grab bag that is the Department of Internal Affairs. As many of us know, the MOBIE—whatever that stands for—is whatever Steven Joyce wants to have within a department, and the Department of Internal Affairs is for what no one wants to have in their department; it goes to the Department of Internal Affairs. There is therefore a certain lack of support there.

It was a very fine thing: the Labour Party caucus spent much time deliberating as to whether or not we should support the bill. On balance, we decided that we will at the second reading, probably as a result of the good work of the deputy chair of the Government Administration Committee, the former member for West Coast - Tasman. He has convinced us that it is worth going to the Committee stage. I do want to signal that I have tabled—it may be on the Table of the House, and if it is not it will be on the Table of the House later in the day—an amendment that would put a 3-year gap after the Order in Council bringing the Act into effect until the Charities Commission wind-up occurred and the transfer occurred. What that would do would be to provide a window for the review that is required in legislation to happen and for the Government to make a decision as to whether or not it wanted to proceed with what we think is ill-thought-through legislation. Notwithstanding that, we will be voting against Part 3, and we will make decisions at the end, after that process, as to our vote on the third reading. Thank you.

Hon JO GOODHEW (Minister for the Community and Voluntary Sector) : Well, today I speak as the Minister who will be responsible for some of the functions contained in this Crown Entities Reform Bill once it has passed. One of my delegations as Associate Minister of Health is responsibility for the Health Promotion Agency, which is being created by the bill. And as Minister for the Community and Voluntary Sector I am able to advise Mr Mallard that it is, in fact, myself who will be responsible for Part 3 of the bill.

The bill’s intention with the Health Promotion Agency is first and foremost to create an agency that will deliver better public health outcomes for New Zealanders. Lifestyle factors like tobacco use, alcohol abuse, and obesity are significant drivers of poor health outcomes, and these are issues that many communities in New Zealand struggle with. For example, surveys indicate that almost a quarter of New Zealand adults have a potentially hazardous drinking pattern and each year more than 2,000 New Zealanders end up in hospital with alcohol-related disease. The Health Promotion Agency will work to inform and empower people to improve their health. At the broadest level the work currently carried out by the Alcohol Advisory Council and the Health Sponsorship Council will remain the same, but in the Health Promotion Agency it will benefit from being much more integrated. A more integrated and efficient approach to health promotion across the range of public health issues will, in turn, deliver better public health outcomes. By combining the skills and expertise of these two high-performing agencies, the Health Promotion Agency will be able to utilise a fuller range of existing relationships and lead the health sector on health promotion issues.

I will move on now to the Charities Act changes, which relate to the Charities Commission. I know from firsthand experience how vital the charitable and non-profit sector is, the challenges that it faces, and the benefits it produces for New Zealanders. It is my view that it will be for the long-term benefit of the sector to have a stable and resilient mechanism for the carrying out of the charities-related functions set out in the Charities Act for the foreseeable future. There was some concern from the sector about the Charities Act’s definition of “charitable purpose” and the commission’s interpretation of this definition. In light of this concern, submitters asked why the Government would not wait until the outcome of the upcoming review of the Act to make the structural changes proposed in the bill. However, the changes, being structural only, will not affect the review’s ability to examine the definition of “charitable purpose” or, indeed, any other of the provisions of the Charities Act. Moreover, delaying the merger to wait for the review of the Charities Act will not address the Government’s other priorities of reducing the State sector fragmentation and achieving efficiencies in areas such as back-office services by housing functions within larger, more resilient agencies.

As the Minister has already pointed out, the transfer to the Department of Internal Affairs of the charities-related functions performed is intended to help ensure the long-term viability of those functions by having them carried out by a larger, more resilient agency. The department is better equipped to respond to challenging financial circumstances than a small, stand-alone agency. The Minister has also already explained how the independence of the registration function will be preserved and the education function, in fact, strengthened in the bill. I would like to reassure those people who have expressed concerns that these functions might be weakened or lost that this is not the case. As Minister, I will not be able to direct the registration board, or the department if it is acting under delegation from the board. The department will be directly responsible to the House for the performance of the education and promotion functions, and it is working closely with the commission to ensure a smooth transition.

The creation of the Health Promotion Agency and the move of charities functions into the Department of Internal Affairs under this bill will improve both the quality and efficiency of public services now and into the future, and I commend this bill to the House.

LOUISA WALL (Labour—Manurewa) : Kia ora. It is my pleasure to speak on this Crown Entities Reform Bill as Labour’s spokesperson on the community and voluntary sector. It has been interesting meeting with the sector because the sector has been very clear that particularly Part 3 of this bill is something that it completely disagrees with: of the 43 submissions that we received on this bill, 20 related directly to Part 3. I continue to receive submissions from the community and voluntary sector about the fact that the Minister is not listening to it, that the Government is not listening to it, and that it does not want the Charities Commission merged into the Department of Internal Affairs. In fact, the Government Administration Committee itself acknowledged the strong concern expressed by submitters in relation to the disestablishment of the Charities Commission.

One of the other things that were highlighted in the select committee process was that the bill was interrupted with the end of Parliament—it was first introduced on 29 September 2011, and it had its first reading on 4 October—so there were some issues about the carry-over of this bill with the community and voluntary sector. Because at the end of Parliament there was confusion about the status of this bill, it was very interesting that this Government has chosen to rush this piece of legislation through and again take no cognisance of what the community is saying.

When I talk about the community, the people I am talking about are ComVoices, which is an independent network of tangata whenua and leading national community and voluntary organisations. It has been set up to promote and make visible the enormous contribution of the community and voluntary sector to New Zealand society. The Minister for the Community and Voluntary Sector is leaving the House because she does not want to hear—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! The member will be seated. Can I just remind members that it is custom and practice in this place that you do not refer to the absence of members. All of us, at some time or other, cannot be in the House.

LOUISA WALL: Thank you, Mr Speaker. It was very interesting for me as the spokesperson—

Hon Trevor Mallard: She was running faster than the member because she’s a winger.

LOUISA WALL: —oh, you reckon, Trevor—for the community and voluntary sector that I have had so many people from this community want to meet with me to talk to me. ComVoices was one of the groups I met with. Katherine Noble was the chair. I also met with Dave Henderson, who represented the Association of Non-Governmental Organisations of Aotearoa, which is an independent network of community sector organisations. I met with Ros Rice, who represents the New Zealand Council of Social Services, and with Tina Reid, who was there on behalf of Social Development Partners.

One of the organisations that have sent me some communication most recently is an organisation called Te Roopu Waiora Trust, which is a national Māori disability advocacy rōpū based in Papatoetoe, South Auckland. What is interesting, from what it says—and what I really want to highlight—is in its communication, which I quote from. It has existed for over 22 years as an active network committed to progressing Māori aspirations and outcomes. What it notes is that in those 22 years it has never been invited to participate in policy and planning within the Department of Internal Affairs. However, developing a relationship with the Charities Commission has occurred, and it is in negotiations with the Charities Commission on behalf of its community to ensure that Māori actively participate in the first-principles review of the Charities Act that has been proposed. What is interesting in this process is that the Charities Commission is actually actively engaging with its stakeholders, who are the community and voluntary sector organisations of New Zealand. They have a relationship, and the commission is ensuring that those organisations have been well briefed and have an opportunity to participate. I quote: “In view of the principles promoted in the development and implementation of the Kia Tūtahi accord, we find this move by Government and the lack of consultation with the communities of Aotearoa to be completely contradictory. It is extremely disappointing that our trust in working together as Government and communities in good faith has once again been eroded.”

The position that we take on this side of the House is that we will listen to our communities when they come to us and say: “Please don’t transfer the Charities Commission into the Department of Internal Affairs. Please let the first-principles review happen.” Once that process is gone through—which ensures that the input of the community and voluntary sector, as the most critical stakeholder for the Charities Commission, into that process is enabled—then we will know the best outcomes that we want for that sector, and we will have a better Charities Commission that is going to meet the needs of the communities of New Zealand.

One of the other things that I want to highlight is that some of the key themes that emerged from those 20 submissions are that the independence of the Charities Commission and its functions would be compromised by transferring it to the Department of Internal Affairs. This really goes to the heart of what I think the community is worried about. It is about the autonomy and independence of the commission, which the community feels it currently has. So we cannot understand on this side of the House why the Government will not just listen to the community and voluntary sector. I will be supporting my colleague Trevor Mallard. I should have acknowledged earlier, actually, that the chair of the Government Administration Committee, the Hon Ruth Dyson, has been leading this work on behalf of us. I want to reiterate that we are listening to the community and voluntary sector, and we share with it, I guess, a belief in the process that was in the Charities Act. That process should be enabled, and we should go through a process that ensures that the people who are going to be most affected by this change have a say in how their sector will be controlled, and a say on the framework within which a lot of the Charity Commission’s work is undertaken—that those people can have a say in the commission’s work, really, and in the framework of the work that the commission does.

One of the other key themes that emerged from this submission was that the Charities Commission’s role of educating the charitable sector will be compromised by the transfer of functions to the Department of Internal Affairs. Again, this is what the sector is saying, and I think that we should be aware of what it thinks. For us, that is one of the most important considerations in terms of the position we will be taking. The Charities Commission should be retained in its current form until and after the completion of the review of the Charities Act 2005.

One of the other points that have been highlighted is that the savings associated with disestablishing the Charities Commission have probably, in fact, been overstated. There could be a point where it is actually going to cost this Government more money to merge the functions of the Charities Commission into the Department of Internal Affairs. Given that this Government is very quick to use cost savings as one of the rationales for a lot of the work that it is attempting to do, maybe it should critically analyse whether or not it could save some money by just letting the first-principles review take place.

We look forward to working with our fellow Opposition members to ensure that Part 3 of this bill is defeated. That is our primary purpose because, once again, we are going to listen to what our communities say. For those of you who are listening, we will continue to ensure that your voices are heard and have a valid place in this House. I hope that the Minister and the members of that side of the House start listening to what the community and voluntary sector wants. Kia ora.

KEVIN HAGUE (Green) : It is my pleasure to take a call on the Crown Entities Reform Bill. I want to begin by expressing my gratitude to the officials, and to the members of the Government Administration Committee, who kindly allowed me to join them for consideration of the submissions on this bill, and in particular to the chair of the committee, Ruth Dyson. I also express my appreciation to the submitters on the bill. There were some thoughtful submissions, some of which have already been mentioned.

I want to just in passing raise the issue of a procedural matter that is addressed tangentially in the report from the committee, which is that because of the timing of this bill, the process followed by the committee prior to the 2011 election was to open submissions but have no closing date. No closing date was effectively set until this Parliament’s Government Administration Committee was convened and chose to pick up the business, including this bill. What that meant for submitters—and possibly this was a necessary process, given the rules we have to work with—was that many organisations who had an interest and a stake in this bill and who wished to have their views heard either were not aware that submissions were open or were not aware of when submissions were going to close. Certainly, we heard quite a lot of feedback from potential submitters that they were frustrated and angry about that lack of clarity. I think it would be useful for perhaps the Business Committee or perhaps your own office, Mr Speaker, to look at that matter to see whether that could be tidied up to better reflect a good process for submitters in the future on other bills.

The Green Party opposes this bill, and we do so reluctantly because there are aspects of it that we support. When the bill, should it proceed, is split into several separate bills, there is at least one of those that we will vote for. The part of the bill that we support relates to the creation of the Health Promotion Agency.

There has been some commentary, both from the Minister’s speech at the start of the second reading on the bill and from officials, that this is a bill that has been drafted to give effect to the Ottawa Charter on health promotion. I am a bit of a fan of the Ottawa Charter, and so I was very excited to think that a bill would be giving specific effect to it. It is possible that the Minister may like, in the Committee stage, to move a Supplementary Order Paper to more explicitly give effect to the Ottawa Charter in the wording of the bill. My concern is that, although that is the rhetoric around the bill, actually the bill does not go that far.

The Ottawa Charter is important, because it establishes a new approach to health. Within the health sector we talk about the Ottawa Charter and health promotion as a socio-environmental approach to health, and we contrast that with both the biomedical approach and also the health behaviour approach. The biomedical approach tries to explain patterns of health and illness in communities by the distribution of germs, effectively, or bacteria and viruses. In fact, that explanation fails to predict what is actually observed in terms of distribution of health and illness. Then the health behaviour model came along. Health behaviourists say that it is not so much the viruses and the bacteria, the biomedical causes of illness, it is actually people’s lifestyle choices. So we see this phrase “healthy lifestyles”. That, of course, is an attempt to actually bring forward the theory of microeconomics—the rational decision maker—into the health arena. So the theory behind that is that a person will weigh up the advantages and disadvantages of a potential course of action, or health behaviour, and choose the “right” one. If we could only encourage people to make the right lifestyle choices, then we would all be healthier.

In fact, again what we see is a pattern of health and illness that does not support that theory as the primary driver of health and illness. Instead, what we see is disease clustered in particular communities, and that is not because everyone in those communities makes poor lifestyle choices. What health promotion says, and what the Ottawa Charter says, is that that is because health and disease are functions of the level of empowerment of a particular community, control over the life circumstances that people in that community enjoy, and their relative marginalisation. So what the Ottawa Charter says—and I talked about this a little in the first reading speech—is that if the nation wishes to improve the health of communities, we must improve the social and physical environment surrounding those communities and give those communities greater control over their life circumstances. It is a profound change, and I would like to pay particular tribute to this Minister and this Government for their bravery in deciding to set up an agency with the specific function of enacting the Ottawa Charter.

If the Minister chooses not to be more explicit about that in a ministerial Supplementary Order Paper at the Committee stage, then I invite the new Health Promotion Agency to take it from the debate in this House that that direction is indeed the one that the Government wishes the agency to pursue. So that is a part of this bill that the Green Party supports, and we will vote for a bill to achieve that.

The second area that I want to comment on is the change that is being made around the Mental Health Commission. I spoke about this in my first reading speech and pointed out that mental health services have long been Cinderella services within the health sector. The Mental Health Commission was intended as the game-changer to try to very radically alter the direction. The Minister was quite correct in her remarks to say that it was intended that there would be a finite period for the Mental Health Commission, but what I would encourage the Government to do is to reflect on the fact that the job is not yet done.

In particular, the reason why the Green Party will oppose the Government’s intention to fold the Mental Health Commission into the Office of the Health and Disability Commissioner is that the functions are so greatly different. What the Mental Health Commission has been great at doing is taking on a planning function for mental health services and then monitoring against the plan at a macro-scale. That is fundamentally different from the type of role performed by the Health and Disability Commissioner, which has investigated individual cases and tried to draw on learning about that particular case to better inform the health services that are provided in the future. These are not the same functions, and there is no case that has been made out to fold the Mental Health Commission into the Office of the Health and Disability Commissioner.

My colleague Denise Roche is going to talk about the dreadful change that is planned for the Charities Commission. It is completely wrong and we will oppose that as strongly as we possibly can. Thank you.

CHRIS AUCHINVOLE (National) : It is with pleasure that I rise to speak in favour of this Crown Entities Reform Bill. I would like, initially, to acknowledge a few points that have been made by other speakers—in particular, the Hon Trevor Mallard, who mentioned he has concern about the Charities Act but in other ways is pretty supportive of the bill, and, indeed, the most recent speaker from the Green Party, Kevin Hague. I know that he has had a background in health and is very committed to it. I find it sad, though, that both speakers have said they will support the bill, but not bits of it. I think that that is unfortunate, even though there has been a good level of discussion at the Government Administration Committee.

I note the point that Kevin Hague made about submitters not feeling they had sufficient time. It is a consequence, I would suggest, of changes of Government. I know there are several bills that have been thus affected. You would have to be more than an arithmetician to work out a system of overcoming that issue without compromising the new Government by the activities of the old. I think it is something that we do have to take into account. We certainly approached it from an advised point of view in this particular select committee. It was a point of discussion and we were able, I think, to achieve some additional responses from submitters.

The bill provides us with an opportunity to greatly improve the effectiveness of the public sector by reducing the duplication of services and reducing the separation of costs. Indeed, this phrase is not mine, but it is one that I like: this Government is not about increasing public services, but is about increasing services to the public from Government departments. I would have to say—

Hon Christopher Finlayson: Sounds like yours.

CHRIS AUCHINVOLE: It sounds like mine? Thank you, Mr Finlayson; I wish I had thought of it. Indeed, it is something that I have always been keen on. I think this bill goes a long way to achieving that concentration of services to the public.

But also it does something else, and something that I have noticed since National began with its National-led Government. We have done bills on the environment and in other spheres where it produces a synergy for the Government departments that are involved. It brings together people of the same mind. They are not working in isolation; they are not working in silos. It stops the proliferation that occurred, and I say it advisedly, under the previous Labour-led Government. I understand that Labour believes in an expanded Public Service. It always has done and it probably always will, whereas we do not. So we feel this bill is a responsible response to the situation of Public Service proliferation, to reduce that, and it is in keeping with the Government’s overall direction for the State sector, and the Government’s aim of improving State sector performance. None of these changes has been made lightly, and they have been made with a fairly thorough investigation before they went in.

I join the previous speaker, Kevin Hague, in thanking the advisers that we had for the work they have done. I am proud to be the deputy chair of this particular select committee. It is a significant one, which covers eight ministries and involves itself—

Hon Member: Fun working with Ruth.

CHRIS AUCHINVOLE: The Attorney says it must be fun working with the Hon Ruth Dyson, and I have to say that she has a very open approach, particularly to cooperating with committee members. She does have an intensified view of health services through, I think, her continued experience on health select committees. But, as I say, I am always interested when the speeches come out, because they do not always reflect the unanimity or the degree of agreement that does occur during the discussion at committee level.

I will just touch on a few aspects of this particular bill. It accomplishes particular goals. One is the creation of a new Health Promotion Agency, which previous speakers have spoken at length about. It should be noted—and this is one of the concerns of the Alcohol Advisory Council—that the alcohol levy to the council will be continued as a preserve to be spent by the Health Promotion Agency on alcohol-related activities. In other words, it is a centralised feature; it does not get dissipated. The centralisation of services will ensure that programmes are delivered at a high level, removing duplicated expenses. Probably the most contentious issue is the change to the Charities Commission. I think that those who anticipate it the least will find that their anticipated problems do not occur to the extent that they expect them to, and I would encourage them to wait until further in the debate and not to get too anxious about it.

But I am heartened to hear levels of support from both sides of the House for the majority parts of this bill. I support it wholeheartedly and call on all members of the House to do the same, as I am sure all members of the House will. Thank you, Mr Speaker.

DENIS O’ROURKE (NZ First) : New Zealand First does not support Part 3 of the Crown Entities Reform Bill, disestablishing the Charities Commission. Therefore, it will vote against the bill as a whole, and later when it is divided. I will have no comments to make, however, on Parts 1 and 2, and my following comments relate to Part 3 exclusively. I first of all want to refer to the procedure by which this part of the bill has got to the House. The bill was first introduced, as we know, in the previous Parliament, and people have been given only 1 month since then to make submissions to this Parliament on this bill. That is clearly and obviously a totally unreasonable and inadequate period of time for organisations involved in the charities sector to consider and make submissions. That is just not satisfactory, and it should have been much longer—at least 3 months, if not longer than that. A lot of those involved, actually, and they have told me this directly, did not even know that this bill was coming back to the House in this form—and these are the people most directly concerned, so you see how poor this procedure has been.

So there has really been very little consultation on this, and the Government is sailing out on its own without taking any notice of wide public concern about the disestablishment of the Charities Commission. I have many letters and emails to demonstrate that. The public are really being ignored in this process, and that is a very poor process indeed.

The essential problem is, of course, lack of independence for the new board. The current commission is, and is seen to be, independent, and that is a great advantage for the charities sector. The transfer of these functions, as the bill does, to the Department of Internal Affairs does remove genuine independence. The new board of three will be seen as Government lackeys, simply because their functions are so utterly restricted. They will be seen to be there to do the Minister’s bidding, and the fine words in section 8(4) in clause 45, which talks about “not subject to direction from the Minister.”, are just that—fine words, not in any respect real at all.

Independence is important. The purpose of the bill is said to be, firstly, to “promote public trust”. But, in fact, it will do exactly the opposite. It will alienate the public from the charities sector and the Government administration of it in the form that is set out in this bill. It also says that the purpose of the bill is to “promote the effective use of charitable resources:”. What on earth does that mean? I have not heard any of the Government MPs describe what that is, and I would like to hear some discussion on that. Does it mean interference in where charitable resources should go? That is certainly the appearance it gives. If that is a purpose, it is a very bad purpose, indeed. The Government and its departments are not suited to that sort of function. Donors should decide, and charitable organisations should decide.

Thirdly, it talks about registration and deregistration. That, of course, is already achieved, as is compliance with rules, which is already achieved. We see also that the new chief executive is to have a lot of executive powers to carry out functions. That means a lot more executive power and a lot more Government power—yes, more government, not less government as the previous speaker asserted. It means more influence in the private affairs of people and of charitable organisations, it means more bureaucracy, it means less freedom, it means less public encouragement to donate to charities, it means less flexibility, and it means less public engagement. True independence, not just words in the statute, must be a culture—not just some words in a statute. That is not going to be achieved by this bill and the administration system that is set out in it. That is simply not possible in a Government department. I am not criticising Government departments for that; it is just the way they work. They are not suited to it. A separate commission, with the appropriate culture—which the current commission was developing—is the right way to go. So Part 3 of this bill is entirely misconceived and cannot achieve even the purposes that are stated in the bill itself to be achieved. It is not wanted by charities, for good reasons: lack of independence, too much bureaucracy, and less flexibility in administration.

I want to read to the House some of the comments from some of the communications to me. “I have not met one single person in the charitable sector that thinks the absorption of the Charities Commission into the Department of Internal Affairs is a good idea.” “The sector fought so hard for so many years to get a Charities Commission. Please do not allow it to be disestablished now.” “The number of submissions should not in any way be taken as evidence that the sector are ambivalent about the potential loss of the Charities Commission. They are not. Everything I have seen and heard to date indicates that the sector feels very strongly that the Charities Commission should not be disestablished.” “No matter what measures are put in place, the proposed independent board connected to a Government department is very unlikely to be perceived as independent. This will have a profound effect on the public trust and confidence which is so important.” Of course, those comments are from the sector itself, and should be taken notice of by the Government.

What are the effects of bureaucracy? First of all, there will be no real fair or impartial access to the system by charities and those involved with them. Secondly, there will be no real transparency in decision making, which is typical, I am afraid, of Government departments, which do not reach out to the community and are probably incapable of doing so in any real way.

What is needed, of course, is to encourage the sector, and for a commission to engage meaningfully with it, not to regulate and control, as Governments and their departments do. New section 10, in clause 45, for example, makes it very clear: the chief executive officer has functions that are set out in these terms. First of all, issuing guidelines is what the chief executive officer is to do. Does that really mean directions by the bureaucracy? I fear that it will. Secondly, we see the term “model rules” in section 10(1)(ii) in clause 45. That will effectively be regulations—it will effectively be regulations. Also, in section 10(b) in clause 45 there are the words “appropriate information”. What is that? Will only the chief executive officer know what is appropriate? I fear so. The Crown Entities Reform Bill is done in advance of a review of the Charities Act 2005, which is unwise and unnecessary, and it is untrue that to disestablish the Charities Commission now will create a more robust, resilient agency. That is poppycock. It will do no such thing. The current commission would do that much better. In fact, a new organisation will weaken the sector generally, it should not be supported, and it should await the review of the Charities Act so that this can be done holistically and efficiently. This cherry-picking, this piecemeal approach by this Government, is very unwise and should not proceed. For all those reasons New Zealand First supports the charities sector, which, obviously, the current Government does not. We support the charities sector and we support what it says, which is not what this Government is doing. This bill should not be supported now and when it is subdivided later into three separate bills.

KANWALJIT SINGH BAKSHI (National) : I thank you for the opportunity to speak during the second reading of the Crown Entities Reform Bill. The bill once again underscores this National-led Government’s commitment towards improving the performance of our State sector. There is very little doubt that New Zealanders expect, and are entitled to, a State sector that is of the 21st century and that improves as time progresses. This bill does provide what is expected by New Zealanders, by making structural changes to the health and charitable sectors. The Government intends to improve services by reducing the cost of these services in the longer term. I would like to repeat the words of my learned friend Chris Auchinvole, when he said that public services are not to grow, but services to the public are to grow.

I personally am very pleased with the bill, because, quite frankly and plainly, the legislation will end up in practical savings that can be used towards providing other valuable services to New Zealanders. For instance, when I spoke on this bill last time, I mentioned that Counties-Manukau now has 300 extra front-line police on the road. This has been achieved by ensuring optimum utilisation of our resources.

This omnibus bill forms structural changes to the way governance is organised across the health and charitable sectors, including the establishment of a new Health Promotion Agency that will take over the functions of the Alcohol Advisory Council, the Health Sponsorship Council, and the Ministry of Health. This bill by no means reduces the commitment to the alcohol harm reduction programme or towards mental health services; rather, we have strengthened these services. For instance, mental health services functions will continue to be performed by the Office of the Health and Disability Commissioner. The Government has further strengthened the services by providing for the role of the Mental Health Commissioner within the Office of the Health and Disability Commissioner. These changes will reduce the duplication of corporate and governance overheads, and ensure that the agencies can continue to deliver the front-line services that New Zealanders expect. Having outlined the positives of the bill and what it stands to deliver, I commend this bill to the House.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : We have heard from a number of my colleagues on this side of the House and other Opposition parties that there are mixed views on the Crown Entities Reform Bill. That is because the three parts of the bill, although they superficially appear to do very similar things, actually do quite different things. The similarity, of course, comes from the fact that each of Parts 1, 2, and 3 amalgamate parts of the public sector; it is usually amalgamating two different organisations into one single organisation. But, of course, the organisations that are being amalgamated are very different. In Part 1 the Health Sponsorship Council and the Alcohol Advisory Council (ALAC) are being brought together. Part 2 sees the Mental Health Commission rolled into the Health and Disability Commissioner. Part 3 amalgamates the Charities Commission into the Department of Internal Affairs.

What this represents is the ideological position of the National Party that reducing the number of public sector organisations is, by definition, a good thing. It does not matter what the outcome of that amalgamation might be, but the fact that there is an amalgamation and the fact that the number of organisations is being reduced is, by definition, a good thing. Well, nothing could be further from the truth. It is the outcome of those amalgamations that really matters. That is why most parties are saying that Part 1—the bringing together of the Health Sponsorship Council and ALAC—makes a certain amount of sense. It makes one single Health Promotion Agency, which is focused on well-being, healthy lifestyles, and the promotion of healthy lifestyles. Although I can understand some reservations at a time when there is considerable focus on the issue of alcohol-related harm in New Zealand at the moment, and people’s concern that the folding of ALAC into that Health Promotion Agency may reduce the role and the importance of ALAC, we are reasonably confident, from the discussions had at the Government Administration Committee that that does have positives, and the fact that we will have one single agency focused on health promotion is a good thing.

Then you have in Part 2 the bringing together of the Mental Health Commission and the Health and Disability Commissioner, with the Mental Health Commissioner becoming a deputy to the Health and Disability Commissioner. I think it is fair to say there are some reservations about that change, on this side of the House. Mental health has always been the poor cousin of the health system, the Cinderella of the health system—whatever you want to call it. What we are trying to say is that mental health does not get the focus and attention that it ought to, and that has certainly been the case for a number of years. There was an effort under the first mental health blueprint to fix that, and, of course, at the moment what is happening is consultation and preparation for the second mental health blueprint, which, of course, is being carried out by the Mental Health Commission. We all expect that that will be produced in fairly short order, because, of course, the Mental Health Commission will cease to exist fairly soon, so it is going to have to get that job done before it disappears. But under the current Government there is no mental health target, there is no additional mental health funding for secondary services, and we continue to see the proliferation of this attitude towards mental health services as being very minor—almost the health system’s dirty secret, which we do not want to talk about, and which we do not want to support and promote. Supporting mental well-being in the community is absolutely part of health promotion. So there are some reservations about Part 2.

Part 3, which I do not really intend to speak about much, because my colleagues have addressed that at some length, is, of course, the part that we are completely opposed to.

Those three different positions are, I think, quite consistent, because what the Opposition parties are doing, what Labour is doing, is looking at the outcome of these amalgamations. We are not simply looking at should we or should we not amalgamate or reduce the number of public sector organisations; we are looking at what their roles are and what is the best structure for achieving the outcomes that are desirable. National, however, with this bill, simply takes a very, I think, blunt approach, which is that the reduction of the number of public services and the reduction of the number of public organisations, in and of itself, is a good thing.

Part 1, of course, establishes the Health Promotion Agency, and, as I said, we are quite supportive of that. I am looking forward to seeing the work of that agency, and seeing it pick up the work that the Health Sponsorship Council has been carrying out. The Health Sponsorship Council works in tobacco control, sun safety for cancer prevention, nutrition and physical activity, and, of course, minimising the harm related to gambling. It is that particular aspect of its work that, I think, is probably going to become more challenging fairly soon, if John Key and the Government have their way, because what we have seen, of course, is that this Government, which is prepared to sell its own grandmother to get a deal, is going to increase the number of pokie machines just so that it can get a deal with Skycity. Well, I took a look at the Health Sponsorship Council’s website this afternoon to see what it has to say about problem gambling. Here is what it has to say: “Every day New Zealanders lose $5.5 million on gambling. That is around $2 billion each year.” That is lost from our families and our communities. This is the role of the Health Sponsorship Council, and it will be a role of the Health Promotion Agency, as established in Part 1 of this bill, so this is important information that is absolutely relevant to this debate. The website states: “More than 18,000 New Zealanders are problem gamblers.”, and around half of the money lost to problem gambling or to gambling in general, particularly to problem gambling in New Zealand, goes on pokie machines, the very component of gambling that our Prime Minister, John Key, wants to see expanded in this country.

As Kevin Hague said earlier on, this is not simply about some economic approach to health care, where people will weigh up the pros and cons of a healthy lifestyle and will choose automatically a healthy lifestyle. What we are talking about here is that many of the issues that this Health Promotion Agency will have to deal with will be related to addiction, and people do not make sensible, logical decisions when they are dealing with addiction. It is about the environment, and it is about how we construct our communities to reduce the harm, and to reduce the opportunities to engage in harmful and addictive behaviour. That is what really counts. The Health Sponsorship Council knows that. I am sure the Health Promotion Agency will know that. The only people who do not seem to know that are Government members over there, those people who want to increase the opportunities for gambling, and who, in respect of nutrition and physical activity, got rid of the Healthy Eating - Healthy Action programmes, the health promotion in schools, the very health promotion activities that we should be carrying out in order to actually achieve the outcomes that these agencies are supposed to be focusing on.

If we look at the Health Sponsorship Council, it actually looks at some of the costs related to the issues that it is trying to work on. I have talked about the costs related to gambling. We already know about the significant costs related to smoking. Of course, if we look at the costs related to preventable cancer, for instance, it is estimated that skin cancer costs New Zealand about $57 million a year. But, again, what this Government is not interested in is health promotion or promoting healthy lifestyles. What it is doing, and what we have seen from its reprioritisation of health funding, is movement away from health promotion, movement away from primary health, and into secondary health. In other words: “We don’t care if you get sick. We’ll clean up the mess afterwards, instead of working hard to keep people well in the first place.”

The last thing I just briefly want to touch on is the very important fact that the ALAC levy will be secure under this new structure, and that that ALAC levy will be used for alcohol harm reduction promotion activities. It is interesting that we have an alcohol levy, yet we do not have a tobacco levy. That is a question that needs to be canvassed in much greater detail than can be done this afternoon—[Interruption] It might be in the Budget, but it is, I think, an important factor that although we have this very specific levy for alcohol, the fact that we do not have a similar specific levy for tobacco is, I think, a gap that we want to consider addressing. In summary, there are very mixed feelings about this legislation on this side of the House. We look forward to the Committee stage, where we can get down and talk about it part by part. For now, we will support the bill, but without significant changes to some parts of the bill, that support cannot be guaranteed into the Committee stage and third reading.

JAMI-LEE ROSS (National—Botany) : I see from the speech from Mr Lees-Galloway that Labour is on to its tired old hobby horse again of opposing a convention centre for Auckland. The more that Labour members stand up and tell people that they are opposed to more jobs for Aucklanders, and that they are opposed to more economic development for Aucklanders, the better, because the public needs to hear what they stand for, which is opposing jobs. I just want to take a short call on this Crown Entities Reform Bill—

Andrew Little: You’ll have to do better than that.

JAMI-LEE ROSS: How was the process server last night, Andrew? How did that go? I just want to take a short call on this bill. This bill amalgamates the functions of a number of existing agencies to improve financial efficiency and effectiveness, which are goals that we stand behind most certainly. The bill is to help to increase the future viability of those existing agencies. It is unashamedly part of the Government’s overall programme of improving State sector performance as a whole. This National-led Government does not believe in growing the Public Service; it believes in growing services to the public. That means more front-line service delivery, and more efficient back-office services.

We have heard tonight that there is some concern from other parties about this bill. It seems that most parts of the bill have been supported by other parties, except the issue around the Charities Commission. I just want to briefly touch on the issue of the Charities Commission, because from what I am hearing it sounds as though the issue with the Charities Commission is around the independence of the role of the commission, and whether or not that independence will continue through with the new organisation and the board that is being established. I think it is worthwhile pointing out a portion of the Government Administration Committee’s report on this bill. I just want to read it briefly. It says: “We note that Part 3 of the bill contains a number of provisions designed to support the independence of the charities registration function. Clause 45 of the bill as introduced would insert a new section 8(4) into the Charities Act 2005, requiring each board member to act independently in exercising their professional judgement,”.

Denis O’Rourke: Oh, fine words.

JAMI-LEE ROSS: Members can pooh-pooh that if they want to. They can complain and moan about that if they want to, but it is very clear. If members are concerned about the independence of the board, which would be administering functions of the charities-related legislation, they only have to read new section 8. I will read it—I will read it. It says: “In performing or exercising his or her functions, duties, or powers, each member of the Board—(a) must act independently in exercising his or her professional judgment; and (b) is not subject to the direction of the Minister.” I suggest that members have a read of the bill, because it is quite clearly in the bill. The independence that members are looking for will be statutorily required by the board, and I say that that should satisfy many of the concerns that members have.

Overall, this is a good piece of legislation. It goes a long way towards implementing National’s goal of delivering better public services within tight financial constraints, which is one of our four key priorities, and I ask the House to support this Government.

Mr DEPUTY SPEAKER: The next call is a split call.

CLARE CURRAN (Labour—Dunedin South) : Labour members on this side of the House do have a number of concerns about this bill, the Crown Entities Reform Bill, and certainly not just to do with the item that the previous speaker, Jami-Lee Ross, discussed. I would like to refer my comments to Part 2 of the bill, around the disestablishment of the Mental Health Commission. This bill is aimed at what it says is amalgamating “the functions of a number of existing agencies to achieve gains in financial efficiencies, effectiveness, and future viability of agencies.” What we contend is that with regards to the downgrading, the diminishing, of the Mental Health Commission and its functions, it is not effective at all. It is not effective that this bill will actually diminish its functions and diminish its role. I want to address that as being a wrong priority and a false economy, because it is an example of how saving money will result in more problems down the track and will result in worse outcomes for people. As my colleague Iain Lees-Galloway said earlier, this is a vulnerable part of the community, where mental health is treated as the poor cousin, and not given the attention that it deserves.

We certainly support high-quality public services that are delivered in the most efficient and effective way, but what we are seeing here with this particular proposal is certainly not going to be that. There will not be efficiencies, and we have seen a number of examples of that. I just wanted to mention as a clear example of that the Housing New Zealand Corporation, which introduced its “Smarter. Faster. Fairer.” 0800 system, which not only cut 70 jobs but is actually, as we speak, resulting in worse outcomes for people, who are being badly affected.

I have got a case in Dunedin right now of a young family in a State house who had their fireplace taken away a month ago. It still has not been replaced. There are three small children in that household. One of them has been hospitalised with bronchiolitis, which is a disease of poverty, and all the mother can do is ring the 0800 number to try to find out when the contractor is coming back to fix that fireplace. She is having to use electric heaters and spend money on power she cannot afford, because Housing New Zealand Corporation has an 0800 number. You tell me how that is smarter, faster, and fairer.

Disestablishing the Mental Health Commission simply will not adequately reflect the Mental Health Commission’s present functions. We are also concerned that the blueprint funding roll-out, which did not meet the roll-out target in the last 2 years, will be further reduced. We consider that it is turning what was a proactive approach that the commission applied to its auditing and advisory functions into a reactive function, which is well suited to the Health and Disability Commissioner’s complaints resolution process but will not reflect the proactive response and the proactive role that the commission has played in the past.

I did not sit on the select committee that heard this bill, but I have read the submissions. I have read submissions from the New Zealand Drug Foundation, the National Council of Women, the Public Service Association, and the Mental Health Foundation, which have all opposed this part of the bill.

DENISE ROCHE (Green) : The Greens will be opposing this bill, the Crown Entities Reform Bill, because, on balance, we see more harm in it than good. Although we acknowledge that there are some adjustments that could be in order, especially around the area of health promotion, there are several areas in this omnibus bill that cause considerable damage. In particular, I refer to Part 3 and the shift of the Charities Commission so that it sits within the Department of Internal Affairs. There is considerable concern within the charities sector and the community and voluntary sector. I acknowledge that other speakers have already talked about this, but I would like to also touch on some of the issues that these organisations have, and their fears around what could happen to the Charities Commission if it was subsumed by the Department of Internal Affairs.

At the moment there are about 28,000 registered charities. They have been put on a register by the Charities Commission, which actually acts as a watchdog and has a reporting regime that means that those charities are held to account. Their financial records are transparent, and this means that philanthropic organisations are able to go to that register and see what sort of activities those charities have been contributing towards in the last year of their operation. That register is a fail-safe; it is a watchdog. It acts as a measure to ensure that dodgy trusts cannot be set up—and there have been attempts to make that happen. Some may want to set up dodgy trusts because there are quite a lot of tax exemptions that can happen as a result of being registered as a charity.

We believe that the move to shift the Charities Commission into the Department of Internal Affairs—and this bill, basically—is premature. The Charities Act is still a fairly new Act. There is a review of principles that is scheduled to be undertaken within the next few years, and, in fact, there is discussion already around the terms of reference for that review. As well as that, the Incorporated Societies Act was also due to be looked at, so to actually jump the gun, to say that this is what we are going to do to dismantle—and there will be an element of dismantling—the roles of the Charities Commission, and to do that before those reviews have taken place means that that Act, which was passed through this House in good faith, is failing to meet what it set out to achieve.

My colleague from Labour Louisa Wall actually spoke quite movingly, I thought, about how the charities sector and the community and voluntary sector feel about not being listened to. I join with a lot of other speakers who commented on the fact that the process for the submissions was truncated and did not lend it to a democratic process. We acknowledge the reasons for that around the election. However, there were many charities that did want to have their say, as well. They have actually been sending in letters, though, and I would just like to quote from some of the points that have been raised from some of the letters that I have received.

This comes, I think, from the Association of Non-Governmental Organisations of Aotearoa. It is concerned about this move because the proposal is based on major errors of understanding in the Government’s thinking. The first point is the “Lack of understanding that charities are set up by ordinary New Zealanders … to address an issue they see in their community. And that such goodwill and initiatives do not require the involvement of a government department … Most charities receive no direct funding from government, so their responsibility is to their members and their community—not government”, and not to the Department of Internal Affairs. The letter continues: “DIAs involvement is likely to dampen initiatives in the community rather than encourage them … The proposed change is out of step with government’s own policy push around Better Public Services—it will instead lead to more bureaucracy and lower innovation.”

I attended a conference quite recently where four international speakers on charities law also said that this move would be a great leap backwards. We will be voting against this bill, and tomorrow, when the Supplementary Order Paper comes up to defer Part 3 of the bill, we will be supporting that. Thank you.

MIKE SABIN (National—Northland) : I will take a short call on the Crown Entities Reform Bill. It is no great surprise to my colleagues on the Government benches—or to anyone else in the House, I suspect—that the Greens oppose this bill. The Greens typically do oppose reducing bureaucracy, which is usually a fairly good indicator to this side of the House that we are on the right track.

I thought I would take it up to a slightly higher level just to sum up. I think most of the matters here have been well traversed in this good piece of legislation. The National Government was re-elected in 2011, essentially because the public of New Zealand have faith in our economic leadership. A key plank in that is our priority in terms of improving public services. This bill is simply part of the Government’s overall programme to improve State sector performance, and this bill will achieve efficiencies for the New Zealand public. This will improve service delivery to the New Zealand public, and it will also help us achieve a better synergy across those backroom corporate functions. That is yet again another good example, I believe, of how this Government is heeding what the New Zealand public have realised: that we have to be more efficient in the way we go about governance.

There were some comments made from across the floor to the effect that “If it ain’t broke, don’t fix it.” I think we should not forget the fact that if it could be better, we should actually aim for that. That is exactly what the New Zealand public expect of a Government. That is something this bill sets out to do. So what are we really talking about in terms of nuts and bolts? What savings are we talking about for the New Zealand public? We are talking about $19.6 million over 4 years, and $4.1 million thereafter. This bill is another part and another good example of how we are supporting the New Zealand taxpayer to improve efficiency in the way the Government provides services to the front line, and ensures that we have the most efficient backroom services in doing so. I commend this bill to the House.

Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister of Finance: I move, That the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill be now read a first time. At the appropriate time I intend to nominate that this bill be referred to the Finance and Expenditure Committee for its consideration.

This bill is an important part of the Government’s programme to improve the resilience of the New Zealand financial system to volatility in international markets. Turmoil in financial markets over recent years has underscored that such policy needs to be an absolute priority for Governments. New Zealand banks depend on offshore wholesale markets to obtain funding. It is thus essential that the New Zealand banking sector has access to these markets on the same terms as banks in other jurisdictions. The Reserve Bank of New Zealand (Covered Bonds) Amendment Bill aims to support this objective. The bill applies in relation to New Zealand banks’ issuance of covered bonds, although it makes provision for the framework to be extended to other entities, such as non-bank deposit takers, in the future, should it become relevant to them.

A covered bond is a dual recourse instrument, under which bondholders both have an unsecured claim on the issuer and hold a secured interest over a specific pool of assets set aside by the bank, called the cover pool. Covered bonds can be distinguished from senior unsecured debt instruments issued by banks, where the bondholder is simply an unsecured creditor of the bank, and also from mortgage bank securities, where the bondholder holds a secured interest in the cover pool but has no claim on the issuer.

The issuance of covered bonds by New Zealand banks supports the Government’s goal of improving the resilience of the New Zealand financial system to market volatility in a number of ways. First, covered bonds provide access to an alternative investor base, thus increasing the funding diversity of the financial system. This investor base is significant. The covered bond market is one of the largest debt markets in Europe. Covered bond investors also tend to be relatively longer-term investors, such as pension funds and insurance companies. Secondly, covered bonds are typically issued at a longer term than senior unsecured debt, and hence provide a mechanism for banks to reduce reliance on short-term funding, with its associated refinancing risk. Thirdly, covered bonds have proved to be a resilient form of funding at times when other funding markets are inaccessible, including during the global financial crisis. Aspects of covered bonds, such as dual recourse to the issuing bank and the cover pool, reduce the risk to investors, making them more attractive to investors in uncertain times.

Covered bonds can therefore contribute to financial system stability by reducing the probability of a bank’s default. They can also have a positive impact on the economy by supporting banks’ ability to maintain their lending activities if other funding markets tighten. However, the issuance of covered bonds does have the effect of reducing the value of the asset pool that would be available to a bank’s unsecured creditors, including depositors, in the unlikely event that a bank failed. This is because those unsecured creditors would rank behind the covered bondholders in respect of the cover pool assets in a failure. This may therefore increase unsecured creditors’ losses in a failure. In order to minimise any potential impact on creditors and depositors, the Reserve Bank has imposed a limit on banks’ issuance of covered bonds, through the use of its powers to set conditions of registration. In this regard, the value of assets that a bank may encumber in favour of a covered bond programme is restricted to 10 percent of the total assets of the bank. That balances the benefits of a lower probability of default with the need to minimise creditors’ losses should a default situation in fact occur.

This bill establishes a legislative framework for the issuance of covered bonds. Internationally, legislative frameworks for the issuance of covered bonds are commonplace. They are also a prerequisite for investment for some investors. New Zealand banks have been issuing covered bonds under contractual arrangements for the past 2 years. However, a legislative framework for issuance would improve New Zealand banks’ access to the covered bond market and would impact positively on the credit ratings of covered bond programmes, both of which would help to reduce the cost of issuance for New Zealand banks. In 2011 Australia passed legislation putting in place a legislative framework for covered bonds. In developing this legislative framework, the Reserve Bank has considered international best practice as well as the views of stakeholders, including issuers, investors, and the public. It is my understanding that New Zealand banks are strongly supportive of the framework’s introduction.

The legislative framework introduced by the bill aims to provide legal certainty as to the treatment of cover pool assets, in the event an issuing bank was to be placed into statutory management or liquidation. This legal certainty is provided, firstly, by requiring the registration with the Reserve Bank of covered bond programmes, subject to the programmes meeting certain registration requirements. In this regard, the key requirement is that the assets of the cover pool be segregated from the assets of the issuer by way of sale of those assets to a separate company, referred to as a special purpose vehicle.

The registration process also requires the issuer to appoint an independent cover pool monitor to the covered bond programme. This will help to improve investor confidence in New Zealand covered bond issues by providing independent verification of information provided by issuers in relation to the assets of the cover pools.

The bill, then, provides certainty for registered issues as to the application of the law in relation to the assets held by a covered bond special purpose vehicle, in the event an issuing bank is placed into statutory management or liquidation. The bill limits the application of these two regimes, so that special purpose vehicles under registered covered bond programmes can continue to operate outside the statutory management or liquidation of the issuer. This provides certainty to covered bond investors that the failure of the bank that issued the cover bond will not undermine their rights in regard to the cover pool assets.

Registration of covered bond programmes will increase the transparency of banks’ covered bond issuance and offer greater clarity for investors and depositors as to which assets are set aside for the benefit of covered bondholders. From the commencement of this, all covered bonds issued by a registered bank will need to be made under a registered programme. There will be a 6-month transition period for the registration of existing covered bond programmes.

In conclusion, the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill will ensure New Zealand - registered banks continue to have effective access to the covered bond market, reducing the likelihood of liquidity problems affecting an issuer, and promoting the sound and efficient operation of the New Zealand financial system. I nominate that the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill be referred to the Finance and Expenditure Committee for consideration.

Hon DAVID PARKER (Labour) : Can I thank the Associate Minister of Finance Steven Joyce for his contribution and also the officials from the Reserve Bank who have briefed other parties, including the Labour Party. They were fulsome in their briefings and answered all of the questions we could think of to ask at the time. The Labour Party will be supporting the first reading of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill and its referral to the Finance and Expenditure Committee. We recognise that the issue of covered bonds has become normal internationally.

I think the Minister put the issue quite properly when he said that there is, effectively, a trade-off here between obtaining long-term sources of funds that can be cheaper and also longer in the term of lending to the New Zealand bank—and that is a good thing—and, on the other hand, the tension in that the creditor who has recourse through these special purpose vehicles to a group of securities held by the bank through a special purpose vehicle is, effectively, getting a secured interest in those particular assets that ranks ahead of unsecured depositors in the bank. In practical terms, what that means is that the largely overseas lender lending to a New Zealand bank through a special purpose vehicle using covered bonds will have a preferential position in the queue should the bank go bust, to the detriment of unsecured deposit holders. The trade-off that is to the benefit of the unsecured deposit holder in New Zealand is that it is less likely that the bank will go bung, because it has access to covered bond markets that are deep in liquidity and cheaper in cost. The balance between those two objectives is sought to be achieved by this bill’s setting up a regulatory regime and putting a limit on the amount that can be issued by way of covered bonds, which have this preferential security status compared with unsecured depositors.

We were given advice by the Reserve Bank, both in its briefing to us as a party and also in the financial stability hearing pursuant to which the Governor of the Reserve Bank was before the Finance and Expenditure Committee, and the advice that we had on both of those occasions was that currently, before this practice of covered bonds became more widespread, there was very little secured lending to banks. Close to all lending was unsecured, which would mean that on a bank going bust everyone had a scrap, but everyone effectively had a pro rata right to a share of the asset, and no significant secured creditors would have a right of access to the bank’s assets upon liquidation in preference to unsecured creditors. So this is a significant change in recent years. The New Zealand banks are starting to dip their toe in the water when it comes to obtaining long-term funding through covered bond markets overseas.

There are a couple of other points I would like to make. One is that one of the reasons why this might be more important to New Zealand banks than to certain other overseas banks is that, sadly, in New Zealand over the last three decades we have witnessed a decrease in the proportion of our financial institutions that are both owned in New Zealand and actually financed in New Zealand. We have run a current account deficit for so long in New Zealand that we have lost ownership of a lot of our financial sector, and that points to some fundamental problems in the New Zealand economy that this bill is not going to fix, but that make this bill more necessary until they are fixed. The truth of the matter is that New Zealand has run a current account deficit for four decades. The level of that current account deficit has been more than additional capital investment in New Zealand. It has actually paid for consumption. And the current account deficit that we have when the value of our exports is not enough to cover the cost of our imports and our interest bill is every year paid for by a combination of selling New Zealand assets that were previously New Zealand - owned to foreign buyers, and borrowing more money from overseas. Those are the two ways that, normally, a current account deficit is financed. And now that we have done that for four decades—

Paul Goldsmith: Growth in the value of assets.

Hon DAVID PARKER: Growth—sorry?

Paul Goldsmith: The value of the assets as well.

Hon DAVID PARKER: Well, you can develop that point, but, essentially, when we have a current account deficit and we are not covering the cost of our imports and exports, then we have a problem. I do not think there really are many people who would disagree with that. You know, New Zealand now has one of the highest rates of net international liability in the world. Indeed, the countries that are as bad as us are a short list, and they are actually not good company. They are Iceland, Hungary, Ireland, Greece, and Portugal. I think they are the only countries that have a worse net international liability position than New Zealand. That makes us very reliant on foreign credit lines into our banks, and makes us vulnerable to credit squeezes in a way that we would not be if we had greater pools of savings in New Zealand, rather than being reliant on overseas loans to New Zealand and overseas ownership of New Zealand assets.

That background is something that should be highlighted here, because it is that level of international indebtedness—our net international liabilities to the rest of the world—that makes New Zealand banks more reliant on overseas credit lines, and therefore more likely to be needing to access these longer-term deposits from overseas investors into New Zealand, who will have the advantage of these covered bonds, which have some benefits to the New Zealand banking system and therefore also to unsecured depositors of New Zealand banks.

I think for me one of the issues that we will be looking at at the Finance and Expenditure Committee, from the Labour side, is whether the limit on the amount that can be secured by a bank ahead of unsecured creditors should be set out in the statute, or whether it should be left to Reserve Bank guidance. I do not know the answer to that offhand. I am sure we will get advice from the Reserve Bank. I am not sure which other officials will be advising that committee. But I do wonder whether there should be some statutory limit on the amount that can be the subject of these covered bonds, which rank ahead of unsecured creditors. That is one of the issues that we can discuss at the select committee.

But the more important issue for me is that we must take steps in New Zealand to redress this imbalance that we have in our economy where we do not earn enough from our exports to pay for our imports and interest. We must address it through improvements to our savings; through some improvements to our tax system to encourage export growth rather than growth of the speculative parts of our economy, as well as some other measures like a research and development tax credit; and through addressing some of the fiscal pressures that are coming at us through the ageing population and some of the unrealistic settings that we have around our age of entitlement to superannuation.

Those are some of the big issues that need to be tackled by the Government. Only Governments can change those measures, just like only Governments can put in place this measure, effectively. Businesses cannot do it for themselves, and it is incumbent upon this Parliament to actually look at what is the cause of the loss of ownership of our financial sector over the last two or three decades. It is now largely Australian-owned. It is no coincidence that they have got better savings and a better tax system. They tax capital gains and remove the tax bias that favours speculative investment, and as a consequence—

Paul Goldsmith: Try and buy a property in Sydney.

Hon DAVID PARKER: I beg your pardon?

Paul Goldsmith: Try and buy a property in Sydney.

Hon DAVID PARKER: I am not saying that property prices do not go up; no one suggested that, Mr Goldsmith. But there is no doubt that the net international liability position of Australia is better than the net international liability position of New Zealand.

Andrew Little: $1 trillion in industry savings.

Hon DAVID PARKER: A trillion dollars in industry savings is the figure that my colleague tells me. That makes a difference.

In closing, the Labour Party supports this bill going to the select committee, but we are interested as to whether the appropriate limit on these covered bonds is 10 percent, and whether it should be enshrined in statute.

TODD McCLAY (National—Rotorua) : It is a pleasure to rise and speak on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. I want to go just briefly into parts of the bill and the importance of it. But I want to say to the last speaker in this debate, David Parker, who recognised that the Government needs to focus and do more around savings, exports, shoring up the economy, and having less wastefulness in spending, that that was a glowing endorsement of the hard work of the National Government over the last 3½ years. That is all that our work has been about: bringing up savings rates, focusing on exports, shoring up the economy through an extremely difficult time, and getting rid of unproductive spending within that economy. Certainly New Zealanders recognised that only a few months ago.

This is an important piece of legislation—a technical bill, and not an overly exciting one, but important—because it will give greater surety to investors, greater certainty to banks, and strengthen the role of the Reserve Bank when it comes to the role of these banks. The Reserve Bank Amendment Bill establishes a legislative framework for the issuance of covered bonds by New Zealand - registered banks, again to provide greater clarity for these investors. Legal certainty will increase economic efficiency and financial stability, because banks will not have to pay an uncertain premium, which they otherwise would with uncovered bonds. They can have significant benefits for registered banks as a long-term source of relatively stable finance.

In fact, stable finance is very important to New Zealand, to New Zealand investors, and to New Zealand businesses. Just look all over the country at the moment. The thousands of people who have mortgages are talking to their banks and shoring up those mortgages at record low interest rates, in part because of the good economic management of this Government. New Zealand banks depend upon offshore wholesale markets for their funding, and this bill will give greater certainty to them in these markets.

A couple of the challenges that the current arrangements provide to our banks that this legislation seeks to address are that our banks are currently able to issue covered bonds using contractual arrangements—structured covered bonds. I note that in Europe and many other countries, covered bonds have been issued under country-specific legislation frameworks for many years. In recent years most countries that have their banks active in issuing covered bonds have also implemented a legislative framework, including Australia, recently. This legislation will help bring New Zealand into line with these other countries and international best practice in this area.

I look forward to this bill coming to the Finance and Expenditure Committee so that, as the last speaker said, we can hear from others about some of the more technical issues of this bill. But this gives certainty to New Zealanders that the Government is focused on what is important—on helping our banks to continue to deliver for them in a cost-effective and certain manner—and I commend it to the House. Thank you.

Hon DAVID CUNLIFFE (Labour—New Lynn) : This bill, the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, reminds me rather a lot of the Prostitution Reform Bill.

Todd McClay: Tell us how, David.

Hon DAVID CUNLIFFE: I thought you might be interested, and I am being quite serious here. It was probably the most difficult vote that I have cast in my 12 years here. The issue with this bill, however, is similar. There is a practice in the market place that many New Zealanders feel uncomfortable about. In this case it is covered bonds. Let us be clear about what a covered bond is. A covered bond is a vehicle by which large, wealthy institutional investors get themselves to the top of the security queue and mum and dad investors go to the bottom because they do not participate in the special purpose vehicle that extends the guarantee to the big investor. This is a queue-jumping mechanism.

David Bennett: That’s not true.

Hon DAVID CUNLIFFE: It is absolutely true. And like prostitution, the issue here is whether it is better to legalise it and regulate it because it exists, or to pretend it does not exist. I might say that we have had quite an active debate within the Labour caucus about how we should handle this bill, because as a starting point we are not enamoured of covered bonds. Covered bonds are not good for small investors at a time when we are trying to encourage mum and dad Kiwi to put their hard-earned savings, if they can afford any, into the banking system to build up national savings. We ought not to do anything that would undermine that.

There is a counterargument, and to be fair it is worth repeating it, that covered bonds can extend the access of major banks to lower-cost offshore finance from large institutions that, firstly, might lower retail interest rates in New Zealand by passing on those lower costs, which would be a good thing for borrowers, or, secondly, might increase the margins of the bank, which would be a good thing for the bank’s shareholders. But if the price of that is that mum and dad Kiwi face higher risk because they go to the bottom of the queue and their debt is overtaken by the security ranking of the guarantees to the special purpose vehicle, then there is a potential equity issue.

I want to compliment the official from the Reserve Bank of New Zealand—and I will name him, Mr Ian Woolford—who has published the regulatory impact statement. In my view it is a very cogent and competent impact statement, and it does set out the issues on both sides of the ledger here. What the bank notes is that the cover pool assets are sold to a separate legal entity, which is the special purpose vehicle, and it says in paragraph 8: “covered bonds do pose a risk to unsecured creditors. This risk arises as the assets to which covered bond holders have a priority right will not be available to unsecured creditors should a bank fail.” That is the key downside with this legislation. Then the question is if you are going to have legislation because you do not want unregulated covered bonds in the market and they are happening anyway, which is the current, parlous state of affairs in New Zealand, then you had better regulate.

The first question that arises is what the appropriate maximum level is. The Reserve Bank has looked at the publications of the ratings agencies, which recommend around 10 percent as a cap, so no bank could have more than 10 percent of its asset base in covered bonds. Yet we note that Australia has a lower level of 8 percent. We also note that the interests of the rating agencies will not be the same as the interests of the Crown if the Crown is here to defend the interests of mum and dad investors. One of the issues that Labour will be looking at when this bill is at the Finance and Expenditure Committee—we are supporting it as far as the select committee at this stage so we can hear the arguments—is whether that limit should be lower than 10 percent. It sure as heck should not be any higher. Should it be lower? What is wrong with 8 percent? What is wrong with 7.5 percent? What is wrong with 5 percent? We will be very interested to hear submissions on that issue.

The second key issue is that if the justification for this legislation is to regulate covered bonds and to prevent their unregulated spread throughout the market, what type of oversight should be provided? What type of regulation would be sufficient? I note that the regulatory impact statement deals with issues like asset segregation, relating to whether there is a clean split between the special purpose vehicle and the other assets at the bank; the certainty of treatment in insolvency, in section 2 of the regulatory impact statement; and the clarity around the powers of the asset pool monitor, in section 3. I ask whether, behind the monitoring of the asset pool, the Reserve Bank or another regulatory agency will have sufficient reserve powers to hold the system accountable.

Labour has not made up its mind yet whether it will support the bill beyond the select committee. That will depend on the nature and substance of the submissions and the advice that we receive, but we will signal an interest in ensuring that the limit for covered bonds is set no higher than the workable minimum, because we note right up front the trade-off with the interests of mum and dad investors.

Secondly, we will want to be absolutely sure that the three issues that the Reserve Bank has raised are sufficiently covered off, and, thirdly, we will want to ensure that the Reserve Bank itself has sufficient reserve powers to make sure that the accountability in the chain is rigorous. If those conditions were met, I imagine that our caucus could consider seeing its way clear to support the bill through on the grounds that we do not want an unregulated practice in the market, but nor do we want sham regulations. We do not want the impression that we have cleaned up the Wild West but have a sheriff with no guns or with a popgun in the face of some of the largest, most powerful institutions in the country. So that there is the argument.

This is the first reading. We wish the bill well on its way to the select committee and we look forward to receiving submissions. I hope not just that those submissions will come from interested parties in the financial markets who have a pecuniary interest—that is, they make money out of this—but that we also hear from the representatives of consumers and from savers, because it is really important that the select committee gets the full picture. Thank you.

Dr RUSSEL NORMAN (Co-Leader—Green) : I rise to speak on behalf of the Green Party on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. This bill establishes a legislative framework for the orderly development of a new debt market in covered bonds. Covered bonds are a type of mortgage-backed security with one significant difference, and that is that the investor has a secured recourse to a pool of assets, which is essentially a bunch of mortgages. That is the fundamental difference about covered bonds. If this bill makes its way through, what it will do is this. The issuing bank would need to be registered in New Zealand. There would be oversight of covered bonds by a private third party—and the fact it is a private third party is significant—and clarification of the insolvency law should one of these special purpose vehicles actually fail. There would be—and I think this is quite important—a covered bond limit of 10 percent on the issuing bank’s asset base. So this is the fundamental of what has been established.

One way to look at the development of covered bonds is that it maintains the flow of credit to New Zealand. It facilitates, effectively, what has become our national addiction to credit. So in that sense you could view it as part of the problem in that it is facilitating access to that credit. On the other hand, this is where we are: we are running very large current account deficits. So we need to make sure that in order to maintain the stability of the financial system, we allow access to this credit but that we also regulate it. Effectively, what this bill does is provide a legislative framework for the regulation of this form of credit into New Zealand through the banks.

As such, because it does provide a form of regulation to covered bonds, it should add to the resiliency of our banking sector. For that reason the Green Party supports it even though we have concerns. We were very thankful to the Reserve Bank for providing a briefing to us on the covered bond bill and we support the proactive stance of the Reserve Bank, which is trying to provide some kind of legislative certainty around what is, for New Zealand, a relative new debt instrument. Of course, this is not a new instrument from a European perspective; it is a very old instrument and it has been used successfully for many years. But from a New Zealand perspective this is a new kind of debt instrument.

A significant flaw in the legislation, which we really do have concerns about and want to discuss at the select committee, is the reliance on market-based oversight of this market. Under this bill, oversight of the market in covered bonds, essentially, is provided by private sector oversight. That means that rather than the Reserve Bank itself providing the oversight, it is effectively in private hands. Covered bonds are not the kinds of mortgage-backed securities that lay at the heart of the global financial crisis. They are not exactly the same things as those kinds of mortgage-based securities, but they do have many similarities. They do have significant similarities to the mortgage-backed securities that lay at the heart of the global financial crisis and for that reason we think there needs to be good oversight of these covered bonds.

When you think about it, if they do go up to 10 percent of the issuing bank’s assets, we could be looking at a market of about $33 billion or so, which is a significant market by New Zealand standards. The danger is that we create a market or a debt instrument that becomes too big to fail. And once we create an instrument that is too big to fail, the danger is that the Government, effectively, has to end up bailing it out if we run into problems. We saw this, of course, with South Canterbury Finance, where the Government ended up having to bail it out. But that is what happens when you have these kinds of debt markets or debt instruments that become so large the Government had no choice, because it was too big to fail, but to bail it out. We saw that with Treasury’s administration of the retail deposit guarantee scheme. One of the critiques of the Auditor-General in the way that Treasury administered the retail deposit guarantee scheme was that it failed to regulate it properly, with the result—[Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I am sorry to interrupt the member. The cross-banter that is going on has got nothing to do with the debate. Keep it down. I would like to hear the member.

Dr RUSSEL NORMAN: Thank you, Mr Speaker. The issue with South Canterbury Finance and the retail deposit guarantee scheme was that, effectively, Treasury failed to monitor the scheme properly, with the result that there was a cost to the Crown—maybe a couple of hundred million dollars on top of what it should have been. And the risk with the covered bonds, the way this is being constructed by the Reserve Bank, is that we may find ourselves in the same situation where we have developed a market that is too big to fail, and, effectively, the Government has to step in. For that reason we think that it is important that there is independent Reserve Bank monitoring of this new instrument—these covered bonds—rather than simply relying on a market-based oversight or a private sector oversight, which is the way that the model is currently being proposed.

We know that in the consultation on this bill the trading banks had no appetite for Reserve Bank monitoring. Well, I am sure they did not, and that does not surprise me one little bit. However, that does not mean that the New Zealand Government should not have an appetite for independent oversight of the covered bond market. And the reason we should have an appetite for it is that it could be us that end up picking up the bill if something goes horribly wrong with the covered bond market and it becomes a very, very large and very expensive problem for the New Zealand Government, as has happened previously.

One of the lessons, we believe, of the global financial crisis is that market resilience is just as important as market efficiency. So although it is true that having more intensive regulation of this particular debt market may reduce some of the efficiency of the market, by increasing some of the overhead costs in terms of administration, which is entirely possible, it might be that the trade-off in terms of having market resilience—making sure that we do not create a debt market that then becomes so big that the Government has no option but to step in to save it if it runs into trouble—may well be worth any extra minor administration costs that come with having better oversight of the market, hence reducing its efficiency marginally. I would rather that we had a marginal decrease in the efficiency of this market by having better oversight but ensuring that we have greater resilience in the market, given that at the end of the day, given the size of the thing, it probably will be the New Zealand Government that has to pick up the pieces if anything goes horribly wrong. We will be voting for this legislation. We look forward to the select committee debate. We thank the Reserve Bank for the briefing.

PAUL GOLDSMITH (National) : I am glad that the Green Party is supporting the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. I am a little worried about references to minor administrative costs for regulation. Unfortunately, costs involved in regulating banking are far more often not minor, because regulators struggle to get ahead of what is a very complicated and fast-moving industry, and the costs and the consequences of their regulations are often very, very hard to gauge and understand.

When we look at this bill, New Zealand is a borrower and always has been, really, since 1840, if not before. It has been importing capital into New Zealand for most of its history. So access to capital is absolutely important to us, and going out on the world market looking for capital imposes disciplines. Households have understood that around the country. People right throughout the country are reducing their debt and doing it carefully, going through their household accounts, working out what they need and what they do not need, reducing debt, and reducing their exposure and their risks in a dangerous world. This Government is also doing that. We are out there reducing our debt by getting the Government’s books in order, working out what we really need and what we do not really need, and trying our best to have a sound and sensible economic programme. It is a pity that councils around the country do not seem to be following the same pattern; I wish they would, and I encourage them to be more focused on getting those debts back.

Our need to go out in the world to vie in international markets for capital imposes those sorts of disciplines on us and we ignore them at our peril. New Zealand, of course, as a small country is responding to international trends and is always looking for new forms of debt and innovation in global markets so we can have access to the capital that we require for a lot that goes on in our economy.

Covered bonds are a form of debt instrument issued by banks. New Zealand banks have been issuing covered bonds under contractual arrangements since 2010—for the last 2 years, as we have heard. It is an old, established way of raising money in Europe, but relatively new to New Zealand, and we are responding to the fact that Australia has moved recently to get a legislative arrangement around this side of borrowing. New Zealand really has no choice but to respond and follow. Covered bonds are a useful instrument for banks to be able to issue, as they provide access to an alternative investor base that is typically interested in longer-term investment. So for this reason it broadens the pool of access to capital that we have at our disposal.

Internationally, legislative frameworks for the issuance of covered bonds are common. They are a prerequisite for investment for some investors. As I have said, Australia has recently passed legislation, and the lack of a New Zealand legislative framework is likely to put New Zealand issuers at a disadvantage and may impede our access to the covered bond market.

Why it is important is that, at the moment, although banks have been issuing these bonds for the last 2 years, there is definitely a level of uncertainty as to how certain provisions of the Reserve Bank of New Zealand Act, the Corporations (Investigation and Management) Act, and the Companies Act would be interpreted regarding the assets in the cover pool in the unlikely event that an issuing bank became insolvent and was placed into statutory management. This legal uncertainty is likely to impact the quantity of covered bonds that New Zealand banks can issue, and at times of stress it could increase the price that banks have to pay. This legislation is all about removing that uncertainty and providing some certainty as to the treatment of those cover pool assets in the event of an issuing bank becoming insolvent.

The secondary objective of the legislation is to improve investor confidence in New Zealand covered bonds by providing independent verification of information provided by issuers on the covered pool assets.

The Labour Party has raised the issue of the risk to unsecured creditors of these sorts of bonds, and the risk is real, so it has been the practice of the Reserve Bank since these bonds were introduced to restrict the level to 10 percent. I will be looking forward during the select committee process to testing that level and considering whether that is the right level. That is the appropriate time and process for the parliamentary system to rigorously work out whether the 10 percent restriction is the best way of doing it.

This bill seems to me to be a remedy to a situation that has arisen in the last couple of years. It is about New Zealand getting access to the capital that it needs to grow. As I said, New Zealand is a borrower on the world stage, and that imposes disciplines upon us. The Government is responding to those disciplines, and that is absolutely the appropriate way of doing it. Thank you. I commend this bill to the House.

ANDREW WILLIAMS (NZ First) : I rise on behalf of New Zealand First. We will be supporting this bill through its first reading and referral to the select committee. However, we do have some concerns as have been voiced this evening in the Chamber. Covered bonds are debt securities that are backed by cash flows from mortgages or public sector loans. A covered bond is a corporate bond with one important enhancement. It has recourse to a pool of assets that secures or covers the bond if the originating financial institution becomes insolvent. In this day and age, and in the world that we live in, it is becoming increasingly important that we do have these guarantees put in place to ensure a stable and reliable banking system. In this respect the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill does help to bring New Zealand into line with many of our major trading partners, in particular Australia, the United States, and many of our trading partners in Europe and Asia.

Covered bonds go back to the 1700s. Denmark was the first country, back in the late 1700s, to issue covered bonds, so they are a very, very old form of financial tool. More recently, of course, they have been a major tool used by European banking, but in more recent times the likes of the United States Department of the Treasury introduced them in 2008, and the Australian Treasury introduced them in 2010-11. New Zealand banks were the first in this part of the world to actually start using covered bonds, and that was back in 2010, but they did not have a legislative framework to work within, which is the purpose of this bill—to ensure that our banks work to a legislative framework for those covered bonds.

We do have some concerns in relation to the 10 percent level. Perhaps that level needs to be considered by the select committee. As we heard earlier, Australia operates on the basis of an 8 percent maximum for covered bonds. That has to be given full consideration by the committee, and perhaps even 8 percent is too high, as we have heard. Perhaps the level needs to be lower, but at the end of the day the size of the New Zealand financial market needs to be ascertained. What needs to be worked out is what the New Zealand financial market could sustain so as not to overly affect other deposits from unsecured investors and from our normal investors in our banks in New Zealand, so that they are not severely or significantly disadvantaged. It is good that the Reserve Bank will be monitoring this, and that it will ensure that there is offshore capital coming into New Zealand in perhaps a more secure manner and one where offshore investors will see New Zealand as an even safer place to invest money in, when in the situation we are in at the moment there is global turmoil in many areas of banking.

However, I am concerned, and New Zealand First is concerned, that we have seen instances with financing troubles in terms of some of these types of situations with our banking, such as South Canterbury Finance. After the Government provided the Government guarantee scheme for the financial institutions in New Zealand, we saw many of those financial institutions taking a great deal more deposits into their respective organisations, unfettered by the control of Treasury or the Reserve Bank. As a result, during a period of time, many of those financial institutions took on board significant deposits that subsequently failed and were a great loss to the New Zealand taxpayer. We must ensure that those sorts of failings do not occur again. Along with other speakers, we therefore want to ensure that this covered bond market does not end up in the situation where offshore investors see this as a very, very safe haven to put their money into—one that is guaranteed by New Zealand financial banks and institutions—only for us to find out that perhaps, at the end of the day, if something were to occur and they were to become insolvent, we, the New Zealand taxpayer, or some form of New Zealand Treasury, may have to come to their assistance to prop up the banking system. I shudder at the thought were that to occur, so as a result, when this bill goes to the select committee, we certainly would be expecting that all these aspects are fully considered so that the New Zealand taxpayer, the New Zealand Government, is not put at risk through the covered bond schemes.

However, we are confident that this does add another tool, another bow to strengthen our banking institutions in New Zealand so as to be competitive on the global financial stage. It will assist in terms of securing more capital into this country. Perhaps it might even be a situation where, if so much more capital is flowing in here as a result, it may alleviate the requirement of this Government to sell off State assets and other things to try to cover much of its funding with funds from elsewhere. It could well be that this situation is so successful that it provides other financial sources for our New Zealand banks to provide much of the necessary capital for the infrastructure within New Zealand, for loans to the likes of local government, and loans for the likes of infrastructure requirements within New Zealand, without being a huge burden on the New Zealand Government and New Zealand Treasury.

We will be supporting this bill through to the select committee, but we will be requiring the Government to fully address many of the concerns that have been raised, and in particular we will be wanting to ensure that New Zealand investors and New Zealand unsecured depositors in our banks are not in any way less regarded or given fewer advantages than those who would be under the scheme. We certainly do not want to see a situation where New Zealand investors are again left in the lurch. So we support this bill going to the select committee.

Hon Dr NICK SMITH (National—Nelson) : It is entirely appropriate in Budget week that the House is considering the first reading of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, because part of the Government’s agenda in the work that our Minister of Finance, Bill English, is doing is rebuilding confidence in the finance markets. It is part of a broader package—

Andrew Little: When is that due to start?

Hon Dr NICK SMITH: I see that Mr Little is interjecting. The challenge I have for Mr Little is this: when he was president of the Labour Party and Labour was in Government, did he raise a finger—

Hon Clayton Cosgrove: Oh, careful.

Hon Dr NICK SMITH: —for the tens of thousands of mum and dad investors who were burnt so badly in finance companies? The reality that Mr Little and Mr Cosgrove need to accept is that they passed over to this Government a basket case in terms of the management of our financial markets. Never in the history of New Zealand did so many investors lose so much because of the failed regulation of the finance companies that Mr Little’s Government was part of, and what this Reserve Bank bill is about fixing.

You see, whether it is in terms of the growth agenda that this Government has around infrastructure, regulation—and getting things right there—growth of our opportunities for irrigation, growth in telecommunications in the work that Amy Adams is doing in the area of broadband, work that the Minister for Primary Industries is doing in an area like aquaculture, or work that is going on by David Carter in the area of the growth of our primary industries, there is so much going on in the area of this Government’s programme of growing our economy, of which this bill is a small part, that I could give a speech well beyond the dinner hour—

Hon Clayton Cosgrove: Oh, please! We will move an extension of time, this is so good.

Hon Dr NICK SMITH: —it is such a comprehensive programme. Mr Cosgrove is interjecting. I invite him to reflect on his period as a Minister and the way in which he left a basket case for this Government.

Hon Clayton Cosgrove: Oh!

Hon Dr NICK SMITH: He interjects and asks how. Well, let me tell you how. The very first report that this Government got on coming into office was that we were facing a decade of deficits in which we would see public debt grow out to over 70 percent of GDP. Over the 4 years since, this is the ninth bill—the ninth bill—that has been introduced into this Parliament to tidy up the financial services sector. Let me give him a few examples. Take the new Financial Markets Authority. Every member of this House knows in their heart of hearts that we have had to provide far better controls over the finance companies of New Zealand. We have seen—

Andrew Little: When did you call for that when you were in Opposition?

Hon Dr NICK SMITH: I am sorry, Mr Little?

Andrew Little: When did you lead the march on Parliament to call for greater regulation of the finance sector?

Hon Dr NICK SMITH: Oh, well, Mr Little, who was the president of the Labour Party when we saw the—

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. Far be it for me to interrupt the robust nature of this member’s speech, but this is the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill; it is not about who was president of the Labour Party or years gone by. This is a specific—

The ASSISTANT SPEAKER (Lindsay Tisch): I thank the member. I have indicated to the member to come back on track.

Hon Dr NICK SMITH: This bill is about improving the regulation of the New Zealand banks. If members opposite do not think that is particularly relevant to the global financial situation, I can only recite the words of our Prime Minister today about those guys on “Planet Labour”. They do not live in the real world of what we are facing and the importance for New Zealand of having a growing economy, having jobs, and building a brighter future for New Zealanders. Part of that work involves providing better regulation of our finance sector and of our banks, and providing for this legislation dealing with covered bonds.

I also want to say that an important part of this Government’s programme is ensuring a greater degree of consistency between regulation of the financial markets in New Zealand and Australia. It has been noted by previous speakers that in 2011 the Government of Australia passed legislation to provide a registered framework for covered bonds in the Australian market. With the degree to which the New Zealand and Australian banking systems are integrated it makes absolute sense for New Zealand to follow in a similar mould.

Access to affordable finance is absolutely crucial to the growth of the New Zealand economy. You see, if banks are able to provide greater security and greater degrees of confidence, they are able to secure capital at a lower cost. The benefit to New Zealand business from that is that if we have a growing economy, and if businesses are going to invest in new plant, new buildings, new equipment, and new technology, then the price they pay for that capital is important. That is where this bill contributes to the Government’s overall growth programme for the New Zealand economy.

I say again that this is a sound bill. This is a bill that is part of a broader programme that the Minister of Finance has been responsible for in terms of getting our economy on to a substantial footing. I am pleased it enjoys the broad support of the House. It is the sort of legislation this Parliament needs to advance if we are indeed to secure that brighter future for New Zealanders.

Hon CLAYTON COSGROVE (Labour) : The debate was going quite well, I think, in a pretty non-partisan way, but if you had listened to that previous speaker, Dr Nick Smith, you would think Labour was opposing the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. No, we are actually supporting it. He probably has not caught up with that fact.

I want to touch on a couple of things that Dr Nick Smith in his own unique way—in a sort of bout of political amnesia—neglected to say. Part of this bill is about oversight—in fact, the core of this bill. One of the concerns we have is to ensure that there is appropriate oversight as these bonds are issued and as they go forward. We are in favour of independent Reserve Bank oversight. But I have to say that even when you regulate, oversight can fail. I will not digress into the field of dreams that Dr Smith digressed into, because this is a narrow bill, but I will say this: a prime example where Government oversight failed completely was when this Government extended the retail bank deposit scheme, which was—

Hon Dr Nick Smith: It was your mess.

Hon CLAYTON COSGROVE: Before the political version of Jack Nicholson gets on his high horse and blows a fuse, yes, my Government, of which I was a part, brought the scheme in. We brought it in on the day the Aussies told us they were bringing it in. If Dr Smith had half the sense that he purports to have, he would know—because he just made a case for us to be in synch with Australia—that if we had not brought it in, there would have been a flight of capital. But, of course, with Dr Smith one and one sort of makes one and a half. But the point I make is this. His Government came into power and extended the scheme. OK? I am not arguing the rights and wrongs of that. I simply say this: once the Government extended the scheme, it did not monitor it, it got gamed—

Hon Dr Nick Smith: I raise a point of order, Mr Speaker.

Hon CLAYTON COSGROVE: Oh, he does not like it—

The ASSISTANT SPEAKER (Lindsay Tisch): Order!

Hon Dr Nick Smith: The very member who is giving this speech took issue with my speech not being within the scope of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. There is nothing in this bill—and nor was there very little in my speech—about the Crown guarantee. The member is wanting to relitigate a debate about an inquiry in the Finance and Expenditure Committee, not the bill.

The ASSISTANT SPEAKER (Lindsay Tisch): There has been quite a wide range, and I have allowed that. I keep very close watch on the time that members are speaking and whether or not they are actually speaking on the bill. When the member was speaking, I did indicate to him to come back, before there was the point of order. I am listening very closely to what the current member is saying. I invite the Hon Clayton Cosgrove to continue.

Hon CLAYTON COSGROVE: Thank you. He does not like it. He has gone a bit troppo, I think. The point I was making was this—

The ASSISTANT SPEAKER (Lindsay Tisch): I just ask the member to get on with the speech, and how about cutting out the—

Hon CLAYTON COSGROVE: The point I was making, of course, which Dr Smith sort of puts the old cheese in the ears on, is about when National extended that scheme. This bill is about monitoring, and the illustration I make is that sometimes monitoring fails, even when regulated. Dr Smith, who was in Cabinet when it extended the scheme, went to sleep. It will be interesting, actually, in future, to examine and ask questions around that scheme as to what the Treasurer knew, what questions the Treasurer may or may not have asked—but that is for another day. But as a result of those Cabinet Ministers, including Mr Smith, not monitoring, not engaging and asking the tough questions, not monitoring that scheme, they got gamed to the tune of $100 million of waste that they then had to clean up, because people had extended their loans under National’s watch—sorry, under its lack of watch. That is an example where monitoring does not—and he shakes his head—work.

So we will support this bill going to the select committee—and I have only a couple of minutes before the dinner break—but we will be very interested in the regulations and the monitoring framework put in place. I agree with other members who have spoken, colleagues from New Zealand First and others—as old “Rumpelstiltskin” toddles off—that, of course, we would not want to see a hierarchy where institutions, as they will be under this bill, have a higher situation than mum and dad investors in terms of a payout if something goes wrong. We would not want to then see a liability visited on the Crown, which is the taxpayer. That is exactly what happened when these folks, these galahs in Government, extended the retail deposit scheme, and then went to sleep. Financial institutions simply went in, anted up, borrowed more, extended money out as fast as they could, knowing there was a Crown guarantee. The thing about a Crown guarantee, or any guarantee, is that you have an obligation—

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry to interrupt the honourable member but the time has come for me to leave the Chair.

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

DAVID BENNETT (National—Hamilton East) : Thank you, Mr Speaker—

Hon John Banks: I feel a call coming on.

DAVID BENNETT: Mr Banks just said he feels a call coming on, so that would be interesting. This is a bill that tends to have the support of all members of the House at this stage, which is very unusual. I think it is the first time the Green Party has actually voted with the Government—

Kris Faafoi: Second time.

DAVID BENNETT: Second time, is it, Kris? Well, it is good on them and it is good to see them being positive about New Zealand’s future for once and supporting good moves made by a good Government in the best interests of the community. Even the New Zealand First Party, the perennial knockers of the New Zealand public, is voting for this bill as well, so that is good to see.

Hon John Banks: What happened?

DAVID BENNETT: I do not know what has happened. They must be getting close to the Budget and wanting to be supportive of a good Budget that represents a good plan for a country going ahead. That is what I think is happening. They have seen the light. They have seen the brighter future and decided to be part of it.

We are very fortunate to have the support of all parties in this House. I think it does represent the importance of the bill that parties do support it, because a lot of people have lost a lot of money in the finance markets over the past few years, and it is a very turbulent and delicate market at the moment with what is going on in Europe. So it is important that New Zealand has the best regulations that are possible to make sure that we secure the safety of that market for our banks, our institutions, our Reserve Bank, our customers, and our investors. This bill is an important part of doing that because it relates to something called covered bonds. Maybe that is the reason why we are getting New Zealand First and Green Party support for it—they like the idea of covered bonds; I do not know. It is something that the ordinary punter out there would not know of or have to deal with in their normal course of business, but it is a tool used in our financial system. Most countries have structures around it. New Zealand does not, so it is important that we do do so. It is important to give our financial system that security, but it is also important for the simplicity and safety of investment in New Zealand.

The covered bonds approach—I think there was one issue raised by Mr Cunliffe from the Labour Party in regard to it. He tended to look at the situation of covered bonds in a very extreme situation, rather than taking into account the reality of how they are used. They are a device where the investors will know what they are getting into, in the sense that it is a very well-used device around the world. There is that separate pool of assets called the cover pool—basically, the unsecured creditors become secured over that base, through taking a joint ownership in the risk on the bank. What we have done in this bill is we have clarified those situations, and we have also put limitations on them so that they do not raise situations where there is an unusual amount of money that is invested through this process that would call into account the greatest ability of any institution.

This is good legislation. It shows that the Government is proactive in looking after our financial sector so that we have a strong financial sector that enables the country to prosper and grow. It is pleasing to see the other parties in this House supporting it, and hopefully that is a recognition that they see the importance of providing that stability to our financial sector going forward, as well. So we look forward to it passing through the House.

Mr DEPUTY SPEAKER: This is a split call.

Dr DAVID CLARK (Labour—Dunedin North) : I rise to speak to this bill, the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, and Labour will support its referral to the select committee. We recognise the importance of having legislation in this area. It is an area that, as previous speakers have mentioned, banks have already dabbled in in this country. These bonds exist in New Zealand, but they lack a regulatory framework.

One of the debates that no doubt will happen when this bill gets through to the select committee, as I imagine it will, is the appropriate percentage that New Zealand sets for its regulatory framework. We have heard from the experts questioned at the select committee that different rates exist around the world, according to perceived needs. Canada, for example, has a 4 percent rate for covered bonds. We can imagine the arguments that might be put in favour of having a low amount set in our economy, and they might be to ensure that those other investors who participate in the sector are not put at the bottom of the heap at the expense of the big investors who rush in to take advantage of the covered bonds that put them at the front of the queue. We will look forward very much to hearing in the select committee from submitters who represent the unsecured interests that will be jilted down the queue as a result of this legislation proceeding, should it proceed from the select committee through the House. There have been $6 billion worth of bonds issued over 2 years without any regulatory oversight. That is why Labour recognises this as an area that clearly needs to be addressed.

The bill has been through two consultation processes, with broad acceptance of the proposed legislation by most banks and bondholders. So we anticipate that the actual concept itself will most likely survive, unless there are any issues raised that have not been raised in other jurisdictions or that specifically apply to New Zealand in the case of these bonds.

During the select committee process recently in relation to the Financial Stability Report, I had the opportunity to ask the Reserve Bank governor some questions about this issue, and his offsider related that the proposal of having a 10 percent level in New Zealand is, indeed, very similar to that which Australia currently has, at 8 percent. So it seems a good starting point for a discussion. The question really in my mind should be: is that too high, is that adequate, or should it be brought down, similar to the Canadian example that I cited earlier?

I asked the question in that select committee about the effect on unsecured creditors—those who have already invested in similar investments and who may be affected by a subsequent issue of covered bonds. Those investors are the ones whom we, certainly in the Labour Party, will be concerned about in the progression of this legislation, because we can be pretty confident that those institutional investors who are pushing for this covered bond market and the banks that supply them will make sure that their interests are looked after. The Labour Party will want to make sure that those unsecured creditors further down the track are not disproportionately disadvantaged as a result of legislation that is designed to make sure the banking sector has desirable offerings.

The answer that I got was what one might expect from an expert in the field. The answer was that the basis for the limit is the fact that the more secured funding a bank does, the more that potentially dilutes the interest of the unsecured creditors. It is a fact. So the answer was that if you left banks to do what they wanted, they would have that in mind, and so they would not want to have too much secured borrowing. But to be on the safe side, according to the Reserve Bank, it is recommending a 10 percent limit.

As I said, we support the basic proposal. We look forward to hearing from submitters on the merits of the level and, indeed, whether there are any snags that we have not spotted. That is why the Labour Party will be pleased to support this bill’s referral to the select committee. Thank you.

Dr KENNEDY GRAHAM (Green) : The Green Party perceives the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill to be a sign of the times. It is essentially a post - global financial crisis tourniquet applied to the failing patient that is the global financial system. What we are doing here is seeking to ring-fence uncertainty and bolster investor confidence where that confidence is flagging.

All parties support the bill. The Green Party does not oppose the bill, although in light of the excruciating appreciation from our colleague Mr Bennett, I would be tempted, if I had the time, to go back to caucus. But we will steel ourselves and persevere. We do think the bill is necessary, but we think, also, it is a sad metaphor for the financial plight we are all in around the world.

What does the bill do? It establishes a legislative framework for the orderly development of a new debt market in covered bonds to the tune of 10 percent of total assets, a covered bond being a dual recourse instrument for an unsecured claim on the issuing bank and a secured claim on a specific pool of assets. So if the bank goes into liquidation, the creditor has an independent security on those assets. Those assets are to be held by a separate entity, separate from the bank—a special purpose vehicle. What is in it for the bank? The bank does not have to pay an uncertainty premium, and it increases the bank’s access to the covered bond market. This mutuality is expected to increase investor confidence. The facts are that in Europe there has been for some time a €2 trillion market in covered bonds. The US, Canada, and Australia have recently entered the market, with New Zealand tagging along behind, beginning issuing in 2010 without a legislative framework.

I have listened with interest to the debate this afternoon and this evening. The difference to be seen is with National, which claims that this bill will “give certainty”, that there is a need for discipline, and that there is a need and a wisdom to follow Australia and synchronise with Australia, and to rebuild confidence. So there is an affirmation of financial confidence emerging from the National perception. From Labour we have the assurance that it is an understandable initiative that Labour will support, but that it will not fix the main problem of the negative net international investment position, where we are somewhere around the sixth-worst in the world, and that it has given some Labour members, at least, considerable dyspepsia because it discriminates in favour of the larger corporates and against the mum and dad investors.

The policy of the Green Party was determined and articulated by my colleague Russel Norman. We basically recognise the need for this bill in the current circumstances, because it will establish a credit flow into New Zealand and it will increase the principle of financial resilience, which now is up there with the principle of economic efficiency, and we recognise that. But there is a flaw in this bill, and the principal flaw is that the bill will emerge with a reliance on the private sector for oversight, as in the wolves guarding the hen house. We will go into the Finance and Expenditure Committee intending to support the bill, but with a strong concern that there needs to be independent monitoring by the Reserve Bank. The Reserve Bank has said it has no appetite for monitoring, and we need to persuade the Reserve Bank to acquire an appetite. There needs to be independent monitoring in this bill, and on that basis and with that expectation the Green Party will support this bill.

MAGGIE BARRY (National—North Shore) : I rise to speak in favour of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. It is, as the Greens and others before me have said, indeed a sign of the times that we need such a piece of legislation. We need something that is going to regulate us. When you look at what has happened in Europe, you will see that we are catching up, really, with the rest of the world by implementing a legislative framework around this. It has been done in Europe and it has been done in Australia. As we have heard from Labour, the Greens, and New Zealand First, this is indeed a moment of rare accord—the first that I have seen as a member of Parliament coming up to 6 months now. Part of that is probably due to the Reserve Bank briefing, which was substantial and detailed enough and able to answer the sorts of questions that come up prior to the select committee situation. I am on the Finance and Expenditure Committee, so I look forward to debating with my colleagues across the House about the detail of this as to what percentage, of course, there should be limits on. I accept that Canada and Australia have done it differently. Maybe 10 percent can be argued through at select committee level; maybe not. I share also the concerns around unsecured creditors, and feel that it will indeed be a robust discussion around the detail, even though there is very broad-based recognition from everyone in this Chamber and all the political parties that we do need this piece of legislation.

So, really, how much more is there to be said about this? We are coming into line with the rest of the world. It will encourage international investors to come here. In fact, it would be a limiting factor to our ability to attract investors and so forth if we did not have it. It is an essential thing for us to do. Greater clarity for investors and depositors is something that this Government feels very strongly about. This piece of legislation is yet another example of legislation that Nick Smith detailed earlier, prior to the dinner break. He detailed some of the other legislation that this is really part of for this Government to put through. It is important that we can do that, and it is, as I said, refreshing to see almost universal approval for the bill, with the caveats that have been mentioned by others.

Under this bill, as others have said, the banks issuing covered bonds will have to register their programmes with the Reserve Bank and notify the Reserve Bank. Unlike some of the Greens, for example, I do feel that that is the appropriate entity to do that. I think that the Reserve Bank, far from looking for the work, would be the appropriate entity to do this, and there really is not anyone else we could use in that way. I believe that with some of the detail to be still deliberated on, the accord around this bill is excellent, and I look forward to it coming before my select committee. I am very pleased to see Labour, New Zealand First, the Greens, and everyone supporting it. It is a rare event, and I sit down with that uplifting notion in my mind, and look forward to it coming to the Finance and Expenditure Committee.

• Bill read a first time.

• Bill referred to the Finance and Expenditure Committee.

Hon ANNE TOLLEY (Minister of Police) : I move, That the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill be now read a second time. This bill amends the Arms Act 1983 to clarify the definition of military-style semi-automatic firearms—MSSAs—and places controls on the importation of airguns that look like real pistols, military-style semi-automatic firearms, or restricted weapons. I would like to thank the members of the Law and Order Committee and, in particular, the chair of the committee, Jacqui Dean, for returning this bill to the House in good time. I would also like to thank all those members of the public who took time to submit on the bill. Committee members have commented on the high quality of a number of the written and oral submissions that were received. The concerns of submitters were listened to by the committee, and many of these concerns have been reflected in the changes that the committee recommended.

The bill does not seek to radically alter the status quo. What it will do is enhance the clarity of some provisions that relate to military-style semi-automatic firearms, and enhance public safety by reducing the availability of airguns that look like real pistols, military-style semi-automatic firearms, or restricted weapons. The bill will create clarity around the definition of a military-style semi-automatic firearm by wording the definition in positive terms as a semi-automatic firearm that has one or more specified features, rather than in negative terms with a list of features that a firearm in sporting configuration that is not a military-style semi-automatic firearm must be without.

It also provides for the meaning of the term “pistol grip” to be spelt out clearly in regulations with the assistance of illustrations. The revised definition will return the interpretation of what is and is not a military-style semi-automatic firearm based on the style of stock back to what was generally understood and accepted by the firearms community between the passing of the 1992 Arms Amendment Act and 2008. The bill also provides for the use of regulations to provide a mechanism for establishing an authoritative position on the status of particular firearms, types of firearms, and firearm characteristics that are creating confusion or are subject to dispute. The bill will require those who import airguns that can be mistaken for real pistols, restricted weapons, or military-style semi-automatics to have a permit from police that allows their importation. A permit will be granted only if the Commissioner of Police is satisfied that there are special reasons why the airgun should be imported. Permits would also be issued to allow for legitimate importation of airguns for sporting and collection purposes and the like. This will reduce the ready availability of these types of airguns for criminal purposes. The bill’s restrictions on the importation of airguns will not apply to airguns that are clearly designed to be used for airsoft and paintball sports, and could not be mistaken for real pistols, military-style semi-automatics, or restricted weapons. It is also intended that these provisions would not restrict the importation of airguns that are clearly manufactured solely as toys. These tend to not look anything like real pistols, military-style semi-automatics, or restricted weapons.

The Law and Order Committee recommended a number of amendments, which will clarify the intentions of the bill. Firstly, the definition of the term “military style semi-automatic firearm” has been modified to provide greater technical accuracy and legal clarity, and to make it clear as to the scope of the regulation-making powers. A definition of the term “semi-automatic firearm” has also been included that more accurately reflects the operation of a semi-automatic firearm. Secondly, a change to the wording of the bill to clarify the provisions relating to magazine capacity has been made. Thirdly, the committee recommended amendments to the bill to make it clear that the new description of restricted airguns, which will require a permit to import, is intended to include those that have the appearance, whether with attachments or without attachments, of being a pistol, restricted weapon, or military-style semi-automatic, and that it is not necessary for such airguns to have the appearance of any particular model of pistol, restricted weapon, military-style semi-automatic, or firearm capable of full automatic fire.

Amendments were also made to make it clear that permits would not be required to import parts of restricted airguns, but only the airguns themselves. A number of submitters expressed a range of concerns about the proposal in clause 11 of the bill to extend the regulation-making powers in section 74 of the principal Act. The committee listened carefully to these concerns and recommended that an additional layer of parliamentary scrutiny should apply to three of the four proposed regulation-making powers. This is to apply to regulations declaring particular makes and models of firearms, or firearms of a stated description to be military-style semi-automatics, and regulations declaring particular features of firearms to be features of a military-style semi-automatic. The committee has recommended that any regulations made by Order in Council under new section 74A(b) to (d) of the principal Act be confirmed by statute within the specified period. Such confirmation, usually through a Subordinate Legislation (Confirmation and Validation) Bill, would provide Parliament with an opportunity to consider the policy behind the regulations that need to be confirmed. If Parliament did not confirm the regulations, they would become invalid.

The committee recommended that a consequential amendment be made to the Arms Regulations 1992, to ensure that licensed dealers kept records of restricted airguns received for sale, repair, or modification, or that are manufactured by the dealer, in the same manner they record those particulars for firearms, pistols, military-style semi-automatics, and restricted weapons. The committee heard from a number of submitters who indicated that they would like representatives from the New Zealand firearms community to have formal input when regulations relating to firearms use or restrictions are being considered. The committee agreed that improving the level and quality of consultation between police and members of the firearms community would be a positive step that would assist with the development of practical firearms policies. As a result of this, I am informed that police have started actively exploring the establishment of an arms advisory forum. The intention is that this group would provide a forum for input to the police from the firearms community on legal and policy issues relating to firearms, and would be convened whenever a relevant issue arose.

In conclusion, the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill improves the ability of the Arms Act 1983 to continue to take into account the interests of legitimate firearms users, whilst at the same time protecting the public from the harmful use of firearms. Clarifying the definition of military-style semi-automatics is in the interests of gun owners, as it removes uncertainties around which of their firearms will involve additional requirements for their possession. At the same time, it improves the ability of the Arms Act to apply controls on the possession of military-style semi-automatics. I am confident that restricting the importation of airguns that can be mistaken for real pistols, restricted weapons, or military-style semi-automatics will limit their availability for criminal use and improve public safety. The bill has emerged from the Law and Order Committee with a number of changes as a result of the committee’s careful consideration of points raised by submitters. This has strengthened the bill, and I commend the bill to the House.

KRIS FAAFOI (Labour—Mana) : Thank you very much for the opportunity to be the first speaker for Labour in the second reading of the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. It will be of some joy to the members opposite that Labour is going to continue its support for this bill. I would like to take this opportunity to thank the members of the previous Law and Order Committee. I understand that it was chaired by Jacqui Dean, the current chair of the Law and Order Committee, and I thank it for—and the Minister has alluded to this—the work that it did to look closely at this bill. I believe that through a lot of cooperation the bill has emerged as a better bill.

We are talking about further restrictions or further clarification of issues around firearms. It is a polarising matter. It is a matter of trying to weigh up the rights of those who are firearms enthusiasts, who enjoy their sport, and who, because of the restrictions that are placed on them because of the nature of their sport, know those restrictions very well, protect them, and will fight to make sure that they are protected. That was seen by the nearly 250 submissions that were made to the Law and Order Committee in the last session of Parliament. On the other side of the equation, making sure that the duty of this Parliament to protect our community, and also to protect our law and order officers in our communities, has to be weighed up as well. I think that the Law and Order Committee of the previous Parliament pretty much got the balance right in making sure that the objectives of this bill could be met, while making sure that the rights of firearms enthusiasts were protected.

The objective of this bill is to amend the Arms Act to bring clarity to the definition of “military style semi-automatic firearm” so that the police can correctly identify those firearms that should be categorised as such, and that would essentially be subject to greater control. It also, as the Minister pointed out, will put greater restrictions on lookalike airguns that look like military-style semi-automatics, that look like pistols, and that look like other restricted weapons. I think that in terms of our duty as parliamentarians to make sure that our communities are safe and that our law and order officers are safe out in the community, imposing that restriction on those lookalike firearms is a very good thing to do.

Labour, of course, will support any measures that prevent and mitigate the harm of military-style semi-automatic firearms to our communities, and that lower the costs of law enforcement as a result of the importation of these weapons that are lookalike. As we are seeing from the police evidence, these airguns that look like a thing that should be on the front line, or pistols, or other restricted weapons, are increasingly being used out in our streets.

This law has come about because of a High Court decision that I understand came from Palmerston North and created some uncertainties around the definition of what a military-style semi-automatic firearm was. It is also a mechanism with which the Government hopes to reduce the number of incidents due to these lookalike weapons. I think all of us in this Parliament would give that protection to our law enforcement officers, especially our police. If there is an incident, our police officers are the ones who, when most of us would be heading in the opposite direction, head into harm’s way. They have a very unique role in the fact that sometimes they are putting themselves in physical danger, sometimes they are finding themselves staring down the barrel of a gun—or what seems to be a gun. We have had too many instances recently where—and I am thinking about the Napier incident and one in the Manawatū about 6 or 7 years ago—police officers have been killed in the line of duty. We need to make sure that we can put restrictions on these lookalike firearms in order to reduce the incidence of these call-outs where our police are actually going to places and dealing with things where we have got idiots—I must use that word—who are using pretend firearms and the police are thinking they are the real thing. We need to make sure we are cracking down on that so our police are not finding themselves in that situation. We are finding that our police are in situations like this and are having to arm themselves, and it can escalate to a situation where the elite officers get involved, where we have to call out our armed offenders squad to deal with idiots—again, we are using that word—who think it is a bit of fun to use some of these weapons.

I am not a gun enthusiast; I am not a firearm enthusiast. That comes about because I have not had any exposure to it, but I do think there is a place for responsible firearm ownership, in that those law-abiding citizens who adhere to the rules should be able to continue their legal activity, to make sure that they can enjoy their sport. I know two examples in my own electorate: firstly, the former principal of Papakōwhai Primary School Kevin Win, who made a submission to the Law and Order Committee on the day that I subbed in on the select committee, because he is a member of the local gun club; and, secondly, John Wilson from the Tītahi Bay Volunteer Fire Brigade, who I believe is out now trying to hunt himself down some venison. Those are two people who responsibly use firearms in the community and who were very concerned about what rights may have been taken away by this bill. But I think, as I have said before, the Law and Order Committee has got the balance right in trying to manage the rights of gun owners and enthusiasts with public safety and the safety of our law enforcement officers.

As the Minister suggested, there were some concerns from a number of gun enthusiasts around clause 11, I believe, in respect of the regulation-making powers that are contained in this bill. I will just run through some of these. There were concerns that the regulation-making powers were too broad, that the regulations would be unconstitutional, that there would be a lack of parliamentary and public scrutiny, that in some instances regulations might be abused, and that the use of regulations gave too much power to police and could cause more confusion in what was already a confused situation. But I believe, as the Minister said, that this bill will address that in the fact that any regulations of this nature that are made have to be statuted. So those firearms enthusiasts will have the opportunity to have more scrutiny of any changes that are made via regulations if they think they are of concern enough to make another submission to the select committee.

There was one other area that the Minister alluded to, which the Labour members on the previous Law and Order Committee also alluded to, and that is around what the Minister of Police referred to as an arms advisory forum. It was the contention of the Labour members of the select committee that an independent reference group be formed to provide “contestable”—I think that is the word—advice to the Minister, because it would be the police who would be offering other advice to the Minister. So it was our contention that there should be an independent reference group to make sure that there was contestable evidence, especially around concerns that some firearms owners may have. Unfortunately, that did not get support from the select committee, and, as the Minister said, an arms advisory forum will be set up to help advise the police if they are looking at any issues, especially around regulation. As we have said in the select committee minority report from Labour, we will be watching that issue very, very closely.

But Labour will support this bill to the House. We believe that it does strike the right balance in terms of this Parliament’s duty to protect our public and also protect the rights of gun enthusiasts around the country who made their voice heard because of the sheer number of submissions that were made to the Law and Order Committee. We are happy to support this bill. We are happy with the outcome of the select committee process, and we look forward to supporting this further.

JACQUI DEAN (National—Waitaki) : The Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill sought to address—and I believe has gone a long way towards addressing—some problems that we face. The vast majority of category C licence holders who have military-style semi-automatic firearms are responsible enthusiasts of firearms, and they take great pride and enjoyment in their sport, which involves using their firearms mostly on a shooting range under very controlled conditions. Indeed, the conditions of their firearms licence, which I think is a category C—and I can be corrected—if I do recall, is quite a stringent category of firearms licence that requires the military-style semi-automatic to be locked securely in a secured, locked box.

One of the problems is that although the vast majority of military-style semi-automatic owners have the required licence and the required storage for military-style semi-automatics, that is not the problem; the problem is the military-style semi-automatics that the police do not know about. And when those military-style semi-automatics are used and put into effect, it can be with devastating consequences for all of those involved, involving death and fear. It is those military-style semi-automatics that the police cannot track that are the problem, which is why this bill has come to the House, because there is also a problem with the definition of what constitutes a military-style semi-automatic.

The other problem that this bill addresses is that of the fake pistol being presented. It happens on an almost weekly basis in New Zealand. The police are called out to what appears to be an armed robbery or an armed incident, and it ends up that a fake pistol has been used. The news of this happening in dairies appears on a very frequent basis, and we read about it in the news. This bill addresses both those two issues.

The Law and Order Committee gave this bill a good deal of consideration, and it was a good process, in my view. We made a number of amendments to the bill. I am going to start more or less where the previous speaker, Kris Faafoi, left off, and that is community input into firearms policy. We had a very robust process of people coming into the select committee. We met in Christchurch, Auckland, and Wellington, and a number of the submitters expressed a frustration, saying that they would like to have input into the arms licensing regime and that order of activity. The committee did look very closely at the request expressed by the firearms community of establishing a statutory advisory group. That group would include representatives from the New Zealand firearms community, whom the police would consult before recommending regulations relating to the designation of military-style semi-automatics. The problem with that was that doing that would limit the scope of the consultation and engagement with the sector, and it was felt that perhaps that was a little narrow in scope and that it would be of limited use. So I was very pleased to hear the Minister of Police earlier this evening confirm that the police are actively looking at the establishment of a consultation group that would work on a full range of firearms policy issues. That was indicated to us at the time that we were working with the police on the select committee stage of this bill, and it is very encouraging to me to hear that the police are indeed continuing their work on this issue.

The select committee made a number of changes. We modified the definition of “military style semi-automatic firearm” to provide greater technical accuracy and also legal clarity. It was determined that a very accurate definition of “military style semi-automatic firearm” should be included in the bill, not only so that it makes it very clear to police and firearms users what constitutes a military-style semi-automatic but also to futureproof the regulations so that changes in design of military-style semi-automatics could be taken into account under the bill.

We made clarifications to the provisions relating to that magazine capacity. Hitherto, magazines could be the Rambo-style, banana-shaped magazine. This committee is recommending that changes be made to that. Importantly, and as I mentioned when I started my speech, amendments to the bill make it clear that the new description of “restricted airgun”, which will require a permit to import, will hopefully tighten up on the incidence of fake airguns being presented to dairy owners and others. Under this bill a permit is not required to import parts for airguns, but merely the airguns themselves.

A number of submitters expressed concerns about changes to clause 11 of the bill to extend the regulation-making powers in section 74 of the principal Act. What the committee has recommended is another layer of parliamentary scrutiny to apply to three of the four proposed regulation-making powers. These are for regulations declaring particular makes and models of firearms or firearms of a stated description to be military-style semi-automatic firearms, and regulations declaring particular features of firearms to be features of military-style semi-automatic firearms. An amendment was also recommended to the Arms Regulations 1992 to ensure that licensed dealers keep records of restricted airguns received for sale, tightening up on the requirements about airguns.

The provisions in this bill have been gone through, and it was pleasing to see that the Law and Order Committee worked very hard and cooperatively on this bill. I think we have returned to the House an improved bill. It is a bill in good shape, and I recommend it to the House.

H V ROSS ROBERTSON (Labour—Manukau East) : Kia ora tātou. Nō reira, Mr Speaker, and greetings to you in that fine office that you have there. Can I first of all acknowledge the work of both the Law and Order Committee of this Parliament and the last one for the work that they did on this piece of legislation, the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. I think that they have managed to get the rights of gun owners and distributors about right.

I am a strong advocate of disarmament issues and have become actively involved around the world in support of a treaty that seeks to ensure the more responsible control and transfer of conventional weapons. I know, Mr Deputy Speaker, that you—and I should not bring you into it, Mr Deputy Speaker—are a responsible firearms owner and probably know more about firearms than many of us inside this Chamber. We will have a talk about that later on. As the Labour spokesperson on disarmament, small arms, and light weapons, I am aware of the issues locally and internationally. As legislators I believe that it is important for us to remember that there are constituents—not all of us will have these constituents—who have been directly impacted by the irresponsible transfer and control of arms, which has resulted in the loss of life.

This bill that we are debating tonight, and which we in the Labour Party support, amends the Arms Act of 1983 to change the definitions and regulations about what constitutes military-style semi-automatic weapons. It places restrictions on the importation of airguns that look like real pistols, military-style semi-automatics, or restricted weapons. It links with what is proposed through an arms trade treaty to prevent weapons from being exported to Governments or countries around the world where they should not go, such as Governments with poor records in terms of how they treat their own people.

As we here seek to control the importation of armaments, the world and those who are concerned enough seek an arms trade treaty in a diplomatic conference to be held in New York in July, which has the objective of ensuring that the international arms trade industry is cleaned up. As a nation State we need in this country to continue to play a constructive role on armaments, and to lead, and as a Labour Party we support any measures to prevent and mitigate the harm that military-style semi-automatic weapons cause to society. In this country we support the need to mitigate the costs of law enforcement as a result of the importations of weapons that look like military-style semi-automatics.

We do it for a reason, and there has to be a reason why this legislation is necessary. It is necessary because of a court case here in 2010, and it is necessary due to the uncertainties of the definition of military-style semi-automatics as a result of that High Court case. I think it was Lincoln v New Zealand Police. It is also a mechanism through which the Government hopes to reduce the number of incidents due to the weapons that look like military-style semi-automatics. We support the need for there to be greater import controls on imitation weapons—in fact, any weapons for that matter—given their increased use in the commission of crimes and the need for police resources.

I am sure that many of us who have close contact with the police through our own constituencies will have anecdotal evidence of where imitation weapons have been used for burglary, robbery, and the like. In New Zealand we are told that the Government asserts that the police estimates indicate that there could be up to one incident a week where a member of the public presents an airgun that looks like a real pistol, or a military-style semi-automatic, or restricted weapons requiring an armed police response, sometimes involving the call out of the armed offenders squad. Tightening import controls would reduce the easy availability of these replica firearms.

I think that is the reason why we in this House need to be responsible when it comes to the whole issue of firearms, because it is an area that requires controls to ensure that these particular types of weapons do not fall into the wrong hands. I have had a number of people write to me on this issue. One of the purposes of this bill is to ensure responsible ownership, but I want to say to those firearms owners who are concerned that it should be noted that the bill provides an appeal process to the District Court where an owner disagrees with a classification of a firearm as a military-style semi-automatic weapon. So there is the opportunity for gun owners who are concerned to have the ability to go to the District Court, and I am sure there will be responsible firearms owners in this country who will use that mechanism.

Can I draw to the House’s attention Labour’s minority view in the bill. In the select committee our members there proposed an initiative that was to aid in the consultation process, in the form of an independent reference group. We asked that it be established to provide contestable advice to the Minister. However, we were advised that a wide-ranging reference group was outside the scope of the bill. So we had to accept that, and we did.

We also understand, of course, that the police themselves also recognise the need to engage nationally with the New Zealand firearms community. They need to work together, like a community. I am reminded of the Māori saying: “Tātou, tātou.” It means: “Together, together.” And in that true sense of the word “community”, together we serve and together we prosper. If we have the police working alongside the firearms community, I am sure that we will have the opportunity, and we will witness that this piece of legislation can work.

It is the expectation of members on this side of the House that this exploration will lead to the formal establishment of this advisory group, and if it is not established, we would expect the police to provide a robust rationale as to their decision. We think that is important because there needs to be involvement of the community together. As my colleague Kris Faafoi, our spokesperson on police, said, Labour members will be monitoring the development of this issue closely—and we will, because we believe it is for the betterment of the community that those sorts of things occur. If we have the police and the firearms community working together, then that can only be good for our society.

Let me conclude by just saying that this legislation is necessary, and it is necessary because of the uncertainties created in the definition of military-style semi-automatic weapons as a result of the Lincoln v New Zealand Police case in 2010. We as responsible legislators have brought this legislation to the House in order for us to ensure that the right things are done, not only by gun owners but also by the police, for the betterment of the constituents in the communities that we represent here as legislators. For it is our job to serve our community, to represent the interests of those who elected us to this Parliament, so that we in turn can express their views and their concerns about issues that greatly affect them—issues that we can do something about. I endorse this bill to the House, and I hope that the rest of the House will do likewise.

DAVID CLENDON (Green) : Kia ora koutou. It probably comes as no surprise to anyone to know that the Greens will be supporting this legislation, the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. Given that we are a party of principle and that one of our four core principles is a commitment to non-violence, it would be odd in the extreme, I think, if we were to not support legislation that seems well intentioned towards creating more public safety and putting some further constraints on the use of a particular style of weapons.

Clearly, there is a legitimate place for firearms in our community. I believe there are in excess of 220,000 - odd New Zealanders who are licensed firearm users: hunters, of course; competitive shooters; people involved in pest management; farmers—these are all people who can legitimately use weapons, and routinely do in the course of their daily business or their recreation. That is as it should be, but we also need to balance that with a recognition that firearms are lethal. They can inflict lethal damage; they can kill people. For that reason they need to be carefully managed and regulated, and we think, on balance, that this bill takes us a few steps in a better direction.

Substantially, this bill seeks to provide greater clarity about the definition of what exactly constitutes a semi-automatic military-style weapon. It was evident from the case law that has been mentioned, the Lincoln case, that there was sufficient ambivalence in law, that there was too much grey between the black and white, and that the situation did need to be tidied up to ensure we are not constantly caught in these legal battles, which do not really serve anybody’s interests.

I think to the layperson, clearly, what defines these semi-automatic military-style weapons is simply their rate of fire—their ability to do a great deal of harm in a very short time, with a rate of fire much in excess of single shot or the old-style bolt-action weapons. And we know from experience that these are the most dangerous weapons when they are in the wrong hands.

We know that many of the tragedies that have occurred internationally with gun use have been as a result of military-style automatic weapons. In one horrific instance, I believe, something close to 20 people were killed in under 2 minutes by a person wielding one of these weapons. There is no legitimate use for that sort of firepower in private hands, and I think this bill is admirable to the extent that it seeks to ensure we do not have these weapons in the community.

It has been very interesting. I certainly was not on the Law and Order Committee. I am not sure that the Greens were routinely present on the committee, despite—as, no doubt, members will know—my friend and former parliamentary colleague Keith Locke having some very strong views about gun control, which he was never shy to express. But I know, despite not having been on the select committee, that there has been a great deal of lobbying around this bill, and some of it in quite recent times.

Advocates for a more relaxed, perhaps, approach to gun control and particularly to the importation and allowability of these weapons have been active. The usual complaint is that this will put up a lot of red tape and bureaucratic barriers to responsible owners without actually doing much to limit the criminal use of these weapons or the availability of them.

I have to say that some of the attitudes and some of the tactics of the lobbyists have actually done their cause no good. I am sure other MPs would have seen similar emails to the ones I have seen, where they begin with several paragraphs explaining why they know that politicians will be of limited intelligence or experience, such that we will not be able to make good gun law, but, nevertheless, these people will do their best to instil good sense into us. I would suggest to those people that that is not a very promising approach if you are trying to persuade anybody.

But more seriously, yes, I certainly read those emails, I took the trouble to inform and educate myself a little bit about some of the issues around these weapons and the features that define them, and on balance I think that this bill will add a layer of clarity and a layer of certainty to definitions and so on, and so for that reason we support it.

The bill—again, as has been commented on—does allow for the use of regulations to update and modify the legislation on gun control and gun management, and we think that is appropriate, not least of all because technology moves at an alarming rate. I am sure there are weapons available today that were only dreamt about a relatively short time ago. Technology can change, and so too can public tolerance for particular sorts of weapons wax and wane over time. I think allowing for the use of regulations to amend these definitions without the necessity of a legislative change is an appropriate mechanism, acknowledging also that there is the built-in backstop, if you like, of a degree of parliamentary scrutiny of those regulations after they are made.

Mr Ross Robertson, who just resumed his seat, also mentioned that there is a provision for a District Court appeal. If any person is determined that the police, or whoever, got it wrong in terms of defining that person’s particular weapon or the features of their weapon, there is that avenue of appeal to the District Court. I would actually hope that some of the people who have been quite vocal, advocating for a different or, arguably, a less constrained approach will take that opportunity. Clearly, for an individual to go to the District Court could be a costly venture, but one would think that some of the major gun clubs, some of the associations representing gun users, or, indeed, some of the industry—some of the dealers, stores, and gun shops—might see it as being in their interest to take these challenges to the court. It is appropriate that they have that avenue open to them.

The other aspect of the bill, of course, is that it does put some constraints on the importation of airguns that look like real pistols or military-style weapons. The old-style slug gun might not have done people harm, but modern airguns and air pistols are certainly capable of inflicting quite serious harm on people. Indeed, they are a danger to the people wielding them, to the extent that if the police are called to a situation and somebody is waving something around that looks like a real weapon, then the police are obliged to treat it as though it is. That is likely to end very badly for the individual foolish enough to be waving one of these things about. So I think we are identifying that these airguns in their own way can be almost as conducive to a threat to public safety as the real weapons could be.

The issue of an arms forum or some sort of standing consultative group has been brought up, and I have read the Labour minority report with interest, and also I have heard the comments of the Minister of Police and some of the Government speakers. It is important. Clearly, weapons and firearms will always be contentious, and the best way to deal with contentious issues is to create a platform where all sides of an argument can be heard. Clearly, the police will always have very strong views on these matters, and that is as it should be. But equally, community interests need to be represented, and they need to be assured that even if they do not win an argument, at least they have had the opportunity to have their points heard. So along with others we will be interested in seeing just what does evolve in terms of creating that public space, that forum for the ongoing discussion about what is always a contentious issue.

That is probably sufficient from me. I just, in closing, would say that the Greens have some views on other matters about gun use, gun ownership, and gun control, which we would like to see Parliament bend its mind to on occasion, but that is for another day. For the minute we believe this legislation is well intended and is likely to give good outcomes, and for those reasons we will be supporting it. Thank you.

JAMI-LEE ROSS (National—Botany) : It is good to see the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill back in the House for a second reading. I wish to endorse many of the comments that have been made already this evening by a number of members of this House, including the Minister of Police, the Hon Anne Tolley. Can I also congratulate the Hon Judith Collins on bringing this bill to the House in the first place, and seeing it through a first reading and getting it into the Law and Order Committee.

Hon Tony Ryall: A fellow east Auckland MP.

JAMI-LEE ROSS: A fellow east Auckland MP. She is now a South Auckland MP in the electorate of Papakura.

I am not quite as passionate on disarmament as one of the previous speakers—Harold Valentine Ross Robertson, if I may use his full name—when he was talking about disarmament, but I do think he made some salient comments around the desire of New Zealanders not to see firearms normalised in New Zealand to the point where it becomes commonplace for people to carry arms and utilise them on a daily basis. I do accept that there are strong and passionate gun owners in New Zealand who do use guns in an appropriate manner, hunting being one of those. Mr Deputy Speaker, I know you are a passionate hunter yourself, and I have a number of friends who keep threatening to take me out hunting one day. I have not yet been game enough to do so. I may end up going one day.

Hon Member: Go duck hunting. It’s great fun.

JAMI-LEE ROSS: Duck hunting. Ha, ha! But on the point about military-style semi-automatic weapons I think it is appropriate that we legislate further in this area. There are virtually no import controls on replica firearms. This is a concern, because replica firearms are frequently being used for criminal offending. These replicas are easily mistaken for real firearms, which makes them attractive to criminals.

When this Government came into office in 2008, one of our key pledges in the law and order area was to give police greater powers to keep the community safe. We have done things like boosting police numbers, 600 new police on the beat. We have given them Tasers; we have given them powers around DNA testing and car crushing laws. This bill is an extension of that policy of giving police more powers to enforce law and order issues in New Zealand.

Police estimate that there could be up to one incident a week where a member of the public presents an airgun that looks like a real pistol, military-style semi-automatic, or restricted weapon, requiring an armed police response. Those of us who have been in office for a while, and certainly in my time on the council I do remember a number of instances, particularly in the South Auckland area, where there have been firearms presented, and where there have been issues to do with firearms that have actually led to death. Any issue to do with firearms that leads to death of an innocent individual is an issue that we must take seriously. Tightening import controls would reduce the easy availability of these replica firearms, and anyone planning to import these replicas would in future require an import permit. These are some of the changes in this bill that are welcome and we need to be supporting.

I wish to just touch on the point that has been raised by a number of members about community input into firearms policy. I do see in the minority report and in the comments made by the Minister here tonight that there is going to be greater community input into firearms policy. The police are looking to establish an arms advisory group. We know from the police’s history that the police work extremely well with local communities, extremely well with interested parties, and I am sure that the police will do very well in working with those with an interest in firearms policy through the arms advisory group.

Just finally I wish to touch on some further points raised in the select committee report. It is around the minority report from another party. It is not the Labour Party and not the Green Party. I will leave it to members to pick up the report and read it, but I have to say I found some of the comments a little distasteful. The arguments that were being made in this minority report were essentially arguing that we should have the US-style right to bear arms in our nation, and I just do not think that New Zealanders would wish to see our country go down that track.

Hon Member: Mr Crimp?

JAMI-LEE ROSS: It was not Mr Crimp. It was someone who knows Mr Crimp, though. Firearms in New Zealand are not at the point yet, and I hope they never get to the point, where New Zealanders fear on a regular basis firearms-wielding individuals. But the risk that we could have in New Zealand if firearms were to become normalised in local communities, in suburban areas, away from the hunting community—where firearms are held regularly and are carried regularly by individuals—is that it would be putting this country in a situation that I think many New Zealanders would be very, very concerned about.

Yes, there are rights of individuals to live their lives as they see fit, but the State must put in place restrictions on those rights and freedoms for the public benefit and for public safety, and I think that on the topic of firearms we must lean towards public safety. We must be cautious about policies that are put in place, and we must support legislation that sees the likes of military-style semi-automatic firearms having controls placed on them.

The question also of the general arming of the police is something that I think a lot of New Zealanders would have very strong views on, and the types of comments made in this minority report, which argues strongly for greater gun ownership, I think many New Zealanders would find distasteful and would disagree with.

This is a good piece of legislation. I am looking forward to debating it further in the Parliament and to its going through the Committee stage and third reading. I endorse the bill and ask the House to support it further.

RICHARD PROSSER (NZ First) : I rise on behalf of New Zealand First to speak to this bill, the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. New Zealand First is pleased to have the opportunity to make our first input into this important bill, but we would strongly urge the House to re-examine several aspects of this bill with a view to amending certain of its provisions in order to bring the bill into line both with its stated intentions and with the intent of the principal Act.

New Zealand First is a firm advocate of the rights of responsible law-abiding firearms users, and we support any moves that will increase and improve the level of safety surrounding the availability and use of firearms in society without unnecessarily impinging on the rights of those law-abiding users. We would like to support this bill, but we cannot in all good conscience do so while it remains in its present form. There are certain aspects of the bill’s construction that we intend to address by way of a Supplementary Order Paper.

We are concerned, as are many correspondents from within the law-abiding firearms community, about the potential for any semi-automatic firearm to be declared a military-style semi-automatic firearm under the regulatory provisions of the Act, and we have doubts that the requirement for a separate Act of Parliament to validate any such regulations provides a sufficient safeguard against any such declaration being made counter to the intent of the primary Act, that being the Arms Act 1983. New Zealand First contends that the intent of the primary Act was very clear in its desire to draw a distinction between those firearms that were obviously of military style and those that were of obviously sporting configuration. To that end, we would prefer to see an additional clause inserted further to the provisions of new section 74A to the effect and with the intention of ensuring that no regulation shall be made in respect of the definition of “military style semi-automatic firearm” if that definition is contrary to the intent of the principal Act.

We are also concerned, as are many lawful firearms users, about the issue of pistol grips. We note from a reading of the background material to the bill that many submitters to the Law and Order Committee contended that even a fully free-standing military pattern pistol grip was not of material importance in terms of the potential danger to public safety purported to be posed by semi-automatic firearms. It is our belief and concern that the bill, in fact, makes the definition of “pistol grip” less clear and concise than is the case in the existing legislation, rather than more so. We are concerned that the regulatory provisions of the bill with regard to pistol grips may indicate a desire in certain quarters to restrict access by the law-abiding firearms community to semi-automatics generally on what we would describe as the contestable grounds that firearms that resemble those of a military pattern are somehow inherently more dangerous than those that do not or that have a more commonly recognised sporting configuration. It is our opinion that any such actual potential danger from semi-automatic firearms was addressed by the restrictions on magazine capacity for both rim fire and centre fire firearms in the 1992 regulations.

We are bound to accept at face value the bill’s contention that regulatory authorities must have the flexibility to respond to changes in manufacturing design, but it remains our belief that thumbholes and Dragunov stocks do not, of themselves, contain any real or potential threat to public safety. It is true that pistol grips allow for a better hold and for more accurate placing of shots, and it was for this reason that the manufacturers of military arms adopted this design feature from early sporting and hunting rifles, whose use of the pistol grip pre-dates its inclusion in military long guns. But it does not follow, in our estimation, that the availability of a pistol grip, even a fully free-standing one of the pattern commonly regarded as being military-style with regards to a semi-automatic rifle, provides for any greater inherent or potential danger to public safety. The inclusion of a fully free-standing pistol grip may allow an assault rifle to be fired with one hand or from the hip, but this is only of advantage if the weapon is capable of fully automatic fire, and all such firearms have long since been banned from civilian use in New Zealand.

In addition, genuine assault rifles that include a fully automatic function, those capable of what is more commonly known as machine-gun fire—for the benefit of members who may not be familiar with the difference—are in this modern day generally of short carbine construction and are not available. And even their civilianised, semi-automatic counterparts are not available to civilian holders of A and E category firearms licences, because the weapons themselves are physically too short to be owned on anything other than a licence that has a pistol endorsement. The length and weight of a long gun as it is defined in New Zealand law would preclude its accurate one-handed operation in any practical application, even with a free-standing pistol grip, and there is no advantage that I can see in firing any such weapon from the hip, given that the accurate placement of shots from this firing position is dependent on the visual tracing of rounds fired in very rapid succession at a rate far in excess of the rate of fire that it is possible to obtain from a semi-automatic firearm, which requires a separate pull of the trigger to facilitate the discharge of each subsequent round. Again, New Zealand First believes that even if a person were capable of rapid trigger-pulling at superhuman speed, the 1992 restrictions on magazine capacity would negate any advantage that this unlikely ability may provide.

In addition to this, there is the reality of the issue of the degree to which the pistol grip or thumbhole may be said to be incorporated into the stock of the firearm in question. It is this issue that is at the heart of the case of Lincoln v New Zealand Police. The firearm at the centre of the case in question was a Heckler and Koch SL8, which has a thumbhole stock. The stock in question quite clearly does not incorporate a free-standing pistol grip, as the learned judge correctly determined, and the police’s contention that it did forms the basis for the suspicion widely held in the firearms community that some of the police headquarters have a not very well hidden agenda to restrict or deny access to semi-automatic firearms by law-abiding firearms licence holders generally. One of the other firearms held up as an exhibit in the case was an AK-47 copy, which had a connecting rod fitted between the base of the pistol grip and the butt of the stock in what is equally clearly a blatant and, I may say, a rather crude attempt to circumvent the letter of the law, and which I believe that most reasonable firearms users would also agree breaches the spirit of the law. That spirit needs to be observed both ways, and if the police generally desire to uphold that spirit, then they should have no objection to the inclusion of the amendments to proposed section 74A, as I have suggested.

I would contend that the principal Act makes it very clear indeed what does and what does not constitute a free-standing military pattern pistol grip. It is not for the police to seek to rewrite the legislation as it is passed by this House; that is not the way democracy works in this country. I would also add that even in the case of the AK-47 copy with the rod between the base of the grip and the butt of the stock, as with the thumbhole or Dragunov stock, the presence of any physical barrier that impinges on the forearm of the user prevents the pistol grip from being held effectively in a one-handed fashion, because the hand is not able to be held directly behind the grip. This is a false concern.

New Zealand First is also not satisfied that the bill will sufficiently restrict access to powerful or realistic replica airguns by those purchasers who may have criminal intent. It is our belief that any airgun capable of generating a muzzle energy beyond a prescribed limit should be available only to firearms licence holders. At present only pre-charged pneumatic airguns are subject to this restriction. It is of concern to New Zealand First that these replica firearms and powerful airguns are all too often sought after by people who would not be granted firearms licences were they to apply for them, on the grounds that their reasons for wanting those firearms would not be proper and sufficient. We do not believe that people who would ordinarily be denied real firearms should be able to obtain the next best thing either.

We note a concern widely held throughout the firearms community that the bill focuses on extra restrictions on New Zealand’s 230,000 licensed firearms owners yet fails to implement a single regulation that will punish the misuse of firearms by the criminal fraternity. We agree with these sentiments entirely.

Finally, and of great importance to this House and to the validity of this bill, is the fact that it contains a basic error, which if left uncorrected will exclude a large number of .22 rifles from its ambit. In Part 1 clause 4(1)(a)(ii) and (iii) define a calibre of .22 inches or less. The word “calibre” is somewhat interchangeable in terms of firearms terminology. The actual diameter or calibre of a .22 bullet is 0.224 of an inch, which is obviously larger than the definition given. If this error is not corrected, no semi-automatic .22 rifle in New Zealand will be covered by the bill. I own three such rifles myself and under this bill as it stands there will be nothing stopping me from going online and buying 30-round banana mags or 50-round box mags, or indeed fitting them for belt feed if I so desire, in true Rambo fashion.

We would like to support this bill and we give notice to this House that we will be introducing a Supplementary Order Paper in order to address the areas of concern we have highlighted. We would urge the House to support this Supplementary Order Paper in order that we may reconsider giving our support to this bill. Thank you.

IAN McKELVIE (National—Rangitīkei) : I learnt more about guns in the last 5 minutes than I knew in my lifetime. I am not sure whether it is right or wrong and I am totally confused by it. It was certainly a masterpiece of a speech on guns. I will not take a lot of time on this Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill, because I think we have pretty well summed it up tonight already, and it seems that pretty much around the House there is unanimous agreement on the necessity for it. I want to comment briefly on the eloquent introduction by Minister Tolley, and certainly by the chairman of the Law and Order Committee, Jacqui Dean, on this bill. It seeks to alter the Arms Act 1983 to define a military-style firearm versus a traditional hunting gun—and we have heard a lot about that from the last speaker, Richard Prosser—and to provide for an appeal process for those people bringing guns into the country who think they should not be included in this legislation. It also places restrictions on airguns that replicate real guns. There are currently no restrictions on the import of those types of guns.

If you go online and look at the type of airgun that you can import, it is quite staggering. The models of them replicate all sorts of real-life guns, and, certainly, I think, it creates quite a dangerous position in our community where anyone can get hold of these types of guns, and they are threatening to those around us. Police estimate that the type of event where people use these guns to threaten people takes place on average about once a week, which is pretty worrying when you think about it from that perspective, and the ramifications of that of course can be pretty serious as well.

The discussion regarding regulatory powers again reared its head in the course of debate on this bill. There was mention made in relation to section 74 earlier in the night. As a result of this the police will explore the formation of an arms advisory forum, which I think has got some great potential for both the police and the outcomes this bill provides for. Unfortunately, as with everything else in any country in the world, the vast majority of law-abiding citizens who deal with life in general without threatening anyone and without causing any problem are again being compromised by the activities of a very few people who use this type of armoury and this type of environment to create problems for the rest of us. It is a great shame that we have got to legislate to restrict the activities of a whole lot of people when, in fact, it is only a very few people who are causing that problem.

It would be amazing to display, as I said earlier, the pictures of these replica-type arms. They are quite extraordinary and they are so freely available. I guess the other challenge for us as a Parliament is to control the importation of those arms by any kind of a market, because in fact they can be brought into the country just by buying them on the internet—a challenge, I think, for all. Of course, I understand that these arms, or these types of replicas, are already banned in Australia.

The Rangitīkei electorate, the home of Linton, Ōhākea, and Waiōuru, has a special interest in this type of legislation as the firing ranges at all three of those locations are the recipients of some very real military weaponry, as it is tested. I think that we probably have more military-type guns owned by the military in the Rangitīkei than any other part of New Zealand. So it is pretty important to us that this legislation is managed through the House in a good fashion. I have no problem commending this bill to the House and wish it every success as it goes along. Thank you.

Hon PHIL GOFF (Labour—Mt Roskill) : Labour supports the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill, and it was interesting to see the real level of interest shown by the people wanting to make submissions on this issue. There were some 257 written submissions and, of those, 71 people were heard before the Law and Order Committee. I think this is pretty much a reflection of New Zealand as a country where traditionally a lot of people have been keen on hunting. We have got nearly 230,000 people who are licensed to own firearms. I declare my interest as being one of those persons. I use firearms for pest control on my farm, and when I get the chance I enjoy deerstalking.

I think that we do have a problem with firearms in this country, but it is not one that is being addressed by this bill. Actually, the worry that I have is not encompassed by this bill at all. It is the fact that this year we have seen, too often, the inadvertent shooting of one hunter by another hunter who has not followed the basic rule of firearm ownership, and that is: identify your target. I know when I hunt with professionals how seriously they take the issue of safety. There is no room for risk. If we were spending time in the House on anything tonight, perhaps it should be on how we can ensure that people who are licensed to be firearm owners actually understand the need to treat lethal weapons with the respect they deserve.

The debate at the select committee was pretty much about a balance of rights—the rights of New Zealanders to legitimately own firearms to use for pest control or hunting versus the right of the public to be protected from the proliferation of weapons in the hands of people who are improper people to hold those weapons. If we look at the history of this country, we see that we have not been without incidents of mass slaughter of people by individuals, sometimes for reasons of mental health or whatever. I think of the case of Stanley Graham, early in the last century. He did not have a military-style semi-automatic; he had a single-shot rifle. Nevertheless, he killed 10 people, including a number of policemen. We think of David Gray and of course, not in New Zealand but within our recent memory, we think of Anders Breivik. He did have military-style semi-automatic weapons and was able to engage in the mass slaughter of innocent people in a way that horrifies every member of this House. So the need for balance is very clear.

The bill does four things, and I endorse each of the purposes that are set out. First of all, it defines what a military-style semi-automatic weapon is. The definition had been thrown into some doubt by a High Court decision in, I think, Palmerston North, by Justice Mallon, which the police said created uncertainty as to how you define a military-style semi-automatic. Well, I think that the definition under this bill is pretty clear: a firearm that, after being loaded, fires and ejects a cartridge case and that chambers another cartridge with each pull of the trigger. That is the semi-automatic side of it. The military-style side of it is set out in other characteristics: a magazine that contains either 10 or 15 rounds, and a firearm that has a pistol grip. I support that definition.

I also support the allowing of regulations to be made to alter that definition. Regulations can be a useful tool of the Government to respond immediately and without the detailed process of the passage of legislation. But that in itself has some risks. When you make changes by regulation, you deprive the public of a chance to make submissions on the legislation. That is an important part of democracy. You also deprive this House of the ability to scrutinise whether those regulations are justified. I think the select committee did the right thing in saying that the power to make regulations was a restricted power and that there needed to be subordinate validating legislation brought in within a specified period of time. I think that finds the appropriate balance.

Thirdly, the bill allows an appeal to the District Court where a firearms owner believes that his or her firearm has been wrongly classified as a military-style semi-automatic.

Fourthly, but not the least of the provisions in this bill, the bill provides a restriction on the importation of airguns that have the appearance of a restricted weapon, a pistol, or a military-style semi-automatic. It was of concern to the select committee that the police, literally on a weekly basis, are dealing with cases where somebody brandishes a firearm that could be mistaken for a lethal weapon. This happens sometimes with people who are drunk or drugged. The police are cast in a hugely unfortunate situation of seeing somebody with a weapon that may be lethal. Their lives might be in danger, the lives of other innocent people might be in danger, and perhaps on rare occasions the individual with an imitation firearm can end up being shot.

I think it makes sense to prevent the importation of airguns that could be mistaken for real weapons. The police take these incidents very seriously. It is a priority response that involves armed police, and it sometimes involves the armed offenders squad. They believe that this is a change that is appropriate, and I agree with the position they have taken.

Another issue at the Law and Order Committee was the question of community input into the making of regulations and legislation. I know a lot of the leaders in the hunting community. I know them to be responsible people, and I know them to be people who have a detailed knowledge and expertise, which means that their input into the technical side of legislation and regulations could be really helpful. Labour supports the setting up of a statutory body where people can give advice on this sort of legislation. But we were told that making an amendment to the legislation was beyond the scope of this bill. It was also a matter of common sense that if you are going to set up a statutory advisory body, it is not just for the very narrow range of issues such as those we are addressing in the House tonight; it is on the wider area of proper legislation and regulation of firearms in the community. So we maintain our support for the idea of having a statutory advisory body, and we would certainly support the recommendation of the select committee that this is something that does need attention, albeit not in this bill as it is set out.

I want to finish by commenting on the ACT minority view on this bill. When I read it I thought it was a submission from the National Rifle Association in the United States, which takes the approach that it is an absolute right for any individual to control a lethal weapon and that the State has no role in interfering with that right. I beg to differ. I have seen the results, as has every member of this House, of such a policy in the United States. In many states you can go into a store, without a permit, and purchase a pistol that can be concealed, or purchase a military-style automatic weapon, and time and again we have seen the tragic consequences of such a policy.

I say to the ACT Party, get real. Make sure that in this country we can have legislation that applies proper restrictions without unduly restricting the legitimate right of responsible people in this country to use firearms. The fact that the ACT Party gets less than 1 percent in the polls—actually, zero percent at the moment—is a reflection of the fact that it takes such an extreme libertarian view. I believe that this legislation, by comparison, gets the balance right, which is why the Labour Party will be supporting this bill though to its third reading.

MARK MITCHELL (National—Rodney) : I would just like to support the comments that were made by my colleague Kris Faafoi earlier, who is also a member of the Law and Order Committee with me, in congratulating the chair of the committee, Jacqui Dean. I also congratulate the Minister the Hon Judith Collins, and the Hon Anne Tolley, on bringing this bill, the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill, to the House. It is a very important bill, and it is important because it is focused on the safety of the general public. This amendment bill is in line with National’s programme to build a safer New Zealand with a focus on staying tough on criminals and protecting the rights of victims.

I would like to come back to Mr Richard Prosser’s speech, in which he made some very good points and went into a lot of detail about firearms. But only a very small percentage of New Zealanders would ever be involved in that sort of detail or would ever understand that sort of detail. With many of these imitation firearms, air rifles, and air pistols in circulation now in New Zealand, most members of the general public would never be able to tell the difference between a legitimate firearm and one that is an air rifle or an imitation. It is very, very difficult to tell the difference between them.

In terms of how dangerous they are, let us not forget that it was very, very sad to see the loss of Sergeant Don Wilkinson, who in the performance of his duties was chased down by, I think, two offenders. He was shot with an air rifle and killed. The reality now with these high-powered air rifles is that they are able to deliver a fatal shot. They are able to kill people.

That brings me to the tightening up of the import controls. I think it is so important that we have taken this positive step in terms of now giving the police a lot more control and oversight of who is responsible enough to import these types of weapons into the country. When an armed and dangerous offender walks into a bank carrying a military-style replica or PSP air rifle and shoves it in the face of a bank employee, the psychological stress and harm is no less diminished than had it been a high-powered rifle. People do not know the difference; they cannot tell the difference. There is no upside. Mr Clendon made a very good point. Even in relation to an offender, if an offender picks up a firearm, even if it is a replica, and walks into a bank, he is probably asking for what he gets. However, he is putting the police in a situation. When they confront him they have no choice but to treat that firearm as a proper high-powered weapon, even if it is a replica or an air rifle.

So it is with great pleasure that I am able to stand in support of this bill. I support the classification regime, which will be very similar to that administered between 1992 and 2008, and which was generally understood and accepted by the firearms community. But this bill will add a lot more clarity around that legislation. So it is with great pleasure that I do stand in support of this bill. Thank you.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : I just intend to take a short call to reiterate Labour’s support for the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. Essentially what this bill sets out to achieve is to make the job of the police a little easier in terms of definitions of the weapons that they may find they are dealing with in their day-to-day jobs. Of course, the genesis of this legislation came from the decision made by Justice Mallon in the High Court in Palmerston North, which the police contend made it more difficult for them to define which firearms are military-style semi-automatic weapons. I have—and many colleagues will have done the same—spent some time out on the beat with the police. For those colleagues who have not had that experience yet, I wholeheartedly encourage them to undertake it.

It makes the job of the police easier when there are clear definitions in terms of their role, in terms of what they can and cannot do, and in terms of what the public can and cannot do. Then the police have very clear parameters about how to enforce the law. That, I think, is essentially what this bill is about. It ensures that the police have simple and clear parameters around the military-style weapons that they may encounter when carrying out their jobs. I understand that in this case, and in many cases, some people may feel that this bill in some way affects their civil liberties, or affects their right to do whatever they will. But that is the natural balance that we have in a democracy—the balance between people’s civil liberties and the community’s right to be able to ensure that people are safe, and that we give the police the tools to be able to carry out their role as best they can.

That, I suppose, is why I have very significant concerns about the minority report offered by the ACT Party. I think it is so far out of touch with where New Zealand is at. I must admit I probably would have completely missed it had Jami-Lee Ross not referred to it in a slightly obscure fashion by not naming the party attached to the report. But this is old-fashioned, United States Second Amendment right-to-bear-arms stuff. As my colleague Phil Goff pointed out, this has demonstrably failed in the United States. Its Second Amendment came about in 1791, and frankly that is where it belongs—many centuries ago. It is not, I think, an attitude or an approach to law and order that is relevant today or that should be tolerated in a country like New Zealand today.

I will be interested to see how the current member for the ACT Party, John Banks, will vote on this. I do not think that that minority report is the type of view that he would support personally. I hope that perhaps with his influence in the House the ACT Party’s view may change. The Labour Party does support this bill. It is a significant step in ensuring the good rule of law in our community and the safety of our community. For that reason we are more than happy to support it.

LOUISE UPSTON (National—Taupō) : I am pleased to take a brief call in the second reading of the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. There has been quite a lot of discussion on the fact that some of those who follow the pursuit of hunting in this country would like to have more flexibility around the sorts of weapons that they are able to use for their sport. I guess it is about balancing the need to have greater safety and security in our community. I would have to say that I have had the unfortunate experience of seeing the damage that a firearm does to the human body. If there was one thing that I would like to see less of in our country, it is that.

One of my former colleagues talked about the fact that we actually have people in this country who train these sorts of weapons on others deliberately. That is why I am more in favour of anything we can do to control the use of firearms that would in any way—accidental or otherwise—damage those in our society. Thank you.

Hon JUDITH COLLINS (Minister of Justice) : I move, That the Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill be now read a second time. The bill amends the Juries Act 1981. The bill ensures that people who have been sentenced to home detention for a period of 3 months or more within the previous 5 years cannot serve on a jury. It requires that a person serving a sentence of less than 3 months’ home detention be deferred or excused from jury service if they are summonsed while serving their sentence, and it ensures that the registrar may permanently excuse people from jury service if they meet certain criteria. The bill also allows for the address details of jurors to be removed from the jury panel and put on to a separate document that can be viewed only by eligible people. This ensures privacy and security for potential jurors.

I would like to commend the Law and Order Committee for its thorough consideration of the bill, and for the sensible amendments it has proposed. The committee received three written submissions on the bill, and heard two oral submissions. The committee also asked for additional advice from relevant parties in relation to the amendment allowing people aged 65 years and over to be granted a permanent excusal from jury service on written request. The committee considered this advice when deciding whether the bill should be amended. I note that some submitters, particularly the Human Rights Commission, were concerned about the clause allowing permanent excusals for those aged 65 years and over. The Human Rights Commission submitted that allowing people aged 65 years and over to apply for and be granted permanent excusal from jury service was against the New Zealand Bill of Rights Act, and is ageist.

The committee considered the Human Rights Commission’s concerns, and the majority did not agree with them. The bill responds to the actual circumstances of those aged 65 years and over, and is in answer to thousands of requests received by my office and the Ministry of Justice from members of the public in that age group requesting permanent excusals. It recognises that people aged 65 and over have contributed to society for many years and deserve to be recognised for this contribution. Currently, people aged 65 years and over can apply for an excusal as of right each time they are summonsed for jury service. The bill simply extends this right and allows those who request a permanent excusal from jury service to be granted one. This is another benefit for people aged 65 years and over, and can be likened to universal superannuation and the SuperGold card or the transport discounts available to this age group.

I strongly believe that there should not be an upper age limit for jury service, and that people aged 65 years and over are a valuable resource to this country and should have the ability to discharge their duties as a juror if they wish. All people eligible to serve on a jury are actively encouraged to participate through the courts’ advertising campaign.

The bill also responds to concerns surrounding access to juror addresses and details, and recognises that these details should be protected. The bill allows only certain eligible people to view the protected address details. As introduced, the bill defined constables as eligible people who could view the protected particulars. The committee recommended an amendment to this clause after considering a recommendation in a submission. The amendment ensures that police employees who are personally connected to the facts of a case, or to a party to, or to a witness or a prospective witness in, proceedings are not able to view the protected particulars. The bill also ensures that contempt of court penalties are available where eligible people allow the protected particulars to be viewed or copied by someone ineligible.

The bill recognises that a fundamental concept of the law is the right to a fair trial. To ensure that people who represent themselves in court are able to exercise their right to challenge potential jurors, the bill allows a barrister or solicitor to be appointed by the court to exercise this right on their behalf, and allows the appointed barrister or solicitor to view the protected particulars. By talking with the self-represented litigant, the barrister or solicitor will be able to determine geographical challenges without revealing the potential juror’s protected address information.

The bill’s purpose is to protect the integrity of the jury system, enhance the administration of the jury system, and ensure jurors’ privacy and security are protected. I commend this bill to the House.

Hon PHIL GOFF (Labour—Mt Roskill) : This is a relatively straightforward and simple bill, so limited in its real impact, I guess, that no regulatory impact analysis has been done because it has only a minor impact. I think the Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill, however, does some useful things, and on that basis is worthy of support.

The bill basically does three things. Firstly, it prevents persons who have served a home detention sentence of at least 3 months from qualifying for jury service for 5 years. It is a limited exclusion of somebody who has broken the law to an extent that they have received more than a minimum sentence of home detention. Secondly, it empowers registrars to excuse permanently from jury service people who have chronic ill health, or a permanent disability, or who are 65 years and over. I want to come back to that point. This is not an exclusion of people on the basis of their age. People over the age of 65 have an important contribution to make. They make it competently. We would be in some trouble if, in fact, we excluded, in an ageing population, those over the age of 65 from being on a jury. Thirdly, it aims to help maintain the privacy, the safety, and the security of jurors by withholding their addresses from the accused person.

Part 1 of the bill deals with the question of jury service. It says that anyone who has committed an offence and who has served a sentence of more than 3 months on home detention will be prevented from serving on a jury for a 5-year period. There is a permanent exclusion, I understand, if you have actually served a jail sentence. The rationale is, I guess, reasonably simple: if you commit a crime that is serious enough to earn you home detention, then you are not really in a position to stand judgment over another person’s guilt or innocence for a period of time. I do not think that is a big deal.

The bill also allows people to seek exclusion from jury service on the basis of their disability, or their ill health, or if they are over the age of 65. The important point here is that those who seek such an exclusion are excluded permanently from service. I said before that the important point is that this does not introduce an age limit for jury service. It is worth considering some of the submissions, however, that were made to the select committee, because a number of groups felt that by introducing a permanent exclusion for those over the age of 65 who sought it, we would be stereotyping and we would be reflecting on the ability of those people to stand in judgment of others by being part of a jury. I basically disagree with their arguments, but I feel obliged to present the arguments that they made to the select committee.

The Human Rights Commission, for example, said it “considers that the proposed amendment has the effect of perpetuating stereotypical ideas about older people’s ability to contribute constructively to society and, given changing demographic profiles, has the possibility of impacting on the right to trial by one’s peers.” That is the Human Rights Commission. The National Council of Women also said “there are some reservations in regard to the proposed change to the age limit for being excused from jury service permanently.” The New Zealand Law Society did not take a position on the broad policy of the changes proposed in the bill. It simply emphasised, and I agree, that the fundamental principle that must underlie all criminal justice legislation is that the right to a fair trial is an absolute right. I think it would be a different situation if the decision to exclude was not one that was sought by the individual wanting exclusion and was not specific to the individuals who request it. I think on that basis the permanent exclusion provision is acceptable.

I want to now come to Part 2 of the bill, which provides protection of particulars of jury list information in order to maintain the privacy, safety, and security of jurors. It is appropriate that we should protect the privacy of people who serve their community in that way. It would be thoroughly unacceptable to have those who serve on a jury subsequently followed up by the accused, by the media, or by anybody else and grilled about why they made the decision they made. That would be in contradiction to the basic right of a person who does their duty for their community, serves on the jury, to maintain the confidentiality of their position and their identity. A party to court proceedings will be able to inspect the particulars of the jurors, such as their address, only through a barrister or a solicitor. That lawyer, in turn, cannot disclose to his or her client the contents of the protected particulars. There is a reason why this clause has been introduced, and that was a case back in 2010 when an individual who was representing himself as a defendant corresponded with people using his access to the names and addresses of those on the jury panel. As I said before, that simply is unacceptable behaviour, and we need to protect against it. The bill also, for that matter, requires that constables who are parties to proceedings should not be able to view those protected particulars.

Although this is the right thing to do, I do not think we can be naive about what the impact might be. It is not a foolproof way of stopping any party to the proceedings being able to track down the addresses of the jurors through other means. It might be by looking up the telephone book; it might be by looking at the electoral roll. The protection that we provide is something that I do not object to—it is worthwhile—but it does not provide a full level of protection to the jurors in that way. It just makes it slightly less easy for somebody determined to find out where the jurors live and how to contact them, because they will not be given that information directly. It would help if you were a juror by the name of Smith rather than Tisch, Mr Assistant Speaker. It might be rather easier to track you down than somebody with a name that is rather more common.

In conclusion, this is a bill neither with earth-shattering consequences nor one that is particularly controversial. The impact of the changes it makes are relatively minor, but I believe they are worthy of support, and we will be supporting the second reading of this bill.

JACQUI DEAN (National—Waitaki) : The purpose of this bill, the Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill, is to improve the jury’s administration and also maintain its integrity. Most important, and I think this is important and worthy of mention, it helps maintain jurors’ privacy, their safety—most importantly, their sense of safety—and also their security. We are ensuring through this bill that victims are heard, they get the support they need, and they are not brutalised again when defendants are tried.

I do not think we should underestimate the impact on the juror whose address and particulars were revealed to a defendant. It is something that must be guarded against, and this bill seeks to do just that. Although I acknowledge that one cannot completely hide jurors’ particulars—of course there is the electoral roll and of course there is the phone book—I believe we should be doing everything we can to make jury service a safe activity for those New Zealanders who are called upon to do that.

Just on that matter, the provision in the bill that gives registrars the power to grant a person permanent excusal from serving on a jury on the grounds of disability, chronic health problems, or, indeed, age, was I suspect misinterpreted by several of the submitters to this bill, who labelled it as ageist. I do not believe it was ageist. I believe it provided a little bit of getting rid of some form-filling for those over 65 who, for whatever reason, decide they do not wish any longer to serve on a jury should they be called. This provision in the bill provides that they do not have to make application each and every time. The view of the Law and Order Committee was that, in fact, this was a good thing. Rather than making any comment or any ageist reflection on people, the select committee regarded it as a good provision, one that would make life easier for those people who, for whatever reason, decide they do not wish to serve any further on juries.

The main provision of the bill is to remove the addresses of potential jurors from jury lists. It allows the prosecution, the defence lawyer, or the court-appointed adviser to defendants representing themselves to have automatic access to all that address information on request, but it does prevent the accused from ever seeing the potential jurors’ addresses by prohibiting the defence lawyer or the court-appointed adviser from showing the addresses to the accused. It extends section 14A(6) of the Juries Act, which makes it clear that misconduct in relation to jury lists may be treated as contempt of court, to include the provision that the act of showing the accused or any other persons jurors’ addresses will now be regarded as contempt of court.

Further changes in the bill as it is returned from the select committee include preventing certain people sentenced to home detention from serving on a jury. This closes a loophole in the Sentencing Amendment Act 2007, which created home detention as a sentence in its own right but failed to amend the Juries Act. This meant that those who had served or were serving home detention could still sit on a jury panel. People convicted to a custodial sentence of more than 3 years would be barred for life from sitting on a jury.

Further changes to the bill ensure that offenders who are serving a sentence of less than 3 months’ home detention are excused from jury service or are allowed to defer their service until they have completed their sentence. Registrars are given the power to grant a person permanent excusal, which I have already mentioned. Currently, a jury list must contain the name, occupation, date of birth, and full address of potential jurors. This very important point—this sticking point for jurors—has now been corrected. I commend the bill to the House.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : The Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill is, I guess, one of those bills that does so little it would be very, very difficult to find a reason to oppose it. It is one of those bills that will certainly do absolutely no harm, but I think we can all agree it will probably do very, very little that is particularly positive, either. That is reflected in the fact it was determined that no regulatory impact analysis was required, given that the proposals set out in this legislation are expected to have no or, if any, minor impact on businesses, individuals, or not-for-profit entities—in fact, anybody in the judicial system in general, really.

If I were to find a reason that I may have some reservations about it, it would be the fact that predominantly it seems to focus on who cannot or may not serve on a jury when, really, what we should be doing as a nation is trying to encourage people to participate in the judicial process, to take up their democratic responsibilities, I guess, and to participate in the judicial process by being a member of a jury. I personally have been called for jury service on four occasions and have yet to make it anywhere near the courthouse, all for quite—

Hon Member: Slacker.

IAIN LEES-GALLOWAY: I accept that. I would really have liked to be able to participate. The first two times that I was called up, I was actually studying, and somehow or other the jury service that I was called for coincided with exams. The third time, I thought I was going to make it. We got to the day before and we had a spate of illness at my workplace, and my boss came to me and said: “I’m sorry. I really don’t think we can release you for jury service.” We had this flurry of activity where we contacted the local court and managed to get me excused. The fourth occasion was immediately after the 2008 election, and my very recent election as a member of Parliament precluded me from being able to take up jury service. So as an individual who would like to participate, I think we should find more opportunities to encourage people to participate in the judicial process.

But, of course, in respect of two out of the three main provisions of this legislation, one is to preclude those people who have been sentenced to home detention for more than 3 months from jury service, and Labour supports that provision in the bill. It is a perfectly legitimate thing to do. But it is removing the opportunity for some of our citizens to be able to participate in jury service. The bill also offers the opportunity—and it is just an opportunity—for those aged over 65 to excuse themselves from jury service. There would be perfectly legitimate reasons why someone who is over 65 would like to take up that opportunity, and we support it. But I do make note of the fact that these are two provisions that potentially reduce the pool of people who are available for jury service in New Zealand, when we already know that really not enough people are taking up the opportunity to participate in jury service in the way that they should.

The third item in this legislation, which I am sure the whole House will support, is the protection of jurors’ information. We have had examples of why this is important—of recent occurrence, in fact—in New Zealand, and I think that that is something that potentially could encourage people to take up jury service: knowing that there will be greater protection of their information. Of course, there will not be absolute or guaranteed protection of their information; there are other ways that people could find out jurors’ personal details. But in this case Parliament is doing what it can, I think, to provide and afford the protection that is possible to people who are serving on juries. Of course, that will be important in encouraging people to participate in trials that may be of a particular nature, where people involved may have very strong feelings. There may be malicious intent towards jurors, and it is important to give ordinary citizens who take up that role as much protection as we are able to.

As I said, this is really a fairly minor bill. One suspects that it is just something the Government is pushing through the House to say that it is acting in the area of law and order, that it is tough on crime, or whatever other sound bites that it would like to use. It is not a bill that will do an awful lot, but it certainly will do nothing that will be detrimental, and for that reason alone the Labour Opposition is prepared to support it.

DAVID CLENDON (Green) : I am pleased to take a short call on this Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill. I think we would all agree that the basic principle of using juries does not need defending. The idea of a panel of one’s peers sitting in judgment or consideration of one’s innocence or otherwise has got a very long history. It is well established, well respected, and I think that certainly participation in jury service is an expression of our rights, and indeed, our responsibilities. It is a form of engagement in civil society that I think is valuable and entirely valid. This bill does make some relatively minor amendments, but it does make one or two useful amendments as well, and for the third time this evening the Greens will be supporting this Government measure, which might cause some members of the Government to go and have a lie-down, to get over it. But I assure you that by Thursday normal service will be resumed, and we will be critiquing the Government’s Budget very vigorously. That is something for you to look forward to.

More seriously, we do see value in some of the provisions of this bill. It seeks to protect to some extent the integrity, or at least the perception of the integrity, of the jury system, to the extent that it does either exclude or defer some participation, and it looks at issues around the potential for people to be excused, either temporarily or, indeed, permanently. The question of disqualifying a person who has been subject to a period of home detention of some 3 months or longer did give us some reason to consider that fairly carefully, but on balance we see that this provision brings in line people on home detention with those who have a custodial sentence. In that sense, given that in 1981, I think, when the Juries Act, the substantive Act, was enacted, home detention was much less commonly used, and we do use it now in forms and for reasons that formerly might have attracted a custodial sentence, that provision would seem sensible. It brings non-custodial home detention sentences more in line with custodial sentences in this context, and that would seem to be a reasonable thing to do.

Equally, allowing for jury service to be deferred for a person who is currently serving a sentence of home detention of 3 months, or indeed up to 3 months, again seems sensible. I do not necessarily think that a person serving a sentence of home detention would not be a fit and proper person to sit on a jury. We absolutely oppose in principle denying people normal democratic participatory rights simply because they are inmates, which is why we did actively and vigorously oppose the very poor piece of law that was passed, I think, earlier this year or late last year, that denied all prisoners the right to vote. That was a retrograde step, and one which we continue to regret. In this instance, however, the idea of deferring the participation of a person on a short home detention sentence I think is more about the perception. There could be public unease at the thought of somebody currently serving a sentence also sitting on a jury at the same time, and I think we need to respect that. So on balance we have no particular difficulty with that provision, given that that person, at the completion of their 3-month sentence, does have the right—and, again, the responsibility—to sit on a jury and to participate.

The bill allows for the permanent excusal—the word has been used and I will adopt it, though I am not sure it is a real word—of people by reasons of chronic ill health or disability, or of people over the age of 65. We are aware that this excited quite a lot of opposition—in particular, the question of the age of 65 being appointed at which people could choose to permanently excuse themselves from jury service. Different organisations and individuals suggested it was ageist, said it was paternalistic, and said it was excluding an increasingly important demographic, but I think the key to it is that it is a voluntary thing. We would utterly resist any imposition of a barrier to participation on juries on the basis of age, disability, or illness, but in this instance it is a voluntary thing. It is fair to say that for some people with severe disabilities, it could be extremely difficult for them to participate actively on a jury, and they ought to have the right to be excused.

Certainly, I think we will have to take care that this provision to allow for permanent excusal does not somehow morph into an expectation that we need not provide for the possibility that people with disabilities, for example, might choose to actively participate. We must always be alert to the fact that a person’s disability must not in any way exclude them from taking the choice to participate in a jury, as does any other citizen.

I have mentioned in passing that I do agree, I think, with the Labour Party minority report, which suggested that perhaps we need a sort of second-chance provision for people, particularly over the age of 65, who have chosen to take the permanent excusal route but who might think better of it. One can easily imagine a person in their mid to late 60s perhaps suffering a spate of ill health or some other life event that really does not put them in a mind to sit on a jury, who might take this permanent excusal road but then live to regret it some short time later, and a year or two later might wish to participate again. I think it might be helpful to consider at the Committee stage an amendment that might allow a person to take back the right to be a participant after excusal on the basis of age or disability—whatever it might be. I suggest that that sort of an opportunity to change one’s mind might be something that would not be exercised routinely or often, but I think it would do the amendment no harm to at least make provision for somebody simply to change their mind—for their situation to change, for their health to improve; whatever it might be—and to allow them a second chance at this participation in a very important civil service.

I think the second part of the bill—the second major part of the bill—at least talks about protecting the jurors’ personal details, their address, and other details. Mr Goff has quite clearly articulated the difficulty with endeavouring to make jurors’ details absolutely secret. In one sense, it is not desirable that people should feel the need for absolute secrecy. It is, after all, a jury of one’s peers. People should be able to sit on a jury with a degree of security, knowing that it will not cause any ill effect to them. There was, however, one instance where a person defending himself did get the opportunity to cause some discomfort to members of a jury when he was able to write to them directly at their home address. That could give people considerable cause for concern, and quite legitimately so. So to the extent that this bill does endeavour to put in place another layer of security and another layer of protection for people whose details might otherwise be readily available, it is something we can quite happily support—though again, it is only a partial remedy, and I am not sure any of us could come up with an absolutely ideal outcome on any of this.

I think, in passing, that there are things that this bill does not address that it could usefully address, and one of those would be compensation for jurors. I did once serve on a jury, and at that time I had the luxury of an academic salary. I was able to sit on a jury for some 5 or 6 working days and suffer no material cost. I think there was $20 or something, and one’s bus fare was provided. To me it was irrelevant; I was in a situation where I was able to participate. That is not the case for people who might be working part-time or working on an hourly rate. I think that as a general principle, people ought not to suffer any material disadvantage or loss through serving on a jury, and I think it unfortunate that the opportunity was not taken in this bill to address that very real difficulty, particularly for people on low incomes or fixed incomes, or for people who do not have the luxury, as I said, of a salary or a secure financial background.

With those slight reservations, we are nevertheless supporting this bill and will continue to do so. Thank you.

JAMI-LEE ROSS (National—Botany) : We seem to be on a roll tonight. We are having legislation after legislation being supported by the Opposition parties—the Labour Party and the Green Party. One might start to wonder whether we are actually doing the right thing if we are getting so much support from the Opposition, but we just take it as a sign of approval. I am expecting the obligatory speech from Mr Prosser, though, from New Zealand First, opposing this piece of legislation, the Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill. That seems to be the trend tonight.

I think this is a very admirable bill and it is worthy of the House’s support tonight. It makes some important changes for juries, and it protects jurors, who are doing community service, effectively, on behalf of the nation. I do take the point that Mr Lees-Galloway was making that we should be encouraging more people to serve on juries. I have to say that we cannot get much more encouraging than making jury service mandatory. It is mandatory in the bill, and the Juries Act itself really does talk about those who cannot serve on a jury, because the assumption is that everyone else is eligible to serve on a jury. If the biggest problem Mr Lees-Galloway has is about potentially not being able to serve on a jury because he is a member of Parliament, I am sure we can easily remedy that for him if he is wanting us to.

The good changes in this legislation are really about the protection of jurors whereby their address details will not be available to defendants who are defending themselves, or who have their lawyer in a position where the lawyer may wish to provide the address details to the defendant. That would not be allowed. It may not be a huge problem that we have seen happening a lot, but there has been an incident where a juror was caused some discomfort and was harassed in a way by a defendant—in fact, by somebody who I understand was convicted of a crime—and that simply cannot be allowed to happen. Jurors are doing this on behalf of the community for an effective justice system. We need jurors to be putting their time in to serve on a jury, and I think if the State is requiring people to serve on a jury then the State should be protecting those people from any potential harassment going forward.

Other changes around who can serve on a jury around home detention, whereby somebody who is serving a home detention sentence of more than 3 months is unable to serve on a jury, are also a welcome move. I think New Zealanders would accept that if one is sentenced for a crime, then that sentence, even if it is just home detention, does lose one some rights and some abilities, and serving on a jury is one of those. Changes around ensuring that people convicted of a custodial sentence of more than 3 years are barred for life from sitting on a jury are also a welcome move.

I have just one final point before I conclude my brief call in support of this legislation. I have been listening to the comments that have been made around those who are aged 65 and over, and the changes that are made there. I think what is important for us to remember is that at the moment if someone is aged 65 or older, they can be excused from a jury. The only real change here is that rather than them having to be excused on a case by case basis, it can be a permanent excusal, which simply just makes it easier for the registrar and for the person involved if they wish to voluntarily be excused permanently.

This is a short piece of legislation, but it is important for those serving on juries. It is important to make this change for the justice system, and I commend the bill to the House.

MARK MITCHELL (National—Rodney) : It is a great pleasure to be able to stand in support of the Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill. I guess one observation that I have always made with regard to members of the public being called in to perform jury service is that often they are not really exposed to the seedier side of life and criminal activity. Even though they are in the safe and controlled environment of a courtroom, if they are on a particularly nasty case, such as a rape, a serious assault, or a homicide, it can be quite intimidating for them to have to turn up to court and have to face an offender and aggressive witnesses. I think it is very important that we do all that we can to make them feel safe and make them feel secure, so that they are able to turn up and execute their duties as a juror in a focused and objective manner.

I think that the measure that is being put in place in terms of increasing from 30 kilometres to 45 kilometres the radius from a courthouse is a very good one, because it means that the pool of available jurors is going to increase significantly. Going on jury service can be a big disruption to your life. Some of these court cases can run for up to 2 weeks, 3 weeks, or a month and for someone who is in permanent employment it can actually be a big disruption for them. Some of the measures that are in this bill are going to go a long way to actually help relieve some of that stress on people.

The other thing that I really like about this bill is the fact that people aged 65 years and over have got the option available to them as to whether or not they want to serve on a jury. Actually, in my experience those people who are 65 years and older—and the Minister made a very good point here—are still very active. They still want to be involved. They do not want to feel like they are being put out to pasture, and many of them will present themselves for jury service. But it is also nice to know that should they feel they are not in a position, either through health issues or not being able to cope with the stress, to execute the duties of a juror, then they also have the ability to decline jury service.

So it is with great pleasure that I stand in support of this bill. I look forward to the Committee stage. Thank you.

• Bill read a second time.