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13 September 2006
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Volume 634, Week 26 - Wednesday, 13 September 2006

[Volume:634;Page:5407]

Wednesday, 13 September 2006

Madam Speaker took the Chair at 2 p.m.

Prayers.

Questions to Ministers

Minimum Wage—Adjustments

1. Hon MARK GOSCHE (Labour—Maungakiekie) to the Minister of Labour: What reports has she received on adjustments to the minimum wage?

Hon RUTH DYSON (Minister of Labour) : I have seen a number of reports that reflect the Labour-led Government’s commitment to continue annual adjustments to the minimum wage—and consultation on the 2007 rate is under way. Since 1999 this policy has seen the minimum adult wage rise by 46 percent. That stands in stark contrast to the last National-led Government, which over 9 years raised the minimum wage by less than $1 an hour.

Hon Mark Gosche: Has she received any other reports on future adjustments to the minimum wage?

Hon RUTH DYSON: Yes, I have. I have received one report that states: “I’m not one of the hard-core right-wingers who says: ‘Get rid of the minimum wage. You don’t need it.’ Some people take that view. I personally think it has a place and I don’t have problems with it rising.” I have seen a number of other reports stating that we should scrap the minimum wage altogether. The first report I quoted is from John Key. The others are from Dr Brash, who is presumably one of the hard-core right-wingers Mr Key was referring to.

Hon Mark Gosche: Could the Minister elaborate on some of those reports she has seen regarding the minimum wage?

Hon RUTH DYSON: One report, for example, suggests we abandon not only the minimum wage but also minimum holiday entitlements, parental leave, and the moves to close the gender pay and employment gap. Again, those are the wishes expressed by Dr Brash.

Peter Brown: Is the Minister aware that New Zealand First is very determined not only to ensure that the minimum wage exists but to have it raised to $12 an hour before the end of this term of Parliament; will she advise whether the Government is on track to achieve that aim?

Hon RUTH DYSON: Yes, I am aware of that commitment. It is a commitment that the Labour Party, along with its coalition partner, the Progressive party, signed up to with both New Zealand First and the Green Party as part of our Government arrangements.

Speech from the Throne—Political Integrity of Parliament and Electoral Process

2. GERRY BROWNLEE (Deputy Leader—National) to the Prime Minister: Does she stand by the statement in the Speech from the Throne in 1999 that her Government would “restore public confidence in the political integrity of Parliament and the electoral process”?

Rt Hon HELEN CLARK (Prime Minister) : Yes; by keeping our promises—as we have.

Gerry Brownlee: Has the Prime Minister seen reports that the board of Transparency International New Zealand, whose directors include former Ombudsman Mel Smith and former Auditor-General David Macdonald, has condemned Labour’s plans to change the law to validate any election spending found to be unlawful; will she take action to ensure that the leader of the Labour Party does nothing to harm New Zealand’s international standing and reputation?

Rt Hon HELEN CLARK: Yes, I did see that media report, and I think Transparency International should also be concerned about fairness, consistency, and natural justice in audit processes. I further saw the Transparency International report on basic patterns of illegal party funding and campaigning, where it stated: “These include setting up front organisations through which funds can be channelled in excess of legal limitations.”

Gerry Brownlee: Does it follow, in light of the Prime Minister’s statement to the House yesterday that “if spending is within Parliament’s rules there is no reason to pay it back.”, that if the Auditor-General finds the spending is unlawful and outside the rules, then there is reason to pay it back; if not, why not?

Rt Hon HELEN CLARK: Labour plays by the rules and is absolutely confident—[Interruption] I knew their good behaviour would last about 2 minutes—and we can respond in kind, if they wish.

Madam SPEAKER: The member will pleased be seated. I remind members that although interjections are permitted, members, both in questions and answers, are entitled to be heard. So if we could have the answer to the question, please.

Rt Hon HELEN CLARK: Labour is very confident that it played within the rules—the same rules, materially, with the same spending that the Auditor-General gave an unqualified audit certificate to in 2005. That is why I say political parties are entitled to fairness, consistency, and natural justice—and I am not surprised that National members have broken their good behaviour bond, because they cannot take the truth.

Hon Phil Goff: Is public confidence in the political integrity of Parliament undermined by the sort of behaviour whereby a leader one day absolutely denied any knowledge of $1 million in covert funding, only to admit the next day that he knew all along about it, and in the meantime took the precaution to take out of his diary the repeated meetings he had had with the Exclusive Brethren?

Rt Hon HELEN CLARK: None of that enhances confidence in the electoral or political processes. Labour has been very careful, knowing of the extent to which Governments in the 1980s and 1990s let the New Zealand public down, to make promises it can keep.

Gerry Brownlee: Does the Prime Minister accept that for her and her colleagues to refuse to pay the pledge card moneys back, when 81 percent of New Zealanders believe they should, is about as good an illustration as we will get of this Government’s complete contempt for the public of New Zealand?

Rt Hon HELEN CLARK: If spending is within Parliament’s rules, there is no reason for anyone to pay anything back. What the Auditor-General would need to explain, if indeed he goes down the road the member suggests, is why he would give an unqualified audit certificate to the same spending under materially the same rules 3 years ago, and not now.

Hon Bill English: You keep attacking the Auditor-General. You’re above the law.

Rt Hon HELEN CLARK: Mr English knows well that he had the same spending, under the same rules, for which the Auditor-General gave an unqualified audit certificate. He may not like the truth, which is why he has broken the good behaviour bond. [Interruption]

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. A new member from the Waikato region has just made a most unparliamentary statement, and I ask you to ask him to withdraw it.

Madam SPEAKER: I am not sure who the member concerned was—

Rt Hon Winston Peters: The one with the bald head.

Madam SPEAKER: Did the member make an unparliamentary statement? If he did, would he please withdraw and apologise.

Paula Bennett: There were no unparliamentary comments up here, at all.

Madam SPEAKER: Was that the member who made the statement?

Paula Bennett: I think he was referring to me, but I do not know. [Interruption] Oh, sorry—

Madam SPEAKER: Now, did the member make an unparliamentary statement? Would the member rise who made the comment. If he did, would he please withdraw and apologise.

David Bennett: Madam Speaker, my understanding is that it was not unparliamentary. But the response from the Minister was unparliamentary, and perhaps he would withdraw and apologise.

Madam SPEAKER: The member said he did not make an unparliamentary statement, and we have to accept—

Rt Hon Winston Peters: The member made an unparliamentary statement, and in trying to identify him I said he was the bald one. He knows what he said. Would he please apologise.

Madam SPEAKER: The member, when asked, said he did not say it. We have to accept that member’s word.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. He made reference to my own party’s personality. He mentioned something about a “lapdog”. He knows what he said. Would you please ask him to apologise.

Madam SPEAKER: The member has taken offence at the comment. Would the member please withdraw and apologise.

David Bennett: I withdraw and apologise.

Madam SPEAKER: Supplementary question, Gerry Brownlee.

Gerry Brownlee: To the Prime Minister—

Rt Hon Winston Peters: Madam Speaker—

Madam SPEAKER: We have a supplementary question, unless you are raising a point of order. [Interruption] I am sorry, but I have called Gerry Brownlee. I did not realise—

Gerry Brownlee: The member is more senior than me. He can go first.

Madam SPEAKER: Such courtesy; yes.

Rt Hon Winston Peters: That is appropriate—

Madam SPEAKER: If the member would just ask his question.

Rt Hon Winston Peters: That is what I am about to do. Does the Prime Minister believe that having a political party collude with a third party, through the provision of legal advice to ensure that the costs of electioneering by the third party are not attributed to the political party, helps to restore confidence in the political integrity of Parliament and the electoral process?

Rt Hon HELEN CLARK: No, I do not, and I believe it is exactly the sort of practice that Transparency International was getting at when it referred to basic patterns of illegal party funding, like setting up front organisations through which funds can be channelled in excess of legal limitations. It is quite clear Dr Brash knew what the Brethren were doing.

Gerry Brownlee: Would it be acceptable for the owner of a small business in dispute with the Inland Revenue Department over tax payable to argue that the auditors of its accounts got it wrong, and to refuse to pay; if not, what example is she setting by saying the Labour Party will not pay the money back because the Auditor-General got it wrong?

Rt Hon HELEN CLARK: The issue with regard to tax is whether people play by the rules, and exactly the same issue applies here.

Rt Hon Winston Peters: In the interests of getting daily closer to the truth, does the Prime Minister believe that the public—[Interruption]

Madam SPEAKER: Yes, that is unacceptable. We are asking just questions, not making comments on the side. Would the member please just ask his question.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. With respect, that is part of the daily prayer—getting nearer to the truth. How could anyone object to that?

Madam SPEAKER: Would the member please be seated. We were trying to comply with the Standing Orders, where members either ask questions or, if the question is addressed to them, answer it. They do not embroider their questions or their answers; they stick to the point.

Rt Hon Winston Peters: Does the Prime Minister believe that the public would take an equally dim view of those perpetrating election cost avoidance schemes as they do of those who perpetrate tax evasion schemes?

Rt Hon HELEN CLARK: Most certainly I do, and the experience in the last campaign of National Party collusion with the Brethren is what is leading the Government to have a fundamental look again at election campaign financing.

Gerry Brownlee: I raise a point of order, Madam Speaker. How could that answer be in any way in order? It makes an outrageous and untrue allegation, and further, the primary question talks about the Labour Party’s massive overspend on the election campaign and also its dipping into some $446,000 of taxpayer funds illegally. Where on earth can that fit with the answer given by the Prime Minister?

Madam SPEAKER: I thank the member. If we go back to the original question, we find it is a very broad question about restoring public confidence in the political integrity of Parliament and the electoral process. That therefore enables a very wide latitude in terms of supplementary questions.

Gerry Brownlee: Does she believe that if the Labour Party simply paid the money back, that would go a long way towards restoring public confidence in the integrity of the parliamentary process?

Rt Hon HELEN CLARK: If spending is within Parliament’s rules, there is no reason for anybody to pay anything back. The real corruption, as I have said, is in taking money and colluding with the Brethren on how to dodge campaign limits.

Te Arawa Lakes Settlement—Water Column and Airspace

3. HONE HARAWIRA (Māori Party—Te Tai Tokerau) to the Minister in charge of Treaty of Waitangi Negotiations: Was it the Government’s intention that the water column and airspace in relation to the Te Arawa lakes settlement should become Crown-owned; if so, is this the benchmark for all subsequent settlement legislation?

Hon MARK BURTON (Minister in charge of Treaty of Waitangi Negotiations) : In the Te Arawa lakes settlement, the Crown and Te Arawa agreed that the Crown will retain ownership of the water column and airspace, while the beds of 13 lakes transfer to Te Arawa.

Hone Harawira: Given the Minister’s response, does he find it reasonable that Te Arawa should be paid a storage fee for holding the Crown’s water on its lake bed, and has that fee been factored into the terms of the Te Arawa lakes settlement; if not, why not?

Hon MARK BURTON: No; I do not think it would be reasonable, because the water itself will not be owned by either the Crown or Te Arawa. The water will continue to be regulated in accordance with the Resource Management Act 1991.

Hone Harawira: Following on from the Minister’s earlier comments about Crown ownership of the water, has the Crown considered what it would do if Te Arawa asked it to remove its water from the lakes, and how would the Crown ensure that the water it claims to own will never settle on Te Arawa - owned lake beds; or does the Minister think that this is as silly a notion as that of the Crown stratum and its ownership of water?

Hon MARK BURTON: Unfortunately, I think the member either did not hear or did not understand the answer to the first supplementary question he asked, so I will repeat it for him. The water itself will not be, and is not, owned by the Crown or Te Arawa. It will continue to be regulated in accordance with the Resource Management Act 1991.

Hone Harawira: Given that the Government is confiscating Te Arawa’s rights to their lake water, does this mean that the Government will now turn to confiscate all water in all lakes and rivers in Aotearoa; if yes, why; if no, why not?

Hon MARK BURTON: In 1922 the Crown and Te Arawa signed an agreement that confirmed the Crown’s ownership of Te Arawa lakes, but even that misses the fundamental point, which the member still has not grasped—that is, the water itself will not be owned by either the Crown or Te Arawa.

Taxation—Overseas Share Portfolios

4. JOHN KEY (National—Helensville) to the Minister of Finance: Does he stand by his statement yesterday, regarding the taxation of overseas share portfolios, that: “Some variant of a deemed rate-of-return method is likely to emerge out of the select committee process, and I am perfectly comfortable with that,”?

Hon Dr MICHAEL CULLEN (Minister of Finance) : Yes.

John Key: Can he confirm that the fact that he is suddenly perfectly comfortable with this proposed deemed rate of return method is a complete U-turn from the position he previously held when a similar scheme was suggested to him in the 2001 McLeod Tax Review, that it is a U-turn from the position he held when the officials reported back to him on the taxation of offshore investments in 2003, and that it is a U-turn of the position he held when he finally read the report into the Stobo report in 2004?

Hon Dr MICHAEL CULLEN: That added up to four U-turns; presumably I am back where I started from. No. The risk-free rate of return method, which was a 2001 proposal—as I indicated yesterday in a media comment—still seems to have a difficulty around it, in that one ends up taxing people when they make a loss.

John Key: When he said recently: “I have considerable reservations around the risk-free rate of return method.”, is that because back then he agreed with me that taxing someone when his or her portfolio does not pay a dividend and loses money is patently unfair; in which case, will he confirm to the House today that if he introduces the deemed rate of return method, he will not in fact be applying that in a year when a portfolio loses money?

Hon Dr MICHAEL CULLEN: I said yesterday that I have difficulty with the notion of taxing people when they make a loss. If the member had cared to read the full news report, he would not have put out such a silly press statement.

John Key: Why, when over 3,000 submitters concluded months ago that the current proposal before the select committee was such a hare-brained, crazy proposal that it would not work, has it taken the Minister so long to work that out that he is now recommending something else?

Hon Dr MICHAEL CULLEN: The member clearly still has not understood the original proposal, which is based on a version of a deemed rate of return with a final wash-up. The essential difference is that the proposal put forward by Mr Shewan and others, and any form of deemed rate of return, does not have a final wash-up provision.

John Key: Why is the Minister coming over the head of the Minister in charge of the bill, Peter Dunne, and putting his own seal of approval on the change before the select committee has reported back; why is he showing complete contempt for the generic tax policy process; why did he follow a similar contempt of process when he undertook the KiwiSaver Bill; and would it not make sense to put these things up front first so that people could make submissions and have their submissions heard—not change the rules right before the last minute?

Hon Dr MICHAEL CULLEN: We are nowhere near the last minute. I have worked with Mr Dunne on this issue for some weeks, which will come as news to the member.

John Key: That’s not what I hear.

Hon Dr MICHAEL CULLEN: No, but I might say that the member’s hearing is always very faulty in these matters. If the member could make an intelligent contribution, maybe we could talk about it.

Rt Hon Winston Peters: In respect of Mr Key’s views and the representations made by Mr Shewan, could the Minister give us his view as to who on earth would park their money offshore for 3 percent when back home the banks in New Zealand are offering 7 percent?

Hon Dr MICHAEL CULLEN: I think one of the problems with Mr Shewan’s suggestion—apart from the fact that it would tax on losses—is that the 3.5 percent level is very low, indeed. The average rate of return on equities throughout the 20th century was about 8 percent. Even over more recent times the average rates of return have been more like 8 percent or so over a medium to longer run period.

John Key: Is it not the truth that the Minister does not like the deemed rate of return method any more now than when he disliked it back in 2001, 2003, and 2004 when he rejected it, but he cannot get support from New Zealand First and he cannot get support from United Future; maybe even more tragically for him, he cannot get support from his own Prime Minister, who has been running around the country telling people that she does not like the scheme any more than they do, and is that not just further proof that his new-found love of the deemed rate of return is like his new-found love of tax incentives for saving and his new-found love for tax cuts, and maybe it is further proof that she is about to give him the flick?

Hon Dr MICHAEL CULLEN: It is that kind of shallowness that has put Bill English back in front as the challenger.

Hon Members: Is that an answer?

Madam SPEAKER: The interjections that were going backwards and forwards, the long question, and the flick at the end got that sort of reply, but, if the Minister wants to make a more substantive reply, he may. It was a very, very long question. The Standing Orders state that questions should be succinct. But I am quite happy for the Minister to address the question again if he would like to.

Hon Dr MICHAEL CULLEN: I will try to explain to the member again that the current proposal in front of the select committee has, in effect, a deemed rate of return of 5 percent, and a tax on 85 percent of that on an annual basis, but there is a wash-up at the end on realisation. Indeed, a standard deemed rate of return method would not normally have the wash-up at the end, which is precisely what Mr Shewan and others have been proposing. I suggest to the member that what he needs to get his head around if we are going to have that kind of approach, which has simplicity, is that it also has to deal with the issue of not taxing on losses.

Polish Prison—New Zealand Detainee

5. R DOUG WOOLERTON (NZ First) to the Minister of Foreign Affairs: Has he received any reports regarding a New Zealander being held in a Polish prison?

Hon Maurice Williamson: Is this a leadership bid?

Rt Hon WINSTON PETERS (Minister of Foreign Affairs) : We do not have leadership problems in the New Zealand First Party. I have seen—[Interruption] We do not have a leader to complain about in the way that the National Party has. I have seen several reports, mostly official reports from the Ministry of Foreign Affairs and Trade detailing its comprehensive efforts on behalf of Bruce Robinson, who is currently in jail in Poland. However, I also saw last night a hopelessly biased and inaccurate report from Television New Zealand’s programme that represented a totally false picture that the Government was doing absolutely nothing to help this man.

R Doug Woolerton: What, in fact, has been done by the Government to help Mr Robinson, and how does this correspond with the claims made by Close Up last night?

Rt Hon WINSTON PETERS: The New Zealand consul at the embassy in Warsaw has travelled to Katowice—a journey of 2 hours and 40 minutes each way—to attend Mr Robinson’s remand hearing, and to visit him in jail on four other occasions beginning in February of this year, and has, in addition, taken him New Zealand correspondence, newspapers, and fruit. The consul has worked actively with Mr Robinson’s lawyer and has lobbied prison authorities over the condition of Mr Robinson’s detention and successfully prevailed upon the national prosecutor’s office to allow Mr Robinson to make telephone calls to his family—something that the British Embassy confirmed is routinely denied their prisoners in jail in Poland. He has obtained confirmation that Mr Robinson’s family will be able to make four to five visits this month. Some New Zealand representatives in Poland are making every effort to assist Mr Robinson and his family. This directly contradicts the appalling inference left by Close Up last night.

Dianne Yates: Has the Minister any power to change the penal policy of Poland?

Madam SPEAKER: I am not sure that that question is within the Minister’s responsibilities.

Rt Hon WINSTON PETERS: Madam Speaker, it is. Let me just say—

Gerry Brownlee: I raise a point of order, Madam Speaker. Winston Peters has just told the New Zealand Parliament that he thinks he can answer a question on the Polish penal system because he has some responsibility for it. Allowing this question would be turning the whole place into a complete joke.

Hon Dr Michael Cullen: The question asked whether the Minister made any attempts to change the Polish penal policy, and, indeed, it is a normal part of a Minister of Foreign Affairs’ duty to make representation to foreign Governments around a range of issues of this sort. I seem to recollect questions from the Opposition urging us to do it, on occasion.

Gerry Brownlee: I think I can just help by saying that perhaps he should answer the question. It would be nice to know that he is responsible for something.

Madam SPEAKER: That was not a point of order. That is exactly what creates disorder. Would the member Dianne Yates please ask the question again.

Dianne Yates: Is the Minister making any representations about changing the penal policy of Poland?

Rt Hon WINSTON PETERS: Contrary to the appalling inference—[Interruption] That is possible, and, in the member’s case, is about to—[]—slowly, slowly, catchee monkey. Despite the many powers that a Minister of Foreign Affairs or, in fact, a Minister or Prime Minister of this country might have, we do not, contrary to that appalling inference left by last night, have the power to change the judicial or penal policy of Poland, any more than it has of changing ours.

R Doug Woolerton: Did Television New Zealand accurately portray the interest that the Minister has taken in this case?

Rt Hon WINSTON PETERS: Absolutely no. Television New Zealand last night completely misrepresented my letter to Mr Robinson’s family. Far from simply thanking them for their correspondence, my letter directly addressed the family’s concerns over the conditions under which Mr Robinson is being held, and set out the ministry’s efforts on his behalf; all of which Close Up knew before going to air, because my office sent them an email just after 11 o’clock yesterday morning with the details.

R Doug Woolerton: Why does the Minister believe that Close Up’s report is so at odds with other reports that he has received?

Rt Hon WINSTON PETERS: This is a very serious matter, I might say. It might sound laughable, but in Laos, Cambodia, Thailand, and all around the world—as we demonstrated in Palestine recently, and in respect of Sooden—we go to every effort, at a cost of millions of dollars, on behalf of New Zealand people. Most of the reports are from reputable and highly professional Government agencies. [Interruption]

Madam SPEAKER: Would the Minister please just—

Rt Hon WINSTON PETERS: I am trying to answer the question about some poor guy who is in jail in Poland. I thought they might take it—in view of how serious it is—65 people died, and 150 were injured; this is going to be a very serious case. Most of the reports are from a reputable and highly professional Government agency—[Interruption] Well, Madam Speaker, you had a meeting on Tuesday, I understand. What happened?

Madam SPEAKER: Please, members. The question has been asked. The question is on a serious matter. Could we please allow the Minister to answer.

Rt Hon WINSTON PETERS: Most of the reports on this matter are from reputable and highly professional Government agencies. The other report is a desperate attempt, with baseless tabloid journalism by a failing news organisation and its washed-up head of news, Bill Ralston, to win back the hundreds of thousands of viewers who are deserting Television New Zealand in droves. If this is the best that Mr Ralston has to offer the viewing public of New Zealand, it is little wonder that those who care about accurate news coverage that puts the facts before the egos of journalists are crying for his head.

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

Madam SPEAKER: I think I can anticipate it, Dr Smith. The answer should relate to the question. It should also be succinct. So one more go—it is a serious matter.

Rt Hon WINSTON PETERS: Members will recall the question: “Why does the Minister believe that Close Up’s report is so at odds with other reports he has received?”. Speaking to the point of order, I say that the fact is that on Monday, the makers of the programme had an interview with the family and were apprised of all the facts on Tuesday morning. Despite that, they went ahead with that despicable programme with not a fact in it. I am here to defend myself, as I am entitled to.

Madam SPEAKER: I have asked for order, so please be seated. We have had a question. The question was in order. Would the Minister please address it without the references that he was making to other people, please.

Gerry Brownlee: I raise a point of order, Madam Speaker. I think it is quite unfair for you to expect that the House will maintain order when Mr Peters pleads that this is a serious matter—and I accept that the substance of it is—and then goes on to mount some sort of an attack on Television New Zealand because he did not like the way it portrayed his handling of this situation. The other point I make is that the way in which he peppers his answer with all sorts of unnecessary comments is likely to provoke disorder in the House.

Rt Hon WINSTON PETERS: I was asked why I believed, as Minister, that a certain report was at odds with the other reports I had received. I am setting out specifically why I believe that the report from Close Up last night was at odds. I am specifically setting out the facts. That is what the National Party does not like, but today it will get the facts.

Madam SPEAKER: That is enough. Would the Minister please address the question succinctly and to the point.

Rt Hon WINSTON PETERS: I believe what I believe because the makers of Close Up did an interview with the Robinson family on Monday of this week. They were apprised of all the facts by my staff and others on Tuesday morning. Despite that, they went ahead with this programme with all sorts of innuendo and inference that suggested that my department was doing nothing. When I was in Poland on 4 and 5 July, because of logistics I could not get to see the man myself, but we did contemplate it. Last night’s programme, as I said, was a despicable effort by a head of news who has lost hundreds of thousands of viewers.

Madam SPEAKER: That is not relevant.

Rt Hon WINSTON PETERS: I seek leave to table a transcript of the Close Up programme on Television New Zealand last night, including an interview on Monday morning on

  • Document, by leave, laid on the Table of the House.

Rt Hon WINSTON PETERS: I seek leave to table a time line and details of the assistance to the Robinson family, got from the embassy in Warsaw.

  • Document, by leave, laid on the Table of the House.

Rt Hon WINSTON PETERS: I seek leave to table my letter to Mr Robinson’s family, dated 5 September.

  • Document, by leave, laid on the Table of the House.

Rt Hon WINSTON PETERS: I seek leave to table an email sent by my office to Close Up at 11.13 yesterday morning, detailing the efforts embassy staff had made to assist Mr Robinson.

  • Document, by leave, laid on the Table of the House.

Labour, Department—Confidence

6. Dr the Hon LOCKWOOD SMITH (National—Rodney) to the Minister of Immigration: Does he have confidence in his department; if so, why?

Hon DAVID CUNLIFFE (Minister of Immigration) : Yes; because it is a hard-working and conscientious department.

Dr the Hon Lockwood Smith: When asked on Thursday, 7 September who else from the various sections of the Minister’s department had attempted to advise the then Associate Minister’s private secretary of information on Taito Phillip Field’s involvement with the Thais in Samoa, prior to the Associate Minister making his decision on their cases on 17 June 2005, why did the Minister fail to tell the House that the Associate Minister’s private secretary had, in addition to being phoned by the group manager for service international, Mr Tavita, been emailed by a compliance officer, Murray Gardiner, on 27 May 2005 with further information about Mr Field’s involvement with the Thais in Samoa?

Hon DAVID CUNLIFFE: The advice I have received is that the principal means by which the department felt it had informed the Minister was the telephone call from the group manager for service international.

Dr the Hon Lockwood Smith: Does he stand by his answer to this House on Thursday, 24 August that the reason information about Taito Phillip Field’s involvement with Thai nationals in Samoa was not passed on to the Associate Minister by his private secretary was “because of the unconfirmed nature of the allegations”; if so, what was “unconfirmed” about Taito Phillip Field’s letter of 18 May 2005, handed to immigration officials in Apia by his wife, which spelt out the Associate Minister’s agreement to issue 2-year work permits to both Mr Siriwan and Ms Phanngarm—people about whom his intelligence unit had received four consistent sets of information?

Hon DAVID CUNLIFFE: Because, according to the advice I have received, there is a difference between what different individuals in the department thought they knew at the time and what the Associate Minister’s private secretary thought she knew at the time.

Dr the Hon Lockwood Smith: How credible is it that the Associate Minister’s private secretary did not pass on to Mr O’Connor information about Taito Phillip Field’s involvement with the Thai nationals in Samoa, when the source of that information was someone as senior as the group manager for service international, and when the information had been confirmed by Taito Phillip Field’s own letter, dated 18 May; by Mrs Maxine Field’s statements to the Apia branch of the New Zealand Immigration Service on 9 June; by the Apia branch manager, Mr James Dalmer, on four separate occasions; by a compliance officer, Murray Gardiner, in his email dated 27 May; and by the immigration intelligence unit, which held information dated 4 May, 10 May, 27 May, and 9 June?

Hon DAVID CUNLIFFE: Very credible, because that is what Mr Ingram QC concluded.

Dr the Hon Lockwood Smith: When the group manager for service international of the Department of Labour rang the Associate Minister’s private secretary, Nicola Scotland, at 2.41 p.m. on 9 June, spoke to her for 5 minutes about Taito Phillip Field’s involvement with Mr Siriwan and Ms Phanngarm in Samoa, and asked specifically whether the Associate Minister, Damien O’Connor, was aware of this information, which of the following statements made by Nicola Scotland to the Ingram inquiry is correct: first, that she could not recall the conversation with Mr Tavita on 9 June; second, that she could recall the conversation with Mr Tavita on 9 June but did not think the detail contained in that call was confirmed; third, that she had not advised Mr O’Connor of Mr Field’s involvement until many weeks, if not several months, after 23 June; or, fourth, that she advised Mr O’Connor of Mr Field’s involvement within a day or two of his making his decision on 23 June—of all those statements that Ms Scotland made to the Ingram inquiry, which is correct?

Hon DAVID CUNLIFFE: Unless the member is seeking to criticise Mr Ingram, we must all be guided by his conclusion, which is—to answer the 24th question in a row—that the most likely answer is that Miss Scotland did not pass on the information because she did not consider it confirmed intelligence.

Dr the Hon Lockwood Smith: How credible is it that after an off-the-record and unverified phone call from compliance officer Murray Gardiner, Miss Scotland would immediately rush into Mr O’Connor’s office to tell him of Mr Field’s involvement with the Thai nationals in Samoa, but would not attach any weight to or pass on to Mr O’Connor information from someone as senior as the group manager for service international at the Department of Labour—information verified by a senior compliance officer, the immigration intelligence unit, and the Apia branch manager?

Hon DAVID CUNLIFFE: In addition to the word of Noel Ingram QC, the member can take some comfort from the word of the Chief Executive of the Department of Labour, who has stated, as I have reported to this House, that the department’s processes should have been stronger in that instance.

Dr the Hon Lockwood Smith: Was Nicola Scotland sent back to the New Zealand Immigration Service in late 2005 because she knew too much, or did she ask to be sent back because she was uncomfortable continuing to have to cover for Mr O’Connor?

Hon DAVID CUNLIFFE: I think it is somewhat sad that after 7 weeks and 24 questions, the member’s questions have got to that low point.

Madam SPEAKER: Would the Minister please address the question.

Hon DAVID CUNLIFFE: The Queen’s Counsel attached no blame to Miss Scotland, and it is not the place of members of this House to attack officials who are unable to defend themselves.

Peter Brown: Noting the Minister’s answer to the principal question, does the fact that immigrants with HIV have entered the country reflect adversely on the competence of the New Zealand Immigration Service?

Hon DAVID CUNLIFFE: The question may be wide of the mark, but let me offer an answer.

Madam SPEAKER: It is a broad question.

Hon DAVID CUNLIFFE: I have general confidence in my department, and I have confidence in how it is responding to the issue of the health status of Zimbabwean people in New Zealand. Obviously, it is a difficult situation. What is important is that we do not stigmatise a community, and we allow those people to come forward for treatment, to the benefit of all New Zealanders.

Mental Health and Addiction Services—Central Region

7. HEATHER ROY (Deputy Leader—ACT) to the Minister of Health: Has he been advised of the Central Region’s Technical Advisory Services’ Regional Mental Health and Addiction Service Development Plan of June 2006; if so, does he agree that the changes to mental health and addiction services indicated in the report will serve the mentally unwell in the central region better in 2016 than 2006?

Hon PETE HODGSON (Minister of Health) : I have seen a draft report; I believe that it shows the commitment of the central region’s mental health workforce to improving services for local people.

Heather Roy: Does he agree with the report’s focus that in 2016 “the approach to residential services will be substantially different. There will be few residential beds …”; and where does Labour believe those with mental illnesses are better off—sleeping in residential beds or sleeping rough on park benches?

Hon PETE HODGSON: The move to community-based provision of mental health services has been going on for some time. Clearly, it is not satisfactory for anyone with a mental health problem to be sleeping rough. I think that the member should take a look at the report—in particular, at the bottom of the first page of the executive summary—which I think puts in context where mental health services in this country are going.

Maryan Street: Has the Minister seen any reports on public support for improvements in mental health and addiction services?

Hon PETE HODGSON: I have seen a report that Heather Roy has come out against the policy of the deinstitutionalisation of people with mental illness, saying that the policy was driven by fiscal conservatives. The member need only look at today’s media coverage regarding the horrors of Lake Alice Hospital to know that deinstitutionalisation not only costs more but improves people’s lives.

Dr Jonathan Coleman: Can the Minister confirm that the development plan intends to devolve psychiatric care of the elderly from hospitals to rest homes; does he have any idea how unsafe that is; and is not this plan all about cost cutting, rather than treating older New Zealanders with the respect they deserve?

Hon PETE HODGSON: We have been moving older New Zealanders from hospitals to rest homes—or, more accurately, to dementia units and psychogeriatric units—for years. The member should know that it is not a cost-saving matter to look after people in the community. The member should also talk to the member of the ACT party, his colleague who seems to be somehow in favour of residential care for those with psychiatric illness, whereas the member seems to be against it.

Heather Roy: Does the Minister share the plan’s vision of “an increased uptake and dissemination of web-based medicine, telepsychiatry, and telephone based support”; if so, is it now Labour’s plan to have the health needs of Kiwis met by telephone psychics, call centres in India, radiologists in Lebanon, and the Internet?

Hon PETE HODGSON: The member should catch up. The idea that mental health workers might use phones to contact their patients is hardly radical. It has been going on all over the world for a lot longer than two decades. I tell the member that one of the central region’s district health boards, the Wairarapa District Health Board, already has no hospital beds, though it does purchase about 1½ beds in MidCentral District Health Board, through the gorge. But the member needs to catch up; that is where the provision of psychiatric services has been moving for about 20 years.

Heather Roy: I seek the leave of the House to table the Regional Mental Health and Addiction Service Development Plan for the central region’s district health boards.

  • Document, by leave, laid on the Table of the House.

Heather Roy: I raise a point of order, Madam Speaker. The Minister, in one of his answers, referred to the executive summary in the same plan that I just sought to table. The draft I have is dated June 2006 and has no executive summary, so the Minister was quoting from a separate document. I invite him to table that.

Madam SPEAKER: That is not a point of order.

Heather Roy: I raise a point of order, Madam Speaker—

Madam SPEAKER: You want a point of clarification, as I understand it, to the answer. Is that right?

Heather Roy: No, I am seeking to add to the point of order I have just raised. When a Minister refers to a document or a report, he or she is duty-bound to table that document if so requested by any member of the House.

Madam SPEAKER: That is so at the time and if the Minister is reading from it. Could the Minister assist the member on this.

Hon PETE HODGSON: I am very happy to. I did not quote from the report. I will happily table it. I seek leave accordingly.

  • Document, by leave, laid on the Table of the House.

Health Services—Wrongful Claims

8. Hon TONY RYALL (National—Bay of Plenty) to the Minister of Health: What reports has he received on doctors, pharmacists, rest home operators, and other health providers wrongly claiming public money, and what efforts are being made to recover this public money?

Hon PETE HODGSON (Minister of Health) : I have received reports that a significant amount of public money that was misused has been repaid to the Ministry of Health as a result of comprehensive audit processes. The sanctions available to the district health boards and the Ministry of Health include prosecution and referral to professional bodies, but, often, genuine mistakes are made and can be resolved amicably.

Hon Tony Ryall: Should providers who wrongly claim public money, either deliberately or inadvertently, be expected to pay it back; if so, why?

Hon PETE HODGSON: Generally, yes. However, the Ministry of Health is always careful to ensure that people who may be in breach of rules are judged solely on the rules that were in force at the time, not tighter rules drafted after the event.

Ann Hartley: Has he received any reports on the proportion of health professionals who misuse taxpayers’ money?

Hon PETE HODGSON: I am advised that since 1993 only 36 serious cases of fraud by health professionals have required prosecution. That is 36 cases in 13 years for a work force of around 100,000 people. Nearly everyone plays by the rules. The bad guys go to court.

Hon Tony Ryall: If these people think they were following the rules and deny that they broke the rules, but the authorities say they did wrongly claim the money and it should be repaid, should not the Minister be requiring those people to repay the money that the authorities have said is owed?

Hon PETE HODGSON: Let me say to the member again that the Ministry of Health is always careful to ensure that people who may be in breach of rules are judged solely on the rules that were in force at that time, not tighter rules drafted after the event.

Hon Tony Ryall: Does he stand by the report today: “ ‘We won’t repay,’ says Hodgson as Labour hits back at auditor”, and is he aware that many of the providers that his Government is requiring to repay the money were audited, and were given clean bills of health by their auditors and by the Ministry of Health, yet are still being required to pay the money; why are there two standards of obligation with this Government?

Hon PETE HODGSON: This Government operates one standard of obligation, and we are very careful that we not only obey the law but obey the spirit of the law—that is to say, we do not think it is a good idea to launder 92 percent of our election budget through a trust, by way of example.

Hon Tony Ryall: Why does he think health providers who rip off the taxpayer have to pay it back, but does not think the New Zealand Labour Party has to pay it back?

Hon PETE HODGSON: The Labour Party remains resolute that we have not ripped off anyone.

Dr Jonathan Coleman: Is the Minister aware of the decision of the District Court that the withholding of public money from the compensation awarded to a Lake Alice Hospital second-round claimant by the Ministry of Health is unjust, does he not agree that the Government should pay back all other Lake Alice Hospital claimants who are in the same position, and does this jog his memory about any other debts he might have?

Hon PETE HODGSON: My understanding is that the member’s question refers to very recent events, so I will take my counsel on it.

Question No. 5 to Minister

RON MARK (NZ First) : I seek the leave of the House to table a letter to myself from the Minister of Foreign Affairs, dated 10 August 2006, in reply to my letter on concerns about the incarceration of Bruce Robinson, dated 12 July 2006.

  • Document, by leave, laid on the Table of the House.

Auckland—Greater Auckland Council Proposal

9. SUE BRADFORD (Green) to the Minister of Local Government: Is he concerned that the Greater Auckland Council proposal will undermine local body democracy in Auckland; if not, why not?

Hon MARK BURTON (Minister of Local Government) : The Government has not given formal consideration to any such proposals. However, I would note that the Government is committed to democratic processes for Auckland local government structures—structures that can take Auckland forward as a 21st century metro-region, able to compete internationally.

Sue Bradford: Does the Minister agree that having unelected business people making decisions at the regional level—as proposed—that the city councils then have to implement makes a mockery of the democratic process, and threatens to hand local body governance over to what would basically be some kind of corporate board?

Hon MARK BURTON: As I said in the principal answer, the Government has not given formal consideration to any such proposals—and I note there are a number around. However, I repeat for the member that the Government is committed to democratic processes for Auckland local government structures.

Keith Locke: How does it help democracy when the proposed three or four councils within the Auckland region will have elected representatives “significantly reduced in number”, and when the mayors’ plan puts a question mark over the “role and value of community boards”?

Hon MARK BURTON: As I have indicated, the Government has not given formal consideration to any such proposals, but I would note that the Government is committed to democratic processes for Auckland local government structures.

Sue Bradford: Does the Minister agree that a key role of the Auckland Regional Council is to make sure we have environmental protection, particularly of air and water quality, through the administration of the Resource Management Act and other policies, and, at times, against the wishes of businesses and developers; if so, what concerns does he have that the mayors’ proposal seems to fail entirely to mention environmental protection, and, in fact, seems geared to getting rid of the Auckland Regional Council altogether?

Hon MARK BURTON: I would agree with the first part of the member’s assertion, as to the legal functions of the Auckland Regional Council. They are common to regional councils generally. But, as I have said, we as a Government have not given any formal consideration to any such proposal.

Keith Locke: Can the Minister confirm that the mayors propose to run Auckland’s parks by a so-named council-controlled organisation, “maximising business expertise and minimising political interference”, and if parks are seen as a business rather than a service, can we expect to see Auckland’s citizens paying to enter some public parks?

Hon MARK BURTON: I am sorry but I have to repeat that the Government has not given formal consideration to any such proposals.

Keith Locke: I seek leave first to table a paper by Sandra Coney, a member of the Auckland Regional Council, on the Greater Auckland Council plan that describes how it would bring about less democracy and less environmental focus.

  • Document, by leave, laid on the Table of the House.

Keith Locke: I seek leave also to table an article in this morning’s New Zealand Herald by Brian Rudman, calling the proposed Greater Auckland Council a “Frankenstein monster” and saying it will result in “a less democratic and less independent Auckland.”

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is objection.

Question Time

Hon Dr NICK SMITH (National—Nelson) : I know that it is normal practice to lodge applications for urgent questions prior to the beginning of question time, but I note that a statement has been issued by an electricity commissioner—an independent commissioner—just 5 minutes ago, saying that he is being sacked from office, and expressing extreme concern about the way in which his independent decisions have been interfered with. I seek the leave of the House—and I do so now so that the Minister of Energy might have reasonable notice—to ask an urgent question of the Minister, following question No. 12, in respect of the sacking of that electricity commissioner.

Madam SPEAKER: Leave is sought. Is there any objection? There is no objection.

Misuse of Drugs Act—Effectiveness

10. JACQUI DEAN (National—Otago) to the Associate Minister of Health: Does he believe the Misuse of Drugs Act 1975 is working effectively; if not, why not?

Hon JIM ANDERTON (Associate Minister of Health) : Yes, I do. I am aware, however, that any system can be improved and I understand that the Expert Advisory Committee on Drugs is looking at ways to strengthen the consistency of classification of substances, especially new substances, by having clear criteria for assessing any individual or wider societal harm they might pose.

Jacqui Dean: If he believes the Act is working effectively, why are district councils such as Queenstown Lakes District Council now so fed up with the issue of party pills that they are drafting by-laws to ban the sale of party pills in licensed premises, or is he now content to pass off the matter as a local government issue?

Hon JIM ANDERTON: I am very surprised the member should suggest that the Government is passing up this matter. She knows, because I have written to her many times and answered many written questions, that the Expert Advisory Committee on Drugs is considering as I speak, and will be considering before the end of the year, at least four research programmes that the Government has commissioned on benzylpiperazine and party pills in general and what harm they pose in a wide variety of circumstances and groups in the community. If the member is suggesting that we should act as a Parliament in terms of banning any substance, on the basis of no evidence whatsoever before us and before we consider recommendations for change, then her concept of the system is very different from mine.

Jacqui Dean: Does he agree with Clayton Cosgrove that “… party pills are starting many young people on a dangerous path to harder drug use, and the manufacturers and promoters of these pills can no longer deny this fact,”; if so, why will the Minister not take stronger action to restrict the availability of party pills and stop claiming that he needs further evidence from the expert advisory committee?

Hon JIM ANDERTON: With all due respect to my colleague, he does not have the evidence. The evidence is being considered by a wide range of research groups that will report to the Government and the Expert Advisory Committee on Drugs, and then the Government will be advised on a matter of fact. The surveys that have been taken partly support the view that if people use benzylpiperazine it might affect their decision to use harder drugs, but on the other hand there is sufficient evidence as well through those surveys that some people taking them are avoiding harder drugs, so “You can pay your money and take your choice.”

Sue Moroney: Has the Minister seen any reports on a party pill petition currently before the Health Committee?

Hon JIM ANDERTON: Yes, I did see a media release that I found somewhat confusing. It was a complaint by the member for Otago about the lack of progress over her party pill petition, which she accused the Government of ignoring. I realise the member is new to Parliament, but the Health Committee is not a Government committee and, in fact, four of her colleagues are on the Health Committee including Tony Ryall, the health spokesperson for the National Party. I suggest she should talk to her colleague if she wants her petition to make more progress on the committee, on which her party has four members.

Jacqui Dean: Does the Minister believe it is an effective use of taxpayer funding to publish pamphlets explaining how to use drugs, such as P, which state: “When using a new batch always be cautious about what you are using and only try a little at first.”, and: “If swallowing P put it in an empty pill capsule or wrap it in a cigarette paper.”; if not, how does this discourage the use of recreational drugs?

Hon JIM ANDERTON: Of course, in a question like this in the House the member chooses selectively what she quotes. [Interruption]

It is true. I will read out other quotes that basically say P is illegal; do not use P. I wonder why the member did not quote those comments from the pamphlet as well. The pamphlet, of course, takes—

Madam SPEAKER: Would the Minister please be seated. It is impossible to hear what is happening. A question has been asked, and we are waiting for the answer. We are part-way through it. Would the Minister please finish his answer. I just remind members also that both questions and answers are meant to be succinct.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. The member’s question was quite specific, about what a section of the pamphlet states. It did not invite the Minister to quote other parts. The Minister should address the parts on which the member asked the question.

Hon Dr Michael Cullen: I have two points. Firstly, of course the question asked about the pamphlet and therefore invited the member, if he wished, to address the pamphlet in its entirety, including those bits that the member obviously did not wish to have covered. But that, in itself, did not excuse the large amount of barracking that broke out on a very simple kind of question and answer session—after all the promises we had that we were not going to have that kind of barracking in answers.

Madam SPEAKER: I do not think Ministers should be so restricted, but I do come back and say to Ministers to please answer questions succinctly.

Hon JIM ANDERTON: This pamphlet, from an independent, non-government agency—[Interruption] It is independent of the Government; the Government does not direct how the agency works. The pamphlet takes a harm minimisation approach, which recognises that some young people do abuse drugs—

Jacqui Dean: I raise a point of order, Madam Speaker. I have not named the pamphlet, so how does the Minister know which pamphlet I am quoting from?

Madam SPEAKER: I do not think that is a point of order.

Hon JIM ANDERTON: Ministers might be a bit more well informed than the member on these matters, I can assure the House. A harm minimisation approach is taken by this pamphlet, which recognises that some young people will and do abuse drugs, so the information tries to limit the harm they may suffer. It is very similar to advertising that recommends that people eat a good meal before drinking alcohol, and I do not think that the member would be adverse to that kind of advice.

Madam SPEAKER: Before the member asks her question, I would tell those members in that part of the Chamber that they are on their last warning. If we cannot hear the answers, then I will be asking members to leave.

Jacqui Dean: How can he claim that the Misuse of Drugs Act is working effectively when medical professionals are constantly calling for stronger legislation to prevent the escalating problems seen with party pills, when emergency departments are being inundated with teenagers suffering adverse effects, and when we are being overrun with anecdotal evidence of the ill effects of party pills—when will enough be enough?

Hon JIM ANDERTON: The Misuse of Drugs Act and the amendments that this Parliament has passed in relation to party pills with the ingredient benzylpiperazine are based on the 2004 advice of the Expert Advisory Committee on Drugs, which carefully considered the evidence before it and provided recommendations to me, which I put to the House. And I might remind the House that in trying to get the age limit for the sale of benzylpiperazine party pills restricted to 18 years and over, it was done with a good deal of opposition from members of the National Party Opposition. I recall that very vividly, and it is a bit rich for this member to be saying what we should be doing now when the National Party actually opposed even that modification.

Sue Moroney: Has he received any further advice on party pills from the Expert Advisory Committee on Drugs recently?

Hon JIM ANDERTON: I have not received direct advice, but my office has been in touch with the chair of the Expert Advisory Committee on Drugs over a report that the Otago MP Jacqui Dean would be demanding that the Expert Advisory Committee on Drugs take urgent steps to recommend a ban on party pills. I am advised by the chair of the Expert Advisory Committee on Drugs that he is yet to receive any communication at all from the member.

Jacqui Dean: I seek leave to table the following documents. The first is an article from the Otago Daily Times in which the Queenstown Lakes District Council seeks to ban the sale of party pills in licensed premises.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is objection.

Jacqui Dean: I seek leave to table a Ministry of Health - funded pamphlet in which there is advice on how to take “nos”, including the advice to use balloons when inhaling the gas.

  • Document, by leave, laid on the Table of the House.

Jacqui Dean: I seek leave to table a Ministry of Health - funded pamphlet on how to take P, which includes the advice that “less is more” and to use smaller amounts.

  • Document, by leave, laid on the Table of the House.

Police Recruitment—Numbers

11. H V ROSS ROBERTSON (Labour—Manukau East) to the Minister of Police: What progress has been made on police recruitment this year?

Hon ANNETTE KING (Minister of Police) : According to the New Zealand Police, between 30 June and 31 August the number of sworn staff has increased by 76—21 more than was anticipated—and police numbers are more than 200 ahead of those at the same time last year. I have also received reports that more people are attending recruitment seminars, that more people are completing recruitment registration, and that the attrition rate is 4.7 per cent. As I have said, it will always be a challenge to recruit the 1,250 extra police staff, but so far, so good.

H V Ross Robertson: Can the Minister tell the House what other reports she has seen on police recruiting?

Hon ANNETTE KING: Over the past few months I have seen a number of media statements released by Simon Power, in which he has been endeavouring to undermine the recruitment campaign. His latest release was yesterday, in which he claimed there had been a net loss of 41 sworn staff. That is not the case. He constantly gets it wrong. In fact, in the first week of September police numbers were up by 268, compared with those at the same time last year.

Ron Mark: I raise a point of order, Madam Speaker. I am sorry, but given that I wish to ask a supplementary question at some stage, I would have liked to hear that answer. Could I have at least half of it repeated, because the interruptions coming from down the Opposition side of the Chamber just blacked it out.

Madam SPEAKER: Could the Minister please repeat the answer succinctly.

Hon ANNETTE KING: Certainly, Madam Speaker. I said I had seen a number of reports, over recent months, that came from Simon Power, who is attempting to undermine the recruitment campaign. He released a press release yesterday, in which he stated there had been a net loss of 41 staff. I said he had got it wrong and he constantly gets it wrong. In fact, by the first week of September police numbers were up by 268, compared with those at the same time last year.

Simon Power: Can she tell the House, once and for all, when the recruitment campaign for the 1,000 extra front-line sworn officers is supposed to start—was it 1 July, as she has told the House twice this year; was it 1 September, as her spokesperson told the New Zealand Press Association last month; or is it late October, as the police manager of human resources stated yesterday?

Madam SPEAKER: I do not want the Minister to have to repeat the answer, so would members please listen to the answer in a reasonable level of silence.

Hon ANNETTE KING: The recruitment campaign started on 1 July and, obviously, we are having some effect. The television campaign starts in October.

Simon Power: Does the Minister agree with the view of the Prime Minister when she said in August last year that “Some political parties are promising thousands of new police. Such promises are simply not credible.”; if not, why not?

Hon ANNETTE KING: I think any political party that was promising thousands of new police would struggle. I have already acknowledged that it is a struggle to get 1,250. However, we have promised 1,000 extra sworn staff over 3 years, and good progress is being made. It would have been really nice if there could be support across all parties in this House to increase the number of police in New Zealand. That is certainly what New Zealanders want. I think they find it a bit rich to hear the cheap shots from the Opposition on this matter.

Ron Mark: Does the Minister recall New Zealand First predicting that the commitment to recruit 1,000 extra uniformed police would have the flow-on effect of improving retention and reducing attrition, and that the rationalisation of the police recruiting criteria would result in more people applying to join the police; if so, can she advise the House, on the evidence to date, how we are doing?

Hon ANNETTE KING: I recall that all those points were made by New Zealand First. I point out to those who are listening that as part of our agreement with New Zealand First, we are recruiting 1,250 additional police staff. We have interest from those who used to be in the police, because they know that when there are additional staff it makes the load lighter and the job more enjoyable. It also helps to have an increased budget. I have taken particular notice of the police budgets for 1997-98 and 1998-99. I was horrified to see that in those years, under a National Government, the police budget was decreased, not increased.

Housing New Zealand—Investment Return

12. PHIL HEATLEY (National—Whangarei) to the Minister of Housing: Is he confident that Housing New Zealand Corporation’s current investment in housing is returning the most it can for potential residents in need?

Hon CHRIS CARTER (Minister of Housing) : Housing New Zealand Corporation manages over 66,000 homes and has assets worth more than $11 billion. Of course, there will probably always be room for improvement. In the output agreement signed with the corporation this year, Ministers have asked the corporation to advise shareholding Ministers on ways to better utilise what is, in fact, the Government’s largest single asset.

Nathan Guy: Why has the Minister allowed Housing New Zealand to spend $8 million on consultancy fees to oversee the settlement of former Kimberley Centre residents, when that money could have gone into better housing and greater care for the residents?

Hon CHRIS CARTER: That money has gone into improved care for the residents. Under the contract with the Ministry of Health, Housing New Zealand’s role is to acquire and modify homes for the ex-residents of the Kimberley Centre. This is a project worth $55 million. It is a complex project, and we have to get it right.

Georgina Beyer: What has the Government invested in social housing since 1999?

Hon CHRIS CARTER: Since 1999 the Government has invested nearly $1 billion to acquire over 6,000 State houses and to assist families to buy or repair their own homes. In addition, nearly $2 billion has been spent on income-related rent subsidies and the accommodation supplement. Access to adequate, affordable housing is a key commitment of Labour Governments, unlike the Opposition, which extracted over $1 billion from hocking off Housing New Zealand’s assets—mostly to speculators.

Nathan Guy: How can the Minister justify consultants clipping the ticket at around $123,000 per property, costing a whopping 20 percent of the overall budget?

Hon CHRIS CARTER: I am not sure whether the member is very good at maths, but I remind him again that the total project is $55 million. This is a very complex project—

Gerry Brownlee: Point of order—

Madam SPEAKER: I know what the member is going to say. I remind Ministers to stick to answering the question without additional comments.

Gerry Brownlee: I raise a point of order, Madam Speaker. I think he should withdraw that, because this Minister in particular dodges answers to questions with smart answers like this all the time. I would not be at all surprised if we will be expected to allow him to correct his answers later in the day, because that is his usual pattern.

Madam SPEAKER: That is unnecessary also. If the member who asked the question took personal offence, then obviously the Minister should withdraw and apologise. He did not. Can the Minister please just answer the question without these asides.

Hon CHRIS CARTER: The member has alleged that 20 percent of the total project has been spent on consultancy fees. I remind the House again that this is a project that I understand will reach about $55 million; $8 million has been spent on consultancy, but we have to get it right. We are not talking about people buying and selling houses. We are talking about modifying extensively both existing and new houses so that people with very highly specialised needs can be accommodated.

Nathan Guy: Why were modern homes completely gutted and renovated, and which silver-tongued consultant got paid for those wonderful words of advice?

Hon CHRIS CARTER: I remind the House again that these houses and residences have been highly modified for residents who have very specialised health requirements. This is an expensive process. We have done it so that the patients can have a better quality of life.

Georgina Beyer: Has the Minister seen any reports of Housing New Zealand residents who have found that Housing New Zealand has in fact helped them in a time of need?

Hon CHRIS CARTER: Yes, I have seen a report from a former Housing New Zealand tenant who said that he appreciated the safety net a State house provided. I quote: “I really couldn’t give the answer of what would have happened to us otherwise.” That was John Key.

Nathan Guy: Does the use of costly consultants mean that thousands of employees at Housing New Zealand Corporation are not suitable to do the job, and how does this fit with the Prime Minister’s statement that “we have strengthened capability [in the public service] by increasing numbers of permanent staff and seeking to reduce reliance on consultants.”?

Hon CHRIS CARTER: The member who asked the question is, I understand, a local resident of the area where the Kimberley Centre is located. He must be aware, as some other members of this House surely are, that the residents of the Kimberley Centre are patients in permanent long-term care. This development at the Kimberley Centre—relocation of patients—is a highly specialised process where very specialised accommodation must be developed.

Nathan Guy: Does the Minister agree with a Housing New Zealand Corporation internal staff email released under the Official Information Act that it is hard to see value for these consultancy costs?

Hon CHRIS CARTER: I am not aware of that email; I would really welcome the chance to look at it. I am aware that the member who asked the question comes from a party that hocked off $1 billion of Housing New Zealand’s assets.

Nathan Guy: I seek leave to table a reply from the Minister to my parliamentary question stating that the total cost for the consultancy work for this project is $8 million.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. This point of order is in respect of the last answer given by the Minister. In the interests of orderly conduct in the House I do not think a Minister should be able to talk about the hocking-off of $1 billion of assets by a political party, such as National, without being able to prove it.

Madam SPEAKER: I ruled that part of the answer out of order. It was out of order in that context. But the Minister, of course, is entitled to table anything he likes, like any other member.

Hon CHRIS CARTER: I seek leave to table a document demonstrating how much of the Housing New Zealand assets National sold off when it was in Government.

  • Document not tabled.

Nathan Guy: I seek leave to table an internal email from a Housing New Zealand Corporation employee released under the Official Information Act that mentions how it is very hard to see value for these consultancy costs.

  • Document, by leave, laid on the Table of the House.

Nathan Guy: I seek leave to table an address by the Prime Minister to Victoria University School of Government’s prize giving on 11 October 2005 where she states: “In the area of core public service we have strengthened capability by increasing the numbers of permanent staff and seeking to reduce reliance on consultants.”

Madam SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Urgent Questions

Electricity Commissioner—Term of Appointment

1. Hon Dr NICK SMITH (National—Nelson) to the Minister of Energy: Does he agree with the statement today by electricity commissioner Roy Hemmingway: “I can only conclude that I am being removed from office because I stood up to the government as an independent regulator should. I have insisted that regulatory decisions be on the basis of law and the facts and not on what politicians want.” and his further statement that the politicisation of the Electricity Commission by the Government will hurt both electricity investors and consumers; if so, why has the Government abused its powers and interfered with the work of the Electricity Commission?

Hon DAVID PARKER (Minister of Energy) : No, I do not. The commissioner has served his full 3-year term, in accordance with the terms of his appointment. Neither Mr Hemmingway nor anyone else in his position has an automatic right to appointment for a second term. It is true that Mr Hemmingway has competently overseen a complex and heavy workload at the commission, for which I thank him. Nevertheless it is also true that a dysfunctional relationship between the Electricity Commission and Transpower has developed, which the Government has moved to resolve through changes on both sides of the divide. We have chosen to do that for the benefit of the electricity system as a whole and of consumers throughout New Zealand.

Hon Dr Nick Smith: What does it say about this Government’s respect for independent statutory officers, when the Prime Minister dismisses the views of the Auditor-General and he sacks an electricity commissioner for standing up to the Government; is that not proof of the adage that power corrupts and absolute power corrupts absolutely?

Hon DAVID PARKER: The commissioner has not been sacked. The commissioner has served his 3-year term. I repeat that given the dysfunctional relationship between the Electricity Commission and Transpower, the Government has moved to advance that issue through changes on both sides of the divide.

Madam SPEAKER: Standing Order 379(3) permits only one supplementary question.

Hon Dr Nick Smith: I seek leave of the House to table the statement from Mr Roy Hemmingway, which contradicts the statement put out also by the Minister and points out the interference and the confusion there is in policies, and how electricity investors and consumers will lose from that.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Hon DAVID PARKER: I seek leave to table a copy of my letter to Mr Hemmingway, confirming that he will not be appointed for a second term.

  • Document, by leave, laid on the Table of the House.

General Debate

GERRY BROWNLEE (Deputy Leader—National) : I move, That the House take note of miscellaneous business. This is the week that New Zealanders learnt that what they had known for a long time was, in fact, true—that Helen Clark considers her Government to be above the law. She believes that whatever her Government does, does not need to be scrutinised by the law in this country. Further, she believes that if her Government does something, then it most certainly cannot be unlawful.

This all goes back to the very longstanding statement made by the Prime Minister some years ago, when she said that by definition she could not leak. Do members remember that? It was right at the very beginning of her term as Prime Minister when she said she was above the law. Today she has confirmed it again in the House by saying Labour will not repay the $446,000 it stole out of the taxpayers’ purse to pay for its election pledge card.

Let us get some of the history of this in order. There had been concern after the 2002 election about the way in which some parliamentary funding was used. Throughout 2003 the Parliamentary Service Commission met—Dr Cullen was part of it, a number of National members were part of it, and the late Mr Donald from the Green Party was part of it. There was a recommitment to the rules of how expenditure should be used. In addition, it was made abundantly clear that if parliamentary funds were misused, then responsibility for those funds and the paying back of those funds lay with the party leader and the members of that party. So we are not talking about the Labour Party having to go out and get the $446,000; we are talking about the Labour members of Parliament having to get that $446,000.

I want people to tell us how many members on the Opposition side of the House have overspent budgets accidentally in the past and have been required to write a cheque to pay the difference. There are quite a number, and I will stick my hand up—I am one of them. In 10 years I have only ever done it once. I overspent my parliamentary budget and I paid it back with a personal cheque. That is what the Labour Party members should be doing. But instead they have the Prime Minister out there saying: “The rules are the rules, and the rules are what I make them, and the rules say—because I made them so—we didn’t do it.” Well, that is not going to wash with the 81 percent of New Zealanders who say they should pay the money back.

I ask Labour members why they are taking this position. Why do they not just pay the money back? It is because they are so convinced that they are the only group that could govern this country. It does not matter that we are going nowhere; it does not matter that we are slipping behind the rest of the world; it does not matter that all of their measures are a mess; they are going to do what it takes to stay there.

Mr Maharey will recall that a once-great Labour leader said that New Zealanders had a right to good health and good health services. Have they got those now under a Labour Government? No, they have not. He said they had a right to a good education and good education services. Have they got those? He said they had a right to good housing and access to clean housing. Have they got those, with those waiting lists? He said they had the right to be secure in their own country. Which people feel secure in this country when they read the newspapers at the end of the weekend, and see some incompetent like Mr Anderton is encouraging the drug industry in this country? He said they have a right to feel secure as a nation. We do not need to ask the question there, because the answer is abundantly obvious. Those were five rights propounded across this country by the great Norman Kirk, and this Labour Government has squandered that legacy. It has no right to stay there.

I point further to the extraordinary position that we have of Mr Hodgson, on Monday, saying on the radio that Labour would not pay the money back. He then headed into his ministerial office, emailed the district health boards around the country that had overspent on treating people with health needs, and told them that they had to pay it back. I say to Mr Hodgson that is a double standard and there are some answers he should give this House.

Hon STEVE MAHAREY (Minister of Education) : It is good to follow on from the leader of the National Party, and it is also interesting to note the way that National always has to turn to a Labour politician to be able to find something majestic to say.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. Could I just say that despite there being no demur from National members, it is not right for the Minister on his feet to refer to the present cited incumbent as the leader of the National Party, when he is not and never will be. But I was astonished that nobody on that side protested.

The ASSISTANT SPEAKER (Ann Hartley): The member will correct that—

Hon Dr Nick Smith: He’s allowed to do that, is he? You are just going to put up with that.

Hon STEVE MAHAREY: Shadow Leader of the House—

The ASSISTANT SPEAKER (Ann Hartley): Please be seated. I will ask the member to stand and withdraw and apologise.

Hon Dr Nick Smith: I withdraw and apologise.

I raise a point of order, Madam Speaker. During the general debate it has been a longstanding practice that members do not interfere with and interrupt a brief 5-minute speech. I would have expected, after the non-point of order from Mr Peters, that you would have pointed that out and given some ruling of that sort. That is what I wish you to make plain to the House, and I ask you to bring Mr Peters to order.

The ASSISTANT SPEAKER (Ann Hartley): If the member had listened, he would have heard that I asked the member to withdraw and apologise, but there was so much noise coming from that side, and he did not listen.

Hon STEVE MAHAREY: It is always striking that when National members want to find something majestic to say about this country, they go where? They turn to a Labour leader. There was not one single National leader they could turn to, for a quote such as the one Gerry Brownlee raised in his speech. I say to Mr Gerry Brownlee that Norm Kirk was a Labour leader. Norm Kirk was one of us; Gerry Brownlee is no Norm Kirk.

Over the last few weeks, there has been a prolonged, very loud, and often vitriolic debate about election spending. Given the nature of that debate, it has been quite hard at times to get the facts on the table, but I want to do that today. Labour is saying that it is rejecting National’s accusations of inappropriate election spending, because we have played by the rules. Indeed, all parties in this House, over a number of elections, have played by the rules. Those rules are very simple. They allow for Parliamentary Service funding to be used during an election period—as long as the material produced does not ask for votes.

A great deal has been made of the fact that there were changes in 2003. Let me say what those changes were. They amounted to putting the parliamentary crest on anything that was funded by Parliamentary Service money and—not or—putting the address that had to be referred to. Parties have played by those rules. They played by those rules in 2005. It is because Labour played by those rules that we are at pains to point out that over a whole range of elections, all parties played by those rules. It therefore makes sense to say that Bill English was able to produce a commitment card in 2002 under those rules. Labour produced one in 2002; it was reasonable for us to produce that card in 2005, because nothing of substance had changed. Either both cards are wrong or both cards are right. We are not saying that two wrongs make a right. We are not saying that. We are saying that we played by the rules, Bill English played by the rules, and what we want is consistency of rules.

If someone does not like those rules, they can change them, but let me just say that what the police had to say, I think, provides a reasonable guide. Having looked at these issues, I say that the context for a complaint would be an amendment to the Parliamentary Service rules for advertising—that is, clarification of the rules. There can be no case for suddenly saying, after the fact, that people should have behaved in a different way. That would be wrong.

Alongside those issues, some other things have been of concern. The Exclusive Brethren acted in a way that is not acceptable in a democracy. They spent a lot of money secretly supporting the National Party. My colleague Phil Goff pointed out that they lied about policy. They lied about the Labour Party defence policy. Now they complain they are being attacked—and, yes, they are. But as religious studies lecturer Peter Lineham said: “They deserve everything they get.” It is naive for the Exclusive Brethren to think they can come into politics, lie about people’s policy, attack them in their electorates, seek to overthrow them in their electorates, and not have a robust defence put up by the people they attack.

There is concern, too, about donations to parties—donations that are not revealed. There are suspicions that people with a lot of money are buying policy, or perhaps asking for a change of policy. There are worries, for example, that accident compensation policy, which National promised to change if it became the Government, may well have backing from people who have something to gain if there is a change of Government. Third-party funding and anonymous donations are a worry in many countries, and they are now a worry here.

SIMON POWER (National—Rangitikei) : Well, one thing we do have to admire about Labour is its dexterity of explanation. In the last 3 weeks we have seen Labour shift position on this issue two, three, and four times. When Steve Maharey gets up—a week after launching a full-scale attack on the National Party—and starts offering explanations to the people of New Zealand, then we know that Labour is on the downhill slide. More important, Labour could at least have picked a Minister to give the explanation—that it was working within the rules—who did not go red and smile when he said it.

Steve Maharey knows, as does every intelligent member of the Labour Party front bench—so that is probably Steve Maharey—that Labour has broken the rules and is behaving like a Government that thinks it is above the law. The public of New Zealand just will not swallow it. At the end of the day, the way these things are dealt with is to front up, say one got it wrong, repay the money, save a shred of credibility, and try to move on. But to offer up the explanation: “We’ll legislate because the Auditor-General got it wrong.” will not wash well during the selection process for the next UN Secretary-General. Organisations like that are not interested in explanations from Parliaments like ours in New Zealand that simply say they will not pay the money back. The remedy is to pay the money back.

The Auditor-General has made it very clear that the National Party and the Māori Party have exercised that remedy in the appropriate way. At this point in the process, that was quite an extraordinary statement for the Auditor-General to make. Effectively, it signalled to the Labour Party that the way through the problem is just to pay the money back. That is a very straightforward and simple approach spelt out in black and white.

The Labour Party was warned twice about the spending cap. On both occasions it chose to ignore that advice, then, when it got it wrong, it took money from the hard-working taxpayers of New Zealand—the workers; the very people out there whom Laila Harré is working for, right now. Labour took their money and applied it—knowing that it could not do that under the law—to purchasing and distributing the pledge card. That is a practice that the electoral legislation describes as corrupt. The simple way to save face is to write out the cheque. Labour should just write out the cheque and let Parliament, the country, and the workers of New Zealand get on with it.

Phil Goff and Annette King sit pained as this process draws out, just as they sat pained through the Taito Phillip Field process as that drew out. All the while, Phil Goff and his caravan in Mt Roskill are waiting, waiting, waiting for the appropriate moment when he and Annette King can finally realise their dream to run the Labour Party. Yet Annette King came to this House today and said that the police recruitment programme was working. Well, when the height that a recruit has to scale has been dropped to 4 feet, I am all for Lindsay Tisch joining the police! For her to say that that will work is not going to make it. I tell each member of the Labour Party to write out a cheque for $8,600 each and be done with it. Be done with it! Labour should pay the money back, let New Zealanders get on with living their lives, and stop pretending that laws apply to everybody else in New Zealand except for those members of the Labour Party who are desperate to hang on to power. I say to Labour that the clock is ticking—pay the money back.

Hon PETE HODGSON (Minister of Health) : The member who has just resumed his seat has become more and more shrill, more and more strident, more and more florid, more and more repetitious, and more and more wrong. Labour does not believe it is fair, or proper, or natural justice to change the rules after the event. We do not believe it is reasonable to change the rules retrospectively or to reinterpret the rules retrospectively. That is not OK in terms of legislation, and it is not OK in terms of rule making. Furthermore, the Labour Party—and every other political party in the House—undertook similar, or exactly similar, spending in 2002 as it did in 2005. That spending was validated by the Auditor-General. Indeed, as it happened, it was validated by the same Auditor-General who is the Auditor-General today.

In 2002 Labour had a pledge card; in 2002 National had a pledge pamphlet. They were both deemed acceptable, after the event, by the Auditor-General. In 2005 Labour had another pledge card, and the National Party made no such expenditure. The reasons for that I will explain in a minute. So the parliamentary funding that applied in 2002, and that was OK in 2005, was applied in an exactly similar way by the Labour Party, yet the Auditor-General has a draft opinion, which was that things are not as they should be—as if they were as they should be, in 2002. You see, there were rule changes between 2002 and 2005.

My colleague Steve Maharey has pointed to one of the rule changes—that is, the addition of a parliamentary crest. What he has not done is to point to the other rule change, which was the more substantive change, but it loosened the rules and did not tighten them. That is to say, if the 2005 rules are to be interpreted as the draft Auditor-General’s report would have us interpret them, then the 2002 rules must be even more tightly interpreted, and National’s 2002 expenditure—and, for that matter, Labour’s 2002 expenditure—was even further outside the rules than the 2005 expenditure was.

Why is this issue of rule-change such a confusion to the public? It is because the National Party wants it to be. Dr Brash, who either did not read the rule changes or decided himself to interpret them according to how he wishes, went on the attack, saying that the changes to the rules made Labour’s 2005 expenditure illegal. It actually did the opposite. It loosened the rules for 2005, compared with those in 2002.

Why has National decided to confuse the issue in other respects? Why is the National Party saying the Auditor-General sent a report to parties in June 2005 regarding a tightening-up of the rules before the election?

Actually, the Auditor-General did no such thing. That report is public. The report is clear, even at the bottom of the first page of the foreword, that the Auditor-General did not intend that there be any changes for the 2005 election, because he expressly asked that it be looked at after the election, and that if there was to be a new framework, it be developed after the election. So there is the National Party running confusion about rules, and running confusion about the Auditor-General’s 2005 report. Why? It is because National wants to create confusion.

This is the same National Party that voted for the 1993 Electoral Act provision that stated that if people donated under $10,000 they could remain anonymous, but if they donated above $10,000 to any political party, they must put their name into the public arena. National voted for that legislation in 1993—I was on the select committee that devised that legislation. National then set up trusts to frustrate that legislation, so much so that 92 percent of its entire budget went through that laundering process. It is not OK to vote for legislation in the House, then to set out actively to frustrate it in reality.

Hon Dr NICK SMITH (National—Nelson) : That was the Minister of Health, Pete Hodgson, who is saying to doctors, pharmacists, and hospitals that they have to pay the money back. But when it comes to the Government, he says it writes the rules, so it will take public money, use it wrongly, and not have to pay it back. What we witness in this country today, sadly, is just one case after another of the gross abuse of power by this Labour Government. It is trampling all over the independence of statutory officers like the Auditor-General, it is trampling all over the Chief Electoral Officer—the referee for our free and democratic country—and it is stomping all over the independence of the Solicitor-General.

Today the Government says that regardless of what the Auditor-General says, it followed the rules. That is a bit interesting, because a few days ago the Government said it would not decide whether it would pay the money back until the Auditor-General gave his final ruling. Now the Government says it does not give a stuff what the Auditor-General says and it will not pay the money back. I say to the members of this arrogant Government that every New Zealander knows the common-sense fact that this pledge card, issued 2 weeks prior to the election, was part of Labour’s election campaign. To pretend anything different from that is to treat New Zealanders with disdain.

Hon Lianne Dalziel: It’s exactly the same as National’s.

Hon Dr NICK SMITH: I say to Lianne Dalziel that it is really interesting that Mike Smith wrote to the chief returning officer 2 weeks before the election to say that Labour would accept that ruling, and that the pledge card expense would be included in its election return, only to backtrack on that afterwards.

But it is not just in the area of electoral law that this arrogant Government tramples all over independence. Today we have seen the sacking of the chairman of the Electricity Commission. Do members remember that Mr Roy Hemmingway was appointed by this Labour Government? He was interviewed personally by the Minister of Energy. I want to read what he had to say today, for the benefit of the people of New Zealand. “I can only conclude that I am being removed from office because I stood up to the government as an independent regulator should. I have insisted that regulatory decisions be on the basis of the law and the facts and not on what politicians want.” Mr Hemmingway says that this Government has been interfering with the independence of not only the Auditor-General but also the Electricity Commission.

Mr Hemmingway goes on further to state: “I was promised that the Electricity Commission would be independent of the government’s wishes. This has not turned out to be true. Regardless of what it says, this government has not trusted regulation to deliver the outcome that only good regulation can …”. He goes on to state: “Politicising electricity decisions will hurt investor confidence in the sector and result in an even more confusing muddle of policies than now.” We have an awful mess within the electricity sector. It is failing on every front. The lights are going out in Auckland, prices are going through the roof, greenhouse gas emissions are growing at the fastest rate of those in any developed country, and now the Government is shooting the messenger—the electricity commissioner—who has attempted to do his job competently.

But the real worry is the way that this Government is tearing up the constitutional fabric of our democratic society. We have independent officers like the electricity commissioner, the Solicitor-General, and the Auditor-General to keep this country honest. Labour says that what it says goes, regardless—that it will abuse its powers. Whether it is with regard to the Electricity Commission, to electoral law, to speeding motorcades, or to forged paintings, this Government believes it is above the law. It is time New Zealanders stood up and said: “Enough is enough!”. Why do we have, in a sector as important as the electricity sector, the Government trampling all over the independence of the Electricity Commission? That is a disgrace. This Government is rotten to the core.

SUE BRADFORD (Green) : The proposals from the four metropolitan mayors and the One Auckland Trust to form a new “super city” across the Auckland region are an affront to democracy. I find it incredible that even some members of the current Government, including the Minister with responsibility for Auckland Issues, are countenancing such a move, involving as it does the abolition of the Auckland Regional Council, the forced restructuring of up to seven councils into a much smaller entity, and the possibility of a greater Auckland council consisting, at least in part, of non-elected representatives. This is one of the most barefaced bids for power by the few over the many that I have seen in my political lifetime. I do not know why the One Auckland Trust and the mayors seem to think the people of Auckland will swallow this particular dead fish whole, without looking at what is really going on.

Sure, there is plenty of discontent over the size of rates increases and concern over slow progress on things like our transport infrastructure, but it is incredible that some of those currently in power think citizens’ valid concerns over those things can be translated into a will to lose most of their rights to democratic participation in local government. It is also a myth that somehow the “super city” proposal will lead to a decrease in rates. In fact, the inevitable massive bureaucratic restructuring—and we have seen heaps of those before—and the bottomless trough of public money that will go to consultants are, in fact, likely to lead to greater rather than lower cost to ratepayers.

The Green Party believes that the ability of people to participate in the governance of their local communities should be maximised, not minimised. We will end up with a greater Auckland council run by fiat by a kind of corporate board that governs Auckland in the interests of mainly rich, white, powerful men. The interests of tangata whenua, Pasifika peoples, women, refugees and migrants, low-income people, and their sectoral and geographical communities are unlikely to get any look-in, at all. Nor will the interests of those living in rural and outlying localities like Pukekohe, Wellsford, Muriwai, or all the others be likely to get much chop from a “super council” that is focused on promoting the interests of a Queen Street - oriented group of mayors and businesspeople.

The move to get rid of the Auckland Regional Council is an equally dangerous part of the new proposals. The Auckland Regional Council plays a crucial and balancing role in providing Resource Management Act functions, including regional planning in critical areas such as air, water, transport, and urban limits. The metropolitan mayors and the One Auckland Trust do not say anything about what will happen to the physical environment of our region, should their grandiose plans come to fruition. I have a strong feeling that a big part of the motivation for what is going on right now is, instead, to try to find a way not only to grab the Auckland Regional Council’s resources but also to get rid of an obstacle to unfettered growth beyond the current urban perimeters. With the advent of climate change and peak oil, cities of the future will need every bit of environmental and social sustainability they can achieve—that includes Auckland. This proposal heads straight in the opposite direction to that. Like a number of other commentators over the last week, I believe that this is really a naked attempt by the big-city mayors to control all regional planning, to get their hands on strategic regional assets, and to widen the rating base for the Rugby World Cup stadium.

What is the role of the Government in this? I was stunned to read on Friday that Judith Tizard, Minister with responsibility for Auckland Issues, actually welcomes the mayors’ proposal and appears to be buying into their agenda. I hope that she and other Labour MPs will look at what is going on here a little more closely, now that the first burst of enthusiasm has passed. The lack of commitment from the Hon Mark Burton in answering our questions on this topic this afternoon gives me hope that perhaps not all of Labour is equally committed to this wholesale attack on local body democracy.

The Green Party would be the first to agree that there are ways in which local governance in the Auckland region could and should be reformed, but the “super city” proposals are not the way to do that. The Government and local government should be working with the people of Auckland on how to deepen and extend local democracy and environmental protection and planning for the future that awaits us, not weakening all those things. We should be looking at maintaining at least the current level of political representation on our councils and giving more resources and power to the community boards, as well as moving towards single transferable voting systems. We want there to be want more democracy in Auckland, not a whole lot less. We want a future in which our environmental and our social goals are equally protected. This proposal flies in the face of all that.

DIANNE YATES (Labour) : There is obviously an urgent meeting of the National Party this afternoon, and I am really quite interested that Mr Henare does not seem to be part of it.

Hon Mark Burton: No justice.

DIANNE YATES: There is no justice. Recently I noticed a cartoon that had members of the National Party sitting around looking at the polls, and one of the captions said: “If only we had Helen Clark”. I note today that Gerry Brownlee, one of the candidates for National Party leadership, spoke at some length on the qualities of Norm Kirk. There is obviously a huge gap in leadership in the National Party, and I am really pleased that those members recognise the immense capacity of the Rt Hon Helen Clark and the wonderful contribution that Norm Kirk made to this country.

Labour plays by the rules, as previous speakers on this side of the House have said. When it comes to an election, we are very, very careful to play by the rules. I have before me a letter written by Bill English in 2002 and it plays by the rules. It does not ask for money. It does not tell readers to vote for him. It has several pages of what Bill English believes in, and it has a tear-off form that can be sent back to him—obviously, that postal service is paid for by the Parliamentary Service. I can assure the House that MPs are very, very mindful of the rules at election time. We are also very, very mindful of the Electoral Act, which says that MPs can function as MPs right up until the election. We are able to put out our normal advertisements and newsletters; that is the case. I know that personally, because I have rung up the Parliamentary Service and asked whether it was OK and within the rules to do that. I am sure that I am not the only one who has done that. Along with Bill English, I have been very careful not to say “vote for me”, “vote for my party”, or “give me money”. As previous speakers have said, the Labour Party has been very, very careful to abide by the rules.

Talking about the average New Zealander, I think the average New Zealander is very concerned about transparency. I think it was Chris Trotter who wrote an article saying that the engineers union gave around $60,000 towards Labour’s campaign. The donation was transparent; it was open; it was out there. Everybody knows about it—we declared it. I think average New Zealanders do not mind what people do in their private lives or in their public lives; what they care about is people trying to hide things—people trying to hide behind trusts and behind third parties. When things are not transparent average New Zealanders get suspicious and start to worry. They ask themselves what else they do not know about, what else they have not been told, and what else was not declared. The Labour Party has never not declared any donation. We are very, very careful about who donates what. We are very, very careful about who distributes our newsletters. We are very, very careful. In the last election, people went around with a razor blade and cut off the authorisation on my signs. Those people must have known that there has to be an authorisation on a sign. They deliberately went around with a razor blade and cut an inch off the bottom of my signs.

Hon Lianne Dalziel: What were the public meetings like?

DIANNE YATES: The public meetings in Hamilton were absolutely outrageous. Three rows of people, who were wearing a costume that has become very familiar in this House, shouted out erroneous comments about my sexuality, would you believe, Madam Assistant Speaker. It was absolutely appalling. These are people who say they worry about the conduct of MPs.

Hon Lianne Dalziel: And they talk about hate speech.

DIANNE YATES: They talk about hate speech and a whole range of things. In this House we have to be open, upfront, and transparent—that is what the people of New Zealand are looking for. At the time of an election or any time when politicians are more concerned about process than content—and I look at members opposite who are making strange noises—they are in trouble. Labour has delivered on that pledge card. There are more teachers, we have removed interest from student loans, and unemployment is at 3.6 percent—the lowest rate in the OECD. We will have 18,000 apprentices by 2008.

Hon TAU HENARE (National) : If it smells like a rat and looks like a rat, it most probably is a rat. If it smells like corruption and looks like corruption, it absolutely is corruption. Mr Maharey said that Labour played by the rules. No, Labour members did not do so. They stole from the public. They stole money from the taxpayer and used it to try to get re-elected, and everybody in this country knows about it. They thieved and stole, and that is corruption.

The ASSISTANT SPEAKER (Ann Hartley): The member cannot say that.

Hon David Cunliffe: I raise a point of order, Madam Speaker. Members in this House have previously taken exception to the word “corruption”. It has been ruled out of order. In this case the member has repeated the word and said that National played by the rules. I wonder whether he means to include the destruction of election hoardings in that description.

The ASSISTANT SPEAKER (Ann Hartley): The member knows he cannot use that word. He will withdraw and apologise.

Hon TAU HENARE: I withdraw and apologise.

Lindsay Tisch: I raise a point of order, Madam Speaker. This is a point of conjecture. On Thursday, when the same issue came up, Speaker Wilson said she would not rule out the word “corruption”. Previously, Madam Assistant Speaker, you and Assistant Speaker Ross Robertson have ruled out the word. Speaker Wilson said on Thursday that the word “corruption” could be used, and now we are getting a different interpretation. I am not challenging your ruling; I am just saying that there is a difference in interpretation and that my colleague Tau Henare used the word on the basis that Speaker Wilson allowed it to be used last Thursday.

The ASSISTANT SPEAKER (Ann Hartley): A member cannot call a member or a party corrupt. That is the difference.

Hon TAU HENARE: Well, if that is the case, then maybe the organisers of the Labour Party, such as Mike Williams, etc., are the corrupt ones. Yes, all of those people are the corrupt ones.

Hon David Cunliffe: I raise a point of order, Madam Speaker. You have just ruled, not 1 minute ago, that it is out of order for someone to call an individual or a party corrupt. The member responded by naming individuals and alleging they were corrupt. That is clearly out of order and would be defamatory if said outside the House.

The ASSISTANT SPEAKER (Ann Hartley): A member cannot use that term for a member of Parliament or a party. He did not actually do that.

Hon TAU HENARE: I mentioned Mike Williams because he is the so-called president of the Labour Party. What about all his mates in the union?

Let me tell members what the Service and Food Workers Union did. It stole $240,000 from its members, without telling them, and gave it to the Labour Party so that the Labour Party could use it.

Hon Member: You’re making it up.

Hon TAU HENARE: Making it up, am I? The member should just read the last Investigate magazine to see how the union stole $240,000 from its members and gave it to the Labour Party. If that is not corruption, I do not know what is.

I shall go through the events. In June 2003 the Auditor-General invited every party to meet with him to discuss election funding. What happened? The Labour Party leader, Helen Clark, and Michael Cullen actually refused to meet with him, because they knew that what they were doing was absolutely wrong and absolutely against the law—and it will come out. Dianne Yates moaned on about somebody cutting off the authorisation on her sign during the election campaign. Maybe the face should have been cut off it, as well. In July 2005 the Auditor-General wrote to everybody in order to reiterate the election spending rules. And what happened? The Labour Party broke the rules, and no manner of spin by Labour members in this House will let them get away with it.

Dianne Yates: Party-hopper.

Hon TAU HENARE: Absolutely! I am a party-hopper. So was Winston Churchill, but that is another story.

What we are talking about here is the dirty, sleazy tactics of a Government in trouble. It would have been easy for Helen Clark—for “Hele Baba and the 49 thieves”—to front up and say: “OK, if the Auditor-General says we’ve done wrong, we’ll pay it back.” But, oh no, not only does the Auditor-General believe that Labour Party members did wrong, in their sleazy, dirty manner, but those members front up to this House and say they are not going to pay the money back, even if he tells them to. And that leads this nation down the path of all the people out there—the ones whom we purport to represent and the ones whom this House purports to represent—

Hon David Cunliffe: I raise a point of order, Madam Speaker. You have established in previous rulings that it is against the Standing Orders to refer to a political party as being corrupt. The member has taken variations on that theme by referring to the president of our party in those terms. He has used a pejorative descriptor of our parliamentary party and has used the words “dirty” and “sleazy”. I put it to you, Madam Assistant Speaker, that those words connote the same meaning as the word you have previously ruled out, and I seek your considered ruling on whether they are acceptable parliamentary terms.

Hon TAU HENARE: Speaking to the point of order, I point out that the word “corruption” has been ruled out by you, Madam Assistant Speaker, and I accept that unreservedly. The words “sleazy” and “dirty” have been used in this House not only today but also yesterday. They were also used last week and the week before that. Are you now going to rule the words “sleazy” and “dirty” out, as well?

The ASSISTANT SPEAKER (Ann Hartley): No, I am not. But I say to the member that any words can be ruled out if they are liable to bring disorder to the House.

Hon TAU HENARE: Those members are sleazy. They are dirty. That is what we see here and that is what the public sees. In 2 years’ time that lot of sleazy, dirty people over there who try to use taxpayers’ money to get re-elected will be turfed out on their ears. And why? It will be for one reason only: they did not play by the rules. Maharey gets up in this House and has the audacity to say they played by the rules, even though the Auditor-General said they did not. The Labour Party spin machine has been out there working overtime, because those members do not have the money to pay back the taxpayers. Labour is broke, and its members are morally broke, as well.

RUSSELL FAIRBROTHER (Labour) : If it smells like a rat and looks like a rat, then we are probably talking to the last speaker. The words “dirty” and “sleazy” are somewhat more of a description of what that member sees in the mirror in his office. In my speech I was going to dwell for the 5 minutes available to me on what Labour promised in the pledge card and what it has delivered: more hip operations, more police, interest-free student loans, more apprenticeships—

Hon Tau Henare: What about the $400,000 worth?

RUSSELL FAIRBROTHER: I tell the member not to interrupt. He has had his say, and he could not say anything then.

Instead, I think I will give a case example of one of the member’s own colleagues. I will throw away the opportunity to talk about the good things Labour has done. We play by the rules; that member’s party does not. Here is a good case study. There is a member in this House whose election fund came 10 percent from local party members and 90 percent from big business. That is appalling. When we say that the Exclusive Brethren funded the National Party’s exercise, I can say that I received a letter in my office from those seven Exclusive Brethren members, pointing out that, no, they were not Exclusive Brethren, but they were all businessmen. They are obviously big business men who choose to use the Church. Why do they use the Church? In Hastings, Hawke’s Bay, people of the Church rang and push-polled. That is documented, but big business, by way of our newspapers, would not report upon that hard and fast fact.

And what did big business do in the case study I am talking about? Ten percent of the member for Napier’s funding came from National Party members. The other 90 percent came from big business—from millionaires-plus, including an insurance company. Another big business contributor was a printing company that printed, without authorisation, the member’s pamphlets. The first lot of pamphlets was distributed right around the electorate without any authorisation on them, but the pamphlets in the second distribution had a rubber-stamp mark on them that had been smeared out. That was breaking the rules. That was not playing by the rules. That was a clear breach of the rules. Those pamphlets were funded by big business. That member paid 7 percent of the market price for pamphlets to be distributed around Napier—pamphlets that were not attributed. A complaint was made, so he rubber-stamped the second distribution of pamphlets. But that was not playing by the rules, because those pamphlets were funded by big business. Seven percent of the market price was paid.

What else do we have in this case study? Big business contributed 90 percent of the funding—and we know who was connected with big business in that campaign: the Exclusive Brethren. We do not know from the names to what extent that 90 percent was paid by the Exclusive Brethren, but we know that the Exclusive Brethren are big business and that they are paying for the tongue of that member. We needed only to listen to his speeches in the House in the last year. None of them were about Napier concerns; they were all about increasing benefits for big business. That tongue was paid for from the 90 percent contribution to that man’s campaign.

What else do we have? We have the non-declaration of the van. Big business donated to this man a van that he painted up with one of Labour’s promises to increase the number of police—and we have delivered on that. That van was owned by, and used at the expense of, big business right throughout the campaign, and it was not declared. I suppose that is a very liberal interpretation of not declaring the cost of transport, but I would have thought the gift of a van, worth many thousands of dollars, was a gift from big business that should be declared. Was that playing by the rules? I think not.

So those who get up here and say: “If it smells like a rat and looks like a rat, then it is …” should look at themselves, at their own party, and at their own members. If those members can sit here, having been funded 90 percent by big business, having been funded on a major, undeclared asset by big business, and having had pamphlets paid for at 7 percent of market cost by big business, then we can know what the analogy and example of: “If it smells like a rat and looks like a rat, …”, means.

If we look at the track record of speeches in this House, we see that the rules clearly apply differently if a party is funded by big business. That party’s members do not talk about the needs of their electorates, and they do not talk about what is good for the towns they represent; they talk about what is good for big business, by way of cuts and tougher employment laws. That is what smells like a rat.

Hon PETER DUNNE (Minister of Revenue) : For many New Zealanders listening to the debate this afternoon, what they have heard will be of little relevance to them, because for many New Zealanders at the moment, in all walks of life, one of the most pressing issues they face is paying the rates bill. As property values have escalated, and as council services have increased, the pressure on domestic rates as a way of financing those operations has also increased, to the point where it has become intolerable for many. The decisions that were announced a few weeks ago about an inquiry into the rating system will go some way towards addressing these matters, but they are, in effect, dealing with the symptom rather than the problem. I want to spend my time this afternoon concentrating on what the problem is, and on some of the solutions to it.

We have 4 million people in New Zealand; we have 12 regional councils and 74 territorial authorities, including 16 city councils. Local authorities in New Zealand contribute about 3 percent of the GDP of this country. When one looks at the number of councillors who are elected and at the roles they perform, it can be seen that we are hopelessly over-governed at a local level. In my area of Wellington, we have one member of Parliament for every 54,000 people, and we have one local council or district health board member for every 5,400 people. The real issue as to why rates are increasing is that the cost of local government in New Zealand is increasing, and the charges that local government imposes are increasing—and that is the issue we ought to be targeting.

It is worth noting that 57 percent of the $4.6 billion it costs to run local government in New Zealand comes from rates. Twelve percent comes from central government, 20 percent comes from other sources, and there are other bits and pieces, as well. Until we tackle that issue, we will always have a problem with escalating local body rates. One of the things we need to do is go back to the process that was begun in 1989 of local authority amalgamation and reformation, to ensure that we have structures that meet the needs of our people today, and that do not impose significant additional costs upon them.

The issue of rates financing local government has been a significant one worldwide. The Irish in 1977 abolished rates altogether and took to financing local government out of significantly increased motor vehicle registration charges. That did not work, and they are now reverting to a system of some limited rates application. Britain tried a poll tax in the late 1980s. All that did was to bring down the Conservative Prime Minister and Government of the day, and cause rioting in the streets.

There is no simple answer to the financing of local government. Australia is trying various state taxes and levies. The real issue is the purpose and function of local government itself, and for a country of our size it is a big question to be asking as to whether we need the level of local government we have—whether we need the relationship between regional authorities and territorial authorities, with their plethora of duplication of administration. We need to ask whether we continue with the system whereby some services are provided by some councils while in other places they are provided by central government, where every single council seems to have to have a tourist promotion initiative or an economic development initiative, and where we have constant repetition and argument between parochial local authorities that stifle development, stifle growth, and stifle opportunity.

I think that if we got back to basics and looked again at the structure and purpose of local government, and our expectations of that, then structured the system accordingly, and if we then worked out the best way of financing those operations, we could make significant changes for the benefit of the rates bills many New Zealanders are now facing. It is simply not good enough to continue with the high level of over-government we have at a local authority level. By all means, we should look at things like community boards and other forms of direct representation for specific communities, but we have to get away from the monolithic structure of local government in New Zealand that is stifling so many areas of development today.

CHARLES CHAUVEL (Labour) : I rise for the first time in a general debate, and I am proud to do so. In doing so, I am proud to be a member of the Labour Party, as well, because the Labour Party is the party of consistent and progressive social policy in New Zealand. Since 1999 we have kept growth high, we have invested in infrastructure and in retirement savings, and we have governed for all the people, not just for a wealthy or privileged few. As a result, we have built a mainstream—and I use that word advisedly, because it is time we reclaimed it—coalition of New Zealanders. It comprises working people and their families of all descriptions: Māori, Pacific peoples, ethnic communities, women, gay and lesbian New Zealanders, environmentalists, disabled New Zealanders, and, here is the key, urban, liberal New Zealanders. That coalition has won us three elections in a row and, if we keep our focus and our humility, it will win us a fourth. That is the lesson from the recent Queensland election. No one buys our policies, and there is no economic benefit for us in enacting our programme. We follow the programme because we know it is the right thing to do. It is born of our strong commitment to social justice—what one of our early leaders described as applied Christianity.

The National Party once had a proud record of liberalism. One of its constituents was the old Liberal Party. The National Party introduced the Humans Rights Commission Act in the 1970s, and it also reformed matrimonial property law. In the 1990s Doug Graham progressed Treaty settlements. So I want to know, what has happened to the National Party since then? What has caused the great change? What has caused this reversion to dog-whistle politics, the politics of the lowest common denominator? Where are the great liberals of the National Party of the past? [Interruption] I wish Mr Auchinvole good luck, because its future is in his hands and in those of his new colleagues.

Let us look at the National Party’s recent record on social policy. When Bob Clarkson said the most appalling things about Islamic New Zealanders and gay and lesbian New Zealanders, what was the response? The “liberal” spokesperson for National, Chris Finlayson, said: “Oh, I agree with everything he says.” Some liberal! When Georgina Beyer introduced legislation that would have protected one of the most marginalised groups in our society—transsexual and intersex New Zealanders—what did Richard Worth, supposedly another liberal on the National back bench, say? He went on about cross-dressing teachers, cross-dressing soldiers, and cross-dressing prison officers, appealing to the lowest common denominator again, and forsaking and burning off that important urban liberal constituency, without which it is not possible to govern in this country.

We all know about the subliminal message given when the leader of the National Party—for the time being—talks about one law for all New Zealanders. We know what it means; we know the implicit permission it gives for racist New Zealanders to vent their prejudices on talkback and elsewhere. That is a disgrace; it is an absolute disgrace. How can Māori votes be courted while a party espouses that line? The number of urban, liberal New Zealanders who have said to me they did not vote for National last time because they did not like the racist undertones of its policy, is very significant.

For our country’s sake, I hope that the National Party will return to its proud tradition of liberalism, because a consensus on human rights and social policy is important in a small country such as ours—a small country that has suffered unduly from the pendulum swings of policy.

Hon Members: Ha, ha.

CHARLES CHAUVEL: I do not think this is an amusing question; I think it is a fundamental one to the health of our democracy, so I would not laugh as hard as that about it. I think it is a great shame that the National Party has lost its liberal traditions, and that it is now a case of “policy for sale”, it would appear. That is not the case on the Labour side of the House, but it is certainly the case over there. That is a very, very bad thing for the National Party, and a very, very bad thing for New Zealand. But it is a great thing for the Labour Party, because people see through this—they see through the capture of policy by big business and by weird, extremist, religious sects. They see through it, they know what it is, and they know it for what it is. Having seen it, they will reject it, and they will leave Labour in power for a long time.

Dr PITA SHARPLES (Co-Leader—Māori Party) : From the Wharerata Ranges, south of Gisborne, to Cape Palliser in south Wairarapa, from Paritū in the north, to Turakirae in the south, there is a tribal nation called Ngāti Kahungunu. Over the last fortnight Ngāti Kahungunu has launched a host of key strategies that it hopes will move it forward towards the promotion of self-determination for Māori, tino rangatiratanga. The 25-year grand plan comprises the te reo and tikanga strategy, the housing strategy, the establishment of a Māori relationship board with Hawke’s Bay District Health Board, and the creation of the Kahungunu asset holding company, an investment strategy. The iwi commemorated the Kahungunu fisheries Treaty settlement allocation, and in true Kahungunu style, the celebrations were capped off with a performance by Kahurangi of the journey of te waka tapu o Tākitimu.

I come to this debate today, honouring the capacity for self-determination—the freedom for indigenous peoples to live well, to live according to their own values and beliefs, and to be respected by their non-indigenous neighbours. It is a capacity that the nation of Aotearoa has observed in abundance as we have marked the passing of two legendary monarchs. It is a concept that I believe it is now timely to examine, and to ask some questions about of ourselves and of others.

Self-determination is, as the indigenous Premier of Greenland, Lars Emil Johansen described: “The right to take responsibility. Self-determination is hard work.” So it seems an appropriate time, as we pay our last respects to Te Arikinui Dame Te Atairangikaahu and, in the last few days, to King Taufa’ahau Tupou IV, to sit and reflect on the unique experiences of the people of Tainui and the people of Tonga, in taking responsibility for their own destinies.

Mr Johansen put forward some critical insights to the 1994 Cape York Land Council in Cairns, which I believe have relevance for the indigenous policy for our own development as tangata whenua. The view put was that, basically, if we are claiming the right to tino rangatiratanga, then we are claiming the right to take responsibility. In turn, Aboriginal leader Noel Pearson asked, as we must also ask: “Do we really want to take responsibility? Do we want to do the hard work of self-determination? Are we properly unified to fulfil our responsibility? Are we prepared to show leadership and build consensus and overcome division? Or are we so divided that, if we took on the responsibilities, we would do just as bad a job as the bureaucracy and the white fellas?”.

As Māori, our rangatiratanga is expressed in our rights to determine our own economic, social, and cultural development. As part of our journey we have resisted the process by which our indigenous language, tribal values, and cultural identities were to be pounded out of shape. Through it all we must retain the ability to ask questions of ourselves. How do we pay regard to the freely expressed will of the peoples?

We have watched the resurgence of the Tongan people to hold tight to their unique value of rangatiratanga. One aspect of this has been the official report of the Kingdom of Tonga National Committee for Political Reform, which His Majesty the King was presented with just 10 days before he died. Originally chaired by the late Prince Tu’ipelehake and endorsed by the Tongan Government, the work of the committee was shared in a nationwide consultation process of talanoa—seeking the people’s views about political changes in Tonga, as well as consultation with Tongans living here in Aotearoa, in Australia, and in the United States. The people themselves are embracing a new period of political and constitutional reform. The challenge ahead will be how the monarchy responds to the call for the right to self-determination.

It is a matter of some concern that our own Government is seriously compromising our international reputation in the way in which it misrepresented New Zealand’s position on the Draft Declaration on the Rights of Indigenous Peoples. Article 3 of that declaration, adopted by the Human Rights Council on 29 June this year, states: “Indigenous peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development.” The Māori Party celebrates the right of self-determination. Thank you.

  • The debate having concluded, the motion lapsed.

Insolvency Law Reform Bill

Second Reading

  • Debate resumed from 5 September.

CHRIS AUCHINVOLE (National) : I wish to reflect the comments of the chair of the Commerce Committee, Katherine Rich, in an earlier part of the debate on this legislation, in acknowledging the significance of that committee. The Commerce Committee addresses very important aspects of New Zealand life. For those of us on this side of the House for whom business is the lifeblood of New Zealand, the whole aspect of business is important. One could be forgiven for thinking that the significance of business to the present Labour Government, and to its supporting satellite parties, is merely an opportunity to provide a means of distributing wealth from wealth’s creators to the recipients of the present Government’s largesse—those whom the Government considers to be more deserving of getting the money than the workers who earn it.

Indeed, I think this is a most pertinent time for Labour to consider the Insolvency Law Reform Bill, as it has been suggested to me that one of Labour’s major concerns at the moment is its likely insolvency if it is obliged to pay back the election pledge card money, which was drawn from the tax take as if it were the property of the Labour Party. It was certainly spent as if it were. Oh for the days of President Harry Truman, who famously displayed on his desk a sign that declared: “The buck stops here!”. I guess one could be forgiven for thinking the present administration has a sign that says: “The buck stops over there, or anywhere, or everywhere, but not here.”

The select committee works in the best interests of commerce—not just the good bits, but the bad bits, and also the sad bits. It is a reality that from time to time businesses falter, and stumble into failure. On those occasions there is a group of very skilled people—and we were privileged to meet a number of them at the select committee—who are insolvency practitioners. They are required to bring a semblance of order or closure to businesses when they go into difficult times. We often hear quoted a “new business failure rate”, but sometimes it is quite illusionary to concentrate on that, because the activity that the new businesses have been engaged in are often carried on. Even though the original company has failed, the activity is often carried on by other companies.

The present change to the law looks at voluntary administration, which is a new system, and I will speak about that in a moment. It effectively puts a stay on creditor closure when companies get into a difficult situation. It looks at establishing administrators who can restructure companies, working on the basis of the agreement of a majority of creditors. It is certainly an excellent idea, and certainly better than the four systems we presently work with. It allows a sensible and mature approach to company difficulties.

However, the Insolvency Law Reform Bill is borrowed legislation. It has been taken from Australia. The voluntary administration part of it is essentially a good means of allowing a company to recover from an insolvent situation through effective, appointed administration, given the approval of at least 50 percent of a company’s creditors who are owed at least 75 percent of the debts. Those creditors would have to approve any plan for voluntary administration. So it is not a device that a company can use to shelter in, hide under, or avoid its true responsibilities. It is a good system, and it is an Australian one.

To make sure that the administration is untrammelled, it embodies a requirement—and I think that this is a significant point—to take away the pre-emptive rights, or priority status, of the Government, with regard to repayment. I am sure that the members on the benches to my left will be really gripped with this bit. At present in New Zealand the Inland Revenue Department uses a priority that in the case of it being owed at least 26 percent of the debt, it would be able to defeat any plan for voluntary administration. As a preferred creditor, the department would receive the proceeds of liquidation before unsecured creditors, but in a voluntary administration it would receive the same proportion of what it was owed as other creditors. That is a major change.

The other special quality associated with the Government is that the Inland Revenue Department is in a special position, in that it has access to company information well beyond that available to other creditors. In the Australian jurisdiction, as well as the priority being removed, an added responsibility is also imposed on directors. In the event of a voluntary administration being called for by Government tax agencies, directors are obliged to respond to the requirement within a specific period or take full liability for the company’s debts.

Those two parts of the Australian legislation were presented to us at the Commerce Committee and were seen as being in tandem. I am not quite sure why they were seen as being inseparable by some Labour members of the select committee, but that is how they were seen by those members.

For myself, I recall raising the point that if we wished to stick to the true spirit and purpose of voluntary administration, then I had a little difficulty with the aspect whereby if a company did not want to accept it, it became punitively compulsory. I could, though, easily understand how the withdrawal of priority to the Government could give good effect to a voluntary administration system. Let us remember that this system works for the majority of companies and their creditors, and the difference between it and normal liquidation or bankruptcy is that it allows a period of administered control, so that the company can get back on its feet. That is certainly to the advantage of the creditors in the long term, and to the business of New Zealand in the long term, as well.

There were two occasions during my own business career when I had problems of certain complexities, when customers were clearly getting into financial difficulties. Like many other small business operators in New Zealand, I underpinned my operation with a mortgage on my home. If the business part failed, we were not just out of a job; we would have been out of a home, as well. So business carries with it a fair level of personal responsibility and anxiety. Running a business is a risk, but I was in it on the basis that the buck stopped with me, and that my creditors would be safe. I can tell the House that I know which system I would be happier with—voluntary administration or liquidation? Give me voluntary administration any day!

The Labour members were fine towards voluntary administration until it came to the crunch of making a tough decision. The Minister of Commerce, the Hon Ms Lianne Dalziel, in speaking to the bill earlier, cited her reluctance to adopt a loss of priority for the Inland Revenue Department. Her reluctance was caused by the tandem requirement in Australia for directors to accept personal responsibility for debt levels, if they failed to use voluntary administration after being advised of clear problems by the department.

On the select committee, Labour member Shane Jones was particularly emphatic that he felt that the present structure of director protection from personal liability should be protected. If I can remember the phrase he used, he said that we should avoid “piercing the corporate veil”. I think it is highly commendable that Labour’s Mr Shane Jones expressed such a view. It is a view that other Labour caucus members, trade unionists, and Labour supporters would normally associate with a National policy. Perhaps Shane is positioning himself as a better choice than the Hon Trevor Mallard as Labour’s sub for the Hon Dr Cullen as Minister of Finance.

These changes are probably perceived as dealing with the reality of a situation of insolvency. However, I wish to voice concerns about the direction that our situation of credit, debt, and insolvency is going. Although on the one hand we have a Labour-led Government that boasts we have a debt-free Government, we have domestic and personal debt levels that our grandparents would have been appalled by. We have a prediction that changes in investment practices could affect the flow of investment dollars into New Zealand. “Maybe we will not have a soft landing.”, is what economists are now saying, so what will happen to personal debt levels?

I read this morning an article by Allister Heath in the August issue of The Spectator on the effect of lenient bankruptcy rules introduced into the UK 2 years ago. The article states: “… insolvency [has become] a lifestyle choice for tens of thousands of feckless consumers.” Corporate bankruptcies in the UK have declined by 3.3 percent over the past year under the sort of legislation we intend to introduce here, but personal insolvencies, which follow on, have surged forward by 66 percent. There has been a surge of specialist growth in individual voluntary arrangement advisers—people who advertise widely. In New Zealand such a development will be a natural and an inevitable consequence of an easy credit arrangement.

To conclude, I say I am disappointed that we have failed to grasp the nettle of bringing in full insolvency changes. We have not grasped the nettle firmly enough, so our commercial communities will continue to be stung. Thank you, Mr Assistant Speaker.

A party vote was called for on the question, That the amendments recommended by the Commerce Committee by majority be agreed to.

Ayes 71 New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.
Noes 48 New Zealand National 48.
Question agreed to.

A party vote was called for on the question, That the Insolvency Law Reform Bill be now read a second time.

Ayes 71 New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.
Noes 48 New Zealand National 48.
Bill read a second time.

Communications Legislation Bill

Second Reading

Hon DAVID CUNLIFFE (Minister of Communications) : I move, That the Communications Legislation Bill be now read a second time. In speaking to the second reading of this bill, let me first extend my thanks to the Commerce Committee, which has worked to report this bill back to the House in a short period and, in so doing, has given a full consideration to the public submissions received. I am pleased to see a unanimous report back with only minor alterations, which improve the bill.

I reiterate my comments made at the first reading that the bill is not related to decisions on the broader telecommunications stocktake, which is being considered under a separate Telecommunications Amendment Bill currently before the Finance and Expenditure Committee for report back by November 2006.

This Communications Legislation Bill contains a number of more specific but more urgent matters, and has accordingly been dealt with separately. The bill maintains a commercial environment of certainty and confidence for both telecommunications services and the users of the radio frequency spectrum. The environment will benefit both producers and consumers of goods and services, be they providers of telecommunications services, radio spectrum licensees, customers, viewers, or listeners. A robust, up-to-date communications sector is an essential part of an innovative, growing economy.

Let me reiterate the key objectives of the bill. Part 1 amends the Telecommunications Act of 2001. These amendments to the Act are simply to prevent the premature expiry of the regulation of 10 particular telecommunications services. Submissions to the select committee were supportive of that and no submissions were received opposing the proposal. Under the present Act, the Commerce Commission can recommend that regulation be extended. Although the commission has initiated an investigation, there remains a risk that the overall process would not be completed by December of this year. In any event, it is of course desirable to maintain a stable regulatory environment, such that the extension of regulation is not left until just prior to expiry, as telecommunications service providers and customers need as much certainty as is practicable. The bill therefore extends the regulation on 10 services until 2008.

Part 2 amends the Radiocommunications Act of 1989. The main amendments to the Radiocommunications Act concern, firstly, criteria for certification of licences; secondly, the aggregation of consecutive management rights; and, thirdly, the extension of applicability of existing arbitration procedures. On the first point, the certification of licences, the provisions of the bill are designed to improve and clarify the requirements for the certification of licences. The bill establishes a process whereby inappropriate receivers are not to be taken into account in the certification of those new licences. Submissions to the bill were supportive of this approach. Indeed, some sought an even wider approach. A further issue raised in submissions was specifically in regard to receivers and imported vehicles designed for use in Japan, and potential prohibition of such receivers. I note that the select committee commentary states that this can be better approached as a consumer information issue. The committee makes a suggestion on how this could be achieved—I concur with this viewpoint.

Secondly, in relation to aggregation of management rights in time, the present Radiocommunications Act provides for management rights and underlying spectrum licences to be created for periods of up to 20 years. This gives certainty of investment for services using the radio spectrum. The bill allows in limited circumstances the aggregation in time of an existing management right and a successive right. This will facilitate an efficient transition from one right to the next and give improved certainty and efficiency in the radiocommunications sector. Those rights created from 1990 onwards reach their 20-year expiry date from 2010 onwards.

Thirdly, in relation to arbitration, the bill includes provisions to allow radio licensees to resolve issues concerning interference through arbitration, in a similar manner to the existing provisions for commercially allocated spectrum licences. This provision recognises that radio licences are seldom revoked and that radio licensees have made investments in equipment, often over many years. It is appropriate that they should be able to choose to participate in arbitration rather than be simply subject to decisions by the Ministry of Economic Development.

All of the bill’s provisions are intended to maintain and enhance the efficient operation of the regime prescribed in the Act. Due to its nature, the communications sector is subject to rapid changes in technologies, in services, and in commercial strategies. It is also characterised by long-term investment in physical infrastructure assets. These characteristics require a regulatory environment that allows a fair return to those who own those assets, but one that is also able to keep pace with the rapid changes in technology by allowing efficient entry into markets for those services.

This bill is an important step in New Zealand’s keeping its regulatory environment up to date. The issues are narrowly focused and they need to be dealt with now. Wider legislative changes have been proposed in order to progress decisions from the telecommunications stocktake, but those provisions are more detailed and of a more strategic nature and will benefit from a fulsome discussion in the select committee in due course.

In conclusion, the Communications Legislation Bill is critical to maintaining and improving the efficiency of the communications sector. It addresses key issues of telecommunications and radiocommunications, both of which are important in the information age and in continuing to grow an innovative economy. The main principles of the bill are designed, firstly, to prevent the unplanned expiry of regulation on a narrow range of communication services, and, secondly, to provide the legal certainty to allow the full use of the radio spectrum. I commend the bill to the House.

PANSY WONG (National) : This so-called technical bill actually reveals some major problems with regard to the Labour Government’s lack of progress in the telecommunications and energy sectors, and in other infrastructure areas. The reason for the lack of progress in all those areas is the lack of a final vision for those sectors. The various Labour Ministers in those portfolios have no idea of where they want to take those sectors to. We find they put up frameworks, pass legislation, set up commissions, and sack commissioners. We end up with more consultation and more ad hoc decisions, U-turns, and delays.

That last point is particularly demonstrated in Part 1 of this relatively short bill. The bill’s full name is the Communications Legislation Bill, and it has two main parts. The first part amends the Telecommunications Act of 2001. I ask members to let me share some of the faults in that legislation with the public. At the time of the passage of the Telecommunications Act 2001, which is nearly 5 long years ago, 13 telecommunications services were identified as designated services. The telecommunications companies needed to apply to the Commerce Commission for a determination on the terms of and process for access to those specified services. Five years ago those 13 designated services were set up, obviously with the expectation that all the issues relating to them would be resolved at the end of 5 years. Part 1 is needed because an extension of 2 years is required for 10 out of the 13 services. I do not think that lack of progress deserves even a D grade.

Five years ago the Minister of Communications—we have had many Ministers, but at that time it was the Hon Paul Swain—claimed that with the Telecommunications Act the Labour Government had set up a framework for the telecommunications sector to move forward in an orderly manner. I do not think that anybody, but particularly the shareholders in Telecom who lost billions of dollars from the worth of their shares, would believe that that framework is assisting the sector to move forward in an orderly manner. Five years ago when the legislation was set up, 13 services were identified as designated services and were regulated. Five years later, we are being asked to extend the period for a further 2 years.

But 5 years ago the Labour Government also appointed a Telecommunications Commissioner, Mr Douglas Webb, who was charged with addressing the problem of the lack of uptake of broadband. In his draft report he actually recommended unbundling. Then he made a U-turn, which the Government accepted in 2003. But earlier this year the Government did another U-turn and decided to declare unbundling as a major plank in its 2006 Budget announcement. Incompetence in the handling of that issue led to the leaking of that information, and suddenly the whole unbundling decision had to be announced in a hurry and billions of dollars were wiped off the value of Telecom shares. One can hardly say that that was done in an orderly manner so as to introduce certainty into the sector, or that, as the Minister just stood up and claimed, the Telecommunications Act 2001 and the subsequent legislation lead business to have confidence in being innovative, to take our telecommunications sector forward.

I also would like to give a wee warning to the Telecommunications Commissioner. He should be careful about the wishes of his political masters, because we have just learnt this afternoon that the electricity commissioner has been sacked. Why? Because when the Labour Government does not know where it wants the telecommunications sector or the energy sector to go, it blames the commissioners for not doing their job. I think the commissioners are probably following the legislation.

Hon David Cunliffe: I raise a point of order, Mr Speaker. I would not normally interrupt a member’s speech, but this is an important matter and the Standing Orders do provide for the clarification of facts. In this case it has been made clear by the Minister that the electricity commissioner has not been sacked; he is simply not being reappointed at the end of his standard 3-year term.

The ASSISTANT SPEAKER (H V Ross Robertson): There is opportunity under Standing Order 106, “Misrepresentation”, to do that at the end of a speech.

PANSY WONG: I am surprised at the defensiveness of the Minister. Surely he should be experienced enough to know that that was not even a proper point of order. We are engaged in a very serious debate on a very important sector.

As I say, I think the Telecommunications Commissioner should take note. That is very bad for the sector. The commissioners in the telecommunications and energy sectors have now learnt that they need to watch their political masters very carefully, because those masters do not know the final vision for the sectors, so, in the meantime, anybody who cannot deliver the answers may get the blame. In effect, the lack of vision for the telecommunications sector is causing all the delay, and the fact that we are standing here and debating this bill proves my point that if nobody knows the destination, then there will be delay and uncertainty.

National will cooperate with the Government on this legislation, because we do not want to punish or penalise business just because the Labour Government has no answers. We will agree to an extension of 2 years, but we are not very sure whether, within those 2 years, we will really see progress.

I ask members to let me confirm the dilemma that now faces business with regard to the lack of direction and the tolerance of inefficiency in the telecommunications sector. Only one submission was made on Part 1 of the bill, and it was from TelstraClear. The company supported the extension provided for in Part 1 for 2 years, but stated, in the reasons why it supported it, that it was worth noting: “The experience of previous Commission Investigations and Determinations suggests that the Commission’s proposed timetable may slip, and that any such slippage may be significant.” In other words, our businesses have learnt to live with delay. I look forward to further debate during the Committee stage about the delay and uncertainty that are being created in the telecommunications sector.

Part 2 is about changes to the Radiocommunications Act, and I want to raise two points and then debate those further in the Committee stage. One is that many submitters are getting very nervous because in the bill the Government is changing the way that, in future, radio licences may be issued. Under the current legislation, that has to be done by competitive tendering or auction. The bill introduces the term “by any other means”. So, once again, the industry and the users are becoming very nervous about interference and about having to watch every move of their political masters.

The other issue we will explore in detail is a submission by the Radio Frequency Users Association of New Zealand. That is a non-profit organisation, and its membership includes local government authorities and companies connected with transport, communications, forestry, farming, taxis, consultancy work, and tourism. It complained that it was not included in the consultation on the bill, and we want to explore that lack of consultation further in the Committee stage.

Hon GEORGINA TE HEUHEU (National) : I am pleased to stand to talk to the second reading of the Communications Legislation Bill. As witnessed by the fact that the report back was unanimous, it is obvious that National supports this bill. National, of course, supports a strong framework for the communications sector—there is no doubt about that—and if the Government’s intention is to achieve that, then that is good. I have to say, though, that everything the Government has done to date would make one doubt that it is totally committed to that aim.

My colleague Pansy Wong has already quoted Paul Swain when he spoke to the Telecommunications Bill in 2001. Let us face it, although this is the Communications Legislation Bill, we are all very mindful that before the Finance and Expenditure Committee now is the Telecommunications Amendment Bill that dominates a lot of this area, simply because of the way Telecom has conducted its business. That bill is sitting there in the background—or the foreground.

But the reason why I say National doubts very much the commitment and the determination of the Government to make sure that the communications environment is robust and provides certainty and clarity is that, frankly, a range of Ministers in this area have all said the same thing, from 2001 to the present, 5 years later. But if I asked ordinary New Zealanders out there whether they thought we were moving quickly and in the right way in this whole communications area, I guarantee people would throw up their hands in horror. I do not think there is anything that this Government has done to give anybody any confidence that it knows what it is doing. As my colleague said, there seems to be a road map but there is no certainty as to where that road is going.

In speaking to the Telecommunications Bill in 2001, Paul Swain said: “For the first time we have established a framework for ensuring that the telecommunications industry can move forward in an orderly way.” Gosh! If what we have seen in the last 5 years could be called “orderly”, then I would hate to see what chaos means! Quite frankly, it has looked totally chaotic. The current Minister, the Hon David Cunliffe, made a speech today that resembled what he said on the first reading of the bill: “This bill contains a number of urgent technical matters that need not, and should not, await that wider review process.” We are still waiting.

The Communications Legislation Bill amends both the Telecommunications Act and the Radiocommunications Act. It will contribute to improving the efficient operation of the communications sector as part of the economic transformation of New Zealand society. Transformation brings to mind a perspective that we all know where we are going, that the Government is leading us in the right direction, that we do not have to put up with more reviews, more papers, more this, more that—things we have seen over the past 5 years—and that the transformation it is talking about is clearly visible to all of us. I have to say it is not. It is not visible to those out there who are looking to make the long-term investment that the Minister speaks about. It is not visible to those who are users of the services that flow from both telecommunications and the radio spectrum. It is not visible at all, and really, when the Minister gets to his feet and blandly reads his speech, I say to him that there is no vision, and there is no excitement.

Pansy Wong: At least there’s no leaking.

Hon GEORGINA TE HEUHEU: At least there is no leaking. Well, I think we have had the biggest leak we would ever want to see in the unbundling decision. It took all the gloss from the poor old Minister’s—what would members call it—coup d’état. He was going to announce to the world the unbundling decision and, blow me down, some messenger riding his bike, with his helmet on, somehow got those papers and did not deal with them properly. Did we ever know what happened to that guy? Is that the way the Prime Minister’s or the Minister’s office—

Pansy Wong: No security check.

Hon GEORGINA TE HEUHEU: There was no security check—there you go. And this Minister has the gall to stand up and say that the Government is looking to get certainty, to confirm confidence, and to give confidence to long-term investors—and that is what has carried on in these last 5 years.

Now that the Commerce Committee has done its job and given the tick to this bill, National also gives it a tick. Let us hope that we see it move quickly and pass into law so we do not put at risk any of the specified services it covers, in terms of telecommunications and also spectrum management rights. This whole area is critical to transforming the New Zealand economy, and it has taken 5 years of bumbling. Labour set in place a process, and appointed a commissioner who says one thing and then says another thing. The Government then says it does not like what he says anyway, and is going to do something else. Honestly , it is so chaotic that people would weep. It looks like we are in a Third World country. The Minister has to get moving—

Hon David Cunliffe: I raise a point of order, Mr Speaker. I give just a quick reminder to the member that she is referring to the Telecommunications Amendment Bill that is before the Finance and Expenditure Committee, and not the one that the Commerce Committee has just reported.

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

Hon GEORGINA TE HEUHEU: That was a pathetic point of order. Everybody out there knows that all of these things are linked. Sure, this bill deals with some specific services and the radio spectrum, but the reality is that if people are talking about transforming the economy, that bill comes into the picture as well. I have already said that the Telecommunications Amendment Bill is before the Finance and Expenditure Committee. We know all that, but the reality is that members cannot seriously stand and talk about transforming the New Zealand economy and have such a mishmash of things that it gives nobody—especially those waiting to invest their money—any confidence that this Minister, and indeed this Government, know what they are doing in this area.

I want to make a comment about something my colleague raised in the first reading of the bill. Maurice Williamson said this is a fast-moving area. He is a real technohead, and he knows a lot about this area. He flagged with us that this is not an area where members can sit on their laurels and think that once the legislation has been passed everything is OK. This is an area of fast-moving technologies. The Minister may know—he probably considers himself an expert in this area—but do we really know what is ahead of us in terms of the technology? Maurice has pointed out that we need to keep our eye on the ball in this area, that we have to make sure the framework we develop is adequate and appropriate, and that, if needs be, we are in a position to update and strengthen it, if that will see the transformation of our economy. If that is what the Minister is really aiming for, National supports that. But if he is aiming for another 5 years of mishmash and chaos, we cannot support that.

BARBARA STEWART (NZ First) : I rise on behalf of New Zealand First to speak in the second reading debate of the Communications Legislation Bill. I will take only a very brief call.

I must say at the outset that New Zealand First did not have a member on the Commerce Committee, so we were not able to follow up with the various submitters any aspects of the bill. We note that the bill was basically intended to improve the regulation of the communications sector. The select committee report for this particular bill recommends that the bill is passed, and it contains only very minor amendments. There were no minority views written, so obviously most parties were in agreement with the bill. It was interesting to see, too, that there was very little media interest in the bill. To follow that up, there were only five submitters on the bill.

During the first reading of this bill, the Hon Brian Donnelly commended the Hon Maurice Williamson for his knowledge of the physics lying behind this bill. He said he had a lot of confidence in the honourable member. As we all know, Maurice Williamson lives and breathes this type of technology, which is an area that is rapidly developing. Members were told the bill is really critical to maintaining and improving the efficiency of the communications sector. New Zealand First has been supportive of this bill. We are, however, quite concerned about suggestions we have received that, as it stands, the bill poses serious threats to the wireless delivery of supplementary emergency, taxi, and control—and here we are talking about sewerage, irrigation, and dam control—services.

New Zealand First seeks the assurance of the Minister, the Hon David Cunliffe, that the enactment of this bill will not lead to the confiscation of allocated frequencies, or be a cause of congestion and interference in some areas of the spectrum, or provide uncertainty in the future management of some frequencies. We also seek some assurance that current licensees who might be affected by the proposed changes have been consulted and have also had their concerns taken into account. Without such assurances, New Zealand First would have to consider proposing amendments to the bill during the Committee stage that would address those particular matters.

We are looking forward to further debate and discussion on this bill in the Committee stage. At this stage, we are supporting the legislation in the second reading.

MARYAN STREET (Labour) : Tēnā koutou te Whare. I rise to take a short call on the Communications Legislation Bill.

As a member of the Commerce Committee, the discussion took me into areas I had never been in before, but there was one area that I did understand particularly, and it was raised in the speech of the previous speaker, Barbara Stewart. It was to do with band expanders. One thing I did understand was the nature of a band expander, having once upon a time bought a second-hand Japanese car and discovered that I could not get National Radio on the radio. I then went to find out how I could remedy this problem, because the car clearly had a capable radio in it, but I did not know why I could not pick up some of my favourite stations. I could not hear Parliament, for example. So I went to a place that installs car radios and the people said: “Madam, you need a band expander.” I asked what that was, and they said it was a device that increased the capacity of a radio to access different radio stations and receive a wider range of frequencies, and therefore increased the coverage of one’s car radio. I said that was fine and to put in one of those.

What happened thereafter, I found really interesting. In the course of the discussion in the select committee, it became clear there were some concerns about the wording of the legislation and whether the definition of “interference” was going to make life difficult for people with cars that had band expanders. I am not the only person in New Zealand who has ever bought a second-hand Japanese import. It became important to clarify, as reported back by the Commerce Committee, that interference did not include any effect on the reception of radio communications caused by the use of inappropriate receivers. In other words, the key point was that band expanders tend to affect only the reception in one’s own car and not the reception in other cars. So it is not as if it creates a difficulty for anybody else in receiving a signal from a given frequency.

So it was clear that the law needed to be clarified, in the wake of a court case, to ensure that the efficient allocation of frequencies was not prevented by the fact that a band expander can cause interference, because generally the interference is very localised—to one’s own car. But the point that my colleague Barbara Stewart raised was that there was some anxiety about whether the existence of band expanders could interfere with the reception of particular kinds of transmissions; I think she mentioned emergency frequencies and things of that sort.

That issue having been covered in some detail in the select committee, it was clear that there was not a significant risk of this at all, largely because people like myself with band expanders in a car would normally listen to stations with good reception in their area. If they do change stations, they are more likely to change to the wider coverage of an AM service, which is not affected by a band expander. So, in the view of the committee, the issue would not really arise in practice. In any event, a band expander does not affect the reception of all FM stations available in an area. So it is unlikely that during an emergency or something of that kind, like a civil emergency, an individual would be unable to tune to a station with the required emergency information.

Although the Radio Broadcasters Association suggested that band expanders should be done away with altogether, it would seem to be a very draconian and very heavy-handed mechanism, if we were to do that. In the end, whether one has a radio with a band expander in one’s car is a consumer choice issue. That is something the Commerce Committee decided was best left at that point.

We discussed further another point that my colleague the previous speaker raised. We discussed the extent of consultation with interested parties. Certainly, we had some parties back more than once in order to ensure we had addressed their concerns, and had allayed any fears about whether there was a danger of usurping property rights, or anything of that kind, caught up inadvertently in this bill. The bill was unanimously supported by the Commerce Committee, because we felt that none of those concerns—which we did address with considerable vigour—really warranted the anxiety with which they had been portrayed.

I commend this bill to the Committee stage.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) : Tēnā koe, Mr Speaker. Tēna tātou te Whare. We have before us another urgent bill, another omnibus bill. This one is to amend the Telecommunications Act 2001 and the Radio Communications Act 1989. It is a matter of urgency, apparently, because of the need to sort things out before the registration of telecommunications services expires at the end of the year. Yet despite the pressure of time, it seems, clearly, that consultation was not a priority for the Government. This is an urgent matter, yet only five submissions to the Commerce Committee were received. This is supposed to be an urgent matter, yet the Radio Frequency Users Association of New Zealand told the committee that it was not even consulted in the drafting of the bill. This is supposed to be an urgent matter, but the Government neglected to consult the group, whose members collectively hold more radio licences than any other group in the country.

This oversight—this slip-up in consultation—seems uncannily like that which has occurred in another matter before the House, whereby a bill supposedly representing the interests of Te Arawa iwi and hapū seems not to have taken full regard of the interests of Ngāti Mākino, Ngāti Rangitihi, Ngāti Rangiwewehi, Tapuika, Waitaha, certain Ngāti Whakaue hapū, and, most recently, Ngāti Rangiteaorere. The Government seems quick to demand that Māori have a mandate for their decisions—which the Government then promptly ignores—but it is clear in this piece of legislation, as in others, that the Government does not feel an urgency to get one itself.

The Communications Legislation Bill is supposed to make it easier for competitors to get into the game and to make things cheaper for customs, but at the first reading we noted that the bill regulates everything except price, which is quite absurd. One does not have to be a communications expert to realise how the big boys will react. They will say: “Sure, there’s no problem about us putting in place your regulated services, but for those of you who want to compete against us, here’s the cost of that service, and we hope you choke on it.” The Radio Frequency Users Association said that rushing this bill through without proper consultation would raise questions about the quality of the decisions and throw into doubt the Government’s commitment to making the best use of industry expertise.

Another key issue for the Māori Party is whether legislative change should be piecemeal, making small or frequent changes, or whether it should be less frequent and more substantial—whether we should leave the small stuff and go for a level playing field for everyone. For example, the Radio Frequency Users Association suggested we amend the provisions for mobile frequencies, as well. The Government acknowledged that point but left such provisions out of the bill, meaning that the issue will still have to be dealt with later.

Another issue is the concern of TelstraClear about the allocation of radio licences by methods other than competitive tender or auction. Whatever the final process, it is important that the industry can see that the process will be transparent.

I note, though, that the Government is right to keep aside spectrum and licences for purposes other than commercial profit, and we support the right for licensing to be held for allocation to Māori and community purposes.

One has only to walk down the street these days to know that the world of telecommunications, and communications generally, has moved a long way since the 1970s and 1980s, when women like Naida Pou, Tītewhai Harawira, and a host of other bolshie Māori women upset their bosses by greeting people with the simple phrase “Kia ora” whenever people rang in to make toll calls. I take this opportunity to honour Naida and Co. for continuing to welcome people in Māori when all the world seemed to be going bananas about it. Her supervisors of the day pulled her off the toll board, but they eventually had to give her back her job after public pressure forced them into the 20th century. The furore over those two words went so far as to be referred to the Prime Minister of the day, the late Rob Muldoon, who said: “I’ve been overseas deciding the economic development of the country and while I’ve been away some girl wants to say ‘Kia ora’. As far as I’m concerned she can say ‘Kia ora’, just so long as she doesn’t say ‘gidday blue’.” In an interview later, Naida said: “For me, Kia ora is a salutation that’s indigenous to this country, it’s a Tangata Whenua right. Our reo is a Taonga because of all it captures. It’s not just reo, it’s a dimension which is expressed in tone. Tone is part of our connectedness to universe energies.”

So change happens, and we are generally supportive of the amendments and clarifications behind the Communications Legislation Bill. But in this debate we also need to mention that Māori have an issue with lumping all of the spectrum rights together. In June 1990 the New Zealand Māori Council lodged Wai150, seeking a ruling that Māori had a claim to radio frequencies and that in the absence of an agreement with Māori, the sale of frequency management licences would breach the Treaty and be prejudicial to the interests of Māori. The Waitangi Tribunal report noted: “The spectrum is a taonga to be shared by the tribes and by all mankind. Neither of the Treaty partners can have monopoly rights to this resource.”

The Māori Party wishes to draw a parallel with the current Treaty breach, which was created by the Crown introducing a brand new concept whereby it assumed total ownership of the water stratum of Te Arawa’s lakes, including the airspace, supposedly on behalf of all New Zealanders, and simply took what it wanted through the Te Arawa Lakes Settlement Bill. Here, in the Communications Legislation Bill, we see the Crown trying to assume ownership of the spectrum, although the tribunal has already ruled that neither Treaty partner shall have a monopoly on that resource. The Wai150 ruling also stated: “Tribal rangatiratanga gives Māori a greater right of access to the newly discovered spectrum. In any scheme of spectrum management it has rights greater than the general public, and especially when it is being used for the protection of the taonga …”. In the development of new spectrums Māori must not be shut out by commercial interests or by the other Treaty partner.

The Māori Party says “Kia ora” to the telecommunications sector. We do not want Māori to have to wait in line behind “Gidday, Blue”, “Yankee Doodle Dandy”, or any other bugger, for that matter. We do not want to be put on hold, on call waiting, or to be hanging on to a busy line. The Māori Party is pleased to hear that there will be consultation before any regulations are made on allocation, and on that basis we support the second reading of this bill. We look forward to Māori being included in that loop, so as to ensure that we stay involved in the nation’s transition to having a world-class telecommunications system. It is about rangatiratanga—our right to be part of the effective and efficient operation of the telecommunications sector, our right to be key players in the communications industry, and our right, as Manhattan Transfer so sweetly puts it, to hear the words: “Operator, information. Give me freedom on the line.” Kia ora tātou.

KEITH LOCKE (Green) : I rise on behalf of the Green Party to indicate our support for the Communications Legislation Bill. It is very important to have a proper regulatory framework around access, and to avoid interference. Maryan Street talked about the problem of interference with band expanders, and that sort of thing. From the listeners’ point of view, there are two things they want: firstly, to have no interference, so that they are able to hear their radio stations clearly; and, secondly, to be able to hear all the types of stations they want to hear.

There is a huge range of stations now. In Auckland it is very hard to keep track of them as they rise and fall, and change names, and to find out what their little niches are. As the preceding speaker, Hone Harawira, has indicated, there is a very dynamic Māori radio sector that requires access at an appropriate price. There is another category I am very interested in. When I was living in Wellington in the early 1980s, the Wellington Latin America Committee was organising a Wellington Access Radio programme every couple of weeks. That was a quite a challenge, but quite an experience at the same time. The Access Radio network, which has now expanded to many cities, has been very dynamic, and Wellington Access Radio was the founder of that trend.

Those stations—and I think this is the same with the iwi stations—have made their waves, got their audiences, and developed their skills, with very little recompense. They are not well-heeled stations, so it is important to have a radio network system that allows all of those community organisations—iwi and non-iwi—to have ready access to frequencies, rather than to be shut out because they are too weak, and not to have a totally commercial mode whereby community stations are competing with the big commercial stations and just cannot get their foot in the door. We have preserved that access for many years. As Hone Harawira said, there is a guarantee from the Government that there will be consultations over the distribution of frequencies and over regulations. The Green Party certainly supports those consultations.

We support this bill. Thank you.

PHIL HEATLEY (National—Whangarei) : I acknowledge my colleague Hone Harawira, who certainly has experience in radio and television, and has something to add to this debate. I listened to him with interest, and I appreciate his contribution. We in the National Party, of course, also support the Communications Legislation Bill, because we believe it addresses technical issues to do with communications legislation that need addressing. As we are a party of principle and a party that enters into rational debate and quite clearly makes sensible decisions, we can see the value of this legislation, and we will absolutely support it.

The bill’s amendments address issues that could otherwise cause disruption to the effective regulation of communications—and we would not want to see that. We know that the Minister has enough problems on his plate without having to deal with serious disruptions in communications. I know that Minister Cunliffe is very busy juggling balls between, on the one hand, what he is trying to achieve in changing the country and making a difference in a way that he thinks is for the better and, on the other hand, having to deal with wayward colleagues such as Taito Phillip Field. That cannot be easy, and the National Party would not like to see a disruption in effective communications add to the Minister’s woes. I do not want to see Minister Cunliffe weeping in the corridors. We do not want to add to his woes, so we will certainly support this bill.

The two main Parts will be divided into separate bills at the Committee stage, and we will hear more about that in the next stage of the debate. First of all, Part 1 will amend the Telecommunications Act 2001 by extending by 2 years—that is, roughly, to December 2008, so it will be a little more than 2 years—the regulation of 10 of the 13 telecommunications services that were originally regulated under that Act way back then. We see the extension to 2008 as being a reasonably smart move.

Part 2 amends the Radiocommunications Act 1989 by updating the management of the radio spectrum. Radio spectrum management rights are for 20 years, and the bill allows for the aggregation of rights, to simplify the management process. In addition, adverse impacts on inappropriate receivers—such as band expanders used in imported Japanese cars—are not to be considered when distributing radio spectrum, as this could limit the full utilisation of the available spectrum. The bill also introduces an option of arbitration in resolving disputes between radio broadcasters. The National Party supports all the aspects addressed in the second part of the bill and can understand the reasons for them.

Under the Telecommunications Act 2001, telecommunications companies can apply to the Commerce Commission if they want a determination on the terms and the price of access to specified services. Thirteen services were identified and 10 remain under consideration. It is difficult to believe that we have made progress on only three of those services. However, there is an extension of the time frame now. We deem that necessary, and that is why we support this bill.

Speaking of the Telecommunications Act 2001, I say that way back in 2001 the then Minister of Communications, Paul Swain—before he saw the writing on the wall for the Labour Government and retired from his ministerial position—stated: “… for the first time we have established a framework for ensuring that the telecommunications industry can move forward in an orderly way.” On the key issue of increasing New Zealand’s broadband uptake, the Telecommunications Commissioner, Douglas Webb, began his investigation into unbundling in December 2002. Almost a year later, in September 2003, Webb released his draft recommendation, in which he recommended quite clearly that Telecom should be unbundled. But then, in his final report of December 2003, he then reversed that decision and recommended that only bitstream access be unbundled.

That was an intriguing time for those watching the telecommunications industry—that a report from an independent commissioner should state in September 2003 that telecommunications should be unbundled, and then his final report, issued just a few months later, should state that there should not be total unbundling and recommend looking at the unbundling of bitstream access only. The Government accepted that report in May 2004, having sat on it for 9 months. It hurriedly announced its decision on unbundling in May 2006. So it took Labour members 2 years. They accepted the report in May 2004 and, no doubt, formed a committee and hired some consultants. I do not know what they paid those consultants.

Jacqui Dean: Perhaps a single consultant.

PHIL HEATLEY: Perhaps it was a single consultant—a single, silver-tongued consultant worth $8 million. I do not know. The Minister might be able to confirm how many consultants were employed in that period from May 2004 to May 2006. I calculate just quickly on my fingers that that is 2 years. The Government most definitely formed a committee, possibly employed consultants for that period, and came up with the decision that it would unbundle in May 2006.

Of course, this brings into question the role of the Telecommunications Commissioner, the Government’s commitment to the process, and the original time line. I say those three things quite sensibly. First of all, the Government has brought into question the role of the Telecommunications Commissioner, because, effectively, it went against his advice after having employed him. Secondly, the Government’s commitment to the process is brought into question, because it sat on the information for some time after receiving it, and then went down a different path than what was recommended. And, of course, there were changes and tweaks during that period.

Thirdly, it brings into question the original time line. How could the Government ask something as important as what the future of telecommunications could be, receive an initial report in May 2004, and then take 2 years—until May 2006; nearly a complete parliamentary term—to report back to this Parliament and to the nation on what it would do? It is quite an appalling approach in terms of the original time line. However, National does support the bill.

The Commerce Commission, interestingly enough, announced that it would begin investigations into the mobile phone market and, in particular, into the lack of new market entrants. A number of people are saying that there are really only two major players, Vodafone and Telecom, in the mobile phone market. Sure, one can argue that there are other players, but essentially there are two major players, a lack of new entrants, and, therefore, a lack of competition. This could lead to additional Government regulation.

Clark told Newstalk ZB on 9 May—

The ASSISTANT SPEAKER (H V Ross Robertson): The member will use the member’s full name. See Speakers’ Rulings 26/6 and 26/7.

PHIL HEATLEY: Helen Clark, the Prime Minister, told Newstalk ZB on 9 May that the rules of the game had to change in the mobile phone market—and members might be shocked to hear that that is my wedding anniversary; she chose my wedding anniversary to announce that. On my wedding anniversary, Telecom stock lost $240 million in value. Was that a gift from the Prime Minister to me on my wedding anniversary? I do not know. Thankfully, I do not own Telecom shares, because I would not have been able to pay for that anniversary dinner.

Hon David Cunliffe: What did you get for your wedding anniversary?

PHIL HEATLEY: The Minister David Cunliffe might chip, but he also spoke out and had an effect on the sharemarket. I hope he has learnt his lesson about that.

New Zealand really has an extremely cumbersome system. Helen Clark’s comment was that we need to cut right through that. Her Government set up this cumbersome system, and I think we should recognise that. Telecom did lose share value after the statements made by both the Minister of Communications and the Prime Minister, and we should be very careful and cognisant of what comments we make publicly, in this House, and, of course, privately. I counsel the Minister in that regard.

National does support this bill. It addresses technical issues to do with communications legislation. We will support it and we look forward to the Committee stage debate, when we can go into more detail. Thank you, Mr Assistant Speaker.

DIANNE YATES (Labour) : I thank the member opposite for sharing the details of his family life with us. I am very pleased he could enjoy his wedding anniversary. I trust he was not giving us a little lecture on family values at the same time, because it seems that a number of National Party people celebrate a number of wedding anniversaries. Nevertheless, we are talking about the Communications Legislation Bill. The bill is not dealing with communications between individuals and their families; it is actually dealing, as Maryan Street informed us, with radio licences.

This is an interesting bill. Let us get back to what it is about. The bill is intended to improve the regulation of the communications sector. As the introduction states: “Part 1 of the bill amends the Telecommunications Act 2001 to extend the period of regulation for 10 specified telecommunications services to December 2008, allowing time for a Commerce Commission review to be completed. Part 2 amends the Radiocommunications Act 1989 to clarify and update the radio spectrum management regime.” So this is all about radio licences. It is about radio regimes. As Maryan Street has informed us, it is about frequencies. It is actually quite a technical bill. It is a reasonably small but quite technical bill about communications legislation. It has come under the guidance of the Minister David Cunliffe, and we thank him for the work he has done on it. As has been mentioned, he picked up from the work done by the previous Minister, Paul Swain, who was also a very able Minister.

As people have said, this matter went out for wide consultation. I was quite surprised that one of the previous speakers in this debate said there was no consultation. I noticed he was not a member of the Commerce Committee, but that he was actually quoting from a submission to the committee. I remind members of the public that New Zealand is particularly good in its consultation processes. I was not a member of the select committee myself, but I assume the bill had the usual form of consultation. It went out for public submissions, no doubt being advertised in the major newspapers as bills normally are.

The committee received only five submissions, but it is the responsibility of the people who are interested in the bill to make submissions. I note that the committee heard three of those five submissions, and it gave a comprehensive report. The committee made some changes to the bill, but not a huge number—in fact, I can see only one or two. One was to do with Ministers being satisfied that there was optimum utilisation of a radio frequency system. The other was about transitional rights of licence holders and what happens in terms of conditions lapsing if public funding ceases, and so on. So although the committee made some minor changes, I understand that generally it was unanimous in its support of the bill.

I see that the bill was referred to the committee in May 2006, so I do not quite understand the comments made by the previous speaker. I wonder whether he got a little confused about the years. The Minister may be able to enlighten me as to whether there was a previous bill, because I do not understand why the previous speaker was talking about May 2004. I think he was a little bit confused, because according to the report this Communications Legislation Bill was referred to the committee in May 2006. The closing date for submissions was June, so there was about a 6-week period for submissions to be received, and they were heard. I note also that the Ministry for Economic Development gave advice to the committee.

The committee has made reference to the definition of “interference” in clause7. I come cold to this bill, but it does seem that there was a need to define the word “interference”. I will share that definition with the House. Subclause (4) states: “Section 2(1) is amended by repealing the definition of interference and substituting the following definition: Interference (a) means the effective radio waves owing to 1 or more emissions, radiations, or inductions, or any combination of 1 or more of those things, on the reception of radiocommunications; but (b) does not include any effect on the reception of radiocommunications by inappropriate receivers.”

I think Maryan Street, who was a member of the committee, did go to great lengths in her speech to explain what all that was about, why that definition was changed, what all the implications are around the term “interference”, and why that was important. As the report states: “Clause 7 amends the definition of “interference” In the Radiocommunications Act to clarify that it does not include any effect on the reception of radiocommunications caused by the use of inappropriate receivers.”

To some extent I am not quite sure what this means. To me, interference on the radio is a kind of static. Usually in our offices, if we hold on to the aerial we stop getting that static. It seems that if a human being hangs on to the aerial for long enough, one does not get that interference. I admit to the House I am not really au fait with what the select committee has done, but I trust that good advice was given to it and no doubt the new definition is much better.

The report states: “We recommend amending the bill so that the Minister can recommend that a receiver be declared inappropriate only if satisfied that the type of receiver concerned might compromise the best use of the radio frequency spectrum. This will make clear the purpose of declaring a receiver inappropriate.” I am getting a nod from the Minister, who says he completely understands what his responsibilities are in this regard. I am glad he does, and I am pleased we have a competent Minister in this area. He is a Minister who is fully cognisant not only of the contents of the bill but also of his responsibilities under it. We look forward to the Committee stage of the bill.

LINDSAY TISCH (Senior Whip—National) : I seek leave for the House to rise for the dinner break.

Hon Lianne Dalziel: The question has to be put on the bill.

The ASSISTANT SPEAKER (H V Ross Robertson): The Opposition has suggested that the House rise because it has made such good progress. The member is seeking leave for that. Is there any objection? If members do not want to give leave I will put the question.

  • Bill read a second time.
  • Sitting suspended from 5.57 p.m. to 7.30 p.m.

Business of the House

TIM BARNETT (Senior Whip—Labour) : I seek leave for Harry Duynhoven to sit briefly in the Chair, in the forthcoming debate.

The ASSISTANT SPEAKER (H V Ross Robertson): Is there any objection to that course of action being taken? There is none.

Standards and Conformance Bill

In Committee

  • Debate resumed from 12 September.
Part 2 Amendments to Testing Laboratory Registration Act 1972 (continued)

NICKY WAGNER (National) : We were discussing the Standards and Conformance Bill, and I was worried about the standards concerning noisy vehicles and the lack of a testing regime for noisy vehicles. Our legislation is out of sync with international standards. It has become weaker and harder to enforce over the last few years, while most countries, including the UK, Australia, and those in Europe, have tightened their standards. Australia has updated its requirements so that all new cars need to meet a test of 76 decibels, while New Zealand cars have to meet a test of only 81 decibels.

But the real problem is that we allow the modification of cars, with no commitment to a regular testing regime to ensure that even our inadequate standards are met. Cheap Japanese cars, with modified noisy exhausts, have been a consistent, persistent, and growing problem ever since Labour came to power, and over the last 6 years it has done absolutely nothing to solve it. If New Zealand is going to conform with international vehicle noise standards, we need to introduce a regular and compulsory testing regime, with an approved objective test, through vehicle-testing stations. The key is to have an objective test, because that is the only way we can guarantee consistency.

National opposes the Standards and Conformance Bill, but we do support improved and updated vehicle noise standards, and the introduction of a standardised objective test in vehicle-testing stations to ensure conformance to international standards. So I ask the Minister for Transport Safety, Mr Duynhoven, to please get on with it.

Hon Dr NICK SMITH (National—Nelson) : I firstly want to support my colleague Nicky Wagner in the quite powerful points she has made to the Committee about the mess the Government has made in respect of standards for noisy exhausts. The member for New Plymouth, Harry Duynhoven, was rolled by members of the noisy industry as a self-confessed boy racer. As a consequence, I myself and Nicky Wagner have heard complaints from communities all over New Zealand—Nelson, Christchurch, Hamilton, almost every corner of New Zealand—about the hopeless Government response to noisy boy racers. The Government allows 7,000 vehicles a year that are imported into New Zealand to have perfectly good muffler systems ripped out of them and be replaced with ones with wide bores that are designed to be as noisy as possible. In fact, I found out that in my own community of Nelson the equivalent of a 747’s noise is being created by the wide-bore muffler industry every single week.

What has the Government done? I can recite the contents of six press releases from Tim Barnett of Christchurch, who said he would bring a member’s bill into this House in 2004. That is over 2 years ago. Well, I have searched through the papers, gone to the Clerk’s Office, and crawled over the desks, looking for Mr Barnett’s member’s bill, and it is nowhere to be seen. He got the sexy story in the Christchurch Press, but he has not done a single thing.

And we keep getting statements from Harry Duynhoven. He issues press releases—I think he has them in the fax machine on automatic release every 6 months. “I am going to do something about noisy exhausts.”, he says. He puts the press statement out, and nothing happens for another 6 months. He puts it out again; nothing happens for another 6 months. It has become farcical.

Thankfully, there is somebody who is taking this issue seriously. Nicky Wagner has launched a proper member’s bill to deal with noisy racers, and to set some standards in place.

Hon Harry Duynhoven: Bit late—it’s already done.

Hon Dr NICK SMITH: Well, I ask Mr Duynhoven why the standard of noise for a car in New Zealand is less than that for a 12-axle truck in Australia. I sort of thought that New Zealanders were more environmentally conscious than Aussies, but here we have Harry Duynhoven and his boy-racer mates allowing that sort of abuse of New Zealanders. People staying in hotels are refusing to pay their bills the next morning and are walking away in disgust. Cafe owners in my own electorate of Nelson are frustrated out of their tree with this problem. Thousands of people have signed a petition launched by Nicky Wagner. And still the Government does nothing.

So I challenge the Government, in respect of this Standards and Conformance Bill, to actually do some doing, actually walk the talk, because for all the rhetoric, for all the waffly provisions we see in this bill, this Government in important areas like building standards and exhausts standards is doing nothing. In fact, I will re-emphasise a question that I have put to the Minister ad nauseam. Standards New Zealand says there is one set of standards for the treatment of construction timber for houses, but the Department of Building and Housing is saying something different. A number of building associations are saying: “Please tell us what the rules are.” The Minister in the chair, Lianne Dalziel, cannot tell us. She refuses; she does not know.

Hon Lianne Dalziel: Part 2. We are doing Part 2 of the bill.

Hon Dr NICK SMITH: Yes, and I have a simple question for the Minister.

Hon Lianne Dalziel: This has got nothing to do with Part 2 of the bill.

Hon Dr NICK SMITH: Well, the bill is about Standards New Zealand, and Standards New Zealand has introduced a change in standards for timber treatment. We want to know what the standard is to which we have to build a house today. The Government does not know. So why should we be ramming through this Parliament the Standards and Conformance Bill, when the Government cannot answer something as basic as that? The reality is that for the first time in New Zealand history we have two different agencies of Government telling different stories about what the right standard is for something as critical as New Zealanders’ most important asset—their home. We do not know from this Government what the correct standard is. Why on earth should this Parliament advance a bill of this type, when there is that sort of confusion in the Government ranks over an issue as important as the standard of timber treatment, which is critical?

DAVE HEREORA (Labour) : I move, That the question be now put.

SANDRA GOUDIE (National—Coromandel) : Thank you, Mr Chairperson.

Hon Harry Duynhoven: I am sorry to interrupt the member who is about to speak, but I seek leave to table a set of statements outlining the noise-testing procedures currently in place, and recently introduced.

The CHAIRPERSON (Hon Clem Simich): Leave has been sought for that? Is there any objection. There is.

Hon Dr Nick Smith: I simply challenge the member, Mr Harry Duynhoven, to take a call. If he wants to contribute to the debate, I would be delighted to have him answer the questions. Instead, I seek leave to table the very good member’s bill that is in the ballot in the name of Nicky Wagner, which will actually show some leadership on the issue of noise control for vehicles.

The CHAIRPERSON: Leave has been sought for that course to be followed. Is there any objection? There is.

SANDRA GOUDIE: In speaking to Part 2, I would just like to look at the powers of the council, and also at the amendments to testing laboratory registration. I note that International Accreditation New Zealand has made a substantial submission with regard to that. Its members are concerned—they want to clarify—that the issue of competition created by the Joint Accreditation System of Australia and New Zealand for inspection body accreditation is currently the subject of review by the Ministry of Economic Development. The council is concerned that continued competition for inspection body accreditation by the Joint Accreditation System of Australia and New Zealand risks compromising confidence in, and the credibility of, New Zealand’s accreditation system for inspection bodies, particularly in regulated areas critical to safety and public health.

Actually, speaking of public health, I say we are concerned about the Government’s intention to require water quality standards throughout this country. It will place unbearable costs on to ratepayers to try to meet those water quality standards. That is a huge cost. We have a community of about 35 households, and 95 percent of the water is used for stock purposes, yet they will be required to meet the water quality standards set by this Government, at a cost of over $500,000. That is an insurmountable cost for any small community. Those communities just cannot afford to meet those sorts of standards.

The very Minister in the chair, the Hon Lianne Dalziel, says that standards are set with the input and consultation of all parties involved that have a major interest in them. I challenge her to take a call and explain the input into the water quality standards from all of the councils throughout New Zealand that will have to meet those standards. I put it to the Minister that that consultation was poor in the extreme, and that communities did not support having water quality standards set. Communities want to be able to make those decisions for themselves. They want to be able to choose the standard of water quality they want for their communities. If they want to set a lower or reduced standard, they should be able to choose that standard—it should be up to them. In actual fact, the water quality in the Canterbury area is so good that communities there are penalised by the water standard. Their water quality far exceeds the standard, yet the activities they have to undertake to meet the standard reduce the quality of their water.

In talking about the Joint Accreditation System of Australia and New Zealand I would like to identify one of the other submitters’ concerns: the compliance costs. Of course, the Joint Accreditation System of Australia and New Zealand states in its charter that it is a not-for-profit organisation. We should remember it is a joint committee between Australia and New Zealand. It has 10 members, and six of those members are Australian. It is meant to be a not-for-profit organisation, yet in 2005 its profit before tax was $773,000. That is pretty good for a not-for-profit organisation. We have to ask ourselves what the Minister was doing. Was a compliance report required? What was the assessment of the compliance costs involved in all of that profit? Was there an assessment of the charges, as was asked for by a number of the submitters? It is quite clear that the compliance analysis for this bill is so poor that we could consider it to have not been done at all.

I will go back to my original concern around the amendments to testing laboratory registration, and about International Accreditation New Zealand and its competition with the Joint Accreditation System of Australia and New Zealand. Perhaps the Minister would like to take a call to explain how she has met the concern that was raised by International Accreditation New Zealand about the competition from the Joint Accreditation System of Australia and New Zealand. In the council’s view, the very same reasons that support that system having sole responsibility for the accreditation of certification apply equally in the case of International Accreditation New Zealand having sole responsibility for the accreditation of inspection. It is critical to the credibility of New Zealand’s accreditation system that International Accreditation New Zealand has sole responsibility for the accreditation of the inspection bodies. It is a pretty big concern for that organisation, and perhaps the Minister may like to take a call and tell us how she will address those concerns.

TIM BARNETT (Labour—Christchurch Central) : I move, That the question be now put.

A party vote was called for on the question, That the question be now put.

Ayes 67 New Zealand Labour 50; New Zealand First 7; Green Party 6; United Future 3; Progressive 1.
Noes 51 New Zealand National 48; Māori Party 3.
Motion agreed to.

A party vote was called for on the question, That Part 2 be agreed to.

Ayes 67 New Zealand Labour 50; New Zealand First 7; Green Party 6; United Future 3; Progressive 1.
Noes 51 New Zealand National 48; Māori Party 3.
Part 2 agreed to.
  • Schedule agreed to.
Clauses 1 and 2

The CHAIRPERSON (Hon Clem Simich): Before I give the call, I point out that some members may have thought I was hasty in putting Part 2 to the vote. That was not the case. We had a number of speakers on a previous sitting day. All bar one of those contributors were not speaking to the part in question. In no way were they speaking to Part 2, so I thought we had had enough and I took the question. We are now on to clauses 1 and 2. It is a wide-ranging debate.

JACQUI DEAN (National—Otago) : I have been going through the standards update. I do not know how up to date it is, but I have been going through the local government component of it because local government is a subject dear to my heart.

My colleague Sandra Goudie very ably raised concerns about the by-laws and the standards for the water supply standard. I just want to reconfirm what my colleague Sandra Goudie has been saying about water quality standards, and to perhaps give members a bit of a picture of the impact that those standards have had on rural communities throughout New Zealand. They have had an impact on all communities, obviously, but in my experience the impact has been felt in rural and provincial communities. I can tell members that the drinking water standards have added an awful lot of cost to the people in local government, particularly where I come from, where there are a lot of people but not many people to pay for these new standards. We really need to keep that in mind when we are passing legislation.

I will now talk to the title of the bill. One thing that worries me about this bill is that we seem to have a daily diet of rhetoric from the Government on reducing compliance costs. I find it ironic that Minister Dalziel touts herself as being business-friendly, because in the general debate today it appeared that big business had become the enemy. I am not sure why big business should be anybody’s enemy, especially given that big business is a large employer, it seems to make a great contribution to our GDP, and it also pays an awful lot of tax. If somebody could tell me what is so wrong about big business, I would be very interested to hear.

I come back to the Minister’s comments on reducing compliance costs, and I turn now to the business compliance costs statement, which appears on page 10 of the Standards and Conformance Bill. Here is the issue I wonder about. The business compliance costs statement covers the effect the bill will have on businesses. It will affect businesses run by a couple of people, businesses involved in manufacturing, or, perhaps, a large company.

The business compliance costs statement—and I will read from the explanatory note of the bill because I think it is very interesting—states: “One-off compliance costs arise as the 2 bodies that are affected by the proposal will be required to shift their accreditation from IANZ to JAS-ANZ, and they will need to understand the requirements imposed by JAS-ANZ in order to obtain accreditation by that organisation.” Those requirements seem to be imposing an awful lot of work on some of the small businesses that I represent. I read further: “This will require staff of the affected organisations”, or businesses and people in offices who are otherwise trying to earn a living—and I know that the Minister is enjoying my speech, so I will continue—“spending time with JAS-ANZ accreditation staff so that the latter can have confidence that the 2 organisations are issuing certificates to their clients in accordance with IAF procedures.” This is riveting stuff, and it is also costly. “The size of these compliance costs will depend on the confidence JAS-ANZ has in the previous accreditations undertaken by IANZ.”

I ask the Minister whether we will hold seminars for people so that they understand how to do this. But she should not worry about it, because the statement then goes on to state: “These compliance costs will be mitigated by the Ministry of Economic Development …”. Well, that is good; I feel better! And I am sure our businesses will feel better, too! Our little businesses, trying to make a dollar in Central Otago and Cromwell, which is a wonderful hub—[Interruption] No, in the middle of the picking season for stone fruit. Those businesses have all the time in the world! All the staff necessary will sit down with this business compliance costs statement, and it will not cost them a thing and will take no time, at all! They are not to worry about it, because the compliance costs will be mitigated by the Ministry of Economic Development!

NICKY WAGNER (National) : The title of this bill is the Standards and Conformance Bill, and one cannot have much argument with a bill that is designed to make sure that the Standards Council, which develops standards for goods and services, and the Testing Laboratory Registration Council, which makes sure those standards are being met, both conform to international standards, norms, and practices. But we can have an argument about how much this legislation will cost—what my colleague Jacqui Dean has just been talking about—and we can oppose it because of the costs and level of compliance it demands.

The business compliance costs statement accompanying the bill—which my colleague also referred to—lacks detail, but it does show significant increases in costs, particularly in the fees of the new certification body. In fact, there is a huge increase in those fees, as was explained by Pansy Wong last night. She calculated it as being nine times—

Pansy Wong: Ten times.

NICKY WAGNER:—10 times the existing cost, and the worst thing is that the increase is for no discernible improvements in service. I have to say that for someone who comes from a background in small business, compliance costs, especially any huge increases in compliance costs, are like a red rag to a bull.

New Zealand businesses believe that regulation and increased costs of red tape are their biggest problems. We can look at the latest findings of Grant Thornton’s international business owners survey 2006, which shows that companies in New Zealand rate red tape as the most significant constraint to business expansion—at a 42 percent rating. These results are reflected in a global trend. Australia, with a 32 percent rating, and Ireland, with 30 percent, were among those countries that fretted less about red tape, but the least concerned was Singapore, which is at the foot of the global worry league. In fact, only two Asian nations, Malaysia and the Philippines, rated above 30 percent. Of course, the worry for New Zealand manufacturers and service deliverers is that, increasingly, we are competing with those Asian markets.

The Grant Thornton survey was conducted among more than 7,000 owners of medium-sized businesses—businesses with between 10 and 50 employees—around 30 countries. Its chairman, Warwick Jones, said that he was not surprised at the New Zealand results from the survey. He said that New Zealand business is strongly wrapped up inside regulations, rules, and bureaucracy. The situation here is in stark contrast with our competitor State in the shape of Singapore, which many people perceive as being authoritarian, but which clearly has a much more open view on making it easy to do business.

It is also a concern that for our neighbour Australia, red tape is very much second among concerns about constraints—well behind its concern about the availability of skilled workers. That is not good news for New Zealand, for two reasons. One reason is that it could further encourage New Zealand businesses to relocate their operations to Australia, and the other is that it could mean that Australia will lure more skilled workers across from New Zealand, in order to alleviate its chief block to expansion.

So, because of the costs and the increased demands of certification, National opposes this bill. We also oppose it because New Zealand business does not want, and does not need, any more red tape. Thank you, Mr Chairman.

BARBARA STEWART (NZ First) : I rise to take a call on behalf of New Zealand First. I was not going to do so, but I am compelled to get to my feet by the speakers I have heard. I have never heard so many erroneous statements in my life. It is important to realise that this is not a compulsory accreditation being imposed on the businesses of New Zealand. It is a totally voluntary regime that is there to help businesses in the export industry to have some accreditation to an internationally recognised standard.

The businesses involved in this accreditation know the costs before they become involved. I know that, because in my previous employment I was involved in working to an international standard ISO 9002, and we knew the costs. We knew what was involved. So for members to say that this is extra red tape and that it will increase costs is absolutely ridiculous, and for them to say that the businesses do not know the requirements to meet these standards and will need seminars to get them to meet the standards is outrageous. The manuals are there, in clear black and white, to assist businesses to reach the standards.

When we hear about accreditation costs, the costs are dependent on the size of the business, and one expects to have those costs. One knows the costs before one gets into this particular regime. They are outlined by the agencies when one applies to have one’s product or service certified. So it is quite astounding for members to say that there will be extra red tape and costs, when a business actually goes into this accreditation regime knowing that this will happen.

We know that these standards support New Zealand’s trade. They support a health and safety environment. In a manufacturing industry particularly—like the dairy industry—one has to have that certification to sell product overseas. It is the only way that one can give one’s customers an assurance that the product meets the standards that are required, and often the product standards are set by the country one is exporting to.

Before I left my previous employment I was very pleased to see that standards were made fit for purpose, because prior to that, one could manufacture a lead lifejacket—which I know some National members would like to have—but that lifejacket was absolutely not fit for purpose. Not many people want a lead lifejacket; they want one that will actually help them when they get into difficulties out on the water.

So some of the arguments I have heard tonight are totally astounding. This is a good Standards and Conformance Bill. It meets the requirements of the people who are involved in this particular industry. I hope that I hear some more accuracy in speeches before the end of the night.

SANDRA GOUDIE (National—Coromandel) : I am delighted to be speaking to the Standards and Conformance Bill, and to the title, even more so when I know that we are opposing it. One of the things I wanted to do was to see why these changes were being made, and why we were going down this path with this bill, which makes changes to various pieces of legislation. I could find only one reason—it is stated in the explanatory note that international practice is that only one body in any country has the function of registering certification bodies. I would have thought the system we had was fine. I did not see any reason for the change, and I still do not. Perhaps the Minister in the chair, the Hon Lianne Dalziel, might like to take a call and give us an explanation, but I will not hold my breath.

I was interested to look at what the Joint Accreditation System of Australia and New Zealand—JAS-ANZ—is required to do, particularly when it is meant to be a not-for-profit organisation yet is making $773,000-odd before tax. What does that not-for-profit organisation do? It is about strengthening trade. It is to be the joint accreditation body for Australia and New Zealand, to develop mutual recognition in overseas markets for Australian and New Zealand producers, exports, and personnel. I thought that was a bit strange when I thought about our apple exports. I think Craig Foss would be interested in that. If he has a little look at the objectives of the Joint Accreditation System of Australia and New Zealand, he will wonder why on earth we cannot get our apples to Australia, and he will see what those guys are doing.

Hon Lianne Dalziel: Ha, ha!

SANDRA GOUDIE: Well, it is all part of free trade. Do they or do they not meet the standards? Can it not do something in this regard? This is meant to be about trade.

I would also like to take on the points made by Barbara Stewart. She said that this is a voluntary situation. It may be a voluntary situation, but if people want accreditation for international trade they are caught between a rock and a hard place, and they do not have much of a choice if that is to be the process by which they can improve their market access. With a captured clientele the Joint Accreditation System of Australia and New Zealand can screw the cost and, from the concerns raised by submitters, it seems that that is exactly what it is intending to do.

If we look at the submissions from Telarc and from Health and Disability Auditing New Zealand Ltd, we can see quite clearly that they have major concerns about the increases in costs. They have set out those cost increases quite clearly to the Minister and the select committee, and one has to wonder why those concerns have not been addressed. If we look at the explanatory note in relation to the compliance cost report, we can see quite clearly that the Joint Accreditation System of Australia and New Zealand itself acknowledges that there will be some confusion amongst organisations wanting accreditation, and some confusion about what is to be complied with, what the procedures are, and what has to be done to meet its new certification.

Perhaps the Minister would like to take a call and explain the situation around compliance costs, and how she can justify increased costs—to a degree of 10 times the original—which is what has been mooted by submitters. These submitters have some expertise in this field and it is to be hoped that the Minister has taken some cognisance of the substantial outline of fees that will be imposed. I draw her attention to the outline of fees by Health and Disability Auditing New Zealand. It has shown, in summary, that a 3-year certification period will cost $155,000, compared with the $18,000 it used to be through International Accreditation New Zealand. That is a huge difference in cost—$155,000 as opposed to $18,000. Could the Minister please take a call and give us an explanation about the difference in those costs, and why she is condoning a compliance cost that will be incurred to that degree by all participants. The Joint Accreditation System of Australia and New Zealand is supposed to be a not-for-profit organisation. It is supposed to be there to assist not only consumers but also businesses. I cannot see businesses being assisted by compliance costs to that degree. So could the Minister please take a call.

A party vote was called for on the question, That clause 1 be agreed to.

Ayes 67 New Zealand Labour 50; New Zealand First 7; Green Party 6; United Future 3; Progressive 1.
Noes 52 New Zealand National 48; Māori Party 4.
Clause 1 agreed to.

A party vote was called for on the question, That clause 2 be agreed to.

Ayes 67 New Zealand Labour 50; New Zealand First 7; Green Party 6; United Future 3; Progressive 1.
Noes 52 New Zealand National 48; Māori Party 4.
Clause 2 agreed to.

Hon LIANNE DALZIEL (Minister of Commerce) : I move, That the Committee divide the bill into the Standards Amendment Bill and the Testing Laboratory Registration Amendment Bill .

A party vote was called for on the question, That the motion be agreed to.

Ayes 67 New Zealand Labour 50; New Zealand First 7; Green Party 6; United Future 3; Progressive 1.
Noes 52 New Zealand National 48; Māori Party 4.
Motion agreed to.
  • Bill to be reported without amendment presently.

Securities Legislation Bill

In Committee

Part 1 Amendments to Securities Acts

The CHAIRPERSON (Hon Clem Simich): The debate on Part 1, clauses 3 to 31, includes debate on schedules 1 and 2.

PANSY WONG (National) : National supports the Securities Legislation Bill, and, in the spirit of cooperation, I hope the Minister in the chair, the Hon Lianne Dalziel, will consider accepting two of my amendments, one to Part 1 and the other one to Part 2. My Part 1 amendment proposes to increase the authority for the Securities Commission to carry out functions so that the relationship and the role of both the Securities Commission and the stock exchange can be improved.

During the financial review the Commerce Committee had an in-depth exchange with the Securities Commission. In September 2004 the Securities Commission completed an inquiry into the performance of the New Zealand Stock Exchange. The stock exchange declared in that year that Access Brokerage had defaulted under its participant rule, and the exchange suspended it from trading. But it revealed a lot of confusion about the understanding of the front-line role of the stock exchange and whether it has a reporting function to the Securities Commission.

Why did the joint monthly meeting not send an early detection warning that the compliance rules of the stock exchange or programme could have been improved? At the time we conducted our financial review, we noted that the Securities Commission, although it claimed that there is a working relationship between the two agencies, seemed to be helpless in terms of getting the review programme completed.

So my proposed amendment inserts new clause 3AA, which would allow the Securities Commission “to keep under review the operation of the securities markets, and to comment on those operations to the appropriate body or the Minister;”. That means that the Minister in the chair, the Hon Lianne Dalziel, could have an early warning sign from the Securities Commission if, indeed, that agency finds itself lacking in power or not able to take early action.

I hope the Minister will look into that recommendation properly, because the objective of the bill is, supposedly, to improve the confidence of investors in our capital markets, so I think my proposal is going in the right direction. At the moment, the Securities Commission and the securities stock exchange market are operating under a joint regulatory role. Although we agree that they can work in partnership, one cannot help thinking that the Securities Commission is, ultimately, the agency that needs to know whether any breach is happening. Given the example of the way Australian authorities operate, we believe we do not need to wait for another bill to be introduced into the Parliament. There is goodwill on both sides; we do want to increase investors’ confidence in the capital markets, and I hope we could cooperate and support this amendment.

I am pleased to see that the Minister seems to be discussing the issue with the officials. I am happy to accept further amendments, but the spirit of this provision is to ensure that the Securities Commission does have that authority to review the operation of the securities market at all times, and then comment on those operations and bring them to the attention of the Minister. We all know that a thriving capital market and securities market is, indeed, very important in order to ensure that investors have confidence. That would assist business to prosper. I am sure the stock exchange and the Securities Commission would welcome a proposal in that direction. So I am hoping the Minister will look kindly on this one.

Hon LIANNE DALZIEL (Minister of Commerce) : I really would like to respond positively, in the spirit of the way it has been presented—the Opposition is supporting this legislation and I am very grateful for that. I am a little bit concerned, because I had only just seen the amendment, but I refer the member to the existing section 10(1)(caa) in the Securities Act, which states that one of the functions of the commission shall be “to keep under review activities on securities markets, and to comment on those activities to the appropriate body; and (cab) on the Minister’s request, to advise the Minister on the conduct rules, or amendments to those rules, proposed by securities exchanges;”.

The member seems to think there is a difference between the word “activities” and the word “operation”, and I actually think that the language of the existing Act is broad enough to pick up on those points. But I would like to say that I felt the Commerce Committee members handled that matter particularly well when they looked at the financial review of the Securities Commission, and I felt that the Securities Commission explained itself particularly well in its annual report, which has just recently been tabled. It did explain that it was very difficult that, at the time it was developing that early relationship with the stock exchange for the co-regulatory regime to work, there was the Access Brokerage case, which it then had to deal with and set aside the time it was spending on developing that relationship. As soon as the Access Brokerage decision came out, the Securities Commission was quite clear and acknowledged that the stock exchange had changed some of its practices and procedures as a result of Access Brokerage, and then it was able to move on. The relationship has developed very well ever since that time. So I am very pleased that the member has raised that point.

I do not think the amendment to the legislation is necessary, because the Securities Commission has that ability to review activities on securities markets, and that is indeed the function it is carrying out very well now.

BRIAN CONNELL (National—Rakaia) : I will start by saying to the Minister in the chair, the Hon Lianne Dalziel, that I am bitterly disappointed to come to the Chamber this evening to find that two Supplementary Order Papers have been tabled. I say that I think that makes it very difficult to have informed debate about legislation that should otherwise have the full attention and understanding of those who are debating the issues. The select committee process was very rigorous—and, at times, vigorous—but to find that there are now two Supplementary Order Papers, one 3 pages long and the other 14 pages long, I think is simply unacceptable.

Having said that, let me turn my attention to the body of the bill. Because it has been some time since it came out of the Commerce Committee—in fact, it was in the last Parliament—let me take a moment to recap what the bill is trying to do.

The Securities Legislation Bill is an omnibus bill containing amendments to the Securities Act 1978, the Securities Markets Act 1988, the Takeovers Act 1993, and the Takeovers Code. The main aim of the bill is to increase confidence in New Zealand’s capital markets. The National Party accepts that as being conceptually sound, but as this debate proceeds I will draw the Committee’s attention to some concerns I have about the way the bill is framed, because I think it may actually work against that lofty objective and may, in fact, stifle the flow of capital into, and throughout, New Zealand.

For the sake of the Committee’s accuracy, I say that this bill has three important changes. One is the restructure of the current insider-trading regime, and I will come back and talk about that in some detail. The second is amendments to the disclosure regime required of substantial securities holders, which I agree with, and the third is increase of disclosures of advisers and brokers, which is, again, something I agree with, provided that it does not become too burdensome.

One issue worth noting is the proposed market manipulation provisions, which is a concern I raised both in my first reading speech and in my second reading speech in this House. Those provisions have been dropped. I made the point at the time, and I think the argument held sway in the select committee, that market manipulation enforcement is notoriously hard to nail home, so I think common sense has prevailed.

Of more important note is the component relating to insider trading. The bill expands the present civil liability to include, in appropriate cases, criminal liability. Additionally, the concept of an insider has been expanded to include any person who has inside information regardless of its origins. Critics—and I am one of those—say that this could discourage directors and employees from owning shares, including incentive shares or schemes. That is an issue that I raised in the course of the second reading and is a view I still hold very strongly. I think that rather than enhance capital flows into this country or through our capital markets, we might create an environment where people become so risk-averse that they may find markets in other jurisdictions more attractive.

Throughout the course of the select committee discussions I was concerned to avoid the creation of a regulatory regime that would stifle our capital markets in the pursuit of one or two crooks. I was at pains to point out then, and I will do it again now, that I do not want to see anyone who is engaged in insider trading getting away unscathed. At the same time I do not want—and I know the Minister is cognisant of this—to create an environment that also scares people from engaging in the pursuit of legitimate activities. What we particularly do not want to do is to stifle initiative.

I draw members’ attention to one or two examples and ask them to contemplate the argument I am putting forward. Is it insider information if a bright young thing uses his or her initiative and, through his or her own inquiries, determines that an enterprise is worth pursuing and putting some money into? A case in point might be someone taking a packed lunch and a pair of binoculars and looking over the Auckland, Christchurch, or Wellington wharves. They see the activity of a particular company and how that company is increasing its importation of goods for sale in this country. On the back of the company’s retail success, that person invests heavily in that stock. Is that insider trading, or is that information that any bright young thing could have had at his or her disposal? If that person then passes that information on to clients, on the back of his or her own endeavours, in my view that is information anyone in the community who had put in the hard yards could have had access to. That is a very strong concern I hold, and on reading this bill I am not sure that the select committee has yet addressed that issue. Maybe the Minister would be good enough to take a call and give me some assurance that she is satisfied that will not happen.

The other issue that bothers me is that we are relying heavily on the Australian example, in terms of basing our legislation on Australia’s. Having spent the best part of my corporate career in Australia, I can say to the House that having a tougher law in itself will not be the panacea if the resources are not there to enforce the legislation. I caution the House that what we need are resources to police, as opposed to more restrictive legislation. I would go as far as to argue that if we had better enforcement now, this legislation in itself may not be necessary. Certainly in my time in Australia there were one or two very high profile convictions. But I have to say that for every conviction that was made, there were probably 50 that failed. What it certainly did in Australia was to make people risk-averse.

The last issue I want to address in this call is the issue of banning orders. For those who wonder what banning orders are, they are essentially a mechanism to ban managers—directors of companies—from being involved in those activities if they are found to be in breach of the regulations. When this bill was first drafted, I thought the banning orders were punitive and would apply to everyone regardless of what the breach was. Through the good work of the select committee—and I commend my select committee colleagues for the work they did, and the officials for listening and redrafting this component—people will be banned from management and directorships if they are found to be in breach of serious misconduct. This is quite different from people making an inadvertent mistake. At the time I was concerned about managers involved in minor misdemeanours. I am glad to say that concern has been removed. In my view it was going to drive people away from taking on executive management positions or directorships and it would have certainly spelt an end to share schemes.

With those point made, I am looking forward to having a very vigorous debate throughout the evening over the Securities Legislation Bill. It is very complex legislation and runs to something like 182 pages. I do not want to labour the point with the Minister but I will end where I began, by saying I am very disappointed that Supplementary Order Papers have been tabled today, given that the select committee worked its way through 182 pages of original legislation. It would be useful to understand exactly what those Supplementary Order Papers intend to accomplish.

CHRIS AUCHINVOLE (National) : The purpose of the Securities Legislation Bill is to increase confidence in New Zealand’s capital markets. Let us look at the basic structure of securities and how that fits with this bill. I note that National is supporting the bill. It is an omnibus bill, and therefore it contains amendments to the existing Securities Act 1978, the Securities Markets Act 1988, the Takeovers Act 1993, and the Takeovers Code. The main aim of the bill is to increase confidence in New Zealand’s capital markets.

Securities are often related to bonds—an exchange of stated trust. How familiar are we with that expression: “My word is my bond.”? Throughout commercial history, business people have been judged on the efficacy of their word. Oh, that that was still a valid currency!

Having had 1 year in Parliament, I have found it to be a remarkably rewarding experience in terms of being part of the hub of the wheel. However, if I am permitted to be slightly critical of the procedures of the current Government, I would have to question the way that questions are answered in question time—or perhaps I could say that I question the truth or answer avoidance that occurs during that time. How that can instil confidence and trust leaves me be.

So what security can we have as a country? What do we each represent? I guess there are three effective measurements: ethics—what we believe in; confidence—what other people believe about us; and integrity—what we believe about ourselves. I am still struck by the saying of President Harry Truman: “The buck stops here.”

Hone Harawira: Harry Truman.

CHRIS AUCHINVOLE: Harry Truman, that is right. In the Securities Legislation Bill—[Interruption] Some of these things, I say to Hone, are timeless. Indeed, a breach of trust is equally timeless—it is not easily forgotten.

With the Securities Legislation Bill it is important to determine where the buck stops, and it is important to make sure that that is a known place. This is necessary for confidence in the country’s capital markets. Confidence is so necessary, and it is something we all have to contribute to. I have had the opportunity to deal with overseas interests. I have operated a joint-venture company with overseas interests, and I am aware of some of the measurements used in determining how much confidence can be placed in New Zealand business. I am delighted to say that, when I established the company in the 1970s, there was a very high understanding of New Zealand’s integrity. There was a high level of appreciation of New Zealand’s sense of ethics. Word was that when a New Zealander said he or she would do something, it was believed the person would do so.

The confidence other people have—

Peter Brown: And then came the National Party!

CHRIS AUCHINVOLE:—and the confidence that is based on the way we behave, I say to Mr Brown, is reflected in the saying: “By our work we will be known.” I think the National Party and National Governments have an unparalleled record in stimulating the confidence of people from other countries in the way we behave.

Then we can measure integrity—the belief in oneself. I like to think, as a businessman, that these lines on my face are not just laugh lines; nothing could be quite that funny. I like to think that I have been through the mill a little bit—as has my colleague “Bob the Builder”, and as have my other National Party colleagues who have been involved in business.

Hon LIANNE DALZIEL (Minister of Commerce) : I was hoping there would be other things I could respond to, but I will go back to Brian Connell’s speech, which raised a couple of points that I ought to respond to.

The first point Brian Connell raised was about new section 8A, “Who is information insider”, which is proposed to be inserted by clause 21 of the bill. He raised questions about insider trading, including who an information insider is, and whether “material information relating to the public issuer that is not generally available to the market;” would be caught by his example of some bright young market analyst who goes with binoculars to take a vantage point overlooking the activities of the Auckland wharf—this was the example he used in his second reading speech and has repeated again tonight.

In order to find the answer to that question we really have to go to new section 4 of the bill, which is proposed to be inserted by clause 20. New section 4(1)(a) talks about information being generally available to the market if “(i) it is information that has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in relevant securities; and (ii) since it was made known, a reasonable period for it to be disseminated among those persons has expired; or (b) if it is likely that persons who commonly invest in relevant securities can readily obtain the information (whether by observation, use of expertise, purchase from other persons, or any other means); or (c) if it is information that consists of deductions, conclusions, or inferences made or drawn from either or both of the kinds of information referred to in paragraphs (a) and (b).” That new section makes it clear that the example the member uses would not be caught by the insider trading provision. I would like to offer him that assurance.

The second question Brian Connell raised was about Supplementary Order Paper 59, which makes a number of relatively minor amendments to Part 1. A number of those amendments were brought up with officials by the financial services industry after the bill had been reported back from the Commerce Committee. So we have been working on the Supplementary Order Paper for quite some time. It is not an ideal circumstance, but the bill had already been reported back from the select committee, there had been a general election between times, and in the meantime we had been talking to various market participants about this particular Supplementary Order Paper.

I will quickly run through the key changes to Part 1. It ensures that capital market advisers are not caught by insider trading or continuous disclosure provisions of the bill, providing they are legitimately advising their client on its own activities. I think that was a partial question that the member raised. It extends the time period for bringing civil proceedings from 2 years to 3 years, to enable the Securities Commission and others to have sufficient time to detect and investigate behaviour before bringing proceedings. It clarifies that the Securities Commission can recover its actual costs, rather than court costs, where it brings a successful civil pecuniary penalty proceeding. It requires investment advisers only to disclose to a potential client an adverse finding against it by a court, not an adverse finding by a disciplinary body. When we worked through that issue we thought some relatively minor breaches could bring an individual in front of a disciplinary body. If that individual had to disclose each breach, then he or she may not join what are voluntary bodies, and we thought that that might somewhat minimise what we were trying to gain by the passage of this legislation.

A couple of other minor technical amendments ensure the overall efficacy of the bill and ensure there is a greater consistency of approach across other pieces of legislation.

CRAIG FOSS (National—Tukituki) : I thank the Minister for clarifying those matters, and I endorse the goodwill that seems to be around this Securities Legislation Bill here and in the Commerce Committee, even though it was over quite some time. National is supporting this bill. It was interesting to pick up on the point that Mr Brian Connell made about the two Supplementary Order Papers. Last time I spoke to a bill like this—the KiwiSaver Bill, 2 weeks ago—a couple of key Supplementary Order Papers were launched in the Committee. The democratic process was somewhat abused, in my opinion, in that fundamental changes were introduced to a bill at the last minute. Having said that, I freely admit that the changes in these Supplementary Order Papers are not quite as fundamental.

I would like to declare a personal interest as we speak about some of the insider-trading matters, not that I have insider traded but I have traded securities in New Zealand, Singapore, London, Australia, Tokyo, New York, Hong Kong, and also most interestingly as far as insider-trading stuff goes, in the emerging markets when the Soviet Union broke up, and particularly also with South America and the Indonesian states. If we think we have a need for this legislation in New Zealand, my goodness gracious once one gets involved in some of those markets with their various versions of insider trading, “bauble” exchange if you like, cash for favours, and cash for questions, it is endless. I make that point because in all those countries they, of course, did have securities legislation. The key is the teeth and the appetite to enforce the legislation, or the punishments and enforcing the boundaries that surround it.

My colleague Mr Chris Auchinvole, the next West Coast MP, made some very good points. In fact, it is interesting; why do we need this legislation? Sadly, yes there was a time when one’s handshake was one’s bond, and that was one’s pledge. For example, the pledge card could be an interesting example of why we need such legislation, or proactively, in the internationalisation of share markets, securities, and financial markets, we need robust legislation, ongoing and work-in-progress legislation, if you like, to keep us in tune with the rest of the world.

I would make one more point—whatever gets passed in the Chamber, sadly we will have examples again of dodgy behaviour, shareholders being ripped off, and investors being ripped off by unscrupulous individuals. I guess we will have some further legislation, once that arrives. In particular the arrival of the Internet and the ability to share trade in unregulated environments—particularly in some of the emerging Asian countries, with all that goes on there—has created ripe opportunity for further abuse, sadly, of people’s goodwill. There are a few recent examples. Some are currently in the headlines. We have an issue around the recent fall in the Feltex share price and the issues around the Feltex company, when it was floated versus where the share price is now, and who knew what, and was it just the market, or did some people know more than others, and did they let on more than others? Did they deal within the law, or the spirit of the law, or the word of the law?

Interestingly, another example where there was very, very robust legislation was around the Enron debacle in the United States a few years ago. I am sure members remember that that debacle brought down the great accounting company, Arthur Andersen and Co. Again, the United States had more robust legislation, probably, than New Zealand will ever have, yet, again, unscrupulous individuals managed to exploit the system, tunnel right in, and, sadly, the auditing sector of the market was never the same again.

We recently had an interesting example in New Zealand over the allegations around Telecom and the leaking of insider information in respect of what the Government proposed to do with the unbundling. Regardless of the merits of that, we saw, quite openly, the impact someone can have if that person has a key piece of information and is about to short-sell into a market. From memory, that leak wiped about $2.5 billion off the market value of Telecom, which was—and probably still is—New Zealand’s largest telecommunications company. Thank you, Mr Chairman.

DAVE HEREORA (Labour) : I move, That the question be now put.

Hon Members: Part 1 is huge!

The CHAIRPERSON (Hon Clem Simich): Yes, Part 1 is a very big part—it is huge. I call Tim Roper. I apologise to the member—Tim Groser.

TIM GROSER (National) : Mr Chairman, if you had a name like mine and you had a dollar for every time it had been misspelt or mispronounced, you would be a rich man, so I take no offence.

I rise to take a call to support the Securities Legislation Bill. I am well aware that the bill had been in front of the House for a number of years prior to my arrival. Unfortunately I have not, unlike some of my colleagues, had personal experience in dealing with securities, but I have had a long interest in economic reform, and I recognise that this bill addresses some issues in that area and is therefore worth supporting from that perspective alone.

I am well aware of—and I think we have had increasing debate in this country on—the thinness of our capital markets. I am well aware that those capital markets are vital not only to establish New Zealand companies but to benefit new companies that have gone beyond the mezzanine and angel financing stages and are looking at initial public offerings. I am well aware of a recent Ernst and Young study that placed—unfortunately, as an illustration of the weakness of our capital markets—New Zealand 21st out of 22 OECD countries in 2005, in terms of the funds raised through initial public offerings. I think the parties in this Chamber recognise that we have a structural problem in this country, and the cleaning out by some Australian companies of some of our more successful emerging companies is itself, unfortunately, an illustration of our need to address some of those weaknesses as best we can. The bill is worth supporting as one move in that direction, because it is perfectly obvious that the public’s confidence in our capital markets legislation is a component in it. The public can get burnt off capital markets for any number of reasons, including, of course, the public’s own inappropriate decisions. But if there is a widespread belief in the malfeasance of markets, that is something that is within the control of the authorities, and we should move to do what we can to put in place the measures necessary for the public to have confidence in the integrity of the markets.

I have to say, however, that on all of these issues there is a first test that one has to apply, and that is to establish whether there is a problem, and, if there is, to find out how large it is and what the costs and benefits are of fixing it. I remain a little bit unconvinced by the argument that our having had no prosecutions in the last 5 to 10 years proves there is a problem. I ask members to just look at the matter intellectually. As far as I know, for example, the authorities have not captured, recently, a single live ferret in Wainuiōmata. I am not quite sure what that proves. It could prove that the authorities do not have the Taser guns necessary for the task, or it could establish that there is not a problem with live ferrets and, therefore, the good denizens of Wainuiōmata have nothing to fear; I am not quite sure what it proves. So I do not think the absence of prosecutions per se is particularly convincing proof that we have a pervasive difficulty in this area. It would be naive to imagine that in the last 10 years there have not been, in the capital markets of New Zealand, people who have gone well beyond what I would call sharp practices towards engaging in some very dodgy activities. But I start from the somewhat more optimistic assumption on matters of this nature that there is a fairly high level of integrity in New Zealand. I do not think there is even anecdotal evidence that suggests—a few obvious examples aside—that we are dealing here with a large problem.

Therefore, the policy implication that I would draw, as somebody coming to this debate fresh, is that we should look quite critically at some of these provisions, support them in terms of their general direction, but regard this legislation, frankly, as a work in progress. Obviously, this bill does some positive things, including the tidying up of the provisions for the three relevant bodies, the Securities Commission, the Takeovers Panel, and the Commerce Commission, that are responsible for ensuring that deceptive practices are not left undetected. It is very sensible that the bill establishes procedures for the proper exchange of information between those regulatory authorities.

Equally, it is very sensible that the legislation tidies up provisions to ensure that the considerably enhanced penalty provisions apply only to serious offences. I am not quite sure which adjective I would use to delineate those offences from other offences, but let us use the term, for want of something better, “technical offences”. Those are very considerable penalties, and I think the issue of proportionality arises here, so it is sensible that the bill addresses that. Equally, it is sensible that the bill contains provisions to avoid what I call “forum-shopping”. I am not quite sure whether that is a term one uses in this realm of public policy, but it concerns the ability of litigants to look around for alternative forums to pursue endless litigation—in this case, conducting private prosecutions under the provisions of both the Fair Trading Act and the Securities Markets Act. It is sensible that we are tidying up this provision. So I put these provisions down as good housekeeping and well worth supporting.

But what worries me—and I think Mr Connell and Mr Foss touched on this—are the illustrations of that old enemy of legislation, the law of unintended effects. Having worked in the public sector for 30 years, I am deeply conscious of the dangers of putting in place compliance regimes and management systems that encourage deeply risk-averse behaviour. I remember when I was a junior investigating officer in Treasury, more years ago than I am prepared to admit—

Hon Members: Tell us!

TIM GROSER: I will tell members in private. It was pointed out to me that a certain very senior Treasury official—and I am not referring to that great public servant Henry Lang—had sat in his office at a very senior level in the New Zealand Treasury, and for 30 years he had never approved a single departmental expenditure proposal, had never put forward an initiative on his own, and had said no to everything that had crossed his desk. So I know all about risk-averse activity and its great cost to the public sector. I guess what I am worried about, if we apply the law of unintended effects here—and I have listened carefully tonight to the helpful explanations of the Minister, the Hon Lianne Dalziel, on some related points—is that here we are dealing with something that is at the cutting edge of private sector entrepreneurial activity; we want to ensure that due attention is paid to risk, but we do not want to put in place compliance regimes that are actually completely counter to the underlying purpose of having capital markets in the first place.

Mr Connell and Mr Foss have addressed some of those issues, including the definitions of insider trading, and the tests that are generally available to the market—the evidentiary tests. The Minister has given us a view that is interesting, but I have to say that I have some reservations about this, and I have some reservations about the enforcement policy. Although National supports this bill, we should regard it as a complex piece of Government machinery that is very much a work in progress. Thank you.

RUSSELL FAIRBROTHER (Labour) : I move, That the question be now put.

The CHAIRPERSON (Ann Hartley): No. This is a large part, and there are still people debating the issues.

PANSY WONG (National) : Thank you, Madam Chairperson—we really appreciate that you have reminded the Labour MP that this Part 1 is two-thirds of this bill. I suggest he uses his spare time to do a good, thorough going over of Part 1. We still have a lot of issues we want to raise. I want to go on to discuss the insider-trading provision, plus the investment advisers disclosure law. I want to echo the concerns raised by both of the previous National speakers. I appreciate that the Minister is taking calls—she might like to give us some assurance.

I want to share a case. There is a credit card technology company—an Eftpos maker—that used to be known as Advantage Ltd and has changed its name to Provenco. In May 2003 Provenco conducted an on-market buy-back of $4.2 million of its own ordinary shares, paying $1.4 million. The Securities Commission considered that the defendants received insider information about the future earning of the business. This case dragged on for a year, and eventually the Securities Commission and the company came to a settlement whereby the company agreed to pay $622,000. In the meantime, the business had taken off and the company was doing very well. Both the Securities Commission and the company had come to this sensible settlement; both sides acknowledged that dragging on would not actually generate additional benefit.

This case has reminded us that under the existing securities legislation, insider information can be detected and dealt with. I hope the Minister will take a call and maybe alert us to additional problems that she felt necessitated the tightening up of the existing legislation. There is a balance to be struck. If we want businesses to thrive, they have to take risks. My colleagues correctly questioned whether we are tightening the net too much; are we actually trying to correct the problem with too big a tool? Does this send the right type of message to the Securities Commission, and does it send the necessary incentive to potential investors to invest in our market?

The other important issue I raise is that I wish the Minister would share with us why it took a whole year for this legislation to be reported back to the House, when National supported it. It contained a very important provision in Part 1: the disclosure by investment advisers. I want to share with the public the following very sad case. Recently, three very high-profile finance companies went into liquidation. Let me share the saga of Provincial Finance Ltd. After it withdrew its prospectus on 10 April, $9.5 million of investors’ funds were poured into that failed company. That suggests to us that there is some serious problem and that investors are not getting good advice or are not getting information. National definitely welcomes the provisions in Part 1 that enforce more disclosure by the investment advisers. Investment advisers will now have to disclose, for example, their qualifications, their experience, whether they are a member of a professional body, and whether they have professional indemnity insurance.

Investment advisers must also disclose whether they have certain criminal convictions. When a company withdraws its prospectus, and $9.5 million of investors’ funds finds its way into the failed company, it certainly suggests there is a market failure. I really want the Minister to take a call to tell us why she waited a whole year to bring back this legislation.

BRIAN CONNELL (National—Rakaia) : I start by thanking the Minister in the chair, Lianne Dalziel, for her willingness to get to her feet to clarify questions that have been put to her.

Simon Power: She’s good like that.

BRIAN CONNELL: She is proving to be very good like that this evening. I also say to the Minister as regards my argument around the Supplementary Order Papers that it was not the substance of the Supplementary Order Papers I was concerned about, but rather the timing with which they were tabled. I was concerned that, without having the opportunity to read those Supplementary Order Papers in detail, it was hard to make a significant contribution to the debate. Now that I have had the opportunity to read them, I agree with the Minister that they are warranted. I accept they have come from financial markets and institutions, and that is quite legitimate. My point is just around timing.

The other issue the Minister responded to was my question around insider trading and the concept of an insider being expanded to include any person who has inside information, regardless of its origins. That is why I went to some trouble to give the example I did; it was to do with the origins of that information. The bill still states that insider liability has been expanded to any person who has inside information, regardless of its origins.

I now go to another component of the bill. In my discussions with submitters to the Commerce Committee, I found that they still have some concern with new section 4, to be inserted in the Securities Markets Act by clause 20. They say that section 4(1)(a)(ii), which will prevent those with insider information from trading until a reasonable period has passed for it to be disseminated, is inconsistent with section 4(1)(b), and that the matter will probably be left to the courts to distinguish. The problem has occurred in Australian legislation, on which this provision is based.

I say to the Minister, with the best will in the world, that I think this is a flaw in the drafting of the legislation. If submitters to the select committee still feel, in subsequent discussions, that this issue is left open to interpretation, then I think that is a problem. Now that we are going through the Committee stage and trying to draft legislation, I think we should try to get it as right as we possibly can. So I leave that issue with the Minister, and ask whether she would be good enough to talk to her advisers and maybe come back to the debate with some response. If she could give me some satisfaction that that issue has been clarified, I would be grateful.

The other area that concerns me is that, when preparing a takeover involving third-party consultants, there is no defence provided to those consultants for the inside information they obtain through due diligence. It is standard practice in any takeover or acquisition to involve a due diligence team, and how inside information is treated in that situation is an issue for debate. Again, I seek the Minister’s indulgence and ask her to speak to her officials and to give the Committee some satisfaction that that issue has been canvassed, as well.

We should comment on the issue of additional disclosure for advisers and brokers, as well. Those offering investment advice are now required to disclose qualifications, experience, professional standing, criminal convictions, and, most important, any relationship that would influence their advice. It is my view that most advisers do that now. What this legislation will not do, though, is protect the unwitting public from those people who are crooks or who have a criminal intention. Having as advisers people who are well-trained or well-qualified, but who do not have good intent, will not protect the investing public. That issue still concerns me.

I can see that compliance costs will have to be built into investment companies, because people will have to get qualifications where generally, I think, quality advice is being given now, and there have been no incidents where those particular organisations have given bad advice. So I think the Minister should look at this issue.

Hon JUDITH TIZARD (Minister of Consumer Affairs) : I move, That the question be now put.

PANSY WONG (National) : I would like to continue the debate surrounding disclosure by investment advisers, because I was very disappointed that the Minister in the chair, Lianne Dalziel, who had been very good in taking the call, suddenly stopped doing so. I am still wondering why this bill, which was reported back to the House late last year, is still only at the Committee stage. People would really benefit from this additional disclosure, and we can share with them piles of information about what happens in Australia. The chairman of one failed financial company, Provincial Finance, went over to Australia and started a finance company to try to raise funds over there. The Australian agency, the Australian Securities and Investment Commission, is right up with the task. Its spokeswoman says that it is chasing disclosure in relation to that company. She said: “I can say that we are concerned to ensure that investors are provided with all the information required to make an informed decision.” So the Australians are very effective in trying to protect their investors.

I think the Minister should take a call and explain to the Committee why provision for disclosure by investment advisers took 1 whole year to get to this stage. I would also like her to share with us how quickly the second part of the regulation relating to investment advisers will take place. My colleague Brian Connell has just been saying that disclosure is fine and that a lot of people disclose their information. But the public has a right to know that people calling themselves investment advisers do actually belong to a professional body—that there are regulations and that somebody is checking their qualifications—to ensure a level of comfort.

Or does the delay have something to do with the extension of the definition of what constitutes insider trading? I understand that the definition of “information insider” has now been extended to: “A person is an information insider of a public issuer if that person—(a) has material information relating to the public issuer that is not generally available to the market; and (b) knows or ought reasonably to know that the information is material information;”. There was some speculation about whether the Hon David Cunliffe, when he was under investigation by the Securities Commission for speculating about the future dividend policy of Telecom, would be caught under this new extended definition of “information insider”. Now that his case has been closed, we have suddenly seen this bill find its way into the Committee stage. If that is the case, it is not fair.

The public has a right to get protection as soon as a problem is detected. There have been three very high-profile collapses of finance companies, and we are being told there are still more on the way. A lot of finance companies engage in the financing of second-hand cars, and with the economy starting to slow down—we are now looking at 2 percent growth—people are suddenly finding themselves unable to meet their payments. So I think there are more collapses of finance companies under way.

Personally, I would like to see this bill pass through all its stages a.s.a.p., but we also urge the Minister to fast-track the regulation of investment advisers, because unless we can instil public confidence, then our capital market will not thrive.

Hon DAVID BENSON-POPE (Minister for Social Development and Employment) : I move, That the question be now put.

A party vote was called for on the question, That the question be now put.

Ayes 71 New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.
Noes 48 New Zealand National 48.
Motion agreed to.
  • The question was put that the following amendment in the name of Pansy Wong be agreed to:

to insert the following new clause:

3AANew subsection 10(caaa) inserted

The principal Act is amended by inserting, after subsection 10(caa), the following subsection:

10(caaa)to keep under review the operation of the securities markets, and to comment on those operations to the appropriate body or the Minister; and.

A party vote was called for on the question, That the amendment be agreed to

Ayes 48 New Zealand National 48.
Noes 71 New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.
Amendment not agreed to.
  • The question was put that the amendments set out on Supplementary Order Paper 59 in the name of the Hon Lianne Dalziel to Part 1 be agreed to.
  • Amendments agreed to.
  • Part 1 as amended agreed to.
Part 2 Amendments to takeovers legislation

PANSY WONG (National) : Part 2 amends takeovers legislation, and I hope that the Minister, once again in the spirit of cooperation, will consider my amendment to this part. We have heard reported high-profile cases where company mergers try to sidestep the Takeovers Panel and use the restructuring provision in the Companies Act. I am trying to be helpful in saying that we do not need to wait for another piece of legislation to be introduced to the House, and taking a few years to go through the first reading, the select committee process, etc. It seems to me that all the commentators agree that a company in a takeover situation should be dealt with by the Takeovers Panel.

My amendment proposes that the panel, using the stated criteria, should have the authority to decide whether a takeover should come before the Takeovers Panel and also rule out mergers when companies are structured for the purpose of avoiding their coming before the Takeovers Panel. In doing so, the Takeovers Panel would consider whether the same result would be achieved if it were a takeover, whether there was a legitimate commercial purpose in preferring the merger, and whether there was a key feature of the merger that could not have been achieved through the use of the takeover mechanism. Key features could include a reduction of capital, an amendment of the target’s constitution, a variation of the terms of options or convertible securities, or an acquisition of more than one class of share by a single procedure. The provision is largely taken from the Australian takeover legislation because, I guess, in the spirit of closer economic cooperation, a lot of our commerce, etc., is moving to standardisation with Australia’s.

It seems to me that those are sensible amendments to avoid company restructures where their purpose is simply to avoid being interpreted as a takeover. National is in a mood of full cooperation, and I think that if the Minister has a discussion with her officials she is indicating that they are considering it, well, the Government is considering my amendments. I always say that if something is worth doing, why do we not grasp the opportunity and accept those amendments. We have time; in the next hour or so we can look further through the individual provisions. But it seems to me that we should not tolerate a business that would restructure solely to avoid coming under the Takeovers Code.

So far we have not really seen too many complaints against the Takeovers Code, and the fact is that Part 2 will make further amendments to improve it. It seems to me that businesses should not be allowed to circumvent that issue, and obviously I am looking forward to a contribution from my colleague Brian Connell to assure us that Part 2, the amendments we are now debating, will improve the Takeovers Code. Maybe the amendments that I am proposing now will help further the working of this legislation. So I am positive and hopeful that the Minister will start to look into those amendments.

In talking about this takeover, I say that we are also pleased that there is a proposal in this legislation that the Commerce Commission, the Securities Commission, and the Takeovers Panel will sensibly share some of that information, to ensure that our legislation regarding the operation of the capital market and security market will work very well. I think we endorse those three agencies to work in a cooperative manner.

Hon LIANNE DALZIEL (Minister of Commerce) : Yes, I did have the time to have a look at Pansy Wong’s proposed amendment, but I do not think the amendment she is proposing would do what she wants it to do. I want to give some background to it.

The Takeovers Panel decided to go out and consult on what it felt was a problem in relation to schemes of arrangement and amalgamations under the Companies Act and the Takeovers Act. Interestingly, both of those pieces of legislation were passed in 1993, so the Government of the day did intend for different rules to apply, and specifically allowed for schemes of arrangement under the Companies Act. I do not think that an amendment moved on the night, as the bill is going through the Committee, is a good way of resolving this. I know that the member has chosen to take up the Australian language, but unfortunately that does not resolve the fact that the Companies Act still has the other provisions within it. So the inclusion of this within the Takeovers Act would not actually stop what has been occurring from occurring again.

The Takeovers Panel heard submissions over a 10-day period. That—even with my Small Business Advisory Group representational role—is not long enough to actually qualify as the level of stakeholder input required to make the changes that need to be made. My officials are certainly looking at the report that I received from the chair of the Takeovers Panel, probably a fortnight or 3 weeks ago—it was not very long ago—and I understand there is to be a report to the select committee that is looking at the Business Law Reform Bill, because the Takeovers Panel made a submission on the Business Law Reform Bill at the same time that it provided me with its results of its consideration of the subject matter.

So it is not that I am unsympathetic to the issue; I think the issue does need to be resolved. But I do not believe that an amendment to the Business Law Reform Bill—which, tragically, I have already been told would be out of the scope of the bill, anyway, and that is not a decision I get to have any say over—is appropriate. On the other hand, dealing with it in this way would not be appropriate, either. I am glad the member feels that there is an issue that needs to be addressed.

We want to go through a proper process, now, with the Takeovers Panel recommendations. I should say that the Takeovers Panel did not get unanimity from the community sector. Some felt it was too much to leave it entirely within the jurisdiction of the Takeovers Panel, and some felt that the Takeovers Panel recommendation that it be heard by the High Court in the consideration of schemes of arrangement would in fact resolve the problem. So I think we have a wee way to go before the issue is resolved, one way or the other, but I thank the member for raising it in the spirit that she has.

CRAIG FOSS (National—Tukituki) : In continuing what we spoke of earlier, I look forward to a speech from the Māori Party on this Securities Legislation Bill. I would be interested to hear its members’ thoughts on what was perhaps New Zealand’s earliest—perhaps even founding—piece of securities legislation, which of course was the Treaty of Waitangi. So I look forward to 10 minutes on that one, as we go through the night. I would also be interested in hearing that party’s opinions—and, in fact, the opinions of more members on the Labour side—of the securities legislation, particularly the takeover side. I notice that members of United Future have obviously been through takeovers, with their takeover of various small parties, etc. I would be interested in seeing it in that context, which is a bit from left field, I appreciate, but it is always worth looking at issues from the point of view of the other side.

Takeovers, equity markets, and financial markets all have to operate in an environment of confidence and total transparency, and with a free and full flow of information to all parties concerned—regardless of whether or not they have a stake—and in an environment full of integrity where, as earlier speakers have said, a handshake is as good as a bond. Yes, that has to be backed up by legislation; I think we have 182 pages of legislation here, plus two Supplementary Order Papers, and plus the amendment that my colleague Pansy Wong is putting together. But confidence, transparency, and certainty are what financial markets are all about. Commitments must be delivered upon when promises have been made and consideration given. When I spoke earlier, I touched on the pledge card. I would be interested to examine that in these circumstances, but of course it is outside the realm of this bill.

New Zealand is part of an international global capital market. We are talking about equity takeovers here, and we talk about New Zealand and Australia in particular, but we are only 2 percent of the world equity markets—only 2 percent. I find that interesting, given that the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill, which is currently before the Finance and Expenditure Committee, actually disincentivises New Zealand from going to 98 percent of the world’s equity market, and encourages us—in fact, essentially gives us a tax incentive—to operate within only 2 percent of the world’s equity market.

Under this takeovers part of the bill, many of those new entities that now have to be KiwiSaver-compliant will also have to deal under the taxation bill as it was prior to the suggestions and the changes the Minister of Finance announced the other day, which were thrust upon us. They will also have to deal within the new certainty and the transparency that this bill will give.

The incoming National Government will, of course, need robust and strong capital markets. As we are supporting this bill on its way through, we will endorse it to help create the parameters we need to help New Zealand grow. The earlier part of the bill touched on insider trading. I realise that we are on to Part 2 now. I think the world has moved on an awful lot. As I mentioned earlier, sadly and unfortunately problems will still happen. People will still deal outside the spirit of this legislation.

I note that the Minister of Commerce and earlier speakers also mentioned that we are getting closer to the Australian examples. We are following its lead, perhaps hand in hand, around certain law on this issue. Of course, being a good Hawke’s Bay MP, I make the point that our apples are still not allowed into Australia. Hopefully, one day our agricultural markets will follow our business tax law and our commercial law. Interestingly, I think, this convergence with Australia is a debate that New Zealand is yet to have. Almost every bill that is coming before the Commerce Committee and the Finance and Expenditure Committee touches on a closer economic relation with Australia. Of course we all know about Closer Economic Relations, but the back office of New Zealand is starting to resemble another state of Australia. This bill is part of a portfolio of changes that the current Government is bringing through. There is this bill, the Reserve Bank of New Zealand Amendment Bill, taxation legislation, and the Westpac New Zealand Bill that was passed the other night. All of those bills have a common theme of New Zealand getting closer to Australia, with convergence of back office legislation, etc. On its own I do not have a problem with that. But I do have a problem when that debate is not out in the public arena.

BRIAN CONNELL (National—Rakaia) : I will start by asking this question, albeit a hypothetical one. Is this legislation necessary? As I examine my own inner feelings on this, I have to conclude that the answer is yes. I do add, though, that if capital markets are to work properly they need clarity and certainty.

We do risk stifling capital flows, with the way this legislation is drafted. I am not sure we could do it any better, having said that. What I do say to members, though, is that we need to be pragmatic enough, big enough, to come back to the House and make changes to tweak this legislation, where and when appropriate, as we discover, through the course of examining legislation that is so large, that we have made errors in drafting, in intent, or in application. Experience has taught me that that will be necessary. What investors in this country do need, though, is certainty and confidence in their markets and in the operators therein. I have no problem with supporting the legislation, but I do offer that advice to the Minister and to subsequent Governments. I am sure that this is legislation that, just by its sheer complexity and size, we will come back to, sooner rather than later, and have to rework in some areas.

I turn now to Part 2, and look at the powers that the courts have. There is no doubt that the powers inherent in this bill do enhance the powers of the courts to bring convictions; there is no doubt about that. But I say to colleagues let us not assume that because there are enhanced powers, we will see a significant number of prosecutions as a consequence. What I think this part will do is send very clear signals to people who are operating in this market that they need to be very careful and they need to be beyond reproach, otherwise the consequences will be severe. That is a warning, also. It goes back to my concern about stifling capital flows, because I think there is a tendency, in the way the legislation was drafted, to make operators risk-adverse. By that I simply mean that when they are uncertain they will take the no-risk approach and decline to get involved, as opposed to shaking their shoulders and having a go, just because the consequences are significant.

I touched on management banning orders in a previous call, but it is something that concerns me. I think, on balance, the Commerce Committee has worked well to come up with a sensible solution. I want to share with members just how significant some of these things are. In terms of management banning orders, new section 44DB, inserted by clause 51, states: “A management banning order may, for a period stated in the order of 10 years or less, prohibit or restrict the person (without the leave of the Court) from being a director or promoter of, or in any way (whether directly or indirectly) being concerned or taking part in the management of, an incorporated or unincorporated body …”. I say to the Committee that that is a hell of a power; it is a hell of a thing to do to ban someone from taking part in what was hitherto his or her livelihood.

I do not want to be giving confused messages. If someone is engaged in inappropriate behaviour, let us throw the book at that person. But let us be careful that we are not getting people caught up under banning orders because of a technical breach, an unintended breach, because the consequences are very, very significant. A person who is banned and cannot pursue his or her livelihood as a manager or director of an organisation in one field, will not be able to pursue his or her livelihood in another.

Hon Lianne Dalziel: They have to be convicted of an offence.

BRIAN CONNELL: I agree with that. I understand that point. I am just drawing attention to the fact that this is a very significant issue.

CHRIS AUCHINVOLE (National) : Business thrives on risk. That is how it measures progress—by taking risks, and getting benefits from taking that risk. What stifles business is uncertainty. The question we have to ask—as well as the question asked by my colleague as to whether legislation is necessary—is whether this legislation, the Securities Legislation Bill, will provide certainty, and remove uncertainty, to those in the commercial field. In speaking to support the bill I join my National colleagues in considering that it will indeed remove uncertainty and therefore it merits support. It is worthy of support, given the considerations and concerns that my colleagues who spoke earlier have mentioned thus far.

I do have a question, though. Even though we have moved on from Part 1, I do have a question for the Minister. Why has this bill taken so long to come back to the House? We are talking about certainty and uncertainty. I would suggest that this bill requires a certain amount of urgency. We have heard the comments of my colleagues—Mr Tim Groser, not least—about where New Zealand sits on a world measurement basis. We need to have confidence in the level of integrity, and we need to know why the bill has taken so long to come back from its introduction and consideration by the Commerce Committee. It has now come back, at this late stage. Were there difficulties associated with its development? I think the Minister should take a call and help us with those responses.

Hon Lianne Dalziel: I wasn’t the Minister when it was reported back.

CHRIS AUCHINVOLE: Well, that says it all I guess. I know there has been an array of Ministers who have handled this portfolio. Indeed, of the last four Ministers, I think the present Minister has held the position longer than most, and that is to her credit.

There are aspects of the bill that merit being looked at individually. One is the effect on the Takeovers Act 1993. The bill makes three main changes to that Act. It amends the application to the Takeovers Act and the Takeovers Code by removing the $20 million threshold requirement from the definition of a specified company. The Act and code will apply as long as a company has 50 or more members and shareholders, regardless of whether it has $20 million of assets.

Hon Lianne Dalziel: This is extraordinary—it’s exactly what my notes say.

CHRIS AUCHINVOLE: It is. It is similar, and I think it is important that those who are listening to the debate are party to some of the detail in the bill. It is not a matter of just talking in platitudes, although the Minister might be more comfortable with that. I think it is important that we get into the nitty-gritty of it, look at some of the hard stuff, and ask questions in the hope that those questions will be answered.

Again, the overarching question I have is why this bill has taken quite so long in coming back. Is that an indication of the significance that the present Government attaches to this bill? Because National would attach rather more to the integrity and the confidence that people can have in our capital markets in New Zealand. I notice that aspects of this bill—I think someone has commented on it—are borrowed legislation. A lot of it comes from Australia. To me, that is not entirely a bad thing, because, ever-increasingly, we do need to have closer relationships and closer harmony in our legislation with our trans-Tasman cousins so that there can be a regular interchange of business relationships between the two countries. Thank you, Madam Chairperson.

  • The question was put that the following amendment in the name of Pansy Wong be agreed to:

to insert the following new clause:

52ANew section 45A inserted

The principal Act is amended by inserting, after section 45, the following section:

45APanel to decide on use of code

The panel may decide whether a merger is structured solely for the purposes of avoiding the code and therefore must proceed as a takeover, in doing so the panel must consider—

(a)whether the same result can be achieved via a takeover; and

(b)whether there was a legitimate commercial purpose in preferring the merger; and

(c)whether there is a key feature of the merger that could not have been achieved through the use of a takeover mechanism, a key feature could include:

(i)a reduction of capital; or

(ii)an amendment of the target’s constitution; or

(iii)a variation of the terms of options or convertible securities; or

(iv)acquisition of more than one class of share by a single procedure.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 48 New Zealand National 48.
Noes 71 New Zealand Labour 50; New Zealand First 7; Green Party 6; Māori Party 4; United Future 3; Progressive 1.
Amendment not agreed to.
  • The question was put that the amendments set out on Supplementary Order Paper 59 in the name of the Hon Lianne Dalziel to Part 2 be agreed to.
  • Amendments agreed to.
  • Part 2 as amended agreed to.

BRIAN CONNELL (National—Rakaia) : I appreciate the confidence my colleagues are showing in me, in taking this call! I start by thanking the officials for the advice they offered to the Commerce Committee. I was negligent in not having raised this issue earlier when I took some calls, because the officials did help the select committee work its way through some very complex issues. I know there were lots of questions, and comprehension at times was lacking. The officials were very patient and we appreciate their indulgence. I also thank my select committee colleagues for the way they worked in drafting this Securities Legislation Bill, as well. The same argument applies. It is complex legislation and we worked collectively in a collegial way in order to come up with the best legislation that we possibly could—albeit I have expressed some reservations about compliance costs, and some of the complexities, and have raised the spectre of revisiting this legislation in future years, if the need arises.

Importantly, Part 3 deals with the sharing of information, and I will talk about that in a little detail. The information-sharing power inherent in this bill recognises the public interest in ensuring that regulators working in similar areas cooperate in the performance of their duties and, thus, enhance the efficiency of their investigation and enforcement functions. It might surprise members of the Committee that that has not been the way we have done things as a matter of course in the past, so I think that this is a very sensible initiative. Again, I thank the select committee members for working to make this possible.

Prohibitions against misleading and deceptive conduct have been introduced into this securities and takeovers law, and the same considerations suggest that the information-sharing power should be extended to encompass the Commerce Commission’s role under the Fair Trading Act. Again, I agree with that measure. It is a very significant and good initiative. My colleagues have touched on the significance of this legislation in the course of the debate, and on how important this legislation will be in enhancing confidence in our capital markets. I think information sharing like this is absolutely critical to the success of this legislation, so I commend this component particularly to members of the Committee as a cornerstone of the legislation and as something that is extremely important if successful prosecutions are to be brought.

I have laboured the point in the past and I do not want to bore members with it again, but bringing successful prosecutions for insider trading is notoriously hard to do. Without the ability to share information across Government departments and authorities, we will continue to have a poor success rate. So this is a very important component of enhancing our intention to capture those who would engage in misleading, deceptive, or insider-trading activities in this country.

We should have no sympathy for people who are prepared to engage in those activities. In the past I think there has been the view that white-collar crime like this is something we should not be overly concerned with. Well, it is mum and dad investors who are often the target of some pretty unscrupulous people who engage in activity for personal gain, which is why I feel so strongly about supporting this legislation and why, again, without labouring the point, I think the information sharing inherent in this bill is a very significant step in the right direction.

I conclude by again thanking the members of the Commerce Committee for working through this bill. I know there is one more debate to be had on the title, but I was remiss in not raising the point earlier. I know that some of the officials are here tonight. There are questions still unresolved in my mind that I am sure, if I had access to the officials, they would be able to answer. The Minister in the chair, the Hon Lianne Dalziel, has done a pretty good job in taking responsibility for answering tonight some of the legitimate concerns and questions, and I thank her, once again, for answering those. With those few words I will conclude.

PANSY WONG (National) : National is supporting this bill, because we certainly believe in the objective of passing legislation to increase the confidence of investors. But I do have a concern. In the last 2 weeks in this Chamber we have been constantly told by the Hon Pete Hodgson that if the rules are correct and the interpretation is wrong, then Ministers will still pass the blame and say that the rules are not correct. So, to me, passing this legislation is fine—we are supportive of it—but what sort of assurance do we have in relation to agencies such as the Securities Commission, which is a statutory body, the Takeovers Panel, and the Commerce Commission, all affected by this legislation? If they operate following the intent of this legislation, will they be left alone to implement its spirit?

We have learnt this afternoon that the chairman of the Electricity Commission has been sacked, because he would not give in to political pressure. He wanted to carry out his duty according to legislative provision, but what happened? He was sacked. I want an assurance from the Minister that if we assist the Government to pass this legislation—in the spirit of improving and enhancing the confidence of investors in our capital and securities markets—the people who are in charge of the Securities Commission and the Takeovers Panel, if they adhere to this legislation, will be left alone to carry out their tasks objectively. I think that internally this legislation will assist them, because it will give them the flexibility to cooperate with each other. As my colleague Brian Connell said, they can share information in relation to commercial crime, such as insider trading, which is incredibly difficult to detect. So I think it is a good thing they are allowed to share information.

But to me, the biggest challenge facing those agencies is not so much having legislative backing; it is when, how, and where political interference comes. I have stated time and time again that if the Government is clear in its vision and in what it wants to achieve, only then is legislation the tool to point out the direction to get to that destination. But if the Government has no idea where it wants to go, then those agencies will be left carrying the can. For example, if the capital market continues to flounder, or if we find there are not enough investors interested, the Government will continue to say that it is because we do not have enough protection to tackle insider-trading practices, etc.

We are not trying to underrate the existence of the problem, and just now I have demonstrated that we have one case that was able to be prosecuted. Provenco was able to be prosecuted by the Securities Commission, under the existing legislation. That company and the Securities Commission eventually came to an agreement and agreed on a $600,000 settlement. So it seems to me that existing legislation had already provided the Securities Commission with the tool to do the job. The language and intent of this legislation are quite harsh and one wonders whether they will strike the balance, but the concern we really have is whether the Labour Government will leave those statutory bodies to carry out their tasks, according to the latter of the legislation we are debating tonight.

CHRIS AUCHINVOLE (National) : We have heard quite a lot lately about the seeming inability on the part of the Government to encourage New Zealanders to invest in stock, shares, bonds, securities, and other financial instruments instead of domestic property. I have no wish to be seen to be critical of Minister Dalziel—nothing would be further from my mind—but surely the Minister in charge of this bill will take a measure of responsibility for the seeming lack of confidence on the part of punters to invest their money beyond domestic property.

Perhaps the Minister in the chair, the Hon Lianne Dalziel, will take a call and explain why this bill is so late in coming forward.

The CHAIRPERSON (Ann Hartley): We are on three clauses—clauses 60 to 62—and they are quite narrow.

Hon Lianne Dalziel: Part 3.

The CHAIRPERSON (Ann Hartley): Part 3, clauses 60 to 62.

CHRIS AUCHINVOLE: We are sharing information on this aspect and I am sure the Minister will be interested in it. She is looking particularly interested as I speak. The Minister has surely accepted the fact of the matter that people are not sufficiently assured over the security of putting their money into the financial markets.

So we look at the specific parts we are presently discussing, clauses 60 to 62, as the Chair pointed out to me. Clause 62 amends the principal Act by inserting after section 48 new section 48A, “Sharing of information with Securities Commission or Takeovers Panel”, which states: “(1) The Commission may communicate to the Securities Commission or the Takeovers Panel any information that the Commission (a) holds in relation to the exercise of the Commission’s powers, or the performance of its functions and duties, in respect of this Act; and (b) considers may assist the Securities Commission or the Takeovers Panel in the exercise of their powers, or the performance of their functions and duties, in respect of false, misleading, or deceptive conduct under the Securities Act 1978 or the Securities Markets Act 1988 or the Takeovers Act 1983 or the takeovers code in force under that Act.”

Finally, for the sake of the listeners, I will read out subsection (2): “The Commission may use any information communicated to it by the Securities Commission under section 17B of the Securities Act 1978 or under section 15B of the Takeovers Act 1983 in the Commission’s exercise of its powers, or the performance of its functions and duties, in respect of this Act. (3) This section applies despite anything to the contrary in any enactment, contract, deed, or document.”

A central feature of the bill is the relationship between the Securities Commission and the Takeovers Panel, which is laudable. The question, though, that the Minister in the chair, the Hon Lianne Dalziel, should take a call on and answer is, what will this do to improve the confidence of investors in this country in the financial markets? Where will they draw from—the purpose of the bill—to increase the confidence of securities? How will this happen? How will it help? That is the challenge for the Minister. Will they stop investing in property? Will we see, with the passing of this bill, the intended target of the present Government, which is to see a wider-based level of investment on the part of New Zealanders other than into property? That is the question.

  • The question was put that the amendments set out on Supplementary Order Paper 59 in the name of the Hon Lianne Dalziel to Part 3 be agreed to.
  • Amendments agreed to.
  • Part 3 as amended agreed to.
Schedule 1
  • The question was put that the amendments set out on Supplementary Order Paper 59 in the name of the Hon Lianne Dalziel to schedule 1 be agreed to.
  • Amendments agreed to.
  • Schedule 1 as amended agreed to.
Schedule 2
  • The question was put that the amendments set out on Supplementary Order Paper 59 in the name of the Hon Lianne Dalziel to schedule 2 be agreed to.
  • Amendments agreed to.
  • Schedule 2 as amended agreed to.
Clauses 1 and 2

BRIAN CONNELL (National—Rakaia) : Thank you for the call again on the Securities Legislation Bill. We have had a fairly broad and far-reaching debate this evening. We have touched on the issue of sharing information with the Commerce Commission, which I think is something that is a good move, and I have already spoken to that. We have touched on management banning orders, which is an issue that has my support also, subject to the concerns I raised around the severity of some of those orders. Another issue was declaration of contravention and declaration of civil liability procedure. We touched on liability under the Fair Trading Act. We did not touch on the issue of bank term deposits being excluded from the definition of security, and I want to touch on that very briefly. We did talk about information generally available to the market. So it has been a good debate that has canvassed the significant issues.

One area I want to touch on is that in drafting legislation we need to be very careful that we are not creating an impression that we are providing certainty about the market. What we are doing is enhancing confidence in the market, but to say that we can now say to punters there is absolute certainty and confidence in the market would be a mistake. I am sure the Minister does not intend that, but I sound that as a general warning to members and those listening, because it is a very important issue. The investing public must still take responsibility for its actions. Governments and members of Parliament, in framing legislation, can go only so far to give people an even playing field. Their own decision-making ability and the advice that they seek or rely on should be something that they are satisfied with themselves, because there is no such thing as a perfect market.

The issue of bank term deposits was raised at the Commerce Committee by a number of submitters as something that would be too difficult to enforce. Collectively, the select committee agreed that the inclusion of bank term deposits was not particularly sensible. I think it would have been an impossible issue to police. Sanity has prevailed, but what was initially suggested was that those who ring up to put money on deposit would have to go through a paper transaction and declaration that would take a huge amount of time. It would have been an unreasonable impost to put on to people—the banking institutions in particular. So that provision was removed, which was a step in the right direction and helped the National Party come to the conclusion that this was pretty reasonable legislation that we could support with good conscience.

The issue around a research and analysis defence to insider trading is something I have raised in the course of the debate. It is an issue that still concerns me. From going back and looking at the commentary on the bill, I see that it is an issue that has been addressed, albeit that the scope of that defence is very narrow. I reiterate my warning that we do not want the medicine to be worse than the disease because, on balance, I think New Zealand’s capital markets operate very efficiently. Is there room for improvement? Yes, that is why we are trying to draft sensible legislation. But we do not want to get to a point where we restrict capital flows. We must not do anything to undermine the confidence, the ability, or the willingness to participate in the market place of the bright young things who underpin our capital markets, for fear that they might get something wrong. I accept the Minister’s assurances and from re-reading the commentary I think that issue has been reasonably addressed. Again it is something that we might need to be big enough to come back to as a House if it causes concern or starts to stifle those capital flows.

With those remarks, I conclude by saying it has been a good debate. Those who have participated in the debate have done so in a constructive way and I have to say it has been a very satisfying evening’s work.

PANSY WONG (National) : The National Party supports the passage of the Securities Legislation Bill, but I take the opportunity, in the 25 seconds left, to alert people to tune in to the radio tomorrow afternoon when I will continue to dissect some of the major issues. I am sure that everybody will be waiting with interest. With that, I say that a very cooperative style has been taken in the passage of this legislation.

  • Progress to be reported presently.
  • House resumed.
  • The Chairperson reported the Standards and Conformance Bill without amendment, and that the Committee had divided it into two bills, and progress on the Securities Legislation Bill.
  • Report adopted.
  • The House adjourned at 9.56 p.m.