SUE MORONEY (Labour) : Last night when we were debating Part 1 of this bill, the National Party was asking what these issues had in common. I just want to spell it out, because this debate is about the purpose of this bill. National members asked what having meal breaks and rest periods, having the right to breastfeed at work, and having the right to take a personal grievance against one’s employer if he or she tries to disadvantage one for joining KiwiSaver, have in common. Well, I will tell National members what those things have in common: it is all about fairness at work. It is all about having fairness at work, and it is all about ensuring that when there are mean-spirited employers who will deny employees their proper meal breaks, or will try to disadvantage them because they dare to save for their future or dare to save for their retirement, all these things are about fairness at work. The Labour-led Government will not stand by a minute longer to allow that unfairness to continue in the workplace, and that is what it is about. So the National Party needs to understand that workers do have rights at work, that it is about fairness, and that—

Paula Bennett: Send it back to the select committee.

SUE MORONEY: The member says to send it back to the select committee. There was a very full select committee process over KiwiSaver. The employers understood the rules—they knew exactly what was being asked for there. And the National Party voted against KiwiSaver as well.

The CHAIRPERSON (Hon Marian Hobbs): Before I call Dr Wayne Mapp, I will ask whether we could have less barrage. Both sides know well, I say to Miss Bennett—less barrage.

Dr WAYNE MAPP (National—North Shore) : I should correct an impression that you gave—that this is a hard-working Government that would work through to midnight. In fact, Government members were so lazy that they actually lifted the Committee at 10 o’clock—

The CHAIRPERSON (Hon Marian Hobbs): Apologies, and you know very well that we were not in urgency and that we finished at 10 o’clock as per normal, and as per the rules of the House. No game-playing. On you go.

Dr WAYNE MAPP: We are debating, as is quite plain, not just the purpose provision but also this Supplementary Order Paper. I know that the Government thinks it has done a good thing for workers, but in fact it totally misunderstands the situation. The Minister in the chair, the Hon Trevor Mallard, has been in continuous conflict with the Employers and Manufacturers Association (Northern) Inc.—not that it is a surprising situation for this particular Minister to be in continuous conflict with whomever he is talking to—and Government members have always misunderstood the point that the Employers and Manufacturers Association (Northern) was making. It is surely an issue of choice whether someone joins the KiwiSaver programme, and the whole point of the Employers and Manufacturers Association’s concern was that it is the total remuneration that ought to be looked at. People should be able to say: “Well, I’m going to be in KiwiSaver, and I will get my remuneration through that.”, or “I’m not in KiwiSaver, and I don’t want to be disadvantaged against those people who are in KiwiSaver.” So, in that instance, some people will simply want to have the cash in hand. That is particularly true of lower-paid workers.

Certainly, there are a significant number of workers in KiwiSaver—I understand that—but I would suggest to members that the ratio of lower-income workers is not nearly as high as middle-income workers. The truth is that if one has more money it is usually easier to save, and those are the groups that are choosing to join KiwiSaver. Actually, I might add that the 700,000 includes a very large number of children who were joined up by their parents, who are there to get the $1,000 without having to make any further contributions. Often the Government tries to pretend that that figure of 700,000 represents people who are in the workforce. Well, that is actually not the case anyway—many of them are children.

I suggest to the member who spoke before, Sue Moroney, that, in fact, lower-paid people are not joining KiwiSaver at nearly the same frequency as middle and higher income earners. So that is why the Employers and Manufacturers Association’s view on KiwiSaver is the correct view, because it is all about people making choices. For lower-income people, that is a particularly important choice they need to be able to make, for many of them actually need the cash in their pockets—not put into a savings scheme. Paying the petrol bills, paying the food bills, and paying the interest or rent is rather more significant than saving for the future. Indeed, many of those people will simply see New Zealand superannuation, supported by the superannuation scheme, as probably their protection.

I want also to correct another misapprehension that the Government is labouring under. Sue Moroney explicitly said she did not expect National to support this bill at its third reading. I want to make it very clear to the Government, and, more important, to New Zealanders, that we are supporting the bill its at third reading—that is not news. Whilst we are opposed to the insertion of the Supplementary Order Paper put in this way, we do not see that as such a large issue that would then cancel our vote altogether for the broader principle around fairness in the workplace in relation to meal breaks, and mothers who wish to breastfeed at work. We do understand the importance of those claims, and therefore wish to support the bill. That is indeed why the bill has gone through the parliamentary process relatively quickly. It was introduced only earlier this year, and it is now going right through into law at this point in time. And that does actually represent a level of consensus. I know it pains the Government to find out that we are supporting it. I guess the Government would prefer us to vote against it, but, in fact, we are supporting it.

CHRIS AUCHINVOLE (National) : I recall the way this Employment Relations (Breaks and Infant Feeding) Amendment Billwas introduced to the public once it had been decided on. I was actually down at Blackball on the West Coast, and indeed, Madam Chair, you may have been there yourself at the time. You too will possibly remember the occasion of the 90th anniversary celebration of Paddy Webb and others’ activity in obtaining half-an-hour’s crib time for coalminers. This was an interesting occasion because there were historians down there who painted an interesting picture of the whole sequence.

Let us address Part 1 of the bill. It refers largely to breastfeeding opportunities for mothers and to rest breaks. It is a perfectly sensible bill and one that National is supporting. It was introduced, as I say, at Blackball. Maryan Street introduced it to the assembled gathering that was down there to note the 1908 strike, which led, eventually, to the crib break of half-an-hour. There were quite a few interesting aspects of that. There were some historians there, and there was also a High Court judge there, who corrected some of the myths and the legends that have crept into the memory of the litigation. An interesting point is that there had always been a half-hour crib break, which was reduced to 15 minutes at the request of the miners so they could get out of the mine a little earlier. So it was not quite as plain as it first looked. I have to say that this bill is not quite as plain as it first appeared, because here we go again. An innocent and useful little bill has been treated as a sort of miniature Trojan horse.

The bill has been loaded, in the words of my colleague Kate Wilkinson, with a “sneaky little Supplementary Order Paper”, as if by sleight of hand to include an amendment to cover disadvantages to employees signed up to KiwiSaver as grounds for personal grievance. I wonder whether this is really in the scope of the bill. I do not remember it being discussed. It certainly was not mentioned by Maryan Street down in the workingmen’s club in Blackball. She said in her splendid manner that she had received advice from the Hon Trevor Mallard that we had these new advantages for working people—breastfeeding breaks, meal breaks, and rest breaks. She did not say: “Oh, and by the way, there’s going to be another little addition that will refer to personal grievance associated with KiwiSaver.”

How long has this been part of an intended but undisclosed agenda? I do not say it is a secret agenda because it is out in the open now, but there was certainly very little advice when this bill was put forward that this provision around KiwiSaver would be part of it. I have to wonder, as a novice in the House, what other Supplementary Order Papers disguised as something else we will see slipped into bills as part of an intended but undisclosed agenda during this period of urgency. I am astonished that this is the way it is done. Is this really the ethical standard that Labour is now showing towards the end of this term? Is this Mr Mallard’s ethical standard suddenly revealed? What else will be rushed in during urgency? Ah, the Minister smiles! That indicates to me—being a trader and a bit of a negotiator—that what we have seen is just the start. Are we going to hear, perhaps, something about the situation of Timberlands down on the West Coast, where West Coast millers and West Coast communities are calling for a response from Mr Mallard and other shareholding Ministers? There seems to be silence on the issue. Those on the West Coast seem to think they have not been treated fairly.

The CHAIRPERSON (Hon Marian Hobbs): The bill, sir, the bill.

CHRIS AUCHINVOLE: Indeed. Coming back to the bill, I say that this again is a situation where something has been promised, something has been proposed, something has been discussed, and now it is going to be changed. The emphasis has changed completely, away from the original intention of the bill. People are beginning to feel “We was robbed, we’ve been cheated.” I think Paddy Webb, whom I have respect for, would have been ashamed.

KATE WILKINSON (National) : I raise a point of order, Madam Chairperson. I seek a ruling as to the relevance of the amendment to the initial question, pursuant to Standing Order 119. I seek a ruling as to the relevance of KiwiSaver to the issue of meal breaks, as it is outside the Standing Orders and, therefore, out of order.

Hon TREVOR MALLARD (Minister of Labour) : The member is absolutely right and that is why the House, before it went into Committee, unanimously passed a motion to bring the amendment within the scope.

The CHAIRPERSON (Hon Marian Hobbs): That is actually correct, Ms Wilkinson. There was a—

Hon Trevor Mallard: —motion in the name of Dr Cullen.

The CHAIRPERSON (Hon Marian Hobbs): Yes. A motion—and I have in front of me now—was moved at the beginning. It said: “I move that it be an instruction to the Committee of the whole House that it have the power to consider and, if it thinks fit, adopt the amendments set out on Supplementary Order Paper 229.” That was passed by the House, and therefore it has been agreed by the House that Supplementary Order Paper 229 is under consideration as part of this bill.

CHRIS TREMAIN (Junior Whip—National) : I raise a point of order, Madam Chairperson.

The CHAIRPERSON (Hon Marian Hobbs): Is it a new matter?

CHRIS TREMAIN: I want to clarify when, specifically, that was moved.

Hon TREVOR MALLARD (Minister of Labour) : It was moved immediately after the urgency motion; as soon as this bill was called and before we went into Committee. The member’s party supported it.

CHRIS AUCHINVOLE (National) : Just to help me with the technicalities, does that mean, then, that without that clause this particular part would not have been within the scope of the bill?

The CHAIRPERSON (Hon Marian Hobbs): Let me take the member through it very slowly. The House is master of its own destiny. In this case, a motion was put to the House, while the Speaker was in the chair, which said we should consider this Supplementary Order Paper 229 in conjunction with the bill. The House agreed to that. That is done. Otherwise, it may not have been—but the House agreed to that. I will take no further points on that.

DAVID BENNETT (National—Hamilton East) : We have just seen a prime example of what the Labour Government has been doing in the last couple of weeks. It has been doing sneaky little tricks to pass through things that it knows it cannot pass through under the conscience of the public gaze.

Hon Trevor Mallard: I raise a point of order, Madam Chairperson. The member is now referring to a ruling that you have given and to a motion that has been agreed to by the House, as was made absolutely clear. This was not sneaky; this was something that was agreed to unanimously. The member’s whips voted for it.

DAVID BENNETT: Madam Chair—

The CHAIRPERSON (Hon Marian Hobbs): You are not speaking to the point of order?

DAVID BENNETT: No, it is the speech.

The CHAIRPERSON (Hon Marian Hobbs): I will rule on the point of order. Can we just settle down on the issue. Members may make points of order about it, but they cannot say that the House has been sneaky. The House agreed to this.

DAVID BENNETT: I never implied that the House was sneaky; I just implied that Labour was sneaky. There is a subtle difference there.

The Employment Relations (Breaks and Infant Feeding) Amendment Bill is an attempt by the Labour Government to put through a couple of pieces of its policy in a bill, under the guise of something that, politically, most members of the public want to see happen. The infant feeding portion of the bill is something that is not really a debatable issue. Most members of the public perceive the need for that and for some regulation in that area.

The meal breaks portion of the bill is not such a public issue and has not required such attention. It was quite obvious in the Transport and Industrial Relations Committee that this idea was not thought through. The meal breaks component of the bill could have taken away workers’ rights. There was the potential that many workers may have engaged in contracts that gave them greater meal breaks than the mandatory ones in this bill. The bill had to be amended at the select committee once the National Party members brought it to the Government members’ attention that the bill they put forward would hurt workers. They were putting forward legislation that would take rights off workers. Can members believe that? Only the National Party members of the select committee brought that up, and it was only the National members’ good conscience at the select committee that enabled workers to retain the rights that they got in their individual agreements, rather than get Labour’s quick-fix solutions to these idealistic programmes that did not take into account the reality of contractual arrangements between employees and employers.

Today and yesterday we have been aghast at seeing that the Minister has included a portion in this bill in respect of the KiwiSaver legislation. There is a problem in respect of the KiwiSaver side of it. That programme was another piece of legislation the Government brought forward that it did not think about. It did not follow due consultation, and it did not look at what the options would be in the marketplace. One of the problems with the KiwiSaver legislation has been that employers may be able to not give a wage rise in the year following the implementation of the legislation, and to say that the KiwiSaver contribution is the pay rise. That is something that a lot of employees would naturally feel quite aggrieved to see happen. This is why that change has been brought about to the legislation—so that elements of the law in which employers could potentially take advantage of employees are able to be rectified.

But this is not the appropriate place to do that. It is not the appropriate place to put in a sneaky amendment to legislation that would mean that this part of the KiwiSaver regime had been fixed up through a Supplementary Order Paper in respect of the Employment Relations (Breaks and Infant Feeding) Amendment Bill. If the Minister had liked to do the process properly, he should have put forward an amendment to the KiwiSaver legislation and put it through the appropriate political processes, not use this method of trying to get the fix-up measures done in time for an election in a few months’ time.

Those fix-up measures are something that the National Party is now seeing and that the public of New Zealand will see over the next couple weeks. We are seeing this Government attempt, in any little way it can, to change legislation to its advantage in its last dying days in office. We will see it put up a lot more Supplementary Order Papers and amendments. The National Party will be vigilant in looking at those, because it now sees the agenda of this political party in its dying days in Government. Its agenda is to change the focus of legislation.

PETER BROWN (Deputy Leader—NZ First) : If the member over there is convinced that Supplementary Order Paper 229 put up by the Minister of Labour is sneaky, why the dickens did he agree to it going before the House? The Minister sought leave yesterday evening to extend the scope of the bill to embrace his Supplementary Order Paper. Why the dickens did the National Party agree to it, if it feels so strongly—

Hon Trevor Mallard: Moved a motion.

PETER BROWN: He moved a motion. The whole thing was done correctly, as per the Standing Orders, and National members sit over there and say “Oh, it’s sneaky.” It is not sneaky if it is up front.

New Zealand First supports this bill. Something else the member might think is sneaky—but I know that Kate Wilkinson does not—is the amendment in my name, which adjusts the main part of the bill. It amends the part that deals with rest breaks in particular. It simply proposes adding subsection (2) to section 69ZH, inserted by clause 5, and states: “(2) Despite subsection (1), where an employee is a person who is required to take a rest break by, or under, another enactment, the requirement for a rest break defined by, or under, the other enactment applies instead of the provisions or entitlements for rest breaks or meal breaks provided under this Part.” The amendment comes about because, basically, the legislation that the Transport and Industrial Relations Committee—of which I was a member—handed back to the House did not correctly cover the rest breaks scenario in respect of the transport industry. We thought it did, but it did not—hence the amendment in my name, which I tabled this very morning.

Supplementary Order Paper 229 in the name of the Hon Trevor Mallard deals with KiwiSaver. Let me make it quite clear: as far as New Zealand First is concerned, we believe in compulsory savings. We always have; we have long been on record as saying that loud and clear. This measure is not compulsory, but it is a step towards it. The Supplementary Order Paper is needed to ensure that there is the maximum incentive for individuals to join KiwiSaver. That is how I see it. It encourages people to join KiwiSaver. We understand that some employers are caught in a trap. Understandably, they will be given time to rectify the situation, but, in essence, KiwiSaver is an essential vehicle in this country to encourage people to save. We hope that, in the fullness of time—and I clarify for members that I am talking about years rather than days, and certainly not hours—legislation will come into being that makes it compulsory for people in this country to save. It is likely there would have to be exceptions for people on low pay who cannot afford to save, but, by and large, we should do everything we can to encourage people in this country to save, and we should eventually make it compulsory for them to do so. Australia introduced such legislation years and years ago, and it has over a trillion dollars in its superannuation account that it invests here, there, and everywhere. It is about time New Zealand stepped up to the plate. New Zealand First has advocated that for a long, long time.

Supplementary Order Paper 229 improves the legislation by giving more incentive for people to save for their retirement and whatever else. So New Zealand First will support this provision. We would have preferred the process to be a little different—a little more transparent, should I say—but we need this measure here and now. That is how New Zealand First sees it. So we will support it.

In essence, this bill is not contentious. It does the right thing for New Zealanders in terms of breastfeeding and breaks—I hesitated just then, because I was going to say “smoko breaks”, but they are not allowed now, are they—and it addresses the KiwiSaver concerns. New Zealand First supports this bill.

KATE WILKINSON (National) : I am pleased to take another call on the Employment Relations (Breaks and Infant Feeding) Amendment Bill. The comments of Mr Brown were interesting. He said that the bill was not contentious, and in a sense he was right. The bill was not contentious, but it certainly is now in relation to KiwiSaver. I still think that the Supplementary Order Paper in relation to KiwiSaver is sneaky, and I want to address that point for a moment.

National will be opposing the KiwiSaver amendment to the bill. We will be voting for the bill because we do believe in fairness in the workplace, and we do believe that workers are entitled to meal breaks and rest breaks. We think it is good employment practice also to provide breastfeeding facilities and breaks where reasonable and practicable. National does believe in fairness in the workplace.

Employers should be able to treat employees fairly regardless of their private and personal savings decisions. Why should it be unlawful to offer employees different salary packages because they are or are not members of KiwiSaver? Why should one employee be treated less favourably than another merely because that employee has made a different private savings decision? It is a ridiculous approach for introducing important legislation to the House.

The original bill has gone through a proper consultation process. Interested parties have had a chance to work through the issues it has raised. It has come out of the Transport and Industrial Relations Committee with amendments, and now we have this last minute Supplementary Order Paper that gives the general public absolutely no opportunity to consider this change to the KiwiSaver scheme or to make submissions on it. This KiwiSaver amendment is actually another case of bad faith from this Government. This Government touts good faith all the time, yet this is a perfect example of bad faith. The Government specifically allowed for employers to include employee KiwiSaver contributions as part of its total remuneration in the original KiwiSaver. Now it is reversing its position.

This amendment will introduce complex and costly uncertainties into the planning of employers. They cannot be sure how much their wage bill is going to be in any given year, and leaving well alone would at least allow some certainty to employers who, in general, have made a good fist of the introduction of KiwiSaver. Their good faith should be reciprocated.

It is worth noting that it is actually unlawful now anyway for an employer to do what the Minister alleges—that is, to deduct the employer contribution from employees without first giving them a pay increase of at least that amount. It is unlawful now. Why do we need this amendment? Currently section 101B of the KiwiSaver Act makes it quite clear that after 13 December 2007 the question of whether compulsory employer contributions are in addition to current remuneration or can be offset in part against pay rises is subject to mutual agreement between employers and employees. Good faith is a requirement. This Government has exhibited bad faith.

That provision was specifically inserted at the time by Government members on the Finance and Expenditure Committee. At the time Michael Cullen said: “The Government expects that the phase-in of compulsory matching employer contributions will be taken into account in wage and salary bargaining.” That is what he said. The Government was therefore quite comfortable that there would be trade offs between pay rises and KiwiSaver contributions, and now, without consultation, without allowing the submission process, and without allowing the select process, the Government has U-turned and reversed its position.

This Government claims that this move will genuinely benefit people who are in the KiwiSaver scheme, but if one looks at it the other way, one sees that it will harm people who are not in KiwiSaver. People who can afford to save will benefit. People who cannot afford to save and enter into the KiwiSaver scheme will not be able to benefit.

Employment laws should be based on what is fair. There should be a balance of what is fair in the circumstances to both employees and employers. Employment laws need to help both employers and employees control their own destinies as far as possible. This Supplementary Order Paper does not do that, and, as the Hon Peter Dunne has aptly stated, the irony of this amendment is that it will disadvantage lower-paid workers and elderly workers—exactly the people whom Labour claims to represent. National will be opposing this Supplementary Order Paper, but we reiterate that we are voting in favour of the fairness of the meal breaks portion of the bill.

PAULA BENNETT (National) : Thank you for the opportunity to speak in the Committee on the Employment Relations (Breaks and Infant Feeding) Amendment Bill. I will start off by talking about the importance of breastfeeding by our young mums—and our not-so-young mums, as it happens to be in society a bit these days—and perhaps talk about how that actually works in the workplace. Although I am not a big fan of over-regulation, and certainly find parts of this bill a little unnecessary, if nothing else it has brought the issue a bit more to the fore. People are speaking a bit more about what that relationship means when women have a baby and then go back to work, and how they juggle working, the care of the child, breastfeeding, and everything else, so how could we in the National Party not stand up and support that as being a good thing at the end of the day?

When it comes to meal breaks I do not think I am alone in being relatively appalled at some of the stories that we heard, such as those about people who perhaps did not get breaks, had feelings of disadvantage, and did not feel like they could stand up and have their voices heard on the issue. So to say that I thought this legislation was necessary would be utterly wrong, but to say that if it has to be passed and this is the way that this Government thinks all problems can be solved—if it moves, then legislate and regulate—then we actually can stand up and support it.

This morning I will talk a bit about process. I do not think that anyone out there would disagree that if it were a National Government that was slipping a Supplementary Order Paper through like this one is being slipped through—at the last minute, when the public had not had the opportunity to address it—and it was being introduced after the select committee process, there would be an uproar from the other side of the Chamber. I can tell members that the uproar is happening from this side. We say that people deserve transparency on the issue. People deserve an opportunity to have a say on this Supplementary Order Paper, because it makes a fundamental difference to the bill and therefore makes a fundamental difference to their workplaces. People deserve the opportunity to make sure there is transparency on this issue and they deserve an opportunity to be heard. This Clark-Peters Government is not giving them that opportunity, and it is stepping aside and thinking it can slip something through under urgency, at the last minute. That is appalling for process. It is bad lawmaking and bad for process to slip in a Supplementary Order Paper at the last minute that contains an amendment that makes a fundamental difference. That is wrong, and people have a right to be heard. This Clark-Peters Government is a Government that supposedly stands up for democracy and believes that that should actually be happening. This process is obviously not open democracy.

Hon David Cunliffe: Tell us about open democracy, National Party—what do you stand for? What are your policies?

PAULA BENNETT: Mr Cunliffe wishes to speak about open democracy, and let us do that. Let us talk about what this bill actually means for employers when it comes to the KiwiSaver scheme and how it can happen. If this was so important that it needed to go through, I ask the Minister in the chair, the Hon Trevor Mallard, why it was not put through at the beginning of the process and why it is being snuck through under urgency at the end of the process. I think that is a question that the Minister should stand up and be counted on—that he should put on record. Why was this Supplementary Order Paper not presented months ago when we were dealing with the 17th or 18th amendment to this legislation because it was rushed through so appallingly in the beginning? Why are we still rushing amendments through, and why is the public not having a say on something that is of importance to them in their workplaces and in their workplace relationships? While this Clark-Peters Government rails on about how important process is, how important open democracy is, and how important it is to be open, we are seeing a classic example of something being snuck through in urgency, without the substance to go with it.

Throughout the Committee stage on this bill we certainly heard people talking about breastfeeding and how important it is. I think it is, for a small number of people who are still breastfeeding and who wish to have that in the workplace, but we heard from employers that they saw that as being important as well, and that they felt it was something they could accommodate relatively easily, although it will differ from workplace to workplace as to how they actually do it.

We heard about meal and rest breaks. In fact, we heard that it is happening across the board, and it is not such an issue. As far as this legislation is concerned, I know that my colleagues on the select committee certainly spent a lot of time trying to make sure there was that bit of flexibility. The flexibility needed for those rest and meal breaks is as much for the advantage of the employee as it might be for the employer. We heard many instances of when employees wish to take a 10-minute break and attach that other 30 minutes at the end of the day so they can go home early to their children. They were looking at that sort of flexibility in their working arrangements. I only hope that this move to legislate will not deter some of those flexible arrangements that happen for employees and employers at the moment. Thank you, Madam Chair.

• The question was put that the amendments set out on Supplementary Order Paper 229 in the name of the Hon Trevor Mallard to Part 1 be agreed to.

KATE WILKINSON (National) : Again, I am delighted to stand to take a call on Part 2 of the Employment Relations (Breaks and Infant Feeding) Amendment Bill. As we have been throughout this process, National is supportive of giving meal breaks and rest breaks to workers, and National is supportive of giving breastfeeding facilities and breaks in the workplace where reasonable and practicable. I have to say that it is not without some concern, of course, because the prescriptive nature of the bill does add compliance costs to businesses.

In terms of the provision in relation to breaks, the issue that was raised at the select committee was not the duration of the meal breaks and rest breaks or the provision of the meal breaks and rest breaks; it was the prescriptive nature of the timing of those meal breaks and rest breaks. Although one of the union submitters attempted to suggest that the old awards were far more prescriptive and that this provision was far less prescriptive, that was actually proved to be false when we pointed out that the old tearooms award specifically stated that breaks were to be taken “at a time convenient to the employer”. “At a time convenient to the employer” is not the same as the wording in section 69ZE(1AA), in new Part 6D—in clause 5 of the bill—that has been agreed to by the select committee: “Rest breaks and meal breaks are to be observed during an employee's work period—(a) at the times agreed between the employee and his or her employer; but (b) in the absence of such an agreement, as specified in subsections (1) to (4).” That amendment is important. It at least acknowledges the ability of the employer and the employee to reach agreement, and we will certainly be voting for it.

I signal at the outset that we will also be supporting Peter Brown’s amendment. It has particular relevance to the transport industry. The transport industry submitters were most concerned about the consequences of this bill for their respective operations. Their hours of work and the timing of their work breaks are covered under separate subordinate legislation, such as the work time and logbooks rule and the maritime rules. Mr Peter Brown’s amendment makes it clear that those specific transport-related rules would prevail. We will support that. To not support it runs the risk of there being conflicting rules, and confusion as to which rules prevail in relation to the transport industry.

There is still concern, of course, about the wording of the bill and, in particular, about what “reasonable and practicable” means, because that term is applied not just to the rest break and meal break provisions but also to the provision of breastfeeding facilities and to breastfeeding breaks. Concern has been expressed as to what “reasonable and practicable” would exactly mean and what it would entail to test it. We were given some guidance that there is some definition or indication of what “reasonable and practicable” means in health and safety legislation, but not in the Employment Relations Act itself. Perhaps that health and safety legislation can provide some guidance as to what “reasonable and practicable” means. There is also some comfort—again, not a lot of comfort—in the fact that a meaning will be provided in a code of practice that is to be drafted. One can only hope that it will be drafted with sufficient certainty and flexibility to ensure that both employees and employers understand what it means, and to ensure that it is fair. With any legislation, we have a duty to create good law. Good law requires certainty, and not just for businesses; both employees and employers need certainty as to what the wording of the legislation means and what it will entail. That proposed code will need to be drafted with a lot of thought and research.

We support this bill.

DAVID BENNETT (National—Hamilton East) : As regards the Employment Relations (Breaks and Infant Feeding) Amendment Bill, my colleague Kate Wilkinson has made some very pertinent points about it. A number of amendments take into account the views of specific industries that felt the bill did not accommodate the practicalities and the realities of how they actually do business. The transport industry was one of those whose representatives came before the Transport and Industrial Relations Committee—with special reference to the nature of the bus industry. They made it quite clear that the bill would have a detrimental effect on the way that they run their operations. I think all the members of the select committee saw some relevance and some practicality in what they were saying. The amendments put forward in that regard take into account the need to make law that is sensible, where we can do so.

But in looking at the Employment Relations (Breaks and Infant Feeding) Amendment Bill in a general sense, I think one of the big things about the meal break portion of it is to consider what it actually means for a lot of employees. A lot of employees negotiate meal breaks within their employment agreements. During the course of the select committee process, it was found that some employees would actually lose rights under this legislation proposed by a Labour Government. Many employees have better rules in regard to meal breaks than what this legislation was originally going to provide, and, in this case, still provides. We saw that in the medical field, especially with nurses, who in certain cases had negotiated much more comprehensive arrangements for their meal breaks. The legislation was going to take away some of those advantages. The select committee looked at the legislation and came to the conclusion that we needed to make sure that workers would not be in a worse position than they were in before this legislation had been proposed.

That was one of the key requirements that the select committee made some progress on, and we saw amendments made to the bill to take into account the nature of the work arrangements. Members will see that the words “so far as is reasonable and practicable in the circumstances” have been added to clause 4. That is one of the opportunities, I guess, to provide some flexibility within the legislation to take into account individual circumstances. There is a bit of debate about what the wording actually means; “reasonable” and “practicable” are quite legalistic terms, but they are common terms that are used throughout our legislation and in our courts. They open up the way for interpretation, and that should be done in a meaningful and progressive way for all concerned.

When we look at the timing of rest breaks, we see that one of the major considerations was to get those timing requirements right—not too prescriptive but not too restrictive, either. The bill needed to take into account the nature of work arrangements and also employment agreements, in the sense that some speciality of the work or the nature of it may require negotiation on the timing and the nature of rest breaks.

In essence the legislation, in trying to deal with breaks, dealt with some things one would find in normal employment arrangements. The legislation needed to account for that, and in most cases that has been done through the Supplementary Order Paper that has been put forward, or through the select committee process, which looked at the practical realities of what the legislation could provide, to make sure we had sensible legislation going forward that could provide those kinds of meal breaks in the future.

The National Party supports this legislation. Some changes have been made to it in the past couple of days that probably are not in the best interests of this Parliament.

• The question was put that the following amendment in the name of Peter Brown to clause 5 be agreed to:

to add to section 69ZH the following subsection:

(2) Despite subsection (1), where an employee is a person who is required to take a rest break by, or under, another enactment, the requirement for a rest break defined by, or under, the other enactment applies instead of the provisions or entitlements for rest breaks or meal breaks provided under this Part.

• Amendment agreed to.
• The question was put that the amendments set out on Supplementary Order Paper 229 in the name of the Hon Trevor Mallard to Part 2 be agreed to.

Hon TREVOR MALLARD (Minister of Labour) : I move, That the Employment Relations (Breaks, Infant Feeding and Other Matters) Amendment Bill be now read a third time. This is a bill with relatively non-controversial parts to it. Right at the beginning I acknowledge the very good work of my parliamentary colleague Sue Moroney in the early stages of this legislation. I also thank Steve Chadwick for the expertise that she has shown. Those two members from the Waikato and the Bay of Plenty have made an enormous contribution to Parliament, and I thank them for getting into the law something that is very, very reasonable.

There was a fairly small amendment on the question of KiwiSaver that did not take a lot of debating late last night and early this morning. Essentially, the amendment organises the law in the way that people thought it should be organised. In fact many of us thought—other than from the actions of some unreasonable employers—that that was what was occurring under the law anyway.

Craig Foss: Why didn’t you fix it when they submitted?

Hon TREVOR MALLARD: Well, basically it was because I did not believe any employer would be so unreasonable as to take KiwiSaver employer contributions from the wages of a worker and at the same time collect the employer subsidies. That is a sad state of affairs, and it is clear that Craig Foss has more experience of working with unethical employers than I have. He could well be one himself. That is something that the National Party, to its shame, stood up for. National members stood up for employers who were taking the employer contribution out of the wages of their employees. That was absolutely wrong, and I think it is sad.

But I think it is fair to say that National members did not stand up for it for very long. They did not oppose the motion to incorporate the amendment regarding KiwiSaver in the bill, which is something that I was slightly surprised about, and they voted for it at each stage. They voted for Parts 1 and 2 of the bill, notwithstanding those changes. They voted for the second reading, and I understand that they are voting for the third reading.

So I am very pleased to say we have a unanimous decision of the Parliament to treat employees properly as to their meal breaks and rest breaks, and to treat breastfeeding mothers, and those mothers who are expressing milk, with much more dignity than has been the case in the past. I think that is very important. Furthermore, we have had the clarification around KiwiSaver, which I understand will be passed unanimously as part of the third reading of the bill, and I want to thank all members of the House for that.

KATE WILKINSON (National) : I rise to speak on the third reading of the Employment Relations (Breaks and Infant Feeding) Amendment Bill, which we probably should be calling the “Employment Relations (Breaks and Infant Feeding and Sneaky KiwiSaver) Amendment Bill”. However, we are voting, of course, in favour of the third reading of this bill, despite the fact that we vehemently opposed the Supplementary Order Paper in relation to the KiwiSaver provisions.

The bill should have been relatively uncontroversial. Of course National believes that employees should be given meal breaks and tea breaks, and by all accounts common sense prevails and this actually does happen. Employers want to retain good employees; they will do what they can to do so, and they will work in with employees to make sure the workplace is a happy environment. Rest breaks and meal breaks are not there just for health and safety issues, of course; they are also there for the socialising impact between employees so that they can get to know each other and it can be a happy and productive workplace, and we certainly support that.

Obviously, the bill was drafted with two—well, it is now three—relatively separate and discrete issues. Firstly, one was to deal with meal breaks and rest breaks, which most people did think was already covered in the law; it was certainly arguable that it is already covered in the health and safety legislation. But this bill, to a certain extent, codifies what happens with rest breaks and meal breaks, and for that reason it should be relatively uncontroversial.

Secondly, the bill deals with the requirement for the employer to provide breastfeeding breaks and facilities. We did ask at the time why those two matters, which are relatively discreet and separate, were included in the one bill. The answer that was given to us was that it was to make it politically difficult for National. I have to say that National has not found it politically difficult to debate in favour of giving meal breaks and tea breaks to employees, because we believe in fairness in the workplace. We believe in balancing what is fair to employees with what is fair to employers. [Interruption] We have said that all along, I say to Mr Fairbrother, even though the member may not have heard it.

What we did oppose, though, is Supplementary Order Paper 229, which shows the unfairness of this Labour Government, the arrogance of this Labour Government, and, actually, its bad faith. The Employment Relations Act is based on good faith, and this is one of the most classic examples of this Government exhibiting bad faith. The relevance of KiwiSaver to breaks and infant feeding still eludes most common people. That was dealt with in the House yesterday—apparently by motion—surreptitiously and sneakily. The amendment has not been subject to proper scrutiny: it has not been subject to consultation, and it has not been subject to proper scrutiny of the Transport and Industrial Relations Committee. The public have not been permitted to submit on it, and to give their views. It has been snuck through, under urgency, at the eleventh hour, and I have to say that I think that is a sad, sad day for democracy in this country. I think it is a disgrace, and an abuse of process.

Already this Parliament has been criticised by a New York University professor for the recklessness of its lawmaking and for the irresponsible lawmaking that can happen, and this is an example of that. I find it very disappointing that this Government is so arrogant and so ignorant of the process of legislation, and just overrides common sense, common decency—

Hon Trevor Mallard: The member voted for it.

KATE WILKINSON: —we did not vote for the amendment—in fast-tracking legislation, which the professor himself described as disgraceful by world standards. This is reckless legislative process. It is a typical example of bills being rushed through under urgency in a deserted Chamber. Members are subservient to the executive, there are constant closure motions, there is no quorum, and there is no second Chamber, which is why we do have a robust select committee process. But this Government just ignores that. There were no checks and balances on Supplementary Order Paper 229 for KiwiSaver. I have to say that the duty of care was not being properly exercised when this was snuck through.

This undermines the effectiveness of the select committee process. It actually undermines the confidence that New Zealanders can have in the democracy of our country. I think that that democracy, unfortunately, is not as robust and not as stable as one would expect. It is tenuous, and when we have a Government like we have, after 9 long years one realises just how tenuous democracy really is. There is no concern, whatsoever, for common decency, for democracy. It is just power at all costs: “We want to get in; we will do what we have to to stay in power, not what is best for New Zealanders.”

What is best for New Zealanders is to have a proper consultation process. What is best for businesses is that they should be consulted on these far-reaching KiwiSaver amendments. What is best for New Zealanders is that the very people that this Labour Government pretend to be supporting, the lower-paid and elderly workers—those workers who cannot afford to enter into the KiwiSaver scheme—are those workers who have not been consulted. Has the impact of the KiwiSaver legislation been referred to them? No, it has not. On the day that this House went into urgency a sneaky amendment was introduced, bearing no relevance whatsoever to a meal breaks bill, a tea breaks bill, and a breastfeeding facilities bill—bearing no relevance whatsoever—with no consultation and no submission to a select committee, and I think it is atrocious and an outrage that it has been done in this manner.

We did oppose the KiwiSaver amendment, because we do not think it is fair. We think that providing meal breaks and tea breaks is more than fair. We think that providing breastfeeding facilities and breaks is more than fair when reasonable and practicable, but the KiwiSaver Supplementary Order Paper 229 is not fair. Why should it—and this has not been answered by the Minister—be unlawful to offer employees different salary packages because they are or are not members of KiwiSaver? Why should one employee be treated less favourably than another because that employee has made a different private savings decision? This amendment is a case of bad faith.

It is really interesting that the Government specifically allowed for employers to include employer KiwiSaver contributions as part of that total remuneration package when it passed the KiwiSaver Act. Now this Government has flip-flopped, done a U-turn, and has reversed that decision. At the time, the Minister of Finance said the Government expected that the phase-in of compulsory matching employer contributions would be taken into account in wage and salary bargaining. The Government was quite comfortable that there would be trade-offs between pay rises and KiwiSaver contributions. What has happened since then? What has happened is that the Minister has decided that it is unlawful for employers to deduct the employer contributions from employees without first giving them a pay rise of at least that amount. But that is already unlawful under existing KiwiSaver legislation. That did not need to be sneaked through as a Supplementary Order Paper to the meal breaks and rest breaks legislation.

The KiwiSaver Act provisions made it quite clear that after 13 December 2007 the question of whether compulsory employer contributions are in addition to current remuneration or can be offset in part against pay rises is subject to mutual agreement between employers and employees. That provision was specifically inserted by Government members on the select committee, and this Government has now reversed its stance. Good faith is a requirement of the Employment Relations Act provisions. It seems that good faith is not a requirement of the Labour Government.

SUE MORONEY (Labour) : People say that timing is everything. I think it is very appropriate that at roughly 8 minutes past 10, when a lot of workplaces throughout this land are in the middle of having morning tea, we are here in the third reading of the very bill that brings that provision into law and makes it compulsory for workplaces to recognise that workers have the legal right to—not just the right to negotiate—decent breaks at work. As a member of Parliament who was involved in drafting the parts of this bill that refer to the right for workers to have those decent breaks at work, I feel very pleased to be able to stand up here, as most of the nation is having its morning tea break, to vote in favour of the third reading of this bill.

I shall talk a little bit about the history of why, as a new member of Parliament, I chose to make this an issue that I wanted to put before this Parliament. It was because of my experiences, as I campaigned in the last election, when this issue was brought to my attention. I remember one particular instance very clearly. A group of young men who were working in a service station in the Waikato came to see me because their staffing arrangements had changed. Their service station had cut the number of staff it was employing. We all know the story that when we pull into service stations these days we do not have someone come out to fill up our car for us; we prepay and we do it all ourselves. The cutting back of staffing numbers at that service station meant that those workers were not getting a lunch break. They were not getting a lunch break at all. They were working 12-hour shifts, and because there was a requirement to have one person available for forecourt duties at any given time, the service station did not have the staff to allow any of them to go off to have a lunch break. Those young men said to me: “This can’t be right. Surely there’s a law against this.” When I looked into it, sadly I found that there was no law that safeguarded them. That was the very beginning of my thinking very seriously about this issue.

As I kept thinking about this issue I found that those young men are not alone in their predicament; there are a range of workers for whom tea breaks, rest periods, and meal breaks are not the norm in their working day. They are invariably young people, they are invariably workers in small workplaces, and they are invariably the most vulnerable in our workforce who have been suffering this fate. But as a result of this bill being passed, they will suffer no longer.

Another situation that came before our select committee demonstrates the need—yes, the need—for this bill. I know that National Party members have said they do not think the bill is necessary, but we had many stories coming before our select committee that demonstrated that it was. One example was from a young worker in Hamilton East, where I come from. He had been working for Subway, and told us about being sacked for daring to take a meal break of half an hour during a 12-hour shift. He was sacked for that. I observed that National Party members at the time—

Kate Wilkinson: He deserted the workplace!

SUE MORONEY: —and I notice Kate Wilkinson is saying something quite different now—said to this young man that that was illegal and that he could take a personal grievance. Yes, under the current laws he can take a personal grievance and he is, in fact, taking a personal grievance. But the National Party is proposing a 90-day probationary period bill that it wants to bring in if it is the Government. That policy would completely take away this young man’s right to take a personal grievance over that issue, because this young man was in the first 90 days of his employment with Subway. There were some very nice sentiments from National Party members opposite but absolutely no ability to understand that their policies would have taken away that young man’s right to contest that unfair dismissal over the right just to have a reasonable lunch break while at work.

The next situation I want to talk about is with regard to the KiwiSaver aspects brought into this bill. I fully endorse the Government acting at the earliest opportunity to stop that unfairness in the workplace, because there is an unfairness in the workplace. What has been happening is that some employers—and I would call them mean-spirited employers—have taken away and reduced workers’ take-home pay because they dare to be some of those workers who look to the future and save for their retirement. They have been discriminating against workers because they dare to save for their retirement—and that is wrong. This Government was not going to stand by for another minute longer and let that unfairness continue to happen in our workplaces in this country.

I feel confident that fair-minded New Zealanders resile from this practice, because I have had pay clerks come to see me because they do not want to implement their employers’ mean-spirited views on this. The people coming to see me are not those who are disadvantaged by it, but the pay clerks who are saying they are being told to do that, and they do not want to do it because it is unfair and is just not right. If that is the view of a pay clerk, who is not the person who is going to be disadvantaged at all, then I feel confident that fair-minded New Zealanders will see the basic unfairness.

Members should have seen the look on the pay clerk’s face when I told her that the situation was even worse than she expected. When I informed her that her employer was getting a $20 a week tax credit for every single employee involved in the KiwiSaver scheme and that that was more than the 1 percent the employer was knocking off employees’ wages, then she could see straight away that the employer was double-dipping—taking taxpayer money for having employees involved in KiwiSaver and then taking money off those workers to pay for the employer contribution that was already being paid for by the taxpayer. That was completely unfair.

The National Party cannot see that, at all. It voted against the Supplementary Order Paper that said that that was wrong and would not be tolerated in this country—because the National Party does not care. The National Party thinks that that sort of unfairness at work, and that sort of double-dipping into taxpayers’ and workers’ pockets at the same time, is fine. It has no problem with it—“Let’s not fix it up; let’s just keep it going.” Well, that will not happen under a Labour-led Government. We will not stand by for another minute longer and let that unfairness continue in the workplace.

I will not go into great details about my own personal experiences of infant feeding. Suffice it to say that expressing milk in a toilet cubicle is not a very dignified thing to be doing in one’s workplace, but that is certainly the experience I have had in the past as a young mother in the workplace. Again, I congratulate my colleague the Hon Steve Chadwick, who had the foresight to ensure that this bill also included the right to have some dignity in infant feeding in the workplace, and I think that is a very appropriate thing to do.

In closing I also thank the Minister and the officials for their work on this bill. It is a very important bill, it will make a difference to a significant number of New Zealanders, and it will ensure fairness in our workplaces. Thank you.

Dr WAYNE MAPP (National—North Shore) : I will speak on three issues in relation to the third reading of the Employment Relations (Breaks and Infant Feeding) Amendment Bill. The first issue is the general principles of the bill, which the previous Government speaker, Sue Moroney, spoke about. Then I will speak specifically about KiwiSaver issues. Thirdly, I will speak about process and procedure—the way legislative issues are dealt with.

On the first issue, let me make it completely clear to listeners, to governing party members, and to other parties that National supports this bill. The reasons we support this bill are the reasons that were given by Sue Moroney. We believe that people—women, in particular—must have dignity in the workplace in respect of breastfeeding, and so forth. That is why we support the bill. We had an extensive discussion in our caucus, and we understood that fairness requires that employees have proper opportunities for meal breaks and that mothers breastfeeding must have dignity in appropriate circumstances. So National is supporting the bill and I assure listeners that the reasons we are doing so are ones of fairness. The reason this bill is being passed into law today is that there is a consensus in Parliament. I know that the Government would like us to be voting against the bill. That would suit its agenda, and I could tell that from Sue Moroney’s speech. I could tell that she was kind of disappointed that National is supporting this bill. She really wanted to be able to go out into Hamilton East and say that David Bennett does not understand the circumstances of workers needing tea breaks and that he does not understand the circumstances of mothers breastfeeding. Well, she will not have that opportunity.

Perhaps in the past the National Party may not have supported this bill. I can think of a National Party that may not have supported the bill, but the truth is that our party has shifted to some extent on some of these issues. That is why we have taken a much more moderate stand around employment relations generally, and I congratulate my colleague Kate Wilkinson in respect of that. We understand that New Zealanders expect fairness in the workplace and that the law must reflect that, as well. That is why we are not saying there will be wholesale and dramatic changes made to the Employment Relations Act. Clearly, we will make some changes, and they will be moderate and reasonable changes that are the norm in the OECD. The standard operating practice, if you will, across OECD countries is essentially where National is pitching itself, because we are taking a balanced and fair view in relation to employment relations.

Peter Brown: Same old philosophy!

Dr WAYNE MAPP: I know that New Zealand First will be interested to know that we are taking a fair and balanced view on that particular issue. That is a particular stake in the ground that I want to put: National has shifted on this issue.

The other two issues I will talk about relate more fundamentally to issues of, firstly, KiwiSaver, and, secondly, process. National has voted against the Supplementary Order Paper in relation to KiwiSaver. We believe that the situation is actually quite different from the way in which the Government expresses it. The way the Government expresses it is to say that it is unfair that someone who is in KiwiSaver potentially might receive less in his or her take-home pay than someone who is not. Actually, if members look at it the other way around they will see that it is also unfair, because the Government is also saying, by that statement, that it is fair that the person who is not receiving KiwiSaver would get less money, in terms of total remuneration purposes. That is the philosophical objection that National has. We say that employers and employees start from a total remuneration perspective, and then from there they will work out how it is delivered. The vast majority of it will be received as a cash payment via salary and wages. Some people might choose to take, for instance, a company car. Others may take other fringe benefits. Others will take superannuation, and all of that needs to be calculated. I certainly appreciate that clearly there is value in cash received right now, as opposed to the deferment in terms of KiwiSaver.

The way we view this is philosophically different from the way the Government sees it. We start from the point of total remuneration. The Government simply does not see that, and that is why it has never really understood the objection of the Employers and Manufacturers Association (Northern), which looked into this particular issue very carefully; it simply refused to understand it. We can understand the point that has been made about the tax credit, and there is some merit in that, but, of course, that gets taken into account in any event in negotiations on total remuneration. That is the proper starting point in the contemporary workforce around how one receives one’s salary—part in cash, part in superannuation, and part, no doubt, in many instances, in other fringe benefits.

The third issue I want to deal with is the process of Supplementary Order Paper 229. It is actually a broader principle, anyway, because in the last 24 hours we have seen a pattern whereby the Government introduces Supplementary Order Papers in a way that does not allow for proper consideration. I could understand a Supplementary Order Paper on this particular bill, for instance, being introduced last week, giving time for a dialogue, time for members of Parliament to talk to the relevant parties affected and so forth, and time for a more considered debate, but to introduce a Supplementary Order Paper on—essentially—a new topic on the day the bill comes before the Committee of the whole House is, I believe, an abuse of the process.

I refer Government members back to a former Labour Prime Minister’s book, Unbridled Power—published some 29 years ago, in fact—in which he spoke of these kinds of issues. The way the New Zealand Parliament was characterised back then was that it was the fastest lawmaker in the West. What are the characteristics of being a fast lawmaker? It is actually about the House being in urgency all the time, or at least on a regular basis, in relation to bills. It is about introducing large Supplementary Order Papers, which is the case in respect of the emissions trading scheme, into the select committee process at a time when they can no longer be properly considered.

In relation to the emissions trading scheme, 700 amendments were introduced at the very point in time that the bill was to be debated. I read many of those amendments yesterday. Some of them were actually complex in their own right. They had to be referred back to both the bill itself and the prior Supplementary Order Paper. Members had to mesh all that together during the debate in the Committee of the whole House. Some of the amendments clearly were just technical. I guess there is no real objection about a minor technical amendment such as, for example, schedule one being described as “schedule 1” as opposed to “schedule one”. Clearly, no one has concerns about that. But other amendments were not of that character at all, particularly around some of the trading issues.

I use that as an example, because just very recently—and it has been recorded in both the major legal publications in New Zealand—Professor Jeremy Waldron of the New York University school of law spoke in New Zealand of the “terribly irresponsible” view of our parliamentary institutions that has “enabled the debasement”—and I want this to be noted specifically—“of deliberation.” Bear in mind that this Parliament does not have a second Chamber. Second Chambers, historically, are for deliberation and scrutiny. A single Chamber such as this—the legislature, as in Australia and other countries—tends to operate more quickly. That is OK when there is a more deliberative process, but in our jurisdiction we do not have that, so it behoves Governments to be a little bit more careful to allow that debate to take place. I have to say to the parties that are here because of our MMP system of representation that MMP has not actually changed that aspect of our parliamentary institution. It has changed other aspects—and I must say from my own perspective that it is generally for the good—but that particular aspect has not changed at all. Anyone who was a member of Parliament in the 1970s or 1980s under first past the post would see today’s legislative processes as being essentially the same.

It seems fundamentally wrong that in 2008 we are still beset with exactly the same set of problems that Sir Geoffrey Palmer referred to 29 years ago in his book Unbridled Power. So many members on the other side of the Chamber pride themselves on their constitutionalism and their care for parliamentary procedure. At least, they say that in theory; in practice, they abuse it. National is putting on the record our dissatisfaction of the way the Supplementary Order Paper for this bill was introduced. We need that on the record, because, frankly, this Parliament, for the benefit of the nation, needs to do better.

PETER BROWN (Deputy Leader—NZ First) : I listened to Wayne Mapp’s speech with quite some interest. I was genuinely taken aback—amazed—by his statement that the National Party has changed and now wants to be fair to people in the workforce. I do not doubt that the member himself is genuine, but I could not help asking myself what some of his colleagues at a convention would say to a man with a tape recorder—probably if they did not know he had one. But I welcome the National Party saying it wants to be fair, because, as Wayne Mapp has implied, it has been a long way short of that in the past.

This bill is a very simple bill. I think it will go through the House with total support. In the first instance it encourages employers to provide breastfeeding facilities for women in the workforce where it is reasonable and practicable. What is wrong with that? It is very sensible and very fair.

Hon Mita Ririnui: They don’t like it.

PETER BROWN: I suspect that some of those members do not like it, but they tell us they will vote for it.

We think that that is quite a big step forward for society. This bill goes on to formalise the requirement for employers to provide employees with meal and rest breaks. I have to say that before the bill came up I thought it was mandatory for an employer to provide for meal and rest breaks, and I was quite amazed to find that it is not written into legislation. Obviously, if it is written into employment contracts it gets acted upon. When the bill was before the Transport and Industrial Relations Committee and we heard, in particular, the young man from Hamilton telling us his story, we had to think that we do need legislation like this to ensure that people do get their meal breaks and rest breaks.

David Bennett likes to throw a spanner in the works. During the Committee he implied that the workers who received longer rest breaks or meal breaks than this legislation provided for could lose those breaks. Is that correct? Have I understood the member correctly?

David Bennett: Yes.

PETER BROWN: The member was on the select committee, was he not?

David Bennett: That’s why they changed it.

PETER BROWN: Well, let me read out new section 69ZG(1), to be inserted by clause 5: “This Part does not prevent an employer providing an employee with enhanced or additional entitlements to rest breaks and meal breaks (whether specified in an employment agreement or otherwise) on a basis agreed with the employee.” That provision was amended by the select committee.

David Bennett: Exactly! That’s what I’m saying.

PETER BROWN: Well, why did the member not make that clear when he addressed this Parliament a few moments ago?

David Bennett: I did. If you check the Hansard you will read it.

PETER BROWN: Well, I might well check the Hansard. That change is clearly written into new section 69ZG.

The final part of the bill that has upset the National Party to some degree amends the KiwiSaver legislation to give further encouragement for people to save. New Zealand First has been a strong advocate of people in this country saving. We were saying that when the party was formed in 1993, and we are still saying it. This is a move in the right direction. Unfortunately, it will capture some genuinely reputable employers, and they will have some difficulty implementing this change over a reasonable time frame and changing from the total remuneration package to this package, whatever it will be called—there is probably a name for it. But the change will present some difficulty for some employers. I know one employer who will move heaven and earth to get this rectified, but it will take a bit of time. I am hopeful that that time will be given.

This part also protects employees from the situation outlined by Sue Moroney. I did not know that that was occurring, and Sue outlined it very, very clearly a few moments ago. That sort of situation obviously creates a need for us to amend the current legislation pretty promptly. That is being done by way of a Supplementary Order Paper that is outside the scope of the main bill and that has been put forward, as National members have said, more or less at the last moment, which perhaps puts a question mark over it. We debated this amendment long and hard in New Zealand First, and we decided that the issue had to be addressed and had to be addressed speedily. So we are supporting this bill totally.

DAVID BENNETT (National—Hamilton East) : I was a bit disappointed, Mr Assistant Speaker, that you did not give me the call earlier, but given that you are showing your Scottish heritage we will forgive you today.

The ASSISTANT SPEAKER (H V Ross Robertson): That is nice of you.

DAVID BENNETT: It is interesting that although the Labour Government is amending the Employment Relations Act with this legislation, it is not amending the title of the bill to include the word “KiwiSaver”. Why did Labour not include KiwiSaver as part of the amendments? It did not do that because that would be far too honest, open, transparent, and accountable for this Government. It prefers the sneaky approach of just putting through a Supplementary Order Paper and having in it something quite irrelevant to the original legislation—something that deals with a mistake it has made.

This legislation is symbolic of the mistakes that Labour has made. Labour has a continual process of making quick, cheap solutions, and not thinking through the full and final outcomes of what it puts forward. That is the case with the KiwiSaver legislation. There was a loophole in the KiwiSaver Act that some employers were taking advantage of, to the detriment of some employees. The Government has sought to address that loophole through a Supplementary Order Paper to a completely alien bill, the Employment Relations (Breaks and Infant Feeding) Amendment Bill. By doing that, Labour has shown its true colours to the public of New Zealand. It has shown that it is not willing to draft legislation that is good for New Zealand, that is good for workers, and that will build this country stronger. Labour just drafts legislation on the hop when it feels it is right and how it feels it is right, and it does so for political convenience.

That is not the way to run this Parliament. It is not the message to send the people of New Zealand. The people of New Zealand will rectify that message in a few months’ time, because they will deliver a message back to Labour that they are not happy with the process that it is engaged in, with the way it does things, and with the outcomes that it has achieved.

In terms of the outcomes of this bill, we can see that a pretty quick job was done on it by Labour when the bill came before the Transport and Industrial Relations Committee. Labour had not really thought out what it wanted to achieve with it. In fact, the bill was detrimental to some employees. Labour, in its wisdom, was going to pass legislation that took away rights from employees. Why would it do that? The reason is that it does not care about employees. Employees are not its mandate. Its mandate is to stay in power. Michael Cullen has said that. He has said: “Our job is to win this election and to stay in power.” It is not about the people of New Zealand. It is not about the employees out there. It is not about the mothers out there. It is all about staying in power.

Why are we in urgency? To stay in power. Why are we passing this legislation? To stay in power. Why are we passing the emissions trading scheme legislation? To stay in power. Why are we passing the emissions trading scheme? To give Labour something that says it was in power. That is what it is all about for Labour; it is not about the actual requirements of our country, our workers, and our people. It does not care, and it has never cared. It is a Clayton’s promise to say that Labour cares for our people. All it is interested in is self-fulfilment and fulfilling its ambitions of power. That is what one sees time and time again with Labour.

If Labour had really cared, it would not have taken away employees’ rights in the first place. It would have put forward a bill that took into account employees’ rights. It was only the National members who stood up at the select committee and said that this legislation would take away some workers’ rights. When National members told that to the officials, the officials said that some agreements provided for more open meal breaks than this legislation would provide for. Labour members then went back to their offices and decided to rewrite the legislation and put it back through the select committee with changes. That is the reality of what happened in this case. It was the National Party that looked after workers in the circumstances. It was the National Party that provided the incentive for New Zealanders to have the right solutions to their problems. It was not Labour that did so.

Labour will take the credit for the National Party time and time again, and this is another example of that happening. We stood up in that select committee and said that this legislation should not be ideological but practical, and that it should provide for people in their time of need in their working environment. That is something that the National Party is very proud of, and we will stand behind that position at any election forum. We can stand up and say we were genuinely after the workers’ rights in this case, unlike Labour, which was after self-fulfilment and re-election by putting out policies in the last month of its 9 years of campaigning.

Why would you put in a KiwiSaver amendment to the Employment Relations (Breaks and Infant Feeding) Amendment Bill? Why would you not put up your own KiwiSaver Amendment Bill? That would be the normal, natural process that you would go through, but why would you not do that?

Sue Moroney: I raise a point of order, Mr Speaker. I know the member has not been here for very long, but he knows not to bring the Speaker into the debate, and he has done that on about four occasions now in the last minute or so of his speech.

The ASSISTANT SPEAKER (H V Ross Robertson): The member must not use the word “you”. It actually brings the Speaker into the debate.

DAVID BENNETT: Why would the Labour - New Zealand First Government—married and tied together like we will never see in any other political arrangement—put forward an amendment of that kind to this bill?

The Government does not want to admit that it got it wrong with its KiwiSaver scheme. KiwiSaver was one of the Government’s flagship policies. It went out there and talked about how great the scheme was, but the scheme took away rights from workers again. KiwiSaver had a hole in it that actually hurt workers. So the Government needed to reinvent its legislation, and the only way it could do that without going through a formal process of select committee hearings, and creating public awareness of the mistakes that it had made with KiwiSaver, was to amend it by means of this bill. That is the crux of what is going on.

The select committee members from Labour and New Zealand First do not want to admit to their mistakes, so they are trying to hide it by means of this bill. In doing so they are showing, once again, that they are not acting in the best interests of New Zealand workers or the New Zealand economy. All they have regard for is the necessity for them to get through an election campaign. If they were honest, open, and transparent they would put up a separate bill to amend the KiwiSaver Act—called the KiwiSaver Amendment Bill—and they would detail the nature of the issue and look for some solutions.

I believe that Labour members do not know what is going on in the KiwiSaver environment. They are just reacting to what they see as circumstances that may arise in the workplace over time. If they were to take a more progressive approach and get submissions from the public and those concerned, they might find there are other areas in the KiwiSaver environment that need to be amended as well, to look after workers’ rights. That is not likely to happen in a Government that will not admit to failure and that pretends that everything is hunky-dory with its flagship policies.

The Government knows in its heart of hearts that this policy is not successful and that the policy of KiwiSaver has some issues and needs to be refined. That cannot be done by means of this 3-page Supplementary Order Paper to amend the Employment Relations (Breaks and Infant Feeding) Amendment Bill. The heart of that bill now is the amendment to the KiwiSaver scheme. But this amendment should be in a separate bill and be sent to a different select committee—the Finance and Expenditure Committee, not the Transport and Industrial Relations Committee.

Kate Wilkinson: The Supplementary Order Paper didn’t go to any select committee.

DAVID BENNETT: It did not go to through any select committee, but if it had gone through a proper process, then the Transport and Industrial Relations Committee would have been the wrong committee for that amendment.

The Government of the day has abused the processes of this House. It has taken advantage of this House by using urgency to put through this sneaky little amendment. It should not do that. The Government has made a deliberate use of the political process for its own gain. Members of this House should not be able to do that in good conscience. This House should be able to say that it has consulted on issues, that it has given the public of New Zealand the ability to have their say, and that it has given New Zealanders the chance to debate the issues of the day in the public forums of the media and also in the select committees.

If a Government does sneaky little amendments to legislation, as in this case, then it is denying the public the right to justice. The Labour - New Zealand First Government may want to deny the public the rights to justice, which is something it has done on numerous occasions, but it should not have done so in this situation. It should have been up front, it should have admitted its mistakes, and it should have used the appropriate processes to deal with them. It should not have taken advantage of the Employment Relations (Breaks and Infant Feeding) Amendment Bill to do so. That devalues this bill. It says that this bill is being used just for political purposes. It does not show that the Labour Government is committed to the intent of the legislation, and that is a shame for this Parliament.

JUDY TURNER (Deputy Leader—United Future) : I rise, on behalf of United Future, to support the third reading of the Employment Relations (Breaks and Infant Feeding) Amendment Bill, but I start by explaining, making very clear, and putting on record why we have opposed Supplementary Order Paper 229, which amends the KiwiSaver provisions. We have done so for three reasons.

The first, and perhaps the most important reason we are opposing the amendment, is that it represents extremely shoddy process in this House. I think the National member Wayne Mapp articulated that particularly well in this debate. This amendment, put up by the Government, is important but it should have enjoyed a full submission process and full parliamentary consideration. To bring it into the House under urgency in this way we consider completely unacceptable. Our second objection to this amendment is that we believe the Government is trying to solve a problem that it may well have created itself with KiwiSaver. We believe that the Government has been the author of some very mixed messages that were contained in speeches during the introduction of the KiwiSaver legislation, and that could well have created the concerns the Government is now seeking to address. The third reason we are opposing the amendment is that we currently remain unconvinced that it is necessary, and would go so far as to say that Labour, by moving this amendment, has disadvantaged some of the lowest-income wage earners in New Zealand—the very people whom this Government, heading into an election campaign, would say it is there to advocate for. United Future would have liked the opportunity to see this amendment go before a select committee and to hear the arguments both ways—

Craig Foss: And the costings.

JUDY TURNER: —and the costings, making sure that it was the right way forward. This amendment is not just a little technical change; it is an amendment of substance.

However, we see the overall bill as reflecting family-friendly practices. The Department of Labour has put out a rather interesting document for employers on the issue of breastfeeding and I notice a section called “Frequently asked questions”, which covers some really good points: what it will cost employers to comply and the amount of space they will have to make available, if their employees require breastfeeding considerations. There are some really good answers to questions about potential issues for employees who are Māori or Pacific, or from a different religious background, in terms of the need to breastfeed discreetly with cultural considerations. There is a section called “Is this good for business?”, which I think is the most relevant question that the department traverses in this document. I want to reinforce the answer given, because I think the benefits to business of having good employment practices and of being family friendly are very clear for business and are very good for employees. It is certainly clear in this day and age, when we have a very different employment environment from even one or two decades ago, that employers need to realise that the benefits of increased productivity, staff retention, and a number of other very tangible benefits of these types of family-friendly policies will be make-or-break issues in terms of the ongoing success of their business.

United Future thinks this provision is long overdue. The Labour member Sue Moroney traversed the issue very well when she talked about the fact that many of us had always understood that breaks were an entitlement that the law covered. We, like others in the House, were quite surprised to discover that this was an area of law that needed strengthening and we certainly support the strengthening of that provision. United Future thinks this bill is timely, but we are disappointed in the Supplementary Order Paper amendment that has gone through today. We will be interested to see how history will judge this amendment and whether it creates its own set of unexpected and unintended consequences that a future Government has to work on and fix, but we certainly want to make it very, very clear that we support the third reading of this bill.

• Bill read a third time.

R DOUG WOOLERTON (NZ First) : As I recall, last time when I opened up and had 2 minutes on this bill I talked about why people in New Zealand are far keener on putting their money into property when the move by the Government and other people is to encourage them to put it into shares and businesses. I said that that is because a house or property cannot disappear and turn itself into somebody’s Porsche 911 or something like that.

This No. 3 amendment bill will go some way towards requiring finance companies to have a credit rating. There is much angst over that in the financial sector, not because of the fact that finance companies should have a credit rating—they are happy enough with that—but, in fact, over how it should be done. People came to the Finance and Expenditure Committee and said to us they were worried that a credit rating would have an overly prescriptive nature when it came to administration, and may not give as much credence to the fact that there was a certain amount of asset backing to a particular financial institution; another institution with a lesser asset-backing but with different administration systems could end up with a better credit rating.

So there were arguments about how that provision would play out. But, by and large, submitters agreed that the public need more information. They need some sort of a guide as to where to put their money. Only time, we think, can give any surety to the public when it comes to investing funds. But one thing is that we cannot go on as we are, and we have not progressed, it seems, since the late 1980s when we were held up around the world as the Wild West of the financial world. Although the recent credit crunch and finance meltdown have not been that bad, a lot of improvement is certainly needed. This bill goes some way towards that.

New Zealand First would like to go further, and at some time in the next Parliament we will bring legislation to the House that we think will help towards looking after old people—

Craig Foss: Transparency of donations.

R DOUG WOOLERTON: Absolutely, I say to Mr Foss; transparency to the nth degree. People can see, going through our trusts at the present time, how everything is kosher there. There is no fraudulent behaviour. There is no corrupt behaviour. There is nothing wrong there. We feel that if we are happy to have all of those transactions open to the public, with the absolute transparency that people are seeing today, other parties in this House should join, for the benefit of the public and to give everybody surety, in opening their trust accounts in the same manner. Whatever the Serious Fraud Office wants of us, we believe that in a non-partisan way, other parties should front up to open their books, thereby giving comfort to the public and the news media, who have been throwing a lot of harsh words around.

So we are in favour of transparency. [Interruption] I am pleased to hear the voice of my colleague Dail Jones behind me, because he is the member who has been entrusted with the task of giving some surety to retired people, in particular, as we move forward. I say to Mr Jones that I think he is on that case and we look forward to that in the next Parliament. Is that correct?

Dail Jones: Oh, absolutely.

R DOUG WOOLERTON: So we can look forward to that—yet another reason, if I may say so, why people will vote for us at the coming election. They will have the surety that they will have something done, unlike if they vote for the National Party, which has thrown stones and done nothing for 9 years. It is even doubtful whether National will be able to do anything post election, because, sadly for those members, they will find themselves back on the Opposition benches.

But I come back to the point that there is need for this legislation. This bill goes some way towards a solution. It is not the total answer. Risks cannot be taken out of financial transactions. Along with this, it is absolutely understood that there is a need for the public of New Zealand to be given more information, as well as a need to look at a credit rating system. This bill goes some way to doing that.

Dr PITA SHARPLES (Co-Leader—Māori Party) : Tēnā koe, Mr Assistant Speaker. Tēnā tātou katoa. This bill has the primary purpose of implementing regulations for non-bank deposit takers. It is interesting to even consider what is meant by the concept “non-bank deposit takers”. It reminds me of a longstanding discussion about the use of the term “non-Māori”, a term that places all the emphasis on what people are not, rather than on what people are. I have always considered it more appropriate for people to define their own identity, their own cultural heritage, whether it be as Pākehā, tauiwi, Scottish, African, or Tongan. So I come to this bill wondering how it is that we are implementing regulations for finance companies, building societies, or credit unions by considering what they are not; in other words, deposit takers not of a bank. This bill, therefore, defines the default position—what these deposit takers are if they are not deposit takers of a bank.

This bill implements a new framework that will require all deposit takers to comply with minimum prudential standards, as enforced by trustees and the Reserve Bank—standards that in themselves will ensure that care, caution, and regard are taken in providing for the future. We in the Māori Party can think of no better goal than to legislate for care and caution in the context of investment strategies. Such principles will be welcomed, we know, by the lobby group Exposing Unacceptable Financial Activities. It has been established to stand together in solidarity with the victims of the finance and investment industry collapse. Its very reason for being is to ensure that New Zealanders are given every opportunity to receive information, to apply for legal aid, and to pursue multiple avenues to reach a just resolution for all victims of failed finance companies. So we come to this bill alert to their suffering and wanting to see how this legislation will allow deposit takers to better care for and protect the finances of their investors.

Exactly how severe this crisis has been on New Zealanders is perhaps best represented through the words of Exposing Unacceptable Financial Activities coordinator Suzanne Edmonds: “Investors lives are in total despair coupled with economic insecurity, such as losing their homes, while New Zealand sits back watching the games and neglect by those who have a duty of care, slopping around discrediting us all.” The Māori Party takes very seriously our mission to listen and to hear the voices of the voiceless. We have heard the pain of the people who have taken the fall for the company mismanagement. We have heard the pleas for accountability and the collective stand to insist for compliance enforcement upon the finance industry. We must not overlook the victims of finance collapses, including those of Bridgecorp and Blue Chip.

Hon Mahara Okeroa: That’s right.

Dr PITA SHARPLES: Cool, bro. The Māori Party is aware of a number of whānau whose quality of life has virtually disappeared overnight—whānau who lack the funds to take legal action; whānau who have had to sign their homes over in mortgagee sales simply to stay afoot. The headlines may highlight the dollar amounts lost and the fact that 13 firms have failed in the last 18 months owing 61,341 investors $1.5 billion, but what has hit home hardest for us is the real stories of lives hurt by Hanover Finance—victims of money managers who have mismanaged their life savings; stories of real grief.

We were interested in the views the Institute of Chartered Accountants of New Zealand expressed to the select committee. It believed that the case for a more prescriptive, heavy-handed prudential regulatory regime for non-bank deposit takers had not been sufficiently made. Its view was that the collapse of finance companies is not sufficient justification, as failures are happening in other jurisdictions that are more regulated than New Zealand. Its view was that such measures should be used only in extreme circumstances where the risk of the market failure and significant harm were relatively high. However, we cannot overlook the fact that since the Institute of Chartered Accountants of New Zealand made its submission in March this year 16 more finance companies have entered into difficulties, with some entering into moratoriums and some going into receivership, and that eight more mortgage trusts or property funds have closed or suspended the repayment of investors’ funds.

Perhaps the more compelling analysis, in our view, was the advice we received from the Federation of Māori Authorities. It contended that regulations to increase prudential standards are urgently needed to tidy up the sector and make it more accountable to its investors. In fact, if anything, they should have been in place a whole lot earlier. We know the reality that a lot of mum and dad investors, including Māori, have been investing their savings in finance companies without realising the actual nature of the risk that they are exposed to. It is that long lost hope, when our families are struggling to survive, to pin our trust on and have confidence in finance companies to create the pot of gold at the end of the rainbow—a hope that, as the reports remind us, is often not well placed, as these companies do not necessarily have the prudential rules and standards in place to properly protect their investors. The common misconception is that there are standards in place and proper monitoring, but there are not. I commend the advocacy of groups such as Exposing Unacceptable Financial Activities Society, which has so bravely represented the realities of those who may well have otherwise lost hope.

We in the Māori Party will support this bill, as we believe the changes will allow deposit takers to better care for and to protect the finances of their investors. We also support the fact that the changes allow the Reserve Bank to increase its ability to regulate, monitor, and protect the New Zealand finance system and economy. Such attention to the financial infrastructure is, we believe, important for the kotahitanga—the nationhood—of this place, this country of ours. Finally, we want—and I am sure every other member of this House joins me in this—to minimise financial collapses. We have heard the impact the collapses have had on families and on the economy. For all these reasons, we will vote in support of this bill at its second reading.

CRAIG FOSS (National—Tukituki) : The National Party is voting for the Reserve Bank of New Zealand Amendment Bill (No 3). I acknowledge the previous speakers and I will just touch on a couple of points Dr Pita Sharples raised.

Currently there are Acts and legislation to regulate banks. With reference to that word “bank”, an institution cannot have the word “bank” in its name unless it is regulated by the Reserve Bank. That is why the other institutions are described as “non-bank”, because a completely different tree of regulation is set up—there are trustees involved etc. So that is where “non-bank” comes from but I pick up the point that it is funny to be talking about what is not a bank, rather than these financial institutions, as we generally understand them.

This bill is actually part of a suite of bills: there is the Financial Advisers Bill and the Financial Service Providers (Registration and Dispute Resolution) Bill, which are on the Order Paper and before select committees at the moment. I make the point that many non-bank financial institutions have actually survived, and their depositors’ moneys are quite safe. They obviously followed quite conservative strategies—perhaps there is a bit of luck involved. But unfortunately, and very sadly, some funds have been lost. We are very sympathetic to that, but we also have to distinguish between organisations where illegal or misleading behaviour has been alleged—and I repeat the word “alleged”—and the Serious Fraud Office is currently investigating some of those larger institutions, and institutions that have come to difficulty because of the credit crunch, funding crises, and the inability to raise further funds, so they have had a market difficulty as opposed to alleged dodgy behaviour, which the Serious Fraud Office is looking into at the moment both in New Zealand and in Australia, I understand. I think everyone in this Parliament is very sympathetic and wishes all speed to the Serious Fraud Office and the appropriate agencies to find any dodgy behaviour and arrest and bring those involved to account. Many families and individuals are suffering immensely because of some very, very dodgy behaviour.

But there is another point that seems to be lost on many commentators. At the same time as these three bills are going through—the Reserve Bank one here and the other two I just spoke about—there is, of course, the monetary policy inquiry. It seems to have been missed by a lot of commentators that actually they are touching on many of the same issues. In this bill here we talk about capital adequacy, prudential ratios—basically everything that the non-banks influence. They have a part to play, of course, in the financial system—as the monetary policy inquiry is looking at across the sector, I guess at a much more macro level. As we go through the Committee stage I will be talking particularly about some of the technical pieces in there, and I will seek advice on the technical stuff from Mr Doug Woolerton as we go through further.

But there is a concern—it comes from here and I raised this concern at select committee—that there is a balance. It is a fine balance, and I am constantly concerned about any politicisation or further influence of monetary policy via some of the methods and tools that are in this bill here, and the confusion of prudential regulation with monetary policy. They are totally different. The moment there is greyness between those areas we are in trouble. If members think our interest rates in New Zealand are high now, I tell them that any removal of that certainty—those Chinese walls—will actually add further to the New Zealand risk premium that we currently suffer under, and which has actually got worse, particularly over the last 9 years.

It is all about risk. This legislation sets up a framework for non-bank financial institutions—let us just call them things that are not banks; it is a bit easier—that is about risk. It is about the risk of their funding stream, and the Reserve Bank looking to see whether they are actually too exposed—whether they have lent for 10 years and are borrowing every 3 months. The Reserve Bank will look at that and say that if the tap gets turned off for 3 months the financial institution will be in deep trouble. That is actually the exact problem many institutions are facing right now. It is compounded by the credit crunch that started in the United States and arrived in New Zealand about the middle of last year. But it is accentuated here because our interest rates start so much higher, and there already starts to be a risk premium in New Zealand. Sadly, New Zealand is at the back of the queue when we are lining up, whoever it is from New Zealand, to try to find funding in times of crisis. This is the exact problem that many of those pretty sound institutions are having right now: they have lent for 10 years and borrowed for shorter terms.

We can think, way back, to the PSIS problem—in the early 1970s, I think it was—and to the problem JBL had way back then too. It is a common theme: when any of these institutions run into difficulty, it is simply because their funding does not match their obligations on the other side; their liabilities are short term, and their assets are long term. They have borrowed short and lent long and, as interest rates go higher, they have to pay more, they have negative cash-flow, or sometimes that cash flow is turned right off. That is the big problem many of those financial institutions are facing right now.

Another point that I raised throughout the period when the Reserve Bank of New Zealand Amendment Bill (No 3) was before the Finance and Expenditure Committee, was that this issue is about risk, and there has been a merging of all things financial, not only within New Zealand but also around the world. There has to be a level playing field, because if a bank and a non-bank financial institution have the same funding profile, and the same asset and risk profile, the requirements upon them should be the same. Otherwise, the Reserve Bank, or—as a clause in this bill allows—even the Minister of Finance, can start to skew or favour one particular type of organisation over the other, and we do not want to go down that track.

It is really a balance between our need and our want as parliamentarians to provide for the public good a framework to ensure that those who do not fully understand what they may be getting themselves into when they invest in something after seeing some flash advertising programme on TV with celebrity presenters etc., and without really understanding the risks of doing so—there is a tension between that and, at the other end of the spectrum, the principle of caveat emptor, or let the buyer beware. I think we are all pretty much in the middle space there. There are many companies that have—deceptive is not quite the right word, perhaps misleading is the correct word—implied guarantees of people’s funds as they were invested, and in fact those guarantees turned out not to be there once the surface was scratched. This bill starts to address that, and brings, as it states in the introduction, some accountability and transparency back into all things non-bank. I think it is a sign of the maturity of our financial sector that most organisations have come round and are now quite supportive of this bill. The current crisis and the issues people are having regarding non-bank financial institutions are making the bill more pertinent.

We also need to note that there are about only 70 or 80 non-bank financial institutions in total—and that number is declining—and I think they manage about 10 or 15 percent of all funds under management in New Zealand. That is my point: yes, there have been some terrible losses, but our financial system is actually quite sound. Unfortunately, in the case of many of these institutions, the perception of the risk to investors was not understood, was not particularly apparent, or perhaps was somewhere down in the small print. That is not acceptable, I do not think, to anyone in this House or even to the common person out in the street.

As we go through the other parts, I will also speak about this thing called Basel II, which defines how all these capital adequacy ratios are set etc. But it is fair to say that actually there are existing frameworks out there, which banks have used for a long time. Banks also get into trouble, and then they do come right, but there comes a point when a bank gets so big that, of course, the regulator cannot afford to let that institution fail. We have seen that to a massive extent in the case of Northern Rock in the UK, Fannie Mae and Freddie Mac in the United States, and, in fact, in the case of some Australasian banks too, unfortunately, where some larger banks have absorbed some of the minor institutions into their own balance sheet. Although National is voting for the bill, I say that we just have to be careful that an implied underwriting or guarantee by the Reserve Bank or the taxpayer of these non-bank financial institutions is not given. It is a very slippery slope that we go down, once we get into that space. The tensions of the current financial crisis make that quite tempting, and we just have to resist that. Thank you, Mr Assistant Speaker. I look forward to speaking through the Committee stage.

• Bill read a second time.

Hon Dr MICHAEL CULLEN (Leader of the House) : I move, That the Subordinate Legislation (Confirmation and Validation) Bill (No 4) be now read a first time. At the conclusion of the first reading debate I will move that the bill be referred to the Regulations Review Committee, where I am sure, under the estimable leadership of Dr Richard Worth, the committee will deal expeditiously with the bill and return it to the House. This bill of course must pass before the end of the year, not before the election, in order to avoid certain rather nasty consequences for large numbers of people, including New Zealand superannuitants. This is a routine annual bill to confirm and validate items of subordinate legislation that, in accordance with the confirmation and validation provisions in the Acts under which the various instruments are made, lapse at stated times, unless earlier confirmed or validated by Act of Parliament.

This year the bill provides for Parliament to confirm, or validate and confirm, 14 Orders in Council made under 10 Acts. Two apply movements in the CPI to the rates of social security benefits, New Zealand superannuation, and war pensions. There are four under the Customs and Excise Act 1996, and two of those apply movements in the CPI to rates of excise and excise-equivalent duties on alcohol and tobacco products. The other two prohibit the importation of trout and trout products, and prohibit the export of cattle, deer, goats, or sheep for slaughter, except with the consent of the Director-General of the Ministry of Agriculture and Forestry.

Two orders under the Tariff Act 1988 amend the Tariff concession reference No. 80. This concession covers the importation of passengers’ baggage and effects that are not intended for gift, sale, or exchange. Two of the orders deal with commodity levies, which of course go through a process with the industries involved. Regulations made under the Animal Products Act 1999 increase total revenue for verification services provided by the verification agency, and cap the new verification agency disestablishment charge.

An order made under the Civil Aviation Act 1990 increases the annual levy to be paid to the Civil Aviation Authority by the Airways Corporation, MetService, and specified aerodromes to fund the aeronautical information service. An order amends the schedule of the Electronic Transactions Act 2002, which lists enactments that are excluded from the application of Part 3 of the Act.

The final order to be confirmed is made under the Road User Charges Act 1977, and increases from 1 July certain rates of road-user charges. This is to ensure that operators of diesel vehicles contribute more equitably to the funding of land transport activities, once all petrol excise duty is directed to the National Land Transport Fund. Effectively, we are now moving to a fully hypothecated system of excise duty on petrol, with all the money going into the National Land Transport Fund. Of course, it is therefore necessary to adjust the road-user charge system to make sure that those who are using diesel vehicles and paying road-user charges are treated equitably—or, more precisely, that those with petrol vehicles are treated equitably in relation to those who have diesel vehicles and are paying road-user charges.

Dr RICHARD WORTH (National) : The previous speaker, Dr Michael Cullen, succinctly outlined the scope of the Subordinate Legislation (Confirmation and Validation) Bill (No 4), and, as he said, it is to go to the Regulations Review Committee. It is limited at this part of the urgency debate simply to the first reading. The plan of action is that it will go to the Regulations Review Committee, which will meet next Wednesday and come to a view on whether these particular delegated provisions should be confirmed and validated.

There are perhaps a couple of points to be made in the context of a first reading speech. First, the purpose of the bill is to confirm and validate certain subordinate legislation that, in accordance with confirmation and validation provisions in the Acts under which it is made, lapse at a stated time unless confirmed or validated by Act of Parliament. So—if one likes to put it this way—there are a whole lot of sunset provisions in these delegated provisions, which require for continued life a further parliamentary step. If one looks through the bill itself one sees that in some cases the subordinate legislation is to be confirmed and in other cases it is to be confirmed and validated. Nothing really turns on that; it simply relates to the empowering provision in the statute requiring validation or confirmation and validation.

The step of confirmation and validation does not itself cure any invalidity in those particular provisions. As the previous speaker said, a raft of statutes and associated delegated legislation is affected: the Animal Products Act, the Civil Aviation Act, the Commodity Levies Act, the Customs and Excise Act, the Electronic Transactions Act, and so on. I thought I would just take as an example, to illustrate the process, one such Act and its related subordinate legislation. I have chosen the Civil Aviation Act 1990. It is interesting, actually, to see that the dates of all of these pieces of primary legislation are all now of an age—the latest would be 1999. So it seems that this drafting technique may not be in favour as much as it used to be.

But just, for example, looking at the illustration I have chosen—the Civil Aviation Act—one sees, in section 42A and the later provisions that follow, a power given to the Governor-General to impose levies. The levies may be in respect of a range of aeronautical activity and services. But under section 42C there is provision for “Levy orders to be confirmed”. That is what we are talking about here. Under section 42C(2), “Every such Order in Council shall” expire at a fixed date “except so far as it is expressly validated or confirmed by Act of Parliament passed during that year;”. That is why Dr Cullen said that there is a degree of urgency in seeing this legislation in place before the end of the year.

Then if one looks at the relevant piece of delegated legislation—in this case, the Civil Aviation (Aeronautical Information Service) Levies Amendment Order 2008, which was made on 26 May—one sees that a range of levies are set for a number of airports throughout New Zealand. So the aeronautical information service levy for Christchurch, for example, is $39,526, that for Wellington is $47,852, and—the final example—that for Westport is $299.

The Regulations Review Committee will go to all of the relevant ministries, examine their responses for the justification for the legislation, and then report to the House. I know it is certainly the hope of National Party members that we will see the Subordinate Legislation (Confirmation and Validation) Bill (No 4) back in the House in good order for the further steps that must necessarily follow—those further steps being a second reading, Committee stage, a third reading, and the Royal assent.

SHANE ARDERN (National—Taranaki-King Country) : I rise in support of the Subordinate Legislation (Confirmation and Validation) Bill (No 4), as well. I know that the bill will be well handled in the Regulations Review Committee, chaired by our very able colleague Dr Richard Worth. I will just touch on a couple of issues that are of interest in this legislation.

I refer specifically to clause 10, “Customs and Excise Act 1996”, where subclause (a) states “Customs Import Prohibition (Trout) Order 2007 (SR 2007/298)”. When I look at the Order Paper I notice the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill, in the name of the Hon David Parker, languishing down at No. 51. I inform the House that when I arrived here—I think it was in the forty-fourth Parliament, briefly, when I first came here—that proposed legislation was sitting on the Order Paper at, I think, about No. 51 or 52, or somewhere in that order. Here we are today in the closing hours of the forty-eighth Parliament, and I see that the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill is still on the Order Paper. It would be an interesting thing, given that we have the Leader of the House here with us, to find out whether the Leader of the House intends, with similar legislation to this bill, to bring forward the conservation of trout bill in this Parliament. Otherwise I am sure it will turn up at about No. 51, 52, or 53—or something like that—in the forty-ninth Parliament.

There is an interesting process on bills like this one, and I notice that this is the No. 4 bill, so I presume that it happens annually. Therefore, for the last 4 years we have had a rollover provision—in this case, the Subordinate Legislation (Confirmation and Validation) Bill (No 4). It is a useful vehicle, I think, for the House to tidy up and validate bits of legislation that potentially would roll over—or will, indeed, roll over—and collapse if that did not happen. The only question, I guess, that comes from that is whether this is a good way to deal with legislation in general. If it is, why are there not more Acts of Parliament that have—I am not sure whether this is the right legal term or not—a sunset clause in them? Such Acts would therefore roll over on a regular basis and then be subjected to a process such as that gone through in the Regulations Review Committee, where the original intent of the Act, or the reasons for the Act in the first instance, would be able to be scrutinised and it would be deemed whether they were still valid.

There will be an interesting situation going forward, because I know that a colleague of mine not too far from where I am right now has some intentions in the future to bring about an opportunity for legislation to go through a filter whereby the cost of implementing that legislation versus the potential benefit from it will be scrutinised. This type of bill might be a vehicle for that to take place—or a part of that vehicle.

I would also like to pick up on a comment the Minister made about the changes to the Road User Charges Act 1977, and to say that this is actually a good move. For too long, although most people thought excise tax was taken for the purpose of roading, it has not been spent for that purpose.

• Sitting suspended from 1 p.m. to 2 p.m.

LINDSAY TISCH (National—Piako) : National will be cooperating with the Government on the Subordinate Legislation (Confirmation and Validation) Bill (No 4) and supporting its referral to the Regulations Review Committee, which Dr Worth spoke about earlier, and of which I am a member, along with Eric Roy, on the National side. We will be happy to support this bill. We know how important it is to have this legislation back in the House, and National will be supporting it.

• Bill read a first time.

• Bill referred to the Regulations Review Committee.

Hon ANNETTE KING (Minister of Transport) : I move, That the Public Transport Management Bill be now read a second time. I would like to thank the members of the Transport and Industrial Relations Committee for their work on this bill, and I fully support the changes that have been made to improve its workability. If we want New Zealanders to move towards a more sustainable transport system, we must create a public transport system that is a realistic alternative to the use of the private car. It is therefore essential that New Zealand’s public transport services are affordable, integrated, accessible, safe, responsive to change, and, above all, economically, socially, and environmentally sustainable. With the requirement to reduce our carbon emissions, and with high oil prices, there is a need to increase public transport provision. We are already seeing a rise in the number of people using public transport, with approximately 32 percent more trips being taken on public transport in 2006-07 than in 2000-01. This bill will empower regional councils to better plan and manage public transport services. It will give them the tools to do what they need to, when it is needed, and where it is needed.

More than 80 percent of services are contracted and subsidised by ratepayers and taxpayers. Councils set standards for these services, but they cannot do so for the 20 percent of services that are run commercially at the operator’s initiative without a contract. These are called non-contracted services, or commercial services. The bill would empower regional councils to impose controls on all commercial services. The current lack of control over, and information about, commercial services is hindering the ability of regional councils to achieve best value for money, and to effectively plan and manage public transport services. It is critical that public transport services are effectively planned and managed to ensure value for money from the $909 million of ratepayers’ and taxpayers’ money that is forecast to be spent on public transport services in 2008-09.

A wide range of submissions on the bill were received, and a number of changes have been made in response. The most significant is the inclusion of an oversight mechanism to allow existing commercial public transport operators the right to appeal to the Environment Court against controls imposed by regional councils. A number of criteria for adopting controls, and appealing against them, have been added to the bill. This will help to ensure any controls set are justified. The bill also defines the transport-disadvantaged more clearly—not listing groups that may be transport-disadvantaged, but focusing on what it means to be transport-disadvantaged.

It has been made clear that accessibility standards, for example, requiring super-low bus floors, may also be set. Accessibility standards for public transport services have been defined so that it is plain that accessibility is not just about being able to get on to the bus or ferry but also about having access to information, identifying the correct service, getting to and using seating, and being able to get off the service in the right place.

A number of provisions have been clarified and improved, including setting out the development and content of regional public transport plans, who must be consulted, and when. New criteria for determining when the bundling of services is justified have been added. This bill will enable regional councils to set their notice periods for commencing, varying, and withdrawing commercial public transport services. The timing and process for decisions regarding registrations and deregistrations of service have been improved, so notice periods can be extended, while allowing operators a clear right to be heard.

At present, commercial services can be registered, varied, or withdrawn in 21 days. Operators can register some services as commercial if their tender for a contract is not successful, or even while tenders are still being sought, or register part of a timetable of services as commercial. This can inhibit competition for contracted services and give an operator a financial advantage for the contract of remaining non-commercial services in the timetable.

This bill will give regional councils more time to respond to changes in commercial services and ensure continued delivery of services to their communities. The bill will enable regional councils to access more information from commercial public transport services, such as detailed patronage information, and this will help assist in better planning. Monitoring powers have been added so that regional councils can ensure that commercial services are meeting the standard set in their region. Requirements for providing information about commercial services have been improved so that regional councils can use this information for developing plans now, rather than having to go through a complete planning process before being able to access this information. Where information is commercially sensitive, requirements governing its release have been tightened so that such information will be protected, unless there is an overriding reason not to do so.

Regional councils will be able to set quality and performance standards. Quality standards have been defined, and regional councils will be able to require the use of lower-emission buses and specify standards for such matters as accessibility, comfort, and customer service training. Performance standards will help to ensure that services are reliable and run on time.

This bill will enable the integration of services, ticketing, and fares across a region. If regional councils choose to use this provision, services can be scheduled to connect with each other. All operators will be required to accept the same tickets, and travelling on public transport will be made a whole lot more simple. I would like to take this opportunity—[Interruption] I beg the member’s pardon?

Hon Bill English: You’ve got to be joking. It won’t be simple.

Hon ANNETTE KING: The member has just said that it will not be simpler. I would say that he has never travelled on a bus, because anybody who gets on a bus with one ticket, then has to buy three or four more tickets to travel on a ferry, a train, and a different bus service finds it very difficult indeed. I say to the member that he should try using public transport in Auckland to see whether it is simple.

I take this opportunity to signal my intention to introduce a Supplementary Order Paper. Given the recent passage of the Land Transport Management Amendment Act 2008, a number of minor and technical amendments are needed to align this bill with that Act.

Once again I thank the Transport and Industrial Relations Committee for the work it has done on this bill, and emphasise the importance of this legislation in enabling regional councils to effectively plan and manage public transport and respond to rising demands.

This is a very good bill. It will certainly mean a lot to the passengers who travel on public transport. This bill is aimed at ensuring we have more people travelling on public transport than we currently do, and to better integrate it, to better align it, and to give better standards. It will give consideration to those who are disadvantaged in terms of being able to travel, and I believe that this bill will be widely accepted by the community. It provides options for regional councils; it does not impose them. It gives councils a range of tools that they can choose to use.

I am surprised at the deputy Leader of the Opposition, who is showing his ignorance in not having read the bill, in not knowing what is in it, and in not caring whether or not the travelling public of New Zealand have a better transport experience. We know that the National Party’s policy is to build toll roads, at $50 a week, rather than to provide more public transport for the people of New Zealand. We believe in better public transport, and we have taken public transport expenditure now, in conjunction with our ratepayers, to close to a billion dollars, which is up from the miserable $40 million a year spent by taxpayers and the National Government of the day. We are seeing real growth in public transport in New Zealand because of that commitment. I know that the Greens would like to see more. They will see more; public transport services will grow over the years. We will see that because of the ability to provide proper public transport services for passengers.

PANSY WONG (National) : We, National, on this side of the House, and the public, are looking forward to hearing the amount of the tolls this Minister will announce in a month’s time. Apparently Labour is very proud of its toll roads, as well. I also want to tell the good news to the Clutha-Southland people down there, because the Minister has challenged the Hon Bill English to use more bus services. So I am sure the Minister is going to put extensive bus services down there in Clutha-Southland so that the Hon Bill English and other good people can travel on them.

No matter how many times the Minister has muttered the words “public transport”, this Public Transport Management Bill has a very clearly stated objective. It is actually to clarify and extend the functions and powers of regional councils, in respect of public transport planning and regulation. It is all about control, it is typical of Labour’s intrusive micro-management, and it shows neither respect for private property rights nor the proper process for passing legislation.

Let me share with people listening in to this debate: currently we have two types of public transport service. One is commercially viable; the operators register with the regional council their intention to provide a service and they receive no subsidy for it. In the Transport and Industrial Relations Committee we listened to some of the operators during the committee process, and some have built up the commercial viability of their bus routes through the involvement of a family business over a long time. Others have been innovative to ensure that their bus routes have become commercially viable. But another type, which we know as contracted services, actually requires subsidies: public subsidies are required to make sure there is a service on that particular bus route.

Currently, the type of operators who provide public services range from city council - owned bus companies, as in Christchurch and other cities, family businesses, or large-scale commercial operators. Some operators, as I have indicated, have registered their intention for a bus route, and have developed it to a more popular base where public subsidy is no longer required.

Before this bill was introduced, there was indeed a quite extensive consultation process. It was carried out to look at three options. Option A, apparently, was the status quo, where bus and ferry services would continue to operate as a mix of contracted or commercial services, and regional councils would have limited control over commercial services that required no subsidy. During the select committee submission process, it was interesting that no matter what backgrounds these operators or submitters came from, they all hailed the Christchurch bus services as an outstanding success, and we remind everybody that the Christchurch bus services have flourished under the current legislative environment.

Option B was an option to empower regional councils to be able to impose control on commercial services. Let us revisit that: commercial services are services where operators register to operate without public subsidy. One can therefore imagine that commercial operators were very apprehensive. They received no public subsidy, but this legislation would introduce more power for regional councils to tell them what to do or what not to do. Members should think about this—we are down to micro-management, such as the colour of buses that a regional council might want to impose on the bus company. There might be pink buses to stand apart from red ones; I would probably welcome blue buses on the road.

So those operators were shocked to find out that the option B they had been consulted on was eventually different from the option B that had been introduced in the bill. Apparently, the Labour Cabinet, after considering the results of the consultation, have introduced more controls, and more powers for regional councils, than there were in the option that had gone out for consultation. But Labour has not had the decency, actually, in the foreword to the legislation to highlight the fact that option B in the legislation has been presented with variation. It is not the original option B.

It took quite a lot of effort for some of us to debate that, and to say that to be fair to the submitters who had been originally involved in the consultation, they should also be able to see the analysis done by officials, in order to offer them the comfort of the original option B and the revised option B, which, according to officials, consists only of technical differences. I can assure members that they are more than technical. But it took quite a bit to convince the committee that the analysis should be released to the operators, because the Labour-led Government always believes that it should keep people in the dark and introduce changes at the last minute to shut down debate or consultation.

The other option, which is known as option C, was to empower regional councils to prohibit commercial services, and to bundle commercial and subsidised services together. Can members imagine? If an operator of a family business, a bus operator, had developed a service over a long time, and had developed a route into a commercially viable one so that the operator did not need to receive a public subsidy, that service could disappear. The regional council could decide that it would bundle it together with something else, and take it away from that operator. Well, in the bill that was introduced, the officials advised us why they had decided to go against option A, the status quo. They said they also rejected option C because that option would prohibit commercial services in a region, which might lead to the reduction of opportunities for public transport operators to be innovative, and would reduce the control operators had over their own businesses. That would potentially undermine business confidence.

So even the officials had advised Cabinet—I presume—to ditch option C and go for option B. There was a shock, then, to select committee members—not to mention submitters—when the chairman of the committee, the Hon Mark Gosche, suddenly introduced the notion to the committee that most people liked option C. Well, it was actually not most people; it was the Auckland Regional Council, the Auckland Regional Transport Authority, and councils largely from Auckland, that were saying “Isn’t it a great idea to give local government the total say on how people should run their businesses?”.

The chairman said that maybe the select committee should forget about consultation and the official advice, and go for option C. Then, of course, we said that option C was outside the scope of the legislation, but we were told by the chairman that he had had a quiet word with the Minister, and that it was all right because the Minister would welcome option C. That is terrible, I thought. Cabinet had rejected option C, and the chairman was trying to get the select committee members into the position of saying that the select committee rather than Cabinet wanted to impose option C.

Well, even New Zealand First, the doormat for this Labour-led Government, can see the writing on the wall in imposing option C and going against the wishes of the great majority of submitters, who had rejected option C. I just point out that I find this Labour-led Government’s total disrespect for consultation and the select committee process incredible.

The last thing I will say continues to be on this process. We found out that the good Regulations Review Committee, chaired by my able colleague Dr Richard Worth, had sent us advice on some major concerns it had about the regulatory-making powers in the bill. Unfortunately, the letter went astray, but then the chairman of our select committee would not agree to having a proper process for us to bring this bill back to the select committee for a proper debate before it was brought back to the House. National would not agree to a bill that had taken away private property rights and had ignored the consultation results.

Hon MARK GOSCHE (Labour—Maungakiekie) : It is a very sad day when the National Party’s transport spokesman, the Hon Maurice Williamson, who is a former Minister of Transport and the deputy chair of the Transport and Industrial Relations Committee, which dealt with this Public Transport Management Bill, is unable to speak. Why is that man not allowed to speak?

David Bennett: I raise a point of order, Mr Speaker. The member cannot draw attention to a member’s absence from the House.

Hon MARK GOSCHE: Speaking to the point of order, I say that I did not. Maurice could have been sitting right there. That member has just pointed out that he is not even allowed in the House; I did not point that out. [Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): Does the member have a point of order on the floor? If he does, I did not hear it. The member does not.

Hon MARK GOSCHE: Oh dear! The deputy chair of the select committee, who has been National’s transport spokesman for years and years and is a former Minister of Transport, is unable to take a call today. Has it something to do with the fact that he told the truth about the National Party’s policy on tolling—that it would charge New Zealanders $50 a week? National would give with one hand a $50 tax cut and take with the other hand a $50 toll on the roads.

We on that select committee have heard, year after year, about the Hon Maurice Williamson’s travels. He is the most travelled man in Parliament. He has been to every public-private partnership structure ever built in the world—every bridge, every tunnel, every road. He knows what those public-private partnerships cost in tolls. I do not get out of the country very often, but recently I was in Brisbane, and I went over the Gateway Bridge, which is just one of the toll roads in Brisbane. Can members guess how much the toll was? It was $2.90 each way. I know that Maurice Williamson is sure to have visited that bridge, because he has visited every bridge in Australia, he tells us. He knows how public-private partnerships work, he knows how much the public would have to pay, and he was telling only the truth about the National Party’s policy.

What is the National Party’s policy on public transport? Bill English said during the speech of the Minister of Transport that it was ridiculous to say that integrated ticketing and integrated fares would solve the problem. Well, Maurice Williamson believes that they would. Actually, he tells us that it is the National Party’s policy to have integrated ticketing and integrated fares—so much so that we all got on a bus outside Parliament to see the new smart-card system operating in Wellington, which could be turned into integrated ticketing and integrated fares if we pass this bill, if the regional council is able to have control. But, no, Bill English once again has had to put his transport spokesman in his place. He says that integrated ticketing and integrated fares are not National Party policy, that it is opposed to them, and that they are stupid. Maurice Williamson says that National is actually for them; he told us that in the select committee. He told the transport operators who brought a bus here not so long ago that they are a sensible idea, that they are a good part of the bill, and that National supports them.

So what is the truth? Is it $50 a week or $2 a week? Is it integrated ticketing or is it not? Well, we will wait and see whether the National Party can figure out something as complicated as that before the election. I doubt it can, because poor old Maurice has been sidelined. National members have probably buried him in concrete under a highway somewhere to keep him quiet. Even then we would be able to hear from him, because he would take his telephone with him and make calls. Everybody would still hear from Maurice Williamson what the transport policy of the National Party really is, and Bill English would be working full-time to close him down because he does not want anybody to be frightened by Maurice Williamson’s speaking the truth.

I was listening to Pansy Wong try valiantly to take the role that Maurice Williamson should be filling here today as National’s transport spokesperson. She said there should be no control over the spending of public money. She said it should be left the way it is. That is paraphrasing what she said, but she was saying how terrible it is that the Government wants to have some control over those in the private sector who provide bus, ferry, and train services in this country. The taxpayer and ratepayer subsidy is $909 million—not quite $1 billion. But we heard from the National Party members, who oppose this bill, that the local government authorities, which administer the subsidy on our behalf, are evil, stupid, and venal people who cannot be trusted to put controls on the wonderful people out there who run ferries, buses, and trains, and who, because they are from the private sector, know everything and can do everything without any control by the funder. Well, it will be an interesting situation if that party ever becomes the Government; National would just hand the loot over, just give it to the private sector, and it would not expect to have any control.

National says it would be ridiculous for the regional councils to even have a plan for a bus colour system. There is no control in the bill—we took it out—but we have said there should be a plan. Anybody who knows Maurice Williamson’s electorate will know that buses go there and back. Generally speaking, they are owned by one company, which has maroon-coloured buses. Everybody who wants to go to east Auckland—which is, unfortunately, represented by Maurice—knows to get on a maroon-coloured bus. National says it is OK for that bus company to paint its buses to look like a Milo tin or a Qantas aeroplane, but it is not OK for the people who pay the bills, the ratepayer and the taxpayer, to tell the company to put up a standard sign or to use a standard colour scheme. National members say that is an intrusion into the rights of the private sector.

Hon Annette King: Who’s paying for it?

Hon MARK GOSCHE: The taxpayer and the ratepayer are paying for it, because most of those bus companies receive 60 or 70 percent of their income, their revenue, from the taxpayer and the ratepayer. In some cases, it is 80 percent. But National members say we should leave them alone, we should not tell them what to do, and we should not tell them that it would be simple for consumers to figure out that if they want to go somewhere up the coast, they need to get on a bus of a certain colour. No, no, those members say we cannot have that, because it is an intrusion into the private sector’s right to do business. Well, what a lot of nonsense! That is why the National Party is voting against this bill. It says that the private sector should be trusted with $900 million of ratepayers and taxpayers’ funds, without people elected by the community having any say about it. National says that, no, the local authorities should not be planning, and, no, they should not have control. It wants to leave everything to the market.

Well, we left it to the market in the 1990s. If my memory serves me right, the previous National Government, in all its generosity, was putting $18 million into Auckland’s public transport. Aucklanders wonder why their trains are dilapidated and why it is not easy to get on them at the moment. They wonder why their bus fleet is dilapidated. Well, when the taxpayer and the ratepayer are putting in such a pitiful amount, no signals are sent to the private sector to invest, so it did not. It did not build any new trains, it did not order any new trains, it did not do anything about double tracking, and it did not do anything about grotty railway stations that were open to the weather, covered in graffiti, etc. It did nothing about building wharves so that people could access ferries easily—no, no. Those companies did not do any of that, because National left everything to the market, and we had an absolutely appalling public transport system for a city the size of Auckland.

I have just been to Brisbane and I have seen the wonders of a public transport system that has integrated ticketing, that has a plan, and that has a Government and a local council committed to it. One can get on a Quick Cat ferry and go from one end of the river to the other on a daily pass costing $4.40. If one gets off the ferry, one can, within a certain time frame, get on a bus and travel by road—some of the roads have dedicated busways like the ones this Government has built—or get on a train, all on the same ticket.

Bill English says integrated ticketing is rubbish and the National Party is opposed to it. What would one expect from a visionless outfit like that which does not have a policy yet? If it does have a policy, Maurice Williamson is not allowed to espouse it, because he might tell the truth. This is our truth: public transport up and down the country. Local government has called for it; it supports it. Auckland—all the territorial local authorities and the Auckland Regional Council—was united around option C. The National Party opposed it. The Labour Party members on the Transport and Industrial Relations Committee thought it was worth putting it in the bill as an option. Members opposite, who oppose everything for the sake of it, oppose Auckland having a decent public transport system.

There are something like 200 different fares and products within the public transport system in Auckland alone. The Auckland Regional Transport Authority wants to have it down to 20, and it says this bill is necessary. That is why the Government has put it forward, that is why we have improved it in the select committee, that is why it is necessary, and that is why the National Party will vote against it.

Hon BILL ENGLISH (Deputy Leader—National) : In the context of the last couple of weeks I did not think I would be saying this, but I will say it now: “Thank you, New Zealand First.” It may be part of a rotten coalition that is going down the tubes, but it has saved New Zealand from the extreme Labour vision for public transport. Just so the House is quite clear, option C was a grubby little deal done between the member for Maungakiekie and the chairman of the Auckland Regional Council, Mike Lee, with the Prime Minister’s oversight, which would effectively have given Mike Lee direct control of not just hundreds of millions of dollars of public subsidy but also of hundreds of millions of dollars of private assets.

I do not quite know what other people think, but my experience of the Auckland Regional Council is that it is not the most flexible, responsive, and responsible entity in the country. New Zealand First saw what a huge problem this would be, and it vetoed option C, which is what the Labour Party wanted, and we should be grateful for that. I tell members who else should be grateful for it: passengers. I have listened to Government members, who have now given two speeches about public transport, and they never mentioned the word “passengers”. We have heard all about bureaucrats, and all about plans, and all about tickets, and all about what great legislation it is, but we have not heard anything about the people who use public transport.

Even if one goes with the bill, which is option B+—that is, option B with some of the features of option C—it is still a planner’s dream. If we go with this, the only way people will be able to get a bus service from one part of Auckland to somewhere else, is by turning up to the meetings, knowing how to make submissions, and sitting through a 2-year process to get the regional public transport plan changed—and we know how difficult that will be—and then hoping that some bureaucrat somewhere agrees that a person should be allowed to have a bus service. Even though it is completely commercially viable, planners have to agree that it has to fit in with their nice, neat, tidy plan about how the world should work. Then one might get a new bus service.

This is at a time when oil prices have gone through the roof, and public demand for public transport is higher than it has ever been, and growing faster than it has ever been. So just when it has to be innovative and dynamic, Parliament will take control of public transport in Auckland. It actually works fine everywhere else. Wellington and Christchurch are running just fine under the current rules. In fact, there is quite a bit of innovation going on. In Wellington the Snapper card is really going to take off. It did not need the Government to pass legislation to get the Snapper card and the inevitably integrated ticketing, which is a good idea if people want to use it. But people in Auckland will get a new bus route when the Auckland Regional Council gets round to changing its plans to a 2-year or 3-year process.

What about the people who are most dependent on public transport? They do not have the time or the money to be public busybodies going off to give submissions and sitting through long, boring meetings, because they are working every hour in the day that that household can work to keep body and soul together and to pay their bills. That is the reality of people—passengers, users—whom the Government has not talked about in 20 minutes of speeches on the parliamentary consideration of this bill. The Government thinks public transport is for the people who plan it. It thinks public transport is for consultants. It thinks public transport is there to go down the road of the large, failed, integrated ticketing projects in Australia, which in Sydney and Melbourne have fallen apart. This is exactly the vision that the Auckland Regional Council is trying to pursue—to spend $100 million on it, when it has failed in Sydney. The Wellington Regional Council has put in the Snapper card at no public cost. It has been successful, and the council did not need legislation to pass it.

This is a Labour Party dream: how to make sure that we turn our public transport service into all those things that are the worst aspects of public service. Right now our public transport works, because it is a combination of public subsidy, some legislative oversight, and private sector operators who run it, who are able to innovate, who are able to start new bus routes, and who are able to see public transport not just as a utility but as a service for the public that should operate the way the public want it to work.

For instance, if one lives in the wrong place in Auckland, where the planners are dead keen on this new urbanism and intensification, the planners think everyone should live in high-rise buildings next to a railway station. Well, even if they are right—and I think they are wrong; that is not the right carbon or environmental outcome—most people do not think so. The planners are trying to direct our public transport systems to do something that will not suit most people, as in 95 percent of people, because 95 percent of people do not live in high-rise buildings next to big car parks and railway stations, which is the model. They do not; they live out in the suburbs, often a long way from work; and with oil prices the way they are they need new and innovative public transport. This bill is designed for political control, for inertia, for endless complicated planning processes. It is designed to privilege those people who have the capacity to take part in this bureaucratic morass.

I can tell members that the new urbanist planners will have much more influence on the shape of public transport under this bill than the people who use the service—the 1 million Aucklanders who want good and better public transport. And up to now they have been able to get it. The bus-only route to the North Shore appears very expensive. It is mostly empty, but in terms of public transport measures, it has been quite successful. It did not need this legislation to do it.

The other effect of this legislation will be, if we are not careful, a downgrading in investment. You know, one of the reasons people do not like using public transport is that it is just not attractive. In the past, the buses and the trains have been dowdy and smelly, so people avoid them if they can. That is often the case—it is as simple as that.

There need to be people running these services so that investment in quality public transport and a good experience will earn some rewards from that investment. That is how we will get buses painted in a way that is attractive, ticketing systems that are easy to use and reliable, and integrated ticketing across whole systems—when there is a financial incentive for success. This bill is heading in exactly the other direction because Labour believes that anyone—[Interruption] There we go. Anyone who makes a profit must have ripped someone off; that is what Labour believes. This bill is designed to create the lowest common denominator. Instead of a dynamic and responsive public transport system that responds to the fact that oil prices are going through the roof, we are going to get a stodgy, lowest-common-denominator, over-planned, over-politicised public transport system. It may be the dream of Labour to spend millions and millions, and to pass laws to satisfy the planners and the bureaucrats, but National is with the passengers. We want a system that responds to the needs of the passengers—the people who get on, the people who use it, and the people who cannot afford to fill their cars. I can tell members that no one in Auckland believes that the Auckland Regional Council is interested in the passengers, and I can tell Sue Moroney that no one in Auckland believes that Labour is interested in them. They know that Labour is much more interested in the Auckland Regional Council getting bigger and fatter than in people getting better public transport. That is why National is opposed to this bill.

DAIL JONES (NZ First) : My ears were smarting and I was almost embarrassed as the deputy leader of the National Party started his speech. Did I hear correctly that he was saying “Thank you, New Zealand First.”?

Pansy Wong: Yes.

DAIL JONES: I appreciate those comments and I hope all the people who—

Rodney Hide: Tell us about the money!

DAIL JONES: I ask Mr Hide to tell us about all his secret trusts and to open his books. New Zealand First is the most open political party in New Zealand. We would never get Mr Hide to make a true statement outside this House. He hides in this House. He is very well named—“Hide”—he is a hider.

As far as the Public Transport Management Bill is concerned, New Zealand First has a consistent attitude of supporting land transport management. We supported it in 2004, and we supported it a few weeks ago. Of course, the National Party has a consistent attitude of opposing land transport management. It opposed it in 2004 and it opposed it a little while ago. Let us bear that in mind. The speech we heard from the deputy leader of the National Party, although I appreciate his compliment to New Zealand First, is consistent with his party’s failure to support a proper land transport or public transport management system.

New Zealand First went to a considerable amount of trouble with regard to this legislation. Peter Brown, who is busy at the moment on other public business, was on the Transport and Industrial Relations Committee. I met with Peter Brown and other interested people and another member of our team also met with Peter Brown and interested people, and we have taken a close interest in this legislation. What appears to have been the case is that we had the original option A, then we had, in fact, two option Bs—what I have been calling option B1, which was a compromise situation that was agreed, and then option B2, which was a variation of the compromise.

Now I always take the view that if people sat down and had a meeting and everyone has agreed, they should stick to that agreement. They should not, later on, try to use the power and weight from a certain section to bully another party. Some people are just bullies inside this House and they are puppy dogs outside. We take the view that when people have a meeting and have come to an arrangement, they should stick with that. If they are going to change the arrangement, they should have another good meeting and go through the exercise once more; they should not go around the corner and use a cudgel to try to browbeat someone.

We ended up with option B2, which was set away from the compromise, and then we had this option C. I read the explanatory note of the bill during the first reading—I do not have it here—and it totally condemned option C. In the explanatory note, the people who brought this bill to Parliament were highly condemnatory of option C. I cannot see how they could stand up in Parliament to support option C when they had totally condemned option C when they introduced the bill. New Zealand First will not be supporting option C in any shape or form. If any amendments are brought in the Committee, I say we will not be supporting a bill that has option C in it. Let us make that absolutely clear.

Many changes have been made to the bill. As an Auckland member of Parliament, I say that, once again, sadly, this is virtually an Auckland-type of bill. There are no problems, as I understand it, around the rest of the country but once again we are stuck with trying to sort out something in Auckland. Auckland, of course, has a particular geographical nature. It is an isthmus, very widely spread out, and it is uneconomic to run a proper transport system on a population of just about 1.3 million. As far as that is concerned, it is very difficult. Again, we are on an area of volcanic rock and that makes it very hard to go underground. I am not an engineer but I know that Auckland has peculiar topographical difficulties.

To make it clear, New Zealand First recognises that in the majority of regions public transport operates under a fully regulated model and it can be said that it often operates very well. There are other areas where it operates under a less regulated regime but it can also be said to operate well.

In Auckland there are problems particularly around integrating ticketing and bundling of services to some extent. I am familiar with the integrated ticketing system. I was speaking with someone on the plane the other day and asked him where he was going and how he travelled to work and such like. He used the busway on the North Shore and then he caught another bus or train to go to Mount Eden and he used the same ticket. I regard that as integrated ticketing. I understand integrated ticketing already exists in a form in Auckland. I also understand that we do not need to change the law even in Auckland to have integrated ticketing, if we want it.

It seems to be the case in Wellington—and I have just heard for the first time that there is integrated ticketing there. I have seen the Snapper card and I was very interested in it. In England there is another fish—there is the Oyster card. When my daughter greets us at Heathrow she gives my wife and me an Oyster card each. We get off the plane and we get on to the train and we use the bus. We use whatever we like; the system is totally integrated. That is a wonderful way of doing things and I am wholeheartedly in favour of an integrated system, whether it is called a Snapper card or an Oyster card, or whatever fishy name it is given.

Rodney Hide: Talking about fish, how about scampi?

DAIL JONES: I do not eat fish, so I have no idea what people talk about when they go on to fishy things. I am saving the fish population of the world; that is my contribution to the environment. I do not eat fish and stocks will not run out in 2047 because of me.

There are some who believe option C is a solution to Auckland’s public transport woes. New Zealand First disagrees and will oppose any Supplementary Order Paper that attempts to introduce option C. Let us explain why. In essence we believe Auckland needs an administrative structure that encourages investment, innovation, and efficiency. At the same time, it should hold transport operators to account to ensure that services provided are reliable, convenient, comfortable, and affordable. To achieve these attributes it is essential there is regular consultation between regional administrators and the transport operators. We believe that the bill, as returned from the select committee, achieves that balance, so we will support it at the second reading.

A comment was made about buses and the regulations surrounding the administration of the system, and when I first saw this bill I was very concerned about clause 10 and clause 12, which seem to have a considerable regulatory impact on what could be done, including, even, painting the buses in a particular colour. The question was raised by a Labour member as to who is paying for it. The Labour member seems to have forgotten that the buses are paid for by the private operators who own the buses. If someone owns the bus, surely that person has the right as to how the bus should be painted. That person wants, in many respects, to distinguish his or her company from a competitor’s, so will paint the bus however they choose. Stagecoach, as opposed to Ritchie’s Transport Holdings, in Auckland might want to paint a bus in a particular colour, and others might have their own style. They can say to the public: “We—X company—run our company and our business better than you and in commercial areas you should be using our operation because we are good and we are willing to say that we are good and we want our bus painted our way.”

In respect of that aspect of insisting that buses be painted in a particular way, although we can understand it, all we really need, from the point of view of someone like me who uses a bus now and then, is a sign that tells us where the thing is going. We can stand at a bus stop, see the sign, know where the bus is going, and hop on that bus. None of us is that deficient that we cannot work out where a bus is going. We should not insist a bus be painted in a particular colour when we do not even own the bus. When bus owners want to put on, say, a hundred new buses at a cost of God knows what a bus costs—about $400,000—surely they should have the right to paint their own buses in the way they want to.

I note that some work was done by the Regulations Review Committee. I could see very well, having been a member of that select committee in the last session—and having been in Parliament when that concept was first established many, many years ago—why we would be concerned about clauses 10 and 12. I must say that I congratulate the select committee on the work it did. Many amendments have been made to this bill. Clauses 10 and 12 have been changed, in some respects quite drastically and dramatically, and I am very pleased with the efforts made by Peter Brown to try, with the select committee, to produce a bill that goes some way down the middle.

New Zealand First wants to make sure that all New Zealand has a good public transport system. We appreciate that the solution in this legislation is mainly directed at Auckland, because, once again, Auckland is the problem. We believe that this legislation as it stands is a workable solution to the problems that exist at the present time, and we will be supporting this bill. Thank you, Mr Assistant Speaker.

JEANETTE FITZSIMONS (Co-Leader—Green) : Public transport needs a big hand up if it is to play the role that it needs to play to reduce car dependence, to reduce greenhouse emissions, to protect us from oil price rises so we can still get around, and to reduce congestion in our cities. The Public Transport Management Bill sets out to make progress in that direction, and the Green Party supports it. However, still more needs to be done. New Zealand cities are world famous for their poor levels of public transport and their high levels of car dependence. The famous transport academic from Western Australia, Peter Newman, says that car-dependent cities around the world have the highest proportion of their wealth spent on transport. Auckland spends 16 percent of its wealth on moving people around. That is four times higher than a city like Copenhagen, for example. So it is highly economically inefficient to have public transport services that are less than what they could be.

We also have a quote from Paul Mees, from the University of Melbourne, who says: “The decline of public transportation used since the 1950s has been the worst of any major Western city in the world. Even in US cities today the bulk of transport funding is going into public transport. Auckland defies this global trend.”

I want to talk about public transport in our cities from the perspective of a transport user. I will suggest that what Bill English has just said about the perspective of a public transport user could not be further from the truth. The travelling public, in Auckland and Wellington at least, are voting with their feet. They are moving out of their cars now. We have a reduction, for the first time in history, of vehicle kilometres travelled on Auckland motorways at peak time, and we have a very significant increase in the use of public transport. This is in response to rising oil prices, and also, I think, to congestion. The fact that the trains have benefited even more than the buses, because they are not subject to that congestion, just shows what a significant factor this is in influencing transport choices.

When as consumers we try to make those choices, what do we find? Well, Bill English admitted that we find poor-quality buses, we find poor reliability, we find unclear timetables, and we find a complete failure to connect. Who is running those buses now? It is the private companies that Bill English thinks should retain all the decision making. If we have poor-quality buses now that are old and dilapidated and not very clean, we need to be able to set standards for the quality of public transport services. But we cannot do so unless those services are contracted. That is why we need a fully contracted model. If I want to change from my train trip to a bus to get where I am going, the timetable is not integrated, the buses do not leave when the trains arrive, the tickets are not integrated, and, despite what New Zealand First has been claiming, I cannot buy a ticket in either Auckland or Wellington that will allow me to transfer from buses to trains on the same fare. They do not connect. Yes, we have a Snapper ticket in Wellington, which is very snappy, but it is only for the buses; it does not allow connection with the trains, at all.

We have public transport systems that are not reliable. I have a secretary who regularly texts me in the morning to say that the train has stopped between stations, that she does not know when it will start again, and that the trains are not on time. In order to solve that problem we need more investment and we need more services. If the public are moving from their cars to buses and trains, we need more buses and trains at peak hour to accommodate that demand.

Bill English says that private operators and private owners of buses will give the people what they want, but their elected representatives will not. Do we really believe that? Will we vote in those people who say that they will not give people the sorts of bus services they want, and that they will do something else just because they believe in it? I do not think so. The private operators have not been giving people what they want, which is why there is now a call to have greater public control over those services and greater powers for regional authorities. So, in fact, Mr English destroys his own case.

He thanked New Zealand First for protecting the rights of the monopolist bus companies against the overwhelming submissions of virtually every council and of the smaller bus operators—who do not get a fair go in the competitive system at the moment because of the monopolist behaviour of some big ones—against the submissions of the Planning Institute, and against the submissions of commuters. The travelling public will thank the Green Party for introducing an amendment in the Committee stage to insert option C, which is a fully contracting model, as an option. We will not impose that on any regional council. We believe that regional councils that are elected by the people can decide, in consultation with the people, what the best model is for their city. But they ought to have that option of a fully contracted system. We will introduce that amendment at the Committee stage, and we believe it will pass. I thank numerous colleagues for that.

Regional councils need to be able to ensure that there is coverage of the whole city, that there is a network of buses that go where people want and when people want, that there are common standards of comfort, quality, emissions, and reliability, and that all of these services connect. They cannot do that without the powers of this bill, and particularly without the powers of option C, which we will add back into the bill.

This in itself will not be enough. We are strongly supportive of this legislation. We have talked to the Government about it all the way through. It is a great first step, but more is needed. We have a system that tells people that if they want a new State highway or motorway in their region, central government through the National Land Transport Fund will dish out all the money—100 percent funded out of the fund. But if people want public transport as an alternative to that new motorway, they will have to pay for most of it themselves. That has always been a problem, because as soon as a regional council—however much its people are asking for public transport and however much it wants to provide it—puts up the rates to pay for it, it gets turfed out of office.

It has been distortionary of our transport system for years and years that State highways and motorways are centrally funded, yet if we want to build a railway to do the same thing, and to carry the same people the same distance across the city, Auckland or Wellington will have to fund about half of it itself. We need to change the funding arrangements in the National Land Transport Fund. We need to put public transport and roading on a level playing field. We need to make sure that those alternatives to new roading—those alternative choices for commuters—are funded at the same rate as roads are. Otherwise, we are asking them to compete with one hand tied behind their backs.

That is something the Green Party has campaigned on for years. I have a bill that has won the ballot and has been sitting waiting for its first reading for a year. It would change that balance of funding, but it is pretty obvious it is not going to get its first reading before the election. However, I look forward to it progressing next year and to our getting a level playing field for different transport modes so that at least consumers can have the choice of travelling the way they want to travel.

Dr PITA SHARPLES (Co-Leader—Māori Party) : Tēnā koe, Mr Assistant Speaker. Tēnā tātou. The Māori Party comes to this bill fuelled by our commitment towards developing options to support cheap, free, regular, reliable, and frequent public transport. We are acutely aware that the transport sector is responsible for 45 percent of our greenhouse gas emissions. Our capacity to achieve an integrated, safe, responsive, and sustainable public transport system is thus motivated by our commitment towards the impacts of peak oil, alongside our responsibility to prepare for climate change.

We are interested in any strategies to achieve vehicle fuel efficiency and reduce vehicle emissions, and public transport services are certainly a central part of that plan. As the Auckland Regional Transport Authority advised us, a good public transport system is one of the many tools to support sustainability and climate change initiatives. But our focus is also, as always, on he tangata, he tangata, he tangata. What will be the contribution that this legislation makes towards improving the quality of life for our people? It is more than simply adding a band-aid to the perpetual problem of the urgent need to develop a high-quality public transport system for Auckland.

This House has long been aware that public transport in Auckland is inadequate. There is too much duplication between bus and train services and almost no coordination between services. Constituents in my Tāmaki-makau-rau offices are routinely describing public transport in our region as slow, infrequent, unreliable, and expensive. Worst of all, people who happen to live in the outlying suburbs of Auckland, Takanini, Massey, Clendon, and Rānui are often the least well provided for, yet it is these same communities where the people who need quality affordable public transport are more likely to live.

This Public Transport Management Bill is therefore desperately needed, not so much because of the general lack of satisfaction with our transport options but more because of the need to have the infrastructure in place to ensure there is public transport available for those who need it most. One of the most interesting amendments added by the Transport and Industrial Relations Committee was the importance of regional councils considering the needs of people who can be considered transport-disadvantaged and consulting groups that represent them. In the submissions received on the bill, we heard a range of variations on a theme about what transport-disadvantaged could mean.

Age Concern, drawing on the World Health Organization report Global Age-friendly Cities, emphasises that accessible and affordable public transport is a key factor influencing active ageing, describing it as a lifeline from social isolation for those without access to cars. CCS Disability Action and the Human Rights Commission describe the provision of an accessible public transport system as pivotal to enabling disabled people to participate and live full and enriched lives. They drew attention to the issues associated with social isolation and exclusion when people are unable to move freely about their communities and are trapped within their own homes.

The National Council of Women told the committee that there is a lack of public transport in rural towns and in regions. In fact, as a consequence of the submission a new definition of “transport disadvantaged” was established to refer to those living rurally. The council also argued that city services need to provide better for shift workers and those wanting more flexibility in peak time. The proposed definition of “transport disadvantaged”, as put forward by the select committee, chose to focus on people being at least able to get to basic community activities and services, such as work, education, health care, welfare, and food shops rather than refer to specific interest groups or populations. That is a very useful addition to the bill and we welcome the intent of the legislation in clarifying and extending the functions and powers of regional councils to regulate public transport services provided in their regions.

The bill will enable regional councils to plan for the public transport services they wish to have in their region, and all of that is very positive, especially in the case of Auckland. But we in the Māori Party wonder whether this bill goes far enough. The undeniable fact is that world oil production is peaking now. There is an increasing rate of demand for oil but also an increasing rate of scarcity. For every new barrel of oil discovered, five or six barrels are being used. We inevitably find ourselves in a position in which we have become almost totally oil-dependent for transport. So it is essential that we apply our most creative thinking to considering long-term, feasible public transport options. We may need to electrify more transport, to prioritise urban design around walking and biking rather than create more traffic jams or exacerbate the suburban trap.

It may well be time to turn to the ingenious humans who have for some time been leading the world in providing public transport on a reduced energy diet. Cuba now moves masses of people across Havana during rush hour by a complex mass-transit system that requires little additional funds or fuel. Virtually every vehicle in existence is called on for an elaborate system of ride-sharing, in which commuters ride in handmade wheelbarrows and on buses, animal-powered vehicles, bicycles, and motorised two-passenger rickshaws. Imagine that here in Wellington. Ministers could travel to work in pairs in a rickshaw, and Associate Ministers could be issued with a wheelbarrow each. Imagine the savings that would be achieved.

One of the most innovative Havana inventions is the camel—not the spitting humpback version, but a large mule semi-trailer pulled by a truck that holds up to 300 vehicles. It may not sound like a going concern for Remuera or Kohimārama, but the point is that a massive attitudinal change has taken place that we could all learn something from. In Cuba it is nothing for Government officials to pull over and fill up their Government vehicles with people needing a ride. A donkey cart with a taxi licence nailed to a frame will be travelling in Cuban streets while a common truck has been converted to public transport by welding a set of steps on the back for riders to jump on and off with ease. Dover could ride on that. The Māori Party is keen to investigate all options, all strategies, to consider additional public transport options.

Mark Blumsky: Wheelbarrows.

Dr PITA SHARPLES: Wheelbarrows, yes. We believe that we need to make a long-term investment in improved public transport systems to achieve less oil dependency, less smog, lower petrol bills, and significantly reduced emissions.

There is, however, one last thing I would like to raise about this bill—that is, our greatly weakened consultation processes. The select committee has recommended that the consultation provisions of this bill should be amended by deleting the requirement to consult the public and Māori. The rationale given was that such consultation was too onerous, yet, on the other hand, it was content to extend the requirement to consult commercial operators and to add in a two-phase consultation approach. That new approach consults operators and councils as a first step, then the wider public under local government processes.

We in the Māori Party believe that the effect of this new two-phase approach actually narrows the scope, the weight of public voice, and, significantly, the views of whānau, hapū, and iwi. To this end we will be submitting a Supplementary Order Paper at the Committee stage to ensure that these limitations are adequately addressed. There ends my wheelbarrow!

RODNEY HIDE (Leader—ACT) : It is always a pleasure to speak in this House, and to speak, in particular, on behalf of the people of Auckland, and especially those of Epsom. I would like to thank Jeanette Fitzsimons of the Green Party for putting up option C. I can tell the House that, having considered this issue and having talked to the people of Epsom and the people of Auckland, the ACT party certainly will support option C. We in Auckland are sick of a commercial operator dominating the market and blocking out competition and choice—things that ACT favours.

I hear Dail Jones giggling away in the background. I would not mind if Dail Jones would argue this matter on the basis of policy. I find it very disturbing to have reports from the Transport and Industrial Relations Committee that Peter Brown said New Zealand First had to support option B because it had received money from Infratil. If that is the case—

Dail Jones: I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): I know exactly what the member is—

Dail Jones: He’s a liar—[Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): Mr Hide will stand, withdraw, and apologise.

RODNEY HIDE: I withdraw and apologise.

The ASSISTANT SPEAKER (H V Ross Robertson): I now ask Mr Jones to stand, withdraw, and apologise.

Dail Jones: I withdraw and apologise.

The ASSISTANT SPEAKER (H V Ross Robertson): That is one all. Let us proceed with the game.

RODNEY HIDE: Well, that was a reason that Peter Brown gave as to why New Zealand First had to support option B. I am sorry but that was what the members of the committee heard—unless they have been misleading me. Maybe others there will confirm it for me. I see Mr Bennett nodding his head to indicate that what I said was an accurate rendition of what happened at the committee. I notice also that Dail Jones was not at the committee, which is a bit tough. David Bennett was at the committee, and he has confirmed what I said.

Dail Jones: I raise a point of order, Mr Speaker. He is persisting with his disregard of your ruling. You have ruled that this matter cannot be raised any further, and I would ask you to take the appropriate action.

The ASSISTANT SPEAKER (H V Ross Robertson): I ask the member to desist and to be careful with his debate, because that kind of remark can lead to disorder, and that has its own ramifications. Would the member just speak to the bill.

Dail Jones: I raise a point of order, Mr Speaker. The Speaker’s ruling is 52/1 or something like that. A member cannot repeat in this House a defamatory statement that was made anywhere, and cannot regard it as a reliable statement to use in the House. If something is defamatory anywhere, it cannot be used in this House just because someone has said it somewhere else. That is Speaker’s ruling 52/1.

The ASSISTANT SPEAKER (H V Ross Robertson): That is the one referring to quotes. The member is quite right. That is why I have asked the member to desist and to get on to the actual bill, because he cannot get round Speaker’s rulings or the Standing Orders by the use of quotes.

RODNEY HIDE: I raise a point of order, Mr Speaker. I was not quoting from a document. I want to check with Dail Jones that nothing I am saying is potentially sub judice. Am I OK? Just about every time I get up here to speak, the matter becomes sub judice and the Speaker shuts me down.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you, Mr Hide.

RODNEY HIDE: I raise a point of order, Mr Speaker. I also want to know from Dail Jones whether there is anything sub judice about the Tiberius Corporation. Would that be sub judice?

Dail Jones: We know that Mr Hide breaches the sub judice rule all the time because he is a political coward. He does not have the guts to say it outside the House.

The ASSISTANT SPEAKER (H V Ross Robertson): Mr Jones, this is getting to the stage of being out of control. To imply that someone is a coward is to challenge his or her courage, and that is a personal reflection. The member has been here a long time, and I ask him to be careful with what he is saying. I ask him now to withdraw and apologise for the use of that word.

Dail Jones: I withdraw and apologise. I raise a point of order, Mr Speaker. I can, I believe, describe the actions of a person in a vigorous way, but not the person himself. I am describing Mr Hide’s actions when I use that particular phrase, not Mr Hide, which is why I put the word “political” in front of it.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you, Mr Jones. I ask Mr Hide to desist and come to the bill. I remind members that under Speakers’ ruling 51/1 unparliamentary remarks from a member do not justify an unparliamentary reply. That ruling was from Speaker Guinness. I ask Mr Hide to be careful and speak to just the bill.

RODNEY HIDE: I will be very, very careful and I will speak to the bill. I forgive Dail Jones because he is under a lot of pressure, and why would he not be? I have never asked for him to withdraw and apologise, and I have never tried to shut down Dail Jones’ speeches, because I think he is fully entitled to speak. I forgive him for his slights of me and the ACT party, because I understand the pressure he is under.

I come back to the matter at hand, and it is this. This is why I support option C from Jeanette Fitzsimons. We put a subsidy of about $90 million a year, when I last looked, into Auckland bus services. What I find disturbing about how the subsidy operates now is that if one commercial operator has that subsidy, another commercial operator cannot run along that route—it is effectively blocked. It is a huge advantage to receive the subsidy. It blocks competition and choice. When I talk to the people of Epsom, lovely as they are, wonderful as they are, they ask what is wrong with having another bus run down the road, what is wrong with having a bit of competition and choice, and what is wrong with allowing the Auckland Regional Transport Authority to contract on a competitive basis. People in Epsom understand choice and they understand competition, just like the Green Party members do.

Hon Member: Because they are wonderful.

RODNEY HIDE: Yes, because they are wonderful—the people of Epsom; I have to be careful about praising the Green Party! They have fine memories, by the way, of Keith Locke. He will be telling everyone there to give the party vote to the Green Party—which I respect; we can work with those members on some issues—and he will also be saying: “Give your vote to Rodney, and I promise I won’t run naked down Newmarket in my birthday suit ever again.” Of all the people whom I would want to run naked down Newmarket, I would have to say that Keith Locke would be higher up the list than a lot of others I could think of.

Sue Moroney: They banished your yellow jacket in Newmarket, didn’t they?

RODNEY HIDE: They love my yellow jacket in Newmarket. The people have spoken. I tell members the one thing people in Epsom do not like: red jackets. They hate red in Epsom and in Newmarket. They like every other colour. They like blue, they like Jackie Blue, they love Jackie Blue, but they do not love the Labour Party.

David Bennett: They don’t?

RODNEY HIDE: No one does. ACT supports option C, and I am a little bit disappointed in my colleagues in the National Party.

Hon Members: Oh!

RODNEY HIDE: Yes, I know, I know. I am not being churlish, I hope, and I hope I am not being overly critical, and I hope I am not causing any upset that could derail National’s campaign or unhinge future Cabinet posts. I am a bit critical of the National Party because I thought it favoured competition and choice. No? Oh, it looks like it might be up for grabs. I ask David Bennett to say “Yes”; now would be a good time to say “Yes”. No, the National party members have learnt not to answer even simple questions. David Bennett is in favour of competition and choice, and that is what option C is all about—competition and choice. That is why the ACT party favours it. We are against any attempt to monopolise a service, and we know that with option C Auckland will get a better-quality service, it will get better value, and it will get better pricing, and if members add all that up, they will see that it cannot be too bad. Here is another reason for voting for it: if New Zealand First wants option B, members have to look twice at supporting it!

DAVID BENNETT (National—Hamilton East) : After that very inspirational and entertaining speech, the first thing we need to look at is what the options actually were. Option C was the Government’s preferred option, which basically gave regional councils the greater share of control. There were two versions of option B, as New Zealand First has explained; there was B1 and B2. This is probably not the best analogy to describe the options, but B2 was the option that was followed in the legislation, and B1 was the option that was agreed upon between the parties. That agreement happened when the bus companies, the regional councils, and the Government got together, had a bit of a talk, and decided they could live with option B1. Although it was not quite the perfect scenario, it was the one they believed would make some change to assist in public transport, especially in the Auckland region.

But at some point the Government changed its mind and felt it could not live with the agreement it had made with all the parties involved, so it decided, at Cabinet level, that it would go out on its own. The Government then promoted option C, which basically gave the regional councils the greater share of control. The Minister came into the Chamber earlier and indicated that she will be putting forward a Supplementary Order Paper on this matter, which will essentially change the legislation to option C. It will be very interesting to see how the parties in this House vote on that, and the indication we heard from New Zealand First today is that it will vote against that Supplementary Order Paper. I do not expect to see that happen, because from our experience in the Transport and Industrial Relations Committee to actually see New Zealand First carry through on its word and vote in that manner will be something that National will look forward to. The day I see it will be the day I believe it, I guess. But the ball is in New Zealand First’s court, and it may go against the Government’s Supplementary Order Paper and vote for option B2, not for option C. Mr Hide has raised some issues about how and why that may happen, but that discussion is for another day, I am sure.

Public transport is at the heart of the legislation, and I do not think anybody has a problem with supporting the need for a strong, public transport network in New Zealand. That is especially so in Auckland, which has the largest population density in the country. The region needs to be serviced by an effective and efficient public transport system, which will be a combination of buses and trains, and ferries for a city that has a harbour, as Auckland has. Many options can be taken and things done to assist in that process. One option may be integrated ticketing, and another may be to keep the private sector involved in the competitive aspect of keeping public transport an effective and efficient tool in our biggest city.

The Auckland Regional Transport Authority is the body that has the primary role for organising and managing the public transport of Auckland City and it does a very good job. It is a well-known body that has worked well within the community to achieve its aspirations. We look forward to seeing its preparedness to do that in the future, and maybe even the development of its ability to do so, as we see potential change in the structure of Auckland governance. There may be an extended role, perhaps, for the transport authority under such a change.

However, the authority is not the only body that can play an important role in this process; we need the private sector to also be successful if we want to have a public transport system in Auckland that is effective. The private sector role in public transport is very apparent at the moment. The private sector is probably providing the vast bulk of bus services in the city and it does that through a number of operators, with one large operator having a very high percentage of the market. That operator has done an exceptional job, as well. It has worked with the Auckland Regional Transport Authority in the past, and both parties have come to some very fruitful agreements and provided a lot of good services for the public of Auckland City.

We need to see that process continue. There is no way in which we can take both of those parties and then choose one to have the upper hand over the other. We need both the private sector and the regional council in order to be effective. That was the whole reason why they both came to the Government and reached an agreement. Option B1 was proposed and agreed upon. That is what we need to see happen in the future, but at this stage we are seeing a breakdown between the players. We essentially have a situation where the Government of the day is aligning itself with one of the players, and that is not good for Auckland’s public transport. What is needed in this case is for those parties to get around the table and to work out a viable solution that involves the private sector, gives the Auckland Regional Transport Authority the powers that it needs in order to do its job, and also gives the Government the confidence that public transport service operations will be delivered in Auckland City. That is the goal we should attempt to achieve in this House through this legislation.

But that goal is not being achieved through this legislation, and it will not be achieved if this bill, and the Supplementary Order Paper the Labour Government wishes to put through, are passed. That will seriously damage any chance of that kind of tripartite working arrangement becoming a reality for the benefit of Auckland public transport users. So I would encourage the Government to pull this bill—to actually go back to the parties and work out a viable solution that achieves its goals. The Government has got itself in a predicament now where it has a solution that is favouring one of the parties, and that is not acceptable for Auckland transport users long term, because it will not give the best gains for users as they go forward. That is a true test of governance, and a Government showing leadership in this area will be recognised if people can work out that they have made a mistake or have not actually reached a proper agreement, and then work towards a solution in the area. That is something we have seen lacking in this Government in its dealing with transport issues. We constantly see legislation put forward that is a quick-fix solution but does not take into account the parties and the roles they can play in reaching viable and successful solutions.

It has been an interesting environment in which to see how the options were progressed through the select committee, how they were progressed through the Government mechanism, and how we are now getting to a result that is not in the best interests of all the players involved. That shows a poor understanding of the issue by the Government members involved. It shows an unwillingness by the Government to work with all the people who can be involved in solving these issues for Aucklanders.

The National Party has opposed this bill because we see that this solution has gone too far to one side of the argument. It has not taken into account all the parties involved, and what their potential arrangements and contributions could have been towards reaching a greater solution. So the National Party is very disappointed in the result of this legislation. We believe that if the Government had stuck to the original agreement made by the parties, then the House could well have been passing legislation that was not what everyone wanted but was what everybody could have worked on together and achieved.

If this legislation passes and if the Supplementary Order Paper passes, I think we will see that the private sector involvement in Auckland’s public transport will be very much limited, and that will be to the detriment of the users of the services. I do not think that that is in anyone’s interests when we need to encourage people on to public transport, especially in a major city such as Auckland. Equally, we need to take into account the role of the Auckland Regional Transport Authority, and the need for that body to have some control and provide some solutions it sees as important, as it works on long-term planning in the city of Auckland.

There is the prospect of getting that solution, but it will not come about through this bill. The process by which this bill has arrived at the option that has been voted on today is something that we have all found quite interesting, and an eye-opener into the way politics can work. This bill certainly does not represent the interests of Auckland’s transport users. It does not represent the public good of promoting public transport, and it does not represent the potential contribution that the private sector can make in solving those issues. Therefore we oppose this bill.

MARTIN GALLAGHER (Labour—Hamilton West) : I think the Public Transport Management Bill is a very positive bill. I did not have the privilege of sitting on the Transport and Industrial Relations Committee, and I want to compliment Mark Gosche and his team on their work. A bill that attempts to better integrate commercial services into a regional transport plan is a good one. In that context, I also want to say that this Government has, over the years, increased spending on public transport by what—1,000 percent? By what percentage have we increased investment on public transport? The chair of the Local Government and Environment Committee should know that; I am sure she does. It is by at least 1,000 percent.

One of the reasons why I am interested in greater supervision in respect of the commercial services is the announcement made by Maurice Williamson that we are to be looking at tolling on the Waikato Expressway, which would increase the cost to motorists going from Hamilton to Auckland by $100 or $200 a week. Therefore, ironically, the National Party’s intention to look at privatising and tolling some of our major roads is the real secret agenda. Funnily enough, that will be a huge incentive for people to use bus and rail services, even if they are commercial services with no public subsidy. Obviously, we will take a greater interest in commercial public transport services. I hope we can get a better middle course and not necessarily go down that road.

I have repeatedly asked the member for Coromandel, Sandra Goudie, to get up in this House and talk about the National Party’s plans to toll Kōpū Bridge, but she will not. Dare I say that public transport in the Thames area, between Thames and Ngātea, is also quite an important factor because that will be another—

Hon Dr Nick Smith: More desperate scaremongering.

MARTIN GALLAGHER: Scaremongering? That is not scaremongering. That is the truth. How can we be scared of the truth? The member should not be scared of the truth. That is what is in the top drawer of National’s policies. What is scaremongering about Maurice Williamson going on the Agenda programme and speaking the truth?

Hon Dr Nick Smith: He never said that.

MARTIN GALLAGHER: If the member looked at the transcript of the interview, he would see that Maurice Williamson talked about $5 a trip and he talked about tolling. I think he talked about 50 bucks a week, or whatever. That is what he said. The member should read the transcript of the Agenda interview.

Hon Dr Nick Smith: You are making it up.

MARTIN GALLAGHER: That is not making it up. That is not scaremongering. In that context, this excellent bill has a certain resonance to it.

Obviously, we will take an interest in commercial public transport services, because, should National get into office, I would say that some of those intercity commercial services will get a whole lot more attractive. Certainly, the bus services in the Thames area—and Sandra Goudie needs to take a call on this—just got a whole lot more attractive. [Interruption] She will not take a call? She has been in the House, but she will not take a call. Is it National’s intention to put a toll on the Kōpū Bridge?

In the brief time I have to speak on this bill, I want to emphasise that it is good that the bill will improve the tools available to local authorities for providing public transport services to a set standard in our region. I think the leadership that Environment Waikato, if I can speak in terms of my region, is providing along with the city council is really good. I think there is some work to do in terms of the control and the working of the buses within our city, but I think this gives us a very good template and a very good model on which we can improve our integrated public transport services.

My final observation is to point out what an incredible achievement we have seen in this country after 9 years, in terms of integrated public transport services.

Hon Dr Nick Smith: What a joke. It has gone backwards. Congestion has got worse.

MARTIN GALLAGHER: The Maurice Williamson solution to congestion is tolling.

Hon Dr Nick Smith: Build some roads.

MARTIN GALLAGHER: I am speechless. It is not often that I am speechless, but I am. These guys have not watched the interview on Agenda. These guys do not even know what their own spokesperson on transport has in store. They must know what is in store. It will be congestion charges, it will be tolling, and it will be the Macquarie Bank Waikato Expressway. Can members not see the grand opening? Roger McClay or whoever—

Hon Dr Michael Cullen: Jim McLay.

MARTIN GALLAGHER: Jim McLay; I am sorry, I apologise to Roger McClay. Jim McLay and the Hon Maurice Williamson will be at the opening of the Macquarie Bank Waikato Expressway. We can just see it! Commercial bus services between Hamilton and Auckland just got a whole lot more attractive under that terrible scenario.

Finally, I want to commend this bill to the House. It gives a very, very good platform for the future management of public transport in our region. I hope the doomsday scenario that I just painted never comes to pass.

Hon DAVID PARKER (Minister of Energy) : I move, That the Biofuel Bill be now read a second time. Let me first extend my thanks to the Local Government and Environment Committee. The committee worked hard and gave full consideration to the important matters raised in public submissions. The Biofuel Bill introduces a biofuel sales obligation and makes other legislative changes to provide for biofuels in the New Zealand market. The obligation will provide for greenhouse gas reductions in the transport sector, and will also reduce our dependence on oil. Since the bill was introduced to the House last year those objectives have become all the more important.

Since that time the sustainability of biofuels has also come under significant scrutiny. The select committee made a number of recommendations to sharpen the focus of the bill on the sustainability of biofuels. That is provided by the principles of sustainability contained in new section 34GA(3) in new Part 3A, which is inserted by clause 9 of the bill. Principle 1 states: “Sustainable biofuels emit significantly less greenhouse gas over their life cycle than obligation engine fuel.” This principle ensures that biofuels will provide a genuine contribution to greenhouse gas reductions. In the first instance, the bill requires a minimum reduction of 35 percent. Principle 2 refers to food production and states: “Sustainable biofuels do not compete with food production and are not grown on land of high value for food production.” That principle recognises the concern that where biofuel crops are directly substituted for food production, that can increase food prices by decreasing food supply. Where food supply is maintained or even enhanced, however, that is not a concern. So by-products from food production—like tallow for bio-diesel and rotational oilseed crops—are expressly set out as meeting that test. The third principle states: “The production of sustainable biofuels does not reduce indigenous biodiversity or adversely affect land with high conservation value.” That principle addresses concerns that increasing biofuel production can have negative impacts on the physical environment and, in particular, on biodiversity and precious ecosystems.

From the beginning of the biofuel sales obligations, companies will be required to report on the sustainability of the biofuels they supply, and under new section 34GA the Minister of Energy “must recommend the making of an Order in Council … as soon as practicable” requiring biofuels that are sold towards the biofuel obligation to be consistent with the principles of sustainability. Under new section 34GA(4), if no recommendation has been made by 30 June 2009 the Minister of Energy must report to this House and explain why a recommendation has not been made, outline any alternative methods of ensuring qualifying biofuels are sustainable, and indicate when the associated recommendations will be made.

The second major change relates to the proportion of biofuel that oil companies will be obliged to sell. The obligation now begins at 0.5 percent of total sales on an energy equivalence basis, rising in 0.5 percent increments annually to reach 2.5 percent by 2012.

As a consequence of the time taken to carefully consider the bill, the commencement date has been changed to 1 October 2008. That reduces the period of the first obligation from 9 months to 3 months. There is no impact on subsequent periods.

Once again, I thank the select committee for the work it has done on the bill, and I commend the bill to the House.

Hon Dr NICK SMITH (National—Nelson) : This is not just poor public policy—it is awful. Why on earth would we want to impose substantial additional costs on the household users of fuel, at the very time when all the international evidence is that biofuels have a very dubious environmental benefit? The Parliamentary Commissioner for the Environment did not just say this bill should be amended; she told the Local Government and Environment Committee that it should be dropped. She even went further than that and said this bill will damage New Zealand’s clean, green reputation.

Just a month or two ago an article in Time magazine, “The Clean Energy Scam”, said that although it is hyped as an eco-friendly fuel, ethanol increases global warming, destroys forests, and inflates food prices. So why on earth are we subsidising it? New Zealand’s very well-respected former Minister for the Environment, Simon Upton, wrote in the Dominion Post “the road to hell is paved with biofuels”. We have the 400-page report from the British House of Commons that asks the question “Are biofuels sustainable?” and overwhelmingly concludes that they are not; we have the report from the OECD Biofuels: Is the Cure Worse Than the Disease?; we have pleas from the World Food Programme; we have Oxfam submitting to the committee and pleading with this Parliament not to go down this track; and we even have the United Nations Secretary-General calling on nations to halt the passing of these sorts of laws because they are a hoax.

There are two fundamental flaws in this bill. The first is that despite all that the Minister says about the sustainability standards, those standards do not come into effect until well after the compulsory requirement comes into place. If one ever wanted to have a bill where the cart is being put before the horse, we have it here in black and white. On 1 October, in just 27 days’ time, it will be compulsory for fuel sold in New Zealand to have a component of biofuel in it. But the sustainability standard to ensure that that does any good is at least 9 months away, and I put it to this House that it will be many years more than that. You see, the European Union, which has been debating these same issues, has been trying to establish a standard for sustainability for 2 years, and it has not been able to get there. So why does this Clark-Peters Government suddenly believe that it can instantly get there—that it can somehow get through those issues? Even the Government’s own officials said it would take at least until 2011 to come up with a proper sustainability standard. So I ask the House why we are to have a compulsory requirement—a nanny State, “they know all” approach—before there is any sort of sustainability standard.

The second key flaw is this: ethanol is provided with an exemption from excise tax. That means ethanol is being given a huge tax advantage over bio-diesel. We asked Government members, we asked the Minister, and we asked officials why they wanted to screw the scrum so hard in favour of ethanol over bio-diesel. The answer was blank. They said they would look at that issue some time in the future. Well, why on earth would we want to provide an incentive to import ethanol from Brazil, when there are very good reports that show that that product arises from and helps to drive the destruction of Amazonian forests? Why would we want to compel that? Why would we want to provide a tax incentive for that over, for instance, biofuels that are produced in New Zealand by converting agricultural by-products, such as waste fat from the meat industry, to biofuel?

You see, with this bill we are adding very substantial costs. If we can believe the Minister, he says there is no cost for consumers arising from this bill, because they would use biofuels anyway and these fuels are inexpensive. Well, I simply ask the Minister why he needs to compel their use. If it is economic, people will use them anyway. The idea that there is no cost for the consumer is about as straightforward as Winston Peters saying he has never received a donation from Mr Owen Glenn. The submissions heard by the select committee were that the oil companies say this requirement is likely to cost 7c per litre, and the officials said the cost would be about 2c a litre. Let us take the mid-range figure of 4c a litre; that is an extra $240 million a year. Why on earth, in the middle of a recession, would we want to impose extra costs of $240 million a year around biofuels, when there is an overwhelming international consensus that they are not the right way forward?

I put this to the House. We know that the biggest challenge New Zealand faces is around agricultural emissions, particularly from methane and nitrous oxide. We are spending $3 million a year on research in those areas, and the Biofuel Bill proposes to bank $240 million a year in terms of the cost to road users. I say to the Minister that this bill has got it awfully wrong. How can the Minister and Government members claim there is no cost to the consumer? If there is no cost, why do we need a law that compels people to comply with it?

This bill represents another botched climate change policy. For 9 years we have seen emissions go up at record rates. We have seen huge growth in electricity emissions. We have seen more coal-produced electricity being used than at any time in New Zealand’s history. We have seen the Projects to Reduce Emissions policy fall over. We have seen the negotiated greenhouse agreement policy fall over. We remember the promise of the billion-dollar surplus from Kyoto, and how it fell to pickle. We remember the policy announced on animal emissions levies. We have seen one botch-up after another, for 9 years, around climate change policy, but I have to say this Biofuel Bill is the very worst of them.

I challenge members opposite: why are they ignoring the Parliamentary Commissioner for the Environment, whom they themselves supported? They appointed Jan Wright to that role. Her evidence to the select committee was absolutely damning, in terms of this bill. This bill represents the Government jumping on the bandwagon, just as the wheels are falling off. At the very least, there should be no compulsion to use biofuels until the actual biofuel standards are put into place. The idea in this legislation that we are going to impose on the fuel sector the cost of introducing infrastructure, without knowing what the sustainability standards are, is seriously flawed.

This bill should not proceed. We should heed the warnings of the United Nations, the World Food Programme, the Parliamentary Commissioner for the Environment, and every one of the other submitters who have made it plain that this is flawed legislation. Biofuels do have a role to play in respect of the challenge of climate change, but this compulsory legislation will impose costs for little environmental benefit, and, what is worse still, it runs the serious risk of contributing to deforestation and some of the huge difficulties that the world is facing, as we speak, in respect of food prices and their impact on the poorest people of the world.

I can only conclude with the contribution from Oxfam, which said that in order to fuel our cars, we are going to take food from the mouths of the poor.

MOANA MACKEY (Labour) : I am tending to get a sense of déjà vu. Here we are, with another major climate change bill in the House, the Biofuel Bill, and we have had another speech from the National Party, which claims to support any kind of legislation or policy that reduces greenhouse gases, yet all we got was a speech full of excuses about why National could not vote for another climate change policy brought up by this Government. I say to the Hon Dr Nick Smith, who is a member of the Local Government and Environment Committee, which I chair, that I wonder why he did not listen to the Parliamentary Commissioner for the Environment on the Climate Change (Emissions Trading and Renewable Preference) Bill, which she said absolutely must go ahead, and why he is now accusing the Government of not listening to her on the Biofuel Bill. I suspect it is yet another story of what is good for the National Party being no good for anyone else.

I say to the Hon Dr Nick Smith that obviously he has been very well influenced by the huge business lobby against biofuel and against this legislation. Obviously, he has been lobbied. I wonder whether any donations have gone into the Waitemata Trust from people who oppose this legislation. The select committee worked incredibly hard on this bill. We worked hard on it because we know the climate change issue is a reality for New Zealand, that this measure is doable for New Zealand, that some of it is very low-hanging fruit, and that if we put a bit of time and energy into sustainability standards and into making it clear which biofuels would qualify and which would not, we could do this. We are an agricultural and a horticultural nation. We have by-products from that. We have tallow, and we were told that China is already looking at lowering some of its trade barriers to American and Canadian tallow. We also have ethanol derived from whey, as a by-product of our dairy production.

We heard the submitters who came before the select committee. As always, they were from both sides. We had the oil companies on one side, who did not want to do it at all, and on the other side we had the biofuel producers, who wanted us to go miles in the other direction, because they have an interest, too. It was the role of the select committee to look down the line and find a good compromise: one that is good for New Zealand and good for the environment. What response did we get from the National Party? Its response was that the free market would provide. Well, the free market has been fantastic for the environment over the last 30 or 40 years, has it not? It has been wonderful! The fact is that until this bill came into the House and was being seriously looked at, Mobil Oil did not have biofuels. Before the bill is even passed in the House it has now said it will go down that path, and that is because of this legislation.

I thought it was astonishing that the Hon Dr Nick Smith said that because no one else has implemented this measure, New Zealand should never try to do it. The National Party believes that we should just accept that we are not as good as everyone else, that we cannot think for ourselves, and that we are not smart enough to come up with this kind of legislation. A group of European parliamentarians actually came here to speak to the Local Government and Environment Committee specifically to look at what we had done on this bill. The select committee worked hard. We worked long hours to try to come up with something that, indeed, the Europeans are also working on. In the Labour Party we say we will always try to do the best that we can, in the legislation in front of us, to benefit the people of New Zealand. The fact that Europe or America has not managed to do something is never an excuse for Labour members of Parliament to say we will not even try to do it, which is the excuse we had from the National Party.

I thank the officials who worked on this bill. When they walked into our select committee room for the first time we wondered whether they were interns, because they were so young and fresh-faced. But they were incredibly knowledgable and provided us with very timely advice. I was extremely impressed with the quality of their advice, and I thank them for it. I thank all the submitters who came along to the committee. They often faced very robust questioning, and I thank them for all the supplementary information they were able to provide, at very short notice, so that we could get on with our deliberation. I thank the members of the select committee. I thank the Green member Metiria Turei for all the work she did on the sustainability standards. I also thank the National members of the committee, who, despite declaring their hand pretty early on in the process and saying they were not going to vote for the bill, did stay and work hard with the committee in order to make sure we did all that we could do. I am sorry that they declared their hand as soon as they did. I believe that they might have been able to accept parts of the bill, but unfortunately they could not accept them because they had already stated they were going to vote against the bill before some of our deliberation had finished.

The Hon Dr Nick Smith raised a number of important points in his speech, and one of them was about the issue of the relative tax treatment of fuels. We tried very hard to work out whether that was something we could address. I believe that we genuinely agreed that it needed to be addressed properly, not as a tag-along to the Biofuel Bill. We stated clearly in the commentary on the bill that we believed as a committee that the treatment of ethanol as a fuel that has zero excise duty should end in 2012. We stated that in the commentary in order to send a clear signal. The National Party also believed, as we did, that a number of people had expected that that tax treatment would continue until 2012, and had made investment decisions based on that. So it would have been unfair of us to change that, and, if we had changed it, we would have needed to grandparent that zero excise duty for companies such as Gull Petroleum, which had believed that it would continue. We clearly stated in the bill that we thought not just biofuel but also other forms of fuel, such as compressed natural gas and liquefied petroleum gas, and electric cars should be dealt with in terms of the relative tax treatment of fuels for environmental purposes.

Before I finish I just want to touch on the issue of price. It is very, very difficult for us to guess what the price impact of this legislation may be, because there are many different variables. We do not know how the oil companies will implement their biofuel requirement. For example—

Hon Dr Nick Smith: You should know.

MOANA MACKEY: I say to Dr Smith that we do not know because they are private companies, and we have left the bill very, very flexible because we believe that that is the best thing. We know that overall by 2012, of the total fuel sold in New Zealand, there will be a 2.5 percent biofuel component, and we have left it up to the people who sell that fuel to decide how they are going to get there. If we had not done that, Dr Smith would be yelling at us and saying this was a case of nanny State telling private companies what to do. We have said to the companies that they can decide on how to do it themselves. They can do it through the pumps across the whole country or just in Auckland, just in Wellington, or just in Christchurch, or they can sell 100 percent direct to customers, so that it does not even have to go through a service station—they can get their reduction in that way. All of this will—

Hon Dr Nick Smith: How much will this cost the consumers?

MOANA MACKEY: Well, interestingly enough, Gull Petroleum, which already includes biofuel in its product, is cheaper than the rest of the oil companies. It is cheaper than the rest of the oil companies, and it already sells an ethanol blend. So for Dr Smith to stand up and say fuel will be 7c a litre more expensive, which is what the oil companies said it would be, is wrong. Another oil company said it would be 4c a litre dearer, but our officials told us that if they looked at recouping the entire cost of the infrastructure upgrades that may be required by oil companies, using the oil companies’ figures the cost would come out as being no more than 0.2c to 0.4c a litre more expensive, and it might even be cheaper, than it is now, I tell Dr Smith.

Hon Dr Nick Smith: Why make it compulsory?

MOANA MACKEY: Oh, because the free market has worked really well up till now, I tell Dr Smith. I know the National Party just thinks the invisible hand of the market will deliver for the environment, will deliver for poor people, will deliver for the hospital system, and will deliver for the education system. Dr Smith can just sit back and say he does not have to do anything, because the invisible hand of the market is doing it all for him. That makes it really easy to be a National Minister. But I am afraid that on this side of the House, Labour members believe in actually taking action against climate change, rather than sitting in an office as Dr Smith does, thinking of as many excuses as he can to vote against every single piece of climate change legislation that comes before this House.

Well, Dr Smith should be ashamed of himself, because he knows—he was on the select committee with us—that what he is saying is not true. Yet he will go out there and try to terrify the people of New Zealand. Dr Smith apparently knows what the exchange rate will do, what the price of oil will be, and what the price of ethanol will be—all the things that will be relevant to the overall price of biofuel production in New Zealand. But Dr Smith does not know that. Apparently Dr Smith is saying that the National Party will never support a biofuel obligation unless it can be certain about the international price of oil, unless it knows what the exchange rate will be, and unless it knows exactly how the oil companies will implement that obligation. I say to Dr Smith that those are excuses, excuses, excuses—again, again, again! The people of New Zealand can see through that.

This is a good bill. I thank the select committee for all its hard work.

JOHN CARTER (National—Northland) : I will start off by saying that if anybody listened very closely to that last contribution from the member who has just resumed her seat, he or she would not have heard anything positive in regard to supporting this Biofuel Bill. One of the things we would have expected from the Government, and particularly from the chair of the Local Government and Environment Committee, Moana Mackey, is that they would have offered a whole lot of reasons—good, valid reasons—why this Parliament and this country should be supporting this legislation. But if people listened really closely to every word she said, they would have heard that it was all about attacking Dr Smith for what he said, attacking the fuel companies for what they said, and attacking other people for not saying the things the Government thought they should say. Therefore, there was nothing positive, at all, that would have persuaded anybody to want to support this bill. I would have thought that that member, at least, would come up with one or two reasons why this country should be embracing this sort of legislation. Unfortunately, there was nothing at all positive in her speech.

The second point is that the whole reason this legislation is before the House is that the Prime Minister got out ahead of the game and decided to grab the hose from a fuel pump and put it into a car, and try to get a photo opportunity, while saying to everybody “And this is what this Government is going to do. We’re going to do all this stuff, introduce biofuels, and make everything better.” But the Prime Minister did not even know where to put the nozzle. Actually, it was all about a photo opportunity, but suddenly officials and Government members all had to get in behind and support her, because she had gone out saying that this was what was going to happen.

Unfortunately, what had not happened—and this is the problem with this legislation and, indeed, with the Government’s approach to this whole issue—was the Government doing its homework. We just need to look at commentary from all over the place—from everybody. What does the OECD Round Table on Sustainable Development say about biofuels? It says that they are unproven; it says that it is not certain about them. It does not know whether this is the way we should move forward.

The United Kingdom’s House of Commons Environmental Audit Committee report says that we should hang on a minute; we should just take our time on this—that it has been around for a while but we are still not sure whether it is the right way to go. The G8 conference of legislators said the same thing. The United Kingdom’s chief scientist, the World Food and Agriculture Organization, the Royal Society, the World Bank, and the Secretary-General of the United Nations have all said that there are some real problems about this stuff. It is a difficult way in which to approach a fuel issue. All these authorities are saying that there are real question marks over this issue, yet this Government has decided to proceed.

I draw the House’s attention to two other people who have made comment. The first is the Parliamentary Commissioner for the Environment. One would have thought that if anybody was going to get out there and say “Yep! We are on the right track; this is the way to go. This legislation is going to hit it on the nail.”, then it would have been the commissioner, but she did not. I will read to the House a couple of the statements she has made, which I think are absolutely important for us to take into account: “International concern about the sustainability of biofuels and their true environmental and economic impacts has heated up considerably in recent months—which signals a need for caution.” Biofuels are seen as a way of achieving both lower carbon dioxideemissions and energy security, but Dr Wright does not believe that the mechanisms allowed for in the bill will deliver those two goals. There is the Parliamentary Commissioner for the Environment saying that this legislation is on the wrong track. “Biofuels appear to be carbon-neutral, because plants absorb carbon dioxide (CO2) as they grow, and this is equal to the CO2 emitted when the fuel is burned. However this does not account for the CO2emitted during cultivation and processing into fuel. Lifecycle assessments of a wide range of biofuels shows large variation in CO2emissions across fuels and, in some cases, across countries,” says Dr Wright. “Ethanol from corn in the US, for example, is a very poor performer, with total CO2emissions close to those of diesel.”

Well, we have to say to ourselves that if the Parliamentary Commissioner for the Environment is asking those sorts of questions on this legislation, then surely this Parliament should sit up and take notice. She has said that she is very uncertain about this Parliament and this nation proceeding with this legislation.

I also draw the House’s attention to a report of the Ministry of Economic Development, its briefing paper to the Local Government and Environment Committee. I have to say that it was astonishing to start reading through this paper that that committee put before this House. These are the Government’s own advisers talking about this, and they are talking about the principle of sustainable biofuels: “After reviewing a number of potential principles provided by officials, and suggestions from within the Committee, there does not yet appear to be a consensus opinion. In this sense debate in the Committee has reflected international deliberations on biofuel sustainability. While one might know it when one sees it, sustainability is difficult to define. … At its meeting on Thursday 29 May, the Committee asked officials to provide advice on how principles can provide the best possible direction to the making of biofuel sustainability requirements.” They went on to say that they do not know. They are not sure. They cannot convince us, actually, that it can happen. And these are the Minister’s own officials who are telling the committee that. This paper, if it has not come to the attention of the House, needs to come to its attention.

The next thing people should be concerned about is the issue of impact on food. We all know that we have a major issue around the world about food security. It will be one of the major factors of debate as we move forward, around the world, in the next 20 or 30 years. After the Second World War we had food supplies that without producing any more food would have lasted more than a year. We would have been able to feed ourselves. Currently, the food supply is measured in days, not months. What is now starting to happen, which I think is an absolute disgrace, is that some countries in Europe are asking countries in Africa to grow and export food to countries in Europe that will turn it into biofuels, while the people in those very same southern African countries are starving. Quite honestly, that is an absolute disgrace and it should not be allowed to happen.

Finally, I come to the point that Dr Nick Smith made in his address, which is the issue of price. The previous member to speak, Moana Mackey, talked about the fact that there is debate and argument about whether there will be a cost. What she was not able to tell us was that there would not be. She said that there was some disagreement. She said the Government did not know whether it would be 7c or 1.5c, and that it was not sure what it was. She said that different streams of advice gave the Government different levels of increased costs. But what she did not say, and could not say, was that there would be less cost. We all know that this legislation will impose more costs on this country; it will put more costs on to travellers in this country. The fact is that, whether or not we like it, this sort of legislation, with the infrastructure needed to provide it, will unquestionably cost the transport sector in this country a lot of dollars. So when members of this Government stand there and say: “Yep, we are going to move forward.”, when all the evidence is against it, including the advice of the Parliamentary Commissioner for the Environment and its own advisers, and when so many of the submitters have said that we should not do it, then I say to this House that we have to take note.

PETER BROWN (Deputy Leader—NZ First) : When this Biofuel Bill emerged and was introduced in the House some time ago, we had significant concerns. I could perhaps go even further and say that we had major concerns. Those concerns were strengthened when we read the submission from the Parliamentary Commissioner for the Environment. She summarised at the end of her submission to the Local Government and Environment Committee, and recommended that the bill did not proceed.

Our concerns revolved around a number of issues. First and foremost, we did not see why New Zealand should be a world leader in the adoption of biofuels, but apparently we are not. Biofuels have already been adopted in the USA, Brazil, Canada, most European countries, Australia, China, India, and Thailand. All those countries apparently use biofuels.

The second concern we had was the possibly adverse effect on car engines and the cost for motorists. We thought that motorists might well have to have their car engines modified at some expense, but we were informed that modifications would not be necessary for petrol or diesel vehicles using low-level biofuel blends. Petrol engines tuned correctly for use with ordinary petrol would not normally exhibit any problems when using bio-ethanol petrol blends of up to 3 percent. So that knocked that concern on the head. We were concerned that bio-diesel in a diesel-powered vehicle would clog and not flow properly, but we were told that that concern was needless. One organisation involved in producing bio-diesel told us that tests had been done on it, and it had not been found to alter what the organisation called the cold-flow properties of the original mineral. In other words, that was a concern we did not need to have.

We were concerned that productive land in New Zealand would be used to grow crops to make ethanol. I am told that the select committee modified the bill to ensure that that would not happen. So that was another concern knocked on the head.

We were told that the new infrastructure costs would add significantly to the cost of a litre of petrol or diesel. But we were told that the select committee had looked at this issue at quite some length—that is as I understand it; we were not represented on the select committee—and the figures bandied around to us were anywhere between 4c to 7c a litre. But as the member who resumed his seat some time ago said—and I think that this is in the select committee’s report—it is estimated that the cost will be somewhere between 0.2c to 0.4c a litre, and it might be even less than that. Biofuels might even reduce the cost of fuel. That was another concern knocked on its head.

Finally, we had the concern that John Carter raised—that somewhere overseas, in Africa or wherever, people are growing crops to produce ethanol for the world market. That matter is of concern, but it is happening anyway. It will happen whether or not New Zealand buys into this.

We have looked at these issues as comprehensively as we have been able to, and we believe that this bill should proceed. We note that the select committee recommended that the percentage of ethanol in petrol should be 0.5 percent. It will reduce from 0.53 percent this year to 0.5 percent, and then go up in increasing increments of 0.5 percent for the next 4 years to reach a figure of 2.5 percent in 2012. That is a reduction on what the original bill said; I think the percentage had been 3.4 percent in 2012. So we think, all in all, that this bill has taken the concerns into consideration and has addressed them. New Zealand First will support the bill.

JEANETTE FITZSIMONS (Co-Leader—Green) : The whole world is on a mission to move its transport systems off fossil fuels and on to renewable sources of energy, and we do not have a lot of time to do it because this is driven by two things. It is driven, firstly, by rising oil prices, which indicate that oil production has probably already peaked and will continue to decline, and that prices will rise from hereon, and it is driven, secondly, by climate change, where transport is a major contributor. In New Zealand, 44 percent of our carbon dioxide emissions are from transport, and we have to get that level down.

Biofuels can make a small contribution to this. Nobody here is claiming that biofuels can be the whole answer; in fact, no one thing will be the whole answer. The future will be a jigsaw of sensible, effective, sustainable technologies that fit together in order to give us some mobility in a climate and oil - constrained world. So we need to build capacity for the biofuels that New Zealand can produce sustainably.

How would we make that happen? I will read to members from a letter I received last month: “Following the passage of the Biofuel Bill into law we expect to shortly thereafter announce our intention to initiate the construction of our planned bio-diesel production plant at a site close to our present pilot plant. The initial capacity will be 20 million litres annually, but we intend to double that capacity within a year or two. Our plant is designed to process 100 percent New Zealand - sourced tallow, which is recognised as the most environmentally sustainable feedstock … leading, if you include the rendering plant as well, to a greenhouse gas reduction of 68 percent.”

If one listens to National members, one would ask the question: why will those producers not do that unless the bill is passed? There are answers. Those producers will not do it without this bill being enacted because, first of all, they would be exposed to competition from unsustainable imports of cheap bio-diesel—which comes from palm oil grown in South-east Asia, where people have cleared the rainforest to do it—and we have to put some standards in place or no one will be prepared to produce sustainable biofuel in New Zealand. That is the first point.

The second point is that everybody has been talking today about what this measure will cost. The fact is that the cost of oil is just hovering around a threshold at the moment, where for some of the time bio-diesel is no more expensive than oil and for some of the time it is. We know that at $140 a barrel for oil, bio-diesel does not add to the cost of diesel; at $105 a barrel, it does, somewhat. So without legislation, without an obligation, and by leaving it to the market, there is a stop-go policy of cheap imports that come in when the oil price goes high, and that do not come in when the oil price goes low. It builds no capacity in New Zealand—it does not.

People talk about infrastructure; the National Party loves to talk about infrastructure. Part of the infrastructure that we need is the capacity to make, blend, and distribute small quantities of biofuel to eke out our petroleum, and this is the way we will get it. We need to build that industry here. We have resources. We have tallow as the obvious main one. We have some whey, and that is already being turned into ethanol for some purposes. We have other agricultural and food wastes. We have oilseed rape, which can be grown in rotation with other crops, thereby improving the general productivity of the rotational crops, and that is happening on a small scale now. In the future we will have algae, which are capable of producing bio-diesel while growing on sewage ponds. What could be more sustainable than that? We will also have wood wastes turned into ethanol, or potentially into bio-diesel. The quantities that the bill obliges on the industry are carefully scaled to match what can be produced locally from local resources. That is their purpose. We actually reduced quantities a bit from what they were when the bill was introduced, just to make sure that we were not overwhelmed by imports.

It is very easy to stand here in the House and mislead people who are listening in, by saying what a terrible thing biofuels are, how this bill will lead to world hunger, and how it will lead to lack of biodiversity. The Green Party was the first to raise these issues. At the very beginning, before the bill was even introduced to the House or mooted, we told the Government that we would not support its proposed Biofuel Bill—and we had not even seen it at that stage—unless it had a sustainability clause in it. We made it absolutely clear that, firstly, it had to make serious carbon reductions compared with petroleum, and of course corn from ethanol clearly does not do that. Secondly, it had to not compete with food production, because in the unequal market world that we have, where the stomachs of the poor have to compete with the SUVs of the rich, the stomachs of the poor have no chance of winning that battle. So that had to be ruled out. Thirdly, we had to rule out bio-diesel that compromised biodiversity by clearing rain forests, and so forth. It was a high test, and the Government accepted that challenge.

If we do not pass this bill, we will end up in New Zealand with imported biofuels that do all of those evil things. There is nothing at the moment to stop bio-diesel from South East Asian rainforest clearance coming into New Zealand. There is nothing at the moment to stop biofuels grown on land that used to grow food for the poor from coming into New Zealand. There is nothing even to stop the US’s outrageous ethanol from corn from coming into New Zealand. That is what this bill does, and for National members to stand there and say they are on the side of sustainability but they want to preserve the status quo, where all of these biofuels that are destroying people’s food and biodiversity can come into New Zealand unhindered, is absolutely outrageous.

I heard the argument that the officials did not know how to write a sustainability clause. Well, I do not actually believe that, but the fact is that the Greens have written it for them. And it is a good one. Let us look at what it says. It establishes the principles of sustainable biofuels. First of all, they emit significantly less greenhouse gas over their life cycle than obligation engine fuel—that is, petroleum. Secondly, they do not compete with food production and are not grown on land of high value for food production. That is a high test. Thirdly, the production of sustainable biofuels does not reduce indigenous biodiversity or adversely affect land with high conservation value. Those principles are as clear as one can get. There will be regulations under the bill to give effect to that clause, and I have no doubt at all that in 9 months our officials can write those regulations and get them through.

National members know that the scare stories they have been telling in the House today cannot happen in New Zealand under this legislation. They are pretending otherwise, and I think that that is a wicked thing to do. The core message is that some biofuels are very bad indeed, and we will not have them in New Zealand. Some biofuels are good, and we will get them to happen. Is that actually too hard for people to understand?

I totally agree with the Parliamentary Commissioner for the Environment, who says that the first step we should be taking is to reduce our use of transport fuel—to use our cars less and to use rail and public transport, and cycling and walking, more, and not just to ask what we shall put in the tank. She was right. She gave that advice to the select committee, and I applaud her for doing so. That is why the Green Party continues to campaign on all of those transport alternatives. But when she gave advice that the bill should not proceed because of sustainability issues, she did not know that the Green Party had set these conditions. She had not seen any of the drafting that we were doing with the Minister and then in the select committee. She was commenting on the bill as introduced, which had a placeholder clause on sustainability that I said in my first reading speech was merely a placeholder clause.

So this bill is a no-brainer. It is a small start to getting a sustainable fuel industry going in New Zealand, under very, very strict conditions, and the whole House ought to be supporting it.

Dr PITA SHARPLES (Co-Leader—Māori Party) : In the Māori Party we live by the belief that our people are our greatest wealth. In thinking of the Biofuel Bill our thoughts inevitably turn to the late Mountford Te Mana o Te Rangi Retemeyer. Monte was one of those men whose footprints are everywhere. Deeply committed to the marae of Maketū, Parawera, Āruka, and Te Korahā, he also had time to be chairman of the Waikato District Māori Council, vice-chair of Tainui-Kawhia Forestry Incorporation, director of Protac Investments, trustee for Aramiro Ahu Whenua Trust, chairman of the Kawhia Moana Harbour Committee, chairman of the Parawera Maori Culture Group, and to be involved with schools, councils, prisons, and, in fact, every aspect of community life.

But it was Monte Retemeyer’s role as chairman of the major Waikato-based incorporation Taharoa C Block that has particularly inspired me. Taharoa C Block is a multimillion-dollar incorporation, with about 1,500 shareholders, set up under Te Ture Whenua Maori Act 1993. So when Taharoa C Block presented to the Local Government and Environment Committee on the Biofuel Bill, its submission bears the legacy of Monte Retemeyer. It is a submission that is worth listening to. Taharoa C Block told the select committee that the bill has the potential to make an important contribution to combating climate change. That is advice that it is well equipped to give. Taharoa C Block is in a partnership arrangement with Te Rūnanga o Ngāi Tahu, focusing on Māori-owned land as the context for exploring the potential of developing a sustainable biofuel supply. If anyone knows much about the quality of some of our Māori-owned land, it would be evident that most of that land is pretty marginal for food production. So it will be of great interest to see how that project fares.

The project, funded by the Foundation for Research, Science and Technology to the tune of $4 million, involves a partnership with fuel company Chevron Oil as a principal industry partner. It involves growing plants for bio-diesel feedstock that do not require the use of valuable agricultural land. Taharoa C Block in the north and Te Rūnanga o Ngāi Tahu in the south will provide the technical input and the field trial management that are needed to get the project going. The focus is to apply a variety of ecological and agronomical engineering methods to the production of affordable, low-impact fuels that are also ethically sound.

It all sounds a bit too good to be true, but Te Rūnanga o Ngāi Tahu, alongside Taharoa C Block, sees the value of being involved in an entirely new and sustainable industry that opens up opportunities for grassroots Māori landowners in Te Wai Pounamu, the South Island. It is not as though either entity is a newcomer to innovation. Taharoa C Block has already been exploring other sources of renewable energy through its wind power generation and energy crops. Both organisations have been concerned that the environment must not be damaged in the process and, just as important as that, they are keen to ensure that they are not putting in more energy than comes out.

That hits at perhaps the greatest issue with biofuel production. The simple reason for biofuel market failure is the rising cost of fossil fuels—crude oil and natural gas—and the pervasive impact those fuels have on the entire economy, including biofuel production. It is all a question of balance. Modern agriculture is an industrialised system, and large-scale biofuel production is dependent on it.

But as the Māori Party has consistently presented to the House, it is essential that when we focus efforts in one area we do not compromise another area. Environment and Conservation Organisations of New Zealand Inc.—a natural alliance of some 65 groups with a concern for the environment—presented such concerns to the select committee. It warned the committee that it is essential that the development of biofuels does not cause a further loss of biodiversity or result in increased greenhouse emissions. It was able to share with the committee developments from the European Union, which has announced that it may ban imports of certain biofuels that are produced unsustainably.

If we go further down the biofuels track, it is essential that New Zealand does not accept biofuels from sources that exacerbate the destruction of rainforests or result in a net increase in greenhouse emissions. The Parliamentary Commissioner for the Environment, Dr Jan Wright, as has already been said in this House, described the international context of the debate around the sustainability of biofuels, which has, in her words, “heated up immensely”. She urged that this bill not proceed, being particularly concerned about the impacts of importing biofuels while turning a blind eye to the hugely damaging environmental impacts that are occurring in countries like Indonesia and Malaysia, which have been referred to earlier. Dr Wright’s key concern was that importing biofuels would be inconsistent with our clean, green image. So we return to Taharoa C Block and Te Rūnanga o Ngāi Tahu for our motivation.

The critical question, then, is to assess how well the bill will deliver on the two goals of reducing carbon dioxide emissions and increasing the security of our supply of transport energy. The select committee has recommended the Minister issue, through two very comprehensive Orders in Council, requirements to specify that biofuels must not contravene sustainability principle 2 regarding competition with food production or greenhouse gas emissions. The select committee has suggested that the bill will be enhanced by including a methodology to assess life-cycle greenhouse gas emissions from engine fuels. It also recommends the establishment of a methodology to assess the effects of the production of a biofuel on food production and for assessing whether those effects amount to competition.

There are other elements to this bill that we are pleased to see included. The select committee has recommended the insertion of a mechanism for recognising particular land, including land outside New Zealand, as having high value for food production or conservation. It has also introduced a methodology for assessing the effects of the product of a biofuel on indigenous biodiversity and on land that is of high conservation value. Those are all new initiatives that help us to have confidence that biofuels can be offered tentative support. We are, however, always conscious that on their own, biofuels will make only a small contribution to reducing emissions and to contributing positively to reducing the price of oil and addressing the supply problems of the future. As oil prices rise, the contribution to energy costs of biofuels will lessen.

Some will argue that the use of bio-diesels will not result in any fuel price increases, and we are all of the view that the issue still remains of finding new ways to reduce energy consumption by living differently. Conventional economics cannot fix that problem; industrial capitalism as promoted by our major parties, including policies based on building more roads, will not lead into a low-energy future. How we utilise our natural resources in a sustainable, environmentally considerate manner is critical in ensuring that all New Zealanders have access to affordable energy resources in a world where shortages will mean escalating prices.

Finally, I say there are many and varied ways of looking at new ways to reduce energy consumption. We in the Māori Party promote the further development of cheap, free, regular, reliable, and frequent public transport, of telecommuting, of fully connected off-road tracks, and of walkways. We have supported improvements to the rail infrastructure in order for it to deliver a better service, and thereby reduce the number of cars on the road. Ultimately it is up to us to play our part in reducing our dependence upon over 500,000 everyday oil-based items, by developing strategies to reuse, recycle, repair, respect, and replace items, and to trade locally. It is up to us to tread carefully in the footprints left by people such as Mountford Te Mana o Te Rangi Retemeyer.

We will support this bill, as we support us all, in order for people to live differently, to reduce their carbon dioxide emissions, and to look for other sources of energy supply. Thank you.

Hon PETER DUNNE (Leader—United Future) : It surprises me greatly, and I suspect it will astound the Greens even more, to be able to say that we find ourselves in virtually total agreement with the comments that Jeanette Fitzsimons made a little earlier about the Biofuel Bill. This bill is not a silver bullet, but it is a small step forward, and we believe it is a useful step forward that deserves to be supported.

I was interested in the quotation that Jeanette Fitzsimons read, because it reminded me of a number of meetings I have had of late with people and companies that are interested in having a domestic biofuel industry. The message she quoted was very similar to the message they had been giving me in those meetings. It was, essentially, that there was a need for some certainty; some significant investment decisions were pending based on the fate of this bill. There was certainly a need to get this matter resolved, and there was also an issue to ensure that a domestic industry based around our capacity to use tallow was able to be secured and that provisions would be put in place to prevent the potential importation into New Zealand of product from unsustainable sources.

A number of those matters have been mentioned already. The concern being raised at that time was the absence in this bill as introduced of a mechanism that would prevent the importation of product that was adverse to the sustainability interests that biofuels are ostensibly about promoting, and that that would not make it possible to develop a competitive industry in this country.

I was interested, too, because it had bothered me to hear earlier references to the fact that the Parliamentary Commissioner for the Environment was opposed to this bill, to hear of the sequence of the Parliamentary Commissioner’s report and the subsequent amendment to the bill regarding the introduction of a sustainability clause. I think that makes sense and it puts the Parliamentary Commissioner’s comments into their proper perspective.

Because of the introduction of those provisions, which make it clear that issues relating to the food supply, biodiversity protection, and the likely importation of some quite dangerous product into New Zealand would be addressed and that we could look with some confidence to what was available domestically, we took the view that this bill was worth supporting more than it was worth opposing. We had not made the call to oppose it, but we were getting to the stage of thinking that some of its measures would not be as environmentally desirable as they had been portrayed, and that, therefore, this might be one of those things that look good on paper but was unworkable in practice.

The bill that has emerged—and I acknowledge the discussions we were able to have with the Minister at critical stages—I think addresses the concerns that reasonable people have about the way in which this measure is being advanced. Therefore, it is appropriate to support its further passage. Those reasonable views are not some wild-eyed exposition of the fact that biofuels are a saviour to us all, or that the advent of these products would move us away completely from our dependence on oil-based products or other alternatives. But there is a recognition of the possibility that a market niche could be developed in New Zealand, particularly given the level of tallow in this country, to give us some alternative and to perhaps just spread out a little more the range of products available. This has to be handled in a sensitive way and also with a degree of precision, so that key investment decisions can be made.

The message I distinctly recall receiving from a number of the potential investors—and I note that one has already gone by the wayside—was that unless Parliament proceeded to send the signal in relatively good time, this would simply be theoretical, and there would be no capacity to develop a domestically based industry. As a result of that we would be totally reliant on an imported product, with all of the implications that have been discussed in other addresses this afternoon.

On that basis I think this bill is a prudent step forward and is one worth supporting. It is not perfect in every respect. Some issues will need to be resolved as the regime it introduces unfolds. There is clearly an issue about the fact that the bill takes effect in October, but there is a window until July of next year when the sustainability standard comes into force. That is a practical step, as I understand it, to get over the fact that certain transitional steps are under way.

The challenge I think the House faces, and why we come down on the side of supporting the bill, is that we either make a stand on this issue at this time, given the interest there is and the capacity in the New Zealand economy to make some movement, or we effectively give it away as an option for this country. On that basis we made the call to support this bill. We think that it is the right decision, and we believe that although there may well need to be adjustments as the bill takes effect in order to put in place a more viable long-term regime, it is important to make a start at this point. That is why we are voting for the bill.

NICKY WAGNER (National) : Of course we all like the idea of biofuels. All New Zealanders are keen to see a cleaner and greener New Zealand. The vast majority of the public are concerned about climate change issues—we are concerned—but we do not really want to change our lifestyles, so we would be absolutely delighted if a simple change of fuel could solve some of these problems. If only life was so simple.

I have a question for the House. What do the OECD Round Table on Sustainable Development, the UK House of Commons Environmental Audit Committee report, the G8 conference of legislators, the UK’s chief scientist, the World Food Organisation, the UK Royal Society, the World Bank, and the United Nations Secretary-General all have in common? What do those august bodies have in common? They are all respected international organisations that comment on world issues and world policies. Several of them are specialist green organisations, and they, along with the New Zealand Parliamentary Commissioner for the Environment, have all expressed serious concerns about biofuels and any biofuel obligation.

But this Labour Government thinks it knows best. This Labour Government wants to ram through this Biofuel Bill, despite the reservations of all those world experts. The Labour Government thinks it knows best. The Labour Government wants to ram through the Biofuel Bill, despite the fact that it will add increasing costs to all New Zealanders and that the environmental return is very debatable.

There are serious costs to the introduction of biofuels. There is some debate over what those costs are. The chairperson of the Local Government and Environment Committee tells us that she does not know what they are. She does not really have much idea, but the bill will still be passed. There is debate over these costs, and the best estimates we have are somewhere between 1.5c a litre and 7c a litre. So even if we take a mid-point range, the cost of the biofuels obligation will result in an increase to the New Zealand public to the tune of about $240 million. New Zealanders might be prepared to pay that, because we know that they are keen to see the country being more clean and more green. They might be prepared to pay that, but only if they are sure there will be some benefit, and even the world’s experts cannot guarantee that.

When we are making decisions about new green initiatives, we need to prioritise the things that will give us the most bang for our buck. Members should consider other planned environmental spending. For example, there is solar water heating, and we are putting $4 million aside for that; maybe research into geothermal energy or even tidal energy, and we are putting away $1 million each for that; or perhaps research into how we can reduce greenhouse gases from animals, and we are putting $5 million into that. Members can compare that spending with the $240 million for biofuels—the spend for biofuels is huge. What could we achieve if we spent even half of that $240 million on doing some other environmental initiatives with a better pay-off?

In saying that, I also say that I support the development of biofuels. In my previous life as an Environment Canterbury councillor, I was involved with the trialling of biofuels on the Christchurch City bus fleet. We undertook a trial that proved both tallow and reused oil-based biofuels would work very well in the city fleet. In fact, they worked so well that one company, Leopard Coachlines, decided to use biofuels permanently. It decided to use a 5 percent blend. Then came the problem, the problem we are all foreseeing with this Biofuel Bill: the availability of feedstock became the issue. We all talk about tallow today, which is sold on the international market. The increased global demand for tallow has meant that the cost of tallow feedstock has become prohibitive for biofuel manufacturing and for this bus company. The bus company was caught between a rock and hard place.

One of the aims of having a public transport system is to provide a more environmentally friendly method of getting people around the city. The more buses there are, the less congestion there is and the fewer harmful emissions there are. But if bus fares increase because of the use of a cleaner fuel, the service becomes less attractive, and the environment suffers. It was a difficult balance for the bus company to make, but in the end they are no longer using biofuels, and that is a real shame.

As the National spokesperson on waste, I am particularly interested in the new technologies being developed to manufacture biofuels from waste products—the so-called second-generation biofuels. Producing biofuels from waste is a fantastic idea, because one gets double the environmental benefit. It avoids the horrible downside of the world’s present focus on biofuels, which is that biofuels stock is being grown instead of food. It is a supply and demand problem, so any of the rules we put around this can only mitigate, not solve, the issue.

The fact that biofuels stock is being grown instead of food has sent food costs spiralling up and out of control. The horrible downside we have seen is starving people rioting across the world. The horrible downside means that wealthy car owners can have cleaner fuel, but desperate people, who could never even imagine owning a car let alone buying biofuels, are starving because they cannot afford food for themselves or for their families. We cannot allow our demands for biofuels to destroy other people’s lives.

The use of waste as a feedstock for biofuels is a great idea, because it cleans up the environment as well. During the last few months I have visited several biofuel manufacturing projects focusing on waste. One is in Blenheim. The Aquaflow plant is producing bio-diesel from algae growth in Blenheim’s sewage ponds—bio-diesel from nutrients that are polluting our environment, bio-diesel from a very plentiful waste product.

I have also seen projects that involve the digesting of dairy effluent from dairy sheds to provide a fuel source. We all know that the effective management of dairy effluent is essential if we are to be able to control the nitrate levels in ground water and streams, so producing biofuels from dairy effluent is a further environmental bonus. Other groups are working with wood waste, industrial waste, and green matter. The bottom line is that all these projects are a better use of resources than growing biofuel feedstock. All these projects have dual benefits—cleaner fuel but also the recovery of resources that would otherwise pollute the environment.

Right now we again have an environmental bill in this House that is on the right track, but it just has not been very well-thought-out. The basic idea is good, but although National supports the use of biofuels, we are also very aware of the pitfalls of this legislation. These are perverse environmental effects, unacceptably high costs, and international humanitarian ramifications.

The CHAIRPERSON (H V Ross Robertson): Part 1 includes clauses 3 to 17. The debate on Part 1 includes debate on schedules 1 and 1A.

Hon Dr NICK SMITH (National—Nelson) : The great disappointment with this Biofuel Bill is that this Clark-Peters Government is ignoring all of the international evidence in respect of concern about biofuels. We are asked to believe that the OECD is wrong, that the United Nations is wrong, that the World Health Organization is wrong, that the British House of Commons is wrong, that New Zealand’s own Parliamentary Commissioner for the Environment is wrong, and that the only one who has it right is David Parker. Well, the Government is mistaken. Rushing through under urgency this flawed bill, which will impose significant extra costs on New Zealand consumers at a time when they can least afford it, and for very little environmental gain, is flawed, bad public policy.

The first key question I have for the Government is this: why impose a compulsion, a nanny State “you must do”, before putting in place a sustainability standard? Why on earth compel every person who buys liquid fuels to include in his or her purchase a component of biofuel, when the Government has not sorted out its biofuels sustainability standard? I think I know exactly why. It is because, after 9 years of this Government, our greenhouse gas emissions have gone up in every single one of those years. New Zealand has one of the worst records in the world in terms of increased greenhouse gas emissions, and in a desperate last-minute bid, a few weeks before the election, the Government wants to try to get some climate change policy on the record in a hurry.

Hon Pete Hodgson: Oh, Nick.

Hon Dr NICK SMITH: That is it, I say to Pete Hodgson. That is it.

Hon Member: Where’s the rest of it?

Hon Dr NICK SMITH: Well, the thing on which I would challenge Mr Pete Hodgson—the guy who went around New Zealand saying we should ratify the Kyoto Protocol, because we would make a billion dollars—[Interruption] I say to Mr Hodgson that I have spoken to the officials, and he misled Parliament; he knew that New Zealand did not have a surplus, and he fibbed and he told porkies—

Hon Pete Hodgson: I raise a point of order, Mr Chairperson. Dr Nick Smith has just advised Parliament that he knows that I misled Parliament.

Hon Dr NICK SMITH: That is right.

Hon Pete Hodgson: And he has just said that is right. Not only is that remark out of order but it is flat wrong, and I invite him to withdraw and apologise for it. It is entirely out of order.

The CHAIRPERSON (Hon Clem Simich): The member has requested that the member withdraw and apologise, and I would ask him to do that, please.

Hon Dr NICK SMITH: I withdraw and apologise. It is a matter of record that for 12 months before Minister Pete Hodgson came clean about the mess this Government had made around Kyoto policy, Ministry for the Environment officials advised him that the numbers that he was telling the public were untrue—were false. I would be happy to table the emails and the facts to back up my assertion about that scandal involving Pete Hodgson.

Coming back to the Biofuel Bill—

Hon Pete Hodgson: Go right ahead. You’re just making it up.

Hon Dr NICK SMITH: Well, did the member claim that New Zealand stood to make a billion dollars from Kyoto?

Hon Members: Yes.

Hon Dr NICK SMITH: Yes, he did. He got it awfully wrong, and officials advised him at least 12 months before he came clean that he was continuing to express a view that we had a surplus when we did not. That is the sort of snaky behaviour, I say to Pete Hodgson, that we have come to expect from this Government. Whether it is Owen Glenn and his donations to this Government, or whether it is Kyoto, the dishonesty that this Clark-Peters Government now displays is a tragedy for New Zealand, and is one of the reasons there will be a change of Government in a few weeks’ time.

The Government says we should not worry about the big global debate around sustainability, because the Government has put some principles in Part 1. But what is the use of principles if they do not result in regulation? The real flaw in this bill is this: why should we compel people to use biofuels before the sustainability standard comes into place? Can any member of the Government or any of the parties that are supporting this bill answer that very basic question? Why compel the use of biofuels before one has a sustainability standard?

Moana Mackey: Because they told us in their submissions that they wanted to know what would be in those sustainability standards, so that they could plan ahead.

Hon Dr NICK SMITH: The Minister in the chair, the Hon David Parker, is silent, but we have the chair of the Local Government and Environment Committee commenting. The officials have said that it will take till 2011 to get a sustainability standard. That is what they advised us in their papers to the committee. So I ask the chairperson of the committee and the Minister why on earth they would want to compel people to use biofuels before then. This is nanny State saying we must do something without it being really sure that there will be an environmental benefit.

What is really ridiculous about this provision is that there will be a substantive cost—the select committee heard it is about $130 million—in that the fuel companies will have to put in place the infrastructure to be able to deal with the different types of biofuels. Whether it is bio-diesel, which has particular technical issues around it being cold, so there is a need to avoid blockages, or whether it is ethanol, in terms of it being water absorbent, an investment of about $130 million in infrastructure will be required. But before one invested in that infrastructure, would not one want to know which biofuels are OK and which ones are not? The madness, the absolute madness, is that the Government is going to require the introduction of biofuels before the standard is in place. That is unforgivable; it is mad public policy.

A further issue is this. Why is the Government providing a huge skewing of the scrum towards ethanol over bio-diesel? The Government says that, yes, it acknowledges there is a problem. There is no logic to it providing a 42c a litre advantage to the importing of ethanol from Brazil compared with bio-diesel made in New Zealand out of tallow—no good reason at all. The Government accepts that, but it says it will put off sorting out that issue until 2012. What nonsense! Why would one introduce a compulsory biofuels requirement today, when one acknowledges that the tax rules significantly advantage ethanol over bio-diesel for no good environmental reason, and then say: “Oh, we can’t sort that out now; we’ll put it off until 2012.”? I tell the Minister that that is not good enough. He should sort out the tax issues and the sustainability issues now, before introducing the compulsory requirement.

I will be asking the Committee to support a very simple, straightforward amendment to put the sustainability standard before the compulsory requirement. I want any member of the Committee to please advise why Parliament would not want to do that. Why would we not want to put the standard before the compulsion? The silence is deafening; the silence is absolutely deafening. I tell members that there is only one reason for not doing that, and it is political—straight politics. It is because this Clark-Peters Government continually puts its own political interests ahead of what is right for New Zealand. It is desperate to pass any sort of climate change legislation, even flawed legislation, before the election, rather than do what is right for New Zealand. I invite the Committee to support that amendment to ensure that we sort out the sustainability standard and the tax issues before we introduce compulsion.

The last point I would make is this. Every party in this Parliament agrees that a carbon price and an emissions trading system is the sensible way to respond across the economy to climate change. The problem with the Minister is that, in terms of getting an emissions trading scheme, he immediately says we need some extra regulation. If biofuels cannot stack up economically, why are we going to compel their use? That is the million-dollar question. In respect of the illogical ban that this Government wants to put on thermal generation, and in respect of the Biofuels Bill, the Government is being a busybody. It cannot help reverting to a nanny State attitude. It wants to tell people how to live their lives, rather than just give a price signal.

Where members on this side of the Chamber differ significantly from the Government on environmental issues is this: we say that we should provide a price incentive, and not have a nanny State. We should provide an incentive and provide the right sorts of price signals, and let people get on and live their own lives, rather than having the nanny State dictates that we get in Part 1 of this bill. This Clark-Peters Government believes that it knows best, and National says otherwise.

MOANA MACKEY (Labour) : I just want to take a short call to respond to the previous speech. I sometimes wonder whether Dr Nick Smith and I were sitting in the same select committee when listening to the submissions, because what he is relaying to the Committee is certainly not what we were told during those submissions. And if he had listened, then the submitters would have answered a lot of questions for him.

Hon Dr Nick Smith: What did the Parliamentary Commissioner for the Environment say?

MOANA MACKEY: Well, I tell Dr Smith that the Parliamentary Commissioner for the Environment submitted on the original bill, not the bill as reported back to the House after the Local Government and Environment Committee had done its work. In fact, all the international organisations that Dr Smith quoted were the reason why the select committee worked so many extra hours through all the adjournments, and I acknowledge the hard work that Dr Smith himself put into coming along to the select committee and working on the bill. We did it because we listened to those international organisations, and because we listened to the reports out there. We recognised, as a committee, that the bill needed to change from the original format that came to us, which was the format that the Parliamentary Commissioner for the Environment spoke on when she came to our select committee and gave that report. Dr Smith knows that just as well as everyone else.

I want to say of Dr Smith’s amendment, which he brought up, that it is a very handy way of never having to do anything. If we simply do not ever develop standards, and if we do not have a time line in the bill as we have now, where the Minister has to come back with the methodology, then we never have to do anything—that is true. I tell Dr Smith that if we never come up with standards, then his amendment says we never have to have a biofuel obligation—yes?

Hon Dr Nick Smith: That’s right.

MOANA MACKEY: Dr Smith says “That’s right.” Well, we say that that is not good enough.

We were told by submitters that they wanted to know the kind of biofuels that the select committee and this House believe should be exempt. That is why we put in those three sustainability standards that we developed in conjunction with the Greens—to make it clear. Oil companies do not go into 3-week contracts when they are looking at biofuels; they want to know up front what this Parliament might smack on them part-way through their obligation. And we have told them. So they know that some biofuels out there are absolutely never going to be allowed, regardless of what the Minister comes back with after he has done the methodologies and the things the bill requires him to do.

We have been up front about it. We know that that is what biofuel producers want, because they need some certainty. We will never have a domestic biofuel industry in this country if we cannot provide some form of certainty, like a biofuel obligation, so that producers know they will have some kind of industry to provide to here. That is why we are doing it. I do not know how many times Dr Smith needs to be told, but if he had listened at the select committee, then I would not have to be telling him again and again.

JOHN CARTER (National—Northland) : I have been listening to this debate and it is just amazing listening to the reasons why the smaller parties are supporting this legislation. This Government is foisting a Mad Hatter’s experiment on this country, and if we listen to the debates by, first of all, the Greens, by New Zealand First, and by Peter Dunne, we hear them all saying: “Yep, we know there are some problems. Yep, we know some issues need to be debated. But, nevertheless, let us be first, let us give it a go, and let us lead the world on this whole issue.”

One of the things that absolutely astonished me was what Peter Brown said. He went through three reasons, three things that he was concerned about and that really worried New Zealand First, with the last reason being an issue about food security and the impact it might have on other countries. But he said in the end that those members can accept it because it will happen anyway, so it does not matter. That is exactly what he said, and the Hansard will prove it. He said it does not matter, because it will happen like that anyway, so let us not worry about it. Well, we need to be worried about those very things.

Peter Dunne said exactly the same thing. He said there are real worries about this whole bill and we should be concerned about it, but if we do not get started, we will never get going. Well, it is all very well to say we should get on the bike, but I say that if it is going downhill at a great rate of knots and one cannot control it, then one does not want to get on it. That is what Peter Dunne is saying.

I listened to Jeanette Fitzsimons. She said that although we know there are a whole lot of issues around the world that we need to be concerned about and that all sorts of reports are telling us this is a real problem, we need not worry because we will put this sort of ring around New Zealand. She said we will make sure that it is New Zealand - generated and that the rest of the world does not matter, because we will do our own little bit. Well, if we are to try to contain ourselves, then we will be going back to the good old days when we had all the borders shut, people could not come and trade, and we were not allowed to do things overseas. If we wanted to buy a pound of butter or margarine, we had to go to the doctor to get a prescription! Are we going back to those days? Obviously, that is what the Government wants, and those parties are supporting the Clark-Peters Government in making the sorts of policies that take us backwards at a great rate of knots. I have to say that is just crazy.

Mr Chairman, you are indicating that I should come back to the bill, but I am pointing out that this is a crazy, silly bill. All of Part 1 is just dopey, and New Zealand will end up being worse off.

The Minister of Finance has come down to the Chamber to listen to my speech, and I can understand why he would do that. He is worried about the financial impact this bill will have on the country. He should be concerned. He knows that at this time, when New Zealanders are struggling, when New Zealanders have their backs to the wall, and when lots of people are struggling to put food in the mouths of their children, his Government wants to put more costs on to those families. This whole bill will add more on to their fuel costs and it will add more on to their living costs. He might laugh about it, but that is the impact it will have.

Not one person who came before the Local Government and Environment Committee said: “Please do this because it will be advantageous financially to New Zealanders.” Not one! Everyone said that, yes, there will be a cost. Even the Minister’s own officials said that, and I ask the Minister of Finance to have a look at this paper. The officials said there is an issue around the cost. Surely to goodness, should we not be listening to the officials and listening to the submitters?

The only people who seem to think that it does not matter is the Labour Government and New Zealand First. The Greens do not seem to worry about these costs. Peter Dunne does not seem to be worried about them. Surely to goodness, somewhere along the line, we have to take into account what the public think about more costs being put on to them by this House. Is that not an issue we should be worried about? Maybe the Minister of Finance does not care. Maybe it does not matter.

Moana Mackey: What if it works out cheaper?

JOHN CARTER: Cheaper than what?

Hon Dr Nick Smith: Why make it compulsory?

JOHN CARTER: That is a good question. If it could be cheaper, as the chairperson of the select committee says, then surely to goodness it will just happen, will it not?

Hon Dr MICHAEL CULLEN (Deputy Prime Minister) : Given that Mr John Carter, for the first time in about 5 years, deigned to speak in the Chamber in some detail about a bill, although it was not clear that he knew which bill he was talking about—I can help him in that case; it is the Biofuel Bill—let me just respond to a couple of points he makes. The first point, very clearly, following upon the rational guidance from Dr Nick Smith, is that Mr Carter has joined the brigade of those who believe that one can save the planet at no cost, and that it is possible to actually deal with global warming with nobody changing his or her behaviour, with no relative cost changes at all, and with nobody doing anything differently; all anybody needs to do is—what? It was not clear.

We heard from Dr Nick Smith that every party supports the emissions trading scheme. That is not true, actually. The ACT party does not. The ACT party now supports having a carbon charge, but, of course, when the Government proposed a carbon charge, the ACT party opposed a carbon charge. The Business Roundtable is being followed faithfully by the ACT party in that respect. But ACT supports the emissions trading scheme, as long as there is no cost to anybody and nothing has to change.

So what is the cost in this bill? Well, the best estimate we have been told is 0.2c to 0.4c per litre. Petrol prices go up and down 3c or 4c a litre a day, at the present time. They went down US$10 a barrel overnight. Dr Norman was almost in tears this morning, thinking about the price of oil coming down. That is not supposed to happen. It went down by US$10 a barrel! That is equivalent to something like 6c a litre at the pump in New Zealand. So this bill will make a tiny difference on costs, but unless there is a requirement to start moving, we will never build the infrastructure for alternative fuels, because that is where the cost occurs.

The larger the usage of alternative fuels, then the lower the cost per litre to use those alternative fuels, because the infrastructure is being better used in that respect. And, yes, there are some problems with some alternative fuels, but this bill lays out the method by which we address those matters to ensure—

Hon Dr Nick Smith: After it’s compulsory.

Hon Dr MICHAEL CULLEN: Oh, after a period of months or so we will lay out those rules! So what Dr Smith says is that, for the sake of 9 months, we should do nothing. I wish his parents had said the same thing at a certain key moment in the past. We would all have been saved this kind of irrationality on matters of this sort.

I say: “Get with the programme, National!”. There is a real need to address the issues before us. When National members promote themselves as young and vigorous and a brighter future, but on everything they are timid, unable to move, and afraid of change, then this is not the brighter future that National is pointing to.

Hon TAU HENARE (National) : Let me just respond to the comments of the Minister of Finance. The issue about costs is that they will be an impost on those who are involved in the transportation industry. So it will be a cost on them; and if it is a cost on them, then surely to goodness it will be a cost on the mums and dads out there. Even the transportation of a budget loaf of bread will result in an impost, a cost, to the mums and dads. So that is where the issue of costs arises, I say to the Minister, who has gone now.

The CHAIRPERSON (Hon Clem Simich): Order!

Hon TAU HENARE: The whole thing about coming up with a standard is that if we develop a standard, everybody in New Zealand knows the standard and that is what they have to do to make their business work. But there is nothing of the sort in the bill. There is no standard whatsoever.

Moana Mackey: Read the bill.

Hon TAU HENARE: So there is a standard? So the standards have been sorted out in somebody’s feeble mind—for the future. John Harrison of Harrison Motors, the transport company up in the mid-north, has to think: “That’s right. The standards are there in the feeble mind of the Government, but it’s not going to tell us.” So how can they run a business; how can people possibly operate on an idea of standards? What are the standards?

Moana Mackey: Read the bill.

Hon TAU HENARE: So there are standards? The standards have been sorted out? That is what list member No. 43 is saying—no, sorry, that is not the member’s number. That is Louisa Wall’s number.

Allan Peachey: What’s the number then, 48?

Hon TAU HENARE: Well, if she is not No. 48, she should not be there anyway. I want to set out that the bill creates an obligation for fuel companies to blend diesel and petrol with 0.5 percent biofuel on 1 October, with the requirement increasing by 0.5 percent each year to 2.5 percent in 2012. We couple that with the bill’s stated intention that requires a person subject to the biofuel sales obligation to file an annual return. What have we heard over the last 2 or 3 years from businesses? We have heard that the impact of red tape is huge on that 90 percent making up small to medium sized enterprises in this country. It is a huge impost and has a huge impact on their day-to-day business. Because they have just been told that the fuel companies will have to file a return every year—it is another piece of paper they have to fill out—then that is an impost. It has an impact not only on the transport companies and on the fuel companies, but also on mums and dads. At the end of the day, when they toddle off to Woolworths, to Countdown, or to Foodtown, that is where they get it. Who pays for it? The mums and dads do. So on the one hand we get a tax cut from the great Labour Government, but it gets taken away with all these other little add-ons. In the end, they do not see anything.

Hon Pete Hodgson: Have a talk to Maurice. He will tell you about it.

Hon TAU HENARE: Leave it until tomorrow? Well, we could leave it until tomorrow. We might leave it until tomorrow. If the Minister wants to leave it until tomorrow, if that is his philosophy, then it is no wonder he is no longer the Minister of Health.

Let me say this. It would have been all right for the House to accept no standards if the Government had been here for only 6 months. We could have forgiven the fact that there was only a small amount of time in which to figure out what the standards were to be and to put them in place, after the compulsion bit. But let us not forget, the Government has been in office for 9 years.

Eric Roy: How long?

Hon TAU HENARE: For 9 long years. What has the Government been doing for the last 8 years? Has there been anything on standards? No. Has there been anything on listening to other nations and organisations from around the world? No. The Government has gone ahead and thought it knew everything; and all it has done, and all it will do on the passage of this bill, is put an impost on mums and dads. That is where it will happen. Mums and dads will pay for the Government’s weird ideas about saving the planet, because that is all it is. It is the weird ideas from the Labour Government and the nanny State, supported by the Greens over there. For goodness’ sake! Talk about putting the cart before the horse! My goodness me! The next thing we will know is that we will be riding around in a horse and cart. Mind you, there is nothing wrong with that, I suppose, if we are on holiday down in the South Island somewhere. But if we have to get to work from west Auckland out to South Auckland, and there is no highway because the Government could not afford to look forward on the transportation—[Interruption] Absolutely, Mr Chairman.

I want to finish by coining the phrase that Moana Mackey used in this House not so long ago—get with the programme. Absolutely! We have to say “Get with the programme.” What is that programme? The programme is to get rid of this Government.

I feel sorry for my colleagues on the other side of the Chamber. Half of them will not be back here after the election, and they might need some biofuels. Where they are going, they will need our help. In all seriousness, this is nothing more than a cost on mum and dad. Mums and dads, in these times, cannot afford another tax, another impost, on their meagre wages.

Hon DAVID PARKER (Minister of Energy) : One particular part of Mr Henare’s contribution does need to be repeated. It is his complaint that the compliance cost of an annual return on biofuel blends is a compliance cost on small business. There are approximately five oil companies in New Zealand. Those companies have a combined turnover that is measured in billions of dollars—[Interruption] An annual return for companies that have a turnover of many hundreds of millions of dollars is not an onerous compliance cost. If that is the sort of hurdle that can never be overcome by a National Government, as we move towards sustainability measures, it is no wonder National members never do anything to advance sustainability issues.

The reality is that oil companies will not introduce biofuels without there being a mandatory obligation for them to do so, except for the occasional exception, like Gull Petroleum. Probably even that company is introducing them only because it knew that a biofuels obligation was coming. When they do introduce biofuels because of this obligation, they will be helping New Zealand to take a small step towards sustainability—not a large step. But that small step towards sustainability has to be taken before the subsequent larger steps can be taken.

We have to update our infrastructure. In terms of the cost of that, the advice from the officials to the select committee—on which the National Party was represented, and its members did not accuse the officials of misrepresenting the facts—was clear that the infrastructural cost will be between 0.2c and 0.4c per litre of fuel, if that cost is recovered over 4 years. It will probably be recovered over a longer period, because, as sure as anything, it will last more than 4 years. The cost is minimal. In terms of the fuel itself, it is not yet clear what the impact on price will be. Some of the tallow producers say that, at current oil prices—at prices under US$100 a barrel—bio-diesel from tallow could be cost competitive with, or, indeed, slightly cheaper than, petrol.

There is nothing wrong with this bill. The sustainability standards are world leading. That is not good enough for the National Party, but, of course, it is not willing to lead on anything.

Dr RUSSEL NORMAN (Co-Leader—Green) : I am here to speak briefly on the bill. I am one of the few people in the House who has been very actively campaigning against palm oil - based biofuels over a long time. Of course, palm oil is one of the really problematic biofuels. It has resulted in massive deforestation in South-east Asia; 20 percent of all greenhouse gas emissions are now as a result of tropical forest deforestation, which is being driven in part by the palm oil industry.

It should also be noted that New Zealand has a connection to the palm oil industry. One of the by-products of the palm oil industry, palm kernel, is now imported into New Zealand in vast quantities. Last year alone, 400,000 tonnes of palm kernel were imported into New Zealand, largely to feed dairy cattle. One of the secondary drivers of the destruction of rainforest is the palm kernel industry, and the palm oil companies are on the public record as saying that palm kernel is now one of the significant factors in their profit stream. Biofuels are a major issue, and they are linked to the palm oil industry.

The Greens would not be supporting this bill had we not negotiated clauses around sustainability. Listening to the National Party members talking about sustainability reminds me of the saying that “A little bit of knowledge is a dangerous thing.” Clearly, if we are going to make some progress on these issues, we need to encourage, particularly, the domestic production of biofuels. I do not know how many members have been to look at some of the projects happening around Taupō, and elsewhere, around biofuels and woody biomass. Woody biomass offers a real opportunity in a country like ours to develop second-generation biofuels. I would have thought we would be supporting it, because it seems to me that it is real progress.

It is also worth saying, in terms of the amendment that has been put by Nick Smith, that the member has not discussed it with the member in charge of the bill from the Green Party’s side, Jeanette Fitzsimons. If National were serious about that amendment, I am sure it would have discussed it with us earlier. We will not be supporting the amendment, because it has not been discussed with us. If it had been, we obviously would have considered it and looked at it.

I shall respond to the discussion around regulation and leaving it up to the price to determine. It is certainly true that, in the transition we need to make towards sustainability, price and price signals are an essential part. But by themselves they will not be sufficient. We also need to use regulatory mechanisms, and regulatory mechanisms need to work alongside price mechanisms. It is also true that we need to reach out to the community and win people over to the idea of our moving towards sustainability. We have, if you like, three levers that we can use in this transition: one is price signals, one is regulation, and one is what we might call consciousness raising, or winning the community over to our ideas. Green members believe that we need to use all three levers.

Finally, in response to the increase in price that is involved—the very small increase—I say that the long-term trend of oil prices, in spite of what the Minister of Finance was saying earlier, is up. Anyone who has read the International Energy Agency’s reports on this matter will be aware that even that agency is now saying that the long-term trend of oil prices is up, and that we need to look at alternatives. Biofuels may be a small part of that, but they are certainly not a part that we should rule out.

HEATHER ROY (Deputy Leader—ACT) : I stand and agree entirely with my colleagues from the National Party and with what they have been saying about the Biofuel Bill. This bill as introduced requires petrol and diesel suppliers to also supply biofuels with an initial level of 0.53 percent in 2008, increasing—as we have heard—to an upper level of 2.5 percent by 2012. Here we have more dopey legislation being introduced in this urgency motion. Why, after 9 long years of a Labour Government, is this bill suddenly being rushed through in the death throes of this Government? The reason is that it wants to leave its mark on the world and show that it cares. Well, if it really cared it would look not just at the costs, which it is having difficulty quantifying anyway—or describing accurately—but also at the hidden costs this bill will bring, to not just New Zealand but elsewhere.

The environmental benefits of biofuels are arguable at best. Before we embark here in New Zealand on a campaign of changing our fuel source, let us look at what is happening abroad. I contend that other countries are now exhibiting very serious lessons that we should be paying some attention to. In the United States, the leading source of biofuels is corn, or maize. Nobel Prize - winning atmospheric chemist Paul Crutzen, a man not known for his climate change scepticism, found in 2007 that biofuels made from corn and rapeseed—something that Jeanette Fitzsimons stood in this House and propounded the benefits of—contribute more to global warming than fossil fuels. Biofuels made from corn and rapeseed contribute more to global warming than fossil fuels; there is a lesson there.

While we are on the topic of emissions, we should note that biofuels emit a significantly higher level of nitrous oxide into the air. Before Mr Anderton gets too excited, I should point out that nitrous oxides are the principal cause of smog—something that people in Christchurch are well aware of, or at least they should be. So I ask the Labour members of this House from Christchurch to explain to their constituents why they are supporting this bill.

While we are talking about overseas examples, I ask: what about Brazil? It is the second largest producer of biofuels in the world. How has it achieved this honour? Through having a large-scale slash and burn of the country’s native rainforest. As if the rainforest was not diminishing at a rapid enough rate as it is, Brazil has now embarked on an unprecedented campaign of cutting down rainforest to plant sugar cane for biofuel production. That is something I thought the Greens and possibly some of the more conservation-minded members of the Labour Party might have thought was important.

The loss of Brazil’s rainforest, though, is potentially not the worst impact of biofuels. The worst impacts may well be seen in Africa. In May 2008 Olivier de Schutter, the United Nations food adviser, stated: “The ambitious goals for biofuel production set by the United States and the European Union are irresponsible … I am calling for a freeze on all investment in this sector.” Why did he call for that? The reasons are twofold. Firstly, food that was once used for its intended purpose is now being turned into biofuels. The very poor in the world are now starving, because they can no longer afford what was very cheap food that made them sustainable—it actually kept them alive. Again, the Greens and Labour once upon a time actually believed in helping out the poor of the world.

Secondly, land once used for intensive food production is now being converted to biofuel production. The cause is the latest fascination of the West, and the victims are those in poverty—those in poverty in Asia and Africa. Sadly, those who are in poverty in New Zealand will now have more costs imposed upon them. Pushing food prices up will hurt most those who are least able to afford it, and all so that Helen Clark, Michael Cullen, and the Labour Cabinet can feel that they are doing something positive for the environment when they drive around in their new BMW ministerial fleet. Legislation that diverts food supply into fuel for those least able to afford it is dopey legislation, and the ACT party will be opposing it.

ERIC ROY (National—Invercargill) : I want to make a contribution. I am fascinated, intrigued, and a little disturbed by the Biofuel Bill. I think, for a start, it is wrongly named, but we are not having the title debate. I am inclined to think that it is the “Placebo Climate Change Bill’.

The Minister of Energy said this measure would be a small step. Well, it is not even a step; it is barely a shuffle. You see, if we look at what New Zealand is attributed to be contributing to the world’s discharge of carbon gases, we see that we contribute 0.2 percent nationwide. Fifty percent of that is from agriculture. I do not know what the figure for transport is by—

Peter Brown: About half of that.

ERIC ROY: Well, no. I say to Mr Brown that it is less than half of that, because there is coal consumption in a whole lot of furnaces, coal is used in electricity generation, and quite a bit is used in thermal energy. So transport contributes a long way less than one-half of 0.2 percent.

Peter Brown: No, no—half.

ERIC ROY: Let us not get into that. It is minuscule. Yet we are here in the dead of night arguing about 0.5 percent of an element of fuel. It is not even a small step. It is so small that it is not even a perceptible shuffle.

I am a bit alarmed, because I actually believe that the consumption of fossil fuels is a serious issue. I do not believe that, from here on in, we can combust and release 6 billion tonnes of greenhouse gases into the atmosphere every year without it having an impact. My point is this: the energy and the effort that we are putting into this debate will have zero impact. If there is an issue out there, our focus should be on doing some serious work on looking at alternatives in the whole transport arena—hydrogen-powered vehicles and that sort of thing. That is where the focus must be—to find an alternative.

The Minister may well argue that this measure should be a focus. My argument would be that it is more of a placebo. It actually will not make one whit of difference. Well, it will make a difference, because the world has embraced biofuels, and that has created some huge distortions in other areas. Dr Norman referred to this issue. When biofuels are picked up in the wrong way, there is quite often destruction of ecosystems that actually make a contribution to reducing greenhouse gas emissions. For example, in tropical areas, palm oil and sugar cane are replacing rainforests. In a lot of places in the world, particularly in Europe and the United States, crops that have high fertiliser and water requirements are being grown to produce biofuels, and they have a negative impact.

What does that mean in terms of the world? Well, let us look at the world supply of food on a consumption basis. For at least the last two decades, the time frame between harvesting food and consumption has been between 100 and 120 days. If we grow and harvest lettuces, they are not going to last 120 days, but for baked beans, ice cream, frozen mutton, or milk powder, that is what the time frame has been—between 100 and 120 days. We are seeing food shortages in countries that have never had food shortages before. One of the drivers of those food shortages is the shift of arable land to biofuels. I am told—and I am gullible, so I believe it—that the current time frame, in terms of the food chain, between harvest and consumption is around 50 days. At times it has been down to as low as 47 days. That is simply because we are misusing arable potential to create biofuels that will not make one whit of difference in terms of dealing with the issue of fossil fuel - generated carbon gases.

I say that, yes, we have a responsibility, but as for dealing with a bill such as this in urgency, well, that is why I call it the “Placebo Climate Change Bill”. There are a whole range of other issues. We talk about sustainability—

PETER BROWN (Deputy Leader—NZ First) : I will start by responding to John Carter’s comments in regard to my earlier contribution. I outlined the concerns New Zealand First had with this kind of legislation at the time of the first reading, and I outlined the solutions that had been put to us by various experts in the field of biofuels. We are quite happy with that. The growing of crops in Africa to sell to the global market is a concern, but it is not a concern that New Zealand can address. If we can, I would like to know how. If they are growing crops in Africa to produce ethanol to sell in America, that is a concern, but I am not sure how New Zealand can stop that. I would like to stop it, but I do not know how we could.

I do have a legitimate concern and I invite the Minister of Energy to respond to it. I understand that ethanol absorbs water. I see the Minister’s attention is taken elsewhere, but I trust he is listening with his other ear. Ethanol absorbs water. The aviation industry, and particularly the leisure boat and maritime industries, use fuels that, I think, would be more effective if they did not contain ethanol, because water can get in the fuel tanks of airplanes, and it can certainly get into the fuel tank of the outboard motor of a leisure boat. It concerns me that, if we are putting ethanol into these products, and an airplane or a leisure boat fills its tanks with it, there is a high risk that something will go astray—there will be water in the tank, the ethanol will absorb it, and the engine will stop. That is not too good an experience when one is a pilot in the sky, and it is not particularly pleasant when one is in or outside the harbour in a small boat powered by an outboard motor. I invite the Minister to address my concern and tell us how this bill will prevent that problem from occurring. It is a genuine concern. I am an ex-mariner and my son is a pilot, so I would like to know exactly how this bill will address that concern.

Hon DAVID PARKER (Minister of Energy) : Before I respond to Mr Brown’s query, in respect of Eric Roy’s contribution I contrast that with the position he took in the first reading, as recorded in Hansard, when he said he believed that biofuels are a part of our response to the whole issue of climate change—which seems a little inconsistent with the position Mr Roy has articulated now.

In terms of Peter Brown’s question, the member is correct that ethanol does mix with water, so we can get water in ethanol in a way that we cannot with petrol because petrol would float on top of the water. There are issues that ethanol also cannot be used in some transport applications, for reasons of safety—for example, we do not want it in aircraft, because of the propensity of water with ethanol to freeze. How is that avoided? These biofuel blends will not be taken down the lines that are used to deliver jet fuel and the like from the refinery to the major airports, so there will not be cross-contamination there. How will it be handled at service stations for people who are filling up, for example, their outboard motor for a pleasure craft? It is likely that one pump will have a biofuel blend and one will not, and there will be some labelling to ensure that people know which choice they are making.

There are biofuels that are suitable for use in the fishing industry. Indeed, I read an article recently about a vessel that has been specially built to run on bio-diesel. It was a fishing vessel that was launched recently in the Lyttelton region, so there are some biofuel solutions there, too.

ALLAN PEACHEY (National—Tamaki) : I appreciate the opportunity to make a contribution to the debate on Part 1 of the Biofuel Bill. The people of New Zealand heard it here first, when the Minister who is the Deputy Prime Minister and Minister of Finance in the disintegrating Clark-Peters coalition came down to this Chamber and told us that this bill will cost New Zealanders money. I do not know why the Minister of Finance did not go the next step and admit that the way in which this bill is structured amounts to nothing more than stealing food from the mouths of the poor. That is what that crowd opposite and its coalition partners to my left are engaged in.

I listened with a good degree of interest to the contribution made by the list member Moana Mackey. This Government, with contributions such as that member’s, is ignoring some of the best international evidence on this subject. Does anybody in this Chamber, in this debate on Part 1 of the Biofuel Bill, find compelling the suggestion that Moana Mackey, list MP, who is not capable of holding a seat herself, has greater wisdom than the chief scientist of the United Kingdom? For that matter, do the members of the Green Party have any greater wisdom than the secretaries general of the United Nations, the Royal Society, or the World Bank? And surely nobody in this House will suggest there is greater wisdom in the New Zealand First Party—in particular in the New Zealand First member who spoke a few moments ago—than, for example, the G8 conference of legislators, the House of Commons Environmental Audit Committee report, or the OECD Round Table on Sustainable Development.

It will not be lost on the people of New Zealand, as we debate Part 1, that that Government over there, the disintegrating Clark-Peters coalition, is putting forward legislation for this country, and trying to rush it through under urgency, in the dying days of this tired Parliament. I ask the Minister in the chair, the Hon David Parker, what the hurry is. I invite the Minister to explain what the hurry is. Does anybody in New Zealand seriously think that this bill is good for the country? I invite the Minister to get up, be up front, and explain to this House—and, through this House, to the citizens of New Zealand—why this is so urgent. What are the compelling political forces that are driving the Clark-Peters coalition to bring this legislation—Part 1 of the Biofuel Bill—before this House, under urgency, in its dying days? The Minister must answer that question.

The Minister must also answer the question as to why there is a mandatory sales obligation. Why is a mandatory sales obligation coming into effect before the regulations to define sustainable biofuels? Why is that? Is this just another example of a nanny State, a disintegrating Government, and a Parliament in the last days of its life telling New Zealanders what is better for them?

Hon PETE HODGSON (Minister for Economic Development) : I move, That the question be now put.

COLIN KING (National—Kaikoura) : It is indeed interesting to have been part of the audience during the first part of the biofuels debate. It is worthwhile to connect Part 1 and Part 2 together, because this bill really comes from the basis that we are endeavouring here to set up a framework whereby we can grow an industry that will eventually give certainty for investors, and that framework is part of a tax regime. We know that that in itself should not only give certainty but allay a lot of fears for those people who would be strong-spirited enough to consider setting up a biofuels industry in New Zealand.

There is just one thing I want to draw the Chairman’s attention to. We had a speech from the chairperson of the Local Government and Environment Committee, and it made very little sense around the urgency of why we have to implement this bill. My mind went back to a number of the other bills that have been pushed through under urgency, and it worries me terribly to think about the regulations that will be worked out under this bill, should it ever be passed into law.

When we look back on the track record of this particular Government, we see that we have had the Electoral Finance Act, and the debate on the emissions trading system the other night in the Committee of the whole House. It really worries me that we have seen a lot of work done in this Chamber on bills such as this Biofuel Bill—we are on Part 2 here—that really, when the work mutates into its application on the ground, is quite untenable and unworkable, and has to be brought back to Parliament for a number of rewrites.

With regard to our science around biofuels, I suppose that it could be quite clearly said that this bill has had a very quick gestation period. It went to the select committee in 2007—I think it was in October—and it has come back now. Yet that is probably an indication of how quickly this science is moving. The conversations and the science have clearly shown that the perverse effects of biofuels have become very clear. We know clearly now that Government incentives to stimulate biofuels within the economy—whether as a tax incentive or tax write-offs in whatever way is referred to in Part 2—have created such perverse effects as those we have seen in the mid-west of America: less food being produced to be available for sale on the world market, and the subsequent rise and hike in fuel prices.

I imagine, too, in listening to a comment before about what Dr Norman the Green member was saying, that if we went far enough back in Hansard we would find that the very gestation of this bill would have emanated from the Greens, with a plea very similar to what the Minister said originally—that this was a panacea to many of our problems. However, with the quick passing of time and the perverse effects of taxation incentives, we find that we are confronted with harsh realities. This bill is headed in much the same way. It has unintended consequences, bearing in mind the comments made by Dr Cullen when he came to the Chamber to rescue his chairperson, Moana Mackey, who was unable to rebut the scientific arguments.

• Sitting suspended from 6 p.m. to 7 p.m.

COLIN KING: Mr Chair, I seek your indulgence to raise one question to the Minister.

The CHAIRPERSON (H V Ross Robertson): You have 32 seconds—go.

COLIN KING: I draw attention to a further mess in this policy—the incentive that gives ethanol an advantage over biofuels. I ask the Minister to explain to me the logic of why, in schedule 2, “Amendments to Schedule 3 of Customs and Excise Act 1996”, ethanol is given a 42.524c advantage over bio-diesel. I would welcome hearing the Minister explain why to the Committee.

ALLAN PEACHEY (National—Tamaki) : In the debate on Part 1 of the Biofuel Bill, a number of questions were put to the Minister of Energy that he chose more or less to slip over and not answer. That is fine, but one thing I wanted to know applies equally to Part 2—although when I look at Part 2 I see some of the answer. What political imperative of the disintegrating Clark-Peters coalition is driving this sort of legislation through the House in the dying days of this Parliament? That question is as valid in the debate on Part 2 as it was in the debate on Part 1. What is the political imperative? What is the urgency? What emergency is this country facing that means that Part 2 has to be driven through Parliament tonight under urgency? What is the imperative?

Let us look at Part 2. We see definitions of gasoline, petrol, and goodness knows what else. Then there it is, straight in front of us: tax. We see clause 27, “Powers of component authorities to levy petroleum tax”, and reference within it to local authorities’ fuel tax. We see clauses headed: “Assessment of tax”, “Tax recoverable as a debt”, “Penalty for late payment of tax”, and “Effect on agreements of imposition or alteration of tax”. We first heard the answer in this Chamber when the Deputy Prime Minister—the Minister of Finance in the disintegrating Clark-Peters coalition—said that this legislation would cost New Zealanders money. At the end of the day, is that not what it is all about? It is all about the rush of a Government that has taxed New Zealanders for 9 years to take the opportunity to throw some more taxes at the hard-working people of New Zealand.

The Deputy Prime Minister did not even have the good grace—nor has the Minister—at least to acknowledge that the impact of Part 2, if passed in its current form, will be no more than to steal food from the poor of the world.

Hon Members: Ah!

ALLAN PEACHEY: The socialist members of the failing Clark-Peters Government can sneer and shout. [Interruption] The Minister for whatever from Christchurch can bellow out, but it makes no difference. Part 2 will have two impacts. One will be to gather revenue for the Government—tax, tax, tax. I would have thought that members opposite, rather than sneer and bellow across the Chamber, would at least be respectful of the impact that this sort of legislation will have on the poor of the world. Some respect, at least, needs to be shown.

Let us think about how much Part 2 will cost New Zealand. Officials have told us that an additional $60 million a year will be imposed on New Zealanders through the 1c per litre levy on fuel.

John Carter: That’s just 1c. What about when it goes up to 4c?

ALLAN PEACHEY: That is right, I say to Mr Carter. This Labour Government and its coalition partners need to be very, very sure that these additional costs are justified, and I ask the Minister to address that question.

JOHN CARTER (National—Northland) : One of the interesting things about this debate is finding out whether people genuinely believe in and support the Biofuel Bill or whether they oppose it. It is fair to say that the National Party has made it quite clear that it opposes the bill for a whole number of reasons, which my colleagues have already communicated. It is probably fair to say that the Greens are genuine in their belief that the introduction of a bill of this nature may well have some benefit to New Zealand and, from their perspective, to the world. It is also fair to say that Peter Dunne probably thinks that Part 2 will have some positive impact from a New Zealand perspective and maybe even make a positive contribution to the world. Even New Zealand First members—although their arguments were pretty spurious, I have to say—probably have genuinely reflected on the bill and think that it is worthy of support, although I must say I was disturbed by Peter Brown’s explanation. But I cannot accept that the Government’s reason for supporting this bill is genuine. If the Government were genuine, then we could have expected it to bring forward this bill 2, 5, or a number of years ago. We might have thought that that was fair enough—that the Government had taken some time to study the topic. If the Government were 5 years or 3 years into its term of office, maybe it would be reasonable to say that it was genuine in what it was doing. But when the Government is bringing forward this bill 9 years after it came to power, just before the finish of this session, and is asking Parliament to pass the bill under urgency, we just cannot accept that it is genuine. We cannot believe that it is doing this for the right reasons.

It is obvious that the Government is pushing this bill through for political reasons. The Prime Minister said to New Zealanders that she would pour some fuel into the tank—she did not quite know how to do that properly, but it was a photo opportunity for her—and then the officials—

Jill Pettis: What about Don Brash walking the plank or trying to get into that stock car?

JOHN CARTER: The member over there, who lost her seat and will soon go out of Parliament, goes on about a lot of things.

Allan Peachey: Is this her farewell speech?

JOHN CARTER: Well, that may well be so. [Interruption] I am not denying that, of course. Parliamentarians all take photo opportunities. But the member has just accepted and acknowledged that this bill is being passed for the photo opportunity for the Prime Minister and not for genuine reasons, at all. She has just confirmed my argument. Sadly, what this means is that when we look at Part 2 and talk about taxes, it will just put more cost on to the people of this country, and the reason is that it gives the Prime Minister and the Clark-Peters Government another photo opportunity.

Jill Pettis: Doesn’t that word “Government” have a lovely ring to it?

JOHN CARTER: I have to say to the member over there who keeps interjecting that that is not accepted—

Allan Peachey: Her farewell speech.

JOHN CARTER: That was her valedictory—the interjection. The fact is that, whether or not we like it, not even the Minister in the chair, the Hon David Parker, has come up tonight and put forward any lucid argument about which we could say that we might reflect on it and have to accept that the Minister has a valid argument.

You know, it is all very well for all the parties to say that we have to start somewhere. We accept that. No one is arguing that there should not be a debate and an argument around biofuels. What we are saying, which is the opposite of what the Government and its supporters are saying and have not yet put forward lucid arguments for, is that we should question whether this bill will achieve what should be achieved by introducing biofuels to New Zealand. That is the unfortunate thing about this debate—it has become hollow. All that has happened all night, throughout this whole debate, is that the National Party has been attacked for the fact that we do not support the bill. No Government members have argued that they do not accept the National Party’s arguments but that, nevertheless, they will consider this point, this point, and this point because those are the valid reasons for this bill.

I have not yet heard the Minister, the chairman of the Local Government and Environment Committee, or anyone from New Zealand First put forward a lucid argument that we could sit here, as the National Party in Opposition, and say there may be a valid argument in it. The Minister could take a call, and stand up and say: “Listen, John Carter. You need to understand that you have missed the point. You need to understand that there are valid reasons why we are doing this. You need to understand that this will bring this benefit to New Zealand. It will have this benefit for households and car-owners in this country. It will mean this much, from a New Zealand perspective, on the world stage.” If the Minister had put forward those arguments, then maybe we would have had to sit back and think about it. But I am afraid that the Minister has never put forward those arguments. He has never done that in the select committee. Indeed, if you have looked, Mr Chairman—and I am sure you have, because you are a very erstwhile member of this Parliament—you would have read—

Jill Pettis: “Erstwhile”?

JOHN CARTER: He is. He is a very earnest member of our—

Jill Pettis: But you said “erstwhile”.

JOHN CARTER: Well, he is both. I mean, that is a double compliment. The point is that at least he is coming back to this Parliament. Anyway, we should not bring the Chairman into the debate.

Jill Pettis: But erstwhile means former.

JOHN CARTER: Oh well, then it is that member whom I am referring to. I am sorry; I got the direction wrong. I beg the member’s pardon. The point is this. If the members of Parliament had read this statement from the Ministry of Economic Development, then they would see that it is against this legislation. Ministry officials make it quite clear. They are saying that this legislation will not work and that it will put costs on to this country. They know it will increase taxes, and they know it will increase costs for motorists. The Parliamentary Commissioner for the Environment, a person whom one would think would want to support this sort of legislation, has said in her statement that she opposes this legislation for the way it is drafted. She does not oppose the concept; she supports the concept. So does the National Party. No one is arguing against the concept of biofuels; what we are arguing against is the way in which this Government is implementing their use. The timing of it is bad, and on top of that, the bill itself is flawed. It does not allow sufficient time for the whole issue around standards to be established before people have to compulsorily get on and implement it. That is seriously bad.

The fact is that this Minister has failed this Parliament. Mind you, he has done it before in many other things. He has not done anything with regard to energy. We have serious problems with regard to a whole number of issues in areas where he has been the Minister, and this is just another example of where this Minister has been found to be deficient in his ability to contribute to this Parliament and to this country.

Nick Smith put forward a very good amendment—which, unfortunately, was defeated, I assume—and the point now is that we should be considering this bill and opposing it. I would like to think that the Minister would stand up, take a call, and explain to members why this Opposition should be supporting this bill, because he has not done so yet. I say to the likes of Dail Jones, who is here on behalf of New Zealand First, and I say even to the member from the Greens that maybe they need to reconsider. They were opposed to this bill in its original form.

Sue Bradford: You didn’t mention Jeanette Fitzsimons speaking before.

JOHN CARTER: Yes, I did; I mentioned Jeanette. She made a contribution. I made the very point earlier that when I listened to her contribution, it was all about the fact that we were putting borders round New Zealand. We were not worried what was happening worldwide. Well, I say that that is the problem. This Minister has now tried to shut us out from the rest of the world. He is saying that this legislation will all be New Zealand - focused, it will be all about our country, and it will be all about us. The sad fact is that this legislation will be to the detriment of New Zealand, and it will certainly be to the detriment of the people in this country, and all because this Minister has not done his homework. He has not set some standards that we can all apply. This legislation certainly has not allowed us a convincing argument.

COLIN KING (National—Kaikoura) : Speaking to Part 2 of the Biofuel Bill, I say that it is quite appropriate that we direct attention to schedule 1, which contains the new schedule 5, “Biofuel percentage”, to be added to the Energy, (Fuels, Levies, and References) Act by clause 16 of this bill. I make the point that when we look at when this legislation would become law—should it pass—we see that it is 1 October 2008. There is an indication, based on that date, that there is an anomaly and that there will be a perverse effect. I would like the Minister in the chair, the Hon David Parker, to explain why it was acceptable to wait until 1 July 2009 before a standard would be put in place to fulfil the requirement put in at the very beginning of the bill that it was to be sustainable. That is why we on this side of the Chamber are saying that the bill in its present state is perverse, in the sense that it is following the notion that biofuels are a panacea for all our global warming problems. However, time has moved on so quickly that we now understand the full extent of the issue. Forests are being cut down, and the equivalent percentage on which our biofuels are produced is far and away outweighed by the carbon footprint, so there is quite a perverse effect. Yet we have set this standard that is coming in on 1 July 2009, and National members are saying, effectively, that doing that is no better than everybody else’s perverse effects, which are driving Third World countries towards poverty and starvation.

I just draw the Minister’s attention to the fact that a lot of the international commentary is saying that countries will not be able to arrive at a standard until 2011, so this Clark-Peters Government, in its last, dying days, is to introduce that type of legislation into this House. I seek the indulgence of the chair of the Local Government and Environment Committee to allow me to mention what we were saying when we had a very brief discussion about this matter before the dinner break. We were talking about creating a biofuel industry in New Zealand, and about using some of the growth within the dairy industry and using the whey to produce biofuels, or maybe tallow and things like that. Of course, in Marlborough some people have been working on sewage, so from that point of view, some very, very creative thinking is going on.

May I put it to members in the context of where biofuels have replaced a lot of the food basket, would it not have been far better to, in actual fact, have thought beyond just the confines of biofuel, and looked at ways of incentivising research, because in my view that would have been a far more effective way than picking winners with ethanol over bio-diesel? I am still waiting for the answer to my questions that I raised earlier as to the logic of that 42.5c preference of ethanol over bio-diesel.

So when we stop and look at it all here we have this bill in front of us, and we do not have a sustainable standard. We are actually seeing the perverse effects of a bill for virtually the next 12 months whereby continued burning and cutting down of forests, and Government incentivised tax-benefited biofuels, will be produced, and we know even from the Green member, if my memory serves me right, that 20 percent of the carbon emissions at the moment are coming from the perverse effects of cutting down forests, planting crops, and endeavouring to produce biofuels. I would like that question answered, because schedule 1 talks about the percentages of biofuel. In the first year it will be 0.5 percent, year 2 will be 1 percent, year 3 will be 1.5 percent, year 4 will be 2 percent, and year 5 onwards will be 2.5 percent. To me it all looks rather strained—very much just a structure and a framework with very, very little substance. This Government has a track record of this sort of thought to containing global climate change as part of a suite of actions taken by a Government that is in desperation.

Hon Maurice Williamson: In the dying throes of the Government.

COLIN KING: In the dying throes of the Government, as my colleague here mentions. Part 2 talks very much about the taxation, and when one thinks of the tax, one thinks about a pretty structured regime with a well-fleshed up body to it. Unfortunately, the debate being put forward on this side of the Chamber indicates that we are so light on substance. This bill is all about form, and it is a tragedy to see that it is all form without substance when we look at the sustainability standards. Schedule 1A, “Consequential amendments to other enactments”, talks about the far-reaching effects, and it may be interesting from that point of view. Could the Minister also take a call, because I am finding these schedules incredibly complex, and I think they need to be explained. It is fascinating to me that it has an implication on such Acts as the Building Act 2004, and the Injury Prevention, Rehabilitation, and Compensation Act 2001. It also affects international agreements: the International Energy Agreement Act 1976—that is going back to last century—international energy agreements, land transport rules, and the Local Government Acts. [Interruption] It is all written down here in black and white. It will be so very, very difficult for the members on the opposite side to make head or tail of that, let alone from this side of the Chamber.

I would like to take the opportunity to get some answers on those two questions—the one I asked first about why the advantage of 42.5c for ethanol, and, secondly, why it is so urgent to put this Act in place that the Minister will not even wait until July 2009 when, officials are saying, there will be a standard put forward, as referred to in Part 2. I ask the Minister why he has not deferred this bill until such a time as there is the possibility of a sustainable standard. Is it because they know that this Clark-Peters Government is in its last days? Is there another reason for it? In the form it is in today, it is not a very positive bill. It is just one of those other bills that will be following in the footsteps of the Electoral Finance Act, and the emissions trading scheme that we are still debating at the moment. Basically, as I hear it, this Government has stopped listening to the nation—the citizens of New Zealand.

We have so many unintended consequences that emanate out of this bill. Sadly, this bill appears to me to be born out of a notion that biofuels would be the panacea to all our problems going forward. In actual fact, the substance of this bill when it materialises into regulations will not do one thing to stimulate the development of biofuels in a sustainable way or any other way. It will just be a very, very complex morass of regulations—a spaghetti bowl of regulations—that will be just as purposeful as this Government in its last dying days.

Thank you, Mr Chair, for allowing me to speak on this bill. It is rather complex. It is certainly a very new area. I would encourage the Government, though, to think outside the square, because if we have a global issue in finding alternative fuels, I would have thought that it would be very important to be able to identify those people who are doing like research, and get alongside those so we multiply the effect of the dollar that we have here, and in that multiplier effect find some true solutions going forward. At the moment with the bill the way it is, it will not stimulate, sustain, or promote the production of biofuels.

NATHAN GUY (National) : I wish to make a contribution to the debate this evening on the Biofuel Bill. I tell those who are listening that we are sitting in urgency—13 hours of urgency today, right through to midnight. This bill is, obviously, a priority for this Government. It is in its urgency motion. It obviously wants to get it through the House. When reading the bill—some 100 pages; no, it is 97 pages; I knew that it was close to 100 pages—one realises that it is all about the Government’s political survival.

Those listening and those in the House will recall that the Prime Minister’s statement to the nation last year was all about sustainability. In her speech she mentioned it 17 times. Then she said that the Government will sell all the Ford Fairlane Crown cars, because it wants to have less of a carbon footprint. Well, lo and behold, they have been replaced by BMW 7 Series cars, and the former Ford Fairlane Crown cars are now being driven around Auckland. In terms of the Government reducing our carbon footprint, and in terms of the Prime Minister’s statement about the Government wanting New Zealand to be more sustainable, well, it has not happened at all. It was yet another political stunt.

I am interested to see that the legislators are still struggling to define what sustainability really means. The important point about Part 2 is that it is all about taxes and regulations. We have seen that over the last 9 years—more and more taxes and regulations. They affect hard-working people and families in New Zealand. There have been 2,000 regulations passed in the last 9 years, under this Government. This Biofuel Bill requires only 0.5 percent of biofuels in the first year. The environmental benefits of this legislation can be debated until the cows come home. Members should just think about it. The figure I hold in my head is 230 kilograms of corn to produce enough ethanol to fill up the family car for one trip, but 236 kilograms of corn produces enough bread on the table to feed mum and dad and two kids for the whole year. How can ethanol be sustainable, when we analyse those facts? That is the important thing. This is a case of the Government wanting more regulation.

On this side of the Chamber we say that, yes, we want a more sustainable environment, and, yes, the public will determine where they want to go with biofuels, but they do not need the Government and nanny State legislation to tell them they shall have biofuels—but, by the way, they are only half a percent. It is a bit like telling mum and dad and the kids in the morning, after they wake up and go to spread butter on their toast: “Oh, by the way, half a percent has to be margarine.” We have some real concerns about these regulations and the costs they will impose on hard-working families that are currently struggling with mortgage rates. Fuel is actually starting to come down in price, in terms of the price per barrel in US dollars. That is a positive sign.

I think New Zealanders now, as we go into the election, will think hard about this Labour Government and all the legislation it has passed. We are in the dying days of this Clark-Peters Government. It is starting to be incredibly fragile. Today we are sitting for 13 hours under urgency, we are sitting until midnight tonight, to pass a bill, and even those on the other side of the Chamber do not know how it will be implemented.

The important point about this bill that I also want to take particular note of is that the standards will not have been set, so the fuel companies will have to invest considerable amounts of money before they actually know the rules about specific biofuels. Will it be bio-diesel? Will it be ethanol? The list goes on and on. Tallow is another example. National has some concerns about this bill in its current form, and that is why we are opposing it.

MOANA MACKEY (Labour) : I move, That the question be now put.

ERIC ROY (National—Invercargill) : I have had to break an important occasion to get back here to take part in this debate. [Interruption] Yes, it is commendable. I was involved in a carbon-neutral activity to get here—I walked.

Part 2 deals with miscellaneous amendments. National members aired a number of issues that are of concern to us during the debate on Part 1, and, similarly, this part raises a huge number of questions for us.

The first issue is that I have never seen a bill before Parliament with so many delegated responsibilities in it. There will be more than one Order in Council; there will be Orders in Council to change, set, amend, and modify issue after issue. That in itself might not be bad, except that there is a vagueness around a whole lot of these issues—the setting of levies, the setting of taxes, and deeming whether something is sustainable. Being a member of the august Regulations Review Committee, I have to say that I see troubled times ahead when it has to determine, for example, whether an ethanol-based biofuel has come from sustainably harvested sugar cane. Those are the sorts of decisions that are delegated responsibilities. As I said in a previous debate on this bill, the focus is in the wrong place. The focus should be on finding alternative fuels that are sustainable and will solve the issue of our significant consumption of fossil fuels, and this bill simply will not do that. The delegated responsibilities are a significant issue.

Another issue that National members have a number of concerns about is what the cost will be. We are principally an exporting nation. That is where we earn the wealth that drives this economy. If we are imposing upon ourselves a series of levies, taxes, and costs that our competitors do not have, the impact is that we will not have investment in that part of our industry, and significant sections of our industrial base will head off overseas. Already, a number of people who have been investing on a continuing basis in the dairy industry are now heading to South America. They are doing that because opportunities exist over there, but also because they will not be bound by the various regimes that are incorporated in this bill.

One need only read clause after clause. There is clause 29, “Assessment of tax”; clause 30, “Assessment presumed to be correct”; clause 31, “Tax recoverable as a debt”; clause 32, “Penalty for late payment of tax”; clause 33, “Separate bank account to be kept by distribution authority”—for storing the money—and on it goes. Those provisions would not be in this bill if there were not significant costs associated with the implementation of it. We want a quantification of those costs. We are not saying we want to abrogate our responsibilities in terms of dealing with climate change; we need to know some of the specifics of the costs, but all we have are the words “set by Order in Council”, which are embraced within the bill time after time. Having spent some time on the Regulations Review Committee, which has the responsibility of reviewing such orders, I can see inquiry after inquiry. I can see a dearth of knowledge of how to make the astute decisions that will have to be made about issues of sustainability and where to strike those taxes. That will be the responsibility of the Regulations Review Committee. It will have to make sure that those impositions of cost stand where they fit.

The other issue I want to raise—and no other member has raised this issue that I know of—is we talk about sustainability in terms of the supply of fuel—

DARIEN FENTON (Labour) : I move, That the question be now put.

Hon Dr NICK SMITH (National—Nelson) : I want to make two important points in this part of the debate on the Biofuel Bill. The first is in relation to costs. We have no idea of the cost we will be imposing on New Zealand households with this bill. We know that households are under enormous cost pressures—food prices going up, electricity prices going up—and what we know from this Government is that it is completely out of touch with the struggle that is going on in ordinary New Zealand homes as they put their family budgets together. I was just astonished to hear the contribution from Dr Michael Cullen, the Deputy Prime Minister in this Clark-Peters Government. What Dr Cullen said was this: “The price of gas sometimes goes up and down by 10c overnight. So why would we give a bother if this is 1c or 2c?”. Why would we bother if this bill poses an increase of anything from—depending on the advice—somewhere between 3c or 7c a litre? Well, let me tell members what 3c a litre means. Every cent a litre costs New Zealanders $60 million—$60 million. So tonight this Parliament is looking at whacking another $180 million of costs on to families and businesses for very questionable environmental gain.

We believe that if we have an emissions trading scheme, there will be an incentive for biofuels. Biofuels should be able to stand or fall on their merit, rather than our having this nanny State bill where the Minister is going to define the exact percentage of biofuels for the next 6 years. That is my first point. The second point is—and it comes down to the amendment in my name in respect of the commencement date—that every member of this Committee knows there is enormous international debate about the sustainability of biofuels. There is not a publication in the world that has not talked about the awful problems that other countries have got themselves into with their biofuel regulations. And what does this bill do? It says we are going to make biofuels compulsory on 1 October this year, but we are not going to sort out the sustainability standard for some time in the future. So if I bowl a tropical rainforest over, grow palm oil, and export it to New Zealand, it will meet the compulsory requirement of this bill on 1 October. If I go and bowl over some Amazonian forests, if I steal food from the poorest people in the world and produce biofuels, on 1 October that is all OK. And the Green Party, New Zealand First, and Labour are saying they do not care.

They do not care! Have they not listened to the submissions from Oxfam—a reputable organisation? Have they not listened to the Parliamentary Commissioner for the Environment, whom the Government appointed, and who opposes this bill and says that it is damaging to New Zealand’s environmental reputation? My amendment is very simple, and says simply this: do not introduce the compulsory requirement until we have the sustainability standard in place—put the cart after the horse, not before. Have members ever heard of anything so common-sense?

Now, the Green Party members were interesting. They did not want to argue for introducing this compulsion before some sustainability standard comes into place into the never-never. They just simply said: “We can’t vote for Nick’s amendment, because we haven’t yet seen it.” Well, that is not a very good argument. We moved it at the Local Government and Environment Committee. We gave notice that it was one of the most important issues in this bill, and for members in this Committee to proclaim that this bill is about sustainable biofuels, when the sustainability standards do not come into place for some long time down the track—officials say it may be as late as 2011—is reckless and irresponsible.

I could refer to the Secretary-General of the United Nations pleading with countries not to put biofuel requirements in place without sustainability standards. I could refer to the reports of the OECD, and to the United Kingdom House of Commons. I could refer to the reports from the World Food and Agriculture Organisation, and to all of that international advice, and still the Government blindly proceeds with this bill and this compulsory requirement that is so foolhardy.

Hon DAVID PARKER (Minister of Energy) : I would like to respond to some of the misinterpretation of information that was provided to members of the Local Government and Environment Committee, including Dr Nick Smith, by officials from the Ministry of Economic Development. The cost estimates that Dr Smith continues to recount to this Parliament are, as he knows, not the figures that were given to him by the Ministry of Economic Development.

Hon Dr Nick Smith: Give us its figure.

Hon DAVID PARKER: The figure is the figure that I gave earlier, and the member has heard it on numerous occasions before. It is shown on this piece of paper here, which is a briefing on the Biofuel Bill given by the Ministry of Economic Development on 18 June 2008, when that member was on the committee.

Hon Dr Nick Smith: What does it say about costs?

Hon DAVID PARKER: The advice was that the cost of the additional blending infrastructure and the like that the oil companies will have to have would be the equivalent of 0.2c to 0.4c per litre of fuel sold, assuming that the—

Hon Dr Nick Smith: For the infrastructure. What about the fuel?

Hon DAVID PARKER: For the infrastructure, assuming that the cost is recovered over a 4-year period. They will probably recover it over a longer period.

Hon Dr Nick Smith: $20 million.

Hon DAVID PARKER: It is 0.2c to 0.4c per litre. The overall cost to consumers is estimated at being in the range of a net benefit of 4c per litre to a net cost of 1.3c per litre. With higher oil prices, biofuels could in fact save New Zealanders money.

Hon Dr Nick Smith: So you don’t need regulation.

Hon DAVID PARKER: We have Dr Smith chipping away there saying we do not need regulation. His other stated concern is the sustainability of biofuels. At the moment, one can sell biofuels in New Zealand, they are sold in New Zealand, and there are no sustainability criteria. Whichever way one looks at it, this bill improves the status quo, because it immediately introduces reporting obligations in respect of biofuels, and it promises to have fully articulated sustainability criteria by about the middle of next year. In the meantime, it sets out the principles that have to be applied in respect of those sustainability criteria.

Can I just demolish a couple of other things that have been spuriously put up by the National Party. An example was given of corn-to-ethanol. We agree that that is a bad thing. Corn-to-ethanol could be produced and sold in New Zealand at the moment; this legislation, because of the sustainability criteria, will prevent it from occurring in the future. It would not meet the sustainability criteria, because the criterion of a 35 percent reduction in greenhouse gas emissions would not be met. It would fail on that one. In addition, it would fail to meet the criterion that biofuels not be grown on land of high productive value.

Finally, on the issue of cost, as I said, the cost might go down, or it might go up by 1c a litre. We hear National members shed crocodile tears about that, whilst their transport spokesperson, who has not taken a call in this debate, is proposing tolls in Auckland of $5 a day each way—50 bucks a week!

ERIC ROY (National—Invercargill) : I just know, Mr Chairperson, that you are dying to hear the rest of the bit at which I got cut off on when I was debating a previous part, and it does fit neatly into the title of the debate—trust me. The title is, I guess, the principal part of the debate we are having, and, as I said in an earlier debate, this is largely a placebo bill. Certainly, one of the reasons I oppose it is that it does not encompass those things that are really going to make a difference. I would have much preferred this bill to have in its title, and to include, “alternatives to fossil fuels”, because in my humble view if there is to be some resolution to the consumption of fossil fuels, then we have to look at the big picture, at the hydrogen options, and at some of those other things—dare I say electric; I am not sure whether that is a fuel or not—including solar power. That is why this bill is so narrow and will make such a minuscule difference to what actually happens. That is my first point. The bill is too narrow to actually resolve the issues confronting humanity. I put that out there to be considered.

The other thing I was about to raise in the previous debate in terms of sustainability, is that we have a dearth of knowledge—a lack of knowledge—about the impact on existing plant and machinery in New Zealand. When we start mandatorily making regulations about what fuel mixes are to be, I am not sure what the implications of that are going to be. In my modest operations at Te Tipua I have a tractor. It is an old tractor, but it is about 140 horsepower. The replacement value of a tractor today is about $1,000 per horsepower, so members can do the sums. If this tractor, which probably has an engine life of somewhere in the 12,000 to 18,000 hours—it has done about 4,500—does not like what it is mandatorily being asked to consume under this bill, which is a 5 percent mixture of a biofuel into the additive, and it dies, the implications are going to be quite serious on the kind of revenue flows that are in my modest operation, I can tell you.

So when we talk about sustainability, there is a certain sustainability of the plant and machinery that we do actually have currently in New Zealand, and nobody has actually raised that issue. If we are seriously talking about the title, then it might include the words “and killing off obsolete machinery”. So that is an issue I want to put before the Committee as well.

There is another issue about sustainability. Whilst I acknowledge what the Minister said about the corn-to-ethanol argument, there is a sustainability issue, too, surrounding the use of our farmland. We talked earlier in the debate about the pressures on feeding the world, and food chain compaction in terms of the food now being consumed. One or two members in this series of debates have talked about rape or granola, or some of those other oil-bearing fruit alternatives that we can actually grow. The economics are that the current price of wheat is about $500 a tonne, and most good operators are getting yields in excess of 8 tonnes. Some of them are getting over 10 tonnes per hectare. Members can do the sums on that—$5,000-odd a hectare gross. With the current price of canola at about $800 a tonne, and somewhere about 2.5 to 3.5 tonnes per hectare, one is sort of saying that the pressures then come on to sustainably farming one’s arable land.

Whilst the bill talks up the benefits of rape in a crop rotation, most people involved in arable farming in New Zealand have been around long enough to have worked out what grain crops suit them and where they have pulse crops, brassicas, and all that. To actually impose a crop that is not as viable as current arable use puts certain other implications on arable farmers.

The absolute contrast in this is that the current price of wheat at $500 a tonne makes the growing of the oil-seed crops less viable and less preferable. But the more of a move there is to the oil-based crops, the less there will be of the grain crops, and that price goes up further, and that margin just gets wider and wider.

Hon Dr NICK SMITH (National—Nelson) : I apologise to my colleague; I have a meeting I need to go to, and I want to make a further contribution. I have noticed that not a single member in the Committee has been able to refute the core argument around the amendment that National has put.

Moana Mackey: Because it is not doing anything.

Hon Dr NICK SMITH: Well, let us go through it. Does the member accept, as the Minister of Energy does, that there are a large number of unsustainable biofuels around the world and that that is cause for serious concern?

Colin King: He’s nodding.

Hon Dr NICK SMITH: He is nodding, as is the member. In every other area of public policy, before we make something compulsory we want to have the standard in place. Have members ever heard of anything as ridiculous as what the member for Rotorua wants? She is the temporary member for Rotorua; she is a goner, the National candidate is on his way here, and we are looking forward to welcoming him. One of the reasons Steve Chadwick will go is she does not seem to give a hoot about the costs imposed on people in Rotorua on low and middle incomes. She is prepared to pass any sort of politically correct legislation that imposes costs on her constituents, and that is one of the reasons she will go down the gurgler in a few weeks time, when we have a general election.

I come back to the core point: why will this Parliament not support having the sustainability standard in place before making biofuels compulsory? The Government says that that would just delay them.

Moana Mackey: Of course it is.

Hon Dr NICK SMITH: Well, is it a bad thing to delay making unsustainable biofuels compulsory? I ask those ladies opposite why we would want to compel people to use biofuels made from palm oil from Indonesia. Labour is making biofuels compulsory before it introduces a sustainability standard, and not a single member of the Government, including Steve Chadwick, can give me a reason why.

Hon Steve Chadwick: It will stimulate biomass.

Hon Dr NICK SMITH: Oh, she says it will stimulate the biofuels industry. Well, let us try to stimulate a sustainable biofuels industry. There is absolutely no logic in the Government bringing this provision into effect on 1 October.

There is a reason for it. Labour has been in Government for 9 years, and New Zealand has the worst increase in emissions of any of the 42 Kyoto-obligated countries—an awful record. We have lost record numbers of trees. We have had a constant decline in the amount of renewable electricity. Basically, the Government is going into the election on the issue of sustainability with one of the worst records on climate change that any Government could have. It wants a little photo opportunity on 1 October, so that its members are able to say: “Hey, guys, we know that climate change is in trouble, we know that emissions have gone through the roof, but, hey, we’ve got the Biofuel Act.”

What the Government is not telling the public is that the sustainability standard is miles down the track. I do not think a single member of this House believes that it will be provided by the due date of 1 July next year. The Government says it wants to get in early with this legislation in order to get the benefit of it. Sorry? In order to get the benefit of biofuels making up half a percent of fuel in the first year, it will go ahead with it without the sustainability standard!

National members on the select committee struggled for 6 months to get a sustainability standard and could not do it. We have given a hospital pass to the officials to try to work it out. The Government knows that they are not going to meet the timetable for the sustainability standard, but it is passing this bill without that most basic component. I have a simple challenge for members of the Government: if they want compulsory biofuels, they should put in place the sustainability standard that will deal with the risk of food being taken from the poorest in the world, that will deal with the risk of biodiversity being bowled over, and that will ensure that there actually is some climate change benefit, before rushing ahead and introducing compulsion.

The last point I will make to the Minister of Energy is this. He says we need this bill to stop unsustainable biofuels. Well, whenever we get the standard, it still will not prohibit unsustainable biofuels.

COLIN KING (National—Kaikoura) : It is indeed a pleasure to follow my colleague Nick Smith, who would have to be the most knowledgable member in this House on this subject. I would like to refer to the title of the bill, and to cover about six issues very, very briefly: what the Minister of Energy said previously; the behaviour of the various parties in this Chamber; what true leaders would do when confronted with the challenges that this Government has scored own goals on; the comments that Nick Smith drew to the Committee’s attention; and the record of this Clark-Peters Government on the Kyoto Protocol.

If we were to listen to and believe what the Minister said before, we could only draw the conclusion that this bill in actual fact is not required, because everything is rosy. But we know that that is not the case. This Biofuel Bill is a lot deeper and more complex than that.

When I heard the contributions from New Zealand First, United Future, and the Greens, I drew the conclusion that a lot of members are voting in support of this bill for the wrong reasons, and I have seen that happen in this House far too many times. Biofuels have a little bit of a notion around them that they will be the panacea for all our problems. However, the science has caught up with them, and that attitude seems to be very, very perverse. Yet the politicians in this House will support this bill because there has been an amendment around sustainability.

Nick Smith very eloquently highlighted how senseless the speedy process of this bill through the House is. In actual fact it makes the whole thing quite unprincipled.

In terms of talk about principles and sustainability, we heard from the chairperson of the Local Government and Environment Committee, who got up before and gave a contribution. She spoke about the principles. She could not talk about the standards. I put it to members that if they are talking about the principles around a sustainability standard, then why are they pushing this bill through the House before they have that sustainability standard? Why would they continue to go down the pathway of the perverse effects of the production of biofuels: the total demolishing of forests for the purpose of reaping Government-subsidised taxation benefits; rising food prices; and the taking of food from the mouths of the poor? It defies logic.

Another point I would like to make—time is running away on me—is that I have the sense that a very dumb thing is being done by this House. Accepting those perverse effects, a true leader would go further afield, instead of trying to fence off New Zealand and make it a solution inside itself. A true leader would actually go further afield and seek collaborative partners to identify long-term global solutions. Is the Clark-Peters Government doing that? Not at all. One has to seriously challenge the motive for it introducing this measure. The Biofuel Bill is damaged because it is being rushed through the House. National members recognise the potential of it, but it is hugely risky if one does not get the principles right.

In terms of the cost, when we look at the overall context of things we see that, regardless of what the Minister says, a lot more money is being spent on this novel bill than is being spent on the substantive game of addressing climate change. Regardless of how one wishes to quote it, the cost-benefit ratio of this bill does not stack up.

Coming from Marlborough, I recognise that a lot of the growth in that area in recent years has come from the change of land use. It has come from the use of automotive engines such as tractors, which burn fuels. Again, this bill will impact upon the competitiveness of our region.

Probably the point I am most disappointed about is that in asking the Minister to give me an explanation—

RODNEY HIDE (Leader—ACT) : I have to say this bill is a shocking bill. No one here knows how to drill for oil, distribute it, refine it, and put it together, but a bunch of politicians who have never done any of those things sit around a select committee table and decide to mandate how it will be made here in New Zealand. No one here has ever made fuel, or refined it, but, no, a bunch of politicians, a bunch of elected representatives on a select committee, are so, so clever that they can decide and debate in Parliament whether, in the year 2012, the level of biofuels in our fuel should be 3.4 percent, or 3.35 percent, or 2.4 percent. Those are things that our politicians have spent their time debating and considering. Where on earth does the expertise or the knowledge come from?

Those politicians are so clever; they can sit around in this Parliament and decide not only the financial cost but the environmental cost. I promise that no member of the Committee knows whether adding that percentage of biofuel is a plus or a minus in terms of environmental outcomes. Members have no mechanism to account for it. That is what is so extraordinary. We cannot trace all the work, all the resources, all the effort; we cannot trace the sources of all the compounds and chemicals that go into a litre of fuel. We cannot even trace the mechanisms by which biofuel is manufactured and made, but a bunch of bureaucrats and politicians sitting around in a committee meeting in Parliament say they think the figure for 2012 should be 3.35 percent. They have no idea. They know nothing. It is the conceit that bothers me. The socialists have given up trying to run an economy.

Darien Fenton: Ha, ha!

RODNEY HIDE: They think it is funny.

Darien Fenton: No, we think you’re funny.

RODNEY HIDE: At least I would get higher up the Labour list than poor old Darien Fenton has, if I put my name up. What is tragic about this bill is what it means to New Zealanders. It will put up the price of fuel, for no environmental purpose; it is just so, I guess, some madcap members of Parliament and politicians who think they know something about the environment, who think they know something about an economy, who