Hon DAVID PARKER (Labour) : Part 5 of the Rugby World Cup 2011 (Empowering) Bill deals with Rugby World Cup liquor licences. I will ask the Minister in the chair, the Hon Dr Wayne Mapp, to address a couple of issues.

The first point I make is to agree that there was a need to make some changes to liquor licence laws. One reason was the decision from some branch of the liquor licensing authorities stating that where an event is to be held outside of the normal terms and conditions of liquor licences—a situation that is the subject of a special licence application at the moment—and where the grounds for that application are to replay or play contemporaneously in another venue televised coverage of a match that is on elsewhere, it is not within the jurisdiction of the authority to grant the application. That may well be a fair rule normally, but the view of the Government—and the Opposition agrees—is that in respect of the Rugby World Cup, when there will be a lot of people in town who, for some matches, will not be able to get a ticket, and who will want to go along and watch the game somewhere else, those people should be able to do that on licensed premises. Those licensed premises should be able to get a variation of their licence to enable that to happen, and this bill enables it to happen.

The other question I would like the Minister to answer is whether he is willing to express an opinion, based on the experiences that we had at Eden Park over the weekend, about whether we need to take a bit of care here. People getting too tanked up, booing during the Australian national anthem, and throwing bottles on to Eden Park is not a good look. I am sure that none of us in this Chamber want to see that repeated in the Rugby World Cup. Given that the authorities said that the rugby league match on the weekend was a bit of a dress rehearsal for what will happen at the Rugby World Cup, there might be a need to look at some of those licensing conditions as they apply to Eden Park.

Personally, I have always thought that it is a nonsense that in New Zealand we can buy cans and bottles at such venues. They cannot in America. Why not? Because personal injury cases were taken in America, and won when the relevant counsel took out of a paper bag the simple solution of a paper or plastic cup, which, of course, avoids injury to people. It is pretty hard to throw a paper cup very far—the liquid falls out—compared with a full bottle, which can hurt someone. I hope that consideration is given to moving to that sort of a regime in New Zealand, where we consider, at least—and I am not sure what the right answer is—whether under liquor licensing conditions we can protect the public from injury by making sure that liquor is served in a vessel that cannot be thrown. It is a pretty simple advance that seems to have been made in other Western democracies, including the United States, and I hope that through this legislation we can achieve something similar.

I ask the Minister in the chair whether the provisions of Part 5 on Rugby World Cup liquor licences can be used to impose reasonable conditions that are better for members of the public. It would also mean that someone cannot walk back with a dozen secreted around different parts of his or her body, because it is pretty hard to carry a dozen open vessels of beer. I ask that the Minister in the chair address that issue, which arose out of the experience that we had in Eden Park over the weekend.

KEITH LOCKE (Green) : Following on from David Parker’s speech, I think the question of liquor licences and the containers used for liquor is very important. I was present at the rugby league test between New Zealand and Australia on Saturday night, so I had a very good on-the-spot experience of what went on. Thankfully, I bought a $5 programme prior to the event, which I could put over my head to protect myself from any falling missiles.

I read that for the Rugby World Cup itself, Heineken will be one of the official sponsors, and Heineken is demanding that there be cans of beer for sale, no doubt because it wants to advertise its products. What is happening is that we are being driven by multinational sponsors to sell the beer in cans. The sponsors demand that in return for their sponsorship and the millions of dollars or whatever the amount may be that they are paying for it, even though the cans will potentially injure people at those games. We are losing control over the situation. It is a bit like the old Hobbit furore, when we were driven by Warner Bros; now we are being driven by Heineken. The cans will, no doubt, be even more dangerous than the plastic bottles were last Saturday night, particularly if the cans still have a bit of beer left in them.

That is one of the problems with the Rugby World Cup 2011 (Empowering) Bill as a whole, and with this particular part. The power given to the Minister for the Rugby World Cup is a bit like the power given to John Key to negotiate with Warner Bros. The decision will come out on the side of the stronger party, which will be the multinational company, backed up by the International Rugby Board and all of its official sponsors. We will have to have cans, even if there is a risk of injury. I agree totally with what David Parker said when he asked why we cannot serve the liquor in paper cups or whatever. We will never overcome completely the problem of drunkenness. When I was walking to the game on Saturday night, every bar in the Mount Eden area was packed to the gunnels with people tanking themselves up prior to the game. We cannot really control the fact that there will be drunken people at the games, so we will have to handle the situation in the best way that we can.

The other thing that David Parker mentioned was the booing that went on. I put the prime responsibility for that—and I have been along to watch Warriors games at Mount Smart Stadium—on the organisers of those contests. The thing I notice at rugby league games, as compared with some other codes, is the great partisanship on the part of the person on the loudspeaker, the MC, who rarks people up to support the Warriors and, in effect, encourages people to boo the team playing the Warriors. That behaviour carries over to the tests. Responsibility is not on “rugby league louts”; the responsibility is on the people who organise the loudspeaker system at Mount Smart Stadium.

Really, what happened on Saturday night was more of an issue of crowd behaviour. The first Mexican wave went round, and a few people threw plastic bottles in the air. Then the more that it went round, the more people understood that that was the thing to do, and threw things up in the air, wrongly failing to take into account the danger to people. The situation should not be seen completely out of proportion. Crowd behaviour can be controlled with proper control of the loudspeaker system, and that was lacking in the first two or three Mexican waves last Saturday night, as well. If the people who were running the show had intervened on the loudspeaker to tell people to calm down, and that Mexican waves were all right but that people should not throw their stuff into the air, that could have controlled the crowd’s behaviour, as it was controlled at a later point by interventions on the loudspeakers.

It is important not to give the powers available under this legislation to Ministers, and particularly not to give them to the Minister concerned, because the Rugby World Cup will be driven by multinational sponsors at the expense of the safety of the people who are participating. Thanks.

JACQUI DEAN (National—Waitaki) : I rise to speak to Part 5 of the Rugby World Cup 2011 (Empowering) Bill. I note that when the international media covers images of football fans rioting in the streets of a city somewhere in the UK, the international community takes a very strong view of it. It certainly does not reflect well on that particular country. Although it might be a very isolated event in France and other parts of Europe, those things happen, and those of us who are watching from New Zealand think it is a pretty bad thing to happen. We wonder whether we really want to go there. We do not want that sort of occurrence happening in New Zealand.

I think this bill addresses the concerns that I have expressed, and that have been expressed by other members in the Chamber. I do not know whether I necessarily agree with the contribution of the previous speaker, Keith Locke; I am not sure that the commentator at the park has as much influence as that in inflaming or controlling a crowd. But certainly the Rugby World Cup liquor licensing regime aims to do that. It is certainly not the only aspect that will maintain good crowd-control, and I acknowledge that the person on the end of the loudspeaker might have a slight effect.

I think we need to take note of what happened at Eden Park in the rugby league game last week, and do whatever it takes to make sure that kind of behaviour is not repeated at the Rugby World Cup next year, and that we do not have those images broadcast around the globe on which people may base their decisions on whether New Zealand is a good place to come to. Obviously, one of the good side effects of the Rugby World Cup will be the promotion of New Zealand as a desirable destination.

I will address the issues of liquor licensing. This bill does not change the criteria of liquor licensing; in other words, it certainly does not make it any easier to get a liquor licence just because we have a large sporting event and want to provide some hospitality to New Zealanders and visitors. What it does is speed up the process for getting liquor licences and ensures that the significant volume of applications that we expect will be processed in time.

I do not think it would be true to say that this bill goes soft on liquor licences. In fact, the bill provides for some additional requirements, which traverse things like providing food and having free drinking water available. It also gives police more powers to remove licences if conditions are breached. If members turn to clause 59, they will see that the suspension of a Sale of Liquor Act licence will continue for the duration of the Rugby World Cup. So if a Rugby World Cup liquor licence has been suspended for non-compliance, the operator cannot then turn to the licence provisions under the Sale of Liquor Act and continue to trade. I would have thought that was a strong incentive to maintain good host responsibility and compliance.

It is disappointing that we have had events at Eden Park such as those on Saturday night. We simply cannot tolerate—

Paul Quinn: Rugby league.

JACQUI DEAN: Whatever—it was a game of sport. We simply cannot tolerate that kind of behaviour. The stakes are too high for us in New Zealand. Next year’s Rugby World Cup needs to be different. The management needs to be stricter and there needs to be more proactive alcohol management planning. I note that in Wellington when people go to the Sevens, as I have on several occasions, the rules on—

Grant Robertson: How did you dress?

JACQUI DEAN: I was stunning. In fact, I will give you a rundown. I was a potted plant one year, and another year—well, never mind. I particularly enjoyed the occasion but was not able to buy bottles of liquor. The liquor licensing requirements are already tight for some events in New Zealand. Many, many people flock to Wellington for the whole Sevens weekend, and the event is run successfully. I hope that kind of liquor licensing regime will prevail throughout New Zealand for the Rugby World Cup.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : I would like to pick up from where the previous speaker, Jacqui Dean, left off on the Rugby World Cup 2011 (Empowering) Bill. She brought up the Rugby Sevens—

Jacqui Dean: The potted plant was it?

IAIN LEES-GALLOWAY: —and potted plants as well.

Craig Foss: What did you go as?

IAIN LEES-GALLOWAY: I have never actually been to the Sevens, sadly enough. It is something I would like to fix.

Paul Quinn: As a Bucket Head!

IAIN LEES-GALLOWAY: I have never been to a Turbos match as a Bucket Head, either. Moving on, the question was raised about the Sevens, and I think that was a really good point. At the Sevens, the entertainment that goes on around the rugby is often really more of the event than the rugby itself. Whereas I hope that people who are heading along to the Rugby World Cup would want to make the rugby on the field itself the centre of entertainment. Perhaps the alcohol is more of a side issue. It is something that goes with the rugby, rather than the other way around, with the rugby going alongside the alcohol. The Associate Minister Turia is making some interjections; maybe she will take a call and we can hear her views on this.

But the point I am getting at is a point I was talking about a couple of weeks ago on this bill when we were debating about what sorts of vessels we should have the beer and whatever else in. I am absolutely of the view that a paper cup would be absolutely fine. People are not there to focus on the drinking and they are not there to brand Heineken; they are there to watch the rugby. Maybe just for a couple of hours they could put up with drinking out of a probably inappropriately sized paper cup while they watch the rugby, and then we could overcome some of the issues we saw at the weekend.

Mr Quinn suggested those issues were because it was rugby league crowd. I am not quite so divisive; I am a bit more inclusive. I think it does not really matter what sport one is watching, that sort of mixture of alcohol and crowd mentality can make good people do things that the next day they wake up and think they probably should not have done, and do not feel too flash about. But in that environment, cans, whether or not they brand Heineken, or bottles can turn into missiles and they can do a lot of damage. What the Government is saying by saying no to paper cups is basically that corporate sponsorship comes ahead of public health and safety. That is really the sum total of that message.

I think that is something that would be good, given the incident over the weekend, which occurred in the middle of the reading of this bill, for the Minister for the Rugby World Cup to get up and talk about. It would be good for him to talk about how those sorts of situations will be mitigated and minimised by the bill or any of the amendments that the Minister might want to put up to the bill at this stage. That leads me to the amendment in my name. It is an amendment to clause 72(1)(a) in subpart 3 that would require the signage in a licensed venue to carry information about the transportation options available nearby the premise for patrons, which would encourage them to choose safe transportation.

I was listening to the radio this morning and I heard a Mount Albert resident, someone who lives close to Eden Park, complaining not only about what happened in Eden Park but what happened when everybody poured out across their lawn and did things on their lawn that probably were more appropriate for a public toilet. That upset that resident, who felt that things should be put in place to ensure that that does not happen. If we have information in public venues about transportation options that are available, then people might not be walking blind drunk along the streets, annoying the local residents, getting into trouble, and perhaps doing something they will not be so proud of the next morning. They can get themselves into a cab, they can get dial-a-driver, they can get on to a shuttle, and whatever options are available they can take that option—

Jacqui Dean: The train.

IAIN LEES-GALLOWAY: The member opposite mentioned the train—a good option. I would be very pleased if more people took the train in Auckland getting from Eden Park back to their homes or back to the central business district—that would be fantastic. My amendment suggests that that information should be a requirement for venues to have available for their patrons. All the other stuff is there. The free water is a requirement under this bill, which is a fantastic measure, and food and low-alcoholic drinks are available. Those things are right there in front of those patrons and they can see the options that are available to them. Transportation is not right in front of them. It is not an option that is immediately obvious and available to them. So we should take the opportunity, seeing as a sign has to be there anyway, to add this information to the sign in order to improve public health and safety. Seeing as we have parked health and safety for Heineken when it comes to the vessels inside the park, when we are outside maybe we could bring this little measure in to improve public health and safety.

DAVID SHEARER (Labour—Mt Albert) : I want to mention that for the last couple of days I have been speaking to a number of constituents in my electorate of Mt Albert who have been very, very concerned about what has happened in and around the Sandringham area. Obviously that concern is largely due, as other speakers have said, to the excessive presence of alcohol. So I have real concerns about Part 5 of the Rugby World Cup 2011 (Empowering) Bill, which in many ways speeds up the process of opening new outlets and makes alcohol much more available and easier to get. This legislation will increase the number of outlets, and that will make alcohol more available.

What I do not like about Part 5 is that the time in which one can protest or object to an outlet being opened is a matter of only 5 days. The process is very ad hoc and moves very quickly. Yes, the legislation does keep in place the same rules and regulations that would apply under any other system, but the fact that the process is to be sped up, I believe, is probably not necessary. The period of the Rugby World Cup is really from 9 September through to 31 October. If we cannot plan for the number of liquor outlets that we think we will need before that time, then it really is hard for me to understand why we will suddenly come up with the idea that we need to have an ad hoc liquor outlet here or there, or a licence here or there for other purposes.

I was appalled, like many other people, to watch the scenes on television during the test match. The point has been made that it was a rugby league test. I have been to many, many rugby league test matches at Mt Smart Stadium, etc., and I have never seen anything like that, so I really hope that it is a one-off incident. The overwhelming conclusion was not only that what happened inside the stadium was bad enough—people throwing things, and people have talked about glasses and softer containers for beer—but also that what happened outside the stadium was of concern to my constituents: bottles thrown all over the road, fighting, and loutish behaviour.

Those people live in an area where they know there is a stadium. They bought property in the area, knowing that Eden Park was there. Most of them did not know that Eden Park would be expanded to the extent that it has been. I do think that although the Rugby World Cup is incredibly important to us and is very important to the surrounding businesses in the area, the rights of the residents need to be protected. I am not sure whether this part of the legislation does anything to give those residents comfort that they will be better served by having more outlets than they already have and by having a process that speeds up the granting of liquor licences.

I have some concerns about this part. I have looked at the comments made by the police. The police at first voiced some concern about this part. They then relooked at it and decided not to protest against it. Certainly, the St John Ambulance service said it did not support this part. In fact, it believed that it would be to the detriment of the game, and certainly to the image of New Zealanders, if people needed to drink in order to watch sport. I want to see a Rugby World Cup where everybody enjoys themselves, and where people can have a drink—and I certainly will be drinking—but I do not think we want to see a repeat of what we saw at the test match the other night. I have some concerns about this part of the legislation. In particular, my concern is that there will be an increased number of liquor outlets in an area that already has a huge number of outlets, and that the process of approving new outlets is likely to be sped up so that they are pushed through. Thank you, Mr Chairperson.

KELVIN DAVIS (Labour) : I agree with the member Jacqui Dean that the stakes are high here in terms of alcohol and the Rugby World Cup. We need to strike the right balance to make sure that our image as a country that can go to sports games and not get carried away with alcohol is intact. But we cannot be prudes because alcohol, like it or not, is a big part of the whole tourism deal. A lot of rugby supporters will be coming here next year for the Rugby World Cup and drinking will be part of that. We have to find the right balance between having a great time and getting carried away with the drinking.

I suggest that amongst all the hysteria of what happened at Eden Park on Saturday, there was a bit of a perfect storm in terms of the conditions. One of those conditions was the lack of policing of people who brought alcohol to the park. We saw the news reports of people carrying boxes of bottles of beer and preloading on the way in. I suggest that the phenomenon of preloading that we see now, whereby people drink cheap alcohol before going to events, could possibly have occurred because of the cost of the alcohol being sold at Eden Park. I have also heard—and I do not know whether this is true—that because of the queues, people had to buy a minimum of four containers of alcohol at one time. I have been told that we could not afford to have one person buying one bottle of beer, so people had to buy a minimum of four containers of alcohol to take back for their mates to reduce the queuing time.

I go back to the perfect storm. Two games were being played, which will not happen at the Rugby World Cup. To be honest, most people would not have been going to Eden Park to watch the first game, which was the curtain-raiser between Papua New Guinea and England. They would not have cared about the result; they knew that England would give Papua New Guinea a hiding. They would have been sitting there drinking and enjoying the occasion—again, to excess, filling up before the main game. Then, of course, with the main game everyone was hyped up and ready for a great contest, and, quite frankly, it was a dud. The Kiwis were shocking. The frustration in the crowd built, so they were drinking and getting amped up. When crowds are frustrated and bored they start the Mexican wave, which was part of the condition when we saw plastic beer bottles, chips, and the like being thrown. It was a bit of a perfect storm, and that storm will not occur at the Rugby World Cup. There will be one game at a time a venue, and, as a colleague has already mentioned, people will be there for the rugby and not for the drinking, per se.

I want to touch on the fact that Heineken wants its product to be sold in cans. I think that is ridiculous, and it brings me to clause 62. Clause 62(1)(b) states: “(ii) any conditions that he or she considers should be imposed on the licence.” Also, clause 62(1) states that when: “… the persons referred to in section 60(6) receive an application from the administrative secretariat, each must—(a) inquire into the application; and (b) report to the Authority in the form and manner prescribed by regulations”—just moving on quickly—“…(i) whether there is any matter on which he or she opposes the application: (ii) any conditions that he or she considers should be imposed on the licence.” I think that if conditions are imposed on the licence, such as that alcohol should not be served in cans, it is important that the Minister for the Rugby World Cup does not have the right to override that. We have been arguing from the start of the consideration of this bill that it gives the Minister unfettered powers to override decisions of the Rugby World Cup Authority. If a company came in and insisted that its product be sold in a certain way and the authority believes that that is inappropriate, this bill should not give the Minister the right to override that decision.

Again, we need to make sure that we are not prudes. We do not want people to come here and say that there are too many restrictions on the drinking of alcohol, but we have to strike a balance so we do not have people getting carried away.

GRANT ROBERTSON (Labour—Wellington Central) : I want to pick up where my colleague Kelvin Davis left off. On this side of the Chamber we have been making the point throughout this debate on the Rugby World Cup 2011 (Empowering) Bill that we are greatly concerned about the ability of the Minister for the Rugby World Cup, Murray McCully, in consultation with Gerry Brownlee and Nick Smith, to override the decisions of the Rugby World Cup Authority.

On this side of the Chamber we have been quite comfortable with the idea of the authority existing and being there for urgent approvals, but setting up a process whereby the authority’s decisions can be ignored by the Minister is one that we believe is dangerous, in particular, in relation to Part 5. As my colleague Kelvin Davis has just mentioned, clause 77 refers to “Variation, suspension, or cancellation of licence”. All of those things fall into the authority’s ability to look after and therefore, in turn, put in place a situation where the Minister could undermine a decision of the authority in relation to a liquor licence. I think that is a great example of why we are concerned about the undermining of the Rugby World Cup Authority’s powers by, effectively, giving the Minister the right of veto. Clause 77 is quite interesting because it allows an inspector or police constable to, at any time, apply to the authority for an order to vary or revoke a condition of a Rugby World Cup licence, or impose a new condition. Obviously that is something someone would do only if he or she were seriously concerned about a licence, yet the authority’s power to consider that is automatically undermined by giving the Minister the ability to veto what it says. On this side of the Chamber we think that Part 5 includes a number of examples of where the clause that was unfortunately passed in Part 4 allowing the Minister to veto things is wrong.

I say to the Government Administration Committee that I think it made some good changes in Part 5 relating to liquor licences. There has been some clarification to ensure, for instance, that we now know these licences are very much limited to the time of the Rugby World Cup, and that is important. That change also puts in place the ability to clarify that the suspension of a Sale of Liquor Act licence will be just for the duration of a Rugby World Cup licence. A new clause 60A has been inserted to provide the authority the ability to grant licences concurrently, so that we know that all of the venues will be operating under similar arrangements. That is important. I draw the distinction here between the Rugby World Cup arrangements and what happened on Saturday night at Eden Park. The Rugby World Cup is a bigger and greater event. It will be one where people will be moving from ground to ground. Visitors from overseas will be getting used to consistent conditions, and I think it is unlikely that we will see a repeat of what happened at Eden Park. But that does not mean that we should not set in place cautious measures, because we need to do that to protect our reputation.

I return to the question of whether a legacy investment from the Rugby World Cup in the form of wet-pour facilities at Eden Park is justifiable. We saw on Saturday night the dangers in a situation where alcohol is being sold in bottles or cans. We know from papers that have been previously discussed during this debate that the police recommended that wet-pour facilities be provided at Eden Park, and we know that Rugby World Cup Ltd and the Government have opposed that. The police are reflecting the health and safety concerns that we saw at Eden Park on Saturday. Having wet-pour facilities means that beer is provided in cups. It reduces the danger of the kinds of missiles and projectiles that bottles can become.

Wet-pour facilities are quite slow. Kelvin Davis has just mentioned that if people have to go up and take cups of beer away, that is much slower than carrying bottles and cans, but that has to be balanced against the safety concerns that the police have been raising. We have heard from a number of residents around Eden Park and from people who attended the game that serious consideration should be given to the installation of wet-pour facilities at Eden Park. Gerry Brownlee dismissed those things when the police came to him three times to ask him to reconsider that, and I think the Government now needs to seriously reconsider whether a legacy investment is possible for Eden Park. It is a facility that no doubt will be used in the future for major events and it needs to provide a safe environment for everybody who goes there. Although I think that some things in Part 5 are good and useful, the Government needs to consider its options for Eden Park and how it serves alcohol in future.

PHIL TWYFORD (Labour) : I was one of those who began this debate with some real concern about whether the provisions in this bill relating to liquor licensing would open the door to a liberalisation of the availability of liquor at the very time our community is showing great concern about the drinking culture in this country and is discussing, debating, and coming to grips with the recommendations of the Law Commission on alcohol in our society. I expressed some of those concerns in the first reading debate. Since then they have been part of many of the discussions at the Government Administration Committee, and I have to say that I have changed my view on this issue.

I am generally of the view now that the provisions in this bill for liquor licensing for the Rugby World Cup are reasonable, comprehensive, and appropriate, and I support them. Other speakers have pointed out that the provisions in this bill are largely lifted from the Sale of Liquor Act, that they are primarily designed to expedite the granting of licences, and that the fundamentals of the regulatory framework for liquor licensing are reproduced in this bill and, in fact, there are one or two improvements. Whether these provisions amount to a liberalisation is an interesting question. I guess one could make the case that the intent of this legislation is to allow a faster licensing process and, arguably, a much greater volume of liquor outlets being licensed for this very defined period of time.

My colleague Trevor Mallard makes the argument that not one extra person will get a drink because of this legislation, because there will be plenty of liquor outlets, anyway. I am not sure that I entirely go along with that. I think that with 70,000 visitors to Auckland during the Rugby World Cup and with many New Zealanders flooding into the city for the big games, the sheer volume of people in Auckland going to the big games, many of whom will want to have a drink before and after the games, will mean a pretty dramatic expansion in the number of liquor outlets and the number of drinks being sold.

The question is whether, if we accept that that amounts to a liberalisation, it is reasonable in the context of the fact that we are putting on this event, and whether it is reasonable when we balance it against the huge benefits that we hope New Zealand and our communities will get from hosting the Rugby World Cup. Given what I said before about the fact that this legislation has been carefully thought through with regard to liquor licensing, and the fact that there are a number of controls and safeguards in place, my view is that a reasonable balance is being struck and I do not think we have too much to be concerned about.

I am pleased, for instance, that outlets with a Rugby World Cup liquor licence are required to provide water free of cost for the punters. A number of conditions are set out in clause 73 that will give members of the authority the tools to require tailored licensing for particular times and places, and I think that is a good thing. Some of those conditions relate to the hours and the days that liquor can be sold, the supply of low-alcohol beverages, the provision of food, and the maximum number of patrons. Those are all useful provisions. Under this bill the police will have extra enforcement powers that are not available to them under the Sale of Liquor Act. That is useful.

In finishing, I will echo Grant Robertson’s comments. Again, members on this side of the Chamber are concerned about the urgency powers.

CHRIS HIPKINS (Labour—Rimutaka) : I intend to vote in favour of this particular part, Part 5, of the Rugby World Cup 2011 (Empowering) Bill although I still have reservations about the bill overall, consistent with the concerns that Labour members have raised during earlier stages of this debate. I followed the debate over the weekend’s events at Eden Park with some interest. It would be fair to say that I have mixed views on these matters, because although there are clearly some issues with our current laws on the sale and supply of alcohol, I believe that a great amount of personal responsibility is involved. Although a small minority made a mess, caused disruption, and so on, the vast majority of people who go to these events and have a few drinks there behave very responsibly. We should not punish the vast majority, who behave very responsibly, because of the actions of a small minority. I think that Parliament has always faced this dilemma when it is dealing with issues like the sale and supply of alcohol. That is the perspective I bring overall to the question of whether the new powers in this bill are appropriate for the sale and supply of liquor during the Rugby World Cup.

One thing we need to be very clear on is that these provisions do not apply just to stadia; they actually apply across the board to any liquor licences associated with Rugby World Cup events. It is not just stadia we are talking about, and that is an important distinction to make. The provisions can apply to pubs and they can apply to temporary venues that are established specifically for the Rugby World Cup, and so on. They will all be covered by these licensing requirements. One change, however, that the select committee made, which I think is important to understand, is that all stadia will be required to have Rugby World Cup liquor licences, even if they already have an existing liquor licence. The select committee wanted to ensure that there was consistency in the licensing at stadia throughout the country, and that police had access to those extra powers they have under a Rugby World Cup liquor licence. Basically, we have effectively said that if there is a liquor licence already in existence for a stadium and that stadium is hosting a Rugby World Cup match, a Rugby World Cup liquor licence will still be needed. I think that is really important. It will allow the Rugby World Cup Authority to impose a standard set of conditions, for example, around the drinking vessels to be used, such as plastic cups.

I am a regular attendee at the Westpac Stadium in Wellington, and it already has a policy of having only plastic cups. Bottles cannot be taken into the stadium, and I think that works fine. I see no reason why it cannot work at other stadia around the country. We have to recognise that cans and glass bottles, and even heavy plastic bottles, can be really dangerous if they are hurled through the air and they hit somebody on the head. Plastic cups can cause a limited amount of damage—at most, people will get a bit wet if somebody decides to start throwing around plastic cups full of alcohol. But we are limiting the risk of innocent people who are behaving responsibly having what would otherwise be a perfectly enjoyable event spoiled by a very small minority who behave irresponsibly at these events. I come back to the comment I made at the beginning. The vast majority of people who want to watch a Rugby World Cup match will behave responsibly, and we should not punish them because of the irresponsible actions of a small minority.

One of the other provisions in this bill that differs from the Sale of Liquor Act is that anyone holding a Rugby World Cup liquor licence will be required to have water freely available for people who are drinking at those venues. I think that is a huge advance. Parliament may well have the opportunity to consider this, when we look further down the track at wider amendments to the laws pertaining to the sale and supply of liquor. At the moment there is no obligation on those selling liquor in a pub or a bar to supply water free of charge, and there are some extreme examples of establishments going out of their way to prevent people from getting water out of taps, so that they can extract a significant amount of money out of the sale of bottled water. Maybe it should be a requirement overall for pubs to have a free and ready supply of water. That is something that Parliament may have the chance to consider further down the track.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : This will be my last call on Part 5. In my first call I suggested that I was looking around for arguments to decide where I would come down on this part, so let me state for the record that I am in favour of this part.

Chris Hipkins: Was it my speech that clinched it?

IAIN LEES-GALLOWAY: Well, I think it was Mr Hipkins’ speech that clinched it, to be fair. But there were a number of excellent contributions from a number of members that I listened to closely.

I would like to advance the debate a little towards clause 79, “Suspension of licence for public health or fire precaution requirements”. The reason I draw the Committee’s attention to this clause and its various subclauses is that this is a fundamental part of the health and safety regulations. If a venue is deemed to be unsafe in terms of public health, especially with regard to fire precautions, then the medical officer of health or a member of the New Zealand Fire Service has to apply to the authority for immediate suspension or cancellation of the licence, or immediate variation of the conditions of the licence. This is, of course, the authority that is established by this bill but which Part 4 states may as well not exist because the Minister can override every single decision made by that authority.

This is a particularly dangerous little part of the bill. If, in the opinion of the medical officer of health or a member of the Fire Service, a venue needs to be shut down, but that is contrary to the Minister’s opinion, and the Minister decides to step in and halt that process, we have a potential disaster zone. A venue that is unsafe could be allowed to remain open because of the power that is vested in the individual Minister, who may be lobbied or may be contacted through processes other than the authority—people who choose to circumvent the process of the authority and go directly to the Minister. He—and I say “he” advisedly, as I suspect we know who it will be—may not have the information available to him that the medical officer of health or the New Zealand Fire Service may have available to them.

Clause 79A refers to the suspension or cancellation of a manager’s certificate. In this case an inspector or constable may, at any time, apply to the authority for an order to suspend or cancel a manager’s certificate. The grounds on which this may be sought are where a manager has failed to manage the premises or area subject to a Rugby World Cup liquor licence in a proper manner in accordance with the provisions of Part 5 and the conditions of the licence. Again, this is where the authority must use its processes. It is required to make a decision within 24 hours. It is required to cross-examine witnesses, and time must be given to the inspector, the constable, or the manager, or, if appropriate, to the licensee, and, I have no doubt, to any witness or anybody who is available to give evidence. But the entire process that the authority is allowed to undertake could again be completely undermined, thanks to Part 4.

It is Part 4 that the Labour Opposition has problems with, and we have been pointing this out throughout this bill.

The CHAIRPERSON (Lindsay Tisch): We are on Part 5.

IAIN LEES-GALLOWAY: Part 4 affects Part 5, because these provisions in Part 5 are completely undermined by Part 4. Although I suspect there will be a personal vote on Part 5, as far as the Opposition is concerned, I personally am in support of Part 5. I cannot agree with the bill as a whole, as long as Part 4 stays there. Although Part 5 has some excellent clauses, places some excellent requirements on the authority, and sets up a fantastic process for the authority to maintain public order, public safety, and public health, they are completely undermined by the provisions included in Part 4.

In my previous contribution I was interjected upon by Minister Tariana Turia. I do not want to misrepresent her, but I believe she said that alcohol should not be part of rugby fixtures whatsoever. I would be interested if she could rise and make a contribution on this part, because if that is a misrepresentation, then she needs to clarify it. If it is not a misrepresentation, and that opinion is held by a Minister of the Government, when we consider what is in this bill I think it would be quite important if the Minister could rise and give a contribution on Part 5, because it is all about making sure that liquor is safely and appropriately available during Rugby World Cup matches. If the Minister holds a contrary point of view, then I think it would be important if she could rise and make a contribution.

This is all about balance. It is not about taking the fun out of the games.

JACQUI DEAN (National—Waitaki) : I move, That the question be now put.

JACQUI DEAN (National—Waitaki) : In speaking to Part 6, I just reflect that we are now through the major provisions of the bill, and I come now to the part that deals with regulations, the serving of documents, and those sorts of things. It is interesting, is it not, that even this late in the passage of this bill, which will enable the smooth running of the Rugby World Cup 2011, the Labour Opposition members are all at sea. They neither support it nor not support it; they are not quite sure how they really feel about this Rugby World Cup event that we are having next year. I think that is a shame, because the rest of the New Zealand community is gearing up for this Rugby World Cup—

Craig Foss: They must have had an interesting caucus.

JACQUI DEAN: Well, I would say they always have an interesting caucus. Some do not know how they feel about this event, because they have abstained from voting, and I think that that is a shame. I think that is a shame for all of the New Zealanders all around New Zealand who are gearing up to make this the world-beating event that it should be. The provisions of this bill, which will make those processes smoother and easier, are relatively non-controversial and simple, but cannot be supported by the Labour members in this House. I think that is a shame and I say that for the record of the House.

Part 6 deals with regulations and is very much a procedural part. It deals with the method of calculating deposits for people who wish to make applications to the authority that determines liquor licences and other provisions. It covers the recovery of costs, the charging of costs, and the methods by which documents can be served. So it is very much getting down to the nuts and bolts of things.

I want to finish my short contribution by reflecting that for most of us in this Parliament this bill reminds us of the exciting opportunity we have in New Zealand. The National Government supports rugby. It supports all of New Zealand getting behind the Rugby World Cup. All the members of the National Government are vitally interested and do hope that the Rugby World Cup will be the marvellous event it promises to be. I am just sorry that that desire is not shared by the Opposition.

CHRIS HIPKINS (Labour—Rimutaka) : What a vacuous load of nonsense we just heard from Jacqui Dean. The suggestion that the Labour Opposition not supporting the giving of absolute power to Murray McCully means that Labour is somehow opposed to rugby is extrapolating things just a little bit too far. I can assure the Committee and anybody listening or watching on television that the Labour Opposition is 100 percent behind the Rugby World Cup 2011. We are 100 percent behind the Rugby World Cup and we are very much looking forward to seeing it successfully hosted in this country.

Let us not forget how we ended up with the hosting rights to the Rugby World Cup in the first place. Helen Clark flew with the Kiwi crew all the way to Dublin in order to secure the hosting rights. The Labour Government was behind it—

The CHAIRPERSON (Lindsay Tisch): We are debating Part 6.

CHRIS HIPKINS: —and the Labour Party remains behind it. I turn now to Part 6 of the Rugby World Cup 2011 (Empowering) Bill, which Jacqui Dean was just speaking to. Part 6 deals with the remaining technical aspects of the legislation, including the regulation-making power of the Governor-General by Order in Council on the recommendation of the Minister for the Rugby World Cup. Now, of course, we come back to the concerns raised by the Labour Opposition in terms of the regulation-making powers that the Minister will have, effectively, to overturn recommendations given by the Rugby World Cup Authority. The Minister will not have to follow the recommendations of the Rugby World Cup Authority. The regulation-making powers that this part gives to the Governor-General—because the Governor-General will be acting on the advice of the responsible Minister; in this case Murray McCully—effectively mean that the Minister will have absolute power to do whatever he likes. He will not have to be guided in any way by the decisions of the Rugby World Cup Authority, and that is the reason the Labour Opposition is voting against the remaining stages of this bill.

It is not, as Jacqui Dean suggested, because we do not support the Rugby World Cup; we do. We are 100 percent behind the Rugby World Cup, but we on this side of the Chamber support democracy. We believe that the provisions of this bill could easily have been remedied if Murray McCully had agreed to support the amendments put forward by Trevor Mallard. This issue could have been resolved and this bill could have been passed with much broader cross-party support than has been the case. But Murray McCully rejected the approach by the Labour Party and that is why we continue to oppose it.

Finally, I want to talk to some of the clauses in this part listed on page 83 of the reprinted bill as tabled in the House. They concern the service of notice and documents. I am not a lawyer and I do not usually pay much attention to these types of matters, but I think it is important that when we are talking about the service of notice and documents, and about ensuring that processes operate fairly, transparently, and so on, there is real clarity around what will be deemed to be a service of notice or a document. Can it be done electronically, or by fax, and so on? Clause 89, as set out on page 83, makes it very clear when a notice will be deemed to have been issued or served. I think that it is really important that the Committee is very clear on that. Clause 89(4) states “If a notice or document is to be served on a Minister of the Crown, service on the chief executive of the appropriate department of the State is service on the Minister.” This comes back to this ultimate power that Murray McCully will have under this legislation. He can be sending off missives to departmental chief executives, serving notices on all of his ministerial colleagues. That is just a further example of the ultimate power that Murray McCully is being given in this legislation, which is why the Labour Opposition is opposed to it.

We do not have anything that we are really opposed to in Part 6. Part 6 is a pretty technical, non-controversial part of this legislation. It is primarily Part 4 that we have our concerns about, but I think Part 6 gives further examples and further elaborates why it is that the Opposition has expressed so many reservations and how easily that could be resolved if the Government was willing to take a more democratic approach to this legislation.

DAVID SHEARER (Labour—Mt Albert) : I reinforce what my colleague Chris Hipkins just said about Part 6, which is largely an administrative, miscellaneous part of the Rugby World Cup 2011 (Empowering) Bill. Nevertheless, clause 88 states: “The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations that prescribe—”, and it goes through those prescriptions. That comes back to the point that we raised before about the Minister, which cuts to the chase of what we were talking about in Part 4.

Why do we have that problem? One of the issues that has come up in the last few days with regard to the debacle that happened on Saturday at Eden Park is that the trustees at the Eden Park Trust Board were all replaced by Minister McCully. Minister McCully changed the trustees, who then went on to change the management team. The management team has not yet been in contact with the local residents. Certainly, Mr David Kennedy, the chief executive officer, has not yet made contact with the local residents, who were the people who bore the brunt of what happened on Saturday. That is a direct consequence of a lot of the changes being made by the Minister.

Part 4, as I said before, gives the Minister the ability to override and take an enormous amount of licence—

The CHAIRPERSON (Lindsay Tisch): We are on Part 6.

DAVID SHEARER: I beg your pardon, Mr Chairperson. Part 4 gives the Minister a lot of licence and that is reinforced at the beginning of Part 6, as I just quoted.

I come to clause 88(i) in Part 6, which states: “the form, contents, colour, and size of print of a Rugby World Cup liquor licence, including the form and other matters required for licences issued in respect of a group of applications:”. That relates back to what we were just arguing in the debate on Part 5. That, again, is about the speeding up of liquor licences, which have to be advertised as per clause 88(i). The process can be sped up. A lot more liquor licences can be given out in a very short space of time, giving people who object only 5 days’ notice in which to do so. Around this area—and around Eden Park, in particular, which is the area I am specifically concerned about—we will have the capacity to have more outlets and more drinking in an area that has copious numbers of drink outlets already.

Coming back to Part 6, clause 88(i) goes to the issue of liquor licences. It is something I have a real concern about. I do not think that we need to be promoting rugby on the basis of whether we can drink copiously or have an enormous number of drink outlets for this occasion to be a real success.

I point out, as my colleague has done, that we oppose this legislation on the basis of what it allows the Minister to do—on the basis of what it allows the Minister to do. We are completely supportive of the opportunities that the Rugby World Cup gives to New Zealand. I am certainly supportive of what this world cup gives to the people in the area that I represent, around Eden Park. Businesses there will be booming. Obviously, they will have to be in compliance with Part 6, clause 88(i), and I remind people about that.

Once again, I say that it is a mistake to give the Minister more or less carte blanche to make decisions that override the authority, which will then be set up and in place, and that override many of the decisions that have been made through good procedures and regulations. It is something that members on this side of the Chamber oppose.

Part 6 is largely miscellaneous. It is regulations, but, nevertheless, it still speaks to and supports the other parts of the bill that we are not very happy with.

JOHN HAYES (National—Wairarapa) : I move, That the question be now put.

KELVIN DAVIS (Labour) : I know that we are talking about Part 6, but I have to get this off my chest—it comes down to what Jacqui Dean said about Labour not supporting rugby. What she said is ridiculous. I bet anything that Jacqui Dean is one of those chardonnay supporters who are there just for the moment. I bet you anything that Jacqui Dean did not get up at 3 o’clock in the morning on Saturday to watch New Zealand versus England. I bet you she has not cried herself to sleep.

Craig Foss: I raise a point of order, Mr Chairperson. I am just interested that the member is trying to wager bets with you as Chair. He kept saying: “I bet you that x, y, z.” I do not think that is appropriate.

The CHAIRPERSON (Lindsay Tisch): Thank you. I am a betting man, and I took it in good faith.

KELVIN DAVIS: I will bet anybody that Jacqui Dean has not cried herself to sleep every night since 27 October 1991, the day that we lost our world champion title to Australia in Dublin. To say that Labour does not support rugby and does not support the Rugby World Cup is an absolute joke. I bet anybody in this Chamber, anybody in this country, that we know more about any form of rugby or any sort of situation around rugby than that member. A true supporter knows stuff about rugby that nobody else does. I ask that member to name the All Black lock who in 1979 scored the only try for the All Blacks at Twickenham.

The CHAIRPERSON (Lindsay Tisch): We are on Part 6.

KELVIN DAVIS: Yes, Mr Chair; I just had to get that off my chest, because as a rugby fanatic I do not think there is anybody in National who cares about rugby more than I do.

I come to Part 6. As Chris Hipkins said, the Governor-General may, by Order in Council and on the recommendation of the Minister, make regulations. That is the part of this bill that we are upset about. It is the unfettered power of the Minister that we are concerned about. To say we do not support rugby because we are challenging this part of the bill is absolutely ridiculous. The Labour Party has had great discussions and has allowed some members to vote one way and some members to vote the other way, and that is democracy in action—something, of course, that that party on the other side of the Chamber would not have a clue about.

Jacqui Dean: Which way did you vote?

KELVIN DAVIS: I voted for it; in support, OK?

Jacqui Dean: Who was against?

KELVIN DAVIS: Look, it does not really matter who was for and who was against. What matters is that we are concerned that the Minister has unfettered powers—[Interruption]

The CHAIRPERSON (Lindsay Tisch): We do not want that dialogue—it is not relevant to Part 6.

KELVIN DAVIS: Thank you, Mr Chair. We have a concern that the Minister has unfettered powers to override the Rugby World Cup Authority. The Labour Party supports rugby and supports the Rugby World Cup. In our party we are allowed to have robust debate and discussion, and on this issue we voted as we saw it. Some supported it, some were against, and some abstained. The Labour Party is right behind the Rugby World Cup. We have given it a lot of thought and consideration.

As someone mentioned earlier, Helen Clark flew over to Dublin—the city where the All Blacks lost in 1991—and because of her contribution and her support for Tana Umaga and the rest of the Kiwi contingent, this wonderful event will happen in New Zealand next year. It will be a great thing for New Zealand. It will put us on the world stage. But we do have to be concerned about this issue, and it is right that Labour as a party has challenged parts throughout this bill to make sure that everything goes right during the Rugby World Cup.

I finish my contribution by challenging Jacqui Dean and the National Government to come up with any evidence that they support rugby and the Rugby World Cup more than the Labour Party. Members of the Labour Party are true fanatics and true supporters of our national game, not chardonnay supporters such as Jacqui Dean.

CRAIG FOSS (National—Tukituki) : I move, That the question be now put.

PHIL TWYFORD (Labour) : We are in the dying minutes of the Committee stage of the Rugby World Cup 2011 (Empowering) Bill, and it is fitting that we should finish by responding to the excruciating speech made by Jacqui Deans. We are finishing as we started—

Jacqui Dean: I raise a point of order, Mr Chairperson. I would be grateful if the member addressed me by my correct name, which is Jacqui Dean.

The CHAIRPERSON (Lindsay Tisch): I am sure the member has taken that on board.

PHIL TWYFORD: I apologise. I should have said we were responding to an excruciating speech from the member Jacqui Dean. She is the member who cannot understand why Labour voted against the odious Part 4, which gives the Minister—

The CHAIRPERSON (Lindsay Tisch): We are on Part 6.

PHIL TWYFORD: I am getting to that, Mr Chair. She cannot understand why Labour voted against Part 4. She cannot understand why we would take a conscience vote or a personal vote on the alcohol provisions in this bill. The members on this side of the Chamber, unlike the member Jacqui Dean, have not put their brain into neutral while they have been debating this bill. The best argument that she could come up was that we do not like rugby—woo hoo!

Part 6 is interesting, because it reflects just how well thought through much of this bill is. The detail and thought that have gone into Part 6 are extraordinary. I draw the Committee’s attention to subclause 5A of clause 89, where no detail has been overlooked. Subclause 5A states: “A notice or document is deemed to have been received as follows: (a) if sent electronically, when acknowledged by the recipient, or when an automated delivery receipt … is received by the sender:”. Subclause 5B states: “If a notice or document is required to be served or delivered on or by a particular working day,—(a) it must be served or delivered by 4.00 pm on that day;”. If a notice or document arrives after 4 p.m., it is deemed to have been received on the following day. That is extraordinary.

No detail has been overlooked in Part 6, yet Part 4 hands over to Murray McCully, the Minister for the Rugby World Cup, extraordinary powers to override the recommendations of the eminent appointed members of the Rugby World Cup Authority. All of the detail, all of the thought, that have gone into this bill could count for nothing, because Murray McCully, the Minister for the Rugby World Cup, can completely disregard all of the thought that has gone into setting up the systems, structures, and procedures for the Rugby World Cup Authority.

That is why the Labour members of Parliament will ultimately vote against this bill. We will not do that because, as Jacqui Dean thinks, we do not like rugby, are unpatriotic, or do not care about the success of the Rugby World Cup. We do. We have made it abundantly clear that we support the Rugby World Cup. We want it to be a fantastic success for New Zealand. We want it to be an unforgettable moment for all New Zealanders to savour the beautiful game. But we will not countenance the bad law or bad systems that are being put in place by this Government to completely disregard the normal conventions of accountable Government, and to hand over to Murray McCully the unfettered power to disregard the members and the advice of the Rugby World Cup Authority. The sublime, elegant detail contained in Part 6 provides that if a notice is received after 4 p.m., it is deemed to have been received on the following day. But in spite of the beauty, elegance, and simplicity of Part 6, Labour will vote against this bill.

We have not given up hope that the Government may see sense, finally, before this bill is passed.

David Shearer: I don’t know about that.

PHIL TWYFORD: Some of my colleagues have given up hope. I have not; I have an open mind and a good heart. I live in hope that the members on the other side of the Chamber will reignite and reawaken their commitment to the conventions of accountable Government, and will not give Murray McCully the extraordinary powers that are contained in Part 4.

AMY ADAMS (National—Selwyn) : I move, That the question be now put.

• Motion agreed to.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : Clause 1 refers to the title of the bill and, as we all know, the title offered up by the Government is the Rugby World Cup 2011 (Empowering) Bill. On the surface, that seems perfectly sensible. The title refers to the period of time during and around the Rugby World Cup 2011. It empowers the Rugby World Cup Authority, which is created by the bill, the Government, of course, and a Minister—we are not quite sure which Minister; it might be the Minister for the Rugby World Cup or another Minister—to do more or less what the Minister likes. In those terms, one might think the title is fairly appropriate, because the bill vests an enormous amount of power in one individual Minister. It empowers that Minister to do more or less what the Minister pleases.

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

IAIN LEES-GALLOWAY: It is nice that the Minister in the chair, Jonathan Coleman, could amble his way down to the chair to join us for this debate. We are on clause 1, the title of the Rugby World Cup 2011 (Empowering) Bill, which, before the dinner break, I was saying seems superficially like a fairly reasonable title for the bill. I note that the Government steered away from using in the title the word “enabling” instead of “empowering”. Enabling bills were, of course, favoured amongst some of the 20th century’s better dictators and the word “enabling” might have alluded to some of the dictatorial powers included in Part 4 of this bill, so it was probably wise to steer away from it, although it would have been a sensible word to have included rather than “empowering”; “enabling” might have been a bit more appropriate.

The “Rugby World Cup 2011 (Elected Dictatorship) Bill” would have been quite good, because essentially Part 4 offers a Minister of the Crown absolute, complete, total authority over what goes on around the Rugby World Cup, and all the provisions within the bill and the authority that has been set up are just about completely meaningless because of the elected dictatorship that is established in Part 4.

Another title could be the “Rugby World Cup 2011 (Vesting Total Authority in One Minister) Bill”, which is essentially what this legislation does. It could be the “Rugby World Cup 2011 (Establishing an Impotent Authority) Bill”, because the vast majority of the bill—Parts 1, 2, 3, 5, and 6—deals with establishing an authority to deal with a range of aspects of the Rugby World Cup from liquor licensing through to venue establishment through to events that occur around the Rugby World Cup. This legislation establishes an authority that is supposed to have control over those events, grant liquor licences, give people authority to hold those events, and run test events in the lead-up to the Rugby World Cup, but, in fact, all of that authority is completely undermined by Part 4. The bill establishes a completely impotent authority. In the case that the Minister disagrees with the authority’s position, he can just come straight in and overrule anything that the authority does. Although the bulk of the bill—many, many clauses and many, many pages—is turned over to establishing this authority, the real crux of the bill is Part 4, which says that even though we have an authority, it is completely impotent and completely useless in the event that the Minister disagrees with what the authority says.

Given the nature of the debate thus far from the Government benchers, few and far between as it has been, Government members have not looked to engage in the debate as much as all that, but they have tried to say that Labour members hate rugby, that we do not want to have a good event, and that we do not want to run a good event. I would say that that would make this the “Rugby World Cup 2011 (Short-term Memory Loss) Bill”. They forget about the previous Labour Government and Helen Clark, who, as we all well know now, flew to Korea via Ireland. Who does that, I do not know, but it showed how keen she was and how much she had vested in being part of the delegation to the Rugby World Cup to make sure that New Zealand got the Rugby World Cup in 2011. The Government has conveniently forgotten all of that effort put in by Labour and all of the support that Labour would continue to offer for this bill if the Government could just make some tiny amendments to Part 4. We wanted to build a consensus and be able to have a bilateral approach to this, but the Government refused to take that up.

CRAIG FOSS (National—Tukituki) : I raise a point of order, Mr Chairperson. I have a question. Prior to the dinner break when we were voting on various parts—4, 5, and 6, I think—Labour gave split votes, which is absolutely fine, of course. But I bring your attention to Standing Order 139(2), which states: “If a party casts a split-party vote the member casting the vote must deliver to the Clerk at the Table, immediately after the vote, a list showing the names of the members of that party voting in the various categories.” I recall that there were votes for, votes agin, and abstentions from the party opposite. I ask whether those names have been tabled yet, and whether they are available to the Committee.

JACINDA ARDERN (Labour) : I am happy to respond that the proxies have been taken from Labour and will be provided to the Clerk in due course. We are just locating those in the handover between whips at this time. I am sure that the Government will be patient with us while we locate the relevant names, but we have it in hand.

CRAIG FOSS (National—Tukituki) : Are we to expect those names forthwith? I notice that it has been 2 hours since the first split vote, that I am aware of, from the other side. That seems ample opportunity. What would be a normal time frame? When should we expect that?

The CHAIRPERSON (Hon Rick Barker): I do not know what an ample time frame would be. “Immediately” sounds like it will be pretty prompt. The Chair of the Committee cannot force people to do things. We have an assurance from the whips that the names will be produced, and that the paperwork is being resolved. I expect that the whips for Labour will produce the paperwork very quickly. I have that assurance and I accept the whips’ assurance.

KELVIN DAVIS (Labour) : As we debate clause 1, which is the name of the Rugby World Cup 2011 (Empowering) Bill, we obviously know that we are talking about the Rugby World Cup and that it will be held in 2011. But whether it is an empowering bill—empowering for the Rugby World Cup Authority—is the point that we want to make. It is a moot point, because the Rugby World Cup Authority set up under Part 2 is eclipsed by the powers given to the Minister for the Rugby World Cup under Part 4. So a possible name for this bill could be the “Part 2 is a Waste of Time Bill”, because the bill goes through the whole description of setting up the Rugby World Cup Authority and then in Part 4 totally ignores it by giving the Minister unfettered power to do what he wants.

Let us remember that the Rugby World Cup Authority is an authority in which a retired judge or a lawyer of at least 7 years’ standing has to be appointed as the chairperson, and another member who is a lawyer of at least 7 years’ standing has to be the deputy chairperson. The Minister must ensure that the authority has available to it sufficient members with the knowledge, skill, and experience relevant to the authority’s function. I think it is really good that the authority should have that, but then the Minister who does not necessarily have the knowledge, skill, and experience can come and override the decisions that the Rugby World Cup Authority makes. So this bill could also be called the “Put Murray McCully on a Pedestal Bill”, because that is really what is happening. He is being put up there with this unfettered power to override any decisions that the Rugby World Cup Authority makes.

We on this side of the Chamber have said that that is not right, and that the Rugby World Cup Authority, made up of these experts—lawyers and judges—with the knowledge necessary to make decisions around the Rugby World Cup, should have the unbridled power. That group should be able to make those decisions and those decisions should stand. Labour does not agree that the Minister should have the power to override the authority. This bill could be called the “Clayton’s Empowerment Bill”—with all due respect to our colleague Clayton Cosgrove—because it is the empowering bill one has when one does not actually have an empowering bill, since the only person being empowered is the Minister. Again, as I said, Labour disagrees with that.

There is also the whole issue of forgetting that it was Labour that made sure that New Zealand won the right to host the Rugby World Cup. That issue has been continuously downplayed and overlooked. It was Labour that got the Rugby World Cup to come to New Zealand. So perhaps it could be called the “Acknowledge the Great Work Done by the Previous Labour Government Bill”, as Labour made sure that the Rugby World Cup came to New Zealand. We could go through this bill and give it any number of names. They pop into our minds quite easily because of the unfettered, overriding power that the Minister is given in Part 4. We could call it the “Take Part 4 Out of this Bill Bill”, because, as I said, it is not right that the Minister has all this authority to override any decision of the Rugby World Cup Authority. That is not good lawmaking and it is not good democracy. I guess we could call this the “Labour Party Really Does Support Democracy Bill”, because we are talking about setting up this authority to represent people and make sure that the unfettered and unchallenged power that the Minister has will not be misplaced or abused.

Again, I say that we need to make sure everyone realises that it was the previous Labour Government that got this event here through the great work of our previous Prime Minister. Labour still disagrees with Part 4. The Minister should not have this power to absolutely override anything that has been decided by the Rugby World Cup Authority, if he so decides.

JOHN HAYES (National—Wairarapa) : I rise to speak on the Rugby World Cup 2011 (Empowering) Bill, to discuss the title. As all of my colleagues on this side of the Chamber would understand, I am Murray McCully’s greatest fan. In almost every situation I would totally agree with everything he said, but on this occasion I wonder whether the Minister for the Rugby World Cup has the correct title for the bill. I wonder whether it should be called the “Labour in Chaos Bill”. It occurs to me that the title of this bill may be being used by competing factions in the Labour Party to begin to run a coup against Mr Goff. We had a split vote on the bill just before tea, and the Labour Party is unable to name the people who abstained from voting on it.

Is it that we have the Mallard faction? Is it that we have the Goff faction? Is it that we have the Shane Jones faction? Is it that we have the Mr Cunliffe faction? Clearly, there are four people on the other side of the Chamber who have voted, or at least abstained from voting, in a way that does not support their leader. This is a very surprising development.

It may also be that this bill could be called the “Mallard (Sour Grapes) Bill”. I suspect that if Mr Mallard were the Minister for the Rugby World Cup today, he would be entirely supportive of the empowering of the Minister to make sure that the Rugby World Cup event is absolutely successful, because its success is really important for New Zealand’s global brand and for our economy.

It is quite interesting to look at the scrambling that is going on on the other side of the Chamber and work out who is in what faction, because clearly there is a lot of disharmony on the other side. Four people have moved from the main reason that the Labour Party was voting, and they are abstaining, presumably because they do not agree with Mr Goff, or Mr Mallard, or Mr Jones, or Mr Cunliffe. I invite the whip on that side of the Chamber to put us out of our misery, or at least tell us what is going on.

I come back to the point of this empowering bill. I am quite sure that if Mr Mallard were the Minister concerned, with 85,000 people coming from overseas and millions of people watching on television, he would not allow New Zealand to be showcased in a way that was not appropriate. The point of this bill is that it does not change the criteria for issuing liquor licences. It will allow the temporary streamlining of Government regulatory processes to ensure the tournament and the many activities that support it can be organised as effectively as possible. When discussing this issue earlier in the House I have drawn attention to what has happened in the Wairarapa with the La De Da concert, which was scheduled to take place in Martinborough on New Year’s Eve. We do not want the circumstances affecting the Martinborough concert to happen with the Rugby World Cup.

In the Martinborough case, a council initially told the organisers of this concert that they would not need resource consent, as would have been the case if this event had been run in Masterton, but now the council has suddenly discovered that it can ankle tap this concert. It will ankle tap the 12,000 people who have paid more than $100, and up to $350, for a ticket and it will say that resource consent costing $50,000 is needed.

We cannot afford this situation to arise with an event as important as the Rugby World Cup, which is why we must empower the Minister to break through the bureaucratic nonsense, nanny State-ism, and red tape that could potentially stand in the way of this event, which is vital for the New Zealand economy. I particularly want to say that we are not going soft on the liquor process; in fact, the bill provides additional requirements for that. Thank you.

GRANT ROBERTSON (Labour—Wellington Central) : It is a pleasure to take a call in the debate on the title of the Rugby World Cup 2011 (Empowering) Bill. The title is simply not generous enough to the Government. I think it needs to really capture John Hayes’ passion for this issue. Possibly that member could call it the “Rugby World Cup 2011 (Let’s Forget About Health and Safety) Bill”. Mr Hayes has just been telling us all about things being nanny State, but those things on Saturday were bottles flying in the air and landing on people. That image of New Zealand, which Mr Hayes seems so concerned about, will be projected around the world.

Mr Hayes was also concerned about Labour’s voting. On this side of the Chamber, we are always worried about whether Mr Hayes is confused. He is frequently confused, and we are always worried when he is confused. To clarify for that member, I say that when it comes to debating and voting on issues to do with liquor, Labour has a proud tradition of conscience voting. Occasionally in the past National has had a proud tradition of letting its MPs follow their consciences, but now members on that side of the Chamber have only one conscience.

We have noticed this because we on this side of the Chamber know that on another issue relating to liquor—that of the drink-driving rules—there are members of the National caucus who want to back a change to the drink-driving laws.

Craig Foss: Jumping the shark.

GRANT ROBERTSON: I know that Craig Foss wants to back a change. He is looking for stricter drink-driving laws. He is looking for the blood-alcohol limit to be lowered from 0.08 to 0.05. That is right, is it not? I ask Mr Foss whether that is correct. I ask Mr Foss whether it is true that he wants to lower it. He wants to lower it, but he is not allowed a conscience vote. On this side of the Chamber, we are proud of the fact that Labour allows people to express their consciences on one part of this bill.

Mr Foss may not have noticed, but on every other part of this bill and on the final vote on this bill Labour is unified in saying that we are not prepared to back a bill that gives Murray McCully carte blanche to make whatever decisions he likes in the run-up to the Rugby World Cup. The Government has set up an authority to do what it likes, the authority comes forward, and then Gerry Brownlee, Murray McCully, and Nick Smith can override it all. Mr Foss can rest assured that Labour is unified in opposing this bill, but we are very clear that on issues involving liquor, we allow our MPs to have a conscience vote.

The shame in this Chamber is that MPs on that side are no longer able to express their consciences. They are not able to express their consciences on the drink-driving limit, and they are not able to express their consciences on this change to liquor laws. We on this side of the Chamber stand proud of the fact that we give our MPs the ability to speak freely on matters of liquor law change.

Mr Hayes might be confused, but we know that passing this bill in its current form is not right. Iain Lees-Galloway has already stated that with a simple amendment this bill could have been supported by Labour, and Murray McCully would not have a veto right over the Rugby World Cup Authority. National failed to take up that amendment, and that means Labour will be voting against this bill, having given its members the right to have a conscience vote on alcohol issues.

• Clause 1 agreed to.
• The question was put that the following amendment in the name of the Hon Murray McCully to clause 2 be agreed to:

to insert in subclause (1) “Sections 1 and 2 and” before “Parts”.

• Amendment agreed to.

• Clause 2 as amended agreed to.

• Progress reported.

• Report adopted.

Hon Dr JONATHAN COLEMAN (Minister of Immigration) on behalf of the Minister of Revenue: I move, That the Taxation (International Investment and Remedial Matters) Bill be now read a first time. At the appropriate time I shall move that the bill be referred to the Finance and Expenditure Committee for consideration. The bill before us today introduces a number of important business tax reforms that are variously aimed at helping New Zealand businesses to compete internationally and at reducing business tax compliance costs. They complement other recently enacted reforms, such as the reduction of the company tax rate from 33 percent to 30 percent and the introduction of the new research and development tax credit, which was designed to encourage companies to invest more in research and development. The focus of other reforms in the bill is on updating tax law to align it with today’s commercial environment, ensuring the law works effectively and as it was intended to work, protecting the revenue base, and further strengthening New Zealand’s culture of charitable giving.

The central feature of the bill is the proposed reform of New Zealand’s international tax rules to help New Zealand - based companies to compete more effectively overseas. In my view this is one of the most important taxation reforms to come before this House. What is being proposed is a complete change of direction in the way we tax the offshore income of our controlled foreign companies—by which is meant foreign companies that are controlled by New Zealand residents. At present New Zealand taxes all the offshore income of those companies, with the exception of income from operations in the so-called “grey list” of eight countries that our law singles out as having taxation systems comparable to our own. In that respect we are completely out of step with what happens in much of the rest of the world. Many other countries, including our main trading partners, distinguish between passive income—such as that from interest, dividends, rent, and royalties—and active income, such as income from manufacturing, and exempt the latter from tax. Therefore, the fact that our controlled foreign companies are taxed in New Zealand on their active income puts them at a competitive disadvantage internationally.

The cornerstone of the proposed reform of our international tax rules is to exempt from domestic income tax the active income of controlled foreign companies of New Zealand - resident businesses. That is intended to encourage businesses with international operations to remain in New Zealand, as well as to enable them to compete effectively in foreign markets. The passive income of those companies will still be taxed as it is earned, although there will be some exceptions to the rule. For example, it will not apply to passive income for controlled foreign companies in Australia, which is usually the first port of call for our smaller businesses that want to expand overseas. There will also be an exemption for passive income that is less than 5 percent of a company’s total income. Other important features of the reform include an exemption from tax for most foreign dividends paid to companies, as well as measures to protect our revenue base when the active income exemption comes into force.

The bill also introduces further measures aimed at reducing tax compliance costs for small and medium sized businesses, of which there are many in New Zealand. Lacking the resources of larger companies, smaller businesses tend to bear a disproportionate tax compliance cost burden. Reducing tax-related compliance costs is an incremental process consisting of many small steps. There is no single solution to the problem, short of abolishing taxation. A measure that will help one small business may not help another, since businesses vary significantly in their needs, problems, and operating styles. Compliance cost reduction measures introduced in recent years have included, for example, the alignment of payment dates for provisional tax and GST. That change was designed for small businesses that prefer to make smaller and more frequent payments of provisional tax to help with their budgeting. Likewise, some of the fringe benefit tax rules were changed with smaller businesses in mind. For example, the minor benefits threshold, under which the tax is not payable, was raised, and a tax exemption for business tools was introduced.

The changes proposed in this bill raise several other tax thresholds. They include, for example, the PAYE threshold above which employers must file and pay deductions from employees’ salaries twice a month. That threshold is being raised from $100,000 to $250,000, a change that will allow a greater number of small employers to pay their deductions to the Inland Revenue Department once a month, thus saving them time and money.

The bill clarifies the law to ensure that employer payments for employee relocation and overtime meal allowances are exempt from income tax and fringe benefit tax, if certain criteria are met. Those changes, which were announced last year, simplify the law and remove longstanding uncertainty about the tax treatment of those payments, which will save time and money for everyone involved.

The bill modernises the tax rules relating to the life insurance business, which date back to 1990. Since then, products and business practices have changed significantly, with the result that the tax rules are out of date in several areas. For example, many term insurance profits are under-taxed today, with profitable business often leading to tax losses. The reason is that term insurance was a very small part of the business in the late 1980s, so it was not a big consideration in developing the rules. Today, term insurance is a major part of the business, and by being under-taxed it enjoys a considerable subsidy under the present tax rules. A further anomaly in the rules is that people who save through life insurance products face a heavier tax burden than do savers who invest directly or through managed funds that become portfolio investment entities. Under the proposed reform the term life insurance business will be taxed on actual profits, as other businesses are taxed, and many of the tax benefits of the new portfolio investment entities will be extended to all savers in life products.

The petroleum mining tax rules are also being updated to remove potential disincentives to further investment in oil and gas exploration and development in New Zealand. At the same time, the bill introduces measures to ensure that New Zealand receives its proper share of the benefits from our growing petroleum mining industry. In order to safeguard New Zealand’s taxing rights on its own petroleum resources, the changes will allow expenditure on petroleum mining operations undertaken through a foreign branch to be offset only against income from petroleum mining operations outside New Zealand.

As a further measure to protect the revenue base, the bill introduces a number of changes to strengthen the definitions of associated persons in income tax law. The definitions are used primarily to counter tax practices that could undermine the intent of our tax laws because of the closeness of the relationships of the people or entities involved, whether they are relatives, trusts, partnerships, or companies. The definition relating to land sales is in particular need of strengthening in order to prevent land dealers, developers, and builders circumventing the land sale tax rules by operating through associated persons. It is not new law that gains on land sold by dealers and others in the business are taxed if the land is sold within 10 years of acquisition. That was clearly stated 35 years ago, when Parliament enacted the current land sale tax rules. This bill closes the gaps in the definitions of associated persons that allow that tax obligation to be sidestepped. The bill also makes the other definitions of associated persons more robust. For example, it will no longer be possible to use certain trust structures to circumvent the tax rules. Similarly, it will not be possible for companies and shareholders to avoid being associated by fragmenting shareholdings amongst closely related people and entities.

The bill introduces further measures designed to strengthen the climate of charitable giving in New Zealand. The measures build upon related tax changes that came into force this year that removed the caps on the dollar amounts of charitable donations that are eligible for tax relief. As a result, individuals can now claim tax rebates for donations up to the level of their taxable income, and companies and Māori authorities can claim deductions for donations up to the level of their annual net income. The bill introduces a voluntary payroll-giving system that will operate through the PAYE tax system. People whose employers adopt payroll giving will be able to donate regularly to charitable and philanthropic causes of their choice through work-based payroll deductions. They will receive the tax benefit of their donations each pay day without having to present donation receipts. The voluntary scheme will be open to employers who file their employer monthly schedules with the Inland Revenue Department electronically. Growing numbers of employers in New Zealand see social responsibility and good corporate citizenship as an important part of their business. I have met many of them, including some who have already adopted a form of payroll giving for employees who want to participate. They will undoubtedly be interested in the payroll-giving scheme introduced in this bill.

On a similar theme, the bill also clarifies the law relating to the tax treatment of honoraria for voluntary work and the reimbursement of volunteers’ expenses. That will make life easier for both volunteers and charitable organisations, which often incur unnecessary compliance costs in trying to understand their tax obligations.

These are brief descriptions of some of the main reforms that are proposed in this omnibus taxation bill. Time does not permit a description of every measure contained in the bill, so I refer members to the separate 160-page commentary on the bill, which describes the changes in detail and has been distributed to members. I commend the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn) : I raise a point of order, Mr Speaker. I hesitate to interrupt proceedings. The Opposition’s understanding is that we are currently debating the Taxation (International Investment and Remedial Matters) Bill. Without being able to be conclusive about this, it appears that the Minister has been addressing a different bill. Would it be possible to request the Minister to table his notes, so we can ascertain—

The ASSISTANT SPEAKER (Hon Rick Barker): That is not a point of order. A point of order is about the procedure of the House. What the Minister says in introducing the bill is what the Minister says, and that is on the record.

Hon DAVID CUNLIFFE (Labour—New Lynn) : The Taxation (International Investment and Remedial Matters) Bill is a most interesting bill, and it is a complex bill. I will state Labour’s position in respect of this bill in three parts. In the first part, I will briefly summarise the key provisions of the bill; in the second part, I will outline Labour’s position on the bill; and in the third part, I will outline some of the reasons for Labour’s position.

Let us first summarise the objective of the bill and its key provisions. We believe the objective has some merit, which is that it is timely for there to be an overhaul of the controlled foreign company and the foreign investment fund regimes. There is merit in encouraging further outbound investment by New Zealand companies. The reason for that is, as everybody knows, we have a very substantial international investment deficit in respect of New Zealand’s balance of payments that feeds into and, indeed, is the largest part of the financial deficit that is responsible for our persistent and deteriorating current account. There is merit in examining the issue of whether the playing field can be levelled so that New Zealand companies operating overseas do not find themselves in the position of paying tax twice: once in the jurisdiction in which they and their foreign competitors are operating, and a second time in respect of New Zealand tax on the active income part of those transactions. It, therefore, may make sense to restructure the law in the way that is proposed in this bill.

Second of all, it is timely for there to be a further examination of the old “grey list” exemption. The “grey list” is a bit of an anachronism, in the Opposition’s view. It is made up of eight countries, mainly the old Commonwealth countries, that were deemed to have similar tax laws once upon a time, which were carved out from the international tax rules and for which equivalence is deemed. We are willing to explore in the Finance and Expenditure Committee whether this bill adequately deals with any residual issues with regard to the treatment of the “grey list”.

Certainly, it is appropriate to remove competitive disadvantage for New Zealand companies in respect of their active income through a range of trading structures. However, we are concerned, firstly, about the exemptions that are carved out of this bill in respect of the Australian market. As the Minister said, the Australian market is the jumping-off point for many small New Zealand businesses, and it is the Opposition’s concern that a blanket exemption for the Australian market may be too wide. We look forward to hearing submissions on that point at the select committee. Secondly, we would expect to see submissions upon the issue of whether the de minimis threshold of 5 percent is appropriate. Thirdly, we would also expect to see submissions upon the blended hybrid approach that this bill encapsulates between having either an entity base or a transaction base to the tax rules, and we will be very interested in those submissions.

Those, being fair and charitable to some extent, are the reasons why the substance of this bill merits consideration and why the Labour Opposition will be supporting the bill’s referral to a select committee in the first instance. We believe it is appropriate that the Finance and Expenditure Committee calls for submissions and hears from the public and from the professionals on the proper way that the tax process works.

Labour has two overriding objectives in respect of policy. The first is, of course, to grow the export economy. Our criticism of the Government is that it is been like a deer caught in the headlights of the global recession. That growth is not returning to the New Zealand market, and the Government is caught somewhere between wanting to cut its way out, like ACT would have us do and like the Conservatives in Britain are doing, or to perhaps leverage or spend its way out, like the US Government is doing. But it is taking neither of those courses and is showing no new ideas. The Government is stuck and our economy is stuck, and as the weeks pass and successive rounds of data come out, we all understand that the recovery has not come to main street New Zealand, to the towns and villages of our country.

But the greatest reservation we have—and why we are not at this stage able to confer support for the bill beyond its first reading—is that we have learnt, unfortunately, to be very sceptical of the intentions of this Government in respect of taxation measures. History shows why. I think that is made clear to anyone listening in to this debate if they cast their minds back over the last 2 years. National came in and immediately, under urgency, passed tax reform to drop the top tax rate and to deliver gains to the top end of income earners. Then, in Budget 2009, it admitted that it could not afford the fiscal cost. Having passed $8 billion worth of tax remission to the top income earners in the first year, it then decided it could not go through with years two and three.

In Budget 2010, however, while the recovery was still nowhere to be seen, the story changed again. The Government broke its promise not to bring in an increase in GST, which has been absolutely punitive to lower and middle income New Zealanders, who see their small tax breaks washed away in inflation and who are still short at the checkout queue. They are struggling. But in Budget 2010, the Government dropped the top tax rate again—all the way to 33c in the dollar.

No sooner was the ink dry on that $14 billion tax transfer, mainly to the upper end, than we saw a little thing called gift duty was coming up. When the Government, on its own admission, is already running a cash deficit per year of $13.5 billion or so, obviously having broken its promise to be revenue-neutral on the tax package, I ask why it would be a priority to then find other taxes it can cut that specifically benefit the top end. The Minister would say, in fairness, that there is not much money in gift duty—only a few tens or hundreds of millions. Well, in real New Zealand, that is real money. The point is that it would be a lot more if it were not for the protections that gift duty places upon high-wealth individuals transferring income to lower tax structures, like those that might be in their children’s names, were they not facing some compliance cost and some additional duty for doing so.

The point is that in the history of this Government, it has had two rounds of upper-income tax cuts and it has abolished gift duty. Is it little wonder that the Labour Opposition has a healthy scepticism about its real intentions in regard to maintaining the tax base and protecting Government services from yet another loophole for high-wealth individuals?

The principle on the Labour side of the fence is very, very simple. In these tough times, when money is scarce and every penny counts, everybody pays their fair share. That is the decent thing to do. That is the Kiwi way, and that is what we call for. That means no avoidance structures for high-wealth individuals. It means send away the army of trust lawyers and fancy corporate lawyers who are dreaming up tax-avoidance structures for the few while the many bear the load. The burden of proof is on the Government to show precisely why the measures in this bill will not make those avoidance loopholes worse.

How bad are those loopholes? I will give but one example. Loss attributing qualifying companies—the much loved or hated LAQCs—which result in $2.3 billion per year of tax avoidance, are one of the key reasons why half of the top income earners are not on the top tax rate. Half of the top 100 income earners are not on the top tax rate because they use structures like loss attributing qualifying companies. Why, if the Government was sincere about fairness, did it not simply ring-fence loss attributing qualifying companies so that nobody could write off on his or her personal income the losses made on a company? Instead, it has brought in some fancy new structure called a look-through company, which allows the lawyers yet another round of field days, yet another round of high fancy-pants pricing as they dream up new structures to stay one jump ahead of the taxman for their high-wealth clients.

We will be putting the ruler over this bill to make sure that it does not make the problem worse—that it does not create another exemption set where a high-wealth individual can create a company, call it a controlled foreign company, place income or assets in that company, and then make use of a tax exemption to avoid paying tax in New Zealand. We will be looking at the exemptions. We will be looking at the Australian exemption. We will be looking at the 5 percent threshold. We will be looking at why the Inland Revenue Department’s recommendation of a 20 percent threshold was not followed under lobbying pressure from business. This is a bill that has some merit but which deserves close consideration.

STUART NASH (Labour) : I raise a point of order, Mr Speaker. I know this is a little bit retrospective, but I ask whether the Minister who put the question to the House on this bill could please clarify the bill he mentioned. I do not think he spoke on the correct bill.

The ASSISTANT SPEAKER (Hon Rick Barker): I have already ruled on that matter. I ruled on the matter when the Hon David Cunliffe raised it. The member is relitigating a point I have already ruled on. I say to the member, in generosity of spirit, that I take a dim view of that. Once a matter has been ruled on it is final; that is the end of it. But having put that one down, there is something else that has been brought to my attention by the Clerk. The Minister, in moving the first reading of the bill, appears to have made an error in the title of the bill in relation to that on the Order Paper. He did not correctly state the title of the bill as the Taxation (International Investment and Remedial Matters) Bill. Before I put the question on the bill I ask the Minister to confirm that we have the exact title.

Hon Dr Jonathan Coleman: It is as printed on the Order Paper.

The ASSISTANT SPEAKER (Hon Rick Barker): That is correct. It is just a minor technical detail and it is nothing of substance.

Hon DAVID CUNLIFFE (Labour—New Lynn) : In view of the clarification that you have just made, Mr Assistant Speaker, I seek the leave of the House for the Minister to table his speaking notes from the first reading speech so that we might reflect upon whether the substance was—

The ASSISTANT SPEAKER (Hon Rick Barker): I say to the member that that is exactly the same matter that the member raised—

Hon DAVID CUNLIFFE: No.

The ASSISTANT SPEAKER (Hon Rick Barker): The member shakes his head, but in substance he asked for the information to be tabled. I said it is in the member’s speech. The member is traversing exactly the same ground again. The member can shake his head but that is my impression, and I say to him that my impression is the only one that counts on this.

CRAIG FOSS (National—Tukituki) : It is a pleasure to speak to the Taxation (International Investment and Remedial Matters) Bill. [Interruption] Obviously I have found some more Twitter followers over there. I acknowledge the previous two speakers in this debate, Dr Jonathan Coleman and David Cunliffe. I am sure that this bill will be sent to the Finance and Expenditure Committee. The issues raised by the previous speaker do, of course, deserve a lot of attention. The Finance and Expenditure Committee will work through some of the key changes in the bill. There are not too many—there are a lot of remedial matters—but there are some and we will give them fair due, and the sector will submit on them, as normal.

This bill must be seen as part of a journey. To be fair, much of that journey started under the previous administration. These changes—the foreign investment fund changes, the portfolio investment entities, the tidy-ups, the fix-ups, the clarifications, and the widening—all reference back to previous tax changes that came about mostly under the previous administration. So I welcome the magnifying glass that Opposition members have said they will be putting over this bill to make sure that it is in tune with where the original bills started out, and with some of the issues that have arisen after they have come in. In particular, foreign investment fund stuff has arisen since about 2007, I think. It brought in the 5 percent rate of return, which is not quite the risk-free rate of return. It is all those changes around the “grey list” and the Aussie-listed companies—Aussie is essentially the one “grey list” country—and all those kinds of things. To be fair to the sector, there has been a huge change and there has been quite a large impost of administration and compliance around those changes. I am glad to see that that has been acknowledged in the lead-up to this bill. The very good commentary, which is about 80 pages, goes on to explain many of the key aspects of the bill.

As I noted, the bill builds on and extends earlier legislation, in particular the international tax reforms and reforms around passive and active income—what might be interest and what might relate to the ongoing activity of the business. The whole mission here is to create and encourage an environment where New Zealand companies that may be doing well around the globe can feel comfortable that they can stay tax resident in New Zealand, particularly for earnings that would apply under New Zealand taxation law, and not to put them at a disadvantage in some other jurisdiction, which may have slightly different tax arrangements from ourselves. At the end of the day, New Zealand will not change tax law in other countries, but we can acknowledge the differences in the various tax treaties we have.

This legislation will put “New Zealand Inc.” on a fair playing field with other entities. New Zealand has a sad track record of New Zealand companies moving offshore, basically to chase capital and to get closer to the capital they require to grow. This bill starts to address that, alongside other changes that came through in 2007; in particular, in the large tax bill we passed in 2008; and in a recent bill that, again, clarified a lot of the issues.

I want to concentrate on one thing in particular because I think it might get the attention of some members. I am looking forward to discussing this particular part at the Finance and Expenditure Committee. It is in relation to the zero rating of the approved issuer levy on bonds. The monetary policy inquiry that began under the previous administration in the Finance and Expenditure Committee, and which was delivered in September 2008 just before the election, spent a bit of time on this issue. As a headline, everyone would often think that those who are issuing bonds into New Zealand should be subject to the same tax rates, the same interest rates, the same resident withholding tax, etc. as others. In one sense, that is fair enough. But if we tunnel down into the issues around it, we see that at the end of the day this makes the interest rates that New Zealanders pay higher than they need to be. I will touch on some of the caveats related to that later. If the offshore investor who is issuing into New Zealand is asking for some returns of 6, 7, 8, 9, or 10 percent—or whatever it might be; let us just use 10 percent—and if the approved issuer levy is two points, 20 points, or whatever it might be, then that is added on. Therefore, the end borrower in New Zealand is facing 10.2 percent as opposed to 10 percent.

That must be seen in the context of where New Zealand is at. We are a debtor nation, unfortunately; I think we all acknowledge the many issues to do with a lack of savings. But the reflection of the fact that we are a debtor nation is that we need to welcome foreign capital, at least for the moment, to help get us through this current situation and to put our economy on a better footing that may allow us to become a creditor nation and to start to deliver on some of our wants for this new millennium.

I will just touch on some of the caveats. They are very tight, but I see that they are getting the first cut analysis, or one-dimensional analysis, if you like. The approved issuer levy will be at zero percent. Issuers will still have to file a return on the 20th of every month to make sure that they qualify, but it will be rated at zero.

I will quickly touch on some of the caveats just to allay any fears that something untoward is going on. Among the key features of the changes to the approved issuer levy is that the security—that is debt, by the way—is denominated in New Zealand dollars. The security is offered to the public for the purposes of the Securities Act 1978, which is another catch. The security is not issued as a private placement, so nothing untoward is going on with dodgy partnerships or anything like that. The security is not an asset-backed security, so there is no double leverage out of New Zealand, or some equity funding something offshore. The registry and the paying agent activities for the security are conducted through one or more fixed establishments in New Zealand—that is, it stays within these borders. And the security is listed on an exchange registered under the Securities Market Act 1988, such as the NZDX Debt Market, or satisfies a widely held test, because we do not know what might develop as far as exchanges go in the future. I particularly wanted to concentrate on that feature in my last few minutes because the amounts involved are huge. At the end of the day the $180 billion or $200 billion that New Zealand owes offshore all came through vehicles such as the Eurokiwi, the various issuances out of Japan, etc.

This bill is essentially remedial. It makes it cleaner and better in recognition of New Zealand’s place in the world. It ties up with all the other tax agreements that New Zealand has signed to help New Zealand. Regardless of whether we acknowledge that we have to borrow the capital—we do—the intention is to at least try to make it as cheap and crisp as possible for “New Zealand Inc.” as we try to fund our way and build our way out of the economic quagmire that we are currently in. I look forward to discussing this bill further at the Finance and Expenditure Committee, if the House so wishes.

STUART NASH (Labour) : I rise to take a first reading call in support of the Taxation (International Investment and Remedial Matters) Bill. But before I do, I would challenge Minister Coleman, who brought this bill to the House, to show me the clauses that talk about payroll giving, associated persons, insurance companies, and all those sorts of matters that he brought to the House in his first reading speech. I would not mind knowing where those clauses are. But I know, members all know, and everyone in this House knows that there are no such clauses, because the Minister gave the wrong speech. We all know that Jonathan Coleman will not have written that speech. This is not Jonathan’s area. Jonathan was the Minister in the House at the time, and he was told: “Here is the speech on the bill you have to introduce.” Someone on that side of the House is trying to stitch up Jonathan Coleman. I say to Jonathan that if I were him, I would watch my back. One of his colleagues over there has stitched him up. It might have been Amy Adams. She wants his place. It could have been Craig Foss, but someone gave you the wrong speech, and you—

The ASSISTANT SPEAKER (Hon Rick Barker): No one gave me the wrong speech.

STUART NASH: I am sorry, Mr Assistant Speaker. Someone gave the Minister the wrong speech, and he spoke for 10 minutes about a bill that was passed 12 months ago—12 months ago.

Hon David Cunliffe: Did he notice?

STUART NASH: He did not notice. But with all due respect to Jonathan, it is not his portfolio area. I do not expect Jonathan to know this, but someone did know. Someone handed that Minister the wrong speech, and that person is sitting up there, saying: “Ah, look what we have done to Jonathan Coleman.” I wonder which of the Minister’s colleagues gave him the wrong speech. I know that Jonathan will get to the bottom of that.

I would like to make two points. The first is that Labour supports any tax legislation that reforms and streamlines our tax system, that promotes equity, and that closes off tax avoidance opportunities. Labour has always supported such legislation. The second point is that we will support this bill’s referral to a select committee. However, at the Finance and Expenditure Committee, Labour members will scrutinise this bill very closely, and the reason we will do so is that the National Government’s track record on recent tax bills has been very poor in terms of promoting fairness and equity. As mentioned, Labour supports any reforms that streamline our tax system, close off tax avoidance opportunities, and build on fiscal equity. This bill, on the surface, does appear to do this. It builds on recent changes to the tax treatment of international investments that were contained in a substantial tax bill that has been considered—a bill that was passed about 12 months ago, I say to Mr Coleman.

Specifically, this bill changes the rules relating to foreign investment income by aligning it with the current method for calculating attributed controlled company income. The bill means that New Zealanders holding stakes of 10 percent or more in offshore companies will not be subject to New Zealand tax on interest, unless the companies earn passive income such as interest, royalties, and rents. The bill replaces the current exemption for non-portfolio foreign investment funds in the eight “grey list” countries with an exemption of non-portfolio foreign investment funds that are resident and subject to tax in Australia. The bill makes changes to the thin capitalisation rules. Just for clarification, a company is said to be thinly capitalised when its capital is made up of a much greater proportion of debt than equity—that is, its gearing, or leverage, is considered high. I understand that what has been happening is that overseas companies have been gearing up to high levels in New Zealand and then claiming back deductions against interest payments. On paper, as an individual entity, the company may look a little shaky. However, on a global basis, the company is in no trouble at all, and although I would not go so far as to say that this is a tax rort, but it is certainly a way that multinational companies minimise their global liabilities. The bill provides for the delayed abolition of branch equivalent tax accounts for companies and the abolition of conduit tax relief accounts. It also makes some remedial amendments to the changes already made to controlled foreign company rules, as mentioned in the big bill that the Hon Jonathan Coleman talked about tonight and which we passed last year. As mentioned, Labour does support legislation that improves the integrity of the country’s tax system as well as closes down loopholes through which people are able to freely jump and avoid paying their fair share.

My second point is that we in the Labour Party will support this bill’s referral to a select committee. However, at the Finance and Expenditure Committee, we will scrutinise this bill very closely, because the National Government’s track record on recent tax bills has been very poor in terms of promoting fairness and equity. I will outline a couple of examples highlighting what I mean by this. The first example of a Government tax bill that pulled the wool over New Zealanders’ eyes was the bill that increased GST. John Key stood in front of New Zealanders, looked them in the eye, and said: “National will not increase GST.”, and he did. National increased GST after he told New Zealanders that he would not. That Government raised GST when that Government’s leader had said that he would not do that, and that is simply wrong. It is an example of a tax bill put forward by the National Government that is not good for the people of New Zealand. To tell New Zealanders that the price of items would rise by only 2.2 percent was always going to be wrong. Even the cost of Government-owned Lotto tickets has increased by around 10 percent. Another piece of tax legislation put up by this Government that was completely wrong in terms of promoting fairness and equity was the revision to the personal income tax rates.

I do not think there is any doubt that as a country we are in the middle of a recession. No matter what the figures show, one has only to talk to businessmen and businesswomen, to the retailers, and to the workers around the country to understand that the economy is suffering. So what did the National Government do? It did what no other OECD country has done, and that is provide tax cuts to the most advantaged at the expense of the majority. The few did very well, at the expense of the great majority. Someone earning a million dollars, and there are about 650 people in this country who earn over a million dollars, has just received a tax cut of $1,000 a week extra in the hand. It is $1,000 a week. Someone on the medium wage in Napier gets a tax cut of about $5 a week. It is $1,000 versus $5. Is that fair? It simply is not fair. This tax bill in Budget 2010 cost about $14 billion, and the National Minister of Finance, the head of Treasury, and the Governor of the Reserve Bank have all said that these tax cuts are not stimulatory. That means that the National Government has just spent $14 billion, in the middle of a recession, on a package that will not create economic growth at all. In fact, it will have no impact whatsoever on economic growth. That is why this Government is the only Government in the world that has done this. The Minister said it will not stimulate the economy, yet he spent $14 billion. We all know that in the last 3 months tax revenues have been down by a billion dollars. I ask the National Minister of Finance what he was thinking. I ask Treasury where the hell it got its forecasting from.

In conclusion, Labour will support any tax legislation that reforms and streamlines our tax system, promotes equity, and closes off tax avoidance opportunities. However, we will scrutinise this bill very closely because the National Government’s track record on recent tax bills has been very poor in terms of promoting fairness and equity. Thank you.

Dr RUSSEL NORMAN (Co-Leader—Green) : I rise to speak on the Taxation (International Investment and Remedial Matters) Bill. If people have been listening to the debate, they may be somewhat confused as to which bill we are talking about. The reason they might be confused is that the Minister, when introducing the bill, read the wrong speech. The Minister, the Hon Jonathan Coleman, for 10 minutes gave a speech about a bill that we are not currently considering before the House. That bill has gone through the whole process and been referred to the select committee. We are sitting here tonight discussing the Government’s technical competence to run taxation policy, but the Minister, in a 10-minute speech, introduced another bill, not the bill that is before us tonight. Can we be confident that the National Government knows what it is doing about taxation policy when the Minister does not even check that the bill name at the top of his speech notes matches the name of the bill that he is supposedly introducing into the House? He read a 10-minute speech about a bill that he is not introducing into the House.

What we are actually considering tonight, even though the National Government is completely unaware of it—even though it is a Government bill—is a bill called the Taxation (International Investment and Remedial Matters) Bill. If people want to look at the bill in more detail I suggest they go online, because they will not get any information from the Minister’s speech. The Minister gave a speech about a different bill, not the one that is before us tonight.

I turn to the bill before the House tonight. The Green Party will support the bill being referred to the select committee, but we have a lot of reservations about it and we will seek to redress those concerns at the select committee to see whether we can improve the bill. The bill does a lot of things. It is a pretty complex bill. I could have understood if the Minister had been confused about the bill. It is a complex bill; there is no question about it. But it was not that the Minister was confused about this bill. He thought he was introducing a different bill. It was not that he was a bit confused about the detail of this bill, because it is a complicated bill; I give members that. He actually thought he was introducing an entirely different bill, not this bill. Jonathan Coleman stood and gave a 10-minute speech about a different bill, not the one we are looking at tonight.

The bill we are considering tonight is a complicated bill, but the long and short of it is that it is a trade-off. Basically it says we will effectively cut some of the corporate taxes in order to try to encourage New Zealand businesses to stay here, rather than relocate overseas. That is the long and the short of it. There is a lot more to the bill. It is a long bill, but basically it says that there is a bit of a trade-off in that we will accept some lower company tax revenue in New Zealand in the order of tens of millions of dollars. This will be done on the basis that by doing this we are more likely to keep these New Zealand businesses in New Zealand, rather than their locating themselves overseas.

The Green Party accepts that we live in a globalised world with a globalised economy. We have to be competitive, and that means looking at the tax system. However, the measures that promote tax equity with other countries and encourage New Zealand - based companies to stay here bring jobs and they keep expertise here, but there is a trade-off in terms of loss of tax revenue. The problem for us is whether this is a clever response to the challenge of globalisation; that is the real question. It seems to us that this bill is a pretty blunt response. It is largely ideological, in fact. There is very little evidence that these tax changes will stop companies from moving offshore.

The regulatory impact statements—of this bill, I say to Mr Coleman; not another one—prepared by Treasury and the Inland Revenue Department are very thin on hard evidence of the threat of companies moving overseas. In fact, the Inland Revenue Department says in one of its regulatory impact statements on this bill: “A key gap in the analysis is that it is not possible to quantify the economic benefits of fairer tax treatment. Quantification would require knowledge about the sensitivity of business-location choices to tax, which is not directly observable.” That is, we are not exactly sure what would happen if we did not introduce these tax changes. Would any New Zealand businesses relocate overseas? We do not know. The Inland Revenue Department and Treasury are saying that there is very little hard evidence to know.

The other thing about this bill is that it does nothing to promote better business outcomes through tax treatment that backs winners. This legislation will do nothing to drive the New Zealand economy to deliver more sustainable outcomes. Although there is a hope—and it really is only a hope, because there is no hard evidence that this bill will help to keep businesses in New Zealand—it does not actually drive us towards what the Greens think we should be embracing, which is the green economic wave.

The next economic wave is the green economic wave, and if New Zealand wants to prosper we must write our laws in a way that prioritises the development of sustainable industries like renewable energy, sustainable agriculture, green technology, high technology, green design, and energy efficiency. Those are the kinds of tax measures that could be introduced if we want to be competitive in a globalised world, in order to make sure that the kinds of businesses that will prosper in the future base themselves in New Zealand. We could have tax law that targets tax breaks to those kinds of businesses. This bill has a generic tax break, in the hope that by giving away a few tens of millions of dollars we will keep these New Zealand businesses here. It would be much better, in our view, if we were to target those tax breaks towards the kinds of industries that we want to encourage and have prosper in New Zealand.

This bill adds about another $30 million to the Government’s $1.5 billion corporate tax cut package. None of the package that the Government has promoted picks winners, and none of it promotes more sustainable economic outcomes. We think there is a strong argument for supporting and targeting tax breaks towards the industries of the future, which will be the cleantech and greentech industries. Obviously the Green Party’s approach is to reform the tax system to encourage those kinds of industries.

So although the detail is complex, the majority of the tax measures in the bill involve a similar trade-off: lower company tax revenue versus the risk of company emigration offshore. This creates a problematic tension between racing to the bottom with company tax breaks—a race we simply cannot win in the long term—and the losing of tax revenue and jobs as companies move offshore, motivated by tax reasons.

The labour law that we recently saw passed through the House under urgency to secure the filming of The Hobbit was a disturbing example of this kind of bidding war in a race to the bottom. The danger with this kind of tax legislation is that sovereign nations all around the planet compete with each other to have lower and lower corporate taxation in order to try to keep businesses or get them to locate to a certain country. We do not think that this race to the bottom is a very clever strategy in terms of trying to support New Zealand businesses and encourage sustainable New Zealand businesses that embrace the green wave here.

Each tax measure in this bill is slightly different. There is a whole bunch of them, and we may support some measures, while not supporting others. However, as a Parliament we should not in principle support the slow erosion of our tax base for these kinds of unquantifiable theoretical gains, and, as the regulatory impact statement states, it is very hard to quantify. New Zealand would do much better to understand our natural advantages and play to them while simultaneously extending our efforts abroad in international forums to agree to satisfactory environmental, labour, and tax standards. We would do much better to work with other countries to agree on some minimum standards around tax, labour, and environmental standards so that we do not compete with each other on environmental standards, labour standards, or tax rates. This is a relatively small sum in this bill—maybe $30 million a year. So it is small compared with the nearly $100 million that was given away to encourage The Hobbit to be filmed here. But it is still part of the overall trend of the race to the bottom.

So for these reasons the Green Party will be supporting the bill’s referral to the select committee. We understand the basic intent of the bill, and the bill has a lot of components that we do support, but we do raise a flag and we are not guaranteeing our support further, because of the whole problem of the race to the bottom that is encapsulated in this bill.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā koe, Mr Assistant Speaker. Kia ora tātou katoa. I am pleased to take a short call on the Taxation (International Investment and Remedial Matters) Bill on behalf of te Pāti Māori. Three weeks ago the Minister of Finance told the House that New Zealand’s economic recovery is vulnerable to any kinds of price shocks, including oil price shocks. At the moment there is evidence of increases in commodity prices, which suggests that there could be risks in the future, and, of course, we come to this bill aware of the impacts of what many economists consider to be the worst financial crisis since the Great Depression of the 1930s. We have been through a time marked by a failure of key businesses, declines in consumer wealth estimated to be worth hundreds of trillions of US dollars, and a significant decline in economic activity. In this context, then, we are interested in the impact of the proposed introduction of an active income exemption for foreign investment funds.

Basically, this bill aims to reduce compliance costs by offering transparency in the current law by streamlining the process around the taxation of income from foreign investment funds. It does this in an attempt to encourage New Zealand investment in offshore investment funds. In terms of the extent to which such a proposal may incentivise small businesses to grow by reducing compliance costs, the Māori Party is definitely interested in seeing how this plays out over time. The Māori Party places particular priority on the need to support the development and innovation of small businesses, including minimising taxation and compliance costs. In this bill that goal will be achieved by simplifying the number of calculation measures. Apparently, six different measures are currently available. Under the act of income exemption for foreign investment funds, only passive income, such as interest, royalties, and rents derived by New Zealand shareholders in offshore companies, will be subject to New Zealand tax.

The key problem the bill is seeking to address is the inequity experienced by foreign companies offshore in having to pay New Zealand tax as well as comply with the tax rules of their particular country. New Zealand’s international tax rules can often impose higher tax or compliance costs on offshore operations than those faced by competing businesses operating in the same country. Any New Zealand business that invests in a foreign company must not only comply with the tax rules of that country but also attribute income and potentially additional tax in New Zealand. Such a situation can tend to create an incentive for New Zealand companies seeking to establish business ventures outside of Aotearoa to relocate their headquarters to countries that have far more favourable tax rules.

So a very clear benefit in the proposal in this bill is that although we are unable to stop the seemingly unstoppable drive to expand offshore, at least we will not be threatened by the possibility that New Zealanders will sell up and leave Aotearoa for good because of an unforgiving tax regime. The Māori Party is happy to support this bill at its first reading to enable the kōrero to be had. Kia ora tātou.

DAVID BENNETT (National—Hamilton East) : I rise to take a short call on the Taxation (International Investment and Remedial Matters) Bill.

H V Ross Robertson: Sure you’ve got the right bill, David?

DAVID BENNETT: I am sure I have the right bill, and members on the other side of the House should take note of this bill. It shows that the Government is working effectively to provide the economic base that will deliver this country the brighter future it was promised.

H V Ross Robertson: Tell that to Jonathan Coleman. He needs to know.

DAVID BENNETT: Members of the Labour Party get a bit interested when they hear those words about a brighter future, as those words put them in their place in this Parliament.

This bill is an important taxation bill. It extends the active income exemption introduced in 2009 to offshore subsidiaries. Essentially, controlled foreign companies, or CFCs as they are known in taxation terminology, are the subject of this bill. The other name that is used is foreign investment funds, which also are part of this bill. It applies to joint ventures and other significant shareholdings in foreign companies that are not controlled by New Zealanders—non-portfolio foreign investment funds. Effectively, this means that the active income exemption is now being extended to joint ventures and other significant shareholdings. That is in contrast to the other form of income, known as passive income, which is typically interest, royalties, and such like. Under the rules only passive income derived by New Zealand shareholders in offshore companies will be subject to New Zealand tax.

For those looking at the bill for the first time, I say that the point of difference with this bill is the active income and passive income distinction. Active income would be a company that is earning money from producing a product—for example, manufacturing it overseas—and passive income means income that one receives without actually having to do anything to get the money, except to have it invested through something like interest, royalties, or rents. That is the important first distinction the bill applies to. The second part of it is the nature of the ownership and the taxation of that ownership. Essentially, for active income, the point of taxation will be in the country where that active income is earned rather than being treated as taxable in New Zealand, but passive income will be taxed in New Zealand. That is the general thrust of what this bill is about.

The reason it is being done in that way is that passive income is typically seen as investment income, so New Zealanders would be taxed on it. That is a choice that investors have when making those investment decisions. Active income is seen as probably needing to be on a more level playing field taxation-wise in the countries in which one is earning that active income, because one has effectively got a manufacturing or other kind of service site there. With the measures in this bill we are giving a stronger and more sustainable tax system to New Zealand, and we are providing an impetus for growth. We are putting New Zealand taxpayers on a level playing field with their international competitors. It is important for the economic growth element of a better future for New Zealanders that we make these changes.

There are some other changes in the bill, as well. The bill extends and rationalises the 2007 international tax reforms so that there is consistency between types of foreign investments. There is a percentage that is used as a threshold to determine the 5 or 10 percent thresholds for taxation, whether the bill will apply to the form of income or not. Another big part of the bill is the exemption for Australia. Previously, we used to have a foreign investment fund that had a “grey list” of countries. Typically, the eight “grey list” countries were ones that were typical New Zealand trading partners. This bill is taking that down to just Australia as the exemption. That is in line with modern practice within this country. There are also some rules on capitalisation to avoid the incentive for people to stack debt against New Zealand operations overseas. That is part of stopping any taxation or tax planning where people try to avoid taxation by taking advantage of these rules. There are a few other minor amendments in the bill, as well.

Essentially, this bill will create a level playing field for a taxation base—and active-passive income is a huge part of that—and to make sure that controlled foreign companies and foreign investment funds are treated in a manner that enables New Zealand investors and businesses to grow. Thank you.

RAYMOND HUO (Labour) : I rise to take a call in support of the Taxation (International Investment and Remedial Matters) Bill. Labour supports this bill’s referral to a select committee. Deloitte published in March of this year an article on proposed further changes to international tax regimes. I would like to borrow part of the title of that article: “the good, the bad and the ugly”. It is very fitting that I borrow that title to describe the various aspects presented by this bill and the priorities the Government has taken.

The Minister responsible for the bill, the Hon Peter Dunne, in his recent speech at the 2010 New Zealand Institute of Chartered Accountants tax conference explained that the bill was a good bill. He said the bill “provides consistency of tax treatment between similar types of foreign investment by extending the active income exemption and active business test (with some small modifications) to non-portfolio foreign investment funds (FIFs). It also extends and rationalises the portfolio FIF reforms so that those investors who are unable to use the active income exemption (due to having an insufficient shareholding or access to information) will generally be taxed on an assumed 5% rate of return (fair dividend rate method).”

I also note his statement that his Government intends to make New Zealand a more attractive place to invest by lowering withholding taxes through double tax agreements. From the Government’s point of view, this bill means that New Zealanders holding stakes of 10 percent or more in offshore companies will not be subject to New Zealand tax on those interests unless the companies earn passive income, such as interest, royalties, and rents. The bill replaces the exemption for non-portfolio foreign investment funds in the eight “grey list” countries with an exemption for non-portfolio foreign investment funds that are resident and subject to tax in Australia.

As I said, Labour supports this bill’s referral to a select committee. This bill is large and complex, and it reminded me of the days when I was at the Finance and Expenditure Committee. It is a large and complex bill that warrants careful consideration, and the scrutiny of a select committee is necessary and most appropriate. Concerns such as those raised by Deloitte are good examples. Commenting on the discussion document that gave rise to this bill, Deloitte stated that the removal of the “grey lists” would expose investors to income attribution when they have previously been exempt. The corresponding tax compliance burden and possible inability to access the required information to meet the alternative exemption may make some New Zealand investors comparatively worse off. This is amplified when we consider that a number of other major trading nations have, or are in the process of introducing, a form of “grey list”.

I will remain very interested in the development of this bill, and I wish that the Minister would take a call at some later stage and enlighten us as to what he believes to be the best way to address those issues. From a technical perspective this bill follows the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009, which the Government kindly, and inadvertently, reintroduced tonight. That legislation changed the way in which a resident’s attributed controlled foreign company income is calculated.

This bill aligns the method for calculating foreign investment fund income with the current method for calculating attributed controlled foreign company income. It also makes two changes to the thin capitalisation rules. This bill introduces an optional test based on the ratio of deductible interest expenditure to net cash flow. It also changes the rules relating to the grouping for the purposes of the thin capitalisation rules of a registered bank owned by the Crown. Further, the bill introduces a zero rate for the approved issuer levy on payments made by approved issuers to non-residents under some debt instruments. The bill introduces other measures, as well.

Although I commend the Minister of Revenue for his obvious contribution towards this bill, I cannot help but note a report released yesterday that stated that tax revenue was over $1 billion lower than expected. The Government knew, or must have the required knowledge to know, that the upper-income tax cuts were unaffordable, meaning the Government is having to borrow even more to make up the shortfall for its tax cut to the highest-income earners. That meant the Government broke its promise not to raise GST. It meant huge cuts to our health system, to adult education, and to early childhood education. Huge cuts to early childhood education funding mean that parents with young children will have to find extra each week. The $1.2 billion hole in health spending over 4 years will hit the elderly and the sick very, very hard.

The National-ACT Government does not seem to be interested in investing in our future, either. It is turning students away from universities and polytechnics, and it is cutting research and development investment. It even cut the much-needed refugee study grant. I attended the Māngere Refugee Resettlement Centre annual general meeting last Saturday. One could feel that this cut will be felt very hard in the refugee community. Since National has been in office, the migrant and refugee community in New Zealand has taken a number of blows. The fact that the unemployment rate amongst the ethnic community has skyrocketed in the past 2 years has been compounded by a number of short-sighted, negligent decisions from the National-ACT Government.

Funding has run out for the refugee study grant, and it was axed in the 2009 Budget. The grant was established by the Labour Government in 2003. It created a direct pathway for many hundreds of refugees to get into work. [Interruption] Politics is all about priorities. From this move we can see that the National-ACT Government is focused on delivering tax breaks for the privileged few at a time when the majority of ordinary New Zealanders are struggling. A tax switch is no substitute for a real economic plan.

I support the bill’s referral to a select committee. I look forward to more debate on the various aspects of the bill and the priorities of the Government, which will reveal the good, the bad, and the ugly. Thank you very much.

• Debate interrupted.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : It is my privilege to speak on the first reading of the Taxation (International Investment and Remedial Matters) Bill. This bill is another demonstration of the Government’s focus on lifting New Zealand’s economic performance. It has been 2 years, yesterday, to the day since this Government took over the Treasury benches and it has been a busy Government. It has been a busy Government that has taken on a number of pieces of legislation, particularly in the area of enhancing the tax system and promoting economic growth. The Government has been busy promoting better, smarter public services and lifting the education standards of young New Zealanders. The Government has also boosted infrastructure in those 2 years, through spending on roads, warmer homes, and the broadband plan.

This bill builds on and extends earlier international tax reforms. Some of them, as has already been acknowledged in this House tonight, first came to this House under the last Labour Government, but a substantial number of them have come in under this Government in the 2 years since we took office. The main proposal in the bill is to extend the active income exemption, introduced in 2009, to offshore subsidiaries. As has already been stated, they are controlled foreign companies, or CFCs in the tax parlance that is used within the Finance and Expenditure Committee. The proposal also applies to joint ventures and other significant shareholdings in foreign companies that are not controlled by New Zealanders.

The act of income exemption brings New Zealand’s tax rules into line with other countries, and in terms of best practice it is something that the Government is here to promote. Although our colleagues across the benches have said that they will scrutinise this bill in the select committee, it intimates to me that they do not scrutinise other legislation that has been put through the House. All three speakers from the Labour Party used the word “scrutiny” and that indicates that they are all reading from the same research notes that were handed out prior to their coming to this House. We thank them for their contributions on that subject.

Grant Robertson: Wrong message.

PESETA SAM LOTU-IIGA: Yes, Mr Robertson. This bill also helps New Zealand - based businesses to compete more effectively in foreign markets by freeing them up from a tax cost that similar companies in other countries do not face. So it is about competitiveness, and about promoting New Zealand companies and promoting our industries in foreign lands.

We heard the arguments from members opposite that they do not see the promotion of exports through a number of our tax policies, yet for 5 consecutive years under the Labour Government export volumes decreased. That shows Labour’s commitment to the promotion of exports, the promotion of jobs and opportunities, and the promotion of our industries. We also heard from Mr Cunliffe about the possibility of reforming loss attributing qualifying companies. I find that rich coming from the Labour spokesperson on finance, given that Labour had 9 years within which to regulate such companies. Those members sat on their hands and knees and failed to do anything about it.

In terms of productivity we will be deliberating on the New Zealand Productivity Commission Bill in the Commerce Committee and that is another change that we expect will promote productivity, and exports from this country. We know that under the 9 years of the Labour Government productivity increased by 1 percent, year on year. Labour’s track record is nothing to be proud of. The Government has had to turn round this economy with the policies that I have outlined, in terms of infrastructure, innovation, and cutting red tape and regulations. I look forward to the select committee process where we will discuss the details of this bill. I commend the bill to the House. Thank you.

GRANT ROBERTSON (Labour—Wellington Central) : I rise to speak in the first reading of the Taxation (International Investment and Remedial Matters) Bill. It is important to pause briefly to note the name of the bill—the Taxation (International Investment and Remedial Matters) Bill. The bill is not called the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill, which was the title given in the speech that Jonathan Coleman gave to open the first reading. He gave the same speech that the Hon Peter Dunne gave when he introduced the Taxation (International Taxation, Life Insurance and Remedial Matters) Bill. So Dr Coleman gave the wrong speech, but I ask whether members know what makes it more interesting. The speech that Peter Dunne gave, which Jonathan Coleman read out again tonight, was given on 23 July 2008 when Mr Dunne was, in fact, a Minister in a Labour Government—

Carol Beaumont: An oldie but a goody.

GRANT ROBERTSON: An oldie but a goody, indeed. I have Peter Dunne’s speech of 23 July 2008 in front of me and can clarify for Dr Coleman that it is word for word.

Hon Dr Jonathan Coleman: I’ll have to have a word with him about that.

GRANT ROBERTSON: I think Dr Coleman probably delivered it with slightly less enthusiasm than Mr Dunne, certainly when Dr Coleman worked out that the speech was not actually about the bill we are debating tonight. I certainly will table that speech at the end of my speech, just to make sure that we can all see that Dr Coleman read out the same speech that Peter Dunne did, except it was about another bill.

John Hayes: It’s consistency for you.

GRANT ROBERTSON: Mr Dunne is the one who has been inconsistent, I say to Mr Hayes. He was a Labour Minister when he gave the speech the first time, anyway. I say to Dr Coleman that I am sure that we are all grateful for hearing that great speech from Mr Dunne from July 2008 once again in the House tonight, even if it is not about the bill that is before us tonight.

As Labour colleagues have said, we certainly are supporting this bill to go to the Finance and Expenditure Committee. It is a dense taxation bill; it is not a bill that I would normally have much time to focus on, but I have been pleased to look at it tonight. I can see elements in this legislation that look like they will be worthwhile, and will make reforms in the way that New Zealanders are taxed for income from interests in overseas entities and the gains of foreign residents from interest in New Zealand companies. That is a difficult area of taxation and a complicated area of taxation, and it therefore deserves select committee scrutiny. It aims to provide consistency of tax treatment between similar types of investment and it achieves that by extending the active income exemption and the active business test with some small modifications to non-portfolio, foreign investor funds. This side of the House can certainly understand that the bill will be welcomed by a number of investors and that it deserves the attention of a select committee, but some of the questions we will be asking on this side of the House are around just who will benefit from the changes.

We have become suspicious over time about the way that National constructs its taxation programme and its taxation legislation. We certainly saw that when the tax switch—or the tax swindle, as some people have called it—was brought into this House, essentially tilting the tax system in favour of the top earners in this country. We heard from the previous Government speaker, Sam Lotu-Iiga, about the great programme that National has had in office and its fantastic track record when it comes to taxation. But all this side of the House sees in terms of a track record on taxation is taxation policy that favours the wealthy in our society. Although National might be prepared to go back two decades to trickle-down economics and hope for the best that that will lead to an economic recovery for New Zealand, we do not believe that is so on this side of the House. We believe that when we look at the overall economic programme—and taxation policy is part of that—we have to adjust ourselves to a modern world; we will not go back to failed economic policies like trickle-down economics. We need a taxation system and an economic policy that will deliver for the exporters of New Zealand, that will deliver high-quality jobs for New Zealanders, and that will deliver high-tech, clean, green industries.

Mr Lotu-Iiga stood up and talked about the changes that National had made. One thing that he did not talk very much about was the change to the research and development tax credits—the removal of the research and development tax credits. There are varying views about tax credit systems around the world, but one thing is absolutely clear when it comes to research and development tax credits: Australia has a tax credit system, and many people I spoke to when Labour brought in our tax credit system said that the best thing about it was that we were matching the Australians. It meant that the incentive to take their business—the research and development part of their business—offshore had gone. But National came into office and got rid of the research and development tax credits, and that was a negative moment for businesses in this country. It took away an incentive to improve what most people acknowledge has not been a great record on research and development in this country. Mr Lotu-Iiga might be proud of National’s tax record, but the truth is that National walked away from an opportunity to enhance investment in our businesses and increase research and development, which is so vital for New Zealand.

When Labour members look at this bill, we are concerned about the way that National has gone about some other major elements of its tax policy—GST being the obvious one. On 1 October GST went up by 2.5 percent, and it is worth reminding the House that John Key went into the 2008 election saying that GST would not increase. He said that GST would not increase. The video is out there for anyone who wants to watch it. Mr Key has stood up in this House and said that it all depends on what context he was talking in. The context he was talking in was whether GST would go up under a National Government and he said that it would not.

David Shearer: You can’t get around it, really, can you?

GRANT ROBERTSON: He cannot get around it, and that kind of broken promise on taxation policy is the very reason why people on this side of the House look very closely at all taxation bills that come before this House to see who will benefit from them. We know that the people who will be most affected by the increase in GST are those on the lowest incomes. They got the least out of the tax cut package and they are most affected by the increase in GST. It is a double whammy and we know from talking to families all around New Zealand that the impact of this Government’s tax policy has been negative for those on the lowest incomes. Families who thought that they would be better off because the National Government had promised them tax cuts are actually finding themselves worse off—in some cases up to $50 a week worse off when we build in the impact of ACC levy rises and the cuts to funding for early childhood education. Those families are already struggling with cost of living increases.

Here in Wellington, people have come to see me about something as simple as bus fares going up. When bus fares go up, it puts huge pressure on people who rely on buses as their mode of transport. In Wellington, bus fares effectively went up for some people by $40 a month if they caught the bus every day—$40 a month. That is a big chunk out of people’s disposable income. Their power prices may have gone up; here in Wellington, customers of two or three of the power companies have had letters telling of a 6 percent increase in power prices. That is an added increase for families who are struggling and not benefiting from the tax policy of this Government.

I do not claim to be any kind of expert on taxation, but, as my colleague Raymond Huo said before, it is about priorities. It is about the priorities this Government gives in terms of where it wants to take New Zealand into the future. I ask whether the priority is investing in people, in skills, in training, in supporting people into work, and making sure that all New Zealanders can achieve their potential, or whether the priority is making decisions about trickle-down economics, hoping for the best, and rewarding the privileged few, rather than developing the potential of the many.

It is sad for me that we have a taxation bill here. Jonathan Coleman has nearly caught up now with which bill we are actually debating. But this taxation bill is fine, it should go to the select committee, and it should be discussed. But when it comes to tax policy, this Government has, sadly, broken its promises as part of an economic plan that it has not provided to New Zealanders. What we see is a Government without vision, and, in the case of tax policy, favouring the privileged few over struggling New Zealanders who need support.

AMY ADAMS (National—Selwyn) : It has actually been a little while since I have risen to take a call in this House. I have been sitting here hoping that it is like riding a bike and that I will remember how to do it.

It is an interesting time to take a call on the Taxation (International Investment and Remedial Matters) Bill. The first trick with this legislation is not to get it confused with the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill, which of course went through the House earlier last year and is now law. I tell Mr Robertson how much I enjoyed sitting through the Finance and Expenditure Committee when we worked through the detail of that bill. In actual fact, the process of working through that earlier bill has been quite helpful for me in framing the debate around this legislation, because it looked at the same core issues that this bill is addressing: in essence, the proper way that we tax in New Zealand income, both passive and active, from foreign entities.

With that bill, the select committee worked through the process and saw the wisdom of moving away from the old “grey list” test by which we exempted income earned in certain qualifying countries, but which was very unfair and unclear as to how everything else was taxed. We moved instead to a much simpler test where Inland Revenue would look at whether the income was actively earned in that country and whether the company was actively trading, in which case it made sense to put them on a similar footing to local companies in that jurisdiction, or whether that revenue was earned on a passive basis, in which case fairness suggested that it should be taxed here in New Zealand according to New Zealand rules. That made sense to the committee, it was subsequently passed by this House, and, as far as I know, it is working very well.

With this bill before us tonight we see the extension of that regime to non-controlled foreign entities owned by New Zealand residents. On the face of it that extension seems to make a lot of sense to me, but, of course, if this House approves the first reading tonight, we will have to work through in select committee exactly what impacts that extension will have, why those entities were originally left out of the regime, and what any unforeseen aspects might be.

I will touch very quickly on two other matters in my contribution tonight. One is around the changes to the thin capitalisation rules, which are probably a little-known, pointy-head aspect of taxation law but are actually rather important. This bill proposes changes to the thin capitalisation rules for non-residents. One important change is providing an alternative test, which on the face of it seems to be a very sensible alternative allowing an assessment of interest expenditure as a proportion of income for companies that are not State-owned banks. That seems to make a lot of sense in ensuring that those thin capitalisation rules work well; again, I will be very interested to hear from officials and submitters as to the impact of that change as we work through the process.

The final point I want to pick up on is about looking back into the dark old ages. Reading through the explanatory note I saw a reference to the Stamp and Cheque Duties Act 1971. I have to say that in my early days of practising—and Minister Wilkinson will remember those days—we had to collect stamp and cheque duty in all conveyances. I was surprised to see that it is still active. But, yes, we indeed have a requirement under that Act that for approved issuers there is an exemption from non-resident withholding tax and that the rate for those approved issuer levies is set under the Stamp and Cheque Duties Act. This bill would see that rate reduced from the current 2 percent to a robust rate of zero percent. I am very pleased to see that my old friend the Stamp and Cheque Duties Act still breathes life. Again, I will be very interested in talking to officials about how reducing that rate to zero percent will affect the situation.

I support the bill. It seems to be a sensible extension of the regime previously approved by this House, but, of course, until we hear from submitters and until we work through the process, we will not know exactly how it will apply. At this stage, I am very happy to commend the bill to the select committee. Thank you.

GRANT ROBERTSON (Labour—Wellington Central) : I seek leave of the House to table the speech made by the Hon Peter Dunne on 23 July 2008 on the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill, which is the same speech that Jonathan Coleman gave at the start of this first reading.

Mr DEPUTY SPEAKER: I cannot accept that because it is already in Hansard. [Interruption] I think the member has made his point.

• Bill read a first time.

• Bill referred to the Finance and Expenditure Committee.

Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture) on behalf of the Prime Minister: I move, That the Governor-General Bill be now read a third time. The bill repeals and replaces Part 1 of the Civil List Act 1979 with new financial arrangements for the support of the Governor-General and his or her programme, including removing the tax exemption for the Governor-General’s salary. Although the bill will simplify the financial arrangements for the support of the Governor-General and for his or her programme and will modernise the antiquated drafting from the part on the Governor-General in the Civil List Act, it will not affect the constitutional position of the Governor-General in any way.

The Law Commission considered a number of options on how the legislation supporting the Governor-General should be framed. It ultimately concluded that there is symbolic importance in setting out the provisions relating to the Governor-General in separate legislation. The Governor-General Act will enhance the apolitical role of the Governor-General in our constitutional arrangements and align the New Zealand statutory arrangements with those in Australia and Canada.

The key reforms of the bill relate to the changes to how the office of the Governor-General is funded. The bill will consolidate all funding for the Governor-General’s programme with a single permanent appropriation, leaving annual appropriations to account for Government House’s operational budget only. The Governor-General’s international travel will be provided for under a separate appropriation. These arrangements will be much simpler and easier to administer than the current system under the Civil List Act. Although permanent appropriations remove certain payments from annual parliamentary approval, separating out the existing permanent appropriations into distinct categories provides additional transparency in so far as each appropriation will show up as a different line item in both the estimates and the annual reports from the Department of the Prime Minister and Cabinet.

The Governor-General’s salary and allowance are exempt presently from income tax under the Income Tax Act 2007. The salary is calculated on this basis. This is a historical anomaly, which the bill rectifies. The bill contains savings and validations clauses to ensure that the relevant provisions of the Civil List Act and any determinations of the Remuneration Authority or Orders in Council made under the Act continue to apply to the incumbent Governor-General and previous Governors-General and their spouses. Only the annuities provisions, which remove outdated restrictions on the availability of annuities already discussed, will apply to the incumbent Governor-General and his spouse. I thank the Law Commission and the Government Administration Committee for their work on this issue.

Hon DAVID PARKER (Labour) : First of all, I congratulate the Minister of Fisheries and Aquaculture on behalf of the Prime Minister on reading out the right speech. I was somewhat amused to learn that in respect of the previous bill the wrong speech was read out. In fact, it was one that is already in Hansard. I would like to put on record that one of the reasons that the Deputy Speaker declined our application to seek leave to table the earlier speech was that the fact that it is already in Hansard—and it is now in twice.

The Governor-General Bill is a relatively simple bill. It is supported by the Opposition. The bill, as the Minister said, updates the way in which the Governor-General is remunerated. It updates that and makes it clear that the salary of the Governor-General ought to be taxed and grosses it up so that after tax it is roughly the same amount that the Governor-General currently receives. It clarifies how allowances are to be paid, and it does that in a way that the Opposition agrees is appropriate. I think it has already been put on record in earlier stages of this debate that the old legislation is so antiquated that it refers to the fact that the Governor-General upon appointment, who way back then was often appointed from the United Kingdom, had a right to a trip by boat—

Phil Twyford: Sailboat.

Hon DAVID PARKER: —sailboat—from the United Kingdom to New Zealand as part of his or her conditions of appointment. Obviously, that is a bit out of date.

Another matter I would put on record once again is the constitutional importance of the position of Governor-General. It is a very important position. The Governor-General stands as the Queen’s representative in New Zealand. The Queen is the head of State in New Zealand, and her representative in New Zealand is the Governor-General. The Governor-General holds a very important constitutional position, both in the day-to-day administration of justice and in the various reserve powers and prerogative powers that sit with the Governor-General.

Hon Phil Heatley: This is breaking news!

Hon DAVID PARKER: Well, it might not be important to Mr Heatley, but Mr Heatley does not understand these issues very well.

Phil Twyford: No respect for the monarchy!

Hon DAVID PARKER: No respect for the monarchy! Various submissions made to the Government Administration Committee suggested that the mode of appointment of Governor-General ought to be changed. Those submissions generally came from people who thought that New Zealand should move from having the Governor-General as a representative of the Queen to having the Governor-General appointed as a New Zealand official by some process that would effectively move New Zealand from having a monarchy-based system to having a republican system. That was obviously outside the scope of this bill. I am not a person who has a strong view about that but I do have a strong view that if there is ever a move to republicanism, the appropriate method of doing it will be by way of having a Governor-General with the same form and functions as the current Governor-General rather than moving to an elected or presidential system, which would cause all sorts of changes and problems, including bringing to a head constitutional issues such as the proper place of the Treaty of Waitangi in a constitutional sense, when these issues are perhaps best worked through gradually as they currently are through the Treaty settlement process.

I will not say much other than that. Labour supports this legislation. I thought it was appropriate that the Prime Minister attended Parliament and spoke on the first reading. He has not made contributions to subsequent readings, which is not all that unusual for the Prime Minister since the Prime Minister is obviously very busy. Perhaps, given the controversy we had around Paul Henry’s comments that were quite insulting to the current Governor-General, it would have been appropriate for the Prime Minister to take a call and show his support for the Governor-General. Having made those comments, I say that Labour will be supporting the third reading of this bill.

JACQUI DEAN (National—Waitaki) : I stand in the third reading of the Governor-General Bill. This bill is timely legislation and it is important for New Zealand, as the Governor-General plays a very important role in New Zealand’s constitution. The bill implements the recommendation in the Law Commission’s report 112, which reviewed the Civil List Act, subject to minor changes of a technical nature that the Government Administration Committee made. The bill repeals and replaces Part 1 of the Civil List Act 1979, with updated financial arrangements concerning the allowances, salary, taxation, and travelling expenses of the Governor-General and the administrator of the Government.

As noted by David Parker, the chair of the Government Administration Committee, the committee received submissions on this bill, and they were interesting and thought-provoking—for example, some submitters believed that a proper process should be defined for the dismissal of a Governor-General; some submitters wanted to set a fixed term for which Governors-General are appointed, suggesting that a maximum of 5 years or a term decided by Parliament would be appropriate; and some submitters wanted the Governor-General to become the head of State of New Zealand. The committee determined that although those submissions were interesting and perhaps could be picked up at another time, they were outside the scope of the bill. A couple of minor technical amendments were noted, for which the committee did not feel it was worth reprinting the bill, but they are noted in the commentary.

I will make just a few comments to finish off my contribution on this bill. As the Sovereign’s representative in New Zealand, the Governor-General helps maintain the legitimacy and continuity of Government. The Governor-General has a very important role in New Zealand society, and it is a position that is well regarded. The office of the Governor-General makes a symbolic link between the community and the State, and the Governor-General also represents the New Zealand public in a non-partisan way on important public occasions. As those of us who are privileged to have seats in this House will know, the current Governor-General, Sir Anand Satyanand, fulfils his duty with a good deal of grace.

New Zealand Governors-General always support many community organisations. That is also noted and important. It is vital for us in New Zealand that the office of the Governor-General is properly supported in those important roles. With those remarks I commend the bill to the House.

PHIL TWYFORD (Labour) : It is my pleasure to contribute to the third reading debate on the Governor-General Bill. Labour is supporting this bill. It is quite a non-controversial bill, which streamlines the financial arrangements for the office of the Governor-General. It brings in an element of transparency, and the new arrangements are clearer and simpler. The bill will also modernise some of the language that is found in the parts of the Civil List Act that deal with the office of the Governor-General.

It is our view, and I think it is on the record now, that we believe it is no longer appropriate for the Governor-General to be exempt from paying income tax. That change is an important piece of symbolism in modernising the office of the Governor-General, and it carries with it the symbolism that the Governor-General is the first among equals, if you like, in New Zealand and the idea that we are all equal under the law.

The origin of this bill was a request by the previous Labour Government to the Law Commission to consider the arrangements surrounding the office of the Governor-General and make recommendations on how they could be modernised and improved, and we are pleased that the findings and recommendations of the Law Commission are being implemented in full. As my colleague David Parker said, we welcome the progress of this bill.

The bill achieves a number of things that I think are worth mentioning in this third reading speech. The definition of the Governor-General’s family was not clear in the existing legislation, but in this bill “family member” is now defined as meaning a partner or spouse, or a child aged under 18, and that is important in terms of the funding arrangements. The salary of the Governor-General will now be set by the Remuneration Authority, and that is also an improvement. There is a new sum payable after the Governor-General leaves office, and there has been an interesting exchange in the Dominion Post, in which the Cabinet secretary wrote to explain that the change made here from a lump sum equivalent to 3 months of the Governor-General’s salary to a sum that is now doubled, to 6 months’ salary, reflects the removal of the tax exemption. We then saw the political editor of the Dominion Post point out that the Cabinet Office had failed to explain how 3 months’ untaxed pay is roughly equivalent to 6 months’ taxed pay at a 33 percent tax rate. But I do not think anybody in this House begrudges this Governor-General or future Governors-General that payment.

Clauses 8 and 9 deal with the annuity for a former Governor-General or spouse, payable 6 months after a Governor-General leaves office. The bill also provides for the expenses for the Governor-General and his or her family for fulfilling the duties of office, including travel and so on, and provides legislative authority for that funding. Finally, the Civil List Act has been amended, and this bill establishes stand-alone legislation, which I think is an appropriate way to recognise the importance of the Office of the Governor-General. All that, I think, is good and satisfactory.

This debate, as it has progressed through the stages, has provided a welcome opportunity for some debate and discussion on the office of the Governor-General in New Zealand in the 21st century. I will say again that Labour welcomes the chance to begin a conversation about the future role of our Governor-General and the future status of our head of State. Phil Goff and others in the Labour caucus have said that now is the time to begin a conversation about our constitutional arrangements. Many people believe that the current Queen, Queen Elizabeth II, popular as she is, occupies such a place in the hearts of New Zealanders that not many people really want to begin a conversation about shifting to a republic during her reign. But there are also many people who believe that when the current Queen leaves office—dies or abdicates—that will be a time when many New Zealanders would, in fact, like to have that conversation about our future constitutional arrangements. Michael Cullen’s recent intervention sparked a useful public debate about the need to have this conversation in advance of the current Queen’s death or abdication. We may need to do that.

In modernising the arrangements for the office of the Governor-General, it is appropriate that we should begin to kick off a conversation about what true modernisation would look like for the Governor-General, and indeed for our head of State. I am glad that submitters to the Government Administration Committee came along and proposed some simple amendments to this bill that would have modernised it even more than these provisions do. We believe, as many people do, that it is inevitable that New Zealand will become a republic. There are many in this House, across a number of parties, who believe that it is something we should begin to talk about now, and not put off into the never-never.

So Labour supports this bill. It fully implements the recommendations of the Law Commission, and we appreciate the work of the officials and of the select committee in getting the bill to this stage.

I suppose the other thing, finally, that I will mention is that the public debate around the racist and offensive comments made by the broadcaster Paul Henry really shone the spotlight on the office of Governor-General when this rather technical and uncontroversial bill was proceeding through the House. I think those comments stirred up quite a useful and healthy debate about how we feel as a nation about the office of Governor-General and the institution of our head of State. Paul Henry, perhaps inadvertently, cut right to the heart of what is important about the office of the Governor-General, which is that the office is a symbol of who we are as a nation, who we are as New Zealanders, and it gives us our sense of national identity. By attacking in such a nasty and cheap way the current incumbent Governor-General, Sir Anand Satyanand, and questioning whether he looked and sounded like a New Zealander, Paul Henry stirred up a real debate about the office of Governor-General and what it means to us as a nation. Thank you.

KEITH LOCKE (Green) : The Green Party is supporting the Governor-General Bill. It modernises and normalises a lot of the arrangements around our Governor-General in terms of making his or her income taxable and things like that. I tried to modernise the bill even further by moving an amendment to remove the specification in the bill that the Governor-General will have the use of chauffeured cars when he or she no longer holds office, as it seemed a bit excessive to specify that in this legislation. Unfortunately, it only gained the Greens’ votes. I tried to move another two amendments on Supplementary Order Paper 173, which rose out of submissions to the Government Administration Committee. There were three submissions to the select committee, with two oral submissions. The two oral submissions were by the Republican Movement of Aotearoa New Zealand, represented by Lewis Holden and Dean Knight, and there was also a submission by Derek Round. The two oral submissions both proposed that the nomination to the monarch for Governor-General be from a 75 percent majority of Parliament, rather than just determined by the Government of the day.

Unfortunately, it did not proceed to a vote in the Committee stage. Although I moved a motion to say it be an instruction to the Committee on the Governor-General Bill that it have the power to consider it and, if it thought fit, adopt the amendments set out on Supplementary Order Paper 173, it was not supported by the other parties in the House. That amendment was just to make the procedures more democratic. The Labour members said that they could not vote for it, even though they were a bit sympathetic to those amendments, because they would have to be referred back to submitters and another lot of submissions would have to be called. Well, it is a pity if that was the case, as when they were on the select committee they did not push for that extra submission process to take place.

In the first part of my Supplementary Order Paper, proposed new clause 4A on the appointment of the Governor-General simply read: “The Governor-General is appointed by the Sovereign on the recommendation of the House of Representatives. The recommendation must be agreed to by at least 75 percent of all members of Parliament.” It was a very simple proposal, and I wish the vote had been in favour. The second part of the Supplementary Order Paper was clearly, in my view and in all respects, very relevant to the bill. It was also a proposal that came from the written and oral submission by the Republican Movement of Aotearoa New Zealand. It must be said that neither of the two proposals it raised were specifically republican; they were about democratising the institution of the Governor-General in terms of a recommendation to the Queen.

The second part of the Supplementary Order Paper was about the term of appointment of the Governor-General. My proposed new clause 5A said: “Term of appointment of Governor-General (1) The Governor-General is to be appointed for a term not exceeding 5 years. (2) A person who has been appointed as Governor-General cannot be reappointed as Governor-General.” I thought that was quite important because there is no set term for Governors-General in legislation. There is nothing to stop Governors-General being reappointed forever. That amendment was very relevant to the bill because in the bill there is a section on annuities, and, clearly, annuities should be based to the length of service. In fact, in clause 8 on the annuity for former Governors-General, it states that to get an annuity one has to have completed 2 years or more in office. What happens if the Government appointed a Governor-General for 1 year? He or she would miss out on an annuity altogether. There is absolutely nothing in the present legislation to stop the Government from appointing the Governor-General for 6 months, 1 year, 3 years, or 10 years. It could be anything, because there is no legislative control over that. Not having a specified term for the Governor-General mucks up the whole of clause 8 on annuities.

The other thing the bill talks about is the Remuneration Authority and how it determines things in relation to the level of annuity for former Governors-General, or their spouses if the Governor-General dies early on. That is good, because one of the things the Green Party has been proposing is a greater role for the Remuneration Authority in determining MPs’ salaries and allowances, and putting them all together and giving them over to the Remuneration Authority rather than us determining things ourselves. In that context, with all this debate about perks and MPs determining their own perks, clause 11 seems very odd. We as MPs have voted for particular specified perks for the Governor-General in relation to domestic travel and even down to the detail of the use of chauffeured cars when he or she no longer holds the office of Governor-General. That is repeating the error we made in relation to our own salaries and allowances.

John Hayes: Of course it’s not. Mean-spirited Green Party!

KEITH LOCKE: It is not a question of being mean-spirited. I am not saying that the Governor-General does not deserve some consideration of free travel. If a former Governor-General who is living in Auckland has to go to a function in Christchurch in his or her role as a former Governor-General, I am not saying that their travel costs should not be covered in some respect. But to actually specify it as chauffeur-driven cars is, I think, going beyond our democratic mandate, particularly in this era when there is so much concentration on privileges.

It is true that in terms of travel privileges the new Green Mayor of Wellington, Celia Wade-Brown, is setting the standard. When she met Hillary Clinton the other day she did not go to the expense of charging up a big bill to the Wellington City Council for a taxi; she biked around to Wellington Airport to meet Hillary Clinton. I think that sets a very good example. There is a parallel here that we can specify in general that there should be an entitlement to travel, but exactly what that is should be left up to the Remuneration Authority. That is all I am saying.

Overall, yes, we are modernising the role of the Governor-General. Phil Twyford talked about this as preparing to move to a republic. As members know, I had a bill that unfortunately did not succeed, which would have moved us to a larger discussion on whether we should have a referendum on a republic. This bill before us today is not particularly relevant to a republic at all, but it is true that republicans are often interested in democracy and democratising institutions, which is one reason why I am personally quite keen on this bill. I just wish it could have gone a bit further. It is part of the democratic constitutional debate that we are involved in day by day. With those few words, the Green Party will support this bill. We had hoped that it would go a bit further. Thank you.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā koe, Mr Deputy Speaker. Kia ora tātou katoa. Members will be aware that there has been a lot of kōrero recently about entitlements, the appropriate use of expenses, and reimbursements related to the role of a politician. The Governor-General Bill fits within that broader context of public accountability and transparency for a prudent use of the public spend. This bill in itself, as other speakers have alluded to, is pretty innocent. Its purpose is to simplify the funding of the office of the Governor-General and to bring the taxation treatment of the Governor-General’s salary into line with that in other Commonwealth countries.

This bill is a consequence of the 2007 Law Commission review of the operation and provisions of the Civil List Act 1979. The bill provides that the Governor-General must be paid a salary at a rate determined from time to time by the Remuneration Authority and that rate must not be reduced during his or her term. The bill also concludes that the Governor-General must be paid an allowance, at a rate fixed from time to time, for official expenses. The bill has many other aspects to it. There are provisions for compensation for superannuation rights lost during the term of being a Governor-General; for the annuity that is paid to the surviving partner of a Governor-General who has died after or during his or her term of office; and for other benefits or privileges by way of payments in respect of domestic travel, and the use of chauffeured cars, when a Governor-General no longer holds the office of Governor-General.

Like the Hon David Parker, I say it is important that we recognise the role of the Governor-General within the constitutional framework of Aotearoa, a context that was shaped by the Declaration of Independence, Te Tiriti o Waitangi, and the relationship between the Crown and the Treaty partner, tangata whenua.

Arā anō atu tētahi take kua puta mai e hāngai tonu ana ki a ngāi Māori, arā, ko tērā ko te tū o te tangata whenua, me kī, hei Kāwana-Tianara mō Aotearoa. Ki tā mātou e kite nei, mēnā ka whakatūria tētahi Kāwana-Tianara Māori, he mea āwhina tērā ko te noho tahitanga o te Ao Pākehā me te Ao Māori i te mata o te whenua i Aotearoa nei. Ko te mea pai o tērā momo tū, ka noho he Māori me kī, hei kanohi, hei waha kōrero mo te Kuini o Ingarangi. Me maumahara anō tātau, ko te Kāwana-Tianara te kau mā ono o Aotearoa ko Tā Paora Reeves, ko ia tērā i tēnei wā tonu nei, ko ia anake o ngā Kāwana-Tianara katoa, he whakapapa Māori tōna, ā, ko ia tērā i whakatūria ki tērā o ngā tūranga whakaharahara. I te wā i whakatūria a ia i te 22 o Whiringa-ā-rangi i te tau 1985, e hia kē nei ngā Māori i mihi nei, i whakanui nei i te āhuatanga o tā Paora tū hei Kāwana-Tianara mō Aotearoa. Ko Tā Hēmi Hēnare tētahi, ko tana kōrero e pēnei ana: “It must be a fruit of the Treaty of Waitangi to see a person from our people.”

Arā, koia tērā, te kōrero a Tā Hēmi Hēnare. Ko Tā Pāora, he uri o roto o te hapū o Puketapu o Te Āti Awa o Taranaki, ā, he tangata, me ki, i roto i ngā take nui o te wā, ko ia tērā i kaha whakahē nei i te haerenga mai o te tīma whutupōro o Wherika ki te Tonga, arā, ko te Springbok Tour i te tau 1981. Ko ia tērā i whakatūria hei Pīhopa mō Aotearoa, ā, ka mutu, ko ia tērā anō hoki i haere hei tumuaki mō te Whare Wānanga o te Rau Kahikatea mō te Pīhopatanga o Aotearoa.

Nō reira, he aha te tikanga o tērā kōrero mō Tā Paora ki tēnei pire? Ka mutu, ko tā mātou e whakapono nei, me whakaaro tātou mō tērā āhuatanga o roto i tēnei momo pire.

[There is another matter that has emerged relating directly to the Māori people, and that is for someone of indigenous descent to become Governor-General of New Zealand. In our view, if there were to be a Māori Governor-General, it would improve relations between Pākehā and Māori. The great thing about that is that a Māori would become the representative and spokesperson for the Queen of England. We must not forget that the 16th Governor-General of New Zealand was Sir Paul Reeves, who remains the only person of Māori descent to have been appointed to this highly significant role. At the time of his appointment on 22 November 1985, many Māori groups welcomed the appointment, with Sir James Hēnare saying:“It must be a fruit of the Treaty of Waitangi to see a person from our people.”

So that is what Sir James Hēnare said. Sir Paul Reeves is a descendant of the Puketapu subtribe of Te Āti Awa of Taranaki, and opposed the 1981 Springbok Tour. He was an ordained bishop, later serving as dean of the St John Evangelist Theological College or the theological college of the Te Pīhopatanga o Aotearoa.

So how does all this fit into this bill? In the end, we believe that in a bill of this type we should take that situation into account. ]

We believe that this bill, in maintaining respect for the position of the Governor-General, maintains respect for the core elements of our constitutional understanding that have retained an importance in Māori consciousness. In many respects, until the constitutional review is in progress the Governor-General must stand as the representative of the Queen, the embodiment of the Crown. In doing that, we will continue to place that role in the context of respect for the Treaty of Waitangi as the nation’s founding document and constitutional blueprint. Despite the policy and legislative changes of the last 35 years to better recognise the Treaty of Waitangi, shortfalls remain that adversely affect the lives of hapū, whānau, and iwi. These shortfalls also affect the quality of cross-cultural relationships and the operations of society more generally. Enhancing respect for, and giving better effect to, Te Tiriti o Waitangi will enhance the quality of life for all.

This bill does not do any of that by a long shot, of course, but it is a part of the conversation that must be had as a nation. In that sense, we support this bill at its third reading.

JOHN HAYES (National—Wairarapa) : Before speaking on this third reading of the Governor-General Bill I will do something that I probably should have done previously, which is to declare an interest. My interest is specifically that I belong to a group called the Monsoon Munchers, a group that includes the Governor-General. We are a lunch group of people, a mixture of diplomats, journalists, and others, who have lived and worked in Asia. I just declare that interest.

I turn now to the comments of Phil Twyford. It seems to me that it is worth reflecting on where we have come from in the last 160 years, when Hobson was appointed as the first Governor of New Zealand, and thinking about how the role has changed from the days when New Zealand was a dependent colony to our present situation as an independent nation that is able to make its own decisions. In the beginning Governors-General were appointed on the advice of the British Government, not only to undertake the duties of the Sovereign but also to represent the interests of the British Empire here in New Zealand. The Statute of Westminster in 1931, which came after the 1926 Balfour Declaration, changed that. No longer could the British Parliament make laws for New Zealand unless it was at our request, as we are doing tonight with this bill.

That declaration also changed the role of the Governor-General. Instead of simultaneously representing the Sovereign and the British Government, the Governor-General became just the Sovereign’s representative here. That continued until about the late 1960s, with Governors-General who were mainly drawn from the minor aristocracy or the British military. Following the appointment of Sir Arthur Porritt, who as I recall was the first New Zealand - born Governor-General, back in 1967, we have had the first Māori Governor-General, Sir Paul Reeves, the first woman Governor-General, Dame Cath Tizard, and the first Governor-General of Asian-Pacific descent, the present Governor-General, who does a very fine job—the Rt Hon Sir Anand Satyanand.

Dr Rajen Prasad: All New Zealanders.

JOHN HAYES: He was appointed, as that member would well know, in 2006. The backgrounds of those Governors-General have also been varied.

At the request of the Government, over the years Governors-General have increasingly travelled overseas, apolitically representing New Zealanders at major international events and in general promoting New Zealand interests abroad. We have moved from a situation—and I think the bill reflects this—of being an agent of a once-global empire to a situation now in the 21st century where the Governor-General is a New Zealander who represents the head of State in New Zealand and represents New Zealand to the rest of the world. I do not think we should get too tangled up with the views of Mr Twyford or Mr Locke as to where this constitutional arrangement should head.

Overall, this bill represents a great leap forward in the way that the Government supports the office of Governor-General. Apart from one or two exceptions in the new legislation it will not apply to Sir Anand Satyanand, but it will apply when the next Governor-General is appointed. The bill creates a new funding structure for the office of Governor-General. Currently the Governor-General’s personal allowance pays for a variety of official functions that would be better paid for by a separate programme and appropriation. International travel that the Governor-General undertakes at the Government’s request is provided for in the new travel appropriation, and domestic travel will form part of the programme’s appropriation. The present exemption of the Governor-General’s salary from income tax will be removed by this bill, and there will no longer be justification for it. Successive Governors-General have requested that this exemption be discontinued. The Queen, after all, has chosen since 1993 to pay income tax on her private income, and the Aussie Governor-General and state Governors have paid income tax on their salaries since 2001. The Minister of Finance’s power to exempt the Governor-General from paying any public or local taxes and other State duties will also be removed.

With those words of support, I commend the bill to the House.

JACINDA ARDERN (Labour) : I think that was a great example from John Hayes of filibustering. If not, I have to say I did not otherwise feel the need to know about the Monsoon Munchers.

• Debate interrupted.