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Volume 672, Week 73 - Wednesday, 11 May 2011

[Sitting date: 11 May 2011. Volume:672;Page:18549. Text is incorporated into the Bound Volume.]

Wednesday, 11 May 2011

Mr Speaker took the Chair at 2 p.m.

Prayers.

Business of Select Committees

Meetings

Hon SIMON POWER (Acting Leader of the House) : I seek leave for the Social Services Committee to meet outside New Zealand with its counterpart in Australia from 23 to 27 May 2011 as part of the annual joint committee exchange with Australia.

Mr SPEAKER: Is there any objection to that course of action being followed? There is none.

Questions to Ministers

Budget 2011—National Savings

1. AMY ADAMS (National—Selwyn) to the Minister of Finance: How will the Budget next week help lift national savings?

Hon BILL ENGLISH (Minister of Finance) : Primarily by showing a credible path back to surplus so the Government can reduce the amount of borrowing it is doing. However, we will be able to do this at the same time as boosting front-line health and education services and helping pay for the rebuilding of Christchurch.

Amy Adams: What are some of the Budget changes that will help the Government return to surplus and contribute to higher national savings?

Hon BILL ENGLISH: The Budget will include changes to KiwiSaver, Working for Families, and student loans, which are large programmes that collectively cost the taxpayer about $5 billion this year. These programmes were introduced at a time when the economy appeared to be growing but in fact was in the midst of a bubble of consumption, debt, and housing speculation, and the Government has had to borrow heavily to maintain these programmes through the recession.

Amy Adams: What changes does the Government intend making to KiwiSaver, and why?

Hon BILL ENGLISH: The Government intends to reduce the amount of money it has to borrow from overseas to put into KiwiSaver accounts, and increase the amount of genuine savings from the private sector. As the Prime Minister has outlined, the $1,000 kick-start for new KiwiSaver members will remain as it is now. Changes will maintain total contributions into KiwiSaver funds, which are expected to grow rapidly from about $8 billion now to almost $60 billion in 10 years’ time. These changes will not happen immediately and will not affect people until after the election.

Hon David Cunliffe: Why did his Government cut the KiwiSaver default contribution rate for members and employers in 2008, given that the Prime Minister’s big announcement today is that he will seek to reverse his own change?

Hon BILL ENGLISH: The member may recall that KiwiSaver was at the time costing the Government somewhere around $1.5 billion. We made a number of changes to it that made it affordable, particularly in the light of the significant global recession affecting New Zealand, and as part of the tax package we brought in in December 2008.

Hon David Cunliffe: If KiwiSaver needs to be durable and sustainable, as he used to say, how is his Government promoting that durability by flip-flopping on member and employer contributions and breaking his party’s promise not to cut member tax credits, when the average Kiwi now thinks they cannot rely on this scheme under this Government?

Hon BILL ENGLISH: The Government is committed to the durability and affordability of KiwiSaver and we have managed to maintain the scheme through the most difficult economic times the country has had in a long time. We are simply not willing to keep borrowing to put money into people’s savings accounts and calling it savings.

Amy Adams: Has he seen any conflicting reports about the suspension of New Zealand Superannuation Fund contributions by the Government during this time of large Budget deficits?

Hon BILL ENGLISH: Yes, I have. In fact, just yesterday the Opposition finance spokesman maintained his consistent line, which is to attack the Government for suspending payments to the Superannuation Fund. However, on 21 March Phil Goff said that when one is in a position of low economic growth one slows the payments down; when one gets into a position of high economic growth, one speeds the payment up. That is pretty much a summary of the Government’s policy. I wish the finance spokesman and the Leader of the Opposition could agree on Labour’s position.

Amy Adams: Has the Minister seen any other reports about superannuation that might concern older New Zealanders?

Hon BILL ENGLISH: I have. Although the Government has set out to protect national superannuation rates and eligibility, the Leader of the Opposition now seems to be floating a proposal for a two-tier national superannuation system where those who retire early get less than those who delay their retirement.

Hon Trevor Mallard: That’s Don Brash’s plan.

Hon BILL ENGLISH: It is Don Brash’s plan; that is why I am surprised that Labour has adopted it.

Financial Position and Savings—Prime Minister’s Statements

2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that “All savings that the Government makes helps in the current financial position we are in.”?

Rt Hon JOHN KEY (Prime Minister) : Yes. The savings we will make in the Budget will be sensible, responsible, and balanced. We are making those savings so that we can redirect funding into front-line health and education services, invest in much-needed infrastructure, fund our share of the reconstruction of Christchurch, and reduce what otherwise would be very large deficits.

Hon Phil Goff: If he wants to reduce the deficit, why is he cutting tax credits to low and middle income earners in KiwiSaver but not cutting back any of the windfall tax gains he gave to the highest income earners at a cost of $2.5 billion each year?

Rt Hon JOHN KEY: Because this Government introduced a balanced package of tax cuts that were fiscally neutral. Actually, they are fiscally in surplus; they give the Crown about a billion dollars by 2013-14. The Opposition is welcome to go and campaign on a higher top personal rate and make New Zealand less competitive with other countries. It is more than welcome to go ahead with that. In fact, it should go ahead and do it. But when it comes to tax, as we always know with Labour, it campaigns on one thing and does another, just like it did with the bus last—[Interruption]

Mr SPEAKER: I do not blame the Opposition for the reaction, but I was on my feet. The answer was fine until that last bit. The last bit was not acceptable.

Hon Phil Goff: Why is he cutting home care for the frail elderly in order to reduce the deficit but asking for nothing back from New Zealand’s highest income earners, some of whom got more than $1,000 a week in tax cuts, like him?

Rt Hon JOHN KEY: I am advised by the Minister of Health that we are putting more money into home care. That is consistent with this Government, which, despite finding itself in a position where we have to run a balanced Budget, is putting hundreds of millions of dollars more into health care, as the member will see on 19 May.

Hon Phil Goff: If he wants to cut the deficit, why is he cutting tax credits for low and middle income earners in Working for Families but not taking back any of the windfall gains received by the highest income earners in New Zealand, costing this country $2.5 billion a year?

Rt Hon JOHN KEY: Because we ran a balanced programme. In fact, as a result of our tax changes we delivered a position where more money was coming to the Crown. But, as I said earlier, if the member wants to go and campaign on raising the top personal rate, he should go and do it, and we will see him on 26 November.

Hon Phil Goff: Does he agree with this quote from Bill English that “Taking higher-income families out of WFF saves very little money,” and is he therefore just tinkering with the scheme, or does he intend to cut deeper into lower and middle income families and the tax credits they get under Working for Families?

Rt Hon JOHN KEY: I agree with Bill English, and that is why we are not taking higher-income families out of the scheme.

Hon Phil Goff: Why is his Government focusing on cuts that hurt people but do not solve the real problem, which is the stagnation of the New Zealand economy all through last year, even before the earthquakes?

Rt Hon JOHN KEY: I will tell the member what hurts people. It is when a party is in Government for 9 years and real wages do not go ahead, when it runs inflation rates that are so high that New Zealanders pay an enormous amount for their interest rates, when it goes out and fails to address the issue that one in five young New Zealanders leaves school without being able to read or write properly, and when it is more interested in hiring bureaucrats for the health system than in hiring nurses and teachers. That is what hurts people, I say to Mr Goff, not sensible economic management like this side of the House is delivering.

Hon Phil Goff: What responsibility does he take as Prime Minister for turning the forecast deficit for 2011, which was, at the point when his party became the Government, $2.4 billion, into a $16 billion deficit?

Rt Hon JOHN KEY: I take full responsibility, and I take full responsibility because I am proud to stand up as Prime Minister and say to the people of Christchurch that in their moment of need, we are helping them and we will fund them. If the member wants to campaign on getting rid of the money for Christchurch, he should go ahead, and I will see him later, but I bet that Brendon Burns, Lianne Dalziel, and the other members from Christchurch such as Clayton Cosgrove will not be saying that in Christchurch. I am proud to take responsibility for keeping programmes that have helped New Zealand in difficult times, and I am proud to be the Prime Minister who takes responsibility for the fact that unemployment capped at 7 percent in this country, not 11 percent. I am proud to take responsibility for that, and if the member does not like it, that is probably why he will never be Prime Minister.

Hon Trevor Mallard: In light of his comment about the global financial crisis, when did he first become aware of it?

Rt Hon JOHN KEY: I think we all started seeing the global financial crisis in the early part of 2008. We were very surprised that the Labour Government did not respond, but we all know that all Labour knows how to do is spend. Frankly, I am not surprised that the member is asking a question—

Mr SPEAKER: Order!

Hon Trevor Mallard: Did the collapse of Lehman Brothers and the collapse and takeover of Merrill Lynch by the Bank of America, with which he was quite familiar, pre-date his commitment to the KiwiSaver tax credits?

Rt Hon JOHN KEY: Firstly, I was not aware of the takeover by the Bank of America of Merrill Lynch. That happened long after I left the company. I think we could all see that the global financial crisis was looming. It was deeper than we all thought, and in fact I remember in 2009 being a member of this House when hearing those from the Opposition saying that the Government should be doing more, spending more, and indebting New Zealand more. In fact, we took a very responsible view, indeed, and I am proud to take responsibility for that.

Hon Trevor Mallard: In light of the Prime Minister’s comment that he was not aware of the timing of the collapse of Merrill Lynch, I seek leave of the House to table—

Mr SPEAKER: Before I go any further—[Interruption] The member did not need to sit down; I do apologise for that. I just want to know what the document is that he is seeking leave to table.

Hon Trevor Mallard: It is a clipping from the New York Times of 15 September 2008.

Mr SPEAKER: Leave is sought to table an article from the New York Times of September 2008. Is there any objection? There is objection.

Hon Trevor Mallard: Does he accept that someone whose wealth increased by $100,000 a week on average through last year and who received $1,000 a week in tax cuts is more able to save than someone on the median wage with two children?

Rt Hon JOHN KEY: I do not know such a person. [Interruption]

Mr SPEAKER: Both sides will come to order.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. In light of the Prime Minister’s interjections across the House, I want to apologise for understating—

Mr SPEAKER: That was totally unnecessary.

Ministers—Confidence

3. HILARY CALVERT (ACT) to the Prime Minister: Does he have confidence in all his Ministers; if so, why?

Rt Hon JOHN KEY (Prime Minister) : Yes; because they are talented people who are working hard for New Zealand. I might add, we were disappointed to lose one of our Ministers recently but that is the nature of confidence and supply agreements.

Hilary Calvert: Why does he support the position of his Minister for Social Development and Employment of opposing youth rates, when since their abolition by the last Labour Government youth unemployment has nearly doubled, putting an extra 12,000 young people out of jobs?

Rt Hon JOHN KEY: I think we all admit that, and accept that one of the factors for youth is the rates they are paid. I remember at the time, though, when youth rates were being phased out, long before the law changed, quite a number of big employers at that time thought it was a good idea to get rid of them and in fact led the charge on that.

Hilary Calvert: Does he think the statement that youth rates give “employers a reason to hire younger people and give them a chance to get experience.”, which was made in December 2007 by National leader John Key, is extreme; if not, why not?

Rt Hon JOHN KEY: No, because nothing I say is extreme.

Hilary Calvert: Does he consider it extreme to allow a 16-year-old trainee chef to earn $350 a week, or does he think it is more caring to force them to sit at home for $150 a week?

Rt Hon JOHN KEY: I think it is more caring to make sure that they are in work, and that is one of the reasons why last week the Government put $55 million into allowing youngsters to be employed, with a subsidy of $5,000 going into those employers who take on a young person aged 16 to 24, who may have been on a benefit, to have training applied to that employee either in the workplace or for a New Zealand Qualifications Authority qualification.

Budget 2011—Strategic Changes for Economy

4. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: What does he consider to be the main strategic changes required to the economy that Budget 2011 will address?

Hon BILL ENGLISH (Minister of Finance) : I am pleased to see that the member is back from his parachute-packing class.

Mr SPEAKER: I am on my feet, and the House will be silent. That was an unacceptable way to commence the answer to a perfectly fair question. The question was absolutely fair.

Hon Clayton Cosgrove: Extra supp!

Mr SPEAKER: What a good idea. The Opposition has just gained an extra supplementary question; I will make the record 225.

Hon BILL ENGLISH: The main strategic choice for this economy in this Budget is the same as it has been for the previous two Budgets, which is to rebalance the economy away from debt, finance, consumption, and housing speculation to savings, exports, and investment.

Hon David Cunliffe: If the main challenge is the same as it was in the previous two Budgets, will the prescription be the same—namely, further cuts to superannuation pre-funding, and unaffordable tax cuts overwhelmingly directed to people who do not need them?

Hon BILL ENGLISH: The prescription in the first Budget was to get hold of public finances, which were at the time out of control because of the stewardship of the previous Government combined with the effects of the global recession. Last year the focus was on changing our tax mix to get right the incentives in the economy, and favouring savings and investment over consumption. This time the focus will be on building savings, and getting the Government in particular to control its own borrowing and spending so it can contribute to national savings.

Hon David Cunliffe: Does the Minister stand by his recent earlier statement that the centrepiece of Budget 2011 will be to promote savings; if so, does he agree with the member sitting next to him that the best idea the Government can come up with is reversing the cut to the default contribution that they themselves made not a year ago?

Hon BILL ENGLISH: Yes, I do agree with what the Prime Minister said. This Budget has to focus on getting the basics of the Government’s finances in order. I think the New Zealand public understand that. They are concerned, for instance, that over the last 12 months we will have ended up averaging borrowings of, I think, $380 million a week. That is far too high and must change.

Chris Tremain: What other strategic changes are required for the economy that will be addressed in Budget 2011?

Hon BILL ENGLISH: There are a number of benefits that we hope will flow not just from this Budget but from the accumulation of the last two: lifting growth back on to a stable path; reversing the decline in productivity, which is a critical component of economic growth and higher incomes, to help revive the export sector, which actually shrank through the latter part of the last decade; and redirecting Government resources in a way that is much more effective.

Hon David Cunliffe: Does the Minister agree with Steven Joyce that KiwiSaver is a pyramid scheme, and will he be offering Mr Joyce lessons in the basics of finance so that Mr Joyce can learn the difference, or has that job already been done by Dr Brash?

Hon BILL ENGLISH: Mr Joyce, in his usual very insightful way, was referring to the phenomenon whereby the Government borrows money off Asian central banks and pension funds in Europe and puts that money into individual KiwiSaver accounts, and we call it savings. Borrowing is not saving.

Hon David Cunliffe: I raise a point of order, Mr Speaker. The Minister, with the best of intentions, may have misheard the question. I was referring to KiwiSaver—

Mr SPEAKER: No, no. The member’s question was a pretty provocative sort of a question, and the nature of that question will never get a precise answer.

Hon David Parker: I raise a point of order, Mr Speaker. With respect, the member’s question was putting a quote from Mr Joyce about KiwiSaver. The Minister did not address KiwiSaver, at all; that is not provocative.

Mr SPEAKER: I will check the Hansard, but I am fairly certain that there was more than just the quote from the Hon Steven Joyce in that question.

Dairy Farming—Effect of Intensification on Water Quality

5. Dr RUSSEL NORMAN (Co-Leader—Green) to the Prime Minister: Does he stand by his comments in the House yesterday that “intensification of dairy operations will have had some impact on our river quality … But in reality, the impact is not great …”; if so, why?

Rt Hon JOHN KEY (Prime Minister) : Yes; as I said yesterday, the impacts need to be kept in context, as our water quality is ranked second only behind Iceland, with a score of 99.2.

Dr Russel Norman: Therefore, was Dr Mike Joy, a senior lecturer in environmental science at Massey University, wrong when he said, as quoted by the BBC: “Nearly half of our lakes and around 90 percent of our lowland rivers are classed as polluted.”?

Rt Hon JOHN KEY: It may depend on the definition of “polluted”. I will give an example of where sometimes people play with numbers. Yesterday in the House the member claimed that 43 percent of sites in New Zealand are unsuitable for swimming.

Dr Russel Norman: I raise a point of order, Mr Speaker. The Prime Minister was alleging that I was playing with numbers. One might argue I made a mistake or I had got it wrong, but to suggest I played with numbers suggests I manipulated them in a conscious way. That is suggesting I was acting in a misleading way.

Mr SPEAKER: The member cannot litigate the Prime Minister’s answer by way of a point of order. I apologise to the member; I was distracted while the Prime Minister was answering, because I did not perceive that the question was likely to lead to difficulty. I apologise for that. I invite the Prime Minister to answer the question again and I will listen very carefully. I think everyone remembers exactly what the question was.

Rt Hon JOHN KEY: I certainly was not trying to be disrespectful to the member in any way, shape, or form; I was simply making the point that yesterday people gave interpretations of numbers. Yesterday the member said that 43 percent of sites are unsuitable for swimming most of the time. I have gone away and had a look at that number and in fact it is incorrect. Fifty-seven percent of the 206 monitored freshwater swimming spots meet the guidelines all the time, but 32 percent meet the guidelines except in certain conditions—for example, after rainfall. Even the remaining 11 percent meet the guidelines 75 percent of the time.

Hon David Parker: 57 minus 100 is 43.

Rt Hon JOHN KEY: Yes, I know, but the member said most of the sites are unsuitable all of the time. That is the point; people play with numbers, my friend.

Dr Russel Norman: Therefore, was his Minister for the Environment, Nick Smith, wrong when he said in 2008 that “The facts are that water quality, particularly in lowland streams, is deteriorating … with water in many iconic lakes and rivers unfit to … swim in.”?

Rt Hon JOHN KEY: No, Nick Smith was not wrong, which is why on Monday he was at the forefront of leading the National Policy Statement for Freshwater Management. That is why in the 2009-14 period this Government will spend five times what the previous Government spent. We care more about the environment than Labour does.

Dr Russel Norman: Was Professor David Hamilton, Chair in Lakes Management and Restoration at Waikato University, wrong when he said yesterday: “Over the past decade or so New Zealanders have witnessed accelerated degradation of many waterbodies in response to diffuse nutrients derived from mostly agricultural sources”?

Rt Hon JOHN KEY: Not necessarily. I have not seen the full context of the quote, but I think we all accept that there needs to be a balance between intensification and dairying and environmental concerns. That is why the national policy statement and national environmental standards are there, and why the Government is working hard to get that balance right.

Dr Russel Norman: Given the overwhelming weight of scientific evidence that intensification causes water pollution, is there not a contradiction between the Government’s goal to increase intensive agriculture by 300,000 hectares and the Government’s goal to clean up our rivers?

Rt Hon JOHN KEY: No, because I think it depends on how that is done. I refer the member to what has happened in Ōpuha. The Ōpuha Dam Water Management Project, which has been in place for some time now, was the supreme winner of the 2008 Environment Canterbury Resource Management Award. The scheme is supported by Fish and Game New Zealand, local iwi, and the community. It clearly demonstrates that there can be increased economic performance and environmental benefits. So often I hear from the Greens a call for this Government to spend more money. Where do they think that money comes from? We have to have a vibrant economy, and I think we can balance economic growth with good environmental protection. This Government is doing that.

Dr Russel Norman: With reference to the Ōpuha Dam, was Environment Canterbury wrong in January when it accepted that the Ōpuha Dam was linked to an increase in toxic algae blooms in the Ōpihi River, as was reported by their principal surface water quality officer, Adrian Meredith?

Rt Hon JOHN KEY: I simply have not seen the statement. If the member wants very detailed answers like that he should refer them to the member.

Dr Russel Norman: If the Prime Minister thinks we should trade off increased water pollution for more economic growth in the dairy industry, why does he not just come out and say that, rather than pretend that we can have a million more cows and cleaner rivers?

Rt Hon JOHN KEY: I have not said that. What I have said is I think it is possible for New Zealand to increase its economic performance and to improve its environmental outcomes. That is why we are doing all the things we have proposed through the National Policy Statement for Freshwater Management and the like.

Dr Russel Norman: I seek leave to table a report from NIWA, dated July 2010, that shows the link between intensification and water pollution.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.

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

Dr Russel Norman: I seek leave to table an article from the Timaru Herald. I know it is a newspaper but it is not necessarily that easy to access.

Mr SPEAKER: How recent is the article?

Dr Russel Norman: The article is from 26 January 2011.

Mr SPEAKER: No, we are not going to do that. We are not going to worry about newspaper articles from this year.

Dental Care—Access

6. Hon JIM ANDERTON (Leader—Progressive) to the Associate Minister of Health: Is he satisfied that New Zealanders have adequate access to affordable dental health-care?

Hon PETER DUNNE (Associate Minister of Health) : Yes, particularly in respect of children and adolescents. I do acknowledge, though, that some adults struggle to afford dental treatment, but there are mechanisms in place to support low-income adults to access care when they need it.

Hon Jim Anderton: Does the Minister believe that dental care is more, or less, affordable under current economic conditions for New Zealanders on average or below-average incomes?

Hon PETER DUNNE: I can tell the member that in terms of the affordability issue, the Government currently spends around $40 million a year providing hospital-level dental services, and a further $56 million a year assisting people to access the care they need. And in the year ended January some 73,000-odd people sought access through the Ministry of Social Development to the various services they required. So I would suspect that, overall, dental care is affordable.

Hon Jim Anderton: Has the Minister seen the results of the New Zealand Oral Health Survey, published in December 2010, which shows that 44 percent of all New Zealanders are not receiving any form of dental care; if so, does he think that number is acceptable?

Hon PETER DUNNE: I actually launched the survey results, so I have certainly seen them and am aware of their content. What they show is a number of steps that could be taken by people to improve their oral health-care. For example, about a third of New Zealanders do not brush their teeth twice a day. If they were to do so using a fluoride-based toothpaste, that would have a significant positive impact on their dental and oral health status.

Hon Jim Anderton: Has the Minister got any comment on the dental health status of New Zealanders and whether it has improved or worsened over the last 20 years?

Hon PETER DUNNE: The Oral Health Survey shows significant improvement in a number of areas since the previous survey in the late 1980s. But it also raises some areas for concern, such as those I have mentioned already, and these are matters that will be worked on. I might say also that one of the things I think it does raise is the relevance of having a survey every 20 years. In such an important area as oral health we may need to look to having more frequent surveys to assess what is happening.

Hon Jim Anderton: Can the Minister tell the House why dental health treatment is excluded from the public health system of New Zealand, when reputable surveys show that the number of New Zealanders not receiving any form of dental care has increased from 33 percent to 44 percent in the last 20 years?

Hon PETER DUNNE: I said in one of my earlier answers that we currently spend approximately $40 million on the provision of hospital-level dental services, with the majority being targeted to people with complex medical problems or disabilities and those who need treatment for conditions such as cleft palate and cancer. So I do not accept the proposition that dental care is excluded. I also made the point that about $56 million a year is spent by way of social welfare provision to assist people who are in need to get the dental care that they need. That is about $100 million a year. It is a pretty substantial commitment.

Irrigation and Water Storage—Development

7. JO GOODHEW (National—Rangitata) to the Minister of Agriculture: What steps has the Government recently taken to support the development of water storage and irrigation?

Hon DAVID CARTER (Minister of Agriculture) : On Monday the Prime Minister announced a major package aimed at accelerating the development of sustainable water storage and irrigation infrastructure. The package has two parts: the first is a $35 million irrigation acceleration fund to support the development of irrigation proposals to an investment-ready stage; the second stage will see the Government from 2013-14 potentially investing up to $400 million of equity in the construction of regional-scale schemes on commercial terms, to encourage third-party investment. This is a very significant package. It sends a strong message that this Government is serious about progressing water storage because it makes good economic and environmental sense.

Jo Goodhew: What benefits does the Government expect to see from this increased support for irrigation?

Hon DAVID CARTER: Developing irrigation has huge potential to unlock economic growth and to get our tradable sector growing strongly again, while at the same time reducing the environmental pressures on our aquifers. The New Zealand Institute of Economic Research’s research suggests that the package could support 340,000 hectares of new irrigation, boosting New Zealand’s exports by $1.4 billion over the next 7 years and by $4 billion by 2026. This is not about irrigation at any cost, but it is about taking a balanced view to deliver economic growth and environmental sustainability.

Jo Goodhew: What feedback has he seen on the Government’s recently announced water storage package?

Hon DAVID CARTER: The package has received a number of endorsements. Horticulture New Zealand, for instance, has said it is good news for horticulture’s long-term productivity. Hawke’s Bay Regional Council has described it as “welcome news” for the region and “a valuable step” towards future economic development in the bay. The Central Otago mayor said it was “exciting” for Central Otago and “a step in the right direction”. One comment I have just noted was from Bob Engelbrecht, a respected farm management consultant in south mid-Canterbury. He said: “It’s a good sign of Government support for agriculture in New Zealand. It’s just a pity for the whole of the East Coast of the South Island that this sort of project wasn’t considered 20 or 30 years ago.”

Te Ururoa Flavell: How will iwi co-management arrangements, such as those to do with the Waikato River, be impacted by the steps taken by the Government to support the development of water storage and irrigation?

Hon DAVID CARTER: Existing commitments will not be affected. Any irrigation schemes will of course respect and recognise the vital role of Māori. In addition, the Government’s support for water storage offers an exciting economic development opportunity for iwi, both as major holders of agricultural land and as investors in the schemes.

Diplomatic Protection Squad—Prime Minister’s Statements

8. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Prime Minister: Does he stand by his statement in relation to the Diplomatic Protection Squad that “I can’t say I do or don’t want it”?

Rt Hon JOHN KEY (Prime Minister) : Yes.

Hon Clayton Cosgrove: Why was the Prime Minister unable to—[Interruption]

Mr SPEAKER: I want to hear the question.

Hon Clayton Cosgrove: The cuckoo’s nest is—

Mr SPEAKER: It is up to the Speaker to deal with excessive noise, not to the questioner to make those kinds of comments.

Hon Clayton Cosgrove: Why was the Prime Minister unable to decline Diplomatic Protection Squad protection on his holiday in Hawaii at a cost to the taxpayer of $30,000, when his predecessor and other Prime Ministers declined such protection and had that instruction complied with?

Rt Hon JOHN KEY: What I can say is that I am not a security expert. I take advice from the experts, who are the police. I can also say that that is a sensible thing, I think, to do. I stand by, I might say, all the statements I have made in relation to whether I have the ability to take them. One of the reasons I know that is that I have sought the views of a much higher power, as members will know. That member, of course, was Phil Goff. When he was asked why he takes—

Mr SPEAKER: The Prime Minister will resume his seat immediately. The question did not warrant an attack on the Leader of the Opposition.

Rt Hon JOHN KEY: It did, actually.

Mr SPEAKER: Order!

Rt Hon JOHN KEY: Point of order.

Hon Clayton Cosgrove: Point of order.

Mr SPEAKER: We now have two points of order. I must have done something equally wrong.

Rt Hon JOHN KEY: I raise a point of order, Mr Speaker. It was not an attack on the Leader of the Opposition; it was quite relevant to the question.

Mr SPEAKER: The member is not going to litigate the issue. I will hear the point of order from the Hon Clayton Cosgrove.

Hon Clayton Cosgrove: Supplementary question.

Mr SPEAKER: Supplementary question from the Hon Clayton Cosgrove.

Hon Clayton Cosgrove: Why does he require extensive Diplomatic Protection Squad protection with him in the parliamentary complex, including while he is on the treadmill in the parliamentary gym, given the extensive security that already exists in the form of up to 50 professionally trained security officers who already guard the parliamentary complex and the gym?

Rt Hon JOHN KEY: I assume for the same reasons that Helen Clark had them in the facilities. [Interruption]

Mr SPEAKER: I say to both sides of the House that we will not have any more of those kinds of interjections.

Hon Clayton Cosgrove: Was the $800,000 budget blowout on the Diplomatic Protection Squad the highest priority spend for the police in 2009-10, given that the police have already been forced by his Government to cut 340 cars out of their vehicle fleet as part of a $20 million budget cut, as confirmed in writing by the Office of the Auditor-General?

Rt Hon JOHN KEY: No, I think the budget blowout was unfortunate, and therefore I apportion the blame fully back to the previous Labour Government, which signed the employment agreement that made $600,000 of the $800,000 blowout necessary.

Hon Trevor Mallard: Was the Prime Minister aware when he decided not to direct the police not to come on holiday with him that for each day they had surfing in Hawaii, they would get 3 days’ leave when they came home?

Rt Hon JOHN KEY: I take advice from the police and, as I said, I take it in the same way that Phil Goff does when he is asked why he has security at Waitangi. He said it was because the police insisted on it.

Hon Simon Power: I raise a point of order, Mr Speaker. I am just looking for a point of clarification here; I must say I am a little confused. We have had some to-ing and fro-ing in the last day or two about the nature of what you described as “gratuitous comments” that were being made on this side of the House yesterday. I think it is fair to say that we have had a bit of an interchange on that point today, and I think we are starting to settle in that area. There is an issue, though, that comes to mind with the Prime Minister’s responses to some of those questions. Initially, the quote used from Mr Goff was considered inappropriate because it was attacking a member. It was used again and was appropriate presumably because you did not rule that it was not. The use of other members’ quotes over a period of time by both sides of the House has been, frankly, as long as I have been here, a useful tool for question time. I just want to be sure that we are not venturing into new territory here without a bit of a further think about it.

Mr SPEAKER: I invite the honourable member to check the Hansard and look at the question asked by the Hon Clayton Cosgrove and the question asked by the Hon Trevor Mallard, and he will see why I treated the two questions differently. I listened very carefully to the questions asked. In the first case today where I was concerned about an answer given, the primary question was a very straight question, and the first part of the answer was a somewhat gratuitous comment about the questioner, and I stamped on that. But I listened to both, and the two questions that I treated differently were different. I listened very carefully to the questions asked, and when members insert into their questions political innuendo or connotations, I give much more latitude in answers. Where members ask straight questions, I will not tolerate their being attacked for asking straight, fair questions. I am acutely aware that some questions that may seem to be reasonably straight can be quite strongly not so. I am not that stupid; I have been around the place a fair while, and I listen very carefully. That is why I treated those two questions differently.

Hon Simon Power: If I could just respond briefly, Mr Speaker. Nobody is saying for one moment that your experience leads to any degree of stupidity. Are we saying now that the way in which the question is worded determines whether the answer can be used appropriately or inappropriately in the way that you described? Am I clear about that?

Mr SPEAKER: That is correct. Where questions contain political content, political content can be expected in the answer. Where a question is a straight question, I believe that it deserves the respect of a straight answer.

Hon Simon Power: So that I am absolutely clear for members on this side of the House, you are in no way ruling out the use of members’ quotes from previous engagement in this House?

Mr SPEAKER: Not at all.

Hon Simon Power: Thank you, Mr Speaker.

Rt Hon JOHN KEY: I seek leave to table a transcript from Radio Live on 6 May when Phil Goff was asked—

Mr SPEAKER: No, we are not going to do that. I have just tried to settle the House a bit and deal with an issue and I get that dumped on me. We do not table recent transcripts from radio programmes or newspapers, and the right honourable Prime Minister knows that.

Warm Up New Zealand: Heat Smart—Milestones

KATRINA SHANKS (National) : My question is to—[Interruption]—the Acting Minister of Energy and—

Mr SPEAKER: On this occasion I ask the Labour front bench to show some courtesy to a member at the back of the House who has a right to ask her primary question.

Hon Trevor Mallard: Point of order—

Mr SPEAKER: I am not going to hear a point of order on this. The member will resume his seat. I have been very tolerant and I am not going to stand any more nonsense.

9. KATRINA SHANKS (National) to the Acting Minister of Energy and Resources: What recent milestones have been celebrated under the Government’s Warm Up New Zealand: Heat Smart scheme?

Hon HEKIA PARATA (Acting Minister of Energy and Resources) : Tēnā koe, Mr Speaker. This morning the Prime Minister cut the ribbon to the 100,000th house to have benefited from the Government’s home insulation and clean-heating scheme. [Interruption] I am sorry but I do not know what the fun is on that side of the House, because the fun is all on this side for the achievement. The Government has allocated $347 million to retrofit at least 188,000 homes over 4 years before June 2013. I also want to acknowledge the cooperation of the Green Party with this policy.

Katrina Shanks: What other benefits is the Minister aware of that have come from the Warm Up New Zealand: Heat Smart scheme?

Hon HEKIA PARATA: The Warm Up New Zealand: Heat Smart scheme improves the energy efficiency of homes while making homes warmer, drier, and healthier. This means lower power bills, fewer doctors’ visits, and fewer days off work and school. It is very pleasing to see that approximately 55 percent of the retrofitted houses enjoying these benefits are occupied by people on low incomes. In addition to creating energy-efficient, healthier homes for New Zealanders, the Energy Efficiency and Conservation Authority estimates that about 2,000 people will be directly employed under the scheme over its 4-year duration.

Dr Kennedy Graham: Given the huge success of the Warm Up New Zealand: Heat Smart programme, a “smart Green” initiative that is good for the economy, the environment, and the people, will her Government commit today to continue funding beyond 2013?

Hon HEKIA PARATA: We are focused on the current programme. We are just over half-way through. We have another 88,500 houses yet to be retrofitted for which there is funding.

Broadband, Ultra-fast—Regulatory Forbearance Cost

10. CLARE CURRAN (Labour—Dunedin South) to the Minister for Communications and Information Technology: Has he been advised that the regulatory arrangement around the ultra-fast broadband network will be worth up to $600 million, and who will pay for it?

Hon STEVEN JOYCE (Minister for Communications and Information Technology) : The premise of the member’s question is incorrect. The regulatory package reduces the regulatory risk for bidders so they are able to accept lower margins and, therefore, offer lower build prices and lower wholesale prices to the benefit of all users. The member has in fact got it exactly the wrong way around. Without regulatory stability and certainty for investors during the crucial build period, taxpayers and/or consumers would end up paying significantly more for ultra-fast broadband. As to the amount she mentions, a number of figures have been suggested as to what these savings will be, and that number is one of them.

Clare Curran: Can he guarantee that retail prices for existing broadband on the copper network will not rise as a result of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill?

Hon STEVEN JOYCE: Nobody can guarantee that the retail price of copper will not rise at any time in the future, but the pressure will all be downwards because of the competition from the fibre network, and because, as part of the regulatory changes proposed, the unbundled bitstream access product will move from being retail-minus to cost-plus. Many people believe the commission—that it will lead to lower prices.

Clare Curran: Does he accept that the $400 million to $600 million figure to increase broadband coverage will come from the users who are not receiving ultra-fast broadband now?

Hon STEVEN JOYCE: No, not at all. I really worry about the member’s understanding of the regulatory package’s purpose. It is there to reduce the regulatory risk for bidders so they are able to accept lower margins and, therefore, lower build prices and lower wholesale prices for the benefit of all users. It is not a case of taking from one set of users and giving to the other. It is about reducing the risk premium so that the margins can come down. The member needs to understand that.

Clare Curran: Has he read his ministry’s report to the select committee on this issue?

Hon STEVEN JOYCE: I am not aware to which report the member is referring. I have read lots of advice from the officials, and what I have just told the member is exactly consistent with that advice.

Methamphetamine Precursor—Seizure Operations

11. NIKKI KAYE (National—Auckland Central) to the Minister of Customs: What interceptions of Contac NT has the Customs Service achieved in the last month at our border?

Hon MAURICE WILLIAMSON (Minister of Customs) : Very good news—

Hon Member: Oh! More good news.

Hon MAURICE WILLIAMSON: It just keeps coming, I know. Customs officers recently intercepted at the border over 112 kilogram of pseudoephedrine-based Contac NT. This was made up of a number of different intercepts, with the largest individual one being 67.6 kilograms. This one interception resulted in a number of search warrants being executed at several addresses in Auckland last week by the Customs Service in cooperation with the New Zealand Police. The month-long operation, coded named Adrift, led to the arrest of three Chinese nationals, one of whom was a resident. The other two were in New Zealand on student visas. All three have been charged with participation in an organised criminal group, importing a class C controlled drug, and possession of a class C drug.

Nikki Kaye: What is the significance of this large individual seizure and the total seizures for the month in the fight against P?

Hon MAURICE WILLIAMSON: It is very significant. At nearly 70 kilograms this is the largest amount of precursor drug used for the manufacture of methamphetamine to be seized this year. It was sufficient to make between 13 and 20 kilograms of methamphetamine, which would have had a street value of somewhere between $13 million and $20 million. The interceptions for the month have effectively reduced the amount of manufactured methamphetamine on the streets of New Zealand by somewhere between 22 and 33 kilograms.

Ministerial Vehicles—Replacement

12. CHRIS HIPKINS (Labour—Rimutaka) to the Minister responsible for Ministerial Services: Has he now been fully briefed on all of the details regarding the replacement of VIP transport’s BMW fleet; if not, why not?

Rt Hon JOHN KEY (Minister responsible for Ministerial Services) : I have received details on the replacement of the fleet where and when appropriate.

Chris Hipkins: Is he aware that 2 days after his chief of staff met with the VIP Transport Service to discuss the upgrade of the VIP fleet, the owner of an exclusive new and used BMW dealership in Auckland gave a $50,000 donation to the New Zealand National Party?

Rt Hon JOHN KEY: I have no responsibility for that.

Chris Hipkins: How can he claim that, when only a few weeks earlier he had attended, as Prime Minister, a client function hosted by the Team McMillan BMW dealership in Auckland, which led to the donation?

Rt Hon JOHN KEY: Because that is the very reason why contracts subject to the Cabinet Manual are made by Ministerial Services—to avoid accusations that would otherwise be levelled of inappropriate conduct.

Chris Hipkins: Would he say that the meeting his chief of staff had with Ministerial Services to talk through the BMW purchase on 28 July last year—just 2 days before the $50,000 donation to the National Party—was just a coincidence or more sloppy management of perceived conflicts of interest by his Government?

Rt Hon JOHN KEY: I would say that the meeting was very difficult to remember, because the chief of staff could not remember it.

Chris Hipkins: Which statement is true: his statement during question time yesterday that he had aggressively reviewed Ministerial Services’ spending line by line to identify all potential savings, or his statement during question time on 12 April that he did not know about the BMW upgrade because it had been just one line in a “very large document” that he happened to have signed?

Rt Hon JOHN KEY: Both. The member needs to take a lesson from some of the former Ministers in Labour about how ministerial responsibility works and when officials have responsibility. I know that the member is probably very unlikely to become a Minister, from what I hear from his colleagues, but he should take some advice.

General Debate

Hon TONY RYALL (Minister of Health) : I move, That the House take note of miscellaneous business. It just goes to show what 2½ years in Opposition does to some people who used to see themselves bestriding the body politic of this nation. After 2½ years in which to learn why they were unceremoniously flung from office by the people of New Zealand, why their policies were discredited, and why they were kicked out on their heads, what work have they done to prepare themselves to be Government, if they ever get that opportunity again? Absolutely nothing. They have done absolutely nothing. In fact, they have spent their whole time in this House in the last 2 weeks focusing on things that matter to not one New Zealander. They have been focusing on things that matter to not one New Zealander.

We have a country that has gone through the global financial crisis, a huge mining tragedy, and devastating earthquakes. We are facing enormous financial challenges and enormous personal challenges for New Zealanders, and what do the Opposition members focus on? They focus on completely irrelevant minutiae of interest to no one but themselves. That is not a recipe for being an alternative Government. That is a recipe for spending another three or four terms in Opposition. That is what we see opposite. This Government is rescuing New Zealand from the worst peacetime blows since the Depression and the Napier earthquake.

What Labour hates the most is that New Zealand is coming through the storm with the strong and determined leadership of John Key and the National-led Government. Because the Opposition has spent 2½ years on not addressing any big policy issues, and not trying to learn the lessons from being kicked out as the most despised Government this country has ever had, it now finds itself 6 months from an election putting all its energy and effort into stuff that does not matter. Have we had any questions in the last 2 weeks about what is being done to help people in Christchurch? Not one question. Have we had any questions or suggestions in the last 2 weeks on how we can get our country moving forward, creating jobs, wealth, and prosperity? Not one question. Have we had any questions on how we can leverage the billions of dollars of extra money that has gone into health and education? Have we had any questions on how we can improve that? Have we had any questions or policy ideas on how the one in five kids who leave school without being able to read and write well enough can get a better education? Not one. Have we had any questions on how we can get our health service to provide even faster and better services for New Zealanders? Not one. But have we had questions on the petrol that Ministers have used? Yes. Have we had questions on painting a building: Premier House? Yes. Have we had questions on a carpet? Yes. Have we had questions on who is guarding whom? Yes.

We have had no questions on the issues that really matter to New Zealanders, and that is why I say to members opposite that they are destined to spend an even longer period in Opposition than they fear. After 2½ years in Opposition, the very best they can provide is a question time of silly questions to the Prime Minister, from which they have not scored one point whatsoever. Labour is a party that is really suited for failure, and that is what we are seeing.

What we are seeing from National is a determination to deal with the issues that really matter to New Zealanders, and those are the issues of getting our economy moving forward and creating jobs, wealth, and prosperity. The National Government wants to keep down the taxes paid by the people whom we rely on to create jobs for other New Zealanders. It is determined to make sure that the one in five kids who cannot read and do maths well enough get the opportunity to be better educated. It has put 500 extra doctors and over 1,000 extra nurses into our public hospitals.

Hon TREVOR MALLARD (Labour—Hutt South) : We can tell when a Government is in trouble. It is when it focuses on the Opposition, and not on its own policies.

I ask the House how many people were listening this afternoon when John Key told the House that he did not know when Merrill Lynch got into trouble. That was the Prime Minister who previously told the House that he got up every morning and looked at what was happening to Merrill Lynch shares. That was the Prime Minister who had $40 million riding on Merrill Lynch. He knew that it collapsed in the first half of September. He knew that he made commitments about KiwiSaver in October. To pretend that the global financial crisis happened after he made his commitments is to reinvent history, and outside this House we could call him a lot of other things. That goes for a number of comments I will make.

Hon Member: What are you smoking?

Hon TREVOR MALLARD: I hear the intellectual wing starting up down the back of the House. Mr Quinn is away again. The brightest man in National is chipping away again.

Paul Quinn: I raise a point of order, Mr Speaker. I said nothing of the sort. I was—

Mr SPEAKER: The member will resume his seat immediately. It is no grounds to interrupt the member who is speaking, just because someone disagrees with what the member is saying. The member can take a call, but I do not want members to be interrupted in mid-flight.

Hon TREVOR MALLARD: At some risk of commenting on your ruling, Mr Speaker, I say to Mr Quinn that sometimes it is better to keep his mouth shut and let people think he is a fool, than to open his mouth and prove it.

Let us talk about the BMWs, because what we know today is a scandal. We know that John Key went to a fundraiser at BMW. His office knew he went to a fundraiser at BMW. Notwithstanding that, his staff sat down with VIP Transport Service and with Ministerial Services and agreed to an upgrade and a renewal of a contract for BMWs, and 2 days later $50,000 went to the National Party. If that happened overseas, we would say it was corruption. We, of course, cannot and will not make that allegation in the House, but if that had happened in Australia in New South Wales, Thailand, or India I would have called it corruption. It is wrong.

There is certainly at least a perception of a conflict that the Prime Minister is responsible for. No one else in this House is responsible for that. He is responsible twice: he is responsible as the Minister responsible for Ministerial Services and he is responsible as the Prime Minister, who is responsible for the Cabinet Manual as it concerns the conduct, public duty, and personal interest of Ministers. In this particular case I make no allegation of personal interest, but I say that there was a donation from a BMW dealer that was preceded by a personal visit to that dealer’s office. What did the Prime Minister do? He schmoozed up to the clients of that BMW dealer, got $50,000 for the National Party for doing it, and there was an order for BMWs, all within the period of about 3 weeks. That is outrageous. That is not the sort of thing—

Chris Tremain: The Labour Party signed the contract.

Hon TREVOR MALLARD: The New Zealand Labour Party never ever schmoozed up in that way. It never used taxpayers’ funds—millions of dollars—on BMWs and got something in the back pocket for the party. We would never do that, because this party has ethics.

I say that John Key does not know the difference between being a chief executive officer in business and being the Prime Minister of New Zealand. He is taking the morals and ethics of Merrill Lynch, a company that was at the dirt end of a lot of deals, and went down when the global financial crisis came. They did not have the ethics to do proper deals. He was in the middle of that, and that is the level of ethics that he has transferred to being the Prime Minister of New Zealand. I say to him that we do not believe in that sort of approach in New Zealand. We have higher standards for our Prime Ministers. We do not have extra carpet being laid through Premier House at the same time we are cutting hours for old people. We do not have Murray McCully taking a jaunt, spending $70,000 on a plane in a way that was absolutely unnecessary, while old people are being hurt.

JOHN BOSCAWEN (Leader—ACT) : The last fortnight has been a period of great change, rejuvenation, and optimism within the ACT Party. When we returned to Parliament last Tuesday we did so having elected a new ACT leader, Dr Brash, and a new leader of the ACT parliamentary party. Dr Brash, of course, is a former leader of the National Party, and is deeply concerned for the current economic and social state of our country, at a time when we are borrowing over $300 million a week and we have high levels of unemployment, particularly amongst Māori, Pasifika, and young people. Dr Brash’s economic credentials are unparalleled. He spent 14 years as Governor of the Reserve Bank of New Zealand, and 5 years working for the World Bank in Washington, DC, and has served on many policy advisory committees for the Government since 1974. He has spent extensive time in private enterprise. More recently he chaired the 2025 Taskforce charged with analysing and promoting policies that will, first of all, lessen and then eliminate the income gap between New Zealand and Australia. The Government’s response to two very well-reasoned reports has been to scrap that task force, out of sheer embarrassment.

How ironic it was, then, that the Prime Minister’s first response last week to the new ACT team was to move a motion congratulating the New Zealand Breakers basketball team on their outstanding victory in the Australasian National Basketball League. They dared to dream, to achieve something that few New Zealanders had thought possible and that has never been done before. They won an Australian-based A-grade professional sporting championship. The ACT Party asks why New Zealanders cannot also dream, as the Breakers did, and aspire to raise our living standards, to raise the level of prosperity in this country, and to address our social problems. We have done it before. We have been successful in the past, and there is no reason why we cannot be successful again. But it requires the courage to articulate economic policies and the honesty to present them.

It is a pity that when Phil Goff lamented the price of electricity at Grey Power’s national annual general meeting last weekend he did not tell the meeting also that he voted for an emissions trading scheme that increased the price of electricity by 10 percent. Members can expect to hear more from ACT on the emissions trading scheme, choice in education, the damage to our society of a debilitating culture dependent on social welfare, and the wasteful use of Government resources.

The ACT Party will present a different approach to the public in the coming months. We do, however, remain absolutely committed to the confidence and supply agreement that we signed with National, and will continue to provide solid, reliable, and stable government. But there will be one change: we will not be taken for granted. National opted to insert a Treaty clause in the Environmental Protection Authority Bill going through this House this very afternoon. We were not consulted on that, and we certainly were not given the 48 hours’ notice required under the confidence and supply agreement for major amendments of this nature. Heather Roy, on behalf of the ACT Party, voted against that Treaty clause in the Committee stage, and this afternoon ACT will be voting against the third reading of the bill. Thank you.

Hon MAURICE WILLIAMSON (Minister for Building and Construction) : I want to start by trying to offer a little bit of advice to Opposition members. [Interruption] They do need to listen to advice from somebody, and if they do not want my advice, that is fine. I will give my advice to them anyway. My simple advice is that the voters of this country vote on only two things. They vote on their hip pockets and their kids’ future. Those two things determine what most people finally go to the polls on. We can sit in this House and debate all sorts of things until late at night or under urgency, and the vast bulk of New Zealanders would not even know that Parliament is sitting. We can debate the minutiae and have fights about whether new carpet should have been laid in Premier House or whether the BMW fleet should be upgraded. Again, New Zealanders do not actually care. I am trying to tell Opposition members something that it would be in their interest to listen to.

New Zealanders want a credible alternative plan for delivering things that affect their hip pockets and their kids’ future. Part of that plan certainly would be the standards in education. I do not know a single person who is not worried about their kids’ achievements. If Opposition members really want to start scoring some points, they should be focusing their attack on something that improves the educational outcomes of our country. But, no, once again we get back to whether, indeed, Premier House should have had some paint put on it after 12 years. Frankly, most people do not care.

Other people will be saying: “Well, I’m really interested in whether our incomes will match those of Australia. What would you do? How would you go about it? What’s your economic management tool?”. I watched Breakfast on TV this morning, and I watched Labour’s Opposition spokesman on finance—

Chris Auchinvole: What did he say?

Hon MAURICE WILLIAMSON: My colleagues have to stop asking the hard questions. I do not know what he said. Well, actually, I do. I have a transcript and I will help my colleagues by repeating what David Cunliffe said in reply to Corin Dann’s tough question. Corin Dann said to him: “OK, but you’re looking to get back into surplus by a similar time frame here—2016, something like that—so what would you cut instead?”. That is a pretty simple question. It is a very straight question, and I think the Speaker would allow that in this House as being a straight question. He asked what he would cut. I want members to follow the answer. I want some advice, following what he said. This is what the Hon David Cunliffe said: “What Labour has said is that we will aim to reduce net debt, including the Crown’s financial assets, across the business cycle. We believe that about a 10-year horizon is appropriate. We believe we can do that around as fast as the current Government is planning to but in a much more responsible way, because—let’s not kid ourselves—debt reduction is not the only goal here. You see the Australian Budget. They are, at the same time as reducing debt, managing to get more Australians into jobs, cutting their unemployment by 500,000 people to only 4.5 percent. We’ve got nearly 7 percent—155,000 Kiwis looking for work—and we have a responsibility for every Kiwi that wants to get a job.” Do members have a clue about what is happening here, and what Labour will do? He is telling us what Australia has, and what New Zealand has, but what will Labour do? This was his golden opportunity on Breakfast to tell us what the plan is, to tell the nation. He says: “If we’re talking about saving money, how about the thousands and thousands of Kiwis that are dodging their way out of the tax net …? Perhaps every New Zealander ought to be paying their fair share …”. That is it; that is Labour’s economic plan. There is not one statement in there about what Labour would do with tax rates at the higher end, because we know it wants to address that; we know it will. There was no stuff in there about whether Labour would make cuts to programmes that the current Government has put in place—not a mutter, not a murmur, nothing. But, oh boy, Labour is back on the attack when it comes to whether a piece of carpet looks shabby at Premier House and needs to be replaced. If Labour members have a polling organisation working for them, they should get that polling organisation cranked up to start asking some questions of the public. Do they care about that stuff? I can tell you that, no, they do not. That headline passes within a day. Yes, it might be the talking point of the day, but it passes.

What New Zealanders care about long term is their kids’ futures and their hip pockets. If they will vote for another party to be the Government and for another person to be the Prime Minister of this country, they want to know that that person has a plan, has laid it out succinctly, has said what they will do, and has costings for it. We have heard nothing of that from Labour—nothing of it. But members opposite are getting into who was travelling where, and whether the Prime Minister should have taken a helicopter from Hamilton to Auckland. It is just rubbish.

Dr KENNEDY GRAHAM (Green) : I rise to address the situation in Christchurch and the plight of the people of my city as we head into winter. Two and a half months after the devastation that rocked and racked New Zealand’s second-largest city, Christchurch remains in a strange psychological state, essentially one of suspended animation. Most of us have survived the immediate crisis of the death and destruction, the liquefaction, and the deprivation of power, water, and sewerage. We have mourned our dead, apologised to other nations, straightened our backs, shut down the inner city, restored basic services, shared education facilities, and established a new Government agency for the rebuild, with extraordinary powers given to the Minister for Canterbury Earthquake Recovery.

Now is the time to plan for the rebuild. That planning is rendered more difficult and painful by the fact that it coincides with the southern winter, which is always a delightful challenge, but on this occasion is an excruciating turn of the screw. There are those out there whose homes are totalled, many whose homes are half-broken yet livable if one does not mind subzero temperatures at breakfast, and others for whom the future is uncertain and unpredictable.

We do not yet know precisely the nature of the land in our brave new world. We have had two massive earthquakes and half a dozen major aftershocks. We have had 6,989 ripples, large and small, as the land reconfigures and settles down to the new tectonic era. We know that the peninsula has jerked up by a metre, the estuary has gone sideways a bit, and the flat land has sunk by perhaps one-quarter of a metre. But is that the end of it? We do not know. We do not know how many more aftershocks we must endure, or whether they will flatten out within a year, a decade, or more.

This militates against our planning. We have a 9-month recovery strategy, which the Canterbury Earthquake Recovery Authority is to coordinate, and a strangely concurrent 9-month recovery plan to be led by the Christchurch City Council. But our ability to plan for two new cities and their surroundings is munted by a lack of surety—the vexing human inability to see the future.

Meanwhile, people continue to suffer, especially in the eastern suburbs, through broken homes that will let the winter cold creep in. It is a race against time, with the health of our children at stake. I know that the Energy Efficiency and Conservation Authority and Fletcher Construction are doing their best to rectify a daunting situation with the installation of heat pumps and woodburners as fast as they can. I am working with energy Minister Hekia Parata to assist in the warming of Christchurch. I participated this morning with her and the Prime Minister in celebrating the 100,000th home under the insulation programme that the Greens pioneered under Jeanette Fitzsimons. There is much more that we can do, especially in Christchurch, and I look forward to cooperating with the Minister in the coming weeks.

We need to engender a sense of hope in the community—a community that is seriously traumatised. We need to develop a positive vision of the city as it might yet be: a 21st century eco-city that has green spaces, walking and cycling pathways, affordable public transport, an efficient and clean energy system, and environmentally sound waste management—a city that has, in short, sustainable living as its core value.

I have initiated a series of public forums to hear from the public what kind of city and what kind of surrounding suburbs they want to have. My “Visions of Christchurch” meetings are designed to achieve an optimal mix of public input with expert advice. They are designed to provide a distinctly Green vision for the recovery strategy and plan. The first meeting was held in Hagley Park in the netball centre on 20 April. About 200 people braved the cold night to have their say on what kind of city we want. The message was clear, with six themes emerging on what the people want. Those themes were green spaces, architectural beauty, social harmony, sustainable business, environmental sustainability, and risk management. The second meeting is in New Brighton on 12 June and will focus on the eastern suburbs. The third will be on 19 June in Lyttelton. The fourth and final meeting will be back in the city centre in early July.

I look forward to cooperating with the Government and with Opposition members in rebuilding our city along sustainable and resilient lines.

Hon HEKIA PARATA (Minister for Ethnic Affairs) :Tēnā koe. Tēnā tātou huri noa i tō tātou Whare. I rise with absolute excitement and pride—indeed, with energy and resources—to talk about the plan and ambition that this National-led Government has for Aotearoa New Zealand, while at the same time observing with despair the margins the Opposition has chosen to occupy. The issues and items the Opposition seems to think are of interest to New Zealanders are completely missing this point. As previous speakers on this side of the House have outlined, New Zealanders are concerned about what the economy is doing and how they are affected by it. They are concerned about education for their children. They are concerned about health for themselves, their families, their friends, and their communities. They are concerned about law and order, and about the safety of their homes, streets, workplaces, and neighbourhoods.

What is this Government’s response to that? It has responded in absolutely every area of concern and interest to New Zealanders. Despite having been dealt the most difficult hand that perhaps any Government in a generation has been dealt, the Government has responded, and it has focused on the systemic and structural, because it understands that New Zealanders want long-term sustainability. New Zealanders want to see that they will have strength in their hip pockets, as my colleague the Hon Maurice Williamson has described it so matter-of-factly. New Zealanders want to know that they have a Government that is focused on the priorities and on what is important to them.

Notwithstanding all of those more general national application issues and priorities, this Government has also focused on Christchurch, and on how we support that wonderful city and that very challenged community to rebuild and recover. That is important not only to Christchurch but to New Zealand. Christchurch is the second biggest economic hub for our country, which is why this Government has spared no level of energy, commitment, and focus to work with the people of Christchurch and Canterbury to help rebuild and recover that centre of activity, for its people themselves and for us.

In the tax area, as the Opposition knows and as this House knows, we have taken steps to re-engineer the whole tax platform to get the kinds of behaviours that, again, we know will be sustainable over time. We have tilted the tax platform to ensure that we move away from the behaviour encouraged by the Opposition, which was to consume, borrow, and spend.

Dr Cam Calder: And hope.

Hon HEKIA PARATA: Not even to hope, because under that Opposition the situation was hopeless! Instead, we on this side of the House have recognised that New Zealanders are capable of making decisions for themselves. Instead of the Government interfering and intervening in their lives, as was characteristic of the previous Government, we have said to almost 75 percent of New Zealanders that the tax rate is 17.5 percent, so that the general public—at least the 72 percent who are now on that 17.5 percent tax rate—can make their own decisions about how they spend that near to 83 percent.

We have encouraged investment in savings, because we also understand that it is not the Government that creates wealth; it is businesses that create wealth. It is not the Government that should be involved in make-work schemes for employment; it is businesses that should be employing people. We understand that we need to support businesses to take risks on young people, Māori, Pacific Island people, and on all kinds of people in New Zealand, to give them the opportunity to secure employment, and to make decisions for their families.

We understand that health is important. We have heard the Minister of Health speaking in the House today about the kinds of investments that this Government has made, notwithstanding the difficult—difficult—economic context in which we are operating. We have focused on education too, because unlike that Opposition we are not prepared to consign one in five students to some sort of scrapheap of dependence on the State.

We want New Zealanders to be resilient and self-determining; we do not want them to be reliant on Uncle Trevor or Auntie Helen—or on Uncle Parekura, for that matter. We want them to be reliant on themselves. We want the Government out of the lives of New Zealanders. We want to support New Zealanders’ independence. Nevertheless, we have done very practical things. We have put 300 more police on the streets. We have done so much for this country.

Hon PETE HODGSON (Labour—Dunedin North) : The National members do not like it. Each of the three National speakers has got up and said they think Labour should not be dealing with minutiae, and they have then spent a big part of their speech dealing with Labour’s dealings with National over minutiae. It seems that the National members do not like it, and the reason that Labour will continue to deal with minutiae is as follows. What National really wants is for Labour to stop concentrating on National, which is one of the key roles of her Majesty’s loyal Opposition. National should not expect any forgiveness in that direction.

Yes, I do admit that an $800,000 overspend, in the context of the entire police budget, is small. In the context of the entire budget of the Government $800,000 is small, but in the context of the expenditure on one man, the Prime Minister, it is large. It is twice the amount of money that we think his salary is worth. We think that a person should not be responsible for causing an $800,000 overspend, on the basis of his own proclivities. Only this Prime Minister takes bodyguards to the gym. Only this Prime Minister takes bodyguards as far as the debating chamber, to 10 metres from where I am sitting, because it suits him. Only this Prime Minister takes bodyguards on private holidays to Hawaii and Italy. Only this Prime Minister pretends that he cannot have any say in the matter. We know that is bunkum; he is the Prime Minister, after all.

We will continue to focus on National, and if National thinks that spending $800,000 on the well-being of one man is minutiae, then I say we will continue to focus on it and we will see what the people of New Zealand say. The National members say the $800,000 is trivial; we say it is indulgent. They call it small; we call it wrong. They say it does not fix the economy; we say that tomorrow National will make the lives of many New Zealanders worse, and if the National members continue to keep their own noses in the trough, then they lack the moral authority to ensure that they do not do harm to other New Zealanders while they do themselves everlasting good.

Do members remember the ministerial housing debate? Do members remember that? It was long ago. It was the first one. The Prime Minister said we should not worry and National would fix it. He said the rules were a mess. Bill English, the Minister of Finance, was double-dipping, so the Prime Minister said he would fix that and make ministerial housing cheaper. [Interruption] The National members do not like it. There is a continual response from the rabble during my few minutes here on the stage. But National said it would make ministerial housing cheaper. Well, we have been following that, and National has not made it cheaper. Ministerial housing is now more expensive after the fix than it was before the fix. What is more, and this is important, an unknown amount of taxpayers’ money goes into Ministers’ pockets—an unknown amount of taxpayers’ money.

So the anatomy of this self-deception is starting to become clear. National announces changes, like those to ministerial housing, saying it will fix the matter, but it does not fix it. The National members hide behind the word “security”. We saw that in the House yesterday. We saw it last week, with the Vela brothers and their $2,000 helicopter ride. At the end of last week we learnt for the first time that the Prime Minister is facing threats, but there was no ability to tell us where those threats are coming from or what they are, because that is a security matter, as well.

The third trick they pull is that they bet on not getting caught out with their inconsistencies. We heard Chris Hipkins today ask the Prime Minister how it was that he aggressively reviewed Ministerial Services line by line, but he missed the BMWs in their entirety. Which part of that do we believe? They keep forgetting; that is another trick. We have the Prime Minister’s chief of staff already forgetting his meeting with other officials on BMW matters—forgetting because it suits. We have the idea that it does not matter what Ministers do—that there is no conflict of interest. We are told by Ministers that there is no conflict of interest, and that they have had advice to that effect. They never, however, release the advice. The anatomy of the deception is becoming clearer.

Dr PAUL HUTCHISON (National—Hunua) : It would be wonderful if Mr Hodgson concentrated on relevancy, but instead, once again, we have a tirade of trivia emanating from that man.

In 1854, a little before the New Zealand Wars, a madcap, almost suicidal, charge by 600 cavalrymen was memorialised by Alfred Lord Tennyson. The last few weeks of political life in New Zealand could be likened to the Charge of the Light Brigade. After all, we have Hone on the left of us, Don on the right of us, and Phil in between us, wriggling and writhing. His not to reason why, his but to do and die. Andrew Little will make him cry, sooner or later. The question is when Andrew Little will run the sabre through. Will it be before the election—

Chris Auchinvole: It can be any time.

Dr PAUL HUTCHISON: —any time—or after the election? We know that Andrew Little is going up and down the country doing the numbers. The likes of Mr Hipkins have been talked to by Andrew Little. The sabre could be run through at any old time.

What does it matter? Labour is in tatters. It has no plan. All its members can talk about is trivia. That is what they immerse themselves in. Mr Goff, the leader of the Labour Party, is the very man who should be talking about substance. Perhaps one of the only things he has done substantially is sell off New Zealand State-owned enterprises, probably more than anyone else in the history of the New Zealand Parliament, but now he has changed his mind. Now he has changed his mind.

Then we have Annette King, the lady who in 1998 said that a waiting list of 89,000 was criminal. She went on to build the biggest health bureaucracy in the history of the world, with a waiting list of 130,000, from which she culled 10,000 at a time. Productivity in health went nowhere, despite her increasing spending from $6 billion to $12 billion. One of the reasons why New Zealand is in the dire situation it is in is that we had Ministers like her doubling expenditure but not looking at productivity.

Then there is the Hon David Cunliffe, the man of the people, who looks after his downtrodden constituents by remote control from his upmarket house in St Marys Bay. He was the man whose polling went up when he left for Tokyo. It actually went up.

Then there is Shane Jones. Members probably saw him on Make the Politician Work on Sunday night. What happened? He went to sleep. He went out on that boat, past the Manukau Heads, and they required a fire alarm to wake him up. He was supposed to go out and help fishing, but if he had not had the fire alarm, then he probably would have been out there for 3 days and come back still having not realised that he was supposed to be working. We certainly cannot rely on him.

Thank goodness for the John Key - led National Government. Thank goodness for the solid set of achievements in a raft of areas that the Government has been focused on. For instance, there is more elective surgery, 1,000 more nurses, 500 more doctors, and shorter waiting times for radiotherapy.

I will concentrate for one moment or two on the very fine feat in immunisation that has been achieved by the National Government over the last few years. In 2007 only 67 percent of our 2-year-olds were immunised. The number is now 88 percent. This is an incredible improvement. Recently—only last week—$54 million was put into maternity services. We have a forward-looking, progressive National Government that is looking after the future of our children.

CHRIS HIPKINS (Labour—Rimutaka) : We know that the National Government is in trouble when the best it can put up in its defence is Maurice Williamson and Paul Hutchison—if that is all they can come up with! It is like a fifth-form debating D-team, because there is no defence for the absolute hash they have made of things in the last week. We have John Key and Bill English marching around telling New Zealanders that they have to learn to live without the “nice-to-haves” and that they will have to tighten their belts, but, oh no, not them—they are going to give themselves brand-new BMWs. The ones they have now are only 3 years old, but that is all right. They will give themselves brand-new ones with nice, heated seats, so that when Bill English is down in the deep south paying his annual visit to his constituency, he can ride around in a BMW with a heated seat.

What else do those members do? They go and refurbish their ministerial houses—new carpet! Some families cannot afford to put food on the table, but, oh no, John Key needs new carpet—new carpet for him! While he is at it, he will fly from the V8 Supercars to his golf club in a military plane. Those are the National Government’s priorities. While New Zealanders cannot afford to make ends meet and are having the fees for their kids’ early childhood education go up, all their health costs go up, their cost of living go up, and their power bills go up, those Government Ministers are quite happy to splash out on the small stuff for themselves. It is the small stuff for themselves that they are interested in, and they have absolutely no qualms about that.

What did Hekia Parata say about that? She said she wants the Government out of New Zealanders’ lives. In other words, the message from this Government to New Zealanders is that they are on their own. If the going is too tough, then this Government says that New Zealanders are on their own. This Government does not want to know about it. It does not care about it. It does not care about what is going on in the households of ordinary New Zealanders, because its Ministers are riding around in their leather-seated BMWs with heated seats. They are re-carpeting their houses. They are flying around in military helicopters.

Of course, then we have John Key with his eight or so security guards every day, making sure he never has to come into contact with an ordinary New Zealander. John Key does not want any ordinary people anywhere near him. He is so paranoid about coming across an ordinary person that he even has to take security guards with him when he is going on holiday. He has to surround himself with bodyguards when he is going to his private compound in Hawaii on holiday. But it is not only that—he makes the taxpayers, whom he does not want to know, pay for his security. He makes them pay the $30,000 for his security guards to fly with him to his holiday home in Hawaii.

This Government has its priorities all wrong. It calls it balanced—it calls it balanced. Government members are cutting the support for real, ordinary working Kiwis and boosting the money that they are spending on themselves, and they call that a balanced approach. It seems very balanced in the back of their BMWs, with their wonderful wheel alignment, I am sure. But it is not so great for New Zealanders who are struggling with the everyday cost of living.

This Government does not know how to manage conflicts of interest, either. John Key did not think it was a problem to sign off on a massive BMW upgrade for the Government within days—within days—of attending a National Party fundraiser hosted by a BMW dealer. John Key did not think that was a problem, at all. He thought it was fine for a BMW dealer to give 50 grand to the New Zealand National Party at the same time as he was approving a big upgrade of the BMW fleet, which was only 3 years old. Some of those cars have done only 30,000 kilometres. That means they will be pretty attractive when the Government comes to hock them off. Who are they going to hock them off to? Who are the dealers who will be selling the BMWs? I would like John Key to front up and explain that—that is what I would like John Key to front up and explain. But he will not. He will not, because he does not think he has any responsibility for it, despite the fact that it is his signature on the statement of intent that signs off on all of the work. But, oh no, despite his aggressive line-by-line review of Ministerial Services’ expenditure, he did not bother to read the line that said he would get a new car for himself with fancy leather seats and all the other bells and whistles that go with it. These fancy BMWs have fancy mobile offices with phones so that Bill English can sit in the back of his car down in the deep south, and catch up on the news on the internet while he is cruising along with his heated seats. This is a Government that has its priorities all wrong.

NICKY WAGNER (National) : Does Labour have anything relevant to say? Does Labour have any plan for the future? Does Labour have any new ideas? No, no, and no. Those members are paralysed by their miserable showing in the polls, they are squabbling among themselves, and they are bogged down in irrelevancy and pettiness. There is no leadership, no inspiration, and no future. The public is not interested in their petty politics. They are interested in the things that matter to them: the things they need to live their lives well.

Since National became the Government we have worked hard to deliver on health, on education, and on law and order for New Zealanders. Despite the financial crisis, the global economic recessions, and the tragedies of Pike River and the Canterbury earthquakes, we have not wavered from our commitment to deliver stronger economic growth for New Zealanders as a whole.

After listening to Labour’s recent meaningless, confusing waffle on matters financial, everybody can see that New Zealand needs a Government with a plan, a Government with experience, and a Government with the skills to manage the economy going forward. Yes, our economy is stronger now than it was when we inherited it from Labour and, yes, we are better-placed to meet future challenges, but we still have much to do. Members will see that in the Budget.

While Labour has been in disarray, ridden with scandals and with Goff focusing on putting down leadership challenges, we have made good progress on education, health, and community safety. National is committed to improving our education system. We will not accept that one in five young people can leave school without any qualification. We are fighting to change the system so that it delivers for every child. Through national standards in reading, writing, and maths in our primary and intermediate schools and through boosting trades and skills training in schools, more young people will get the learning opportunities that they need. We are getting better value out of our tertiary education system and providing good new opportunities for young people who are struggling to find work. Every young person needs a quality education, and we will make sure that they get one.

In health, National is committed to providing great health-care. With our new, clear targets we are now getting much better value for money, with over 1,000 more nurses and 500 more doctors and with 20,000 people getting elective surgery every year. Cancer patients are being treated faster. They now have a maximum of 4 weeks’ wait, compared with a 16-week wait and a trip to Australia. Medicines are more accessible and more children are being immunised. By working smarter, we are getting more bang for our health buck, and all New Zealanders are benefiting.

All this excellent progress is exactly why Labour members have been slinging the dirt at our Prime Minister, attacking him over everything and nothing. They cannot nail us on education, they cannot nail us on health, and they cannot nail us on law and order. In contrast to Labour’s wasteful negativity and political backbiting, National just has its head down and is getting on with the job, which is exactly what every good Government should do.

Hon DAVID PARKER (Labour) : The first thing I say in response to the prior speaker, Nicky Wagner, who said that we could not nail National on anything, is that it is very hard to nail blancmange.

Sometimes this House has a sense of unreality. One feels like one is in a Disney movie. Today the general debate has been an example of that. The ACT Party came here and described what has happened to them—the National Party takeover of the ACT Party by a septuagenarian—as rejuvenation. Rejuvenation! Then these institutionalised front-bench members of National came and told us, the Labour members, that we have no plan. They put up Tony Ryall, who is a veteran of the Bolger administration and a veteran of the Shipley administration. He is a veteran who has been a veteran for so long that he is replacing the Gallipoli veterans on the front line of Anzac ceremonies. He is as bereft of ideas as National is. Then we heard Maurice Williamson coming up with the same phrases.

They have obviously polled and they have found that they are in trouble for not having a plan. What is the Crosby/Textor response from National? To accuse Labour of not having a plan. This is on the same day that National said it will reverse its reversal on KiwiSaver. Having dropped the contribution rate from 4 percent to 2 percent for KiwiSaver, it is now saying that it will put it back up to 4 percent. That is the big plan for the Budget. No wonder this country is in an economic malaise. The National Government has no credible plan.

That is why it has given up on its promises of the last election. I remind listeners that National was elected on the promise to close the wage gap with Australia, not to put up GST; to lead us to a brighter future, not to the economic malaise we are currently suffering from; and to have higher standards, not to buy new BMWs and pretend that it was not aware of it. National was going to have a step change in the economy. Instead—I think the ACT Party made this point in the House yesterday—we have the highest rate of youth unemployment that anyone can remember. The National front bench members, these institutionalised members who are retreads and have been here now through three administrations, tell us that we have no a plan.

We already have more ideas out there than they have: a tax-free zone, so that the first so many thousand dollars of earnings are free of tax; GST taken off fresh fruit and vegetables; ring-fencing of losses; and a lot of other initiatives. If we put anything more out there, National will just steal it. In fact, its latest policy of reinstating what it cut last year on KiwiSaver is stealing Labour policy. We had a 4 percent contribution rate for KiwiSaver, and National cut it to 2 percent and is now reinstating it to 4 percent. So to hear those members say that we have no plan is rather galling.

Rejuvenation? Rejuvenation, according to National, is retreads from three prior administrations who still have not come up with a credible plan for the economy. Rejuvenation, according to the ACT Party, is bringing back the National Party into ACT via Don Brash and John Banks, in order to bring Don Brash and John Banks into Parliament. They are both former National Party members, and John Banks was the failed mayoral candidate for Auckland at its latest election.

There will be a choice at this coming election, and it will be about who New Zealanders trust to grow the economy. National’s response is to pretend that all of these problems are not of its making. It knew the global financial crisis was here. As Trevor Mallard said today, it is quite incredible for the Prime Minister to deny that he knew that the global financial crisis was coming when he made all of his rash promises to cut taxes. The Government has no plan.

PAUL QUINN (National) : I was looking forward to taking this last call because I was hoping beyond all hope that I might be able to make an excellent contribution to the arguments put forward by the Opposition.

But what have we seen? We have seen a continuation of the extraordinarily poor performance that has characterised this Opposition in recent times. Did members know that question time once again finished before 3 o’clock—again! That was after about 20 minutes taken up with forestalling by the Opposition shadow Leader of the House to try to drag it out. This is what members of the Opposition are reduced to. Instead of following the Speaker’s lead and asking searching, penetrating, and focused questions, those members do not have a clue. So it is all over before 3 p.m. as it was yesterday, and as it was last week, and that is after 20 or 30 minutes of points of order just to try to drag it out. By the way, most of those members are lost anyway. This is just an appalling performance, and it is no wonder that those members are reduced to what Mr Hodgson likes to refer to as “minutiae”. They are going to focus on this because it really will drag down this Government!

They talk about helicopter rides. Has Labour forgotten about the 2006 helicopter ride to bring back Chris Carter’s toothbrush? Did members know that? A Minister of their administration got an air force helicopter ride in 2006 to bring back a toothbrush he had left behind from the islands where he had been. It would have cost him $2 to go down to the corner shop, to the grocery store, or to the supermarket to buy another one. But, no, he had to waste taxpayers’ money on sending a helicopter. Perhaps the toothbrush was pink and he could not get any other pink toothbrush. But I do not know why he had to send a helicopter at enormous taxpayer expense to go and get it.

One really has to ask whether we can have the real Opposition. It seems to me that the real Opposition at the moment is the fourth estate. There is Mike Parkin on Television One talking about the Diplomatic Protection Squad, and there is Patrick Gower on TV3 talking about self-drive cars. Bring them in, but do not pretend to pinch their lines.

Let us talk about, for instance, Diplomatic Protection Squad holidays. Labour members ask, as Mr Hodgson asked, who needs the Diplomatic Protection Squad when they go on holiday. Well, if Prime Ministers have men-mountains like Darren Hughes, Chris Carter, and Damien O’Connor, and they tag them along on their holidays, I suppose they do not need the Diplomatic Protection Squad, because those people will look after them. Or, of course, there is that man-eater, Judith Tizard, who is going to save the Prime Minister while she is on top of Mount Cook. Who needs the Diplomatic Protection Squad when they have such a coterie of hangers-on to save them and to ride to the rescue?

It is interesting that we are talking about the Diplomatic Protection Squad. At the weekend the United States President, Barack Obama, went to Fort Campbell to honour the SEALs. One would think that when the president went to Fort Campbell to honour the SEALs, who are faceless, extraordinary soldiers, he would be under the biggest security and would not need to have his own security detail. Clearly, the Opposition is totally unaware that when the President of the United States went to Fort Campbell this weekend to honour those people, there was a bevy of security people associated with them.

Then, of course, we have ginga No. 2. He seems to have jumped ship; he seems to have left the nest of the duck to go and sit at the foot of the chicken man. He has got on top of, for instance, the cost of $275,000.

  • The debate having concluded, the motion lapsed.

Third Readings

Hon Dr NICK SMITH (Minister for the Environment) : I move, That the Environmental Protection Authority Bill, the Climate Change Response Amendment Bill, the Hazardous Substances and New Organisms Amendment Bill (No 2), the Imports and Exports (Restrictions) Amendment Bill, the Ozone Layer Protection Amendment Bill, and the Resource Management Amendment Bill be now read a third time. It is a pleasure to be at the last stage of this important reform to the governance arrangements for New Zealand’s environment in creating the Environmental Protection Authority. The idea of an environmental protection authority was first proposed in National’s 2006 Bluegreen Vision discussion paper. It was included in our 2008 election policy, it was introduced in a preliminary form in our 100-day Resource Management Act reform bill, and now, alongside these bills, it is being progressed into an independent Crown entity from 1 July.

At the core of this reform is the view that the Ministry for the Environment needs to be the strong and competent policy adviser, that the Environmental Protection Authority needs to be the arm’s-length regulator, and that the Parliamentary Commissioner for the Environment plays a key role as the auditor of our overall environmental governance system. The parallel in the economic and financial sphere is having Treasury as the policy adviser, the Reserve Bank as the regulator, and the Auditor-General. The next stage in our work programme is to beef up the role of the Office of the Parliamentary Commissioner for the Environment in independent environment reporting. When completed, this reform will, in National’s view, give New Zealand a first-class and robust environmental system of governance.

I welcome a broad consensus in this House, with all parties supporting the establishment of the Environmental Protection Authority, but I am disappointed that some are choosing to oppose this legislation on pretty spurious grounds. Let me go through each of the arguments put forward by the Opposition in the Committee stage. Labour’s Louisa Wall said she opposed the legislation because it contained a ministerial veto on Environmental Protection Authority consent decisions. No such provision exists anywhere in the legislation. The irony is that the only veto provision where a Minister could overturn a consent decision was actually repealed by National in our 2009 Resource Management (Simplifying and Streamlining) Amendment Bill after that provision was so badly discredited by Chris Carter over the Whangamata marina. Louisa Wall’s contribution only made Labour look pathetic.

We had a far more thoughtful contribution from Charles Chauvel. His concern was the lack of provision in this legislation for environmental regulation in the exclusive economic zone. This is an issue on which we agree, and work is well under way to achieve this. The debate here is only over timing. The Government, following the environmental tragedy in the Gulf of Mexico, sought an independent review of our regulatory system for offshore petroleum, to be sure that our reforms would provide the most robust regime possible. This is complex policy and we want to get it right. It needs to be carefully intermeshed with the existing fisheries, transport, mining, and other statutes so that we do not have double ups, nor do we want gaps. My plan is to have a bill before the House in coming months to address this.

One of the other repeated objections was that the Environmental Protection Authority did not have a clear protection mandate in its purpose, and that somehow this made the legislation deficient. The reality is that the Environmental Protection Authority will be responsible for the administration of a whole number of Acts—the Resource Management Act, the Hazardous Substances and New Organisms Act, the Climate Change Response Act, and the Ozone Layer Protection Act—and each have their own purpose. Many of these make specific reference to environmental protection in their purpose statements. The problem is that if we establish an alternative purpose for the Environmental Protection Authority beyond that in those Acts, we end up with legal confusion over whether the purpose statement in the Environmental Protection Authority Act or in the other Act would be superior—which would trump which. We do not want that sort of confusion. For members opposite to argue that the Environmental Protection Authority has no mandate to protect the environment is to argue that the Acts covering resource management, ozone protection, hazardous substances, new organisms, and climate change—all of which Labour members voted for, and many of which they designed—do not protect the environment. That is nonsense, and it really does expose how shallow Labour’s opposition to this legislation is.

The most extraordinary contribution in the Committee stage was from Labour’s Brendon Burns. He lambasted the Government for balancing economic growth with environmental protection, saying that we had to have either one or the other and that Labour was for the environment. We now know in this election year that Labour is not in favour of economic growth, jobs, or increasing living standards. I am looking forward to campaigning on National’s rational Bluegreens platform of marrying together economic growth with sound environmental management against the anti-growth Labour policy that Brendon Burns is now advocating.

In contrast, I compliment the very constructive role the Māori Party has played in our decisions on the Environmental Protection Authority. The Māori Party brings a strong cultural ethos of sustainable development to this work, recognising that Māori see the use and development of New Zealand’s natural resources as important, while also showing a strong commitment to sustainable environmental management. The Māori Party advocated for a separate Crown entity, it argued for the Māori advisory committee, and it argued for appropriate recognition of the Treaty of Waitangi. All of these are contained in this legislation.

I wish to conclude with some important thankyous. I wish to acknowledge the good policy work that was led by Dr Paul Reynolds and the Ministry for the Environment, and the work of the Parliamentary Counsel Office in supporting the Government in putting together this legislation. I thank the board and staff of the Environmental Risk Management Authority, who, caught up in the winds of change, have retained a strong focus on doing their existing job well. I also thank the Local Government and Environment Committee, particularly its chair, Chris Auchinvole, and its members for the work they put into getting the important detail of this legislation right.

The idea of the Environmental Protection Authority is an idea whose time has come. The key to its success will be in its being a fair, effective, and efficient regulator of our environment. We do not want an expensive bureaucracy, nor a feeble rubber stamp. We want a technically expert, professional organisation that will protect that which is precious to all New Zealanders while enabling our economy to grow and prosper. I wish the new authority well. It is so important to the success of our country.

CHARLES CHAUVEL (Labour) : I would like to start by acknowledging the Minister for the Environment’s very full contribution to the third reading debate on this legislation arising from the Environmental Protection Authority Bill. This is significant legislation and it is an important initiative for the New Zealand environment. It is correct that many people have put a lot of hard work into the constitution of the Environmental Protection Authority, and, in particular, the work done at the Local Government and Environment Committee involved careful consideration of public submissions, of which there were a number of excellent ones, and, I think, careful thought by members of the committee around the content of the legislation. So although it is helpful to have had a fulsome contribution from the mover of the legislation in the third reading debate, it is a shame that the Committee stage proceeded in the way it did. I have had a look at the record of what happened in the Committee stage. There was a 3 hour 45 minute debate over 2 days. We heard from only five members of the Government during that entire debate, and I include in those contributions the Minister himself on a short call, and the Māori Party member Rahui Katene. The Minister is reminding me that he may have made two short calls. Even if that is the case, it is insufficient. We had one call from the chair of the select committee.

I mention this because I think it is important for the record to reflect that in the Committee stage a number of very significant matters were dealt with. First, there had been significant criticism from submitters and the Labour Opposition that a confusing mandate was conferred upon the Environmental Protection Authority by the legislation concerning its obligations around engagement with iwi. In response to that criticism we saw in the Committee stage a Supplementary Order Paper in the name of Rahui Katene. Clearly it had been drafted by officials in close consultation with the Minister. That Supplementary Order Paper should have come to the select committee and it should have been the subject of proper consideration by the members of the committee. That did not happen. Instead it was tabled, as it were, at the last minute in Committee. As I said, we had one 5-minute speech from Ms Katene, the sponsor of the Supplementary Order Paper. It was touched on in a brief response by the Minister, and that is it as far as the Government is concerned.

John Boscawen: And no discussion with ACT!

CHARLES CHAUVEL: One of the Government’s other coalition partners has just revealed that there was no discussion with it, although I do note that its members voted for the Treaty clause on this occasion, so Mr Boscawen—

John Boscawen: We voted against the Committee, and we are voting against the bill.

CHARLES CHAUVEL: No, no, that is not right. What this confusion shows is just how unsatisfactory the process around the Supplementary Order Paper in particular was.

On the issue of engagement with iwi, this is the position that now pertains in respect of New Zealand’s environment legislation. There are four different types of Treaty clause that exist in different pieces of environmental legislation. They provide different things. There is now an overarching Treaty clause in the Environmental Protection Authority Bill as it currently stands—Act as it is probably about to come. In respect of many of the authority’s other functions there is no obligation to deal with the Treaty or its principles. This is the confusing position that has been created by the Supplementary Order Paper that has been moved and voted on successfully in the Committee stage. This is the mess that now exists in respect of the Environmental Protection Authority’s obligations to consult iwi. If the matter had gone to the select committee, if the Minister had had the courtesy to refer it to the select committee, and if the Māori Party had actually twigged to the fact that there was no Treaty clause in the original Environmental Protection Authority Bill and had asked for one to be inserted prior to the select committee, then we could have avoided all this confusion. But, as it is, this is the level of parliamentary procedure—the level of impropriety procedurally—that we have been subjected to by this Minister on a key matter as far as the ongoing powers of the Environmental Protection Authority are concerned.

The other reason why it is concerning we had such a scant level of contribution from Government members in the Committee stage is that the Minister moved a very significant procedural Supplementary Order Paper during that stage. It divided the legislation into six separate bills and it made changes to the way in which the legislation comes into effect. I would have thought the Committee and the House deserved the courtesy of some explanation of those changes from the Minister. The Minister, when it suits him, likes to talk about procedure, but so often his actions do not measure up to the standard he sets himself. Sadly, again, this is one of those occasions.

I have some other interesting statistics. We had 20 minutes of calls from Government members, and I include in that category Rahui Katene, the Minister himself, and the chair of the select committee. We had, I think, some 20 minutes of calls from the Green Party, and there were some excellent contributions during those calls. The rest of the 3-hour Committee stage consisted of calls from Labour, and despite what the Minister had to say about one of those calls, I would like to put on record for the House that it was the Labour Opposition that bore the brunt of the job that is undertaken by the Committee of the whole House—scrutiny of the legislation for all members of the House. So I make no apology for that, but I do deplore the fact that there was such a scant contribution on such a key piece of legislation from Government members. If the legislation is so important, if the so-called Bluegreens agenda is so compelling, I think we might have heard more about it.

There are other tokens of disregard for the environment in this legislation. The Minister touched on some of them. The first and most compelling relates to the objectives of the Environmental Protection Authority. The Minister said it was just a matter of timing and that he fully intended to bring more legislation to the House later in the year. Why do it that way? That is the question that arises. Why do it in such a piecemeal fashion? This was his opportunity to bring very good and comprehensive legislation to the House, particularly at a time when there is public disquiet about offshore drilling and exploration. The Minister knows that that is the case. He had a perfect opportunity to create a comprehensive environmental safety regulator here, particularly in respect of that offshore drilling activity. People are concerned about the lack of safety requirements and very, very concerned about the lack of any consultation with communities affected, particularly iwi. This legislation could have resolved those problems, but the Minister was not able to bring comprehensive legislation to the House on the matter. There are many environmental functions that remain outside the purview of the Environmental Protection Authority and that situation should have been remedied right from the start.

Then, of course, there is the fact the Environmental Protection Authority does not actually carry any obligation to protect the environment. Nowhere in the objectives in this legislation is there a statement about the Government’s desire that it be an environmental protector. Talk about hamstringing an organisation right from the start! People want to see strong independent environmental regulation from the centre, and what they have in this legislation and in this authority is, unfortunately, a damp squib, and that is because of the absence of the overarching requirement that the authority be an entity that looks after the natural environment.

The other concern that has been voiced time and time again relates to the independence of the authority. This legislation involves moving the powers of the Environmental Risk Management Authority much closer to the Minister. Now, the Minister may well be right about individual cases of direction, but the problem, as I tried to point out in the Committee stage, is that the whole tenor of this legislation, basically, is one of ministerial control and direction rather than independence. That is the default position in this legislation, and that is not the way that a proper environmental regulator should have been set up. Labour created the Ministry for the Environment in 1986 because we believed in the fundamental importance of strong environmental regulation and leadership by the Government. We do not believe, as the Minister has said so many times, that environmental, social, and economic goals are competitive. They should be complementary. This was a great opportunity, but because of the deficiencies I have identified, it is a missed one.

CHRIS AUCHINVOLE (National—West Coast - Tasman) : It is a privilege to speak on the third reading of this legislation. It is a comfort to me to have just heard the speech made by my parliamentary colleague Charles Chauvel. It was perhaps a development from the speeches we heard during the previous debate—the Committee stage—on the Environmental Protection Authority Bill. If I may I will reflect on one point the member made, which is the criticism of Rahui Katene’s amendment. Basically, the amendment sets out very clearly the Treaty clause in each of the environmental Acts and it sets out how they are to be treated. If that is a major problem, then I am quite comforted that that is as bad as it gets.

The establishment of the Environmental Protection Authority changes the regulator, not the regulations. This is something we have emphasised from the very beginning and throughout discussions with the submitters at the select committee. From that point of view, the legislation is technical. It does not seek to change the regulations; it changes the regulator. This is a significant point in allaying the concerns that have, very properly, been brought up by Opposition members in their consideration of this legislation.

It has been difficult to achieve the sort of consideration that I think makes for really good legislation on environmental changes, and I have had that experience in the past. But with changes to the Local Government and Environment Committee membership it was hard to have a consistent, discursive approach. I think the Opposition based the minority report—from my reading of it—on the written submissions received by the committee. Some of the key people of the committee, because of obligations to other select committees, were not able to give cohesive attendance at the select committee on the legislation. So we did not have the sort of discussion on environmental issues we are used to having. This is not a criticism. We understand what it is like to be in Opposition and heading towards an election. It is very difficult. I am comforted that the team from, particularly, Labour has seen fit to make very complimentary comments about the work of the committee with this legislation, and I thank them for that, because a lot of work has been done. I am comforted, too, that the Opposition seems more settled with the legislation now—and certainly more settled in its presence on select committees—and I look forward to the sorts of debates, discussions, disagreements, resolutions, remedies, and reconciliations that make for good legislation.

I share Mr Chauvel’s view of the Committee stage of the Environmental Protection Authority Bill. It was not particularly formative, which was a disappointment to me. But that is the way we are established in Parliament, so that is the way it went.

My view of this legislation is that it is rational and it is National. They go together in this serious legislation. Labour has four main concerns about the bill: the functions are not broad enough, the objectives should require the Environmental Protection Authority to protect the environment, the authority should be independent from its Minister, and the legislation is not clear about the need for the authority to take account of Māori perspectives in decision making. In my view, there are short answers to those concerns. Opposition members say the functions are too narrow to provide leadership; they are not. They say the objectives are inadequate and do not expressly require the authority to protect the environment; they do. They say the authority is not sufficiently independent from its Minister; it is. They say the legislation is not clear about the need for the authority to take into account the Māori perspectives in decision making; it does.

I will expand on why I think that. Under the proposed structure the Ministry for the Environment will have responsibility for policy, the Environmental Protection Authority will have responsibility for regulator functions, and the Parliamentary Commissioner for the Environment will be the auditor. That is a fairly decent, wide sort of a structure to provide leadership. Separating the functions will ensure that the environment is properly protected. All the legislation that sits behind the Environmental Protection Authority—and let us remember that we are changing the regulator, not the regulations—has the protection of the environment at its core. The legislation has no other purpose. It is a significant improvement on the status quo of the Ministry for the Environment, which a Labour member, with some pride, said the Labour Government established. Labour left it untouched for 9 years—hence the changes now.

Like the Environmental Risk Management Authority, the Environmental Protection Authority will have an independent board and a Māori advisory board that are at arm’s length from the Minister. That gives a certain safeguard that the authority will take into account Māori perspectives in decision making. That is what those organisations are established for.

Another key feature that gives me great confidence in the structure of the legislation is the way the relative organisations have packed in, scrummed down, and got together to make sure that this thing works. It has been salutary to them. We spoke to the organisation representatives at the select committee about how they were bringing together their organisations and how they were going to handle the shift. A lot of human resources have gone into the work and there is a lot of enthusiasm. The thing the organisations anticipate most is that for the first time since they have been doing their work there will be a collegiate structure to give them added collegiate, academic strength in the work they undertake. Instead of working in isolation, they will suddenly have a group of colleagues to work with.

Labour has the opportunity to get in behind this legislation and share in the confidence and progress it offers. They should and they could. That would be good. Thank you.

Hon RUTH DYSON (Labour—Port Hills) : It is with a little bit of disappointment that I find myself in opposition to this legislation. It is legislation that had it been properly considered, had it had a clear plan for the protection of the environment, and had it had a Minister for the Environment who was actually driving forward with a clear agenda and some confidence in his role as a Minister—which should be in protecting the environment—then I would be very enthusiastic about supporting it, even though, obviously, it would have been legislation introduced by National. I think that is what both the Minister and the chair of the Local Government and Environment Committee, with due respect, have failed to understand—that actually there are times when proposed legislation can be agreed to by everyone, and such opportunities would be wise to take.

The obstacle National has to overcome in order to do that is to find a plan. A plan in anything would be good: a plan for the economy would be fantastic for the Government to have, or a plan for jobs. Speaking from a local perspective, I say that a plan for heat pumps in Christchurch homes before the middle of winter would be quite handy. In preparing this legislation, a plan for the environment and its protection would have been really valuable. But National did not do that. It does not have a plan for anything, and that is why it is with some disappointment that I end up in a position of opposition to this legislation.

Labour supported the Environmental Protection Agency Bill at its introduction so that the bill could go to the select committee. At the time we said we wanted to hear the debate. We wanted to see whether improvements could be made, because in theory the idea is good. As Chris Auchinvole pointed out, of course it is good to have a strong regulator, and of course it is good to have collegiality—as he so delicately put it. But without a plan, and without legislation that backs up the regulator, we will just get a bunch of overpaid, frustrated bureaucrats, and I am not sure that that is what National says it is trying to achieve.

I am sure the current leader of ACT in the House, John Boscawen, will have something to say about that. I really look forward to hearing his contribution during this debate, and, in particular, to hear the ACT contribution in relation to the Supplementary Order Paper from Rahui Katene, which the ACT leader revealed to the House just a while ago the ACT Party was never consulted on. That is gobsmacking, and I am sure the chair of the select committee was also amazed to hear that his Minister had not consulted on that particular provision.

When this legislation was introduced, and before it went to the select committee, we said we would support it but would tell the House what our concerns were. One of the biggest ones was exactly that point—that instead of a strong authority with a clear mandate to protect the environment, this body would become an overstaffed bunch of bureaucrats who did not have a clear mandate, so instead would be used by the Minister as an opportunity to fast track controversial projects. I know that members on the other side will lift up their hands in horror and say they would never do that. Maurice Williamson actually has more integrity, so he will not be raising his hands in horror; he knows that is exactly what the Minister and his Cabinet colleagues want to do.

They want to fast track other projects, just as they have already fast tracked the Waterview Connection. The organisation that is meant to be protecting the environment has been used to fast track the Waterview Connection. The time frames for submissions were absurdly short for that process. Local community board representation was deliberately ignored; the voice of the very people being affected was squashed by the Minister. “Who gives a toss about local people?” was what National people said. Even the Auckland City Council asked for the submission deadline to be extended, and the Minister told it: “Go back to Auckland. We’re not interested.” Even though it was an Auckland issue—it was the Waterview Connection that was being discussed—not a single National member from Auckland raised his or her hand in support of the local community voice. Those members stood back and let the local voice be totally trampled by the transitional Environmental Protection Authority, which was being used by the Minister to fast track controversial proposals.

In the same way the National Government has done exactly the same thing in the case of Transmission Gully. It has circumvented the Wellington regional freshwater plan by using the Environmental Protection Authority as its vehicle, and it will try to do exactly the same thing in relation to the men’s prison at Wiri. Anyone who says that building a men’s prison in a community does not have an impact, and therefore it does not matter if it is fast tracked, is incorrect. If it were not for this organisation being set up and used to fast track projects, local people would be able to have their say.

Some people might say that that does not sound like what an environmental protection authority or this agency should be doing. But it is exactly what it is doing, and that is why Labour has opposed this legislation. Despite the theory about the authority being great, every bit of practice that National has used it for has been absolutely abhorrent, and absolutely opposed to the very name of the organisation—environmental protection. We should not be surprised, though. We should not be surprised that National has used that organisation to ride roughshod over the voices of local communities, and to totally discard the concerns expressed by people about the negative environmental impacts of certain proposals. Instead, National has used the organisation to just bowl ahead, sidetrack all other protections, and fast track controversial projects.

We should not be surprised about that, because one of the first things National did when it came into Government was to throw out the emissions trading scheme and bring in a very watered-down version, which has added billions of dollars of costs that now have to be borne by New Zealand taxpayers. Those taxpayers, who are currently finding it very hard to pay their weekly bills, need to be reminded that the National Government has loaded bucket loads of costs on to them through changing the responsibility of polluters in the emissions trading scheme. Polluters have been let off the hook. Nick Smith has said: “Let them pollute. Let them not be charged for their pollution. Instead, let ordinary mum and dad taxpayers pay for it.”

Gerry Brownlee, who used to be the Minister of Energy and Resources, tried opening up schedule 4 land to mining. It was not until there was a huge outcry up and down the country that finally he changed his mind and backed off. But I am not sure he has backed off that idea completely; he still drools at the idea of having mining up and down our most important parts of New Zealand. It is another example of the way that National has completely ignored our New Zealand “clean, green” brand and our “100% Pure New Zealand” motivation for exports and tourism. National members have just said: “We have a quick buck to be made here by people whom we know will donate to the National Party if they are able to take advantage of those opportunities like mining, or like providing new BMWs to Government Ministers, and therefore we will go ahead with it.”

The functions of the legislation are too narrow, and remain too narrow, despite Supplementary Order Papers being produced by Labour to extend those functions. The objectives are totally inadequate; the Environmental Protection Authority is not even required to have environmental protection as one of its objectives. How weak can that be? The authority is not sufficiently independent from the Minister. The chair of the Local Government and Environment Committee is wrong in that particular regard; the authority is not hands off. It can be significantly interfered with by the Minister, and that is a very dangerous precedent to have when we are talking about an area in which there is often tension between protection of the environment and development. We cannot afford to have the Minister butting in, regardless of who the Minister is.

The final point I make is that this legislation has introduced a previously unheard of test in respect of consideration of the Treaty of Waitangi. We should have had, at the select committee, a proper debate about the Treaty clause, but instead we had slipped into this legislation at the Committee stage, with no scrutiny by officials, the select committee, or the public, a brand new test for consideration of the Treaty of Waitangi. That will be problematic, and it will do nothing to pursue a vision of protection for the environment.

CATHERINE DELAHUNTY (Green) : Tēnā koe, Mr Assistant Speaker Roy. I am very pleased to speak on the legislation. The Green position has been managed by David Clendon, our Environmental Protection Authority expert, but as he is not here today I am taking an opportunity to speak on something I have been involved in for a very long time.

For many years environmental activists in this country wanted an environmental protection authority. We were looking at the American model, and that was what we wanted, but it was not what we got, so we will be voting against this legislation. However, I might go into a bit of background to describe to members the long struggle to see an independent environmental protection authority set up.

We wanted one to address the extremely substantial environmental problems that face this country. After many years we finally got an independent authority called the Environmental Risk Management Authority, which was set up to be independent and has been, to put it mildly, somewhat disappointing. Although it is independent from Government, the lack of resources and ability to address issues in a way that is both modern and precautionary has been a problem, so we have been interested in the Government’s proposal under the Environmental Protection Authority Bill to create the Environmental Protection Authority.

But we would not call it that. Having read the functions of the bill, and been involved in the functions of the bill, we feel that this bill should be called the “Environmental Undermining Authority Bill. The functions are clearly about facilitating development at the expense of the environment, while masquerading as a new form of appropriate monitoring. It will not meet the goals for which the environment movement has fought for so many years. Nor will it even meet the achievement standards of the Environmental Risk Management Authority, which struggled with a wide range of issues, from genetic engineering to 1080 poison.

Although conservative and often frustrating in terms of its ability to respond to the community, that authority was not the Government. It was separate from the Crown, and it maintained a degree of separation that was valuable for people trying to protect the environment. It did achieve some progress on important issues, such as the reassessment of the toxic chemical endosulfan, which is banned in many, many countries. Finally, through the authority, we managed to achieve, after persistent lobbying—particularly by people such as Sue Kedgley and many other environmental activists—progress on some issues.

The Environmental Risk Management Authority was always a struggle. It was always a struggle for tangata whenua to be heard, despite the existence of a Māori advisory committee, and it was always a struggle for communities to be heard. For kaitiaki Māori and environmental activists it was often a disappointment, but nothing like the disappointment we experienced when we saw this bill and the functions of the new Environmental Protection Authority.

We believe that this bill has been set up to provide a lot of control by the Government over the Environmental Protection Authority, and we do not see any strong advocacy for the environment. If we look at the US Environmental Protection Agency and other bodies around the world that are set up as protection agencies, we see that protection of the environment is a core goal. If we look at this bill we will not find protection of the environment. We will find words associated with development, facilitation, and balance, so that we can do such things as increase the use of water for irrigation, for example, and increase the facilitation of development that the community needs to be able to stand up to and oppose on a case by case basis.

Everybody has been frustrated with aspects of the Resource Management Act, and we were frustrated because so often big businesses had more power and more lawyers. Now we have a situation where the Environmental Protection Authority will have the weight of decision-making power and the control of the Government behind it, preventing the kind of deliberative, facilitative community engagement that the Environmental Risk Management Authority at least tried to do, even though it often failed.

We will have situations like the one I have been dealing with in the last few days, where a chemical is highly toxic and can result in considerable harm to the community, can possibly cause a death in another country, and can be part of our food chain, but to reassess it will be a huge fight. It was a huge fight with the Environmental Risk Management Authority, but it is quite possible, looking at the functions of this bill, that it will be a huge fight under the Environmental Protection Authority. It will not be in the interests of the most powerful people in this country to reassess the use of these chemicals. That is what will be difficult about having to deal with the Environmental Protection Authority.

There is not a lot of substance in this bill, and that is very, very disappointing. It should be the most substantial change in a generation in terms of the idea of setting up an independent authority with the capacity to meet modern precautionary risk assessment standards. But it will not do that. It does not even know what that is about, and it is not driven by that ethos. All over the world we have changed from being an absolutely ruthless exploiter of the environment to understanding that protection of the environment is the economy. The environment is the economy. But this authority is not set up to achieve those goals; it is set up to facilitate the environment, supposedly in balance with the economy, but without the ability to control it.

What we struggled with, when the Environmental Risk Management Authority looked at risk assessment of environmental risk, was the fact that it looked at very backward models of environmental risk assessment, and it forgot about the precautionary approach. If the Green Party was writing this Environmental Protection Authority Bill, we would be talking about the precautionary approach. For those who do not understand it, it is about thinking before we act, and recognising that, as in the medical world, the first rule of the planet is “First, do no harm.” First, do no harm to those things that sustain life. First, do no harm to those things that give us any kind of economy and basic essentials such as clean water, healthy food, and an ability to manage our environment for future generations, not to mention Te Tiriti o Waitangi, which requires us to recognise the rangatiratanga and kaitiakitanga of the tangata whenua, and which—obviously, from hearing previous speakers—was not dealt with in an appropriate and substantial way in the Local Government and Environment Committee, and is not dealt with appropriately in this bill.

The Green Party is very concerned about the Environmental Protection Authority and where it is going. We need the ability in this country to protect our citizens from hazardous chemicals, to protect water for future generations, and to have the power to say no to Project Aqua and other mad, hare-brained schemes that should be able to stopped. Forty-thousand people said no to mining, but with an Environmental Protection Authority that will facilitate development, will those people still be able to say no to those things? It will depend on their ability, again, to go back to the Resource Management Act and try to defend these things.

The whole point of the authority was to set some standards, because the Ministry for the Environment, with all due respect to it, is weak on many of these issues. It is weak on risk assessment, on international standards of environmental protection, and on implementing the precautionary approach.

Why on earth would we create the Environmental Protection Authority to be a weak arm of Government that has the job of assisting the Ministry of Economic Development? That is how this bill reads. It does not read: “Environmental Protection Authority: international, modern, best practice, precautionary.”, let alone: “respecter of indigenous wisdom on the environment.” It is an opportunity missed. We can use all the beautiful words in the world about how we are balancing this with that, but it is a false balance, and this is a bad bill. It misses out on one of the most crucial opportunities in a generation, which was to set up a precautionary approach, and to set up an environmental protection authority that recognised the changes in the understanding of the sensitivity of the environment on a huge range of issues.

In the last 5 years organisations such as the European Union and the Environmental Protection Agency in the United States have changed their standards to lift them into line with what we know about this dying planet, because of our greed and our commitment to trashing resources in the name of development. Instead of that, we get something that facilitates more development, while pretending not to by using the word “environment” in its title, as if that meant anything.

The Green Party is deeply disappointed with this bill. We stand for environmental protection. We have always stood for it, and we are appalled that we will end up with more development, while pretending to be providing environmental protection. Let us just be honest and say that this is a development bill. I would much rather it was called the “National Development (Fast Track Development) Bill”. Let us be honest about where we are coming from, and make sure that we tell the truth in this House. All the Environmental Protection Authority will do is confuse the people of this country who think that environmental protection is a Government priority, when clearly it is not.

Kia ora tātou to all the people out there who fought for a good Environmental Protection Authority. The Green Party regrets deeply that we do not have one. People are being hoodwinked if they think that we have. The Green Party will be opposing this all the way through. Kia ora tātou.

RAHUI KATENE (Māori Party—Te Tai Tonga) : It is with great pleasure, unlike Labour, ACT, and the Green Party, that I stand in support of the third and final reading of this legislation. Less than a week ago I successfully negotiated the inclusion of the Treaty of Waitangi clause into the Environmental Protection Authority Bill, and the emails of jubilation are still coming in. Unfortunately, there were no congratulations from ACT, the Greens, and Labour on that. I had to wonder whether the lack of congratulations from Labour was because Mr Chauvel’s amendment to give effect to the Treaty was turned down. It is really sad that Labour voted against having a Treaty clause. The Māori Party has a deep commitment to assisting whānau, hapū, and iwi, as tangata tiaki, to take whatever measures are necessary to ensure the well-being and future good health of the environment. Kaitiakitanga, the act of protection of our resources, our flora and fauna, is essential to Māori well-being. It is also fundamental to Treaty jurisprudence. For what the promise of the Treaty gave us was to ensure that the Crown would take an active role in protecting the things regarded by Māori as taonga. As articulated in article 2 of Te Tiriti o Waitangi, the Crown has an obligation to protect Māori land for use by Māori for as long as Māori wish.

The wording of the suite of legislation covered under the Environmental Protection Authority Bill now includes the statement: “recognise and respect the Crown’s responsibility to take appropriate account of the Treaty of Waitangi”. I want to break this down in terms of the significance of this amendment. The Environmental Protection Authority monitors and enforces environmental protection processes under the Resource Management Act. With this amendment, anyone acting on its behalf must recognise and respect the Crown’s responsibility to take appropriate account of the Treaty of Waitangi. The Environmental Protection Authority is designed to provide stronger central government leadership on environmental issues. With this Treaty clause now in place, that leadership is about recognising and respecting the Crown’s responsibility to take appropriate account of the principles of Te Tiriti o Waitangi. That will mean a direct commitment towards maintaining and improving opportunities for Māori to contribute to decision-making processes within the environmental protection sector.

As a result of Māori Party advocacy over many months, we have been able to ensure that at least one of the six members on the Environmental Protection Authority board must have knowledge and skills relating to the Treaty and to tikanga Māori. This does not preclude more than one Māori candidate from being appointed, of course, and we will be keen to support that possibility. There will also be a Māori advisory committee established as part of the Environmental Protection Authority to provide assistance and advice to the board on matters that come up from a Māori perspective. This is similar to Ngā Kaihautū Tikanga Taiao, which currently operates within the Environmental Risk Management Authority.

I want to make it quite clear, of course, that the establishment of the Environmental Protection Authority will not prevent iwi from having a direct relationship with the Crown on policy and other strategic matters related to natural resources. What our Treaty clause does is highlight and promote the significance of Treaty provisions throughout the various component parts of related legislation. I will take three examples as a case in point. Section 8 of the Resource Management Act requires that “all persons exercising functions and powers under it, in relation to managing the use, development, and protection of natural and physical resources, shall take into account the principles of the Treaty of Waitangi (Te Tiriti o Waitangi). In the Hazardous Substances and New Organisms Act 1996, there is a similar section 8 requiring again that “all persons exercising powers and functions under this Act shall take into account the principles of the Treaty of Waitangi”, while in the Climate Change Response Act 2002, there is a specific provision for the Minister to consult representatives of iwi and Māori, or to be satisfied that the chief executive will have consulted on his or her behalf. The acceptance into law of our Treaty clause is a triumph for environmental protection and for the Māori Party.

Another unique aspect of this achievement is that the Environmental Protection Authority is a regulation authority. It does not generate policy, as such. As the Minister has outlined, the authority is an independent body concerned with enforcement of regulation. The Treaty clause therefore requires the authority to enforce regulations that in some cases are already subject to Treaty clauses—for example, the Climate Change Response Act 2002, the Conservation Act 1987, the Hazardous Substances and New Organisms Act 1996, the Resource Management Act 1991, the Crown Minerals Act 1991, and the Fisheries Act 1996 all have Treaty clauses and are effectively carried over into these new regulations.

What we have envisaged is that both the process and the substantive decision-making of bodies in the legislation give due and reasonable weight to the special relationship Māori have as tangata tiaki of the environment, pursuant to article 2 of the Treaty. Iwi had the distinct preference that the Environmental Protection Authority be established as a stand-alone Crown entity. The Government has agreed to proceed with the Environmental Protection Authority as a stand-alone Crown agency and to appoint a statutory Māori advisory committee alongside.

I have taken the time to travel through the impact of the Māori Party influence upon this legislation, and in particular the provision it accords to giving effect to the principles of the Treaty. But what we cannot fathom is the fact that Mr Harawira and the Greens have forged an unlikely alliance with the ACT Party in voting against the Treaty clause. This morning we learnt that the sole reason that the ACT Party is voting against this legislation is my amendment to include recognition of the Treaty of Waitangi in this legislation. I guess one could say that the true colours of that party are revealed when the very foundations of our nationhood, the basis on which tangata whenua and other New Zealanders live together in this land, is the reason why that party opposes this bill.

But the opposition of other parties, in particular the Greens, Labour, and Mr Harawira, is surprising and disappointing. It was a complete shock that the Greens reneged on earlier commitments by opposing my amendment, and it is very hard to fathom why the member from Te Tai Tokerau, who I understand has just resigned, would vote against the sacred covenant signed at Waitangi some 171 years ago.

At the end of the day each of these parties will be accountable to their membership, so we leave it in their hands to ask the inevitable questions as to why. But for the Māori Party, we say loud and proud that we stand by our work to recognise and respect the Crown’s responsibility to take appropriate account of the Treaty of Waitangi.

I want to finish by congratulating Dr Smith and acknowledging his consistent efforts to work alongside the Māori Party on developing the model for the Environmental Protection Authority. Dr Smith and his advisers have spent many months producing A3 charts, policy papers, proposals to respond to the many questions we have put forward about how to ensure effective Māori representation, a commitment to iwi engagement, and respect for the knowledge and experience of Te Tiriti o Waitangi. He has taken the time to listen to our concerns regarding the importance of Māori environmental committees, advisory boards, and governance groups currently operating. He has also agreed with our advocacy to safeguard a credible and respectful process for Crown-Māori engagement on natural resources and environmental management. Ultimately, caring for our environment is one of the greatest opportunities we have to uphold our responsibilities for the spiritual and cultural guardianship of Te Ao Mārama. We are pleased to support this legislation.

JOHN BOSCAWEN (Leader—ACT) : Members of the House and those observing the debate on this legislation will know that it would be normal for the ACT Party to take a call immediately after the Green Party, and before the Māori Party. But I took the opportunity to listen to Rahui Katene’s speech this afternoon, before I responded. I thought it was very important to hear the justification both for the Treaty clause and for the process with regard to it before I responded.

I will deal in turn with the comments of Ruth Dyson and Rahui Katene, but, first of all, I would like to refute one of Rahui Katene’s last statements, when she said the sole reason for the ACT Party opposing this legislation, as she had been advised this morning, was the Treaty clause. That is absolutely not correct; that is not the sole reason. We did not decide to oppose this legislation this morning; we decided to oppose it this afternoon, at 1 minute to 2. The reason that we decided to oppose the legislation at 1 minute to 2 is, as I notified the Government last night, that we are not happy about the process. I notified it that we have a confidence and supply agreement, which we are absolutely committed to supporting, as Mr Steven Joyce, the Minister for Communications and Information Technology, knows with regard to his ultra-fast broadband bill. But it is a mutual arrangement, and is an arrangement that calls for respect on both sides.

It is a condition of our confidence and supply agreement that we be given 48 hours’ notice of any significant amendments. My advice yesterday morning was that Heather Roy, who was the ACT MP in the House on Thursday afternoon, was not aware until 5 o’clock, when she walked into the House and heard the speech of the Hon Ruth Dyson objecting very strongly to this legislation, that the Treaty clause was to go into it. That was the first notification that the ACT Party had of it. Heather Roy raised it at our caucus yesterday morning; I took it up with National last night. I discussed it further with National this morning, and I awaited a response from Nick Smith when I came into the House just before 2 o’clock. He gave me no evidence or advice, whatsoever, that this clause had been advised to the ACT Party prior to it being tabled in the House at 3.31 last Thursday. So I refute, first of all, Rahui Katene’s comments that the sole reason that we are opposing this legislation is the Treaty clause. It is both the clause and the process with regard to it.

I also refer to Rahui Katene’s comments when she said—and I was very pleased to hear this from her—“Less than a week ago I successfully negotiated the inclusion of the Treaty of Waitangi clause”. Less than a week ago was prior to 5 p.m. last Wednesday, and once again I say to the Government that we have a confidence and supply agreement. The ACT Party will respect it. We have been very, very good at providing stable Government. We intend to provide that all the way up to the 26 November election day, but we will not be taken for granted.

When Ruth Dyson rose this afternoon she said she was a little disappointed to have to vote against this legislation. She referred in particular to the fact that her party had not been properly consulted on this particular clause. Like Ruth Dyson, I am also disappointed to have to stand this afternoon to speak against this legislation and the way in which it has been handled by the Government. This is very significant legislation. The Treaty of Waitangi provision is a very significant provision, and if members had any doubt about that they had only to listen to Rahui Katene’s comments when she talked about it being a triumph for the Māori Party. It is a pity that the other members of this House and other New Zealanders were not accorded the respect from National of being told what is actually in this legislation, what the Government was planning, rather than Rahui Katene simply tabling the Treaty clause as an amendment at 3.31 last Thursday afternoon.

I would like to read and record into Hansard several paragraphs of Rahui Katene’s press release from last Thursday. It is headed up: “Maori Party succeeds in inserting Treaty clause into Environment Protection law” and reads: “Environment spokesperson for the Maori Party, Rahui Katene, is delighted that her amendment to help to ‘recognize and respect the Crown’s responsibility to take appropriate account of the Treaty of Waitangi’ in the Environment Protection Authority Bill was supported during the committee stages of the Bill today. The amendment ensures that the Environment Protection Authority Bill, and any person acting on behalf of the Bill, must ‘comply with the requirements of an environmental act in relation to the Treaty’. ‘Amidst all the noise of the political theatre played out over recent days, it is extremely important to me’ ”—that is, Rahui Katene—“ ‘and the Maori Party, that we consolidate and strengthen the role of the Treaty as a living document. I hope that my amendment will enable tangata whenua to exercise influence and authority in decision-making processes related to environment protection’ said Mrs Katene.”

Moving on to the second-to-last paragraph—I will skip a few paragraphs—the press release says: “ ‘It is also gratifying that through this SOP, we will be able to maintain and improve opportunities for tangata whenua to contribute to the decision-making process through the establishment of a Maori advisory committee’ said Mrs Katene.” Mrs Katene, in her press release, asks “ ‘What does all this mean?’ ” The release says “ ‘It means we are one step closer to understanding—and acting—in a way which upholds article two of Te Tiriti o Waitangi’ ”—in effect, “chiefly authority over lands, villages and all things precious”. That was obviously news to members of the Labour Opposition. It was news to members of the ACT Party, and I wonder how many National Ministers to whom this was also news, because I can think of a few. I wonder how many National backbenchers this was news to, and I wonder how many New Zealanders this was news to. I wonder how many New Zealanders know we are voting here today on legislation that will go further towards understanding and acting on “chiefly authority over lands, villages and all things precious”.

The ACT Party stands for one law for all. We absolutely stand for private property rights, whether they be Māori private property rights, Pasifika private property rights, or Pākehā private property rights. That is absolutely fundamental: one law for all. We have campaigned on that theme for several years, and I suspect there is no party more concerned about Māori and Māori underachievement than the ACT Party. I say that because my colleague Sir Roger Douglas introduced a bill that would allow young people to take the first opportunity to get on the employment ladder at the age of 16 and 17 years old—youth rates—and National voted against it, despite opposing the abolition of youth rates strongly when it was in Opposition. I make a promise to the House this afternoon on behalf of my colleagues, and on behalf of Dr Brash, the leader of the ACT Party outside Parliament, that we will spend the next 7 months on making sure that New Zealanders understand these issues very, very honestly.

Let me come back to two quick points. The comment was made that the ACT Party actually supported the Treaty of Waitangi clause at the Committee stage. I say for the sake of the Hansard that that is not the case. Heather Roy voted against the Treaty clause in the Committee stage last Thursday afternoon. She continued to vote for other aspects of the Environmental Protection Authority Bill, in part, in the Committee stage, but she voted against this clause, and the ACT Party is voting against this legislation. I should stress that the main bill is the Environmental Protection Authority Bill. We are voting against that bill. We will also vote against the Climate Change Response Amendment Bill. The original bill was broken into six bills. We will support the other four, but we will vote against the Environmental Protection Authority Bill as it now is with the Treaty clause in it.

I make one quick point about the emissions trading scheme. Ruth Dyson continues to perpetuate an untruth about the emissions trading scheme. What is causing us to pay more for electricity is the $350 million of annual subsidies to foresters—$350 million for trees substantially planted before 2008. I have not had time to elaborate on that message, but I certainly will do so in future.

NICKY WAGNER (National) : We have had a very wide-ranging debate in the House about the Environmental Protection Authority, and we have had plenty of suggestions about what it should cover and what it could cover. This package of legislation allows for flexibility in the future, but today we start the process of establishing a new, stand-alone Environmental Protection Authority, which will provide the country with technical and regulatory functions and independent environmental oversight.

This legislation is significant because it allows the Government to provide stronger central government leadership on environmental issues. Combining technical and regulatory skills in one body will lead to better-informed environmental decisions and greater protection of our natural resources.

Contrary to the debate that is going on in the House today, the original bill, the Environmental Protection Authority Bill, was well supported by environmental groups and by the Parliamentary Commissioner for the Environment. Most of the 38 submitters supported the legislation, with many suggesting further functions for the Environmental Protection Authority.

We all understand that it is more efficient and more effective for a small country of just over 4.4 million people to regulate some environmental issues nationally. It is difficult to get consistency when 78 different councils can be involved in environmental decisions. We want to focus our personal energy and resources on conserving and enhancing the environment rather than on continually having to relitigate the same issues in different places.

As New Zealanders we feel closely connected to our natural environment. We define ourselves by our mountains, our rivers and lakes, and our enjoyment of the great outdoors. Our economy depends on the environment. The two major drivers of our economy—tourism and agriculture—are absolutely underpinned by our clean, green environmental image. No one wants to buy food from a country that is degraded or polluted. No one wants to visit a crowded, dirty, and neglected environment. We must work hard to be true to our image, and the Environmental Protection Authority will help us make sure we are conserving our natural resources and enhancing our environment.

The Environmental Protection Authority will be a Crown agent under the Crown Entities Act 2004, and it will bring together under one entity regulatory functions concerning the environment that are presently split between the Ministry for the Environment, the Ministry of Economic Development, and the Environmental Risk Management Authority. The Environmental Protection Authority will combine the functions of the Environmental Risk Management Authority under the Hazardous Substances and New Organisms Act with a wide range of powers, including national-level administration of the Resource Management Act, with a focus on processing applications for proposals of national significance.

The authority will contribute to providing greater central government direction on the administration of the environment. It will pick up all the administrative functions associated with the emissions trading scheme, including the management of the unit registry. It will also have some other functions, which include the administration of the Ozone Layer Protection Act, restrictions on ozone-depleting chemicals, and regulations for hazardous waste, following our international obligations under the Stockholm and Rotterdam conventions.

This legislation has been written to be flexible. It is designed to allow additional functions to be included as needed in the future. The Environmental Protection Authority will continue to develop, and the Minister for the Environment, the Hon Dr Nick Smith, has already indicated that he would like to see the Environmental Protection Authority be responsible for regulation under the proposed exclusive economic zone—legislation that he hopes to bring into the House before long.

The establishment of the Environmental Protection Authority was part of National’s election promise, and it underpins our blue-green vision of protection for the environment while growing the economy. I believe that the Environmental Protection Authority will be positive for New Zealand. It will give us the technical information and the tools to help us protect and enhance our environment. I commend this bill to the House.

BRENDON BURNS (Labour—Christchurch Central) : I swear that if I hear the phrase “Bluegreen agenda” again I will gag. Through the passage of the legislation we have seen clear evidence that the Bluegreen agenda can be consigned to the wastepaper bin. If one does not believe that in respect of the legislation, then one needs only to look at the national policy statement on fresh water, which most of the environmental groups that were a party to the Land and Water Forum are already condemning.

I will turn first to the contribution from Rahui Katene on behalf of the Māori Party. Talk about trying to make a silk purse out of a kunekune’s ear. We heard the member say that the amendment she introduced to establish a Māori advisory committee to advise the Environmental Protection Authority delivered on the Māori Party’s commitment to partnership with the Government. In fact, her amendment fails dismally in that respect. It does not really deliver in respect of any sense of partnership. Really, it diminishes the Treaty, because it acknowledges that the advisory board is not much more than a sham in meeting the Crown’s Treaty obligations. The amendment waters down Treaty obligations to the point of simply providing a pretty toothless opinion-sharing body.

I thought we had reached a stage in the development of our nation where Māori deserved more than at the Committee stage of important legislation a coalition partner representing Māori introducing an amendment that simply delivered a default mechanism in respect of meeting Treaty obligations. That committee will not deliver any amount of partnerships or tino rangatiratanga. It is a sad commentary on the Māori Party. I find myself in the unusual position of being drawn to some understanding of Hone Harawira and the reason he defected from the Māori Party.

At the commencement of this final reading of the legislation the Minister for the Environment tried to portray Labour—and me in particular—as opposing economic development, because of commentary I made through the passage of the legislation. Nothing could be further from the truth.

Hon Dr Nick Smith: That’s what you said.

BRENDON BURNS: No. The Minister did not correctly report me. Nothing could be further from the truth. I am a strong supporter of economic development, but I will support economic development only when it is sustainable. That is not what is provided for by the legislation. The legislation does not even include any reference in its principal clauses to sustainability, and the principles and objectives do not include real reference to environmental objectives.

I put on the record of the House my record of having been instrumental in forming the Marlborough Economic Development Trust. I put on the record of the House my having established a vineyard that contributes to the export economy of this country. I take deep offence at the Minister suggesting that I am opposed to economic development. I am absolutely committed to sustainable economic development. I say to the Minister in respect of my province of Canterbury that I am committed to seeing the greening of the plains, but I will not tolerate any more browning of the waters. I do not believe that the Minister’s agency has the necessary power, clout, budget, or commitment, nor does the Minister represent in Cabinet a towering presence in respect of environmental protection.

We are seeing that affirmed by the parties to the Land and Water Forum. Seventy-two hours since grandiose statements were made about how the freshwater policy statement was going to deliver nirvana and future water quality, they are starting to peel off. We saw organisations that were a party to that process look to the legislation as a signal that this Government would hold the line and improve environmental quality and enforce protection. Already we are seeing Fish and Game New Zealand, the Royal Forest and Bird Protection Society, the Environmental Defence Society, the Water Rights Trust, and others say that that national policy statement on fresh water is not delivering what they understood was going to be delivered. I am sure they will look equally at this legislation as a record of this Minister’s failure to deliver in respect of environmental policy and protection.

That was not what we were looking for. We were looking for something akin to the American model, which outlines five strong goals and principles on clean air and global climate change, clean and safe water, land preservation and restoration, healthy communities and ecosystems, compliance, environmental stewardship, global climate change—all of those things not actually affirmed by this legislation. That is very unfortunate, because there was an opportunity to do so.

I say to the Minister that he made strong comments to my colleague Louisa Wall in respect of her questioning him about clause 82 of the Environmental Protection Authority Bill. She questioned whether he had any veto rights in respect of matters that are called in under the provisions relating to national significance. I just note too that new subsection 142(7), which is inserted into the Resource Management Act by clause 82(3), states: “To avoid doubt, the Minister may make a direction under subsection (2) that differs from the direction recommended by the EPA under section 144A.” So, if we still have another speaker from the Government, I would like some affirmation as to whether that provides a mechanism for a veto in respect of the Minister’s role with call-ins under events of national significance, as provided for under this legislation.

I go back to my opening premise that this legislation was seen by many of us as important legislation. It provided an opportunity for the Government to affirm that it truly was committed to a Bluegreen agenda—an agenda that would balance economic sustainability and environmental outcomes—but, unfortunately, that has not come to be. We have seen that from the legislation in front of us and from the allied freshwater policy statement released earlier this week. These are disappointing times, because New Zealand has to get this right.

We need to look at the BBC HARDtalk programme earlier this week, where an eminent journalist grilled the Prime Minister about New Zealand’s environmental record. That was not the first time. Two years ago the Guardian claimed that we were “greenwashing”, that we had made the claims many times of being a clean and green nation, 100 percent pure, but the facts were not there. That was 2 years back. The real risks of that are actually there for the farming community. I say that to members opposite from a farming background, such as Colin King, the MP for Kaikōura, and those who represent other rural seats. Those who will pay the price for the failure of the Environmental Protection Authority to really grapple with the issues of environmental protection, in the final analysis, will be our farmers, because the rest of the world’s farmers are looking at New Zealand. Our environmental record is being questioned by the global BBC. It is being questioned by other eminent newspapers and media organisations. We have to acknowledge that our reputation is growing more and more tenuous by the day.

The Environmental Protection Authority was a chance. It was a chance for a line to be drawn, a statement to be made, and an assertion to be given that the environment would no longer be the provider of economic growth for this country—that from here on we had to have economic growth that was truly sustainable. Part of that was going to be assured by a stand-alone watchdog organisation with the resources, the power, the clout, and the mandate to enforce environmental regulations, to say that when people pollute, they pay, and to preclude people from having access to resources if they have not committed to those kinds of principles.

So it is with enormous disappointment that I see this legislation in its final stage of the House. We wish only that the Minister had taken the opportunities in front of him and assured New Zealanders that the Environmental Protection Authority would do what its name suggests.

NIKKI KAYE (National—Auckland Central) : I am delighted to speak on this legislation. I am particularly delighted as a Bluegreen from Auckland. We need to remind ourselves of why we need this legislation. The reason we need this legislation is the years of the 2000s, when our environment was trashed. That is right; under the last Labour Government, under a red-green Government, we had significant environmental degradation. I will take us through some of that.

In many areas we have had to redress the degradation. In the area of deforestation, New Zealand lost 30,000 hectares under Labour’s years in office. We turned this around in 2009 and 2010. In the area of renewable energy, there was more generation from coal, oil, and gas under the last Labour Government than in any time in our history. Under this National Government, more than 32,000 gigawatt hours of electricity was produced from renewable sources in 2010.

Ruth Dyson mentioned the emissions trading scheme. The irony of Labour members mentioning the emissions trading scheme is that under Labour’s watch, emissions significantly increased. The other massive irony of Labour members mentioning the emissions trading scheme is that they constantly talk about our most disadvantaged. There is such hypocrisy in that, because the emissions trading scheme that Labour would have passed would have doubled the cost to low-income families.

Hon Steve Chadwick: I raise a point of order, Mr Speaker. The member opposite used the word “hypocrisy” relating to some Labour policy. I take offence at that remark.

Mr DEPUTY SPEAKER: Yes, it is out of order to use that word. I ask the member to withdraw that comment.

NIKKI KAYE: I withdraw and apologise. This legislation is about creating a national, independent environmental regulator. This legislation will finally provide a one-stop shop for the environmental regulatory functions of consenting, monitoring, and providing technical advice. This legislation is about providing a much more professional framework for how we manage our environment in New Zealand. That is sending a very clear message that we value our environment.

In the area of the economy, for a very long time we have had a professional framework with a very clear split, with Treasury as a policy adviser, the Reserve Bank having the regulatory functions, and the Auditor-General as the auditor. By ensuring that the Ministry for the Environment can be a policy adviser, the Environmental Protection Authority a regulator, and the Parliamentary Commissioner for the Environment an auditor, we are showing that we really value our environment.

We on this side of the House understand that our environment and our economy are inextricably linked. Despite the history of Labour—its degradation and trashing of the environment, and the “greenwash” that comes from that side of the House—we have done many things under this Government to show how much we value our environment.

The benefit of this legislation is also in the area of efficiency. We will be bringing together regulations across Government agencies, including the Ministry of Economic Development, the Environmental Risk Management Authority, and the Ministry for the Environment, all under one roof. The merging of these technical and regulatory skills will severely reduce inefficiency and will lead to much more robust and informed decision-making.

There are benefits in the area of national consenting, as well. The Opposition constantly raises issues of certain consents, but one area where the Environmental Protection Authority will really help is the area of renewable energy. We know this, because an application is currently before the Environmental Protection Authority for Contact Energy’s $1 billion Tauhara geothermal station near Taupō.

I acknowledge the support of certain environmental groups for this legislation. There is a very good quote from Gary Taylor from the Environmental Defence Society. He stated: “The EPA is to become the national environmental regulator and it’s vital that it is free from political influence.” We are pleased to see the continuing evolution of the Environmental Protection Authority as a national, independent environmental regulator.

Finally, I will touch on the issue of political neutrality that has been raised by many Opposition members, and I just remind members what is in the legislation regarding this issue. The Environmental Protection Authority is an independent Crown entity. It will be free from political influence, and that is really important. It is really important that we finally have a much more professional framework for our environmental issues, because this country values our environment too much to allow what happened in the “noughties”—as I refer to them—under the last Labour Government to happen again. That is why this legislation is part of a significant amount of reform that our Government has done to ensure that we can properly get good information about what is happening in our environment and properly manage things like our consents, in order to ensure that big renewable energy projects are happening.

This legislation is important not just for current New Zealanders but also for the future New Zealanders who will come after us. This legislation is part of our Bluegreen approach that will enable environmental issues to be considered in a much more professional, independent, accountable, and transparent way. In passing this legislation, we are sending a clear message to New Zealanders that this Government highly values our environment.

PHIL TWYFORD (Labour) : Well, there goes the next generation of the Bluegreens. My advice to Nikki Kaye is that if she wants to burnish her credentials in Auckland Central with the liberal voters of that electorate, she should not go around claiming to be a member of the Bluegreens too much, because after this legislation passes, her reputation as an environmentalist and as a liberal will not be looking all that crash hot. If I were here, I would not go around admitting to the fact that I was a member of the Bluegreens.

In 1970 that great American liberal Richard Milhous Nixon set up the American Environmental Protection Agency in response to the growing concern about the pressures on America’s natural environment. For many years the American Environmental Protection Agency has been the standard-bearer for active Government in the protection of the environment. The Environmental Protection Agency is not perfect, but at least it knows what it is there for. At least it has clear goals and objectives.

I will read to the House the goals of the American Environmental Protection Agency, which are set out in its empowering legislation. Goal No. 1 concerns clean air and global climate change. The goal is to protect and improve the air so it is healthy to breathe and so that risks to human health and the environment are reduced. Goal No. 2, which concerns clean and safe water, is to ensure that drinking water is safe, and to restore and maintain the oceans, the watersheds, and their ecosystems. Goal No. 3 deals with land preservation and restoration. Goal No. 4 is to have healthy communities and ecosystems, and Goal No. 5 is compliance and environmental stewardship. It is all there.

The American Environmental Protection Agency, which is a real environmental protection agency, knows what its job is. It has clear tasks and clear goals. By contrast, the Environmental Protection Authority that is being established by the Hon Nick Smith is a sham. I do not know why he wants it to be called the Environmental Protection Authority, because it is not fundamentally about environmental protection.

As the legislation is currently worded, the objective of the Environmental Protection Authority is to undertake its functions in a way that, firstly, contributes to the efficient, effective, and transparent management of New Zealand’s environment and natural resources, and, secondly, enables New Zealand to meet its international obligations. There is nothing in the fundamentals of this bill that makes it clear to the public and to the nation that the purpose of the Environmental Protection Authority is environmental protection. It is a sham. I say to Minister Smith that there is something missing in the heart of this bill, and it is called environmental protection and integrity.

I will comment on Rahui Katene’s speech. She talked about a triumph for the Māori Party and a triumph for environmental protection. She claimed that she had successfully negotiated the Treaty clause—inserted into the bill by amendment—that we see on the Table. I contend that it is not in fact a Treaty clause. It does not deserve to be called a Treaty clause. In fact, it diminishes the Treaty because it states that the advisory body that the clause sets up, which is a sham, is meeting the Crown’s Treaty obligations. Ms Katene told the House that she had been overwhelmed by congratulatory emails. Well, I suggest that she checks her email filter, because when she gets back to her office she will probably find in her junk folder dozens and dozens of emails telling her what a sell out this Treaty clause is.

It is very clear that the Māori Party has become the party of advisory committees. Members of the Māori Party got done over by Rodney Hide and ACT on the Auckland Council when they were denied democratically elected Māori seats. What did they get? An unelected statutory board, which has brought into contempt in Auckland the whole notion of special governance provisions for Māori. The Māori Party claimed credit for that. I suppose that is a triumph too, is it? The so-called Treaty clause waters down the Treaty obligation and devalues the currency. The Māori Party is so keen to claim victory and to claim credit that it is willing to devalue the currency of Treaty obligations in New Zealand law.

The second part of that clause, which is about complying with the Treaty clauses in other environmental legislation, is hardly a triumph, either. Parties were always bound by Treaty clauses in other legislation. This particular clause adds nothing to that situation. That is a sham, and the fact that the Māori Party is claiming credit and claiming that this is a triumph shows that there is a lot of chutzpah in that party. They should be in fact embarrassed by it.

Labour members voted for the Environmental Protection Authority Bill at the first reading, because we thought that the stated intent of the Environmental Protection Authority would be to provide leadership in the whole area of environmental regulation. We thought that was worth supporting. But even then we had suspicions that it was a kind of Trojan Horse, dressed up for all the world like a comprehensive environmental regulator. A closer look reveals that it is designed mainly to fast track existing controversial projects.

Even during the gestation period of the Environmental Protection Authority, although there is a handful of staff from the Ministry for the Environment, the authority has already been used to fast track controversial projects. That is the real purpose, the real agenda, of the so-called balanced-growth philosophy of this Government. The Government has already used the Environmental Protection Authority to fast track the Waterview Connection and, as we have pointed out in this debate, time and time again the time frames were compressed, local communities have been denied a fair say in the process, and the Environmental Protection Authority has deliberately ignored the requests of both the Auckland Council and the local board to extend submission deadlines.

We are seeing the same thing happen with regard to Transmission Gully, where the Environmental Protection Authority is being used to circumvent the regional freshwater plan. Now, the whole fast-tracking agenda is under way with regard to the private prison at Wiri in South Auckland. The Environmental Protection Authority is consistent with the environmental record of this Government. There are too many examples to name in this debate, but I will give members a few of them.

The Government has watered down Labour’s world-leading emissions trading scheme. It has added billions to the taxpayers’ bill for carbon emissions and let big polluters off the hook. That is a fact. The Government has failed to adopt real environmental standards. We have seen that, as Brendon Burns pointed out earlier, with regard to the national policy statement on water. It has watered that down and failed to provide proper accountability for polluters.

I will summarise, in closing, the key objections that Labour has in respect of this legislation. The objectives of the legislation do not even include environmental protection, the functions are too narrow and are piecemeal, the legislation actually confuses the environmental legislation, and, finally, the Environmental Protection Authority’s decision making is not sufficiently independent, it lacks credibility, and far too much power is put in the hands of the Minister.

The Māori name for the Environmental Protection Authority is Te Mana Rauhī Taiao, which translates as “to protect the mana of the environment”. This legislation and its provisions most certainly do not protect the mana of the environment. The name is a sham and it should be replaced. This legislation is the spawn of the Bluegreens, National’s in-house environmental lobby, which Nick Smith has so keenly fostered. What a disappointment this legislation must be to that Minister! What a disappointment the Bluegreens must be as his great political project! The legislation is a profound disappointment for anyone who cares about cleaning up and protecting our natural environment for future generations. It is final proof that the Bluegreens are an oxymoron.

  • Debate interrupted.

Voting

Correction—Environmental Protection Authority Bill

KEITH LOCKE (Green) : I seek leave to correct a mistake that the Green Party made in voting on an amendment to the Environmental Protection Authority Bill yesterday—Rahui Katene’s amendment to include new clause 3A, “Treaty of Waitangi (Te Tiriti o Waitangi)”, in Part 1. The Green Party accidently cast 9 votes in the negative when the intention was to cast 9 votes in the affirmative. Similarly, a mistake was made in the proxy votes for Chris Carter and Hone Harawira.

Mr DEPUTY SPEAKER: Leave is sought to correct that vote. Is there any objection? There is no objection. Leave has been granted. The new vote is Ayes 72, Noes 48. The record will be altered accordingly.

Third Readings

  • Debate resumed on the third readings of the Environmental Protection Authority Bill, the Climate Change Response Amendment Bill, the Hazardous Substances and New Organisms Amendment Bill (No 2), the Imports and Exports (Restrictions) Amendment Bill, the Ozone Layer Protection Amendment Bill, and the Resource Management Amendment Bill.

Dr CAM CALDER (National) : It is a great pleasure to rise to speak on this very important legislation. I would like to respond to some of the criticisms and comments that have been made by the Opposition. I thank Charles Chauvel for his considered and positive contributions throughout the time he was at the Local Government and Environment Committee and in the House. He made the point about the exclusive economic zone, and the Minister has agreed that in time legislation will be formulated to take into account the importance of the environmental protection of the exclusive economic zone. Some of the other contributions were a little uneven, and seemed to consistently return to the fact that there is no overarching statement in the legislation to protect the environment. Well, I suggest that the Environmental Protection Authority is its own overarching statement. The Environmental Protection Authority has no purpose other than environmental protection. It is backed up by the Climate Change Response Act, the Resource Management Act, the Hazardous Substances and New Organisms Act, and the Ozone Layer Protection Act.

Let us make it clear once again: the Ministry for the Environment is responsible for policy. The Environmental Protection Authority has regulatory functions for which it is responsible, and this legislation is about a change of regulator. The Parliamentary Commissioner for the Environment is the auditor. As I said before, the legislation that sits behind the Environmental Protection Authority has the protection of the environment at its core. Separating out policy, regulation, and auditing functions will ensure the environment is properly protected.

The Environmental Protection Authority will have an independent board and a Māori advisory board at arm’s length from the Minister. The Environmental Protection Authority is a stand-alone Crown agent. Its decisions are above ministerial influence.

The posturing from the other side of the House is richly ironic, and it is patently ridiculous that those members should try to take a moral high ground in matters environmental. My colleague Nikki Kaye alluded to that.

Let us look at the emissions trading scheme. Having said in 1999 that the Kyoto obligations were too modest, and that a 20 percent reduction was needed, the Labour Government presided over a 20 percent increase in emissions. Mindful of the health of our tradable sector, which is an area Labour neglected, sadly, as we know, to our cost, we moderated the emissions trading scheme and struck a balance between environmental concerns and the economic realities that New Zealand faces. Our emissions trading scheme is workable and affordable. Of course, the first emissions trading scheme review, as promised, will take place and be considered by the Minister in June. Our moderate emissions trading scheme incentivises such things as tree planting, replacing thermal with renewable energy, and investment in energy efficiency. How effective has it been? It may surprise members to know that after 8 years under the previous Government and a 20 percent increase in emissions, in 2009 net emissions came down by 3 percent, and in 2010 we will comfortably meet our obligations. These reductions in emissions have reduced cost to the Government, and thereby the people of New Zealand, by $238 million. Our emissions trading scheme costs half of what Labour’s scheme would cost. The cost to the people of New Zealand—the hard-working New Zealanders and the hard-working families out there—is a little over $3 a week, which is half the cost of Labour’s scheme.

Let us talk about deforestation. Under Labour, New Zealand lost 30,000 hectares of trees. How many thousand hectares? New Zealand lost 30,000 hectares in Labour’s last 4 years in office. The National Government has reversed that deforestation trend. Forecast planting in 2011 will be about 4,700 hectares.

How are we going in renewable energy? Once again, Labour talked a lot about renewable energy but did little. New Zealand went backward year after year in terms of the proportion of electricity generated from renewable sources. Eighty percent of new generation built was thermal. Under Labour there was more generation from coal, oil, and gas than ever in our history. In 2010, 74 percent of all our electricity generated under this Government was from renewable sources. Thinking of the future, 830 megawatts of renewable generation was consented in 2010. Our national policy statement encouraged investment in wind, geothermal, hydro, and tidal power. On 1 May this year New Zealand joined the International Renewable Energy Agency. As many members will know, this agency facilitates the rapid deployment and development of renewable energy worldwide. It has a particular focus on the Pacific region, which is an area very crucial to New Zealanders’ hearts.

The Environmental Protection Authority is another strand in enhancing our stewardship of our environment, which is something that we in this Government are completely committed to. It is all very well for us to say that, but I will mention what other movers and shakers in the environmental word are saying.

Hon Clayton Cosgrove: Tell us.

Dr CAM CALDER: I will tell members. Let me tell members what those people say. This is what the Sustainability Council Executive Director, Simon Terry, said: “The Ministry for the Environment never had the necessary teeth …”. The Environment and Conservation Organisations of New Zealand said: “The Government decision to establish an Environmental Protection Agency (EPA) fully fledged is welcomed …”. Finally, the Parliamentary Commissioner for the Environment, Dr Jan Wright, said: “I’m pleased to see the EPA will be a stand-alone entity as that will ensure its work is not only independent but that it is seen to be independent. I’m also encouraged to see that the new EPA will have a high level of technical capability.” I commend this legislation to the House.

Mr DEPUTY SPEAKER: This debate has concluded. During the course of the debate, the ACT Party indicated that it would be voting for some of the bills and against others. It is therefore my intention to put the question on the six bills individually so that parties can then cast their votes accordingly.

A party vote was called for on the question, That the Environmental Protection Authority Bill be now read a third time.

Ayes 63 New Zealand National 58; Māori Party 4; United Future 1.
Noes 59 New Zealand Labour 42; Green Party 9; ACT New Zealand 5; Progressive 1; Independents: Carter C, Harawira.
Bill read a third time.

A party vote was called for on the question, That the Climate Change Response Amendment Bill be now read a third time.

Ayes 63 New Zealand National 58; Māori Party 4; United Future 1.
Noes 59 New Zealand Labour 42; Green Party 9; ACT New Zealand 5; Progressive 1; Independents: Carter C, Harawira.
Bill read a third time.

A party vote was called for on the question, That the Hazardous Substances and New Organisms Amendment Bill (No 2) be now read a third time.

Ayes 68 New Zealand National 58; ACT New Zealand 5; Māori Party 4; United Future 1.
Noes 54 New Zealand Labour 42; Green Party 9; Progressive 1; Independents: Carter C, Harawira.
Bill read a third time.

A party vote was called for on the question, That the Imports and Exports (Restrictions) Amendment Bill be now read a third time.

Ayes 68 New Zealand National 58; ACT New Zealand 5; Māori Party 4; United Future 1.
Noes 54 New Zealand Labour 42; Green Party 9; Progressive 1; Independents: Carter C, Harawira.
Bill read a third time.
  • A party vote was called for on the question that the Ozone Layer Protection Amendment Bill be now read a third time.

CHRIS TREMAIN (Senior Whip—National) : I raise a point of order, Mr Speaker. My understanding is that Hone Harawira has resigned from Parliament. If that is the case, then I doubt whether he is able to vote.

Mr DEPUTY SPEAKER: The member has resigned effective from midnight on Friday, 20 May.

Hon Clayton Cosgrove: Nick’s only here in spirit.

Mr DEPUTY SPEAKER: I am on my feet. His vote is accepted.

A party vote was called for on the question, That the Ozone Layer Protection Amendment Bill be now read a third time.

Ayes 68 New Zealand National 58; ACT New Zealand 5; Māori Party 4; United Future 1.
Noes 54 New Zealand Labour 42; Green Party 9; Progressive 1; Independents: Carter C, Harawira.
Bill read a third time.

A party vote was called for on the question, That the Resource Management Amendment Bill be now read a third time.

Ayes 68 New Zealand National 58; ACT New Zealand 5; Māori Party 4; United Future 1.
Noes 54 New Zealand Labour 42; Green Party 9; Progressive 1; Independents: Carter C, Harawira.
Bill read a third time.

Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill

Third Reading

Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture) on behalf of the Minister of Agriculture: I move, That the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill be now read a third time. The bill was tabled in the House in October 2010. It had its first reading on 14 October 2010, when it was referred to the Primary Production Committee for consideration. The select committee reported the bill back to the House on 22 February 2011. The bill has now had its second reading and passed through the Committee stage.

The dairy industry is an integral part of the New Zealand economy. The industry contributed $12.1 billion, or 29 percent, of New Zealand’s total merchandise export value in the year to December 2010, and the industry continues to grow. As a result of productivity improvements and the expansion of dairy farming over the past few seasons, New Zealand’s milk production is growing at around 3 percent per annum and there is potential for further growth over the next 10 to 20 years. On the back of this strong milk growth, we have seen increased investment in the industry through the entry and expansion of dairy processing companies and specialised food producers. The increasing diversity of business models entering the dairy industry is providing choice to New Zealand farmers, as well to domestic and international customers and consumers.

The Dairy Industry Restructuring Act has provided the regulatory framework in which new companies are able to enter the dairy processing industry and test the efficiency and profitability of their different business models. The purpose of the pro-competitive measures contained in the Act was to promote the efficient operation of New Zealand’s dairy markets by ensuring that New Zealand markets for dairy goods and services were contestable. The contestability of milk supply provides incentives for all dairy companies to seek innovative opportunities and drive cost efficiencies, and, therefore, improve the value of New Zealand milk and the returns to New Zealand farmers and the wider New Zealand economy. Upon the passing of this bill, the market-share thresholds that trigger the expiry of the pro-competitive provisions of the Dairy Industry Restructuring Act will be extended. This will ensure that the Dairy Industry Restructuring Act will remain in place for a while longer, contributing to the promotion of the efficient operation of dairy markets in New Zealand.

The bill also provides for a new process for the expiry of the pro-competitive provisions, whereby the Minister will request a comprehensive competition analysis of the industry. This will provide the opportunity for the Government of the day to consider whether, when the new market-share thresholds are met, the dairy industry is indeed ready to move to a regulatory regime consisting of generic competition law only rather than the additional industry-specific Dairy Industry Restructuring Act.

As the industry continues to evolve, the Government needs to have a mechanism by which to regulate the behaviour of its participants, at least until we are sure that the industry is ready to move to a less regulated environment. It may be that at some point in the future the industry will have evolved to the extent that the pro-competitive provisions of the Dairy Industry Restructuring Act are no longer needed. Until then, we do need them. This bill extends the life of the Act so it will continue to promote a contestable market for farmers’ milk and ensure that dairy markets in New Zealand operate efficiently. I commend this bill to the House.

Hon DAMIEN O’CONNOR (Labour) : It is disappointing that the Minister of Fisheries and Aquaculture, a Minister who does not know enough about this issue, has introduced the third reading of very significant legislation, the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill, although, I have to say, it is perhaps unnecessary given recent announcements. One day after this bill was introduced, in October last year, the Minister of Agriculture made this legislation redundant when he announced the need for a review of the whole legislation. So in terms of the last part of what the Minister read out, we may get to a point where it is no longer needed. In fact, the Minister of Agriculture thinks that that may be the case now. None the less, Labour supports the bill on the basis that it continues to guarantee supply to independent processors. Those processors come in two forms. Some are exporters and some are domestic. Labour supports the provision of milk to those domestic milk industry players. I will talk more about the exporters in a minute.

I will just give some background to this issue. Labour passed the legislation that formed Fonterra. Two big companies and the Dairy Board were merged to be one company, effectively buying the milk, processing the milk, and then marketing the milk offshore. It is New Zealand’s biggest company, and it is owned by New Zealanders. There are not too many companies of its size that are still owned by New Zealanders, so it is very important that we get the legislation relating to Fonterra right. This bill is a small, technical bill, I guess, strictly speaking, but it goes to the heart of some of the debate within the industry. At the time of its formation Fonterra had 96 percent of the milk collected and processed in this country. It was a huge and dominant player. Even just 10 years ago a number of innovations were emerging in the domestic market. There were better kinds of yoghurt, more cheeses, and a number of innovations that the previous Labour Government thought should be supported, aside from the big traditional players like Cadbury and those who were supplying domestic milk at that time. Two companies were owned by the dairy industry, and one of them was forced to be sold. Goodman Fielder came in anyway, but there was a need to guarantee them supply for New Zealand consumers. So Labour facilitated that through the dairy industry restructuring legislation.

But things have moved on. The industry has grown significantly under Labour. I have to say that our 9 years in Government saw very strong growth in the dairy industry, and we welcomed that in terms of export earnings. I think the previous speaker referred to $12.1 billion in exports and 29 percent of our merchandise trade last year—it is a big, big player. But in giving it that dominant position we needed to ensure that there was ongoing supply to independent processors. At that time there were only a couple of other processors exporting offshore—Westland Co-operative Dairy Co. Ltd, which remained independent; and Tātua. There were not many others players. We have seen the development of Synlait, the proposal around Miraka, and a dairy company owned by Māori—a corporation that wants to own its own milk processing plant. The Russians have been down in the South Island. Open Country Cheese Co. is another. It was set up by former members of this House, John Luxton and Wyatt Creech. We have seen those companies develop into competitive exporters of the same products as Fonterra. A question has arisen in the minds of farmers and other fair-minded New Zealanders. Why should Fonterra be forced to collect milk from farmers and then effectively direct a tanker to a competitor’s factory, where they will process the milk and compete in the same markets offshore? That has been an ongoing discussion, and I think it is something that is currently under review by the Minister. Should Fonterra be forced to supply its competitors?

However, there is still a need to ensure that Fonterra supplies innovative domestic products. I picked up today—and we will see many of these articles coming up—adairy industrymagazine article that states: “Soaring milk prices hit cheesemaking.” These are gourmet cheesemakers who are struggling because of the international increase in the price of milk and milk products. They have been forced to pay more for their milk. I think that is fair, but unless we had guaranteed their ongoing supply if they were engaged in a debate or a negotiation over price, Fonterra could have effectively chopped off their milk supply. That is not good enough. They need to have some certainty in their business, and that is what Labour is supporting through its support of this legislation. But we do expect the Government—and Mr Carter is not here—to indicate what is happening with the review. Is the Government likely to change the requirements to supply competitors?

Strange as it may seem, there is one competitor who is getting milk but does not really want it. That may sound a little Irish—with all due respect to my Irish heritage—but that group is from the West Coast and it came to the Primary Production Committee to make a submission on the bill, and it was the most principled submission this House has probably seen for a long time. The Westland Cooperative Dairy said it thought it was bizarre that Fonterra should be forced to supply competitors. But as long as Fonterra was being forced, through legislation, then it, as a competitor, was going to take that milk, and indeed it is lining up to do that. So it was honest enough to come to Parliament and say it did not think that practice should continue but that, as long as Parliament legislated for it, it would seize the opportunity.

There are other competitors who are happy to take as much milk as they can for as long as they can, and then go out into the same markets—not always the same markets—and compete. The danger then is, as we see with the meat industry, that people selling the same products into the same market from New Zealand have only one thing to compete on, and that is price. So we see price and value destruction in the market place, and the ultimate loser from that is New Zealand and New Zealand farmers. That has been very destructive in the meat industry, and it has been very destructive in the wool industry, where competition offshore has undermined value developed and created by New Zealand farmers and the New Zealand economy. We do not endorse the continuation of that. That is why we support a review of the need, through the Dairy Industry Restructuring Act legislation, to continue to supply the competitors.

I want to make a couple of points about Fonterra itself. There is much happening in this area. Fonterra is growing as a company, and there are requirements in the Dairy Industry Restructuring Act that state that if a farmer chooses to leave the company, they are entitled to take all their capital—that is the value of their shares, which are fixed-value shares—with them and move off and supply a competitor. That creates what Fonterra calls a redemption risk—that is, it might have to pay out a huge amount of money if farmers want to exit or if, through a drought, their production drops drastically. I do not buy into Fonterra’s argument completely. It is proposing a total recapitalisation of the company, which will allow trading of the shares between farmers, and then trading of bonds by outside investors. In my view, that opens up the company to potential direct foreign investment and outside influence, and we could very well lose control of New Zealand’s biggest company. That is a big debate taking place at the moment.

I think that the sweet deal done by National and Fonterra whereby Fonterra will hold the price of domestic milk until the end of election year, on the basis that the Government would get through the trading among farmers legislation, has kind of fallen apart. The Minister astutely has worked out that farmers do not actually endorse this trading among farmers completely. They are uneasy about some provisions in the proposals put forward and checked by the Ministry of Agriculture and Forestry, so they want to back out of it. I think this House will see dairy industry legislation in the near future. I just hope it supports and upholds New Zealand’s ownership of Fonterra and that we get a fair deal for farmers.

SHANE ARDERN (National—Taranaki - King Country) : In the 30-odd seconds I have before the dinner break, I say it is a pleasure to rise in support of the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. The previous speaker, Damien O’Connor, has outlined the history of the legislation reasonably accurately. I add that this industry is 27 percent of the country’s export earnings, and it is one that we must get right.

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

The CHAIRPERSON (Eric Roy): The House is resumed. Shane Ardern has the call and he has 9½ minutes remaining, should he wish to avail himself of the opportunity.

SHANE ARDERN: I am not sure whether I would make myself popular if I did. Speaking to the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill, I think it is probably fair to put a little bit of context around it and talk about what is broken and what we are trying to fix. Effectively, three issues were bothering the board of Fonterra and the Government alike. One was that the original Act, the Dairy Industry Restructuring Act 2001, has the potential to expire some time in the not too distant future, as was set out 10 years ago when it was first put in place, given that the triggers that trigger the expiry clause are close to being met in the South Island, at least, and are probably a year or two away in the North Island. The Government looked at that and decided that the dynamics of the dairy industry outside what is controlled by Fonterra are not strong enough as yet. For that reason, the Government decided it would be suitable to extend the period that the Dairy Industry Restructuring Act stays in force.

The other major issue amongst the farming fraternity, the shareholders of Fonterra, was the price at which Dairy Industry Restructuring Act milk was being sold. The formula being used to set that price had developed into what was being seen by the shareholders of Fonterra as a subsidy to other companies that are able to pick up that 50 million litres of milk per company. So a price was set: Fonterra farm-gate price plus 10c. The 10c was put there to take into account the recognition of the loss of opportunity on the shoulders—that is, a dairy season typically goes up with a sharp peak and comes down again on the far side, with not such a sharp peak but it tapers away. If processing companies can pick up milk at the low points of that shoulder, if you like, then they have a substantial advantage. It was recognised that that was a cost to the shareholders of Fonterra.

People talk about Fonterra as though it is some conglomeration of international executives, etc., but it is worthwhile reminding ourselves at this point that, in fact, Fonterra is a farmer cooperative owned by 10,300 shareholding farmers. So the 10,300 individual small to medium sized businesses—some of them could potentially be described in New Zealand as large, but certainly not internationally—that own this company are subsidising the other companies. In the end the Ministry of Agriculture and Forestry accepted that it was the case that they were subsiding those companies picking up the 50 million litres because they were not getting a fair return on it.

The further point that this bill addresses is the fact that in the South Island, the Westland area was excluded from the catchment that was measured to establish the trigger levels. In the legislation it is prescribed as about 80 percent of all milk collected in New Zealand going through Fonterra, which is referred to in the legislation as the new co-op because that was the name it was given when the legislation was first put in place, prior to the name “Fonterra” being introduced. The Westland area—the Westland Regional Council boundary, I think it is, or the territorial authority boundary—was excluded. The reason for that was the Westland company was one of the original companies that was part of the Dairy Board when the merger of the two major companies in New Zealand took place, including the Dairy Board.

The Westland company chose to stay outside that, and until recently—about two seasons ago, I think—it chose not to collect the 50 million litres of milk that it was eligible to collect under the Dairy Industry Restructuring Act, because it never believed that that was in the best interests of New Zealand. But because the Dairy Industry Restructuring Act is likely to be extended, the Westland company submitted to the Primary Production Committee that it is at a commercial disadvantage by not taking advantage of that 50 million litres, and it has chosen now to do so. It collects milk from mid-Canterbury, carts it across to Westland, and processes it there. So the argument that Westland should stay outside the total catchment of the South Island because there is no real competition in that regard is now null and void. The area of Westland has now been included in the total catchment area for the South Island to establish when that trigger will be met.

A range of other issues has been addressed during the discussions, but I will leave those until another time. I sure there will be further debate in the dairy industry going forward and potentially further legislation. It is our intention to support this legislation.

BRENDON BURNS (Labour—Christchurch Central) : Here we are at the final stage of this important legislation, the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. I acknowledge at the outset the contribution the dairy industry makes to this country. It is a $10 billion export earner, and that underscores the importance Labour attaches to this bill and some semblance, I suppose, of regulation around the pricing of milk in this country.

Having said that, I want to express concern. I am a great supporter of keeping dairying in New Zealand hands, and that has been the model until the Dairy Industry Restructuring Act came in. I think Fonterra controlled about 96 percent of the milk produced. That has stretched somewhat over the course of the last 10 years, and this bill is attempting to provide some final mechanisms to ensure competition in milk supply.

In that 10-year period we have seen some other changes that we as a House need to note. I particularly point to the increasing presence of foreign investment in the dairy industry. I am no xenophobe. Foreign investment has helped build this country, but there comes a point when we have to question the value that foreign investment brings, not just in terms of the implications it raises for us as a nation that is short of capital and is constantly needing to import capital, therefore effectively providing a mechanism that keeps our dollar high and makes export industries like Fonterra more troubled as they try to compete in foreign markets. Foreign investment also brings questions around environmental matters. Although we are assured that everybody is covered by the same laws, I guess we have a feeling, an innate belief, that New Zealand - controlled companies with a stake in this country and with a commitment to the communities of this country will be better environmental stewards than those that are simply here for the returns the investment can bring.

In the passage of this bill I have noted the increasing stake that foreign investors have in the dairy industry. I look at the Synlait plant near Dunsandel, where the plant itself is now 50 percent owned by a Chinese investment company. I do not think it matters whether the shareholding is held in Sydney or Shanghai, the net economic effect is the same. The distance from the communities that underscore New Zealand is reflected in this bill, in that 80-plus percent of the milk market is still controlled by Fonterra. Fonterra is 100 percent pure Kiwi, in terms of its ownership structure. That is relevant, and that is why this bill is in front of us.

We want to see healthy competition. We want to see Fonterra still able to trade profitably. I note one of the submissions to the select committee—and I was on the Primary Production Committee for at least part of the hearing of submissions on this bill—in which Fonterra put up a New Zealand Institute of Economic Research report that suggested that the cost to Fonterra of the regulations that are in place, requiring it to supply its competitors, was in the order of half a billion dollars a year—

Shane Ardern: $700 million.

BRENDON BURNS: I am happy to elevate the figure according to my learned colleague across the way from the dairy industry, Shane Ardern. The cost was $700 million. That is a big price to pay, and if that was engendering competition between New Zealand companies and driving competitive milk prices and the like, I do not think we would have too much of a view about it, but of course we have seen milk prices rise over the last few years, and we have also seen an increasing foreign component in investment.

We have to look at the bigger nations that are short of food. Strategic investments are being made. We have seen the pin-up case of the Crafar farms and the question of whether they will be sold to foreign investors. We are expecting outcomes on that fairly shortly, but that will not be the end of it.

We have the Chinese investment in Synlait and Singaporean investment in Open Country Dairy, and we have had—if we do not still have—a 100 percent foreign stake in the New Zealand Dairies plant down near Waimate. As I say, my concern is not about the ethnicity but about the investment. It does not matter whether the investment is from Sydney or Shanghai, it still creates two issues. The first is to do with the outflow of capital, which keeps our dollar and interest rates high and makes it much harder for companies like Fonterra to remain competitive in very strong and competitive markets, and the second is the question about whether something that is purely there for the dollar return, without the commitment to the communities of New Zealand, as envisaged under this bill, will be able to deliver the same sorts of environmental outcomes, especially in the light of what I think is still very weak environmental law. That is evidenced by the Environmental Protection Authority Bill, which passed through the House only today, and in respect of the national policy statement on freshwater management that was released earlier this week by the Minister for the Environment, which simply fails to enforce any new regulatory controls on delivering safe and clean fresh water.

There is another concern that I will refer to. I noted that the Minister of Agriculture answered a question in the House today in respect of irrigation and water storage. Fonterra and other dairy producers will be the major beneficiaries of the Government’s commitment of nearly half a billion dollars to increasing irrigation and water storage. The dairy industry is most likely to be the major beneficiary of that commitment, and I think the Minister indicated that benefit in talking about the sorts of export returns we could see boosted by that investment of $1.4 billion over the next 7 years. He went on to say that the commitment was about taking a balanced view to deliver economic growth and environmental sustainability.

As I said at the start of my speech, I believe that the dairy industry, as evidenced by this bill, can contribute both economically and on an environmentally sustainable basis, if it is done properly. But I have to note the issues that were raised last year about Lake Ellesmere / Te Waihora, which, according to an Environment Court report back in 2005—6 years ago—was found to have been biologically killed by the flow of nutrients and other pollutants into those waterways. The lake was regarded as one of the world’s top trout fishing fisheries only 30 or 40 years ago, and we have to ask whether the growth that is envisaged in the dairy industry under this bill, which is going through its final stage in Parliament tonight, will mean that we will see more Lake Ellesmeres because we are not seeing, parallel to this bill, strong environmental protection.

I note that a decision was made by the Department of Conservation last year to refuse a grazing licence to a dairy farmer—I am not sure whether he was supplying Fonterra or Synlait, but it will have been one of the two—on the banks of Lake Ellesmere. That decision was overturned after an intervention by the Selwyn MP to the Minister of Agriculture. That underscores the concerns that I have, and that Labour holds, when we debate bills like this one, which will see future growth in the dairy industry, and we see the continued repetition of the line that there will be balance between economic and environmental outcomes under this Government. When we see a situation where a lake has died because of nutrients flowing into it, the Department of Conservation takes an entirely appropriate decision to say no to a farmer having a lease of land right on the edge of that lake, which has died because of nutrification, and a Minister gets involved and assists the farmer to overturn the Department of Conservation decision, that underscores the very strong doubts that I and others on this side of the House hold in respect of that supposed balance.

We are constantly told by the Prime Minister and other National members about getting the balance right between economic and environmental policy—

Sandra Goudie: Try and throw a few facts into the equation.

BRENDON BURNS: The old dairy-snorter across the way there might interject, but the reality is that that is the definition of “balance”. I gave an example of where balance is only at the environment’s expense, and that is why even though we support this bill in respect of the continuance of a competitive model basis for the dairy industry we do so with some very real concerns, as evidenced as recently as in question time in the House today and the answers from the Minister. Balance, for this Government, tends to mean at the environment’s expense.

Dr RUSSEL NORMAN (Co-Leader—Green) : I stand to speak on the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill or, rather, the “Movement of the Goalposts Bill”. This bill requires Fonterra to supply subsidised milk to its competitors, but it changes the goalposts. Previously Fonterra could have stopped providing subsidised milk to its competitors sooner, but now we will delay, so that Fonterra will have to provide subsidised milk to its competitors—its overseas-owned competitors, in particular—for a longer period.

There are many reasons why this bill is flawed. We could start with the obvious one. Why are we making a New Zealand - owned producers cooperative subsidise its foreign-owned competitors so that they can compete against it in the foreign markets? That is an absurd proposition and, unbelievably, this House is voting for this absurd bill.

The background as to why this bill is particularly ill-timed is what is happening in commodity prices. Over the last 100 years, commodity prices dropped very dramatically, about 1.2 percent a year across all commodities, looking at food, iron ore, and other minerals, but in the last 7 to 10 years all of that century of drop in the value of commodities has been wiped out, because commodities have increased dramatically in value, right across the board. So a century of slow decline in the value of commodities has been reversed in the course of a decade.

Against that backdrop, those who produce commodities, whether it be milk powder or iron ore, have suddenly found the assets that produce those commodities suddenly become much more valuable than they were previously. In Australia, of course, we have seen the massive boom in Western Australia—linked to iron ore, in particular, but not only to iron ore—and in New Zealand we have seen the boom in prices for land that has access to water to produce dairy solids, and dairy protein has become much, much more valuable as we have seen that dramatic reversal.

Some of the hedge funds, in describing the current situation, have talked about a paradigm shift. It has been a complete paradigm shift, when after a century of slowly declining commodity prices we have suddenly seen this dramatic reversal. Of course, the reason for the reversal is that the planet is finite. It is pretty simple. What we have found is that there is a big increase in demand coming out of China and India, in particular, and there is limited capacity to supply that demand, because, of course, there is not more agricultural land with access to water being created, nor are there more iron ore mines being created, nor is more oil being created. Those are finite resources, so in the context of that backdrop we have seen a big spike in prices.

One of the outcomes of that process is that people who want access to those resources that have become very expensive are looking at how they can secure their supply chains, and New Zealand is part of the global supply chain for food protein, particularly dairy protein. We have seen a lot of overseas interest in buying up New Zealand land, processing facilities, and agricultural processing facilities. We have seen the loss of PGG Wrightson just recently, with its very valuable seed stocks, and other agricultural service companies have become targets for overseas buyers.

As the value of these commodities has increased dramatically, we have seen a much greater overseas interest in buying up New Zealand land and processing facilities, and the supply chains that all go with it. This means that the context for the Dairy Industry Restructuring Act, when it was originally passed, has dramatically changed. It is no longer the same world that it was when the Act was first put in place. When some people come to look at the situation, they treat it as if nothing has changed, but, of course, everything has changed. It means that no longer do these regulations ensure that we have a competitive domestic raw milk market in New Zealand. They do no such thing. They are not designed any more to do that—well, they may be designed to do that, but that is not what they are doing any more. What they are doing now is supplying raw milk to the overseas-owned competitors of Fonterra because raw milk and the dairy protein that comes out of it is incredibly valuable.

The Green Party is a very strong believer in New Zealand production so we are very keen to make sure that raw milk is provided at a competitive price to New Zealand - owned producers based in New Zealand. We want to support New Zealand industry, we want to make sure that the New Zealand raw milk market is competitive, and that milk in that market is at a competitive price. If these regulations were restricted to simply providing raw milk to New Zealand producers, whether it be New Zealand - owned producers, even exporting, or whether it be just for the domestic market, then we would be supportive. But what these regulations do is ensure that raw milk is provided at effectively a subsidised price to the overseas-owned competitors of Fonterra, who then transform that raw milk into the products—mostly milk powder, but not only—which then compete against Fonterra in Fonterra’s overseas markets.

This is what has changed between the original Dairy Industry Restructuring Act and this bill that we are considering at the moment. The problem is that people have not realised that the world is no longer the same, so they are treating the dairy market as it used to be. Part of what stands behind this is we do not want to upset our trading partners. Part of the regulation of the New Zealand dairy sector is to make sure that we do not upset our trading partners and do not attract any kind of World Trade Organization action because of uncompetitive practices within our domestic dairy market. These provisions are in place in order to try to knock aside any attempts to challenge the regulations governing the New Zealand dairy market.

But, of course, what has happened is that in the past, because New Zealand was promoting relatively cheap commodities, it was in our interests to try to break down trade barriers all around the world in order to get those commodities into those markets. But now the exact opposite is happening. Those markets are desperate for New Zealand dairy products. The Chinese are not consuming a lot more of New Zealand dairy produce because of our free-trade agreement with China. They are consuming a lot more of our dairy produce because they need it because it is clean and safe—particularly safe after the melamine scandal—and because they need access to the food protein.

Globally what we are seeing is that food protein is in shorter and shorter supply and it becomes more and more valuable, and those markets where previously we were trying to overcome barriers to get our food in there actually are desperate for our food, and really want our food. So the whole global context has changed. It is kind of like saying, back in the 1940s, the 1950s, or even the 1960s, if we look at the oil market, countries all around the planet wanted oil. They were desperate for oil. The problem with oil was not that there was a trade barrier to oil. People were buying oil because really needed oil. Other commodities are now becoming more and more like oil, because we have a global shortage of those kinds of food commodities. Other countries really want New Zealand primary produce, and that is one of the fundamental things that has changed.

The concern that we have to let overseas companies buy up our land, let overseas companies buy up our processing facilities, and have these regulations in place, all of which are designed to stop any World Trade Organization action against New Zealand, all of which are designed to maintain a multilateral trading environment in which we can get our goods into those markets, has been turned on its head. Now those markets are desperate for our goods. Orienting our entire dairy industry regulations around the concept of trying to avoid World Trade Organization litigation by making sure we sell off our land to overseas owners without breaking our World Trade Organization commitments, making sure we allow Synlait to be bought up by overseas owners, and have these dairy industry regulations in place so that we do not upset our World Trade Organization commitments, all of that has been turned on its head.

Now we are in a powerful position because we have access to something that people want. In fact, what we should be doing is looking after that valuable thing. We should be preventing the overseas buy-up of our land, and preventing the overseas buy-up of our processing facilities and our agricultural servicing companies. We should be protecting Fonterra and not making it subsidise its foreign-owned competitors in New Zealand, through the Dairy Industry Restructuring Act and the amendments that are before us now. It is by understanding how the world has changed in the last decade that we can understand how fundamentally ill-conceived this particular amendment bill is and how fundamentally ill-conceived the framework of the dairy industry in New Zealand is at the moment. The Green Party will not be supporting this bill.

RAHUI KATENE (Māori Party—Te Tai Tonga) : I will take just a brief call on the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill, which seeks to extend the market share thresholds for the expiry of pro-competitive provisions in the Dairy Industry Restructuring Act 2001. The bill also provides for a new process for the expiry of the pro-competitive measures when the new specified market thresholds are reached.

The key driver in this bill is that there is unlikely to be sufficient competition in the dairy industry to ensure the efficient operation of New Zealand dairy markets, and I want to put forward an alternative frame. The lack of domestic competition in New Zealand has, I suggest, little to do with a lack of local market profits. The barrier to entry is straightforward and well known. It is related to the monopoly domination of Fonterra and the undue influence it controls, both in terms of cost lines and milk, and its revenue line—that is, its retail prices.

James Wheeler, the acting chief executive of the Federation of Māori Authorities, in a recent letter stated it quite clearly: “Fonterra are in a dominant position originally created to compete with the world, rather than this be used internally against suppliers and processors. Their track record of being the recipient of numerous complaints against uncompetitive behaviour to the Commerce Commission indicates that Fonterra actively works against independent suppliers.” In other words, Fonterra’s dominance means that it effectively controls both ends of the business because of its scale. It is able both to set the cost of milk and to control the retail price’s revenue, which in effect might have the undesirable result of squeezing any other domestic players out of the market. That is the unique power held by Fonterra, and this legislation is undeniably influenced by its monopoly stronghold on the consumer market.

Every party in this House is aware of the intense level of public concern about milk prices and the level of competition in our domestic dairy market, and this is essentially where we must agree to differ from the Government on this bill. Although we might accept that the changes proposed in this bill do not affect the particular issue about the price of milk, they do fall into the wider context under discussion—that of milk price and domestic competition. I recall a statement made by Kingi Smiler, the chair of Taupō-based Miraka Ltd, 2 months ago. Mr Smiler, in his submission about Fonterra’s Trading Among Farmers proposal, noted: “As a majority Māori owned company, we are in the dairy industry for the long haul as our land cannot be sold. It is therefore vital that any change to the competition rules to assist Fonterra, preserves the integrity of the system for the benefit of everyone.” This is the essential balancing of interests that we believe has been ignored in this bill.

Although the Minister may suggest this bill is necessary to ensure a stable milk market while the broader issues of the matter are being considered, our view instead is that while the Trading Among Farmers proposal is out there, changes to the governing legislation will bring with them an undesirable level of risk. That is of great concern for Māori because, as we all know, the Māori Economic Taskforce last week released a report by Business and Economic Research that pointed out the Māori asset base. We know that agriculture, forestry, and fishing—in fact, primary produce—is a huge area for Māori investment. With Māori getting more and more involved in the New Zealand economy it is very necessary that we have a competitive environment, and that we do not have monopolies that are keeping the industry held by the throat, as it is now. We cannot support this bill while that is happening and while such levels of anxiety exist in the dairy industry sector. Thank you.

COLIN KING (National—Kaikōura) : It is a pleasure to take a call during the third reading of the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. I remember last night we had some great conversations about the sunset provisions, and we said that some time ago the Labour Government was actually saying the primary sector was a sunset sector. From that point of view it is very good that we are actually debating here. When listening to all of those speakers we heard the Labour speakers talking about the environmental degradation that dairying is causing, we heard the Green speaker talking about farmers gouging prices and making unscrupulous profits, and we heard the Māori Party speaker talking similarly. But the point is that unless our farmers are making a profit, this country is in pretty poor shape.

This bill is purely focused on giving certainty in the meantime in relation to provisions tied up in the Dairy Industry Restructuring Act. On that basis, we can be very confident that National looks towards research and development and to sciences to address a lot of the problems that confront the primary sector. We are investing many millions of dollars in the Primary Growth Partnership, and we are very, very proud of the Global Research Alliance on Agricultural Greenhouse Gases, which brings together 23 nations to look at solutions that will impact going forward globally. We export 85 percent of what we produce, and more often than not, as they say, the person who pays the piper calls the tune. The fundamental doctrine that this bill is based on is the fact that we want access to various markets. Although we hear a lot of debate about the comparison of Coca-Cola with milk, the substance of this bill addresses a lot of our trade access issues. On that basis, I have pleasure in supporting this bill.

Dr ASHRAF CHOUDHARY (Labour) : This MP on this side of the House definitely does not believe that the dairy industry is a sunset industry. I explained that last night, too.

I support the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill, and Labour supports this bill, because it is clearly very appropriate that we extend the market-share threshold for the expiry of the pro-competition provisions in it. The dairy industry is our primary export industry. In the given international economic environment I believe that the industry is really helping our economy and our living standards in this country.

I have a number of points I will make. The first one is that, clearly, it is rather interesting that the Minister of Agriculture said after the first reading of this bill that there would be a review of the Dairy Industry Restructuring Act. I wondered why he could not wait until after the results of that review were available before he introduced this bill, so he could incorporate into the bill some of those results. Be that as it may, I am pleased to say that this bill certainly allows farmers in the South Island, particularly in the West Coast Regional Council’s area, to now be part of the wider picture in terms of the supply of milk.

It is interesting that when we were hearing submissions on this bill there were clearly two schools of thought. Fonterra was on one side, and the rest—the private, independent producers or processors—were on the other side. Fonterra was clearly not very keen that it had to supply discounted milk to the independents. But the independents were clearly keen to see more of this milk available to them so that they could add value. This is interesting, because a lot of those independents—Synlait, Tātua, South Island cheese makers, and others—came along, too. They want to add value to the milk produced in New Zealand so that they can get some more markets overseas. Of course, the Fonterra side was clearly not happy with the fact that a lot of these independent processors have not really added as much value as they suggested they would, to get some new markets. There was quite an interesting debate among them about that at the time. This bill, and the philosophy of the Dairy Industry Restructuring Act, is to increase competition, so that, hopefully, we can get some more companies—more processors—to add value in our overseas markets.

As we get more into markets such as China, India, and the rest of Asia, I think there will be demand for additional processing for niche areas. I hope the independent processors will make efforts to do that, because Fonterra and the farmers are saying that after the years of research and development they have put into developing this industry, here come these new processors, many of them with overseas interests involved, using the intellectual property and the research and development that has been done over years not only by our farmers and farming community but also by universities and research institutes. Fonterra and the farmers are saying that the new processors get the benefit of that but do not actually create the niche markets that they said they would. That has been an interesting argument, and I think that argument will continue among those producers, because, clearly, we want more high-value products to go overseas so we can get more of this milk processed, just like meat. We want more of this milk processed here onshore so that we can add more value.

At the same time, there is an issue about price. When one looks at what is happening in Australia, one sees that milk is being sold for $1 per litre, and in this country we are paying more than $2 per litre. Again, I hope this competition will increase—there is the sunset clause, as somebody said, to change the goalposts. I hope that we get some more competition so that prices come down, because living costs at the moment, with prices going higher all the time, are not good for consumers, who are suffering.

We invited some time ago a professor from Massey University Jacqueline Rowarth to the Primary Production Committee to tell us what was going on in the agriculture sector. We invited her earlier to talk about agricultural education. Where is the problem in terms of agriculture not doing so well? I clearly remember her saying that the problem is that farmers are not getting a high enough price on the farm. I think it is very important for us going forward that we analyse the situation. Where are the problems in our economy, particularly with agriculture? She came up with a very researched view that the problem is that our farmers—be they dairy, meat, or wool farmers—are not getting a high enough price for their products.

The problem is that it is the middle people, whether it is the processors or the supermarkets, who are really creaming it off. I think that is an issue that Parliament, the Minister, and others involved should be concentrating on: how we can add value to what the farmer is getting within the farm gate, rather than what is happening with price-gouging in the supermarkets, and in processing. We can have all this competition, but, in the end, if the farmers are not getting due value on their farm we will not make a lot of headway.

I will also make a couple of further points. Going forward, as we increase our animal production—particularly dairy—we need to make sure that the environmental impacts are also considered very seriously. I see in the statement from the Prime Minister that there will be some impact from increasing dairy numbers but not a big impact. I really take issue with that. As a scientist I can say that I foresee that the real problem in terms of utrification of our lakes and streams is that we will get more and more of this downpour and source pollution and more nitrates, solids, pesticides, and chemicals will go into our lakes, rivers, and streams. We need to do more research into that. We need to understand the dynamics, because over time if our rivers, streams, and lakes are more polluted, then as we engage with overseas buyers they will come round and have a look at what we are doing.

A lot of what we do in terms of dairy industry mechanisation and productivity we do very well. But I am really worried about the impact going forward. We—and the Minister—need to put more funding allocation from the Primary Growth Partnership into some of these research areas, so that we can understand what is happening in the industry. As I have said on a previous occasion in terms of animal treatment and the issues we dealt with earlier with animal tracing—we have the National Animal Identification and Tracing Bill coming soon—I think this issue is similar in terms of the context we have with the overseas market. With those words I say that I am pleased to speak on the bill. I commend the bill to the House. Thank you.

CRAIG FOSS (National—Tukituki) : I have just a couple of points. I appreciate and thank the previous speaker, Ashraf Choudhary, for his endorsement of the bill that was before the House previously for the Environment Protection Authority formation. The issues he talked about were exactly some of the issues that the new body, which many of his colleagues were opposed to, will deal with, but I am glad to hear that he supports it. That is very good.

The previous speaker bemoaned the fact that with the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill there may be Chinese investors investing in the New Zealand dairy industry. I remind members that the China free-trade agreement was initiated under the previous Labour Government and formalised and signed by the National Government. The point is that when the Labour Government initiated those discussions and negotiations, such issues were on the table and were discussed, negotiated, and forecast. So it is interesting to hear that the other side now does not want investment from China—the same country that Labour initiated the free-trade agreement with. Labour got the free-trade ball rolling with China, and that, to be fair, has served New Zealand so well. There seems to be a contradiction there.

Another speaker talked about returns to farmers not getting to the farm gate. That is quite right, but of course dairy farmers are also shareholders in the distribution and facilitation agency Fonterra. That is how they share in the upside of that industry. Maybe some more thought needs to go into those points.

I am on the Primary Production Committee. I particularly enjoyed the discussion and what the bill has achieved. I acknowledge the majority of members from the other side who are voting for the bill. The bill sets new market-share thresholds and new changes, as other members have spoken about, for the North Island and South Island. The bill brings in the West Coast of the South Island as part of the South Island. It may be news to West Coasters that they were deemed not to be part of the South Island, but subsequent to Mr Chris Auchinvole coming in, they are now part of New Zealand. That is an improvement and an upgrade from the MP there.

We also had an interesting discussion about milk solids versus raw milk. I particularly enjoyed that discussion. I learnt a lot from my learned colleagues who are involved in the industry. The committee came together on many of the issues. Many speakers also acknowledge that a great review of the industry is going on, which Minister Carter recently announced. We all look forward to that. I also look forward to it coming before the select committee. Thank you.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : We are almost coming to the end of the debate on the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill, which is a reasonably technical bill but nevertheless very important for New Zealand’s dairy industry. We in the House all know and acknowledge that the dairy industry is a huge driver of our economy and an important component of our economy. Certainly, in my electorate of Palmerston North, although it is virtually wholly urban—I think I could just about count on one hand the number of paddocks we have in the electorate—the fact that we have Massey University, the Crown research institutes, Fonterra carrying out its research and development, and a very large service industry in the electorate means it is a pretty big deal to my constituents that we do everything we can to ensure that the dairy industry is able to operate efficiently and appropriately in this country.

The bill seeks to do that by extending the period of time during which Fonterra must provide fixed-price dairy solids to other dairy processors in order to foster competition in the domestic industry. The original Dairy Industry Restructuring Act, which was enacted in 2001, set a sunset clause for this requirement in terms of market share of dairy processing, but at the moment there just is not the confidence that when this threshold is met the independent processors will have developed enough to keep the market competitive. That is why these new sunset provisions have been brought in by the Government and why the Labour Opposition is very, very happy to support the bill.

We want to see a healthy domestic dairy processing market so that consumers potentially have lower prices available to them and, of course, a lot more choice. But also we are looking for much greater added value to our dairy primary products and to all our other primary produce.

We have some reservations about the bill. These have been discussed at some length during all readings of the bill and last night in the Committee of the whole House. We have some reservations about the future of the industry and how long this subsidy for the smaller operators can go on. We also have some issues with where we are going in terms of foreign investment in our dairy industry and what that means for New Zealanders’ ability to own our own future, given the importance of this industry to our economy.

It also has to be noted that a lot of people in New Zealand are very, very concerned about the price of milk. A sign of good competition, which is what this bill is all about, is that prices come down, but we have seen the price of milk and other dairy products go up and up, far outstripping any increase in wages in this country. People, particularly those on middle and lower incomes, who are trying to feed their families well and put good nutritional meals on the table are finding it a little bit harder because the price of milk has gone up so much.

The threshold that this bill changes currently sits at a 12.5 percent market share of the collected raw milk for independent processors in the North Island and a 10 percent market share for South Island processors. The South Island threshold currently excludes the West Coast. That provision was changed by the Primary Production Committee, which I think was a sensible change. These thresholds as they stand currently are likely to be reached about now for the North Island and about this time next year for the South Island. As I said, there was just a feeling that the independent dairy processors have not quite reached the point where they can stand on their own without the support that this bill provides. Extending those provisions gives an opportunity for that industry to develop a little bit further.

We on this side of the House were a little perplexed by the timing of this legislation. In fact, the first reading of the bill occurred just 1 day after the Minister of Agriculture had announced a review of Fonterra’s obligation to supply milk to independent dairy processors. So, it could turn out that all of this is ultimately for naught, and the Minister of Agriculture will come back with the results of the review and throw out this bill altogether. We will find that all this good work from the Primary Production Committee and its excellent chair, who is listening intently over there, could be for naught. That would be unfortunate, and perhaps the Government needs to make sure the left hand knows what the right hand is doing.

The review took place last month, and now we wait to see whether its findings and recommendations will make this bill redundant. Labour members wonder whether that review should have taken place a little earlier so that the bill and any changes arising could have fallen out of that review, rather than the two happening in parallel. It is quite possible that we will be back here next year debating more changes.

But we do support the review of Fonterra’s obligations to supply milk to its competitors. It is a bit of a concern that companies such as Synlait and Open Country Dairy, which are owned by offshore interests, are being subsidised by New Zealand farmers. We have to ensure that foreign investment into New Zealand companies, New Zealand businesses, and New Zealand farms—although we do not want to cut it off altogether—is actually working for New Zealand. We do not think that we have quite got the criteria right at the moment to ensure that foreign investment is working for New Zealand.

I will make a final point regarding the price of milk. This bill is all about competition. As I said, one of the indicators that competition is working well is that the price of raw milk and the price of the milk that people buy at the supermarket comes down. That is simply not happening at the moment. In fact, the price of a litre of Home Brand milk at Foodtown has increased by 20 percent, or 37c, since April 2008. That is certainly of concern to a number of people in New Zealand, and Labour wonders when the Government is going to address that.

In closing, I say that this is a good technical bill that will serve the dairy industry well. The Labour Opposition is more than happy to support it.

SANDRA GOUDIE (National—Coromandel) : I will not take too much of the House’s time, but I do want to echo the comments made by my excellent colleagues. I particularly note the work of the chair of the Primary Production Committee, Shane Ardern. He has done a magnificent job, and probably has one of the greatest understandings of the agricultural sector of anyone in this Parliament.

I also acknowledge every single one of our primary producers in New Zealand, because it is on the back of their hard work that we are able to afford things like health, education, law and order, and, of course, the protection of the environment. I say to all our primary producers and the agricultural sector that they do a magnificent job, and long may that continue.

A party vote was called for on the question, That the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill be now read a third time.

Ayes 107 New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Progressive 1; United Future 1.
Noes 15 Green Party 9; Māori Party 4; Independents: Carter C, Harawira.
Bill read a third time.

Arms (Military Style Semi-Automatic Firearms and Import Controls) Amendment Bill

First Reading

  • Debate resumed from 10 May.

SHANE ARDERN (National—Taranaki - King Country) : Once again, I think I would be fairly unpopular if I took up all of my 8 remaining minutes on the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill.

When we were last discussing this bill, last evening, we were identifying the reasons why it is necessary. Looking at the work that went on to establish the Government’s position, I can gather that there has been an increase in the power or the strength of airguns. As members will be aware, one or two quite serious crimes have been perpetrated with the use of these guns, and I think one resulted in the death of a police officer.

The Government has looked to see what needs to be changed since the original Arms Amendment Act 1992, and has concluded that some of these military-style semi-automatic firearms are poorly defined and are able to be used in the same way as an airgun. A typical slug gun that a farming family might buy for its children no longer fits the legislative framework designed to govern it. I remember that my own very first firearm was a slug gun. I am sure yours probably was too, Mr Assistant Speaker Roy, although in the deep south, to try to knock back some of those charging deer down there, your father probably got you something a little more powerful than a slug gun. In our case, it was a slug gun, and that was a fairly harmless instrument at that time, but no longer is that the case.

The Government has looked at what it can do, and it has decided that the definition of “military style semi-automatic firearm” has been found wanting. The police have submitted to the Government that there is a need for change, and this bill is designed to address that need. Thank you.

KEITH LOCKE (Green) : It is with pleasure that the Greens will be supporting the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. It is a very good bill to restrict access to dangerous firearms and to put the right regulations around them. The bill is appropriately called the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. As the material surrounding the bill explains, there has been a problem with the evolution of military-style semi-automatics, or MSSAs, in that they now have a variety of forms. They were defined previously by having the military pattern free-standing pistol grip, but there has been some variation on that, and this bill allows those firearms to be included under the regulations if they fulfil a number of requirements. Among the most important requirement is what every person would probably expect—that the gun can fire off a whole lot of bullets in quick succession. There are various figures depending on the size of the ammunition, from seven rounds to 10 rounds or 15 rounds, in the regulations.

There is some resistance in the community to the passage of this bill, and I have no doubt that other MPs have been getting emails from what we might sometimes loosely describe as the gun lobby, although I do not want to be too pejorative. It varies in its composition. At the extreme end it includes people whose views are closer to the American concepts of having weapons for self-defence and not needing any regulation, etc., and at the other end it includes the more responsible gun owners. It is interesting to look at some of the emails that come through and some of the arguments that are used. One of the arguments I got in an email on Monday was that this law will affect only law-abiding citizens and it will not affect the criminals. Well, that view is a bit strange. If we were to apply it to legislation we pass quite regularly in this House, we might say that we do not really need tax laws because honest people will pay taxes and dishonest people—tax criminals—will not pay taxes, so we do not need any laws because they will affect only honest people. Clearly, laws are intended to constrain behaviour in a proper manner.

In fact, regulations like these do limit the availability of such military-style semi-automatics, which can be quite dangerous in the hands of criminals, for example. This legislation will limit criminals’ ability to obtain such weapons both in terms of the way the regulations are formulated and because criminals in gangs will be more wary about keeping such guns in their gang headquarters, knowing that there will be penalties if, in raids, they are found to have them. So it will restrict the availability. There are already, according to the regulatory impact statement, 8,000 military-style semi-automatics in the country. I think it is important to make sure their possession is restricted to trusted and registered gun collectors and the like. There is the idea that somehow—and sometimes the gun lobby make this argument—it is just criminals who are creating the problem with military-style semi-automatics, but, in fact, we often find that it is mentally disordered people. If we look at some of the killings that have taken place so far, we see that they have involved people who are either mentally disordered or have gone a bit crazy for a period. Often they involve registered gun owners—for instance, David Gray, who killed 13 people at Aramoana down south in 1990, was a registered gun owner. Jan Molenaar, who killed a police officer, very sadly, in Napier a little while back, had not renewed his registration as a gun owner, but he was still on the books as someone who had registered as a gun owner. So it is important to see this problem not as one that affects just the criminal fraternity. Both David Gray and Jan Molenaar seem to have gone a bit crazy at a particular point.

There is also the question of accidents. Clearly, because military-style semi-automatics fire off a lot of bullets in quick succession, they are more likely to cause casualties in the population. We do get some absurd arguments from the gun lobby. An email I got on Monday said that it is absurd that anyone would think that a military-style semi-automatic is any more or less dangerous than any other firearm. Well, clearly, a weapon that shoots off multiple bullets is more dangerous.

There is sometimes—and this adds to the danger sometimes—a bit of a mystique around military-style semi-automatics, guns that fire off a lot of bullets, and military-style guns. We saw that in the case reported in the Sunday Star-Times and on Radio New Zealand about how the SAS was conducting little sessions with business people from a group called Direct Capital. During the exercise they had last October, the SAS let people from that group fire off automatic guns. Jerry Matepārae, when he did his review, said that they should hold on, that that was not very good, and that they should not be doing that. But I think it shows that military-style semi-automatics can be a bit dangerous and people can be attracted to their use for no good purpose.

Once people who have military-style semi-automatics go a bit crazy, they can cause a huge amount of damage. We had the case back in 1996 in Tasmania in what is known as the Port Arthur massacre where Martin Bryant killed 35 people. Because he had military-style semi-automatics, he was able to kill 20 people in the first 90 seconds. That is what happened, and it would not have happened with a single-shot rifle. So regulations and restrictions are very good.

It would have been good if there had been more of a registration system for firearms. The Green Party does advocate a more systematic registration system for firearms. It would be good to have known how many firearms David Gray or Jan Molenaar had in their possession. At the present time, once someone is a registered gun owner—which is a separate issue from that of the registration of military-style semi-automatics—that person can have as many guns as they like, and each gun is not registered. Someone is registered only as a gun owner. It would be good to register individual guns against the name of the owner. That process could begin in a cost-efficient way by doing something similar to what happens in Australia, where people have to trade guns through a registered gun trader, computer records are kept and stored, and then the trader forwards those records on to the Government database. That provides a lot more control, and means that when the police roll up to a property suspecting an offence has taken place, they are not met by a hail of bullets from guns they did not know were present.

The other part of the bill, which has been referred to already, is the provision to reduce, control, or stop the import of airguns that look like real pistols or military-style semi-automatics. I think that is a good provision, too, because people use those fake pistols in hold-ups at banks or for all kinds of things. It is very, very dangerous. Even if someone is not firing real bullets, it is dangerous in the sense of bank robberies and people living in fear, etc. So that is a very good provision.

All in all, the Green Party is very much in favour of this bill. We would like arms control to go somewhat further towards more systematic registration of firearms in the community.

RAHUI KATENE (Māori Party—Te Tai Tonga) : I rise to take a very brief call on the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. Before I speak on this bill I register that I have absolutely no conflict of interest on this bill; I do not own a gun, which is just as well because I also do not own a firearms licence. Like many people in this House who, I am sure, grew up learning how to shoot, my first lessons were on a .303 rifle. I have also had lessons on a .22, and I have spent quite a bit of time firing air rifles. I have to report that in very few cases I actually hit the target.

Dr Paul Hutchison: You should be registered.

RAHUI KATENE: Yes, I should be registered. But it is not a problem, because I do not shoot now. That is deliberate. We have had such a big problem here in New Zealand over the last few years with guns, with shootings both accidental and deliberate.

I think that in the case of military-style semi-automatic firearms this bill is perfect, because they are very dangerous. We heard a very good call from the Green member Keith Locke. I think we need to have this bill go through very quickly, because regardless of all the lobbying we have been getting from people, the entire population of New Zealand will win from this bill. We do not need these types of guns in New Zealand. The only people who should have access to these types of weapons are the military and perhaps in some cases the police—I would prefer that they did not. But the general population at large should not have any sort of access to these weapons.

I also support the part of the bill about air rifles that look like rifles. That makes them so dangerous for their owners and for those who come by them in other ways—for example, children who think they are toys, pick them up, and cause a problem to themselves, to their neighbours, and to the people who then call out the police. The armed offenders squad comes out to face they know not what.

The Māori Party supports this bill and we are very happy to continue to support it. Kia ora.

Hon RICK BARKER (Labour) : I rise to support the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. I note that this is another piece of legislation on firearms. It has some positives and it has some negatives.

The difficulty with firearms is that there are two distinct groups of people in New Zealand. The first group is those who are very, very supportive of firearms. They write emails to tell us that there is a right to bear arms. Well, that may be so in America because of an amendment to the constitution. Some people have doubts about the extent to which there is a right to bear arms, but the constitution is what people believe it to be, and people in the US believe they have a right to bear arms. In New Zealand we do not have a written constitution; nor do we have an amendment that says that members of the public have the right to bear arms. Carrying a weapon is a privilege and it is a licensed privileged.

I am a member of the public who has a licence to carry a firearm. I have owned a firearm for a long time. The first firearm I got was a Lee-Enfield Mk IV bolt-action rifle with a 10 shot magazine, which I got at the age of 18. I went to the local sports shop and said I wanted to buy a rifle to go deer shooting. I was told by the sports shop owner that I had to see the sergeant in charge of firearms at Greymouth Police Station, and present him with the firearm so that he could record the number of it and my name and address, which I did. When I came back and told the shopkeeper I had done that, he completed the sale and I had a firearm. I was registered, and the firearm was registered. That was the way it was when I was a young man.

Then the police decided that it was all too complicated. We changed the law to license firearm owners, not the weapons. So today we have a disjoint between the firearm owner—the person who is licensed to carry the firearm—and the number of firearms they have. But firearm owners have to have a different sort of registration. I am not licensed to have a pistol. I have no desire to have a pistol, but I am not licensed for it, and I am not a gun collector, so I am not licensed for that. The conditions vary.

There is still disquiet in the community about the number of firearms in the community that are unidentified—for good reason. But Parliament has failed to resolve that broader and bigger issue. Gun owners are very concerned that if there were registration of firearms and registration of owners, like there was in the old system, then that would be a short step away from the State deciding to take their firearms off them. This is a view that is widely held. It is one that I do not personally share, but I have to acknowledge that it is a view that people have. The gun-owning community is very suspicious of this place, Parliament, just as many of them are very suspicious of the intent of this bill.

It is fair to say that the nature of firearms in the community and the use of them have changed. As a young person, nearly every house I knew had a firearm. Their owners were either ex-servicemen or country people who shot pests, deer, goats, and did those things. It was an ordinary, everyday event. People had them for dealing with problems around the local area—possums, and so on. Slug guns in those days were .177 and pump action, and, if someone accidently shot a person with one, it did not break the skin. One was lucky if one got a bruise. But this is not the case today. Slug guns today are of larger calibre, such as .22, their pumping mechanisms are much more powerful, they are gas operated, and they have multiple-shot magazines. They are today a very lethal weapon, and they are completely different from the slug gun that was available when I was a young man. The law has to recognise these changes, and we would be kidding ourselves if we did not.

But the issues are quite often misunderstood. Part of the misunderstanding is the definition of a military-style semi-automatic firearm. This bill started its journey because of a court decision over the way in which the law described a military-style semi-automatic firearm. It was defined in a rather negative way, which led to the police being unable to successfully bring a prosecution about a particular military-style semi-automatic weapon. Therefore, Parliament is back to redraw the line.

I suggest to the Law and Order Committee that it will not be an easy matter for it to understand simply from looking at papers. It will not be easy for people to come and describe to us the various types of weapons there are, how they are configured, what their uses are, and what their capabilities are. I suggest to the committee that it adjourn for a day or two and go to a rifle range. There we should be shown by the police and others who are opponents of this bill exactly the nature of the weapons they are concerned about, and they should demonstrate their use. I also suggest to the select committee that submitters on the legislation also be invited to attend the day, or the days, in order to demonstrate on the rifle range the nature of the weapons they think should or should not be covered by the scope of the bill. I think we have to have a very clear and open demonstration of the nature of the weapons and the concerns people have about them.

You see, many people who in times gone by would have lived in households that would have regularly had a firearm in them do not today. Many households have no experiences of firearms. Many households, and many people, are very nervous and apprehensive about firearms—and for good reason. A firearm is designed with one purpose and one purpose only: to deliver lethal force at range and remotely. It is designed to kill. That is the sole purpose of firearms. Yes, they are used for sport, and, yes, they are used for entertainment, but let us not misunderstand the fundamental nature of a firearm. A firearm is designed to deliver lethal force. Therefore, the public have justified concern about firearms, about their use, their ownership, and the purposes they can be put to. To put aside those public concerns—those genuine concerns—would make Parliament remiss in its obligations.

But, on the other side, Parliament does have to recognise that legitimate owners are entitled to enjoy their firearms, and that legitimate owners are entitled to enjoy the sport and recreation of shooting. We have a wonderful outdoors here in New Zealand for deer stalking, goat hunting, tahr shooting, duck shooting—you name it. It is a fabulous feature of New Zealand that we have a great outdoors. It is made much more enjoyable for many people by the opportunity to use firearms and to hunt and to stalk. I for one would be completely opposed to any restrictions on that activity. But we have to find a balance, and this bill is about trying to find a balance. It does have to recognise that there are significant changes in the style of firearm. One style of weapon that concerns people particularly in this case is air-powered rifles.

I make the point again that when I was a young man the only slug gun or air rifle one could get was a pump action .177 slug gun. They were as slow as a wet week. In fact, one could see the slug come out of the end of the barrel—they were as slow as that. They dropped off, as one member has said, like a stone off a bridge. They had no trajectory at all. They were hopeless at knocking over a sparrow—let us face it. Anything bigger than that it was impossible to do any damage to. But the modern air rifle is completely different. The modern air rifle can have a much bigger calibre, can be gas-powered, and can deliver lethal force—of that there is no doubt. The modern air rifle is not a single-shot pump; it very often has magazines with 20 or 30 rounds in them—multiple rounds in them. These rifles are almost like machine guns.

Parliament has to take note and to change the law, but we need to do that in a considered way. Labour welcomes this bill as an opportunity to again debate the issue of firearms, the nature of firearms, and to come to a considered decision. In saying “considered” decision, I hope the select committee takes up my suggestion of having the police and other interested parties come with us to a rifle range and show us exactly the nature of the weapons they want to have restricted and the ones they want to have unrestricted, so that we can have a really informed view and a very good, practical discussion. At the end of that, we will all be informed, and if we are better informed we will make better law. Thank you.

JONATHAN YOUNG (National—New Plymouth) : I am also pleased to speak on the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill. I enjoyed the comments of the previous speaker, Rick Barker, especially about the slug guns of old. I can just imagine the Hon Rick Barker going rabbit shooting, with the rabbits sitting in the paddock saying “Don’t worry, it’s only Rick.”, and being able to watch from a distance as that slug gun failed to make any dent. But my colleague from the Law and Order Committee was right: that was the situation. As he said, unfortunately it is not the situation today.

I quite like the notion of seeing these firearms in the real. As a young student I was in the Territorials. We went to Trentham and we learnt how to fire self-loading rifles, M16s, and the like. No doubt many New Zealanders are very familiar with firearms, and no doubt that will create lots of debate on this bill.

This Government is committed to making New Zealand a safer society, which is why this bill is before the House. I think everyone in our country, including members on this side of the House and the other side, would be in agreement with that. In recent years we have seen a proliferation of military-style semi-automatic firearms that, for the collector, enthusiast, or firearms sportsman may seem safe, desirable, and, perhaps, the pride of their collection, yet increasingly these weapons, in the wrong hands, stand as a threat to the aspiration of that safer community that we all want to live in. It is not just about weapons being in the wrong hands, it is also about how easily they can fall into those hands.

We have seen a big increase in the number of air guns that replicate real pistols and air rifles that one did not need a licence to purchase but which have been used to kill people. Regulations were changed to require the owners of pre-charged pneumatic, or PCP, air rifles to hold a firearms licence from October 2010. Pre-charged pneumatic air rifles have been used in two fatal shootings, including the murder of police Sergeant Don Wilkinson.

I take a moment to remember Sergeant Don Wilkinson, who was gunned down by a high-powered air rifle on 11 September 2008. He was a man who was more comfortable in active pursuits—playing squash, tramping, sailing, and cycling—and he was one of the people I played squash with in west Auckland. He was a good bloke, a man who served our community, and we remember him.

This Government has been looking at what steps can be taken to improve firearms safety not only for the sake of the public but also for the sake of our men and women in the police force who protect us. This bill is part of measures aimed at improving that safety. Thank you.

CHRIS HIPKINS (Labour—Rimutaka) : I am very happy to take a call on the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill.

Hon Clayton Cosgrove: Full of blanks!

CHRIS HIPKINS: Thank you. I come to this debate not being particularly familiar with firearms myself. I am not a large fan of firearms. However, I do think there is a place in this country for responsible firearms ownership. I know that a number of people in my electorate own firearms. In fact, we have two rifle ranges in the electorate, not including the army’s firearms range. Just recently we have also had a deer-shooting park in my electorate. I have to say the deer-shooting park in my electorate has been quite controversial because it is relatively near a domestic area. It is in a semi-rural area and, of course, the people who live in houses nearby are not particularly keen on the idea of having a deer-shooting park anywhere near them, and I can kind of understand that, actually. There are health and safety issues for the farmer next door, there are all sorts of considerations, so it is always a topic of discussion amongst the people in my electorate.

On the surface of it this bill seems like a sensible thing to do. I believe from the information provided by the Minister of Police that the police estimate that there could be up to one incident a week where a member of the public presents an airgun that looks like a real pistol. That is a significant issue for the police, and therefore I can fully understand why tighter controls are required, particularly on the import of these weapons, and it is one of the reasons why Labour members will support this bill’s referral to a select committee. As my colleague Rick Barker said, it is important that when the bill gets to the select committee the committee takes some time to find out what it is all about, get into the specifics of it, work out the different types of firearms, and make itself a lot more familiar with the issue. I am not on that particular select committee, but I think it is definitely something the committee should take a look at.

I understand that this bill basically reverts us to the classification regime that existed between 1992 and 2008. A recent court case has cast some doubt on it, and therefore it needs to be reviewed. So I think it is very sensible that this legislation is introduced. However, it is rather unfortunate that, overall, the Government’s approach to justice issues has been very piecemeal, and this is another example of that. The public of New Zealand would like to know from this Government what its overall approach is, what its overall priorities are, to make New Zealand a safer place. We are not hearing much about that from the Government. Firearms are a really important part of the equation, but they need to fit within a much wider agenda and a much wider programme of making New Zealand a safer place.

New Zealand by and large with regard to firearms is a much, much safer place than many other places around the world. I like the fact that we can still walk down the street in New Zealand and see police wandering down the street who are not bulked up with firearms and all the protective clothing and so on that we see in other places around the world. Our police are very accessible, and one of the reasons for that is that the per capita rate of firearms in New Zealand is, I am willing to guess, fairly low by international standards. I would not like to see us changing the law in any way that made it more likely for people to own firearms.

I repeat that I do not have a problem with responsible firearms ownership in New Zealand, and I think the vast bulk of New Zealanders who own firearms are very, very responsible. My father is one of those. As kids when we were growing up we used to go up to the bach over the Christmas holidays and my father would go out rabbit shooting and bring rabbits back. This was before all the different things that afflict rabbits nowadays. We would then cook them all up and have them for dinner. We do not do that quite so much these days because we never quite know what is in the rabbit.

Hon Clayton Cosgrove: Can you clarify that?

CHRIS HIPKINS: What diseases the rabbit might have. Occasionally my father would take my brother and me out shooting with him. He never managed to hit many when we were with him, because we would always scare them away before he had a chance to take aim. He would always come back with a much bigger haul when we were left back at the bach and he was allowed to do his hunting in peace and quiet.

Hon Pete Hodgson: Were you trying to save them or were you just lippy?

CHRIS HIPKINS: It could be that we were trying to save the rabbits, because if he shot all the rabbits, where would Easter eggs come from? It is a very real issue. I always find it ironic that there is a massive rabbit shoot at Easter. It must destroy Easter for so many kids around New Zealand to see all those pictures on the news of rabbits stacked up on trailers—the Easter bunny being slaughtered at Easter time.

Anyway, I come back to the topic of this bill, which is the importation of air rifles and so on that look like real firearms. At the moment there are virtually no import controls on them. We are told that these air rifles are frequently being used in criminal offending, and therefore a change in the law is required. If that is the case, then that is something Parliament should look at. Tightening the controls will help to reduce the easy availability of these replica firearms, and that is a very good thing. The 2010 court case Lincoln v New Zealand Police was the case that created the uncertainty as to whether some semi-automatic firearms were MSSAs. MSSA stands for military-style semi-automatic firearms. It is important that there is clarity as to what is covered under that. There is not that clarity at the moment and this legislation will create that certainty.

I am looking forward to hearing more about this issue once the bill comes back from the select committee. I am sure the members of the committee will have looked diligently at this legislation. I am not sure which select committee the Government is referring it to.

Hon Clayton Cosgrove: Law and Order.

CHRIS HIPKINS: The Law and Order Committee.

Hon Member: The all-powerful Law and Order Committee.

CHRIS HIPKINS: Well, I would say that the odds of it getting a fair hearing at the all-powerful Law and Order Committee have increased dramatically in recent months with the change of personnel on the Law and Order Committee, particularly the chairmanship, which I understand has improved dramatically.

Sandra Goudie: They haven’t had any meetings. You have to have a meeting to find out.

CHRIS HIPKINS: Sandra Goudie says they have not had any meetings. Unfortunately, the only downside is that we have to have her on the Government Administration Committee instead—the all-powerful Government Administration Committee, I will have members know. Jacqui Dean, the new chair of the Law and Order Committee, has been a member of the Government Administration Committee, and I think she will do a pretty good job of making sure this legislation is well scrutinised.

Hon Clayton Cosgrove: The bar is not that high.

CHRIS HIPKINS: The bar has been raised significantly. It was not very high to begin with, but I think the committee will give this bill a fairly good going-over and good consideration.

Ultimately, firearms laws in New Zealand are important for all New Zealand citizens. They want to know they live in a safe environment where firearms are not abused and misused, and are kept safe. Responsible firearms owners want to know that they will still be able to do what they have always done. As a result, I imagine that the select committee will be very careful in its deliberations to make sure that Parliament does not end up curtailing the rights of responsible firearms owners but does make sure the public of New Zealand are kept safe. We need to ensure that the police do not have to spend a lot of time and put themselves at risk when dealing with replica firearms, as they may be doing at the moment. Overall, Labour will be supporting the bill’s referral to the Law and Order Committee. We look forward to hearing the submissions, and I look forward to seeing the bill reported back to the House in due course.

MELISSA LEE (National) : Until the previous speaker, Chris Hipkins, started talking about the previous chairperson of the Law and Order Committee—who I must say did an excellent job—I had an image of an innocent Bambi running around Rimutaka. His innocence was obviously shot down while he was talking about the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill.

It is a great pleasure to rise and speak in support of this bill, and I am very pleased to have heard Mr Rick Barker’s contribution. He obviously has amazing knowledge about firearms and hunting. When he was saying that a long time ago slug guns had such and such a speed, I did consider how old he might be. I look forward to listening to his and to other members’ contributions.

The legislative changes regarding military-style semi-automatic firearms were made in 1992 as a result of the Aramoana incident, in which David Gray shot dead 13 people. New Zealand has always had licences for people and not for guns. This legislation will give us an opportunity to look at why we need to place restrictions on the importation of airguns that look like military-style semi-automatic weapons and why we need to amend the definition of “military style semi-automatic firearms” in the Arms Act. I look forward to the select committee process and the great debate we will have. Thank you.

  • Bill read a first time.

Hon HEKIA PARATA (Minister for Ethnic Affairs) on behalf of the Minister of Police: I move, That the Law and Order Committeeconsider the Arms (Military Style Semi-automatic Firearms and Import Controls) Amendment Bill, that the committee report finally to the House on or before 4 August 2011, and that the committee have authority to meet at any time while the House is sitting (except during oral questions), and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 187 and 190(1)(b) and (c).

  • Motion agreed to.

Auditor Regulation Bill

Financial Reporting Amendment Bill

Third Readings

Hon HEKIA PARATA (Minister for Ethnic Affairs) on behalf of the Minister of Commerce: I move, That the Auditor Regulation Bill and the Financial Reporting Amendment Bill be now read a third time. Members should consider the Auditor Regulation Bill within the broader context of the Government’s package of financial market reforms designed to restore investor confidence in our financial markets. Investors need to know that the practitioners charged with carrying out independent audits of financial statements prepared by banks, listed issuers, and other entities that accept large amounts of money from the public are highly qualified, skilled, and experienced. This is what the Auditor Regulation Bill seeks to do.

The bill will reserve financial sector audits for the top members of the auditing profession within the major accounting firms. Following enactment, there will be a transitional period before the Auditor Regulation Bill comes into force. The New Zealand Institute of Chartered Accountants will need to establish new systems to carry out its new statutory responsibilities. The Financial Markets Authority will need to establish a system for monitoring and reporting on the adequacy and effectiveness of the New Zealand Institute of Chartered Accountants’ regulatory systems and processes. The Registrar of Companies will need to establish a register of licensed auditors and registered auditing firms. I look forward to the Financial Markets Authority, the Registrar of Companies, and the New Zealand Institute of Chartered Accountants working together to bring these much-needed reforms into place in a timely manner.

I turn now to the Financial Reporting Amendment Bill. This bill provides for the reconstitution of the Accounting Standards Review Board as the External Reporting Board from 1 July 2011. It also provides for the consolidation of all financial reporting, auditing, and assurance standard-setting within the External Reporting Board. These responsibilities are currently split between the New Zealand Institute of Chartered Accountants and the Accounting Standards Review Board, with the New Zealand Institute of Chartered Accountants holding most of the responsibilities. The changes are being made for two main reasons: firstly, placing the responsibilities within a single entity will make it easier to develop and implement coordinated strategies and programmes, and secondly, it is essential that the setting of financial reporting standards is seen to be independent of the interests of the profession, as per international best practice.

I pay tribute to the Accounting Standards Review Board and the New Zealand Institute of Chartered Accountants for their significant contributions to these reforms. The Minister was pleased to announce recently that all current members of the Accounting Standards Review Board will become inaugural members of the External Reporting Board, along with two additional members. The Accounting Standards Review Board has been working through the process of moving from a virtual entity that has no staff or premises to an entity that will have both. I also thank the Institute of Chartered Accountants for the thoroughly professional manner in which it has continued its standard-setting activities throughout the transition.

To conclude, the passing of the Auditor Regulation Bill and the Financial Reporting Amendment Bill will contribute to the strengthening of the financial reporting system in New Zealand, and will bring that system within the range of international norms. I commend these bills to the House.

CLARE CURRAN (Labour—Dunedin South) : I am pleased to speak in the final readings of the Financial Reporting Amendment Bill and the Auditor Regulation Bill. I have spoken a number of times in the House on this particular issue. There are several issues quite dear to my heart that I will touch on.

The first issue is the widespread collapse of major finance companies in New Zealand, which has badly eroded the confidence of investors in the financial sector. I do not think any of us disagree that that has happened. These two bills will go a long way to ensure that investors have faith in the markets and the businesses they invest in. Labour supports these bills, as the bills continue the work of the previous Labour Government. I put that on the record again. Improving the regulatory environment in the financial sector—improving the regulatory environment in any sector—is quite important, and we are seeing the regulatory environment eroded across many sectors at the moment.

It is also important to put on the record and remember that the Capital Market Development Taskforce, which advised the Government to create the new Financial Markets Authority, was established under the previous Labour Government. It was established by the previous Minister of Commerce, the Hon Lianne Dalziel, and I put that on the record, as well. It is a shame the Government has ignored the work of the officials on the establishment board for the Financial Markets Authority, with only one of those officials being appointed to the current board.

This legislation reconstitutes the Accounting Standards Review Board as the External Reporting Board, with that body setting all standards relating to financial reporting and assurance services. It also requires the Institute of Chartered Accountants to regulate auditors as specialist professionals rather than as general chartered accountants. That provision recognises that the role of auditors is crucial in ensuring confidence in financial markets, and makes sure that auditors are held to a high standard and have the skills to competently do their jobs. It is essential that that happens if we are to avoid the disasters that struck mum and dad investors during the collapse of Hanover Finance, Bridgecorp, and numerous other finance companies.

Further, the Financial Markets Authority will be given oversight of auditors to ensure that they are capable of carrying out a large issuer audit. Self-regulation by the Institute of Chartered Accountants was found to be failing in that area. By ensuring that we have an independent regulatory body for auditors, we are bringing our regulation up to international standards. The new Financial Markets Authority—a new and, as I have said several times in this House, as yet untested authority—will be able to prescribe standards for the licensing of auditors and the registration of audit firms, and will be able to promote the principles relating to the quality and integrity of New Zealand auditors. Without that oversight, New Zealand auditors would not be able to practise in Australia, the European Union, and other jurisdictions.

To be clear, these bills will apply only to major audits of large companies or issuers of securities; it is important to acknowledge that. It will not impact on small and medium sized companies or not-for-profits. I think there has been a little bit of misunderstanding around that issue during some of the discussion in the House, and it is important to put that on the record, as well. It is important because we do not want to increase compliance costs for small businesses in tough economic times, but we do want to make sure that big businesses and those issuing securities are being honest and upfront with investors.

The Commerce Committee thoroughly scrutinised the Auditor Regulation and External Reporting Bill. We believe that the changes made will ensure more effective and fair laws. The requirement that both individual auditors and firms be licensed and registered, respectively, recognises that both the firm and the individual auditor need to meet high-quality auditing standards. Also, under the original bill, all partners of an audit firm would be liable for a breach of regulation. That provision has been adjusted so that only partners who were aware of the breach and did not act to prevent it would be committing an offence. There was quite a lot of discussion about that during the Committee stage, and it is a fair adjustment that avoids punishing innocent parties.

There is no escaping that this is complex and detailed legislation. I know that my colleague the Hon David Parker has talked about that several times. That complexity comes at a cost to the auditors, who face compliance costs, and to the average investor, who has to wade through reams of information simply to understand a basic balance sheet. This legislation is about restoring confidence in financial markets and bringing them into line with international standards.

I will touch on another important point that is lacking in this legislation, which was also raised in the Committee of the whole House, and that is financial literacy. Although I am not ignoring the good work this legislation does in ensuring that there is that important confidence in financial markets, it will be undermined if there is no strategy from the Government to ensure that financial literacy is a priority for every New Zealander. I heard what was said during the Committee stage, and we need both sides of the transaction to be fully informed about financial literacy.

Jo Goodhew: It happened tonight. There was an announcement tonight, you’ll be pleased to hear.

CLARE CURRAN: My apologies for not hearing the previous speaker, Hekia Parata, if that issue was mentioned. The important work done by the Capital Market Development Taskforce, set up under the previous Government by the Hon Lianne Dalziel, identified financial literacy as a key issue. A lot of work was put in under the previous Government in relation to that issue, and that work has largely sat on the table and has not been acted upon. I touch on that because it has been raised so many times in the House as an issue we are going backwards on. A number of issues were raised in a report produced by the task force, particularly on financial literacy, that could form an important part of the Government’s strategy going forward. I hope the Government will actually do that.

The task force identified financial literacy as a key issue, and identified that New Zealand’s capital markets are small relative to the size of its economy when compared with other OECD economies. New Zealanders’ savings practices, which included the limited extent of direct investment in capital market products, might suggest that New Zealanders have a limited understanding of these products. The effectiveness of disclosure by issuers also depends in part on investors’ financial literacy. The task force at that time was interested in looking at the current state of financial literacy in New Zealand and the ways it could be improved.

The task force identified that financial literacy could be improved by more strongly promoting it in schools as part of the curriculum, or by making it mandatory. The task force looked at a process of how it could make that happen. It also looked at financial education outside schools, which could be stepped up in a number of ways if additional funding was available for more frequent marketing campaigns. I think we have seen the importance of this issue during the investigations the Commerce Committee has done, with the truth-in-advertising issue and the way that people in the community can be sucked in by prominent celebrity figures fronting for organisations that turn out to be crooked. It also looked at a campaign that could be run purely on investing and how to invest properly. I hope the Government will look at this.

Although Labour supports these bills, we know that many other issues need to be addressed around them.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : It is my honour to stand and speak to the third readings of the Auditor Regulation Bill and the Financial Reporting Amendment Bill.

As has already been stated, there are basically two major changes in these bills. First, they consolidate all financial reporting, auditing, and assurance standards within a single Crown entity. It will be called the External Reporting Board and will be in full operation by 1 July this year. Secondly—and, I think, more important—the legislation introduces auditor licensing for issuer audits. More specifically, it recognises that audits of companies that manage substantial public investments, or where large amounts of money are obtained from the public, must be performed by the top members of the auditing profession. We saw that, as has already been outlined by previous speakers, in 2009 when the Registrar of Companies expressed grave concerns about the capability of some of the auditors and audit firms to carry out finance company audits to the required or minimum standard.

This legislation provides that the licensing of auditors will be carried out by the Institute of Chartered Accountants and by any other professional accounting body that may be accredited by the newly formed Financial Markets Authority. The authority will set the minimum licensing standards, and this reform, as was stated by the Minister of Commerce, is another step in this Government’s ongoing work programme to restore investor confidence in our financial sector, to restore confidence among mum and dad investors, and to bring about the more effective and more efficient running of our capital markets.

Of course, the previous speaker, Clare Curran, said that not much had been done, but let me outline some of the things that this Government has done in 2½ years: the Financial Service Providers (Pre-Implementation Adjustments) Bill, the Financial Advisers Amendment Bill, the Insolvency Practitioners Bill, and the Insurance (Prudential Supervision) Bill, as well as the regulation of exchanges and settlement systems. That is a record of achievement, it is a record that this Government is proud to take into the upcoming election, and it is a record that far exceeds anything that Labour did in the last 9 years of its administration.

The Commerce Committee recommended a number of amendments to strengthen the legislation, and the most significant of those was to provide for auditing firms to be registered. Firm registration will be permitted if the firm includes at least one licensed auditor, and meets any other requirements imposed by the Financial Markets Authority. That change, which is particularly important and was discussed round the committee table—and there seemed to be some consensus on it—reflected the fact that audit quality, which is paramount within this legislation, is reliant on two specific matters. The first is the competence of the practitioner, or the individual who takes the audit. The second is the quality of the auditing firm’s systems, processes, and procedures. At firm level it is about quality of assurance of the firm that undertakes the audit.

I support this legislation, obviously. It is legislation that reserves issuer audits to experts, and it substantially reduces the future risk of audit-issuer failure. I commend these bills to the House. Thank you.

Hon DAVID PARKER (Labour) : I begin by referring to the Financial Reporting Amendment Bill, which is one of the two bills that we are considering at the moment. This bill sets up a new organisation called the External Reporting Board, which takes over from the Accounting Standards Review Board and sets accounting standards.

The functions of the board are described in new section 24, which is being inserted into the principal Act. Its functions are “to prepare and … issue financial reporting standards for the purposes of” various Government and private institutions. The board can, according to new section 27, express standards that apply to “(a) all reporting entities or groups; or (b) specified reporting entities or groups;”, and that is an issue that I will discuss, developing a theme that Labour members have mentioned on a number of occasions in earlier readings on this bill.

We need to be very careful not to over-regulate here. I agree that we need to have someone who sets standards, and that financial reporting standards are important, and I have no particular gripe with the structure that is being proposed—indeed, Labour members are voting for it. But I will be keeping an eye out in the future as to whether the standards that are produced are practical, and to see that we are not over-regulating for all. As a consequence of the need to have very precise and detailed standards in respect of a few entities, we ought not to require that same level of detail and prescription in respect of all the other entities. Otherwise we are over-regulating them, and putting them to great cost. I know we in this House and the accounting profession often get up and say compliance costs are a terrible thing and we must limit compliance costs—and we must. Overly onerous and expensive compliance costs are a bad thing, and they are a curb upon the success of our businesses. They give an advantage to larger institutions over smaller institutions, because for them those costs are a lower proportion of their turnover and profit. Just because we need those higher standards for some, it does not mean we need for them all.

We must take care, as we have ever-improving financial reporting standards for the most difficult of situations, that we are not making them so complex that people find them impractical and too many people cannot understand them, nor should we be driving people to have to always use expensive professionals in order to meet their financial reporting obligations, when simpler standards could be complied with by people working within their own businesses at less cost. I for one am looking forward to the External Reporting Board taking advantage of its breadth of powers to bring forward standards that are fit for purpose and that do not apply the same minimum standard to all sorts of entities.

That leads me to a related concern in respect of the Auditor Regulation Bill. We have heard prior contributions from both sides of the House—and we agree—that there is a need to have an appropriately qualified audit profession, and that its members have, on occasion, different skills from accountants, and need to have their own standards of regulation. But we are in the process again of increasing compliance costs for businesses. Yes, in respect of the compliance costs for large finance companies and the like, I do not mind them being a bit higher in order for them to have proper scrutiny of their business, so as to avoid repetition of some of the poor practice that we have had of late. I do not think that all of those who are responsible can escape their share of responsibility for what went wrong by saying they were not told to do it properly. I would have thought that the existing rules gave plenty of latitude to good auditors to go in there and expose some of the related party lending that was problematic in those organisations, and to check whether some of the wide boys from the last time there was a clean out in the New Zealand financial system were doing it again during the last property bubble that we had.

Having said that, I do not mind seeing an increasing standard, but it does worry me that this will apply to the regulation of all issuers, because not all issuers are the same as finance companies. Although some finance companies have tens of millions of dollars on their books, an issuer can be anyone who issues securities to the public, and that includes an innovative small business trying to raise a bit of growth money. That small business might have been, until this point of growth, a husband and wife, a family, or a couple of partners in a small business that was growing and developing an innovative idea it wanted to take to the next stage of development, which required them to take it offshore. For them to take it offshore they will need to get some more capital, and they will not be able to get more capital from the banks in New Zealand, so they will have to raise it, and we want them to be able to raise it through capital markets. We do not want the only people able to invest money in these companies to be people who are already wealthy and therefore fit the exclusions of the Securities Act—although I do not know whether they would be an issuer, then; maybe an issue is an offer of securities to the public rather than to the big end of town. But the point is that we do not want businesses that are expanding to be unable to do so because of the cost of raising money because they are all of a sudden determined to be an issuer, and are then caught by overly onerous rules relating to the costs of audits and the complexity of the audit rules that they have to comply with. This is a serious problem in New Zealand, and we risk making it worse through this legislation.

Again, Labour members are not saying that has to be the outcome here, but the propensity of those who are in control of these rules is to try to drive things to an ever-higher standard. We know that that is the propensity of people who are in charge of setting these regulations. That seems to be the natural way of it. The sorts of people who are attracted to sitting on these boards are of a mind to do things ever better, but the cost of perfection is sometimes too high. I do not want to eliminate risk. I just want to appropriately guard against improper levels of risk being taken by people who are either misleading people or not properly making disclosure to the public.

I think we have to be very careful, on the implementation of this legislation, that we are not allowing these new regulators to over-regulate—not the finance company end of town, which is where the problem has been, but the small innovative company that wants to raise relatively small amounts of money. When I say “relatively small amounts of money” we are talking about $250,000, half a million dollars, or a million dollars, which when raised from 20 people is not a large amount of money each. We do not want to over-regulate that space. The key to that is who goes on these boards and the skills that they bring, and that those people themselves are focused on appropriately minimising cost, just as they are focused on appropriately ensuring minimum standards. That lies largely within the control of the Government. I have been in this role. On a lot of these specialist boards we normally accept the recommendation that comes from the professional bodies—the accountants and the solicitors. I think we are reaching a point in our experience of how regulations forever grow, where it is appropriate for Governments of the day to say: “OK, we actually accept your competence to do this job, but we want some assurance that you’re not going add to complexity, and therefore to costs, for our businesses in a way that threatens their competitiveness.”

Labour backs both of these bills. It is necessary that we tighten up the control of audits. I do not accept the proposition that some of the things that went wrong ought not to have been able to be picked up under existing laws. I think there have been some failures in that regard, and I am hopeful that some of that will be brought into the open in some of the litigation that will go through the courts in the years that come, as a consequence of the failures of the finance companies. None the less these are good bills and I support them.

DAVID CLENDON (Green) : Kia ora koutou. I am pleased to take just a short call, in order to affirm the Green Party’s support for the Auditor Regulation Bill and the Financial Reporting Amendment Bill. This legislation has been some time in coming, and there are reasons for that. But it certainly does meet a need. I am grateful to Lianne Dalziel, the chair of the Commerce Committee, who has led us through the sometimes tortuous path to get to this point. She has a phrase, which brings us back to it. She asks: “What is the mischief? What are we actually trying to achieve here?”. These relatively complex bills do engage and address a range of related complex issues. It is very useful just to be centred in that way, and to ask what the mischief is. We know there has been mischief, largely emerging from the radical and excessive deregulation of the finance sector over a number of years—over several decades.

The previous speaker, Mr Parker, very clearly outlined the danger of over-regulation. It is absolutely true that restricting the availability of capital, of finance, is a serious problem for some of our most innovative and potentially productive industries. We have some very smart people in business in this country who are able to come up with ideas and processes that can, in time, return significant value in all sorts of ways. We do not want to overly regulate or restrict the availability of venture capital, of expansion money, needed in order to allow those small businesses to grow and to make a really positive contribution for the benefit of all of us. Having said that, I say the need for more regulation is undeniable, and for that reason the Green Party supports this legislation.

It was often remarked, in the course of the select committee process, that people have questioned why, in the failures of the finance sector, there was so much incompetence. There was a degree of incompetence, undoubtedly. People simply got things wrong. This legislation will serve, in part, to shine a light on that level of incompetence, and, hopefully, to drive it out of the sector. But much more than that, I think there has been a failure of integrity. The deregulation, combined with a prevailing attitude of “if you can get away with it, you should”, has led us to a situation where large numbers of people lost money. The problems in the sector did have very unfortunate consequences, and this legislation will enable a tighter rein, a closer eye, to be kept on what is happening in the sector.

We cannot legislate, ultimately, against dishonesty or foolishness; nor should we endeavour to. But what we can do is endeavour to ensure that people can have a reasonable expectation of integrity, of competence, and of adequate regulation, and that the dealings of finance companies, of the finance sector more generally, and of financial transactions will be openly, transparently, and appropriately reported. Again, this legislation takes us some way down that path.

I heard earlier a reference to financial literacy. We know that New Zealanders, perhaps not uniquely, certainly do not have a high level of financial literacy. I suspect again that that is a hangover from an earlier time, when there was a great deal more trust. People who found that they were in possession of a lump of capital, for whatever reason, could and would invest it with a trusted professional, with a reasonable expectation that their trust would be rewarded and well founded. I think we have gone beyond that. I think we have entered a time when the industry did not in its entirety reflect such integrity. There were not good grounds for trust within that industry. We have, in that situation, needed to return to a regulatory response—a mechanism to ensure that there is more protection for investors, and that people will have a much clearer view of what has been carried out and done in their name.

In terms of financial reporting, I have made the point before that we look forward to a time when not only is the monetary flow through a business reported on but auditors go beyond simply reporting on financial transactions. We look forward to a time when auditors and financial reports generally also engage with, and report on, the broader effect of business activities: the environmental effect, the social effect, the costs and benefits—not only economic matters but also environmental and social costs and benefits. That is not something we need to invent; it is becoming increasingly commonplace internationally. There are well-established and well-respected international bodies capable of modelling good reporting that engages social and environmental costs and benefits, as well as the economic and financial aspects. Again, in time we may see value in developing a light-handed regulatory framework to require that. But I think more and more that will come from the business and finance sector itself, as people require a better, clearer, and more comprehensive picture of what is being done in their names, with their money, and of what the social and environmental impact is of business and finance transactions generally.

To return to the general theme of the integrity and trustworthiness of our professionals, whom we expect to perform on our behalf, I think there is a returning, or certainly an emerging, sense in our education and training institutions that alongside competence we need also to teach ethical models. We need to challenge young professionals, in particular—and, indeed, not-so-young professionals—who are responsible for both managing and reporting on financial activity. We need to challenge them to investigate their own value systems and their own belief systems, in order that they will behave in ways that people can reasonably expect to return honest and open transparency to the sector.

In summary, as I said, in some ways we regret the need for this regulation, but that need is undeniable. We need to put in more reins and demand greater transparency and more authority within the sector. We are very happy to support that, and we will continue to do so. Kia ora.

KATRINA SHANKS (National) : It is my pleasure to take a call on the Auditor Regulation Bill and the Financial Reporting Amendment Bill at their third readings. The National-led Government is absolutely committed to improving the integrity of our financial system.

In 2008 Business Week named New Zealand as one of 13 nations at most risk from the global financial crisis. On too many occasions during the finance company collapses we heard of investors losing money and of there being limited recourse for them to find assistance to reclaim it, or any way for them to claim against their losses. That has damaged investor confidence, and if we are to restore that confidence we need to make changes. Our Government wants to assure investors that we are committed to ensuring that the Financial Markets Authority has the powers it needs and is encouraged to use them.

The Financial Markets Authority opened for business on 1 May and takes over the functions of the Securities Commission and the Government Actuary. This new authority will lift the bar in terms of market behaviour, and will have the tools it needs to help to restore investor confidence in our financial markets, which has taken a battering in recent years. It is clear that if we are to broaden and deepen our financial markets to benefit companies looking to raise capital, our financial sector must be subject to clear rules and visible, proactive, and timely enforcement. I believe we have worked hard to create legislation that will strengthen the regulation of practitioners who carry out issuer audits, and that consolidates the setting of accounting and auditing standards within the new External Reporting Board.

When the Commerce Committee met to discuss the legislation, one of the main issues raised was the importance of providing a high level of assurance that financial statements are free from error and can be relied upon. We know that the quality of information is absolutely vital for sound business and economic decisions, and this legislation address that harm. By targeting the class of audits where investors are most at risk of losing substantial amounts of money in the event of audit failure, we can begin to bring back some confidence for investors. The establishment of a single Crown entity, the External Reporting Board, will consolidate financial reporting, auditing, and assurance standards.

We also looked closely at licensing regulations, and, in particular, we made the recommendation that auditing firms be registered. We see that as fundamental to ensuring the competence of practitioners and the quality of auditing firms’ systems, processes, and procedures. The legislation will bring New Zealand’s auditor regulation system up to internationally acceptable standards, ensuring that New Zealanders can work overseas, and can continue to carry out audits of overseas-owned New Zealand entities.

This legislation has substantially reduced the future risk of issuer audit failure, and will ensure that investors once again have the confidence to invest. I commend this legislation to the House.

STUART NASH (Labour) : It is interesting to listen to National members speak on the Auditor Regulation Bill and the Financial Reporting Amendment Bill, because they herald them as major legislation, yet they cannot even speak for 10 minutes on them. I am not sure whether that shows their lack of knowledge in relation to the details of the bills or their lack of enthusiasm for the bills. But whatever it is, I think it is quite poor form.

I stand in support of these two bills, because they do most important work in restoring the confidence of New Zealanders in our financial markets and our capital markets. But before I continue, if Mr Deputy Speaker may indulge me, I would like to correct or comment on something a member said recently. I think Sandra Goudie may have given out some Budget secrets a week too early. When she was speaking on the last bill that we debated, she thanked the dairy industry because it provided all the money. She thanked the people in the industry for all their hard work and all the money, because, she said, they paid for our health, education, and social welfare systems. Those people paid out $26 million in tax last year, so I am wondering whether the budgets for health, social welfare, and education will be slashed to $26 million.

Mr DEPUTY SPEAKER: We are on the third reading.

STUART NASH: I digress.

I thank the Hon Simon Power, the Minister of Commerce, who brought this legislation to the House. It is very good legislation; he is a very hard-working Minister. In fact, I think it was Simon Bridges who told the House that Mr Power has been responsible for over 40 percent of the bills brought before the House—40 percent of the bills brought before this House. Simon Power is certainly a hard-working Minister. I suspect that is the reason that he has decided to resign. He is sick to death of carrying National. Having said that, Mr Power’s plan for getting the country out of its problems is to sell State assets. He is the man who has been put out with a policy to sell State assets. I wonder whether that is a bit of a poisoned chalice.

Mr DEPUTY SPEAKER: I brought it to the attention of the member earlier that this is a third reading speech. Speakers can comment only on what is in the legislation. I refer the member to Speakers’ Rulings; there are a number of rulings on page 117. I ask the member to come back to the content of the bill.

STUART NASH: As I was saying, Simon Power, the hard-working Minister, has done a good job of continuing the work that the Hon Lianne Dalziel started and heralded through the Commerce Committee.

Specifically, the Auditor Regulation Bill recognises that the audits of companies that manage public investments, or that otherwise obtain large amounts of money from the public, must be performed by registered members of the auditing profession. A very good question is why the regulation of auditors needs to be reformed. It is a very good question. The answer is that 69 finance companies have gone broke since the global financial crisis. I understand that that has taken out about $6 billion of savings from good, hard-working New Zealanders. These are people who wanted to retire or who put money away for their grandchildren’s education, and it was ripped out. What has happened has made financial reporting hugely important to investors.

My colleague David Parker talked earlier about the need for investors to have confidence in the professionals who are charged with ensuring that these documents meet the required standard. As Mr Clendon mentioned in his short 10-minute speech, we cannot legislate against incompetence, but I would say, and it is my contention, that when investors are making an investment decision, incompetence is not one of the variables that they should have to take it into account when assessing risk. In fact, what happened is that in a lot of the 69 finance companies that failed, incompetent people were undertaking to provide professional advice. That is one of the reasons why those companies fell over.

I do not want to taint every single auditor. There were a lot of good auditors out there. In fact, there are a lot of very good auditors. They welcome this bill. They welcome this bill because it removes a lot of those sorts of charlatans from the profession. The bill gets rid of people who call themselves professionals but who act in everything but a professional way.

Hon Clayton Cosgrove: A bit ironic.

STUART NASH: Yes. New Zealand’s self-regulatory model was no longer within the range of acceptable auditor regulation systems. New Zealand needed to change in order for auditors to obtain the right to practise in Australia and other jurisdictions, such as the European Union. My colleague David Parker elaborated on that, so I will not go into too much detail.

The actual purpose of an audit is to provide assurance to investors, regulators, and other market participants that a set of financial statements is free from material error. That is quite an important consideration, because business decisions will need to be made on the basis of financial statements. So it is important that audit firms have a very strong reputation. I do not think that is doubted by anyone. In the last 6 months the disciplinary tribunal of the Institute of Chartered Accountants of New Zealand has made orders against four members who, between them, led five failed finance company audits. The tribunal found that those audits were not carried out in accordance with the institute’s ethical, professional, and auditing standards. It is those sorts of people whom this bill will weed out, because the penalty for breaching this legislation is $50,000. For overseas auditors registered in New Zealand, the penalty is $10,000. We discussed the penalty in the Committee stage. It sends a very strong message that every single member of this House recognises that there needed to be a change. This legislation provides that change. It provides that the licensing of auditors will be carried out by the Institute of Chartered Accountants, and by any other professional accounting body that may be accredited by the Financial Markets Authority. The Financial Markets Authority will set a minimum licensing standard to oversee the professional accounting bodies and will be responsible for practice reviews.

What is the Financial Markets Authority? It is a newly constructed market regulator for New Zealand’s financial markets. It is pretty much what the title says it is. It officially started on 1 May this year, so it is very new. The Financial Markets Authority performs the regulatory functions currently undertaken by the Securities Commission—

Peseta Sam Lotu-Iiga: Not currently.

STUART NASH: —previously; I am sorry, Mr Lotu-Iiga—and some of those undertaken by the Government Actuary and the Companies Office. The Financial Markets Authority Act established the Financial Markets Authority, which Labour supported of course; in fact, I think every member in this House supported it. The Financial Markets Authority has powers, functions, and duties that its predecessors did not have, including, for example, the power to exercise an investor’s right to take civil action against a financial market participant, the ability to prevent products from being structured so as to avoid their being supervised by the Financial Markets Authority, and enhanced warning powers. It is not the ambulance at the bottom of the cliff. It is at the top of the cliff; it is the overview. If anything looks wrong, if anything does not look right, the Financial Markets Authority can step in at any point in time and say it requires a change to be made, it needs to see what is going on, or it needs to audit a practice. It is a very powerful body, and again, as my colleague David Parker alluded to, Labour hopes that it exercises the powers that it has been granted in a prudent manner.

I will wrap up by saying the reform represents another important part of this Parliament’s ongoing work programme to restore investor confidence in our financial sector, in our capital markets. It includes other things like, for example, the review of securities law started under Lianne Dalziel. The Commerce Committee, chaired very ably by Lianne Dalziel, recommended a number of amendments to improve and strengthen the legislation. We went through those in the Committee stage. In fact, this is quite unusual legislation, because we are now passing two bills, whereas in the Committee stage the provisions were merged into one bill. Because the two bills are very similar in nature, they are being read as one. This is very important legislation. I think it will go a considerable way towards restoring the confidence of the New Zealand public in our capital markets and financial sector. That is one of the main reasons why I support this legislation. Thank you very much.

MELISSA LEE (National) : This is just a comment that we all support the Auditor Regulation Bill and the Financial Reporting Amendment Bill. I support this legislation and give the House a reminder that it was, in fact, the Registrar of Companies who identified that audit failures contributed to the finance company collapses, that self-regulation alone was no longer acceptable as it was not working, and that independent oversight was needed. This is great legislation. I look forward to it becoming law. I support this legislation. Thank you.

BRENDON BURNS (Labour—Christchurch Central) : I will take the opportunity as, I suppose, the tail-gunner on this important legislation to affirm the importance that the Labour Party attaches to regulation. I once heard regulation described as the necessary price for a civilised society. I have also heard it described as “One man’s chains are another man’s freedom”, and I say these bills, the Auditor Regulation Bill and the Financial Reporting Amendment Bill, will provide financial freedom and security to more New Zealanders than we have seen in the past.

I am pleased that Simon Power was the Minister who brought forward these bills. I shudder to think of the sorts of financial regulations we might have seen if a Minister like Rodney Hide, with a well-known distaste for regulation, had been the Minister chosen to bring through this legislation. We have seen in the past the consequences that ensue from a complete move away from regulation. I think back to the multibillion-dollar issue of leaky homes, which was created by a volatile cocktail of deregulation, leading to poorer building practices and the ensuing results for many thousands of New Zealanders.

These bills are about the oversight of those who have a role in auditing financial companies that are players in financial markets, and those much smaller than that. If I think of an example that I would like to see subject to the sort of scrutiny that these bills embody, I think of the detestable character Bernard Whimp, who, as recently as this week, was still crowing about the money he managed to extract from poor and vulnerable consumers of financial products. He describes this country as being one that wants to wrap everybody in cotton wool. In other words, what he wanted was the opportunity to rape and pillage the financial savings of poor mum and dad investors—not sophisticated people—who presumed that when somebody approached them over purchasing shares, that person was acting in a broad set of interests, not simply the venal self-interest of one Bernard Whimp.

I also think about the two people behind Hanover Finance who used to advertise on our State television news programme with the line: “Hanover, the name you can trust.” In fact, they were taking the mum and dad investors’ money and putting into their highly speculative investments with no accountability, no trail, and no proper audit. That saw thousands of mum and dad investors lose their life savings. That is why we need regulation, as embodied in these two bills. So I am pleased that Labour has supported this legislation through Parliament to this point. I think it makes absolute sense.

I have a final point in support of this legislation. Today we saw the Governor of the Reserve Bank, Dr Alan Bollard, appear before the Finance and Expenditure Committee in an open session. He talked about how we are seeing a more resilient position in the financial system, but it is still subject to volatility and uncertainty. He particularly noted that in the insurance sector, which has come under a lot of stress in New Zealand because of the Christchurch earthquakes, we have already seen one major insurer needing financial reassurance from the Government. He noted that there are new prudential rules for the insurance industry. They do not come into play, unfortunately, until next year, but he is taking a keen interest in how the insurance industry is governing itself prior to it coming into the new regime that takes effect from next year.

Dr Bollard noted that although overall the insurance industry is sound and functioning well, some may fall short of the sorts of standards that are expected under the new licence requirements, and that could lead to some industry consolidation and exits. Already we have seen one company, Western Pacific, go under. I know personally of people who have lost their insurance cover on buildings in Christchurch as a result of that company going under. It clearly was not subject to the sorts of regulations that this legislation is bringing in for another sector of the financial markets. That is why we need this legislation and why we need regulation. We do not want heavy-handed regulation but we do need to see people in this country being able to invest with confidence. I support these bills.

  • Bills read a third time.

Sittings of the House

JO GOODHEW (Junior Whip—National) : Given that we have made excellent progress and are very close to the usual time for the House to rise I seek leave for the House to now rise for the evening.

Mr DEPUTY SPEAKER: Leave is sought for purpose. Is there any objection? There is no objection.

  • The House adjourned at 9.59 p.m.