Hon STEVE MAHAREY (Minister for Social Development and Employment) : I move, That the Social Security (Social Assistance) Amendment Bill be now read a first time. At the appropriate time I will move that the bill be referred to the Social Services Committee. The bill makes three significant changes to the Social Security Act. It does so in the following ways. Firstly, it extends the eligibility for the accommodation supplement to residents of retirement villages who have “licence to occupy” tenure. Secondly, it ensures that benefit applicants who work for part of the year, such as seasonal workers, are not financially disadvantaged by enabling them to elect a 52 or 26-week income assessment period for the calculation of their stand-down period. Thirdly, it makes changes to the regime that encourages sole parents to establish paternity for children and apply for child support.

Let me go through those three changes one by one. The bill extends eligibility for the accommodation supplement to residents of retirement villages who have a “licence to occupy” tenure and who meet other qualifying criteria, including an income and cash asset test. This change ensures that people with a “licence to occupy” tenure are treated consistently in terms of access to financial assistance. It addresses a financial barrier facing older retired people on low incomes with limited cash assets and high accommodation costs who want to continue to live independently. The Working for Families package substantially addressed housing affordability pressures by increasing the maximum level of accommodation supplement in some areas and by making it available to more people. The amendment in this bill also assists people on low incomes with their housing costs. From 1 July 2005, it is expected that 200 to 300 retirement village residents will qualify for an accommodation supplement of, on average, between $37 and $54 a week. I imagine that that step will be applauded by the House.

Secondly, the bill changes benefit stand-down rules to improve incentives for people on a benefit to undertake seasonal work and other short-term employment. Currently, a stand-down period of between 1 week and 10 weeks applies to most new applicants before their benefit commences. The stand-down period is calculated on the applicant’s income in the 26 weeks before becoming entitled to the benefit and the number of children in his or her care. But from 1 May 2005 benefit applicants will be able to elect a 26-week or 52-week income assessment period for the calculation of their stand-down period. At the moment some seasonal workers who work for part of the year can be disadvantaged by the 26-week assessment period. Although they may have earned a reasonable income over a short period, if before they had a job they had a low income, their annual income position will become lower. This change will benefit approximately 4,500 benefit applicants a year, by reducing the length of their initial stand-down period. This will reduce disincentives for people to undertake seasonal work and may also reduce the need for recoverable assistance. I am sure that the entire House will applaud that change.

I should stress that this Government has been extremely successful in the area of employment and unemployment, and we are very keen to remove every single barrier we can to people going to work so we can also ensure that work pays. That measure will help.

Thirdly, as part of a broader package of initiatives, this bill also puts into effect changes to the regime that encourages sole parents to establish paternity for their children and apply for child support. People bringing up children on their own are not uncommon in New Zealand. At the last census one-parent families made up around 29 percent of all families with dependent children; over double the number recorded in 1981. For these families the State will step in to help them financially when they cannot financially support themselves. However, in doing so the State also expects the other parent to contribute to the costs of the child. It is not unreasonable to expect that single parents bringing up children on their own identify who in law is the other parent, or to expect that they seek financial support for the child from the other parent. It is not unreasonable to penalise financially those who do not. It is not a new philosophy.

Before the domestic purposes benefit, and after its introduction in 1973, single-parent beneficiaries were financially penalised unless they sought financial support for the child, where appropriate, from the other parent. What is unreasonable is a parent not providing anything towards the cost of his or her child. I am sure that the approximately 93,500 parents who are required to pay child support, because the other parent of the child is on a benefit, would agree. We actively encourage single-parent beneficiaries to name the other parent in law and apply for child support, and the majority do so. Some do not, and these people face a $22 a week penalty and miss out on that income.

This Government is letting sole parents know the personal financial cost of their decision. We are ensuring that this group has full information about paternity and child support. We are sending out field officers to every one of these sole parents. All evidence shows that given the right information in the right environment sole parents will usually reconsider their decision not to name the other parent or apply for child support, and our policies are having effect. When we came into office the number of sole parents penalised because they had not named the other parent or applied for child support had increased by over 40 percent since 1993. They were increasing at a rate of 1,000 a year, and that trend was not abating. We also found around 1,500 people who had not met their obligations and whose benefits should have been reduced. However, between March 2003 and March 2004 the number of beneficiaries receiving a penalty because they had not named the other parent in law or applied for child support increased by only around 200—down from the 1,500 we found that the other Government had done nothing about.

In this sense the bill is building on our successes. The $22 penalty per child has not been adjusted since 1993. From 1 July 2001 the Government will increase the penalty where 3 months have passed since the sole parent had the penalty imposed. During this period sole-parent beneficiaries will be given a reasonable opportunity to reconsider their decision. If they still refuse to comply with their obligations, their benefit will reduce by an additional $6 a week per beneficiary, not per child—that is, per household. That additional $6 reduction will continue to apply until beneficiaries have met all their obligations.

Some people will think we are being too tough, some people will think we are being too soft, but we think we have it about right. We will also ensure that there are exemptions where sole parents can prove such things as violence against them or their children, or it is proper that they are able to be exempted because they are refugees, asylum seekers, or have parents who are overseas. Those kinds of conditions will allow people to seek a proper exemption. There are special circumstances where this needs to apply, but I stress that this is working. It is working because we have begun talking with these beneficiaries, and they have responded well to it. After a long period of time when nothing was done about this by previous Governments, when the increase in the number of people in this situation was rising 40 percent over a period of 7 years, this Government, as usual, has stepped in to do something sensible about the issue. I commend this bill to the House.

KATHERINE RICH (National) : The House will be stunned to hear that speech and to hear how the Minister has changed his tune on this issue. Let us not doubt the reason we are here debating this legislation: it is because of the work done by the National Party and by Muriel Newman. Both the National Party and ACT have brought up this issue time and time again over the last 5 years, but it is only now that the Government wants to do anything about it. It knows it is in trouble in the area of welfare and wants to look as if it is doing something constructive about it. However, this bill is unlikely to deliver what the Minister says it will.

The National Party intends to vote for the bill to go to the select committee, but with some pretty strong reservations. It covers an issue that has troubled the National Party for some time. When we look at the numbers, we see that about 19,000 women do not name the father of their children. Unfortunately, the issue involves mainly women, but, quite interestingly, the ministry was not able to give me any explanation at all why more than 250 men were getting this deduction. It could not tell me why those men were finding it difficult to name the mother of their children. Who knows, maybe the bill will clear that up, as well. We are talking about 35,000 children whose liable parent does not make a contribution to their support.

Under this Government, child support debt will go to $1 billion. The Government knows it is in trouble. That is why it is scrambling about trying to make some changes. What is its answer? It is to impose an additional reduction of $6 per week per beneficiary. Well, whoop-de-doo! If I have 10 children, then, frankly, $6 per week from my benefit will not motivate me to do anything.

Jill Pettis: People don’t have 10 children.

KATHERINE RICH: I suggest to the member that if she goes out to her electorate, she will find that some families do have 10 children. I think she needs a lesson on the birds and the bees.

The problem of child support debt is very, very troubling. It is likely to go to $1 billion under this Government—and I hope that David Cunliffe will take a call to discuss this issue, because the collection of child support debt is very important. A growing number of women cannot, or will not, name the father of their children. I understand there can be some very reasonable reasons why that it is so, but I do not for 1 minute buy into it that nearly 20,000 women are totally unaware of who the father of their child is.

One thing the Minister did not explain was why the Ministry of Social Development does not collect child support from some non-custodial parents, even though the names of both parents are on its files. About 2,500 case files have the names of the fathers on them, yet the Government does not collect a cent from them when it comes to child support. This issue is not just about making sure that the House is fair to the taxpayer; it is also about making sure that we are as fair as possible to the children. I hope that most fathers would do more than just make a financial contribution towards their children’s upkeep; I hope they would give emotional support and support in other ways, as well. But if fathers are not named or asked to meet their responsibilities, then they would have to go some way to prove themselves as parents. We are unsure how these measures will make a skerrick of difference. Six dollars will not make a difference to a family of five or more children, because the amount does not go up. I question how the measure will motivate some parents to make a decision to name the other parent of their child.

The Minister keeps chirping in with all sorts of silly little comments. He needs to explain to the House why, under his watch, the number of women aged between 15 and 24 in south Auckland who do not name the father of their child has gone up to nearly 33 percent. So rather than there being an extraordinary situation where the father is unknown—I just do not buy that for one moment—it has become the way to do things in some pockets of that community. Things have to change.

Hon Steve Maharey: We’ve got it under control.

KATHERINE RICH: After 5 years that is a bit of a lame comment. Today in the House we heard the Minister debate issues like the Community Employment Group and talk about some of the changes he is making in the welfare area, but let us not doubt for one moment that he is doing that because he needs to look as though he is talking tough on welfare. His polling information will be telling him that this issue is the next issue of concern for many of his constituents. He knows that for the last 5 years he has just sat on his hands while the problem has spiralled out of control. Thirty-five thousand children have a parent who does not make a contribution to their upkeep. Mr Maharey knows the names of 2,500 of those liable parents. They are on the files, but he cannot do anything about it. Because the form has not been filled out, Work and Income cannot take it to Income Support to get that parent to make a contribution.

It will be interesting to see what the submissions are like in the select committee. I think that the bill is unlikely to deliver on its stated aims. However, because we have an open mind we are supporting it to a select committee, and we look forward to hearing the submissions. I suspect that some of the submissions will say that while the bill talks tough, basically it is unlikely to change any behaviours out in the community; that rather than making any real changes, it is more about making the Government look as though it is doing something. Let us not one moment doubt that this issue is one of the major ones facing the welfare portfolio. When more and more parents will not name the other liable parent, an extra burden is put on the taxpayer. It is unfair not only to the taxpayers, who continue to carry the can for the upkeep of some of these children, it is also unfair to the children. It is difficult enough to bring up children when one has a supportive family, but doing it on one’s own and on a welfare benefit is much tougher.

I think that a lot of families will welcome some of the changes. Hopefully, they will bring in more income and more support for their children. But we need to get real about this particular problem and stop pretending that every single parent who refuses to name the other parent does not know the parentage of his or her child. I totally accept that there are some circumstances where that may be correct, but on the whole I believe that it is not correct. Many parents refuse to fill out the form so that the Inland Revenue Department can track down the liable parent to get some relief for the taxpayer and, more important, for the children involved. I do not for one moment think that Mr Maharey is as worried as all that about the children this legislation will affect; I think he is more interested in window dressing—more interested in looking as though he is doing something to try to turn round this problem.

I can tell members that this legislation will not make a difference for the 33 percent of women aged between 15 and 24 in south Auckland who do not name the fathers of their children. Six dollars over three kids! Why would that motivate anybody to make any changes? We need to be honest about this issue. We need to try to make some changes that will ensure that parents take responsibility for their children and ensure that the kids involved get the support they need. As child support debt spirals out of control to nearly $1 billion under this Government, those children will still wait for their soccer boots, their music lessons, and their school camp fees to be paid—$1 billion, and this Government continues to fail in this portfolio.

GEORGINA BEYER (Labour—Wairarapa) : The disappointing aspect of the speech from the member who has just resumed her seat was the lack of policy from the National Party. That member stood there and whinged for 10 minutes about the Social Security (Social Assistance) Amendment Bill in its first reading. The only positive thing she had to say was that National would vote the bill through its first reading, and we are grateful for that. I hope it will come to pass that the whole House will support the bill through its first reading, because it is likely, although it has not yet been confirmed, that it will go to the Social Services Committee, which I am fortunate enough to chair. That is where the Minister has requested it go, I believe. Fortunately, Mrs Rich happens to be a member of that committee, so we hope we will see some more philosophy of the National Party regarding these particular matters drawn out from its members and thrown on the table for us all to consider. The wonderful thing about the select committee process is that those kinds of things can be nailed. That is what this Government has done with this proposed legislation.

I remind members of the House of the key points mentioned by the Minister in his speech. They are that this legislation ensures fairness and security and that it makes three significant amendments to the social security system by, firstly, extending eligibility for accommodation supplement to residents of retirement villages who have “licence to occupy” tenure; secondly, ensuring that benefit applicants who work for part of the year are not financially disadvantaged—for example, seasonal workers; and, thirdly, changing the regime to encourage sole parents to establish paternity for their children and apply for child support.

The internal tensions that are obvious between Katherine Rich and Dr Brash have stopped the National Party from making any progress in developing its welfare policy. When this bill gets despatched to the select committee we hope we can draw out some of that policy from National Party members.

BILL GUDGEON (NZ First) : High on the agenda of New Zealand First is the social policy that people should be independent of the State and of the encumbrances associated with dependency. New Zealand First supports the Social Security (Social Assistance) Amendment Bill. We as a party have always supported the concept of family and the responsibility of parents—that is, mum and dad as the minders or caretakers—for the upbringing of their children. Unfortunately, many people, from either gender, are left with that sole responsibility.

The quotation I am about to give, from Aristotle, touches on an area that is part and parcel of a social dilemma facing our country—one that is a major factor contributing to our demise. He said: “All who have meditated on the art of governing mankind have been convinced that the fate of empires depends on the education of youth.” One can imagine the very positive effects this country would experience if the social traumas were eliminated and parents did all they could to help their children be the best they can be, at any given time. The Social Security (Social Assistance) Amendment Bill goes part of the way to try to rectify this problem. An increase from 5.6 percent in 1993 to 16 percent in 2004, indicates an increase in the number of liable parents who are failing to meet their responsibilities. One result is that it makes it financially harder for the custodial parent to move off the benefit, as that parent would not receive child support. The crux of the matter in sole parenting is how the children receive physical and spiritual support. Is the benefit sufficient? Will the sole parent become independent of the State? Many in today’s society would consider these questions to be quaint and old-fashioned, yet I say that we should look at where we have been, where we are, and where we are heading.

The bill increases the rate of reduction in the benefit, and does so as an incentive for sole parents to carry out certain actions so that the other parent contributes financially to the upbringing of the child. Currently, under section 70A of the Social Security Act the rate of benefit paid to the sole parent is reduced by $22 per week for each dependent child where that parent fails or refuses to identify the other parent in law, to make an application for child support, or to attend a hearing and give evidence at proceedings brought under the Child Support Act. By July 2005 additional increases in the rate of reduction will be imposed, but this decision will be reconsidered should the beneficiary meet the section 70A requirements.

Let us look at the responsibilities that we have as parliamentarians, because within the four walls of this Chamber we have the power to pass laws. But what about the citizens of this country? New Zealand First is not judgmental of people who find themselves in this situation, but it is the responsibility of Parliament to help them to become independent of the State. It is our responsibility to ensure financial support is given to the sole parent from the other partner, who, in many cases, is the father. On too many occasions we sit here and debate with each other, and among parties, about who did this and who did that, but our prime responsibility as parliamentarians is to govern so that freedom prevails and assistance is given to people in need.

This legislation will be very difficult to implement, but New Zealand First supports it. Some people will not be happy about it, both within this Chamber and outside. However, something has to be done about the problem so that these citizens of our nation can become independent. It will take a while. Speaking as an individual, I would not put a time limit on it, but we need to make this move. That is one of the reasons that New Zealand First supports this bill. We are seeing more people from all walks of life becoming dependent on the State. We have to rectify that situation if New Zealand is not to become a Third World nation. This applies across the board for all legal citizens who reside in this country. Our first commitment is to our citizens. New Zealand First is satisfied that a move has been made; that legislation will be put in place to help rectify the situation faced by some of our citizens. Those citizens also need to be more committed, and they need to be more accountable for their actions.

We need this legislation to ensure that children born from the union of a man and a woman are taken care of. When we look at other countries we see that that is happening. This ministry is one of the most important in terms of ensuring that the people of this nation develop their potential and prosper. Let us as parliamentarians put in place the means by which this can be achieved. New Zealand First understands that there is potential in this country for this area to be developed and for people to be accountable. We believe that every citizen should be taken care of. We support the bill and hope that in time to come the citizens in this situation will see and appreciate what this Parliament is trying to do for them to ensure they become independent of the State.

SUE BRADFORD (Green) : This afternoon we have before us yet another piece in the jigsaw puzzle of never-ending amendments to the Social Security Act of 1964. That ramshackle piece of legislation is now 40 years old, and it is high time some Government took the bull by the horns and gave us a whole new Act—one that simplified and clarified our social welfare system, rather than redoing it and fragmenting it endlessly. With hundreds of policy analysts being currently employed within the Ministry of Social Development, and a Minister who has at least some vision of how the system could be disentangled and streamlined, I cannot quite understand why a second-term Labour Government has not yet been able to take that long-overdue step. But perhaps with some encouragement it may consider doing so next time round.

The Social Security (Social Assistance) Amendment Bill we are considering today deals with three main areas. It extends eligibility for the accommodation supplement to residents of retirement villages who have “licence to occupy” tenure, makes sure that people like seasonal workers are able to elect a 52-week rather than a 26-week income assessment period for the calculation of stand-downs, and changes the rules around what happens to sole parent beneficiaries who refuse or fail to name the father of their child.

The Green Party has no quarrel with the first two measures. Indeed, we have always supported the extension of the income assessment period for calculating benefit stand-downs, as it has disadvantaged certain classes of worker for a very long time. Industries such as the meatworks and fruit and vegetable picking rely on a steady supply of willing labour, and at a time of low unemployment and increasingly pressing labour shortages it is critical that such workers are encouraged to continue in their occupations, rather than be discouraged by the rules governing stand-downs. Where we do have a problem with this bill is around the changes to section 70A of the principal Act, and in particular the increasing of the penalty for not naming the father of a child by a further $6 per week. Twenty-two dollars is already deducted for that. Once this bill becomes law, a mother on the domestic purposes benefit with one affected child will lose $28 a week from her benefit, and a mother with two affected children will lose $50 a week.

While to some people in this House and around the country losing $28 or $50 a week from their income may not seem like a particularly big deal, for a family on a core domestic purposes benefit of $235 or $256 a week that is a very big deal indeed. I really question the Government’s motivation in further intensifying this sanctions regime against the poorest families in the country. Report after report tells us that single parent families are at the bottom of all socio-economic indicators, yet Labour is deliberately increasing child and family poverty for some of those very same families. It is not even doing that by an amount that will make any real difference to the country’s finances, which are booming, anyway. What the Government is doing is taking a mainly symbolic, but punitive, step to try to win over those voters whose psychology unfortunately revolves around the idea that single parents who are bringing up children on a benefit must be harassed to the maximum extent possible—at least until they get a job or find a husband. I note with interest that the National Party is supporting this bill.

Whom exactly is this bill punishing? It is not necessarily punishing absent or unaware fathers, who will remain untouched, but rather the children, who will continue to pay an even greater price for the State’s moral vendetta against their parents. Increasing the deduction and extending its enforcement by Work and Income will only succeed in forcing families to fall back on food banks, and on a ceaseless cycle of debt to both Work and Income and other bodies. The children in those families will continue to suffer from a lack of decent food and housing, carrying with it the long-term negative educational and health impacts that have been exposed over and over again in so many studies of child poverty. There are no moves to lift core benefit levels alongside this bill. There are no announcements of a drastic increase in the provision of State housing, which is needed to meet the real needs in many of our communities right now. Instead, what this bill does do is to further calibrate and index degrees of deprivation, so as to punish children for the so-called sins of their parents.

I question the underlying assumption behind this shaming approach to benefit law—the assumption that somehow it is morally better to be dependent on a completely absent and uncaring father than on the State. As a society we should value all those who choose to bring children into this world, and to raise them to the best of our ability. We are not suffering from an over-abundance of children in this country, and each and every baby should be valued for the contribution that he or she will make in future, just as the mothers of those babies should also be valued for the work that we all do as mothers in raising our children. In the end, the moral argument around this issue comes down, for me, to quite a simple question: would all those people from whatever political party, or church, who support increasing the penalties against those single parents also support the State advising mothers to have abortions if they are not willing, or able, to name the father of their child? That, after all, would be the simple answer to the problem. If we are to blame and punish someone after her child is born because she does not wish, or is unable, to name the father, the logical extreme is to ask her to consider not having the baby at all, much earlier on in the piece. I doubt whether there are many people in our society who would, in reality, wish to go as far as that, but I suggest that is the ugly, but ultimate, inference one can take from this debate.

The Green Party has no problem with the Government doing more to encourage mothers to name the father where it is possible and desirable for them to do so. We obviously have no problem with another amendment to section 70A in this bill that will provide for an exemption from benefit reduction when the parent or children would be at risk of violence if the parent takes the steps of naming the father or applying for child support. What we do have a problem with is the extension of penalties against beneficiaries who are often already trying to cope with an inadequate income and a whole host of other problems, and the lack of recognition of the concept that all children, even the children of those whom some in society see as morally reprehensible, deserve the best possible start in life, not the worst. There are all sorts of reasons that mothers do not wish, or are unable, to name the father of their child. Sometimes it is because the contact was so fleeting that there is no connection and no reason why the mother would ever want to know or see the father again. Sometimes it is because she simply does not know who the father is. In other cases one of the more common reasons at present, I suspect, is likely to be that the custodial and non-custodial parents have come to an arrangement that means that an application for a child support assessment will not be made.

The making of private arrangements like that is frequently a response to the inflexible nature of the Child Support Act in regard to the amount payable in shared custody and substantial non-custodial access situations. At the moment, a liable parent is allowed to pay decreased child support only in a shared custody situation that is seen as substantially equal. That does not allow for the variations that happen in real life—for example, when the mother may care for the child or children for 57 percent of the time, and the father for 43 percent. In that situation the father would have to pay full child support payments, despite caring for his offspring for 43 percent of the time and having a similar share of the costs associated with that care as the mother. Even if two parents in that situation decide to share care absolutely equally and both become subject to child support liability, the percentage for each of them does not drop to 9 percent, but rather to 12 percent. To compound the inequity, there is a risk in a fifty-fifty custody arrangement that the mother will no longer be seen as the primary caregiver, and may completely lose her entitlement to a sole parent rate of benefit. In those kinds of situations, it is easy to see why some mothers take the step of not naming the father as a trade-off for maintaining some kind of equable relationship with him, and for financial reasons. Surely the State would be better served in dealing with this particular issue by reforming child support alongside the welfare law, rather than by increasing benefit deductions. In that way a far healthier outcome could well be achieved from all points of view in the long run.

Without the provision that increases the penalties for sole parents who fail or refuse to meet the requirements of section 70A of the principal Act, the Green Party would happily have supported this bill. However, under the circumstances we are voting against this legislation, and will continue to do so unless this part of the bill is chucked out. I believe that as with the no-go zone aspect of the Jobs Jolt package, Labour is once again succumbing to pressure from parties on the right, and is further penalising beneficiaries in a bid to win the votes of those who think beneficiaries—in this case, solo mothers—should be demonised. It is a real pity that Labour thinks in that way, and I hope in the future it will not feel obliged to include such nasty little attacks inside otherwise laudable legislation.

Dr MURIEL NEWMAN (Deputy Leader—ACT) : I rise on behalf of the ACT party to speak on the Social Security (Social Assistance) Amendment Bill. This bill, more than any other, shows us just how soft on welfare this Labour Government is. The Minister talks tough, but is actually a soft touch—and I will explain what I mean by that. We know he is driven by the beneficiary unions; we do know that. Under this Minister’s watch the number of women who have refused to name the fathers of their children has grown from 14,000 when he took office to almost 20,000 now, which is a growth of 40 percent. Some three women a day are now refusing to name the fathers of their children—that is 40,000 children who do not have the name of their father on their birth certificate. I say that is a modern scandal, and this Government has been watching over that as the numbers have grown.

On assuming office the Minister promised, as a priority, to deal with this issue. Here we are, 5 years later, with his answer. What is his answer? His answer is to take another $6 a week per household off those women who do not name the fathers of their children, as of 1 July next year. But can members guess what else is happening on 1 April next year? On that date the family support package that will go to those families will be $25 a week per child for the first child, with an extra $15 a week for other children. So we have the Labour Government pretending to get tough on this issue, when it is increasing the penalty by just the rate of inflation per household and is then giving those same households another $19 to make up for the $6 it has already taken off them. That is absolutely an utter and a complete farce.

Not only is that the case but the explanatory note of the bill explains that social workers will go out and talk to those families, to make sure they receive all their entitlements. I predict that rather than the amount of money those families receive going down it will actually go up, as social workers find other entitlements that they think those families should have. That will increase the dependency of those families, and make it even harder for those women to leave the welfare system, get a life that is independent of this Labour Government, and get out there and do better for themselves and their children.

But that is not the only really bad issue about this bill. The Government is introducing some very, very poor incentives through the exemptions that will be brought in. First of all, there is an exemption if a woman claims that the father of her child is violent. The worrying thing about that is that it will go both ways. Firstly, it will create an incentive for men to be violent towards the mothers of their children, and, secondly, it will lead to more false allegations. A woman knows that if she claims that the father of her child is a violent man, then she will not lose an $6 extra a week, nor the $22 of family support. I think that is absolutely disgraceful. This Government is bringing in an incentive to create more violence in households. We already have enough of that; we do not need legislation to create an incentive for more violence to occur.

Secondly, there is another exemption, essentially for deadbeat dads. If the woman can claim that there is no hope that the father will ever pay for his child, then she is exempt and he is exempt. I ask what sort of signal that sends out to all those fathers out there who do pay child support and who have taken responsibility. What kind of message is that? The message is that if a man is a deadbeat dad who does not care, everyone will forget about him. He will not be chased, and the mother of his child will not be penalised. Well, I say that incentivising fathers into becoming deadbeat dads is absolutely stupid, and I do not know why this Government would even contemplate having such a provision in this bill.

Finally, there is another exemption: if a woman can claim that the father is dead, then she does not get the penalty. Now, that will incentivise lying. How on earth, if the father is not named, can anybody who is trying to investigate the case prove whether he has died? It is an absolutely crazy situation, whereby the Government will incentivise violence, irresponsibility, and lying.

We do know that as a result of all those new incentives—in answers to parliamentary questions we have been tracking the number of women who do not name the fathers of their children—the number of women who receive the benefit cut will go down. There is no doubt about that. But it will not be because those women are naming the fathers of their children, or because the fathers are fronting up to their responsibility to pay child support, be a dad, and give those kids the right to know who their dad is on their birth certificate. No, it will not be because of any of that; it will be because the numbers are hidden. The Labour Government, rather than getting on top of the problem, will simply hide it, so that the Government cannot be found out and held accountable.

No one believes that 20,000 women today do not know who the fathers of their children are. We do know that they are refusing to name those fathers, and in many cases, unfortunately, it is because there is a rort going on between mothers and fathers whereby payment is being received under the table. The Minister has acknowledged that in public statements. The really worrying thing is that by letting that go on, we are denying those children the right to know who their legal father is. I think it is an absolute disgrace that, aided and abetted by this Labour Government, those children are being denied their legal right to know their father. This bill will make that problem worse. Not only is that the case but this bill will allow more fathers to avoid the responsibility to pay child support for 18 years, leaving the taxpayer to foot the bill for raising those children for 18 years. A penalty of $6 a week is just a joke. It means that those fathers will evade that responsibility, making it totally unfair on the taxpayers of New Zealand and on the 140,000 liable parents who front up to their financial responsibility to raise their children—often while working hard to start a new life.

It is unacceptable that what Labour is proposing here is the answer to this complicated problem. If the Government were serious about this issue it would have looked overseas and found that fathers are very happy to be named on birth certificates, and happy to pay their financial dues, if they can have quality time with their children. Many countries have introduced shared parenting as a way to facilitate that—and it works. This Government has denied New Zealand families the opportunity to bring in shared parenting. With the Care of Children Bill it had another chance to do that, but it is turning its back on a proper solution to this problem. The child support laws are totally unfair; they need urgent reform. That is why all sorts of deals are going on under the table, and is the second reason why fathers are not named. The third reason is that paternity testing in New Zealand is very difficult to obtain. We have to get the mum to agree to it, even though the test is now done with just a mouth swab. A lot of fathers out there who are paying child support for 18 years know they are not the father of the child concerned, and a lot of men do not want to be named because they are not sure whether they are. I say to the Government that it should sort out those three problems, and the number of women who refuse to name the fathers of their children will then diminish dramatically.

This is poor legislation. The ACT party cannot support legislation that is based on bad policy and bad incentives, because it will create bad outcomes. We oppose this legislation.

JUDY TURNER (United Future) : I rise on behalf of United Future for the first reading of the Social Security (Social Assistance) Amendment Bill. Although this bill makes changes to the eligibility of retirement village residents—so that they can apply for the accommodation supplement—and also adjusts the way in which stand-down periods are calculated for seasonal workers who move on to the benefit, it is kind of inevitable that the focus of today’s debate has been the changes to the penalties for a domestic purposes benefit recipient who fails to name the other parent of her child when applying for child support.

On the one hand, the bill increases the penalty from the current $22 per child by an additional $6 per beneficiary but, on the other hand, the bill widens the exemptions for a reduction in the benefit, under section 70A of the Social Security Act, to include the situation where there is risk of violence to the beneficiary or her children, and the situation where no child support is able to be collected for some reason—for instance, the death of the liable parent.

The Government has indicated that its aim is not necessarily to create a more punitive system, but to get beneficiaries to name liable parents. United Future would certainly be supportive of anything that would effect that kind of change. It wants parents to pay child support and to take greater responsibility for their offspring, and that is a very noble thought.

I do not believe that this is a great money-making exercise for the Government. About 15 percent of domestic purposes beneficiaries have their benefits docked for not naming the father, so that measure may save $6 per beneficiary, but it would be more worthwhile if more fathers paid child support at even the lowest rate of $13 a week, which apparently is about 70 percent of what liable parents pay at present.

However, I think this whole debate about section 70A penalties would be a lot more enlightened if we had a lot more information about why mothers do not name the father or apply for child support. I think Katherine Rich mentioned that numbers of beneficiaries have both parents on the certificate but do not claim that support, and we need to address that issue. There is a theory that some separated parents are effectively colluding to avoid the child support system. I think Ms Newman referred to suggestions that some fathers pay their ex-partners on the benefit less than their liability for the child, in return for not being named in domestic purposes benefit applications. That way both the mother and the father are better off, because the mother gets the benefit plus the extra cash, while the father pays less than the law requires.

It is probably more realistic to assume that many of those who have had their benefits docked from the beginning have simply become accustomed to getting by without that money, yet to increase the amount would perhaps give beneficiaries the opportunity to reassess their position about naming the other parent.

Although we will support this bill in its first reading, I need to signal several areas within the bill that we think the select committee will have to give further consideration to. One of the issues is the additional exemptions to the section 70A penalty. Currently this applies where the child was conceived through rape or incest, or where there is insufficient evidence to establish the other parent’s identity. The addition of the risk of violence uses the definition in the Domestic Violence Act to include physical, sexual, and psychological abuse. Muriel Newman argues that this will open the way for more “deadbeat dads”, who will get away with not paying child support because they have been violent or abusive, but I would imagine that fathers’ rights groups would argue that this new exemption strengthens a mother’s ability to shut them out of children’s lives by making false allegations of abuse.

I would question the inclusion of domestic violence. Presumably it has been included due to the concerns that filing for child support would further enrage the abusive parent and place the family at risk. But if we were to use the same test as in the Domestic Violence Act, then the law has already established the occurrence of abuse, and some kind of protection order or restriction on access is already likely to be in place. I do not want to devalue the severity of domestic violence or the need to ensure the ongoing safety of a family, but that is somewhat separate from the issue of ensuring that the father contributes to the financial cost of raising the children. In those situations, there is usually little question of who the father is, but there are also situations where the father, through his own violent and abusive behaviour, has denied the children his presence in the home and the associated financial contribution.

Those fathers need to be held accountable not only for their criminal behaviour, but also for their obligations to their children. The Government may know who those men are, but at present, without the mothers’ consent, it cannot file for child support. So in addition to scrutinising whether the threshold for an exemption should be lowered in this way, I would like the committee to give serious consideration to the proposal that the State should be able to file for child support if the mother is unwilling to do so.

Furthermore, once paternity or child support liability is established, I see no reason why the State could not set backdated child support payments from the liable parent, going back to the child’s birth. I would also like the committee to consider whether another $6—not per child whose father is not named, but per beneficiary—is sufficient to achieve the kind of outcome the Government wants. I agree that that amount needs to be reviewed. I realise that the penalty is intended as a symbolic gesture in order to achieve a salutary effect, but in this case I really think it is worth considering increasing the amount to make it more meaningful.

Ultimately we need to look more broadly at the whole system of child support, such as raising the minimum amount of child support payments to better reflect the cost of raising a child, rather than reviewing the financial situation of the liable parent. Another possibility is to pass liable parent contributions directly to the custodial parents on benefits, as is the case with custodial parents in paid employment. The domestic purposes benefit could then be reduced by the amount of child support, yet liable parents—and for that matter, custodial parents—would be able to see their money going directly into their children’s upbringing, and I believe that compliance would increase as a result. I realise that those moves are beyond the scope of the bill, but they signal our intention to seek wide-ranging changes to the system of child support in the future.

I would also like to pick up on some comments I think Sue Bradford unwittingly made that acknowledge, I believe, the weakness of the Care of Children Bill. That bill posits more equitable parenting arrangements, yet I believe that it is pure window dressing, because it is quite clear that unless the Government is prepared to review and reassess the benefit system, there is no way it can facilitate shared parenting orders of any kind. The benefit system is just not flexible enough to allow that kind of arrangement.

Therefore, the Care of Children Bill becomes a bit of a nonsense. We change some unpleasant terminology, but the outcomes are exactly the same because we will not address the benefit system to reflect the kinds of orders that I believe the ACT party would support because of Ms Newman’s long campaign for shared parenting arrangements, and I am sure that that would get the support of other parties, as well.

As I said before, we are very keen to support this bill in its first reading, but we are very keen that the select committee looks very closely at some of the arrangements we think could be reviewed as part of that process, and that it has the courage to make the kinds of changes we are recommending.

JILL PETTIS (Labour—Whanganui) : I shall just respond initially to some of the comments made by other members during this debate. Of course, ideally in an ideal and perfect world, all mothers would name the fathers of their children, so that those people could take shared parental responsibility. But we do not live in a perfect world. To the best of my knowledge, there has been only one immaculate conception, although I suspect from time to time that a number of people, particularly when there are moral crusades issuing forth through the media—I am not blaming the media; the media are just a conduit—I suggest that some people would like to imply that the same situation applied to them, but that is not the case.

I would also like members to consider that sometimes mothers do not name the fathers of their children, because of the very real threat of violence. I know—and other speakers this afternoon have acknowledged it too—that there is room for exemption. But I want to also point out to members—and I am sure they know this themselves through their own constituency work—that a fair degree of bribery, coercion, threat, and other methods of emotional blackmail are imposed upon the mother by the father of the child, by words such as: “If you go me for child support, I’ll go you for custody.” Now I am sure that the phrases used might be a little bit more colourful, but I know that members know exactly what I am saying.

This is not attacking fathers; 99.9 percent of fathers in this country do an exemplary job. But I just caution members that there are a lot of things that we do not know about, because—luckily for us—the majority of members in this House enjoy very good relationships.

We in this House do, in the main, live in a nuclear family, or, if not in a nuclear family, in a safe family environment. One does not have to be a nuclear family to be a safe family. But one would think that this was the only issue in the bill, when there are a number of extremely positive aspects to it. One that I am particularly pleased about, because it will have tangible benefits for older New Zealanders living in retirement villages, is that up to 300 retirement village residents will be better off by between $37 and $54 per week. That is money in the hand—money that can be spent on essential items. That is very real and extremely helpful relief for people in that category.

Also, there are advantages for those in seasonal work programmes—those 4,500 benefit applicants per year who are affected by having a longer stand-down than is necessary. That is a large number of people who will benefit from the flexibility that applies to seasonal workers, as the stand-down period will be much shorter for them. That will not only benefit those seasonal workers, but provide considerable support and assistance for growers, particularly in provincial New Zealand.

So there are many positive aspects to this bill. I am sure it will be debated and discussed extremely comprehensively in the select committee. But rather than concentrating just on moral issues all the time—that does get tiresome—let us also consider the very positive aspects of the bill that provide a direct response in a meaningful way to retirement village residents and seasonal workers. This is a good bill.

JUDITH COLLINS (National—Clevedon) : There have been some very interesting speeches in this debate this afternoon—none of them from the Labour Party, unfortunately. I particularly enjoyed the contributions from New Zealand First, ACT, United Future, and the Greens, as well as Katherine Rich’s contribution for National. I mention the Greens because although I do not agree with everything they say—in fact, not a lot—at least Ms Bradford’s comments have some logic to them. She has done her homework, and she does not just twitter on about nothing, as the last speaker did. Certainly, most of us are finding it quite bizarre that, having heard a speech from Jill Pettis—it was the longest speech I have ever heard from her—we have absolutely no idea what she was talking about. I do not think any of us do. It was something about morals.

There is an old saying—and it is becoming increasingly true—that it is a wise child who knows its own father. That is increasingly true in this country. It is a shame. It is not about money. Certainly, Ms Rich made it obvious that National will support this bill going to the select committee, not because we think it is a fantastic bill—we do not—but because we think there are issues here that need to be raised and looked at thoroughly. Hopefully, we will get back something that is a bit better. The reason it is not just about money is that we are talking about $6 per week. I know that $6 per week is a lot of money if one does not have it, I know that it is a lot of money if one does not have enough money to buy shoes for one’s children, and I know that it is a lot of money when one has to decide which of one’s children will get what. Having said that, I say that money is the easiest thing we can give children. It is also the thing that gives them the least in terms of what they need. It is the easiest thing for parents to give children. There are lots of parents in this country who give very little to their children other than money. One is not a good parent just because one gives ones children some money, and one is not a bad parent just because one does not have an awful lot of money to give. Children need an awful lot more than money. They need a tremendous amount of commitment. They need love, understanding, and education. They need a warm bed and someone to care. Giving $6 per week to a child’s mother does not amount to caring or not caring.

We have been told this afternoon that close on 20,000 mothers in this country cannot or will not name the father of their children. I do not believe for a moment—and I do not believe that anyone in the House would believe—that 20,000 women in this country did not bother to ask: “Hey mate, what’s your name?” before they decided to have a child with that particular man. I do not believe for a moment that 20,000 mothers did not have enough nous to say: “Oi mate, what’s your name?”. I also do not believe for a moment that 35,000 children in this country do not have a clue who their father might be. That is a staggering number of children when we look at the fact that we are talking about 20,000 mothers. There must be an awful lot of twins born in this country, or else the mothers again forgot to ask the man’s name, the next time they decided to have a child with a particular sperm donor father.

I am pleased there are some exemptions in the bill to the rules about that, but I also say that those exemptions are not necessarily the right exemptions, nor given for the right reasons. I do not say that because I do not care about mothers who live in abusive relationships—certainly not. I say that because it is a child’s right to know his or her parents. It is absolutely fundamental to children that they know the names of their parents—more than that, that they know their father and mother. Whether children always live with their mother and father is an absolutely different issue, but every child has that right. Recently we looked at a Supplementary Order Paper introduced by my colleague Dr Paul Hutchison. It related to children born as a result of sperm donation being able to find out the name of their father and something about him. This issue is the same: children must know. It is the same with adoptions; we find that adopted children who do not know their birth father or birth mother often have an absolute need, whether they are 10, 20, 40, or 50 years old, to know where they come from.

I was a lawyer before I came to Parliament. I dealt with fathers—I will call them middle-class fathers because they earned significant amounts of money—who said to me that they were going to be the father of a child. One particular father said he had arranged with the mother of the child that he would not be named on the birth certificate. I can remember looking at that man, who must have been 40 and who was having his first child—that he knew of—and asking why he would not be named. He said that he and the mother had arranged it so that he would give her some cash and she could get the domestic purposes benefit. This is not just an issue for people on low incomes; this issue goes right through our society. A whole stack of men are being told they do not need to care. They do not need to care that, in a couple of generations, when some child is looking up his or her ancestry, the child will find a great big vacant space where that father’s name should be. They do not care about the message that that gives to their own children—when they are adults and become parents themselves—about the value of parenthood.

So I support this legislation going to the select committee. I support it because it does little other than to send a signal—that is the only thing this particular provision does. It sends a signal that the Minister for Social Development and Employment has heard from the National Party, ACT, and some of the other parties about the need for children to have parents. He has had so many letters from people on this subject that he is having to do something. However, I know that what he is doing is nothing more than sending a signal, because I know that on 1 April next year—April Fool’s Day—these same people will get a pay rise, despite the $6 being taken off them now. They will get an extra $19.

But at least the bill does send a signal, and that signal needs to be sent. Parents must be responsible. They must have the rights and responsibilities of parenthood. And children need both their parents. Whether or not their parents like each other, children at least need to know who they are. That a mother had a relationship with a man who is violent does not mean that that man should not be named as the father of that child. I do not say that because it is his right; I say it because it is the child’s right to know. Even if children have a murderer for a father, they have the right to know who their father is; that is the children’s right. The children do not need to acknowledge him particularly, but it is certainly their right to know who he is, and it is also the right of their grandchildren and their great-grandchildren after them. This is something we need to start taking seriously in this country: the rights of children, the rights of parents, but, mostly, the rights of families.

DARREN HUGHES (Labour—Otaki) : There might have been a lot of discussion about the splits and divisions in the ACT party over the last fortnight, but I would have thought that the last party that would want to speak in the House on any welfare-related issue would be the New Zealand National Party. The National Party caucus cannot agree on anything regarding welfare policy, so divided is it between the right-wing extremists, like Mr Brash, and the more moderate, like the one-time favourite Katherine Rich. So it is extraordinary that we have already heard two speeches from the National Party, and by the look of Dr Hutchison, who was girding his loins a few moments ago, we will hear from him as well. I hope we get some consistent positions on the National Party welfare approach, because this bill, which is having its first reading, is another piece of legislation in which the Labour-Progressive Government sticks very firmly to its principles of fairness and security. That is very evident throughout this bill.

I will remind this House of the three significant amendments that this bill will make to the social security system. It will extend eligibility for the accommodation supplement to residents of retirement villages who have “licence to occupy” tenure. I am very pleased with that measure, representing as I do the Otaki electorate, which has the highest number of senior citizens in the country. The second aspect of the bill will ensure that benefit applicants who work for part of the year are not financially disadvantaged. A classic example of that is seasonal workers. With the situation our economy is in at the moment, with this country having the second-lowest unemployment rate in the OECD, we need to pay special attention to industries that use seasonal workers, because it can often be hard to recruit such workers. Once again, the Government is responding to a need, through this legislation. Finally, the regime is changed so that we can encourage sole parents to establish the paternity of their children, or to apply for child support.

I return to those themes of fairness and security that we believe our coalition Government stands for, and contrast them with the divided rhetoric coming from members opposite, who cannot even sign up to agree to much. They would have difficulty filling out an unemployment form, but very shortly more of them will get that opportunity.

Dr PAUL HUTCHISON (National—Port Waikato) : I take the opportunity to speak on the somewhat dubious and deceptive Social Security (Social Assistance) Amendment Bill. Here we have the extraordinary situation where the Minister for Social Development and Employment is taking away $6 from each mother who does not name the father of her child, but next year—on, of all things, 1 April—the Minister will give something like $25 for the first child and $15 for each successive child. What an extraordinary thing! If one could identify a party that was totally mixed up in terms of providing consistent incentives, it would have to be the Labour Party. There is nothing progressive about it; it is totally regressive.

There is no doubt that the situation that has arisen in New Zealand is a scandal. As Muriel Newman so clearly pointed out, under this Minister’s watch the number of fathers who have not been named has gone from 14,000 to 20,000—an increase of 40 percent. Three women per day are choosing not to name the father of their child. In fact, the genesis of this situation arose over some period of time. Back in 1993, in the order of 7,900 women chose not to name the father of their child—about 5.6 percent. But under this so-called Labour-Progressive—I would say “Labour-Regressive”—Government, that figure has now risen to 19,467, or 16 percent of the total. That has to be an extraordinary scandal.

The Minister says that the Government is sending a salutary signal; that it is putting out an incentive for people to front up and name the father. He is penalising a parent $6 for one child, which is a total reduction of the benefit of $22. If a family has four children, the figure is $88, and the $6 increase on 1 July makes it $94. That is a substantial amount to take away from a family of four. But then we hear this absolutely laughable irony that while the Minister is indeed taking away, he is tripling how much he is giving. On 1 April there will be $25 more for the first child, and $15 more for each child after that. That has to be an absolute farce.

As my colleague Judith Collins quite rightly pointed out, tomorrow there will be another irony, in that we are debating the Human Assisted Reproductive Technology Bill, and one of the basic tenets behind that bill is the huge importance and benefit to children of their knowing their biological background. Certainly, the right of children to know their father is fundamental. Yet this waffly “Labour-Regressive” Government is giving such an extraordinarily mixed set of cues as to how people should think.

It is also extraordinary that Labour has supplied very little evidence as to why almost 20,000 women do not name the fathers of their children. It seems absolutely inappropriate that Labour should bring in this sort of legislation without knowing the facts. What evidence is available? Labour has provided none in the background notes or background papers that I have seen. Some people have asked whether there is collusion between the parents, who make their own deal. I think Jill Pettis came out with the idea that one parent may say: “If you do me for child support, I’ll do you for custody.” That sort of attitude, suggested by the senior Labour Party whip, is absolutely inappropriate. The incentives should be utterly clear, and based on evidence as to how to solve this massive problem, which is occurring in New Zealand every day.

I note that a number of exemptions are posted, and there are new ones. I was quite interested to hear Muriel Newman’s point that the exemptions could be incentives. I think that is a very valid point. So often we hear of fathers quite incorrectly being accused of violence or abuse, which only makes the situation worse. Here we have an incentive actually to name someone for the very fact of his being abusive. It seems as though the Labour Party members not only are confused, in terms of this amendment, but also are providing absolutely inappropriate incentives.

There are some extreme and compelling situations, and I note three that are listed: refugees, asylum seekers, and carers of children not their own where the natural mother has not established paternity.

That brings up another very valid point that Muriel Newman brought up. In this day and age the science of paternity testing is reasonably simple. I well remember about 20 years ago going to the Pukekohe District Court after being asked to be an expert witness to sort out which of the men a woman had slept with over a course of about 6 weeks was most likely to be the father. I checked the menstrual dates, and worked out who was most likely to be the father. The most unlikely one was the only one with any ability to pay for the support of the child, and that was the one who was nobbled by the judge. It was absolutely outrageous. That judge holds a hugely important position in New Zealand society today.

Darren Hughes: That was 20 years ago?

Dr PAUL HUTCHISON: That was 20 years ago. Today we have paternity testing; a very easy, simple swab can absolutely, unequivocally identify the father. Yet the “Labour-Regressive” Government has failed even to suggest in this important amendment that such techniques should be introduced. The Government is 20 to 30 years behind, and is using very crude, mixed messages to address a very complicated and serious problem.

There are some outstanding anomalies in terms of the failure over the last few years to collect the money. I point out that a separated father earning $40,000, whose ex-wife cares for the children, pays only $129 a week, or $6,000 a year—not $250 a week, or $13,000, which is a major proportion of the domestic purposes benefit. In other words, it is only when the father starts to earn more than $65,000 a year that Child Support recovers the benefit. At that wage, the amount of child support is $246 weekly or $12,000 a year. The extraordinary thing is that 70 percent of those paying child support earn so little money that they pay only $13 a week. It is quite absurd that 70 percent of liable parents are paying that extraordinarily minimal amount. It is worthwhile our sending this bill to the select committee for it, hopefully, to sort it out.

Hon PAUL SWAIN (Minister of Labour) : I move, That the Employment Relations Law Reform Bill be now read a second time. I would like to thank the members of the Transport and Industrial Relations Committee for their comprehensive work on the bill. The select committee received 354 substantive submissions and heard 202 oral submissions. This bill has been closely examined by employers, employees, unions, industry associations, and other interested parties. The select committee has carefully considered their submissions, and, as a result, recommended a number of practical improvements, and I draw members’ attention to the following key amendments recommended by that committee.

The commencement date is now 1 December 2004 as a result of the committee’s work. In good-faith areas the bill clarifies that good faith is a broader concept than common law obligations of mutual trust and confidence, and confirms that good faith applies to bargaining for individual agreements. The select committee has also recommended a number of amendments to better define the duty of good faith. These amendments include removing the specific requirement for employers and employees to be supportive of each other, in recognition of the fact that the parties are entitled to pursue their own interests and bargaining in other situations.

The provisions relating to employers’ good-faith obligations to provide information to employees, and give them an opportunity to comment on it, have also been amended. The intent of these provisions is that employers should provide information to their employees on decisions that will, or are likely to, adversely affect the continuation of their employment. The select committee has recommended that employers will not be required to provide information on routine operational decisions, and will not have to provide information where that would unreasonably prejudice their commercial position—a clearly sensible recommendation.

In relation to whether employers and employees have acted in good faith over individual bargaining, the fact that employers and employees may have differing resources and capabilities may now be taken into account. A similar provision already exists for collective bargaining. This is a sensible amendment because it recognises that employers may have differing capacities and resources to engage in good-faith bargaining and that approximately 80 percent of New Zealand employees are employed on individual agreements.

In regard to free-riding, or passing on, the bill aims to prevent employers from undermining collective bargaining by automatically passing on collectively bargained terms and conditions to employees not covered by the collective agreement. The risk of undermining collective bargaining is higher during the bargaining process. The select committee has therefore recommended amending the bill so that it would be a breach of good faith if, during bargaining, an employer passed on the term or conditions reached in that bargaining where this is done with the intent, or has the effect, of undermining the collective bargaining process.

After collective bargaining has concluded, the test for a breach of good faith would be higher. An employer would be in breach of good faith at this point, only if he or she passed on the collective terms and conditions with both the intent, and the effect, of undermining the collective agreement.

The select committee has also recommended clarifying that employers are not prevented from providing all employees with the same terms and conditions of employment—[Interruption]—an issue that the National Party has difficulty in comprehending, so I will read it again. The select committee has also recommended clarifying that employers are not prevented from providing all employees with the same terms and conditions of employment. These amendments make it explicit that the outcome of different sets of bargaining may be the same, or similar—provided, of course, that employers and employees have bargained in good faith.

On bargaining-fee arrangements: the select committee has recommended that I move an amendment to the bill to allow for bargaining-fee arrangements to be negotiated where it is agreed that the terms and conditions of a collective agreement are to be passed on to non-union members on individual agreements. Non-union employees who do not wish to pay the bargaining fee will, of course, be able to opt out of the arrangement. I agree with this recommendation, and I have released a Supplementary Order Paper, which has now been tabled, proposing that where a union and an employer agree on a bargaining-fee arrangement, affected employees would take part in a ballot to decide whether the bargaining-fee arrangement should operate in their workplace. In practice, that means that where a majority of those balloted support such an arrangement, all non-union employees falling within the coverage of the collective agreement would be given the same terms and conditions as those covered by the collective agreement, in return for paying a bargaining fee. Employees who do not want to pay a bargaining fee will be able to opt out of the arrangement. Strikes and lockouts over bargaining-fee arrangements will be prohibited.

The issues surrounding concluding a collective agreement were also discussed by the select committee, and it has recommended that the bill give more guidance on what could be considered to be a genuine reason not to conclude a collective agreement. A genuine reason must be based on reasonable grounds, and this does not include opposition or objection in principle to collective bargaining or collective agreements.

What about multi-employer collective agreements, or “MECAs”, I hear members ask. Amendments have been proposed to the provisions relating to multi-employer collective agreements. The select committee has recommended removing the specific requirement to attend the first meeting of bargaining for such agreements. This was obviously an issue that was raised at the select committee. A number of employers had concerns about it and came to see me about it, and the select committee, quite wisely, has recommended that the first meeting for bargaining for a—

Dr Wayne Mapp: You actually made it tough by another device.

Hon PAUL SWAIN: That is not a bad idea, and the member on the select committee, hopefully, will agree with it. The existing good-faith obligations will continue to apply to bargaining for multi-employer collective agreements as well as to bargaining for single-employer collective agreements.

What about restructuring situations and continuity of employment? The select committee has recommended clarifying the schedule that lists a group of employees who will receive employment protection in sale-of-business or restructuring-of-business situations. The term “food services” has a broader reach than was intended and the select committee has recommended rightly that it should be replaced with the term “food catering services”. This change ensures that the protections—

Simon Power: This will not work.

Hon PAUL SWAIN: Of course it will work. This change ensures that the protections in the bill are targeted at the most at-risk employees. Amendments to these provisions also tighten the process for changing the schedule. A report commissioned by the Minister of Labour about whether the grounds for changing the schedule have been met would form the basis for consultation with employers, employees, and other parties as appropriate.

I turn now to the question of equal pay. After careful consideration of the views on updating the equal pay legislation, the select committee has recommended that the equal pay provisions of the bill be removed. Amendments to update equal pay legislation will be considered in the context of the Government’s pay and employment equity initiatives.

What about personal grievances? The select committee has recommended amending the test of justification in personal grievance cases to reinforce that it is based on what a fair and reasonable employer would have done. The requirement of an employer to consider and balance the legitimate interests of the employee and the employer has also been removed. I am aware that many employers, particularly small-business owners, have concerns about the procedures for dismissals and personal grievances and their capability to deal with these issues. I have spoken to a number of these employers, including those that are represented on the Small Business Advisory Group, and they argue that the issue of personal grievance is the single biggest issue that they face. In fact, 80 percent of small-business people employed in New Zealand are not covered by any collective agreement or union, and this is the issue that they are most concerned about. As a result, I have indicated to them that once the bill is passed I will be looking at ways to give better guidance around these issues, and I have already indicated a number of—

Hon Dr Nick Smith: That’s what you said with the holidays stuff.

Hon PAUL SWAIN: And we did that. Does the member remember that? It is coming up a bit later in the week. If the member did some reading it would be helpful.

So all in all, the select committee has done thoroughly good work on this legislation. [Interruption] I heard that there were quite good discussions on the select committee, actually. Of course, one of the issues about employment relations legislation is balance. Everybody recognises that perhaps the balance went too far in the 1980s and in the time leading up the 1980s. Then in the 1990s, of course, the Employment Contracts Act stripped away all the rights, and we replaced it with the Employment Relations Act. National, of course, said it would scrap the Employment Relations Act. Only last year it said that, and now the Leader of the Opposition, Don Brash, says that, basically, business thinks it is all right. So once again there is a problem, and I would be very interested to know what the National Party position is on the Employment Relations Act generally. I would like to hear about that, but as far as this bill is concerned it is about getting the balance between the rights of the employer and the rights of the employee.

The select committee, under the good guidance and leadership of my friend and colleague Mark Gosche, has provided excellent leadership on this legislation. He has brought back a piece of legislation, a reform bill, that has been much improved since it went before the committee. It is great legislation, and I recommend it most strongly to the House.

Dr DON BRASH (Leader of the Opposition) : I rise to oppose this bill, and I oppose it very strongly. Sometimes in this House I rise to speak on a bill that is a bit like the curate’s egg—good in some parts and bad in others—but this bill is unqualifiedly bad in every respect. What will this bill actually achieve? Will it achieve faster growth for New Zealand? Not a dog’s chance! Will it achieve higher productivity? Not a dog’s chance! Will it narrow the gap in living standards between New Zealand and Australia? Of course not! Will it lower unemployment? No. Every economist in the world accepts that if we want to lower unemployment on a consistent basis over time and over the cycle, we need to have a less inflexible labour market, not a more inflexible labour market.

This bill will achieve one thing, and one thing only. It will help the Labour Party’s friends and funders in the trade union movement. Almost 80 percent of all employees in this country choose not to belong to a union. Almost 90 percent of all employees in the private sector choose not to belong to a union. So what does this Government do? Well, this Government, as some of my colleagues have been pointing out, is basically made up of people who were previously members and office holders in unions: Rick Barker, David Benson-Pope, David Cunliffe, Lianne Dalziel, Helen Duncan, Paul Swain, and so on we go. It is a long list of names: Phil Goff, Mark Gosche, George Hawkins, Darren Hughes, Winnie Laban, and on and on. All of them are former union representatives, so surely it is not a surprise to us that they introduced a bill that will have the primary purpose of boosting union membership.

The Government designed a bill to assist unions increase their membership by making it a breach of good faith for an employer to do anything with the intention of undermining the union or that might have the effect of undermining the union. So it is clear that it would be a breach of good faith for an employer to pay a non-union employee the same as he or she has agreed to pay a union member. I strongly suggest that it would be a breach of good faith under this law to pay a non-union employee more than union members, even if the employer judged that a non-union employee was likely to be more productive, more flexible, and therefore more beneficial to the employer, than a union member would be.

The bill requires that all individual contracts must be negotiated individually. So the bill places huge pressure on employers, especially large employers, to abandon individual contracts. In case non-union employees still do not get it, the bill will provide, as the Minister himself has just indicated, that a majority of all employees, union and non-union, can impose a bargaining fee on all employees—payable, of course, to the union. This bill is all part of the Government’s plan to push people into unions, disregarding the effect on growth, disregarding the effect on productivity, and disregarding the effect on employment. Let us look for a moment at what the Government has done elsewhere in this area. It has been paying lump-sum payments to members of the New Zealand Public Service Association—$5 million last year. This year the Government has made lump-sum payments to staff in the Ministry of Social Development, the Inland Revenue Department, and several other departments, provided they were members of the union. The Government said that it is more convenient for the employer to deal in a general way with members of the union. I suspect that some employers would like to say that it is more productive to have employees who are not members of the union, but I also suspect that if employers were to say that, they would very quickly find themselves in breach of the legislation.

As my colleagues have pointed out in recent press statements, members of both the Post Primary Teachers Association and the New Zealand Educational Institute have recently been again awarded lump-sum payments by this union. We are on the way back to de facto compulsory unionism. Let me say it again: we are on our way back to de facto compulsory unionism.

Darren Hughes: Say it one more time!

Dr DON BRASH: I thank the member. We are on the way back to de facto compulsory unionism. I am delighted to hear that Mr Hughes accepts that. As the Minister pointed out, the bill makes it relatively easy to force an employer into a multi-employer collective agreement. That will be disastrous for small employers, and it will be disastrous for employers in those parts of the country where the cost of living is a bit lower and therefore wages are a bit lower. We are on our way back to national awards, and, again, that will be a disaster for smaller employers, and employers in parts of the country outside metropolitan New Zealand.

The bill also threatens to destroy much of the goodwill built up in small businesses when those businesses are sold. The Minister did not spend much time talking about that. The bill contains a clause that allows employees to simply choose not to transfer to the new employer, with potentially disastrous effect on the goodwill involved in that business. That faces the vendor with the possibility of large redundancy payments when the employees all decide to opt out, and the buyer could face the prospect of taking over a business with no staff at all. This bill could be a disaster for the people who have spent their lives building up a small business with 5, 10, 15, or 20 employees. So it is hugely damaging legislation, and one that the National Party is committed to repealing.

Government Member: You said that about the Employment Relations Act.

Dr DON BRASH: Since the member has raised the question of the Employment Relations Act, let me say that there are some features about it that we have no problem with.

Darren Hughes: What’s National got against it?

Dr DON BRASH: I say to Mr Hughes there are three areas in particular that we have a great deal of problem with. First of all, the Employment Relations Act makes it almost impossible to dismiss even recently hired staff. It gives unions a monopoly of bargaining, and it makes it very difficult, indeed, to hire staff on fixed-term contracts. Those factors are all disastrous and damaging to our productivity growth.

The majority report on the bill explains why references to pay equity have been dropped. That is because it points out that equal pay for work of equal value is under “significant examination” in preparation for another bill. This is a warning that there is yet more damaging legislation on the way.

The bill also provides that an employer would be in breach of good faith if a collective agreement in the health sector did not observe the principles of the Treaty of Waitangi. We have surely had enough of references to the principles of the treaty without indication of what that might mean, and yet again here we have a new bill writing the principles of the treaty back into more legislation. This legislation is seriously bad, and the National Party not only will repeal it when in Government, but will oppose it now with every means at its disposal.

Hon MARK GOSCHE (Labour—Maungakiekie) : That speech was made by a dead Opposition leader, not by one who is full of vigour and passion but by one who hates unions with vigour, like his predecessor did. I was most disappointed. The worst insult he could sling at people on the Government side of the House is that we used to be in unions. Some of us are still in unions, and we are proud of it. There is nothing wrong with that. It is as though it is some sort of crime to belong to unions. That was not the case when I last looked at that. One would have to ask oneself whether that was the real National Party position we heard from Dr Brash. I hope we will have speeches from several National members. The latest addition to the spokesperson’s role is Dr Wayne Mapp, who is still in nappies as far as industrial relations are concerned. He did not have anything to do with this bill, but that is not his fault because he only recently got the hospital pass when Roger Sowry decided to depart from the House. At least Roger Sowry heard the submissions on this bill, and heard from employer after employer that the Employment Relations Act was working well.

Let us go back a little while—not too long ago in history—and look at what the National Party said. We find that Max Bradford—the man who would take away people’s holidays, and who is now on a permanent one—said that National would repeal and replace the Act. He was talking about the Employment Relations Act.

Hon Paul Swain: When was that?

Hon MARK GOSCHE: That was in August 2000. National’s then leader, Jenny Shipley—National changes leaders and spokespersons so quickly that one needs a list as long as this to keep up with what the National Party’s policies and statements are—swore that National would repeal the legislation as soon as it reclaimed the Treasury benches. That ain’t going to happen in a hurry. The next leader, Bill English, said he would repeal the legislation, because he thought it had too many problems. In October 2003 Don Brash said that most definitely National would scrap the Employment Relations Act. It was reported: “Brash views a less regulated labour market as the key.” John Key said that under National people should expect quite significant changes to be made to the Employment Relations Act, and that there had been nothing wrong with the Employment Contracts Act. He should ask the employers and the workers what they think about that.

We now have Dr Brash saying that he thinks the business community is broadly happy with the Employment Relations Act. So the Act is not the evil that it was, but this bill is the evil! National said the Act would drive down productivity, drive up unemployment, make workers and bosses worse off, and make us worse off than the rest of the world.

Hon Paul Swain: What did they say then?

Hon MARK GOSCHE: National said that all of that would be a result of the Employment Relations Act, and now Dr Brash says that it is actually working quite well. Every employer who came along to the Transport and Industrial Relations Committee—and Roger Sowry can vouch for this—said that he or she thought the Act was going well. Mr Prebble asked employer after employer what they thought of the Act, and they said they thought it was going pretty well and that we did not need to fix it. Some of us have memories that go back for more than 3 minutes, and we can remember employer after employer making submissions on the original Employment Relations Bill, and saying that it would bring the world to an end, unemployment would shoot up, strikes would happen more often, and productivity would come down. None of that has happened, and at least the employers have the honesty to say that that is the case. They are pragmatic, honest people in the main, and they say that the Act is working pretty well.

Some employers had some difficulties with this bill. The select committee listened to them, and we have come back with a changed and an improved bill. We listened to their concerns about multi-employer collective bargaining, and the offending clause is gone. We listened to submission after submission from employers and employees on equal pay. That has been taken out, because the select committee did its job and listened to submitters. What does the National Party do, in terms of listening? It is impossible to expect people who are dead to listen, and that is why the leader of the National Opposition, whatever his name is, cannot figure out what his position on the bill is, or what it will be next week or the week after—and certainly not next year. We will be listening with interest to the outgoing Roger Sowry, who got on top of this bill and understood it. He does not agree with every aspect of it, but he knows that it contains some good things. He has a smile on his face now, because he is getting out of the National caucus. He is going to get a real job in the real world, instead of being part of Six Feet Under, or a New Zealand version of that programme.

Of course, Dr Wayne Mapp, who has a law degree, knows nothing about the law in respect of employment relations. He did not even know that the previous National Government he was a member of gave workers days in lieu for working on public holidays, so he will be able to contribute greatly to this debate on industrial relations! Dr Mapp has not even caught up with what National did when it was last in power, so we can expect him to have a different view from that of Dr Brash and Mr Sowry. Then there is the whip who managed to get those dull-faced, sleepy people on the Opposition side to come down here to the House to dutifully listen to their leader make a terribly boring speech. Most of them were desperate to keep their eyes open during 10 minutes of what passed for a speech on employment relations law. Simon Power’s great desire was to be the spokesperson on industrial relations. He is terribly disappointed that he got the whip’s job, and that Wayne Mapp got the job he had wanted. Wayne Mapp is disappointed, because he probably wanted to be given something more important than industrial relations.

The National members know they are on a loser. The days are gone of National’s tired old mantra of attacking unionists as if they were evil and devilish. Those days are gone, just like the National Party’s days are gone. Nobody listens to that sort of nonsense any more. The National Party has no policy in the employment relations area. One minute it says that the Employment Relations Act is evil, terrible, Third World legislation, and then its leader says that now he has had to listen to employers who tell him they are broadly happy with it. National does not have a policy at all, other than to come along here to the Chamber to whinge and put us to sleep with boring speeches from its so-called leader. It is just sorrowful what has happened to the National Party. Jenny Shipley was passionate about it; she hated unions with a passion. When Jim Bolger got his rancour up he would have a good go at the unions, even though as a former Minister of Labour he knew that pragmatism was much more important than ideology. Of course, Bill English has gone on to greener pastures now, attacking kindergartens and whatever else he is up to. For poor old National, it is like the last one out the door gets the industrial relations job. That job used to be a strong point of National, because it used to think that the class war still existed, that workers were evil, and that unions were even worse.

However, most people have come into the modern age and realise that there has to be legislation that gives some equality to people on both sides of the bargaining table. That is what this bill seeks to do. It defines good faith so that people can understand it, and it provides for proper bargaining, so that people cannot just turn up and say that they do not want something. That is not good-faith bargaining, but it is what the law, as it was applied, allowed some employers to do. We have defined good faith. We have given clear indications of what an employer can do if he or she wants to dismiss an employee, and what the test should be. It is odd that people complain about personal grievance procedures, but who opened that up to the lawyers and the ratbags? It was the previous National Government, under the Employment Contracts Act. That was one of the worst things that ever happened. We look forward to Wayne Mapp moving an amendment to go back to the days before the Employment Contracts Act, and stop all the ratbag advocates who take personal grievances for the fun of it, so that they can screw money out of decent employers. We look forward to the National Party putting up a Supplementary Order Paper or an amendment on that one. We will be waiting a very long time for that to occur. National whinges, but takes no action, and it has no policy or ideas.

We have done something in this legislation to make the law clearer. We are looking after the most vulnerable workers in New Zealand—those who have been treated like cattle and have been contracted out, without any protection of their employment. This bill contains very important legislation, and I am very proud of it. I have seen far too many workers be screwed by the system of contracting out. They now have some protection, and that is the way it should be. This bill is very good. I thank the other members of the select committee, and I look forward to the passage of this bill.

PETER BROWN (Deputy Leader—NZ First) : I start by explaining quite categorically that New Zealand First is not anti-union. Nor are we worried about the existence of unions; they do not scare us, as they appear to do to some of my colleagues on this side of the House. In fact, we will go a little bit further and say that in many areas of industrial relations the climate is better for having unions. But that is not to say, and I make this quite clear, that we will support this bill. We will not, and I will tell the honourable members over there precisely why.

Hon Mark Gosche: What about the workers?

PETER BROWN: Exactly, what about the workers! The member should read part of the opening sentence of the third paragraph of the original bill that went to the select committee, which states: “To achieve this, the Act acknowledges the inherent inequality of power in employment relationships, and seeks to balance the interests of employers and employees through the promotion of unions and collective bargaining,”. That scares a number of employers in this country witless. It really scares them. I tell honourable Government members that with power comes responsibility, or, to put it more correctly, responsibility brings power.

The employer has far more responsibilities than the union, or the union official, or the employee. First, the employer is responsible for the location of the very business, where it is situated, the site it is on, and how it is structured. The employer is responsible for the organisation, how it functions, and what it is trying to do, etc. The employer is responsible for the management and the administration team that is in place to make a successful business. The employer is responsible for financing the business and takes the financial risk. So far the employee has had no involvement in any of those categories.

The employer is responsible for the equipment, maintenance of the equipment, and all the costs that go with maintaining proper equipment. The employer is responsible for health and safety. I know that employees have a role in that, but the buck stops finally with the employer. The employer is responsible for the development and marketing of the business and for industrial harmony. The employee does not have a say in any of those, and if he or she has a say, it is a relatively minor say. The employer is responsible for staff morale. The employer and the company suffer if morale is not high, or not adequate.

I find it, and New Zealand First finds it, disturbing that this legislation sets out to promote the inherent inequality of power in employment relationships and seeks to balance the interests of employers and employees. That we find alarming, as do many employers in this country, particularly small to middle-sized employers.

We come from the position that the Employment Relations Act is working pretty well. Many employers told us: “If it ain’t broke, don’t fix it.” If we heard that once, we heard it more than a dozen times at the select committee. New Zealand First voted against the Employment Relations Bill when it went through the House. We were very concerned, but at the select committee we modified the first bill and got it into a semblance of acceptability. One area in that bill, and I make note of it, is the mediation system, which is working very, very well. A very positive move was to introduce the mediation system in the Employment Relations Act, as against what occurred under the Employment Contracts Act.

So there are aspects of the Act that are working exceedingly well. Having said all of that, and having made clear that New Zealand First will not be supporting this bill, I say that there is one aspect that causes us concern and that we will want to look at in some detail. I am talking about free-riding or freeloading, which is a concern felt by unionised working people. I know many union officials, and very moderate people at that, who are absolutely brassed off when the conditions they have negotiated are passed on to somebody else—

Hon Paul Swain: Who has not paid a fee.

PETER BROWN: —who has not paid a fee. That was a real issue for the select committee to wrestle with. New Zealand First is of a mind that members should look closely at the Minister’s Supplementary Order Paper, which addresses the bargaining fee arrangement. [Interruption] My National Party colleague is talking in the background and I cannot quite hear what he is saying, but I gather he is not agreeing with me. That issue alone is worth examining, and New Zealand First will be looking at it in some detail in the Committee stage. We understand the concern about freeloading or free-riding, or whatever we want call it.. We will look at that positively. On a personal note, I have examined the Minister’s Supplementary Order Paper and I believe that at least two clauses should be added. I see the Minister is taking notes. First, I believe that employers should have some say about whether they will allow a bargaining-fee arrangement.

Hon Paul Swain: If the employer decides no, that’s it.

PETER BROWN: The bill does not make that clear, so it should be tidied up. Secondly, before a secret ballot is taken there should be some outline, guidance, or structure as to what the bargaining fee will be. We do not want a situation where, at the last minute, employers say that everybody voted for it, and then people find out it will cost an arm and a leg. I know of employers—and I see the Minister is taking a good deal of note—who probably will be prepared to pay that bargaining fee themselves, by negotiating with a union and paying a fee so that it is all clean-cut. Obviously, I cannot commit them to it but I know that some employers think along those lines. New Zealand First might well be putting forward an amendment, but if the Minister is taking note of the points raised by us, and wants to produce his own Supplementary Order Paper that takes those into account, then we will be more than pleased.

We believe that the remainder of the bill could lead to, and is an attempt to lead to, more people becoming unionised. We know that basically 20 percent of the workforce in this country is in a union and 80 percent of the workforce is not. We believe there is an underhand attempt in this bill, if I might be so bold, to get people to become more union orientated and join a union.

Dr Wayne Mapp: That’s the whole point of the legislation.

PETER BROWN: I suspect that it is.

Hon Paul Swain: They can opt out.

PETER BROWN: Yes, they can. We would like—[Interruption] Mr Mapp will get his turn in due course, I suppose.

Dr Wayne Mapp: I hope so.

PETER BROWN: Well, I do not. But never mind, he will. That is why we are worried about supporting this bill any further than looking at that bargaining-fee arrangement. We would prefer, and I want thison the record, that collective agreements were not the monopoly of unions. In Australia non-union people can combine and have a collective agreement, and given that New Zealanders are not inferior in any way, shape, or form to Australians, this bill is an ideal opportunity to open up collective agreements to non-union people and any others who want to have a collective. We believe that that is the long-term solution, and contrary to what Mr Mapp said, we believe that the bargaining fee, if adopted, will be an opening to allow for collectives to be negotiated by non-union people in the longer term.

Dr Wayne Mapp: True. But it’s not on the Supplementary Order Paper.

PETER BROWN: The member is agreeing with me now, I think. Apart from the bargaining-fee arrangement, which we will take a genuinely sincere look at—and the Minister was taking notes of my points—we will be opposing the bill.

SUE BRADFORD (Green) : The Green Party is pleased to be supporting the second reading of the Employment Relations Law Reform Bill this afternoon.

Dr Wayne Mapp: A Labour-Green coalition.

SUE BRADFORD: Great stuff! Despite the enormous amount of work that went into drafting and considering the Employment Relations Act in 2000, it is inevitable that a number of issues would eventually need tidying up, once the Act was put into practice. However, despite the usual protestations of many employer and business submitters, I do not think that either the original Employment Relations Act or this amending bill is in any way radical or extreme. I am sure the economy of New Zealand will not collapse as a result of the introduction of bargaining fees or the protection of vulnerable employees’ interests in some change-of-employer situations.

In the Transport and Industrial Relations Committee process this time round, I was particularly struck by the number of submitters from the employer community who started off by saying, as Mr Brown has already mentioned, that the Employment Relations Act is working pretty well, and “If it ain’t broke, don’t fix it.”, but then went on to warn that businesses would go under, or leave the country, as a result of the draconian measures proposed in this bill. What the submitters seemed to have forgotten is that all the same warnings of imminent disaster were made in 2000, often by the same organisations and the same people, and as a result of their crying wolf once too often, the power of their prophecies has been somewhat diminished.

All that the Employment Relations Act and this amending bill are doing is taking some small and useful steps towards redressing the imbalance of power created by the introduction of the Employment Contracts Act and the benefit cuts in 1991. There is a lot more that should be done to rectify the situation than the Government has deemed possible with this bill—for example, in the protection of low-paid workers and casual workers, and stronger safeguards against freeloading. But, of course, the Green Party supports the bill’s intent and direction, as far as it goes.

We are particularly pleased to see that, finally, some protections will be put in place for certain groups of employees whose continuity of employment and conditions are threatened when the business they work for is restructured or sold. In 2000 we tried really hard, alongside some of our union colleagues, to make sure that what was then called the “transfer of undertakings” clause was retained in the Employment Relations Act, but unfortunately at that time, Labour saw fit to beat a retreat, in the face of big-business pressure. I commend the Government for sticking to its principles a little more strongly this time around, and it is great to see that people who work in the cleaning, food catering, caretaking, orderly, and laundry services in the public sector and aviation sector, and those who work in the cleaning and food-catering services in the private sector, will at least now have an arrangement in place that will go a long way towards safeguarding their wages and conditions when their jobs are sold out from under them, or otherwise restructured.

A second area of particular interest to the Green Party has been the vexed question of how to do more to prevent non-union members from freeloading off their union colleagues in the same workplace. Since the period of mass de-unionisation following the introduction of the Employment Contracts Act, this has become an entrenched and difficult problem, with workers who pay union fees each week feeling naturally somewhat aggrieved that their colleagues in the same workplace, doing the same or similar work, are often given all the benefits of a collective agreement negotiated by the union but without ever having to pay a cent towards the costs incurred. Even research carried out by the Department of Labour itself in 2003, evaluating the short-term impacts of the Employment Relations Act, reported: “Free-riding by individuals on collective terms and conditions has become commonplace in many organisations.” When the department asked non-union members why they did not join the union, over 65 percent said it was because they could get the benefit without joining.

The bill, as reported back, makes welcome but limited progress on this issue, with the introduction of new sections to the Employment Relations Act aimed at preventing the undermining of collective bargaining and agreements, by making it a breach of good faith in some circumstances for an employer to pass on terms and conditions, and, in particular, when it is clearly the employer’s intention to undermine the collective.

The Green Party has also been pleased that the Government has seen fit to go a step beyond this by agreeing that the Employment Relations Act should also be amended to allow for bargaining-fee arrangements to be negotiated where both the employer and the union agree, and that non-union employees who do not want to pay a fee or join a union in these circumstances will then have to undertake their own individual negotiation without any kind of automatic pass-on. While the amendments around bargaining fees that the Government is putting forward at the Committee stage do not, in our view, go far enough, at least those amendments will be a further small but significant step in the right direction.

A third area of this bill in which the Green Party has taken a particular interest has been the erstwhile Part 2, which repealed the Equal Pay Act and the Government Service Equal Pay Act, and replaced them with new equal-pay provisions. We found ourselves in agreement with the many submitters who argued that given all the good work that has been done in recent years on equal pay for work of equal value, it would be a retrograde and undesirable step to make such a legislative change without including pay equity as an essential component. The Green Party felt it would be better just to ditch Part 2, and for the Government to consider the results of the work of the task force on pay and employment equity in drafting up a new and separate bill covering both equal pay and pay equity. We are pleased that in the end the Government supported this position, and agreed to delete Part 2.

It will be incumbent on all unions, women’s groups, and others who continue to fight so hard on this issue, to make sure Labour sticks with the statement in the commentary on the bill: “The majority looks forward to the development of robust equal pay and pay equity provisions being introduced in the future.” We do need to make sure that this is not put off into some never-never land but remains firmly on Labour’s agenda over the coming months.

Another welcome change to the bill achieved as a result of the select committee process has been the improvement to amendments dealing with the implementation of a code of good faith for the public health sector. We were very concerned that the bill as originally drafted would have undermined all the good work that was happening between health unions and their district health board employers on developing a code, and would have given the Minister undue influence when industrial action took place. What we now have is a real improvement with the inclusion of the now agreed-upon code in the schedule, and a matching of clauses in this area with other good-faith provisions elsewhere in the bill.

Overall, I commend the Government for being willing to listen to submitters, and for making these and other improvements to the bill as we have gone along. This is not to say that this bill is perfect—far from it—but it is a small but useful step towards further realising a fairer and more productive industrial relations environment for the benefit of both workers and employers.

Hon RICHARD PREBBLE (ACT) : I rise on behalf of the ACT party to speak to the Employment Relations Law Reform Bill—

Darren Hughes: The only one left.

Hon RICHARD PREBBLE: —dream on—and to advise the House that this bill should be rejected. It is our view that the bill will result in a significant deterioration in industrial relations and in fairness in the workplace, and that there will be a loss of productivity and, over time, a loss of jobs and growth. This bill is not, as various Government Ministers have attempted to describe it, a tinkering with the Employment Relations Act. The proposed changes are comprehensive, and they will have a significant impact.

On that point, it is true that I said that the Employment Relations Act, when it came in, would have a significant impact. What Labour members fail to mention to the House is that amendments made to it—some moved by myself and some moved by National members, as a result of submissions from employers—meant that it was significantly better legislation than the original bill that the Labour Government had introduced. [Interruption] The member should listen; this is important because a number of the very damaging amendments and clauses in the original bill have now been reintroduced in this amendment bill.

What is wrong with the bill? Let me take the House through some of those amendments. First, the bill extends the meaning of good faith, in terms of employment relations, beyond the common law obligations. The common law obligations are well known to lawyers, and they are quite understandable. Good faith basically means that one has to deal with people with mutual trust and confidence. But the bill extends that term to mean whatever the Employment Court decides what it means. Some future Employment Court judge—whom, no doubt, we will criticise for being an activist—will decide that the good-faith provision has some extraordinary meaning that perhaps even members opposite have not conceived of. That is what happens when Parliament drafts vague amendments of that sort. We in this Parliament are not saying what “good faith” means; we are actually saying that any judge—appointed by Margaret Wilson—can make any sort of interpretation of good faith. That, of course, will create total confusion in employment relations, and will lead to much more aggravation than there is under the present law.

The next problem is this. If the court decides that there has not been good faith, the Employment Relations Authority itself is entitled to determine what the terms of employment will be. So if one is an employer employing 50 people, and one has worked out one’s budget and worked out how much the employees will be paid, but an employee says that he or she was not dealt with in good faith, because when that employee put some proposals to the employer the employer said “No”, the State steps in. Members might think it is pretty reasonable to say “No”, but we just heard from a Labour member that one cannot say “No” any more; one has to keep talking for hours. Well, perhaps one wants to get on with making one’s widgets! [Interruption] Then what happens is that the State—not the employer but the State, which does not have to provide the wages each week—decides what all the terms of employment should be. There is a name for that and it is communism. That is a measure that we are introducing, and its final ramifications could be to deter—[] The member opposite has no idea what he is passing and he has no idea what it will actually mean. We could have the Employment Relations Authority setting terms and conditions of employment that would bankrupt the company. That is what this Government is prepared to do.

The next purpose of the bill is to promote collective bargaining. Members have said that they heard employer after employer praising the present law. That is actually not quite right. What happened was that employer after employer said there was no need to change the present law. I do not recall hearing a single employer, in the submissions I heard—I did not hear all of them, but I heard a large number—say that he or she wanted collective wage bargaining. In fact, what employers said was that they wanted the ability to deal with their employees directly. They did not want to be forced by unions and the State to have to sit down with their competitors and tell them what they were paying people, or to have their competitors decide what the wages and conditions in their factory should be. I thought that the position that the employers put was a pretty reasonable one.

We then have the most extraordinary abuse of State power in that the bill states that it is a breach of good faith for an employer to pass on the terms and conditions of a collective agreement to non-union members. The Government has said that it is a breach of good faith only if the employer does it in order to undermine the collective agreement.

Dr Wayne Mapp: Just the effect is all that is required.

Hon RICHARD PREBBLE: That is right. The member who interjected is a member of that committee, and learned in law. He said that it is a breach of good faith if it has the effect of undermining the collective agreement.

Well, what are these amendments designed to do? They are certainly not designed to improve productivity. They are certainly not designed to promote job growth. The real reason for these clauses is to promote trade union membership and trade union power, and they most certainly do that. Well, is there a case to do it? If we go and ask employees, whom members opposite say they represent, we find that 90 percent of private sector employees do not belong to trade unions. So 90 percent of employees—outside the Government’s own workforce, which is encouraged by, I think, illegal measures to belong to unions—are basically saying they do not want to belong to unions. They are quite happy to deal with their employers themselves, and they do not need the help of the Council of Trade Unions and the like. But here we have a bill where the Government is saying that it knows better and it is going to help trade unions.

The Government is intending to introduce—I do not know whether the Supplementary Order Paper has arrived yet—a freeloader clause whereby we will have compulsory unionism without the bother of the union having to represent members. It is—

Rodney Hide: Just pay.

Hon RICHARD PREBBLE: Yes. If the union bargains with the employer for, maybe, just five people, the 90 employees there who did not belong to the union will get a bill for the fact that the union bargained with the employer. We received no evidence at all that trade unions have actually introduced better conditions. In fact, employer after employer came along and said that when they had renegotiated their agreements, nearly all the advances and new ideas had come from them, and the unions had just sat there and said: “I want, I want.” Well, why should one have to pay a bargaining fee to a union that one does not even belong to?

I say to the House that that is an American idea. Yes, it happens with American unions, in American unionised states. What happens to that bargaining fee? Is there any requirement that it has to be spent for the advantage of the person who pays it? No, there is not. There will be no requirement that it be spent on bargaining. We all know where most of that money will go. It will go to promote the Labour Party. This bill is actually a bill between the Labour Party and the trade unions, whereby the Labour Party will give them a bargaining fee—wink, wink, nod, nod—and next election the unions will give a large part of it back to the Labour Party. It is a sort of—I was going to say deal—[Interruption] Well, it is worse than that; it is actually a triangle because the bureaucrats in the Department of Labour, who under the Employment Contracts Act—which employers said they liked very much—

Darren Hughes: We call it the Pipitea clause.

Hon RICHARD PREBBLE: The member says he calls it the Pipitea clause; I call it a monstrous step back towards compulsory trade unionism.

PAUL ADAMS (United Future) : I rise on behalf of United Future to speak on this bill. After hearing all the previous speakers, I say that the biggest sign or indicator to the Government that this legislation is bad legislation is that the only other party I have heard supporting it in the House so far is the Green Party. That has to be a wake-up call for the Government, if nothing else is.

But, really, there is no better situation for a good working relationship between an employer and an employee than the current working environment. The employer needs staff, and staff numbers are short at the moment, but, of course, every worker in the country needs a job. So I think there is a great opportunity there for the worker and the employer to work together and negotiate, as the Hon Richard Prebble said, a satisfactory working relationship.

I want to raise some of the amendments made by the Transport and Industrial Relations Committee. Some of the changes seem to make good sense. The bill now acknowledges that it is possible that an employee, in negotiating an individual agreement, may end up with pay rates and conditions that are the same as those negotiated as part of a collective agreement, without it being part of some grand, anti-union conspiracy. I suggest that under this legislation it will still be very difficult for employers to avoid the claim that they are undermining the collective agreement.

This bill also gives employers more scope to withhold sensitive financial information when jobs are under threat. We do not want a situation where a company that is contemplating restructuring is forced to share commercially sensitive information with the unions, which have the opportunity to comment, and which may then publicise that information in an attempt to put pressure back on the company. That is hardly acting in good faith. It is also a serious threat to employer autonomy. After all, employers are the ones who are risking their capital that they have invested in the business, as Peter Brown adequately pointed out to us.

However, the committee did not get rid of the provisions that allow collective agreements to recognise the benefits of that agreement through a bargaining bonus. Last year, over 6,000 Public Service Association members at the Inland Revenue Department, the Ministry of Social Development, and Land Information New Zealand received a total of almost $4.5 million in bonus payments for successfully negotiating new collective agreements. At the time, United Future and other parties in this House questioned whether that was a breach of section 9(1) of the Employment Relations Act, which prohibits preference on the basis of union membership. Only unions can negotiate collective agreements, so the one-off nature of the bargaining bonus means that it is, effectively, restricted to union members. It does not extend to non-union members who are then signed up to the same terms and conditions as in the collective agreement.

If we look at the average bonus received, $712, we see that it would cover each member’s union dues for the year. The Minister of Labour must have been worried about the legality of the bargaining bonus for Public Service Association members, because clause 8 amends section 9 of the principal Act by adding subsection (3), which states: “this Act does not prevent a collective agreement containing a term or condition that is intended to recognise the benefits—(a) of a collective agreement: (b) arising out of the relationship on which a collective agreement is based.”

To further discourage free-riding, the Government members on the select committee even encouraged the Minister to bring in a Supplementary Order Paper containing a provision that means that employers and unions can agree to take money off non-union workers as a bargaining fee. Fonterra and the Dairy Workers Union tried to get non-union workers to pay the fees of the union members, who had negotiated a collective agreement, but it was thrown out of court. The amendment put forward on the Supplementary Order Paper will effectively override that judgment. In theory, it enables non-union employees to opt out of paying the fee, but members can imagine the situation of a new employee who has just started working in a job where a collective agreement exists. The current law requires a new employee to be put on the collective agreement for the first 30 days, and he or she is then given the opportunity to join the collective agreement or to negotiate an individual contract. It is really a Hobson’s choice. The employer cannot pass on the terms and conditions of the collective agreement to the employee in the form of an individual agreement, because the employer would risk opening himself or herself up to a claim that he or she had undermined the collective agreement. The employee is then faced with the choice of remaining in the collective agreement, thus retaining the current terms with the possibility of receiving an additional bargaining bonus when the agreement is next negotiated, or negotiating an individual agreement that is likely to offer him or her less than the collective agreement does, and that may be reduced again by the amount of a bargaining fee. Under this bill the unions will have the ability to double dip, by both gathering a bargaining bonus as part of the collective agreement, and taking a bargaining fee off non-union employees.

This bill started out as a way for the Government to pay back its union mates by making it more difficult for employees to avoid joining a union, and the select committee’s recommendations only reinforce that. It is evident in the preference given by the legislation to multi-employer collective agreements, which comprise only 1 percent of agreements yet dominate in the public service. Pushing uniform conditions on the private sector does not recognise that, unlike public sector agencies, individual firms are in competition and want the freedom to change the wage structure of their employees for competitive advantage. This bill denies the private sector the legitimate choice between collective and individual agreements.

The expectation that a collective agreement should be concluded is nowhere more evident than in the provision that places the burden of proof on employers, who have to provide a genuine reason not to conclude a collective agreement. An employer may not want to agree to a collective agreement for a very good reason, such as few of his or her employees belonging to a union, or the union making unreasonable claims. Yet if the union persists, the law is behind it, and the Employment Relations Authority could force the employer to agree to a collective agreement, anyway.

It is those sorts of provisions, and particularly the numerous references in the bill to all the penalties that can be applied against employers for breaches of the legislation, that seem totally at odds with the object of the Act, which is to build productive employment relations through the promotion of mutual trust and confidence. Therefore, United Future will continue to oppose this bill.

DAVE HEREORA (Labour) : I rise to talk about two issues surrounding the bill. One is quite a passionate issue for me, as during the mid-1990s I dealt with the contracting out of workers. I would like to revisit the clause in the bill that offers protection to workers in transfer of employment situations. It will provide certainty about what happens to workers when a business or part of a business changes hands, as all employment agreements will now be required to address what processes will be followed if the business is sold or if work is contracted out.

There will be additional protections for workers categorised as vulnerable under the Act. Vulnerable employees—people who work in certain sectors where businesses change hands often—will be given the right to transfer on the same terms and conditions, and they will at least have the chance to make a case for redundancy. In my experience in the field of contracting out, the practice of businesses changing hands was quite rife in the mid-1990s, particularly in the public hospitals. Every public hospital in the Auckland region had contracted out what was termed “non-clinical core services”.

One of the hospitals in particular had contracted for an international company to take over the service, and that company lasted less than 12 months before it went bankrupt. The effect of that bankruptcy left 300 workers—overnight—with no terms and conditions of employment. I think that most important was the hurt of it all that surrounded the workers’ service—the service given over 15 to 30 years by that 300-strong workforce, who lost their redundancy provisions as a result of the bankruptcy. Half of that workforce is currently employed back in-house, and we have had to renegotiate terms and conditions for the remaining half, but we can imagine the instability that has occurred as a result of a changeover from one employer to the other, particularly where redundancy provisions have lapsed as a result of the problem.

I think that under this change that has been proposed, we now have some certainty for those workers, and I am sure that giving workers the opportunity to maintain their terms and conditions upon transfer from one employer to another is a sensible move by this Parliament. It is a sensible move to maintain some certainty for workers, particularly those workers who have large families, and I am sure that the security this bill offers will provide them with the chance at least to apply for a new job if the service is transferred to another employer.

The other area I wanted to talk about was the issue raised by the ACT member Mr Prebble in terms of the bargaining fee. Often I have been in the situation of negotiating employment agreements on sites, and I have found a huge division in relation to the workforce at those sites. Obviously, the division was caused through union members in negotiation as opposed to non-union members, and when we were successful in negotiating decent wage increases, those increases were often passed on to non-union members. It caused a huge moral problem on the site for workers, to the extent that I felt in some cases it could have led to a health and safety issue.

I would also like to revisit the Minister’s intention. I recall that he said he was looking at bargaining-fee arrangements to be negotiated, where it is agreed that the terms and conditions of effective agreements are to be passed on to non-union members on individual agreements. Non-union employees who do not wish to pay the bargaining fee will be able to opt out of the arrangement. The Minister also agreed with the recommendation, and is looking at releasing a Supplementary Order Paper proposing that where a union and an employer agree on a bargaining-fee arrangement, affected employees will take part in a ballot to decide whether the bargaining-fee arrangements should operate in their workplace. I think that that is a positive move at least, to address the discrepancy between those two groups of workers. The issue about providing a fee, of a sort, for non-union members will, I hope, enhance and reduce tensions on the site between the two groups. Obviously, I believe that that is a key fundamental, from my experience of being in those situations and negotiating those terms.

The purpose of the bill is to amend the Employment Relations Act, and the key amendment made in this Employment Relations Amendment Bill is about fair employment law. It is about resolving disputes without lawyers—if that is possible—about giving employees a genuine choice between individual and collective employment agreements, and about creating more certainty about what happens to employees when a business is sold or transferred. I think the bill represents a good balance of practical and realistic measures that will strengthen the Act and further promote positive employment relationships. After all, that is the key to any industrial situation. Claims that the amendments are about compulsory unionism, national awards, or compulsory arbitration are absolutely wrong.

The bill is about providing a balance in employment relations. Opposition parties would like that balance to be tipped in favour of the employer, but often when we are talking about equal balance we need to have some assurance that workers do have an opportunity at least to negotiate on an even playing field with their employer. They should have that opportunity to be able to put forward claims and negotiate their way through. I suppose that in looking at the principles of good faith, we hope that the principles will at least set a platform for negotiation in situations where often—and I have been in those situations—employers just refuse to negotiate, and where there is not even the opportunity to place claims on the table, because some employers refuse to get around the table so that at least that can be achieved.

I am confident and hopeful that these moderate changes may provide an opportunity for workers at the very least to be able to sit at the table and talk through the issues that I think both the employer and those workers have in common. In my brief association with the Transport and Industrial Relations Committee before I was released from the committee, I heard a number of submitters talking about looking at various changes. From what I observed, I think the select committee has done a good job in addressing those changes.

Dr WAYNE MAPP (National—North Shore) : Today a book is being launched. It is about that infamous trade unionist, Fintan Patrick Walsh. On this very day this Government, this Labour-Green coalition—

Hon Judith Tizard: Eh?

Dr WAYNE MAPP: Yes, that is exactly what the case is. The Labour-Green coalition is launching New Zealand back into that era of the “Black Prince” of unionism, because these are the facts. There are 2.1 million people in the workforce, and 1.7 million have chosen not to belong to unions.

Hon Richard Prebble: How many?

Dr WAYNE MAPP: The number is 1.7 million, or 80 percent of the workforce. Twenty years ago—up until 1991—it was compulsory to belong to a union, but when people had a choice they voted, and they voted to opt out.

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

Dr WAYNE MAPP: Prior to the dinner break I was making the point that 80 percent of New Zealanders, when given the choice, have chosen not to be members of a union. They have decided they could better spend the kind of money that goes on union fees—several hundred dollars per year—on themselves and their families. More particularly, they will not be bound by the cloth-cap ideology that infects so many members on the other side of the House.

This bill is clear. I have to say about the Government that it is honest in its intentions. It wants to force people back into unions. That is the only possible explanation for this bill, because the evidence before the Transport and Industrial Relations Committee was compelling. Not one employer wanted this bill. Did we hear demands from workers up and down this country for this bill? The answer is no. They have already voted with their feet; 80 percent have said no to unions. The only people who want this legislation are the unions, and the Government has caved in to them.

Why did the Government do that? It is because they are one and the same. The members of this Government are essentially unionists. That is their background, tradition, and history. If a union asks the Government to help it out, its response is: “How can we do that? How high do we have to jump?” The Government wants to force New Zealanders back into unions. It wants to deny free choice.

The Government is ignoring all the evidence. The OECD in its economic survey of New Zealand made the very clear point that this legislation would reduce productivity, harm the progress of our nation, and set back this country. Yet that is precisely what the Government is doing today. It is setting back this country by reducing choice and restricting freedom.

Let us look at the bill. Under this bill, “good faith”—or rather the breaches thereof—will be subject to a fine of $10,000. We will soon be the only country to have penal provisions for breaches of what are essentially negotiation positions. Let us be honest: negotiation is a robust process. People set out their positions to the maximum, yet the Government’s approach is to say that if they do that, they will be fined $10,000. It is the absolute antithesis of good faith to be providing fines.

It will now be virtually impossible for employers to offer to employees an individual contract that is the same as a collective contract. I know the Government says that that is not true, but the Government has put in a whole series of pernicious measures that have precisely that effect. Every time that happens the unions will argue that it undermines collective contracts, and therefore is a breach of good faith. Even if an employer does not intend to do that, it will be sufficient for the union to show that it has the effect of undermining the collective contract.

What does that lead to? It leads to a fine, and that is wrong. If the unions have their way, we will see a record of the way in which firms conduct their negotiations. If the unions are successful in showing on a number of occasions a breach of good faith, under proposed new section 50J the Employment Relations Authority—which has been absolutely stacked by this Government with unionists—will then set the terms and conditions of an employment contract. So what will we have? We will have unionists dressed up as authority members fixing the terms of contracts—and we can just bet they will favour the unions. That is why this legislation is pernicious.

Further, employers will be forced to stay at the table to negotiate everything on the table. That is another means for multi-employer collective contracts. The employer cannot object in principle, which is what proposed new section 33 states. Employers cannot object in principle to a collective contract, so they will be forced to sit at the table and negotiate. The Government says that employers will not have to attend the first meeting but in reality they will, because if they do not they will be in breach of good faith. The Government has constructed a catch-22 scenario, whereby employers will be forced into multi-employer collective contracts.

We have seen the first shots of this campaign. The Auckland watersiders went on strike. They want a collective across the entire country. They had picketers from Tauranga and Australia. That is a return to the bad old days, the days of Fintan Patrick Walsh, with a single union contract across all the ports.

The unions will pick their targets. They will pick the transport industry, the ports, and the freezing works, because they know that is where our economy is vulnerable. Our economy is uniquely vulnerable in that regard. We are more dependent than any other economy on the export of primary products, produced from a few large facilities. If we block that export, we will block our economy; if we give those powers to the unions, we will reduce growth in our country. We have seen it before. That is precisely what happened in the 1950s, 1960s, and 1970s. This country paid heavily for that, with low growth and low productivity, and I might add that the Chair knows the truth of that. We have had growth only when we have provided freedom. That is what has happened. The growth has occurred in the last 15 years when there has been freedom, so this bill is a return to the bad old days.

Dr Brash referred to a particular point that the Government has snuck in even in this legislation—a Treaty of Waitangi clause. Parties to public health contracts are required to recognise the principles of the Treaty of Waitangi. That is what clause 7 of the code proposed in schedule 1AA states. Does that mean that the Employment Relations Authority—and the all-knowing unionists on that outfit—will now interpret the treaty for the benefit of workplaces up and down the country? Is that the kind of nonsense this Government would deliver to employment relationships in our country? I say, frankly, that that is ludicrous. The Government must surely realise the absurdity of that.

I close on this point: National is fundamentally opposed to this legislation. We are of the view that it is totally wrong, and we will repeal it when in Government. We will strip out from the Employment Relations Act all the provisions that relate to union preferences, because we believe in freedom—freedom for New Zealand workers to make their choices and their arrangements.

DIANNE YATES (Labour—Hamilton East) : I think the only thing worse than that speech on this bill was the speech by Dr Brash. Both speakers, Dr Mapp and Dr Brash, have shown a complete lack of understanding of the history of New Zealand. Both have shown us—

Hon Roger Sowry: David Bennett has got this lady. She’s gone.

DIANNE YATES: That member can have his turn to speak in a minute. Both those members have shown us that they have not read the bill. Both of them are going on about something called the bad old days, without realising that they are now living in the good, modern, present day. I support this bill, and I say to Dr Mapp that he has forgotten what it is like to be an 18-year-old who is going for his or her first job and trying to negotiate a salary. There are many people who have forgotten about the realities of employment; they have been here in the House for too long. They have been with the rich and the powerful for too long, and do not understand what it is to go for a job, to negotiate a salary, and to work as an ordinary human being who is trying to make a living in this world.

Hon ROGER SOWRY (National) : National is totally opposed to the Employment Relations Law Reform Bill. It is interesting to see the Labour Party tonight. The member for Hamilton East, Dianne Yates, spoke for about 90 seconds on the bill. We know that she does not have her heart in it. David Bennett will win Hamilton East, because we know that the member for Hamilton East has lost the political fire in her belly. We saw that in the quite pathetic speech she gave tonight. It is understandable that the member was overlooked for Cabinet, and now the voters of Hamilton East are about to overlook her for David Bennett.

A whole range of businesses appeared before the Transport and Industrial Relations Committee to speak about this legislation. I will run through just some of them, because I do not have time in 10 minutes to go through them all. I will talk about what businesses said in the select committee, because Labour members have tried to change history to make it look as though businesses support the current employment law. They do not, and they certainly do not support this bill.

I will start with the tourism industry, because I see that the Associate Minister of Tourism, Dover Samuels, is in the House today. I bet he has not been sitting with people in the tourism industry and saying that this bill is good. I was at a tourism meeting in his electorate in the far north just a few weeks ago and I can say that the people in the industry there are 100 percent opposed to this bill. I told them to go and see Dover Samuels, and they laughed—just as Richmond Ltd representatives laughed at the prospect of talking to Rick Barker. Heinz-Wattie Ltd told the select committee that if it had known that this bill was to be passed, it would not have brought the plant from Australia across to New Zealand. Fisher and Paykel told the committee that this bill would lead it to look at manufacturing off shore.

A whole list of industries come before the select committee and opposed the bill. Spotless Services, a cleaning company and one of the largest employers in New Zealand, is totally opposed to it. Fletcher Building, Progressive Enterprises, Foodstuffs, Sealord’s, Top Town Cinema, Westpac, Auckland International Airport, Armourguard—if one can name a company, that company appeared before the select committee and opposed the legislation. But it was not just those companies that opposed it; the largest company in New Zealand, Carter Holt Harvey, was totally opposed to it. The New Zealand Refining Co. in Dover Samuel’s constituency was totally opposed to it. A whole range of other companies that the Crown owns and that we never hear from because they are full of Labour-appointed board members who cower to the Labour Government came out of their shells to appear before the select committee to say that they do not want this bill. Crown-owned Solid Energy fronted up and said that the legislation would be bad for the company. It does not want it passed. That was highly unusual. Crown-owned Air New Zealand appeared before the select committee and said that this bill would put it at a disadvantage.

All those companies complained that the Government was not listening to business. The Government has decided, in conjunction with the Greens, that basically its mandate was to say: “To hell with business; we will proceed to pass this legislation because we need the union funds for next year’s campaign”. That is all that this bill is about. Effectively, it will bring in compulsory union membership.

Jill Pettis: Don’t be ridiculous.

Hon ROGER SOWRY: The member for Whanganui knows that if employers in her electorate front up and pay to a non-union staff member the same wage as they pay to a union member, they can end up before the Employment Tribunal. She also knows that the unions will use that to enforce compulsory union membership. The meat companies operating in her area told us that in the select committee. We asked them what their local member said, and they said that she does not care. We know that. I think they are being charitable. I think that she does not understand, but they said she does not care.

Lakeland Health, the Government’s own Crown health enterprise, fronted up to the select committee and said: “This legislation will not work for us.” Lakeland Health said that it had two unions on site and that it could not pass the wage from one union on to the other. The staff are doing the same job. Nurses and cleaners are involved. Some nurses belong to one union and some to another. Some cleaners belong to the same union as a group of nurses. The unions will not sit at the table together and negotiate with Lakeland Health. This legislation means that Lakeland Health cannot pass on the same terms and conditions across its enterprise. So how can Lakeland Health work it? I think Mr Hereora was at the committee that day—

Dave Hereora: It’s tough.

Hon ROGER SOWRY: He says it is tough, but I ask him what Lakeland Health should do.

Dave Hereora: Treat its workers fairly.

Hon ROGER SOWRY: How can it pay the same to both?

Dave Hereora: It should treat its workers fairly.

Hon ROGER SOWRY: Members will see that Mr Hereora does not have an answer. He does not know. I liked what he said in the select committee best of all. He sat in the committee and said nothing—not a word. But it was not for just a few hours that he sat there saying nothing; he sat there for day after day after day not saying a word.

The best example we have to show why we oppose this bill involves a collective that runs a childcare centre in Manukau. It has to deal with the New Zealand Educational Institute. The New Zealand Educational Institute, using the provisions of this bill, fronted up to the childcare centre and said that the collective was required to negotiate with the union in 2 weeks’ time in Wellington. So the collective in Māngere began fund-raising to send someone to Wellington to negotiate because the union would not negotiate with it in Auckland. Is that good law? Do Labour members support that? They sit there in silence.

The member for Hamilton East gave a half-hearted speech. This bill is all about pay-off, compulsory unionism, more union fees, and more funds for the Labour Party coffers. It is not about growth, new jobs, productivity, or any of those things. Mr Hereora sat in the Transport and Industrial Relations Committee and said nothing, not just for hours, but for days, because he has come to Parliament to say nothing. He has not come for his own views; he has been sent here by the union as its doormat for this legislation to be passed through Parliament.

This bill will damage this country beyond belief, and it will be repealed by the next National Government. The test of this legislation is that there is no Labour member who will stand up in a workplace and defend it—not one.

Dianne Yates: Yes there is.

Hon ROGER SOWRY: Oh, Dianne Yates will do it. Will she go to Gallaghers and defend it?

Dianne Yates: Yes.

Hon ROGER SOWRY: Right, we will set the date—[Interruption] Oh, she will do it if the Engineering, Printing and Manufacturing Union invites her, and not the employer. That shows how weak and pathetic she is. That shows why she has gone.

JILL PETTIS (Labour—Whanganui) : That member does not have to worry—[Interruption]

Hon Roger Sowry: I raise a point of order, Mr Speaker. I take deep offence at that member’s comment, and I require it to be withdrawn and apologised for.

The ASSISTANT SPEAKER (H V Ross Robertson): The member has taken offence under Standing Order 116. He is entitled to do so. The member will withdraw.

Dianne Yates: I said he was ignorant.

The ASSISTANT SPEAKER (H V Ross Robertson): The member will withdraw.

Dianne Yates: I withdraw. I said he was ignorant.

The ASSISTANT SPEAKER (H V Ross Robertson): The member must not refer to the comment she made. She must stand and withdraw the comment.

Dianne Yates: I withdraw.

Hon Roger Sowry: I raise a point of order, Mr Speaker. I think that if I called the honourable member an “old cow” you would require me to withdraw. The member used a phrase, “ignorant pig”. I find that—[Interruption]

Hon Marian Hobbs: No, she didn’t—[Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): I refer members to Standing Order 84(3).

Hon Roger Sowry: Unless the senior Government whip is going to take her pills, she should be quiet.

The ASSISTANT SPEAKER (H V Ross Robertson): That is out of order.

Hon Roger Sowry: I heard the member; I took deep offence at what she said. I require her to withdraw and apologise.

Dianne Yates: I will withdraw if the member thought I said that, but I did not say it.

The ASSISTANT SPEAKER (H V Ross Robertson): The issue has now been dealt with.

Hon Marian Hobbs: I was sitting—[Interruption] Can we have silence during a point of order?

The ASSISTANT SPEAKER (H V Ross Robertson): Is this a point of order?

Hon Marian Hobbs: Yes, it is.

The ASSISTANT SPEAKER (H V Ross Robertson):The issue has already been dealt with. I thought the member was seeking the call.

Hon Marian Hobbs: I am seeking a point of order.

The ASSISTANT SPEAKER (H V Ross Robertson): The issue has already been dealt with. The member has withdrawn and there the matter rests.

JILL PETTIS: That member, Roger Sowry, does not need to worry about—[Interruption]

Hon Roger Sowry: I raise a point of order, Mr Speaker. The member for Wellington Central called a comment across the House that I take offence at. I require it to be withdrawn.

The ASSISTANT SPEAKER (H V Ross Robertson): I never heard anything but I was somewhat distracted at the time. If the member made an offensive comment, the member will know that she has done that. Offence has been taken under Standing Order 116. I ask the member to withdraw.

Hon Marian Hobbs: I withdraw.

JILL PETTIS: That member, Roger Sowry, does not have to worry about going near any freezing works, because he is already dog tucker. He has been rejected four times by the electorate of Ōtaki that he once represented, and Darren Hughes on our side of the House has got that seat sewn up. He will probably hold it for as long as Jonathan Hunt has represented his seat in this House.

The speeches from the National Party tonight have been like the year 2000 revisited, when the Employment Relations Bill was introduced by this Labour-led Government, with all those dire predictions of doom and gloom and the earth going to end as we knew it, and with National members running around like Chicken Little saying the sky was going to fall in. None of it has come to pass, at all, and in fact their own leader, who pops in here from time to time—40 minutes today, probably on overtime—

Hon Roger Sowry: I raise a point of order, Mr Speaker. If it is in order to refer to the fact—and the member should get her facts right—of the over 1½ hours the National Leader was here, she should talk about the half hour the Prime Minister spent here.

The ASSISTANT SPEAKER (H V Ross Robertson): Can I remind members that under Speaker’s ruling 23/7 it is inappropriate to refer to the absence of members.

JILL PETTIS: I was not referring to the member’s absence; I was referring to his presence—but never mind. I think this is delightful. I love these kinds of debates because, boy, does it separate us from them! I love it when we have debates about industrial relations, because I am so proud to be a member of the Labour Party and the Labour Government. At times like this, I just love it!

I enjoy going to workplaces and talking about the industrial relations policies that have enabled people to be paid a decent wage. Who do those members over there think negotiated their wage increases for them? Did they do it themselves when they were 18, 19, or even 30, and not in a position of power on the workplace floor? Do they think that their charm and good looks—and I am being extremely generous here when I say that, but I am prepared to be generous—got them their wage increases? I do not think so. It is trade unions that have negotiated and won wage increases for the average New Zealander. I bet not one of those people over there said to their bosses when a pay increase had been won: “Oh, sir, take it back; I don’t want it.” How many of those members over there have ever put up their hand to an employer and said: “Oh, please sir, I don’t want it.”? Tito, tito—that is all I can say.

Any claims by those members over there that these amendments are about compulsory unionism shows that they had better enrol for a literacy course, because they have clearly never read the amendment bill—never read it at all. All the scare tactics—actually they are pretty pathetic and weak—are not as good as they used to be from the National Government.

Just as a little aside, I say that if my grandfather, who I am proud to say was a “red fed”, was reincarnated and saw the National Party over there today, and compared it to the National Party that he fought against to the marrow of his bones every day of his adult life, he would not believe what was happening. He would say to me, his granddaughter: “You’re not telling the truth. It can’t be the National Party.”, because he fought every single living moment of his day for workers’ rights.

The National Party was a strong, powerful force when I was growing up. In fact, most of my childhood was spent under National Government figures, and we were scared of them. When we look at how powerful the National Party was during my childhood and my youth, and then look at it today, we see that it is just a pathetic shell. The claims that National are making today about this Employment Relations Law Reform Bill have absolutely no substance at all. National members would not have a clue about workers’ history in this country, because they are not in the least bit interested.

To say that this legislation will affect productivity and the economy of this country is to absolutely ignore the current situation. Members should read their papers. We get them delivered free to our offices every morning. They should read what the reports from the World Bank say about how New Zealand’s labour laws are more flexible than those of comparable countries.

They should read what the report: New Zealand - Australia Economic Interdependence found. It found that Australian firms just across the ditch saw New Zealand as more flexible and innovative than Australia, and it is stated in other reports that New Zealand is the easiest country in the world in which to do business.

The vast majority of employers in this country are fair and want a good working arrangement for their staff. We have a labour and a skills shortage in this country because that lot over there failed to plan, failed to train, and failed to upskill workers. They know that, but they will not admit it. We cannot afford as a country to go back to the 1990s and those draconian, dinosaur-like policies that they would like—but fortunately will not have the opportunity—to foist upon this country. This is a good, progressive bill, and the House should support it.

ANN HARTLEY (Labour—Northcote) : The House is in Committee for further consideration of the Electricity and Gas Industries Bill. When the Committee was last considering the bill, the question before the Committee was—

JUDY TURNER (United Future) : I raise a point of order, Madam Chairperson. I think I got my votes round the wrong way. I thought I was voting for the procedure, and United Future was voting against the bill but voted for the procedure. I am not sure, but I think I have got those votes around the wrong way.

The CHAIRPERSON (Ann Hartley): We cannot deal with that until the House resumes, so we will have to wait.

Hon ROGER SOWRY (National) : I raise a point of order, Madam Chairperson I know that the Speaker is just outside the door so I seek leave for the House to resume and to change the vote right now. I think United Future will not want this to be recorded in the House, and I can see the Speaker through the door.

The CHAIRPERSON (Ann Hartley): Leave is sought for that purpose. Is there any objection? There is not.

• Progress reported.

LINDSAY TISCH (National—Piako) : I raise a point of order, Mr Speaker. I did not hear what the member for United Future actually wants to do. While we are not objecting to leave being granted—that is why the House has resumed—I wonder whether you could explain what the member wants to do.

The ASSISTANT SPEAKER (H V Ross Robertson): I call on the member Judy Turner to explain exactly what the position is.

JUDY TURNER (United Future) : I think I confused the votes procedurally and the vote for the bill. United Future is opposing the bill, but we are happy to support the procedure, and I think I got those around the wrong way. I want to change our vote from eight in favour to eight opposed.

Hon RICHARD PREBBLE (ACT) : We are now all confused because there was no procedural vote. What I think the member was saying—if she does not mind my helping her—is that the United Future party was prepared to vote in favour of the amendments from the select committee, but then wanted to vote against the whole bill. I do not know how she voted on the first question, but that would mean that she ought to vote with the Ayes on the first vote and with the Noes on the second.

LINDSAY TISCH (National—Piako) : I wondered whether you, Mr Assistant-Speaker, could tell us what the votes were, or whether the Clerk can let the House know exactly what the votes were. [Interruption] We know what the totals were, but I am particularly interested in what the United Future member voted, because that is what we are going to reconsider. So can you tell us what the votes were for each party, or, more specifically, what the vote was for United Future so that we know which way United Future members voted?

The ASSISTANT SPEAKER (H V Ross Robertson): I think that what we need to do in this case is for the honourable member Judy Turner to take a call and explain to the House exactly what she wishes to do with the votes that have been cast. Then we can seek leave of the House to do so.

JUDY TURNER (United Future) : United Future is opposing the bill in its entirety. I think I mistook a vote as being for a procedural thing and voted eight in favour when I should have voted eight opposed.

The ASSISTANT SPEAKER (H V Ross Robertson): The voting list can be corrected. That is done under Speaker’s ruling 66/4. Is the member seeking leave to change her vote?

JUDY TURNER (United Future) : Yes, I am.

LINDSAY TISCH (National—Piako) : I raise a point of order, Mr Speaker. Which vote are we talking about? Two votes were taken, as Mr Prebble has identified. There was the vote on the amendments, and then the vote for the second reading. So which vote are we referring to?

Hon RICHARD PREBBLE (ACT) : I think I can help. I think the United Future member confuses the House when she talks about procedural votes. There were not any. But I have had an opportunity to have a quick chat to her, and the position is that United Future actually wants to be recorded as having voted against both motions. I know that on the second one it certainly voted in favour, which somewhat surprised me, but I do not know how it voted for the first. What the member needs to do is make sure the record shows that the United Future party wants to be recorded as being opposed to both motions. I do not think anyone will object to that.

Hon ROGER SOWRY (National) : I want to back up Mr Prebble because I think he is exactly right. What United Future members are trying to do today is vote against the bill but facilitate its passing, so they want to vote against it but help the Government and pass it through any procedural issues. So they want to be seen as voting against it but as helping the Government pass it through any procedural issue. It is a godly way.

The ASSISTANT SPEAKER (H V Ross Robertson): I ask the honourable member Judy Turner whether Mr Prebble is correct in what he stated.

JUDY TURNER (United Future) : Yes, he is.

The ASSISTANT SPEAKER (H V Ross Robertson): The member wants those votes to be recorded as Noes. Is there any objection to that course of action being taken?

LINDSAY TISCH (Junior Whip—National) : I raise a point of order, Mr Speaker. To clarify and to get back to square one it might pay if we recommit both votes again so that we can go through and take any uncertainty out of what the process should be.

The ASSISTANT SPEAKER (H V Ross Robertson): Quite frankly, the House is the master of its own destiny, and that can only be done by leave. If the member is seeking leave, then I will put it.

LINDSAY TISCH: I so seek leave.

The ASSISTANT SPEAKER (H V Ross Robertson): Is there any objection to that course of action? There is.

JILL PETTIS (Senior Whip—Labour) : I raise a point of order, Mr Speaker. Judy Turner from United Future has made it abundantly clear what it is that she wants to do, and Mr Prebble has made it abundantly clear in explaining the situation to the House. I am sure the Clerk knows exactly what to do. We do not need to go through the farce of another vote.

RODNEY HIDE (Leader—ACT) : I raise a point of order, Mr Speaker. I am actually not clear. I understand what Mr Prebble said and that Judy Turner said that she agreed with that. However, I am interested to know whether Mr Sowry’s point of order described what Judy Turner intended to do as well. Could she clarify whether she agrees with Mr Sowry’s point?

The ASSISTANT SPEAKER (H V Ross Robertson): As I understand it the member has asked that her vote on the second reading where she voted Aye should in fact be No. Is that correct?

Judy Turner: That is correct.

The CHAIRPERSON (H V Ross Robertson): I thank the member. The member sought leave to change the votes. Is there any objection to that course of action being taken? There appears to be none. The Ayes are 63, the Noes are 57.

Hon ROGER SOWRY (National) : I want to thank members for coming to the Committee, because this is a very important bill. Part 3 is where the Minister can direct the Energy Commission. For the benefit of people who are listening to this debate, I will explain that we have a bill here that sets up a large bureaucracy—in fact, it is growing by the week. Most weeks there are advertisements for staff for this bureaucracy in the Dominion Post. The commission is charged with the job of acting in the interests of a range of people—both generators and consumers. Where those interests collide, then the Electricity Commission has to have the Wisdom of Solomon and make decisions and recommendations to a Minister about the energy market.

Unfortunately, before this bill has been passed the commission has not only been established by the Government but, in a sweep of the arrogance that we have come to know this Government for, has in fact been ignored by the Government. What the Government first did with regard to the commission was to decide that one of the Government’s own entities, Genesis Energy—to which the Government has appointed the president of the Labour Party, Mr Mike Williams, to sit on the board—should have a special deal with the Crown to underwrite a facility that it is building, namely a gas-fired electricity plant. Although the commission is not even established and up and running, the Government’s first major action in terms of its energy policy was to decide to ignore the commission and to do a cosy deal with the president of the Labour Party and Genesis Energy, because he is on its board, to allow Genesis Energy to be underwritten as it goes and builds a new gas-fired power plant. The independence of the commission then comes into question. When we look at Part 3 we can see that the independence of the commission is brought into question because the Minister can direct the Energy Commission as to what it does. So we have a body that is established to give frank and fearless advice, but the Minister can direct it. Although we have a commission that has been established to give free and frank advice, the first thing the Government does is to go round to the back of the bike shed and ignore it, and the next thing is that it is passing a bill in the House whereby the Minister can direct the commission as to what to do.

If that is not enough, the Government, which is really all-controlling in its arrogance, has decided in this part to cross-credit appointments to the Energy Commission with those to the Commerce Commission. In this nation we have had a proud history of having an independent Commerce Commission—the people who looked at the Qantas – Air New Zealand merger and fearlessly recommended that it not go ahead. Even though the Government was desperate for it to happen, the Commerce Commission stood independent of the Government. Through this legislation the Government is deciding that it can appoint someone to the Commerce Commission and the Energy Commission who is the very same person. We will have a person who on one day takes an instruction from the Minister on matters of energy, and then on the next day sits on the Commerce Commission and has to act independently. I do not agree with New Zealand First on the campaign it is running against Powerco, but I say to the New Zealand First members that if the Commerce Commission were to look at the Powerco sale, or at any takeover or merger of any energy company, it would have the same person looking at it who took the instruction as an energy commissioner on how to act. What sort of system is that? In some countries people would call that almost corrupt. It is certainly not free and frank or fearless advice. So it certainly fits with the Government’s modus operandi, which is to have a Minister to control and dictate everything, and, where he cannot do that, to ignore a commission. I think it is murky, political, unhealthy, and wrong—it is plain wrong.

I want to appeal to the Government, because Governments come and go. I know the Minister in the chair does not know much about this bill, but I say to her that long after she is gone the legacy—

Phil Heatley: It won’t be long.

Hon ROGER SOWRY: It will not be long, in her case. The Government will leave a Commerce Commission that is no longer made up of wholly independent people. Is that what she wants? Does the Minister have a view on that? Instead of reading papers that are totally unrelated to this matter, I would really like the Minister to take advice from the officials behind her—

Jill Pettis: Go to sleep!

Hon ROGER SOWRY: The senior whip for the Labour Party, Jill Pettis, does not care about this. New Zealanders have valued having an independent Commerce Commission.

Jill Pettis: Give Max Bradford a phone call.

Hon ROGER SOWRY: The member does not care about New Zealanders having an independent Commerce Commission. Business in New Zealand does care about that; it is about setting standards for business. All I want to say to the member for Wellington Central, who is sitting in the chair, is that she has some of the largest companies in New Zealand in her electorate. Does she believe in having an independent Commerce Commission? If she does, how does she reconcile Part 3 of this bill with that? Will she take a call on that? Will she even engage in eye contact on it, or will she continue to studiously look at the Woman’s Weekly or whatever she is looking at? I think it is appalling that a Minister of the Crown will not engage in that sort of debate. It is something that worried the Commerce Committee, across party grounds. I know that it worries New Zealand First.

I will give the Minister the benefit of the doubt. Perhaps she has not read all the Cabinet papers. Not all Ministers read all the papers; a few try to slide by. I say the Minister should at least take the advice of the officials.

CRAIG McNAIR (NZ First) : In speaking to Part 3, I want to focus on new section 57GF inserted by clause 32. New Zealand First thinks the bill should strive for three principal aims for the industry—that is, guaranteed security of supply, fair and reasonable prices, and encouragement for investment to ensure ever-increasing capacity. The section deals with the requirement to consult, but New Zealand First says that though there may be all the consultation in the world, this bill will not achieve those three main aims if kept in its entirety. The very foundation of the bill is wrong. In terms of obtaining fair and reasonable prices, we doubt whether it will have the desired effect. I believe that New Zealanders—and this goes to the very heart of the requirement to consult—are sick and tired of political games involving electricity. They are told they will be consulted, and so on, but really they are not consulted.

I have talked to different people in my office in Albany, and in other places I have visited around Rodney and in other places in New Zealand, and the average New Zealander is of the strong view that electricity is not a luxury but an essential service, which should be available at the flick of a switch and at a reasonable price. From what they have seen in the electricity industry over the last 10 to 20 years they think it is a diabolical disgrace, and they feel ripped off in terms of price.

New clause 57GF states that the chairman must make copies of the material available for inspection during working hours for a reasonable period free of charge at the head office of the Electricity Commission; must make copies of the proposed material available for purchase at a reasonable price at the head office of the commission; must make copies of the available material free of charge on an Internet website maintained by, or on behalf of, the commission; and must give notice in the Gazette stating that the proposed material is available for inspection during working hours free of charge, and so on.

My point is that although all of those things may be done, I do not think the bill strives to achieve the three main aims I mentioned earlier. It probably takes guaranteed security of supply one step further, but it will not achieve fair and reasonable prices or encourage investment to ensure ever-increasing capacity for the industry.

At a time when Australian companies are moving more towards coal-fuelled power stations, we should be talking about that issue in terms of our electricity generation problems.

RODNEY HIDE (Leader—ACT) : We oppose this bill, of course, because it is another example of the arrogance of this Labour Government with its command and control approach, and its assumption that it is an all-knowing, all-seeing, and all-understanding Government that knows what is best.

Having said that, I suggest that the Minister in the chair, the Hon Marian Hobbs, takes a call. I implore her to take a call, to answer the very serious charge Mr Sowry has put to her and say whether this Government wants an independent Commerce Commission—yes, or no. It is not enough for a Minister to come to this Chamber and just sit in the chair and read comics. The purpose of Parliament is to examine this legislation and to test it, and the reason we have a Minister with a bevy of advisers seated behind her is for the legislation to be explained in order to win support for it. I understand that Marian Hobbs does not know much about anything, but all she need do as Minister is turn around to the advisers behind her and ask what the responses are to Mr Sowry’s questions.

If the Minister is not prepared to do that, or to stand up in this Committee to defend the bill she is responsible for tonight, I do not know how she can take her pay or lie straight in her bed at night. The Minister has a responsibility for this legislation, but Marian Hobbs sits there like a stuffed dummy and does not even engage in the bill. She has not had even one engagement. She may as well not be here. We may as well get a stuffed dummy from Kirks and stick it in the chair. In fact, it might be more useful. Marian Hobbs should take responsibility for this bill, and she should answer the question from Roger Sowry about whether this Government wants an independent Commerce Commission—yes or no. Or she could take a call to explain why Mr Sowry is wrong.

The Minister should turn around; there are one, two, three, four, five advisers—

Jill Pettis: Leave the advisers out of this.

RODNEY HIDE: Oh, well, even the wonderful whip from the Labour Party is embarrassed by the Minister in the chair and will not run interference on her. There are five advisers there, doing overtime, who are full of knowledge about the bill. They could talk to the Minister in the chair. They know the answer, I think, to Mr Sowry’s question.

Hon Roger Sowry: I doubt it.

RODNEY HIDE: He doubts it. Or is it the case that the officials are not backing this bill, either?

Jill Pettis: How was Spain?

RODNEY HIDE: It was great. I tell the member that it is great being back and seeing the most useless Government Minister this country has ever seen in the form of Marian Hobbs sitting in the chair unable to engage, explain, answer, or even lift her head and look up. [Interruption]

David Benson-Pope says that he cannot hear. I am not surprised, given who his benchmate is. If I had that woman screaming in my ears, I would be deaf, too.

But again I make the point—

The CHAIRPERSON (H V Ross Robertson): Would the member address Part 3, please.

RODNEY HIDE: Mr Chairperson, it is all very well for you to say that we should narrow the debate, but we are talking precisely about Part 3. [Interruption] It is interesting that everyone in the Labour Party wants to make a comment—except the Minister responsible for the bill. Is that not the case? Every one of them wants to sit and run interference, but I am asking a very simple question. We are working on Part 3. Mr Sowry has put the question to the Minister. Why does that Minister not do her job, or is she incapable of it?

PHIL HEATLEY (National—Whangarei) : Perhaps I can help Mr Hide with regard to Marion Hobbs’ inability or unwillingness to answer the question. It is simply that she does not understand the question. She was asked whether she believed in an independent Commerce Commission, but she does not understand what an “independent” Commerce Commission means or the significance of that. I could spend the next 4 minutes explaining to her very briefly what the Commerce Commission does, and Marion Hobbs could go away knowledgable about it. However, in 10 months’ time Mark Blumsky might very well be sitting in Marion Hobbs’ seat, so it would be a waste of time telling her, as she sits here reading her New Idea magazine, what the Commerce Commission does.

We in the National Party believe that the Commerce Commission should be independent. My understanding is that the ACT party certainly believes that the commission should be independent. New Zealand First believes that it should be independent, and I think that even the Greens believe that it should be independent and free from ministerial interference. Whether Marion Hobbs believes it, I am afraid that tonight the Committee will never know.

I would like to address another issue to do with ministerial interference, which relates to new section 57DF, “Ministerial powers”, inserted by clause 31. It states that the Minister of Energy may not set objectives and outcomes under the Electricity Act that amount to a direction to the Electricity Commission on matters relating to its jurisdiction. The Minister may not act in a way that gives direction to the Electricity Commission.

However, the Commerce Committee has already received submission after submission expressing concern about ministerial interference. In fact, we had a lovely submission from Simon Carlaw of Business New Zealand, Steve Barrett of Contact Energy, Federated Farmers, the Electricity Networks Association, three State-owned enterprises—Mighty River Power, Genesis Energy, and Meridian Energy—Powerco, TrustPower, and Vector. All of them were concerned about ministerial interference. They stated: “In addition to the competing and irreconcilable objectives, the bill provides for an extraordinarily high level of ministerial intervention. These provisions are incompatible with a regulatory institution, and are in stark contrast to the independent processes which are supposed to be associated with the Commerce Commission.” That was their concern about ministerial intervention and interference.

Do members know what the fallout will be from their concern about ministerial interference? Those companies, when it comes to generation or to investment in lines to transmit electricity, will lower their risk, because they know it is very risky to be in a business that can be interfered with by the political whims of the Beehive. To lower their risk they will do one thing, and one thing only—that is, they will restrict investment. There will not be investment in generation. That is what Genesis Energy says, what Meridian Energy says, and what every other State-owned enterprise says that this Government has its fingers on. Those companies will not be investing in generation, lines companies will not invest in upgrading lines, and retail companies will not invest in services to their customers, simply because by investing they expand their risk. They do not want to expand their risk in situations where the Minister can interfere with their businesses.

PETER BROWN (Deputy Leader—NZ First) : It is some time since this bill was last debated in Parliament, and I have to say that I am a little bit rusty, particularly on Part 3. But I listened with interest to the Hon Roger Sowry, because he has been making some quite relevant and pertinent points in the debate on the whole legislation. I know he has taken the issue very, very seriously. I hope I have not misunderstood him, but he seemed to imply, at least to me, that the Genesis gas-fired plant being proposed at Huntly should have gone through the process of consultation with the Electricity Commission or the Commerce Commission.

Hon Roger Sowry: Yes—the Electricity Commission.

PETER BROWN: I thought that was what he was driving at. I have to say that New Zealand First does not agree with that. I might be wrong, and I have looked desperately through this part to try to find—

Hon Roger Sowry: The Government guarantee.

PETER BROWN: Ah! Well, maybe I can comment on our view of the Government guarantee in terms of the Huntly power station. My understanding is that the Government has guaranteed that if there is not gas available after the year 2012 for that power station, then it will pay Genesis some compensation.

Hon Roger Sowry: How much?

PETER BROWN: I do not know.

Hon Roger Sowry: It’s your money and my money.

PETER BROWN: Indeed, but I suggest to the honourable member that if we do not have any gas by the year 2012 to supply Genesis in order to produce electricity, then we might have much bigger problems to worry about than whether Genesis gets any compensation or at what level the compensation is.

New Zealand First welcomes the building of that power station by Genesis. I understand it is going to be on line by 2007, and it will add something like 362 megawatts to the grid. I see the officials nodding, so I have got it right—and that is all from memory! We are very pleased. We think that it is an initiative this country can do with, and that we should be applauding Genesis for its move, rather than criticising it. But I am glad the Hon Roger Sowry has clarified the point he was making.

We want an independent Commerce Commission and, as far as we can have it, an independent Electricity Commission. We do not see that that raises the concerns that Rodney Hide mentioned, in terms of stifling that independence.

I am looking now at new section 57DD, “Procedure before jurisdiction order can be made”, inserted by clause 31. It refers to the transfer of jurisdiction in respect of Transpower or other electricity lines businesses. It states that the Minister has to consult with representatives of industry participants and representatives of consumers. We think that is fairly reasonable; we do not see anything harsh in that. The clause goes on to state that the minister has to consult with the Electricity Commission and the Commerce Commission and to seek a recommendation from them. We believe that that is reasonable. We think that the Minister should be obliged to get a recommendation from the Electricity Commission before he or she does anything with Transpower lines or with any other large electricity lines businesses.

Perhaps Government members, or even the Minister, can take a call and tell us where there is a possible threat to the independence of the Commerce Commission, because on looking through this part I cannot find any. I cannot recall, before the recent adjournment break, being aware that there was a threat to its independence, and I cannot find it readily now. If it is there it is a major concern, but I am not aware of where it is.

In fact, the more I read this part, the more likely I think it is that New Zealand First might be able to support it, even if we cannot support anything else. I cannot see a threat to the independence of the Commerce Commission, and I cannot readily see a threat to the independence of the Electricity Commission. Maybe the Minister can advise me whether I am right or wrong, whether Mr Hide is right or wrong or, indeed, whether the position is somewhere midway. It seems to me that the clauses in this part are right and proper, and they outline the authority that the Minister has.

Hon MARIAN HOBBS (Minister for the Environment) : Can I just take up the point that was reasonably and rationally raised by the last speaker, on the question of the independence of the Commerce Commission. The chair of the Electricity Commission is an associate member of the Commerce Commission only in respect of Part 4A matters, which relate to price control under the Commerce Act. The Minister cannot give directions on Part 4A, either to the Commerce Commission or to the Electricity Commission. So when the chair of the Electricity Commission is sitting on the Commerce Commission for Part 4A matters, he or she as a member of the Commerce Commission is not subject to direction, and is therefore independent.

Hon ROGER SOWRY (National) : I thank the Minister for that, and now I want her to answer the other part of the question, because what the officials have told her is what we already know. We heard through the Commerce Committee that the chair of the Electricity Commission is a member of the Commerce Commission, and it concerns only Part 4A. The Commerce Commission appeared before the select committee and made plain to the committee the Government’s view that the cross-accreditation of appointments allows the appointment of an electricity commissioner who is also a commerce commissioner.

The Government actually has its eye on one of those people. The Hon David Caygill is the name that springs to mind, and he is deputy chairman of the Commerce Commission. I want to say to the Minister that I do not in any way want to bring David Caygill into the debate in terms of his skills and attributes because I have a great deal of respect for him. However, the principle is one of an appointment—[Interruption] The member should take the issue seriously, because it is actually an issue that I know he takes seriously. The issue is one of—[] The member would not even pretend to understand the issue. The issue is one of an appointment between the Commerce Commission and the Electricity Commission. I want to say to Mr Peter Brown that if the Government intends to appoint—it is not in the bill or in this part, but this part implements it—the same person to the Commerce Commission and the Electricity Commission, then the Minister directs the Electricity Commission, as he is entitled to under this part, and the Electricity Commission, for example, under new section 57CA(3), inserted by clause 30B, states that it wants the Commerce Commission to consider this, we then have the same Commerce Commission person also appointed to the Electricity Commission, and there is therefore a conflict of interest.

This issue has been raised by people, it is an issue that is outside just the chair—and I am looking to the officials here for advice to the Minister—and it relates to commerce commissioners also appointed to be electricity and gas industry commissioners. I think the law is murky on that. I understand that the Government wants to appoint people to both jobs. It wants someone to sit on the Commerce Commission and also on the Electricity Commission. I think that is political, I think it is unhealthy, and I think it is wrong. I really worry about it.

Mr Benson-Pope might not worry about it, but I wish that the member—and I thank the Minister for her call—had time for the officials to see her. They are writing something for the Minister now, and I know she cannot see because they are behind her. I just hope that the advice we get is that the Government is not allowed to appoint someone to both bodies. At the moment, my understanding of this part is that the Government is allowed to do it. The talk around town is that the Government will do it, and that talk is quite person specific. I think that is wrong. I think, quite frankly, that it exposes a Minister, and it exposes the independence of the Commerce Commission. I heard someone from the other side say: “Oh well they can just opt out.” The Commerce Commission in this country has a history of fierce independence and I am worried that the Government is undermining that.

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

Hon ROGER SOWRY (National) : Part 4 of the Electricity and Gas Industries Bill is a large part, and substantial because it includes new Part 4A as well—or are we just debating Part 4, Mr Chairperson?

The CHAIRPERSON (H V Ross Robertson): I called clauses 40 to 45.

Hon ROGER SOWRY: That is fine, because Part 4A is substantial, and we will come to that soon. Part 4 in the first part of this bill really relates to the introduction of gas amendments into the legislation, where the Government decided—

The CHAIRPERSON (H V Ross Robertson): I am sorry to interrupt the member, but I tell him that Part 4A is included in clause 45. It is inserted by that clause. So now the member will be aware of that.

Hon ROGER SOWRY: I will start again; I thought I was getting an extra part to debate. Part 4 is a large part, and of course includes all of Part 4A. It is a huge part of the bill, and it is worrying because it will stop infrastructure development in this country for the gas industry. I will be particularly interested to see where United Future will go on this one—I know where ACT and, I think, New Zealand First will go—because this part has been totally opposed by the industry players.

This bill proposes a mechanism by which the Minister can nationalise gas facilities. If members look at new section 43C(2), inserted by clause 45, relating to “Wholesale gas market” and “Processing facilities”, they will see that those provisions allow a Minister to regulate when gas is found—say, if one of the new rigs finds gas—and where the finder wants to bring it on shore but does not have a processing facility to enable the gas to be processed. The finder can go along to the existing processing facility and say: “We require you to give us space to process our gas”. Effectively, we will nationalise that facility so that we can use it to process our gas.

Now, what does that mean? Well, the Government says that that means the gas gets processed, but the industry says it means that it will not drill here. A large company like OMV New Zealand will go back to Brussels and say it wants to bring a rig down to drill off the Taranaki coast to find gas. But then it will say: “Gosh! If we find some and build a processing facility, some other company can come along and just demand, and have the Minister give access to that facility to our competitor.” So why would a company invest? Why would it build a new facility in New Zealand if that were the case? Why would it do that? I hope the Minister will take a call and explain that.

I raise a point of order, Mr Chairperson. I understand, in fact I see, that the Minister, the Hon Pete Hodgson, is now in the Chamber. My understanding, unless there has been a new Standing Order, is that if the Minister is in the Committee, he is required to take the chair.

The CHAIRPERSON (H V Ross Robertson): The Minister is quite prepared to take the chair.

Hon ROGER SOWRY: It is good to have the Minister in the chair. I hope he will explain to us how he will alleviate the concern the industry has around the potential nationalisation that is provided for in this clause in this part. I say to the Minister that the industry players who have come to see me—and there have been a large number of them—have all said the same thing: they could not convince their parent companies, who without exception of course are foreign companies, to invest in New Zealand because of this part. Not one of them has said that it would invest—because of this part. I know it suits the Greens not to have any investment here, but I think the Minister is being quite genuine—in fact, very genuine, to be blunt—in his desire to see more gas discovered here, because the biggest problem we have at the moment is the lack of gas. If people are not prepared to drill—because they are scared they might find something, and then if they find something they might have to go back and try to invest in a processing plant, and then they know they would never get approval because of the potential nationalisation of that plant—then we are not going to make any progress with drilling, notwithstanding the fact that we have a couple of rigs out there at the moment. They are watching this legislation and this part very, very carefully.

I say to the Minister that I think this part should be withdrawn. I think that he has a threat in it that is overcooked. He does not need it at the moment. The industry is functioning without it, and my appeal to the Minister is not to proceed with Part 4A but to treat it—[Interruption] I wish the junior Government whip would just try to contain himself for a moment. My appeal to the Minister, which really comes after talking with the industry, is that if he feels he needs Part 4A as the stick, in a carrot and stick approach, he should recognise that he has showed his hand, and he should put the part in a black box and keep it. He should tell the industry to get on with it, that we expect reasonable access, and that there is a threat of regulation. He has used that before for the electricity industry, and my appeal, I guess, is for him to do the same with gas. He should not legislate for it now, because my worry is that it will turn investment off.

I noticed, and I am sure the Minister will have taken a bit of heart today from, the announcement about the progress on access to the pipeline. He nods, and he has good reason to take heart from that. He probably has good reason to say that it got that far because he has been out there with a big stick. But all I am saying to the Minister is that I think he should step back from Part 4A, and that he should not pass it. He should just say to the industry that it is there. We have had a Gas Industry Steering Group that has gone away and looked at that part. The Minister put Mr Bolger in charge of that group as, I think, a clever political move, and nothing other than that. It does not have the approval of the industry, and industry groups have said to me that they do not agree with those provisions, at all. They have said that both as a collective voice and as individual companies. I tell the Minister that they do not agree with that part.

So my appeal to him is that he should not just listen to Mr Bolger and Mr Roche, who have been paid to give the Minister the advice he wants, but he should listen to industry representatives themselves. They are saying they can see what the Minister is proposing, but they do not like it and do not want it. They want the Minister to let them get on with it, and do their own thing. I think that that is the right way to go. So I hope the Minister will take a call. In fact, I am sure he will, because he did on earlier parts. I hope that he will consider freezing—stalling, whatever—Part 4A in particular, and holding it, and let us just see whether the industry can sort itself out. I have confidence in their being able to do that, but I think that if he proceeds with this part, the only effect it will have is that companies we want to come down here and prospect, will not. They will know that if they find something, they will not be able to get the approvals they need to build the processing facilities, because any processing facility, effectively, can be nationalised at whim by a Minister. That is bad legislation for this country.

Hon PETE HODGSON (Minister of Energy) : The speaker who has just resumed his seat may not be as fully aware of the detail of the proposed legislation in this regard as he might be. It is very similar to a transmission pipeline, which he spoke of when he said that I should be pleased about the progress of open access to the Māui Gas pipeline.

All members in this Parliament would find it repugnant if, for some reason or other, a person who owned a pipeline—if that pipeline had spare capacity—could somehow stop someone else from using it in order to gain some competitive advantage at the other end. We would all find that to be anti-competitive and the inappropriate use of a monopoly power.

A similar analysis can be applied to gas processing facilities. Gas processing facilities are often big, but gasfields in this country may in the future—we do not know—be often, or usually, small. So it is well within the bounds of possibility that one, two, or three gasfields with different owners may want to use the same gas processing facility, and that that gas processing facility might have spare capacity.

In the ordinary course of events, people would use it through a commercial contract; that is what people do. In the normal course of events, that is how the Māui pipeline would work, too. The company would ring up, just like a trucking company, and ask: “Have you got spare capacity? Well, we want to use you.” But because there could be monopolistic behaviour there, backstop regulation is proposed.

Let me tell members the conditions. The regulation-making power is permissive. It can be used only if a need is demonstrated. The fact that the regulation-making power exists, of course, is an incentive for people to behave reasonably—the member who resumed his seat acknowledged that—but really interestingly, the regulation can be made by me only if it is recommended to me by the industry. It can be made by me only if the industry as a whole says: “This ain’t working.” Those are the only circumstances under which I may make the regulation, and then I have to use reasonable terms and conditions, and also be personally satisfied that spare capacity is available and non-competitive practices are afoot. That, surely, is reasonable.

RODNEY HIDE (Leader—ACT) : I am afraid that the Minister’s explanation goes no way to satisfying the ACT party. I ask him to consider these questions: how is gas found, how is gas lifted out of the ground, how is gas lifted from the ground to where it can be processed, and how is gas processed?

I can enlighten the Minister. This is the answer: it is by investment, and by heavy, heavy investment. When investors invest their money—I know that this is not something the Labour Government is aware of—they are looking for a return. This is an industry that is fraught with risk, but this Government with this bill is introducing a phenomenal risk.

Let members read in section 43C, inserted by clause 45, what can happen. Investors can invest in a pipeline or a processing plant, and the Government can come along and take it off them. There is no other way of putting it. The Government can come along, through an Order in Council, and set reasonable terms and conditions for access to processing facilities and to the transmission and distribution of gas.

I have a simple question for the Minister: whose pipeline or processing facility is it? It belongs to the people who own it. The Minister stood up in this Committee, waved his arms, and said: “Oh no, we would only pinch it if the rest of the industry thought it was a good idea.” It is as if the Minister is in his house—I will put it into something that maybe a Labour Government Minister can understand—and the Government decides he has a spare bedroom and sets the rules by which someone can come and occupy it. Then the Government says that it is excess capacity, so there is a spare bedroom and to make it available. But the Government says “Oh, no, no. We won’t do that—it will require everyone in the street to agree.”

Somehow, this Minister of Energy thinks that that is OK. Well, we have had plenty of experience down through the ages, across a whole lot of countries, of what happens when people do that. It crashes investment. I just wish that the Minister in the chair, Pete Hodgson, understood the significance of the Berlin Wall coming down in 1989, and of communism collapsing under its own weight of poor incentive and failure to understand the significance of property rights.

If the Minister wants to have good investment in gas exploration, and in the gas processing and distribution industry, the very best thing that he could do is to protect property rights—not pinch them, as he proposes to do in Part 4A. I implore the Minister not to be blinded by ideology or the politics of this, or by the idea that a bunch of civil servants sitting around can somehow come along and reshape an industry into a better outcome.

I look to United Future. I do not believe that those members are stupid enough to think that Part 4A will increase investment in gas exploration and distribution. I know about the Greens. They will vote for this because they do not want gas processed, found, dug up, and distributed; they want it just left in the ground. I can understand that. I look across to New Zealand First and I say to its members: “Ask yourself. If you were an investor in anything and this rule applied—whether to your car, house, place of work, or business—would you invest under these rules?”. They might, if there were a big enough return, but they would be less likely to—and that is the trouble with this bill and this Government.

GORDON COPELAND (United Future) : I would like to continue the discussion on new section 43C(2)(b), inserted by clause 45, concerning gas processing facilities. I am also aware that members of the Petroleum Exploration Association of New Zealand have been to see me, as I am sure they have been to see Rodney Hide and Roger Sowry, on this matter, to say that they are opposed to this particular provision in the bill. I must say that my first reaction to them when they came was I thought that, yes, they had a fair point. I say that because United Future is a free-market party, and we believe in the creation of free markets.

Hon Member: You’re voting for it.

GORDON COPELAND: I will tell that member, if he will just hang on a minute, why that does not apply in this situation. The first thing that I have to ask myself is what the big picture really is here. The big picture was well explained by both Roger Sowry and Rodney Hide, and it is that we do want to encourage exploration. But one could look at it from this point of view: if one does not happen to be the owner of an existing gas processing facility—and most of the explorers that have rigs here at the moment do not own gas processing facilities—then, indeed, new section 43C(2) works in one’s favour. One has the assurance that if gas is found and there is spare capacity—look at the wording of subsection (b), because none of those members have mentioned it—then there are conditions on it where that is (i) “reasonably necessary to allow new fields to be developed”—so the emphasis is on the development of new fields—“and (ii) spare capacity is available”.

I worked in the oil industry for 14 years of my life, and I can tell members that I fully understand free-market economics. Of course, if one has sunk capital into a gas processing facility and one has spare capacity, then in the normal course of events, one will make some money by selling that spare capacity to someone who will use it and that gives a return on the investment.

That is the way markets work, except that we have to analyse what kind of market we have here. Is it a free market? Is it a monopoly market? Those are two possibilities, but actually there is a third possibility—an oligopoly. Let me tell those members who may not have studied market economics what an oligopoly is. It is a market situation in which control over the supply of a commodity—in this case, gas—is held by a small number of companies. That is exactly the situation that applies to gas processing facilities in this country at the moment. We have an oligopoly, and the danger in that situation is, as the Minister explained, that simply to keep a competitor out one can say: “No, I am sorry, I have spare capacity but I own this plant and you are coming nowhere near it.” Believe me, that happens in this kind of situation.

Is that in the interests of New Zealanders? Let us look at the big picture. We want gas to be discovered. We want to encourage, not discourage, exploration. If gas is discovered, we want it processed in the most efficient manner so that we can deliver the best price to the ultimate consumers, who are the people of this country. That is my reasoning and analysis of the situation we have, and that is why I support new section 43C.

Rodney Hide: Pretty poor.

GORDON COPELAND: That is Mr Hide’s view, but he can take another call to try to argue otherwise. That is what good, vigorous debate is all about. I am just giving my point of view at this point in time.

The other thing, which I do not think Roger Sowry or Mr Hide mentioned, is that, as the Minister explained, we are talking about a co-regulatory model.

Rodney Hide: What model?

GORDON COPELAND: A co-regulatory model. That means that the Minister, as he said, will not intervene unless a person, having discovered gas, comes to him or to the industry and says: “Hey, so and so has a gas processing facility that is only 25 percent used and he will not let me use it.” In that situation—

Rodney Hide: It’s called communism.

GORDON COPELAND: No, it is not called communism. It is called sensible economics, aimed at delivering to the consumer gas at the cheapest price in the most efficient manner. It is all part of the deal. If the member is so purist that he has never heard of oligopoly situations, then he can just be enlightened tonight that they do exist. [Interruption] If the member wants to pronounce it the other way, as some people do, he can say oligopoly. Either pronunciation is quite fine.

Rodney Hide: How do you spell it?

GORDON COPELAND: Oligopoly. I will take Mr Hide to “Economics of Markets 101” some time and explain it all to him if he likes. This is the way it works, and that is my view.

BRIAN CONNELL (National—Rakaia) : I thought that clear-thinking people could not possibly stand up and defend this clause, but after listening to the United Future member, I have to say that I think anything is possible.

Rodney Hide: It wasn’t clear thinking.

BRIAN CONNELL: I stand corrected—the member was not a clear thinker, and he has just confirmed that. I knew the Green members would support this legislation, because they are the people who dumped on Dobson, even though they said they wanted regional development across this country. But for a United Future member to stand up and try to defend Part 4, and this clause in particular, is, I think, beyond reason.

Let us talk about what is being suggested here. The Minister of Energy, Pete Hodgson, took a call and said that if organisations invest hundreds of millions of dollars in finding gas, and if they put up the risk capital to do that, then he expects others will have the right, through him, to annex that part of their operation in the public interest. The annexing of private property is a theme that is running through the current Government at the moment in a way that should alarm people. I was with a senior Minister of the Crown in Timaru last week, and at a public meeting he said that annexing a private property in the public interest can be justified. Here we have another example of that.

The Minister said these organisations may cooperate. Of course, they may cooperate—that is what commercial practice is all about. If one wants something that the other guy wants, then one forms a contract and does it. The Minister went on to say that if they could not form a contract, then he, as the Minister, would decide. I ask any clear-thinking person in this Chamber—and that now excludes the United Future and Green members—why organisations would invest hundreds of millions of dollars in finding gas, put in place the infrastructure to process that gas, and then run the risk of the Crown coming along and annexing that. Will that drive foreign capital into this country? I see that the United Future member’s head is down now. Will that drive foreign capital into this country? Will that drive exploration of the gas industry in this country? The answer is clearly no. That is why the United Future member cannot answer—he knows I am right.

I ask members to listen to what is being proposed. I turn to clause 45, which inserts new section 43P(1)(a), which states: “the facilitation and promotion of the ongoing supply of gas to meet New Zealand’s energy needs, by providing access to essential infrastructure and competitive market arrangements:”. That all sounds good until the Minister stands up and says that what he actually means by that is that the Government will hold a gun to the head of Shell, or whatever other organisation has run the risk, and say: “You must share these facilities, otherwise the State will move in and take them.” That is the worst type of centralised model I can think of. That is the type of thing that was happening in the Eastern bloc in the 1960s and 1970s, and that is the best idea this Minister can come up with to correct the problem in this country—which is a power crisis, not an energy crisis.

We have lots of energy in this country, if we are prepared to harness it. But we cannot harness it because this Minister, through this Government, keeps putting blockages in place. This clause is just another classic example of that. I know that it concerns Mr Brown, because he said so at the Commerce Committee. I am sure he will take a call, have the courage of his convictions right here and now, and say that he said so at the select committee, that he is still opposed to the clause, and that his party cannot support this component. United Future is having its report card marked over this issue, as well. Clear-thinking people who have supported that party as a free-market policy party cannot believe what they are hearing now. That party is saying that it believes the State can annex private property in what it considers to be the public good. If that is not an attack on private property rights, I do not know what is.

PETER BROWN (Deputy Leader—NZ First) : My honourable colleague behind me, Brian Connell, has compelled me to get up to offer New Zealand First’s viewpoint. I have to say to my friend that I cannot recall making that statement at the Commerce Committee, but I can tell members that New Zealand First has anguished over this part. We have genuine concerns.

I have listened intently to all the speakers, particularly the Minister, Pete Hodgson—and, I have to say, Gordon Copeland. I thought he put his viewpoint very, very well, and New Zealand First is tending towards sharing that view. When I listened to my colleague behind me, I began to get the impression that every trucking company in this country would have its own road—that is what it sounded like to me—unless the Government were to intervene and tell companies that they could not have all those roads, and that they had to share them and make best use of them. It is the same with—

Brian Connell: With a private road you wouldn’t expect that, would you?

PETER BROWN: With a private road one might, but the Government would step in and say that there are not going to be 10 private roads.

Brian Connell: This is not Government money we are talking about.

PETER BROWN: We might well not be, and that is a very valid point, but we must remember that at the end of the day we want to get gas into the market at the cheapest possible price. If it is reasonable to share a processing facility, a pipeline, or whatever, and it can reduce the price of gas, then that is a reasonable way to do it. I do not profess to be a free marketeer, as Gordon Copeland said he was. I know I am digressing a bit, Mr Chairman, but I cannot resist. I cannot understand how Gordon Copeland, as a free marketeer, would limit the lines companies to just 50 megawatts. People like me, who do not profess to being a free-marketeer, would give the lines companies a greater flexibility to invest—

Brian Connell: We agree on something.

PETER BROWN: We do agree on something. It is quite amazing. I just cannot make out how Gordon Copeland can say he is a free marketeer. Maybe he is a free marketeer on Tuesdays—

Brian Connell: A free-market socialist!

PETER BROWN: Yes, a free-market socialist, and then something different on Wednesdays. New Zealand First has listened intently to the explanations given, and we are persuaded by the Minister’s viewpoint and by United Future’s viewpoint. In the short calls that those members have taken, a number of concerns that New Zealand First has had about this part have been answered. We believe that there needs to be some regulation and some rules that are fair, objective, and can deliver gas at a reasonable price. We think this will do it. We will support this part.

PHIL HEATLEY (National—Whangarei) : I also rise to talk about this issue of investment, or lack of it. There is no lack of disincentive for investment. There is no lack of risk for investment. But there is a lack of investment—whether it is investment in the wholesale gas market, exploration, processing facilities, or in the transmission and distribution of gas. In all of those cases there is a degree of risk, and that risk is reflected in the lack of investment. We in the National Party can say only that the risk goes up when the Minister gets his dirty fingers involved in the deal. That is what this clause is about—the Minister getting his dirty fingers involved in the deal.

Clause 43C in Part 4A is headed “Gas governance regulations for wholesale market, processing facilities, transmission, and distribution of gas”. It states that the Governor-General, by recommendation of the Minister, can make regulations for all or any purposes. That is, of course, along with the industry. But our question is: who in the industry makes these recommendations to the Minister? Which side of the industry, when it is in disagreement, gives the Minister a mandate to make these regulations? The idea that in some way this is market-led or industry-led is quite absurd because the Minister, first of all, has to either get 100 percent of industry participants backing him in his views, or he has to pick winners in the industry that he will get to back his views.

Looking at the wholesale gas market, I am intrigued that the Minister can provide for the “establishment and operation of wholesale markets for gas” including, and this is through regulation, providing and forcing the “disclosure of data and other market information”. Who would want to come to New Zealand, or arise out of New Zealand, and make multimillion-dollar investments when this Minister can make provision for the disclosure of data and other market information? We understand through the electricity markets that it is quite important to disclose some significant information in order to run those markets correctly, so that there is the correct bidding of price into the market. But for it to be as broad as any “other market information”, and that is stated in clause 43C(2)(a)(iii), is too much discretion for the Minister who is enforcing the divulgence of sensitive commercial information. If businesses are forced to divulge sensitive commercial information, they will not want to take that risk and therefore they will not invest. That is our message to the Government.

Another subclause concerns “arrangements relating to outages and other security of supply contingencies”. I am concerned the Minister believes that the bureaucracy can decide on arrangements relating to outages and security of supply better than the industry can. I would have thought that the bureaucrats would struggle compared with the industry, and I cannot see how the Minister would expect them to do better than that.

In terms of processing facilities, the Minister, apparently being industry-led, can make regulations relating to the setting of “reasonable terms and conditions for access to, and use of, gas processing facilities”. We have heard a number of speakers talk about that. Why would overseas investors come to this country, spend millions of dollars on exploration, gathering gas, and processing gas to compete with others in the market, only to be told that they have to open up their processing facilities to competitors?

Brian Connell: They won’t.

PHIL HEATLEY: They will not do it. There will not be any investment, because this implies an increase, again, of risk. It is the most serious form of risk when competitors can walk into a processing company’s property and use the facilities to produce a product against that processor’s products in the marketplace. That seems quite absurd to us.

There is an argument to say that spare capacity should be available, or could be made available, only if the person accessing or using the facilities paid reasonable costs of providing the additional capacity. But who is to say that there is spare capacity? If one disgruntled gas wholesaler, or an exploration company, wanted processing to take place, it could very well claim that there was spare processing capacity. Where is the burden of proof—on the processor that owns the company to prove that there is no capacity, or on the disgruntled supplier to say that there is capacity? All we know is that it would be a long-winded process costing many resources and much time.

I ask the Minister where the burden of proof would be as to whether there was spare capacity available, or spare capacity that could be made available. I ask the Minister to take a call and answer that question.

Further to that, that spare capacity, or the potential of spare capacity, will change over time. Has the Minister decided whether that could change over a matter of days? Could spare available capacity change over a matter of weeks, or months, or will we forecast this for years ahead? What certainty is there for a processor that has to forgo the use of its own facilities for a competitor into the future? There may very well be spare capacity at one point in time, but only weeks or months later there is not. A processor will have to shift its whole processing regime, which is set up for a competitor, back to a regime that is set up for itself. Again, that takes resources, time, and money, as well as expertise.

There are lots of questions around this whole idea of regulating that a competitor could walk into one’s facility and use that equipment to compete against one. None of those questions have been answered. I ask that the Minister be courageous enough to take a call and answer those questions, and the one in particular to do with the burden of proof as to whether there is spare capacity available, or not. I want to know who does that.

I also notice the issue regarding the transmission and distribution of gas through the pipelines. I note in clause 43C(2)(d) that there is a requirement for “expansions, upgrades, or service quality improvements” that will have to be undertaken through regulation at the whim of the Minister, and companies will have to pay for it. That is far too much interference, in my view.

Hon DAVID BENSON-POPE (Minister of Fisheries) : I move, That the question be now put.

Dr LYNDA SCOTT (National—Kaikoura) : I would like to go back to what the Minister Pete Hodgson said about spare capacity. He said that gas-processing facilities are the same as the Māui pipeline; that if there is spare capacity, rather than a commercial contract being entered into, it would be better if the Government saw a demonstrated need, that it had regulation-making powers to actually demand that the industry share that capacity. He said that it had to be recommended by the industry. Well, I would like to know from the Minister how he can make that assumption of who the industry is. How many players does that involve? Because in the commentary on the Electricity and Gas Industries Bill that we are debating tonight it states: “The co-regulation model has been developed as a result of a consensus view in the gas sector that: the gas industry could not achieve voluntary self-governance . . .”. Well, we have heard tonight from many people in this Committee that the industry does not agree with that. There are many players outside who believe that they would prefer to be self-governing rather than having this co-regulation model. So I would like to know how the Minister can say that it has to be recommended by the industry. How will he know that?

This to me sounds like a really good example of the nanny State, it really does: “Nanny, he won’t let me play in the sand pit. I can’t get in there.” So the Government, being nanny, is going to come in and enforce that, rather than let the industry take over. What do New Zealanders who may be listening to this debate want? They want to be able to switch on the lights, turn on the oven, or turn on the heat, and have surety of supply.

This is 2004, and we have 4 million people in this country. How hard can it be? We have this huge bill, and a Government that, for years and years, has been promising these types of improvements, but we have not seen it. We just have not seen the improvements. Despite the rhetoric and despite all the promises we have not seen it. Here we have Part 4A, which many industry players are opposing, where the Minister can play at being nanny State and nationalise gas processing and make a private company share spare capacity. Well, I cannot see that that will not be a disincentive to investment. In Marlborough at the moment we have a huge shortage of accommodation for our vineyard workers.

Darren Hughes: Bring back Mr Burns.

Dr LYNDA SCOTT: No, Mr Burns has not sorted anything out. The fact is that this is like this Government coming along and saying: “OK, you’ve got a big house, you’ve got lots of rooms, we’re going to regulate and make you share your accommodation with these vineyard workers whom we need. Because, you know, there’s a need. The country needs these people to have accommodation. We need our vines to be picked, and we need the experts.” We had the Marlborough wine people here today at Parliament. We have a wonderful number of vineyards in Marlborough and a fantastic product, and this is exactly the same. One could say, “OK, this is really important for the country so we’re going to insist that people actually share their houses and use their spare-capacity bedrooms to house these workers.”

I do not think many people would put up with that. I do not think the Minister would share his house, but here we have it with the gas industry. The Minister is saying that if one has some spare capacity the industry can make a private company share that spare capacity. Well, a lot of people out there do not want to see this go ahead. Many do not agree with that, and they do not agree with the co-regulation model that has been developed.

The commentary goes on to state: “the proposed regulatory model in the bill was heavily influenced by electricity industry concerns and might impose rules that may be inappropriate for the gas industry”. So it is saying that the electricity industry and the gas industry have some conflicts and “co-regulation would share responsibility between Government and industry”. Well, many in the industry do feel that they can regulate their own industry, and do not need this Government’s interference. So we will see that this bill will put off overseas investment. United Future members were talking before about being a free-market party, but—

DARREN HUGHES (Labour—Otaki) : I move, That the question be now put.

Hon ROGER SOWRY (National) : I want to thank the Minister for his comments and for responding to our concerns. I tell him that I understand his concerns about monopolistic behaviour. I understand the need to make sure that where there is someone with a monopoly he or she is not unfettered in the way that he or she could use those monopolistic powers. The point I would make to the Minister is twofold. Firstly, before the Minister comes into the House with legislation as draconian as this, he should let the market sort it out, and we are seeing that with the gas pipeline. The second point I would make to the Minister, which he did not notably address, I thought, was that the companies that have come to me, and I am sure to him, or at least to his officials—but the Minister does seem to engage with companies quite a bit—could not convince their parent companies to invest in New Zealand, because of this law.

Now that is the real worry—that companies cannot go back to their parent company and say “Let’s drill, and if we find something, let’s invest in the processing plant.” Because why would anyone sitting halfway around the world with a range of options as to where to invest money for a processing plant, invest it in the one place that has on the books a law that says one’s competitors can have access to that plant at the Minister’s discretion? The Minister says that it is important to remember that he would act only on advice.

Brian Connell: Who’s advice?

Hon ROGER SOWRY: He says the industry’s advice. But if someone is sitting around the world and some hitherto unknown Minister is going to act on a competitor’s advice to give that competitor access to a facility, I tell the Minister that it does not make sense. The companies know that it does not make sense and they are saying with one voice that they do not want this. With one voice they are saying: “This will stop investment.” I again appeal to the Minister to withdraw this clause. If he will not withdraw the part, I ask that he at least withdraw the clause that nationalises the industry.

I predict that if the Minister passes this, we will, in the event of trying to get companies to invest in this country, be back repealing that part of the bill. The Minister is saying that there is now understanding within the industry and that they can do it, and they will negotiate the process. I believe that that is what will happen, and the Minister should back down now rather than proceed with this.

I give the Minister another option. He could tell the House the name of one company that supports this part of the bill. I ask him to name one exploration company—one company that is likely to put up the money for the facilities—that agrees with this, and he will not. There is one other option, of course, and that is that a company will drill, find the gas, and make a decision not to invest. So, after finding the gas, it will make a decision not to invest in the processing facility because that is going to be nationalised. So who will build the processing facility? The Crown. Maybe that is what the Minister wants. Maybe the Minister is saying that that is OK, and maybe the commission will say: “We’ve got these gas finds and the large companies will not invest in the processing facility, because of the nationalisation clause, so the Crown should do it.”

NANAIA MAHUTA (Labour—Tainui) : I move, That the question be now put.

LINDSAY TISCH (Junior Whip—National) : I raise a point of order, Mr Chairman. I want some clarification. There were two lots of amendments from the Minister. There was one set of amendments on Supplementary Order Paper 243, and other amendments on the sheet I have in front of me. I am looking for clarification as to whether we were voting on both lots of amendments, or just on the ones that you read out, as being the amendments that we were voting on. I seek your guidance and clarification on this matter.

The CHAIRPERSON (Hon Clem Simich): I thank the member for raising that. The member is quite right. There are two sets of amendments, and that is what the typescript amendments refer to. There are the amendments set out on Supplementary Order Paper 243, and the typescript amendments.

Lindsay Tisch: That is what you refer to as the typescript amendments?

The CHAIRPERSON (Hon Clem Simich): Yes, they have been aggregated, as is normal. I thank the member for raising that. The amendments were agreed to.

Hon ROGER SOWRY (National) : This is a relatively small part of the bill, but a crucially important one. Over the next hour or so there are a few issues that I wish to canvass. I want to start by talking about the need for the part. It is an amendment to the Crown Minerals Act that allows for the collection and disclosure of information in connection with reserves that are discovered in both the gas and the oil area. Obviously, those are decisions that any Government wants because what one does not want—and it happens around the world—is a company to come in, exercise its rights under the licence that has been issued by the Crown to sink its wells, make a find, and then hold that information so that the Crown has no idea of the reserves that may be coming, and the impact that that will have on the wider economy, both in terms of oil usage and gas usage—and in this country, the gas usage as it relates to the gas and electricity markets. I say to the Minister that it makes sense. There is no problem with clause 47 and the requirement that the Minister is putting in.

However, I want to come to clauses 48 and 49, because I am a little bit worried. The issue that I have is one of compliance costs. I do not have a problem with the fact that companies are required to disclose; they should be. That is fine. That information should be out there in the public arena. The real issue is with regard to prescribing the form and manner in which, and the time by which, this information has to be collected and published. With the exception, I guess, of Todd Petroleum Mining, there are no New Zealand companies out there drilling now, or that will be drilling in the near future. Well, there are; I tell a fib, actually. Of course there are other consortiums around the country, but the bulk of the consortiums that are drilling are overseas consortiums.

I worry that we are putting a regulatory environment on them in terms of compliance costs, in the manner and form in which they must publish their information, that may well be unreasonable. It goes with the whole tenor of the bill, as another reason why companies may not wish to come to this part of the world. This is a very hostile and difficult part of the world for people to drill in. They are drilling offshore largely, in difficult conditions in many cases. On top of that we are putting in requirements that I think may well be too onerous.

I guess that the issue I would ask the Minister to clarify to the House is why we need this. At the moment are there examples of companies that are drilling and not providing information? If so, name them. The good old “name-and-shame” principle might work very well here. The other issue is that if companies are coming to New Zealand and publishing information, is it being done in a way that is too difficult for our ministry officials to read? Is that why we have to prescribe the form? One would have thought that if it was good enough for the Australians, the South Africans, the Indonesians, or the people from whichever countries those companies are drilling in, to read the information, then our ministry officials could certainly read it and publish it. One would have thought that would make a lot of sense.

The issue is serious, and I know that Mr Benson-Pope has trouble with serious issues. I tell him that companies are concerned about this sort of issue. If they are required to publish their information in Australia, Indonesia, or South Africa, why would we require a separate form? Why would there be that requirement in this country, in terms of the form and manner of the provision?

I tell the Minister that I accept the timeliness provision in the clause. We do want to require that permit holders publish in a certain timely fashion. We do not want them holding the information forever. That is fine. But it is the other issues that we are particularly concerned about. If we take Part 5 together with the very, very draconian Part 4 that we have already talked about, we have a package that starts to get quite hostile towards companies that are investing a large amount of money in what is a very, very risky business. I say to the Government that if the Minister is serious when he mops his brow and worries at public functions about the future of gas, why is he making it so hard? Either the brow-mopping exercise is an act and the Minister is not that worried, or there are some other reasons behind it and he is not in control of his own legislation. Perhaps the Minister of Finance or someone else is in control of this and is more worried about the revenue side of the timeliness of reporting, and the manner and form of reporting. Is this being driven by the Minister of Finance, rather than by the Minister in the chair, Pete Hodgson?

These are serious issues, and I think we need to have them addressed. I note that the Minister looks like he is ready to answer these questions and I look forward to him doing that. As we move through this part there are other issues that clearly we will want to come back to. I hope that once the Minister has answered these questions, we will come back to those issues shortly.

BRIAN CONNELL (National—Rakaia) : Can I just carry on from where my colleague—

The CHAIRPERSON (Hon Clem Simich): I am sorry to interrupt the member, but the time has come for me to report progress.

• Progress reported.