Volume 686 Week 29 - Thursday 29 November 2012 
Text is incorporated into the Bound Volume 
Volume 686 Week 29 - Thursday 29 November 2012 
[Sitting date: 29 November 2012. Volume:686;Page:6937. Text is incorporated into the Bound Volume.] 
Thursday 29 November 2012 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 When the House resumes on Tuesday 4 December the Government will look to pass the Callaghan Innovation Bill and a number of first readings on the Order Paper including the Family Court Proceedings Reform Bill and the Public Finance (Fiscal Responsibility) Amendment Bill. With the agreement of the Business Committee there will be extended sittings on Tuesday 4 December and Wednesday 5 December effective on the mornings of Wednesday 5 December and Thursday 6 December to progress a number of non-controversial bills agreed by the Business Committee. On Thursday afternoon Parliament will continue the Committee stage of the Alcohol Reform Bill. Wednesday is a members’ day. 
Questions to Ministers 
Housing Affordability and Availability—Government Work Programme Auckland Issues and Hobsonville Development 
1. 
Hon ANNETTE KING (Labour—Rongotai) 
 to the  
Minister of Housing 
: What progress has the Government made in the provision of affordable home ownership in Auckland? 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 We have recognised that you cannot fix housing affordability without fixing the underlying drivers of cost. The Government has recently set out its response to the Productivity Commission’s report. We will work with the Auckland Council to increase land supply and reduce the cost delays and uncertainty of the Resource Management Act along with other measures. Interest rates are at record lows saving Kiwis thousands of dollars in interest. In addition over $8 million was invested in affordable housing projects in Auckland through the Social Housing Fund and over the next 5 years as part of its redevelopment work the Housing New Zealand Corporation intends to provide 400 houses for affordable homeownership along with 600 more affordable homes in Hobsonville. 
Hon Annette King 
: Can he confirm that the Government’s affordable houses now to be built at Hobsonville will be indirectly subsidised by spreading their costs across the whole Hobsonville housing development as stated by the Department of Building and Housing at the Social Services Committee yesterday? 
Hon PHIL HEATLEY 
: The houses at Hobsonville will not be subsidised. It is pretty usual in a development that there are a range of section sizes and house sizes sold at different values. I think that indicates how much the Labour Party knows about subdivisions and the building industry. 
Hon Annette King 
: Can he confirm at this stage that there are no criteria as to who would purchase his affordable homes at Hobsonville there are no criteria for allocation there is nothing stopping developers from buying them up and onselling them and there is no requirement for them to go to first-home buyers as confirmed by the Department of Building and Housing at the select committee yesterday? 
Hon PHIL HEATLEY 
: I can confirm half of those things because they were in my speech in the announcement when I made it. I said that the Hobsonville Land Company was working through the details and would announce in the next few months exactly what the criteria were. So I announced that. I am glad that the member was listening. 
Hon Annette King 
: Obviously no work done on it. 
Mr SPEAKER 
: Order! 
Hon Annette King 
: Is he aware that the Department of Building and Housing said at the select committee yesterday that the international measure of housing affordability is that a mortgage should not exceed 30 percent of the annual household income; if so has he worked out that a buyer of one of his affordable houses at Hobsonville would need an annual income of $110000? So who is going to buy these houses? 
Hon PHIL HEATLEY 
: We made it very clear that 10 percent of the houses at Hobsonville and units there would be under $400000 another 5 percent under $450000 and another 5 percent under $485000. We called these houses more affordable because in the Auckland context houses are very expensive. We are not running up and down New Zealand saying that we can have 100000 houses across this country—66000 of them in Auckland—under $300000 each. We are not claiming that. 
Simon O’Connor 
: What reports has the Minister seen on alternative affordable housing proposals? 
Hon PHIL HEATLEY 
: I have seen a report of a proposal to build 66000 houses in Auckland for $300000 or less each based on the winner of the Starter Home Design Competition. I thought it might be of interest to the House to know that the Housing New Zealand Corporation built that home in Otara Auckland and actually the estimated cost of building that starter home in Otara Auckland was for the build $170k; the site work $25k; local authority costs $10k; consultants and other costs $10k; $27k for GST; and land $120k. That starter home was $362000. It is the flagship of the Labour Party policy. 
Hon Annette King 
: Well in light of that answer can he confirm that the size of his affordable houses to be built at Hobsonville will be as small as 65 square metres as stated by the Department of Building and Housing at the select committee yesterday; and did he confuse Hobsonville with Hobbiton? 
Hon PHIL HEATLEY 
: At the announcement I told the media and all there that the houses the units and the studio units would be one two or three-bedroom properties. I said what the costs were. I am not running up and down New Zealand saying I can build 100000 houses—66000 of them in Auckland—for less than $300000 each. I am not making that claim. The Labour Party is making that claim. 
Hon Annette King 
: I would like to table household plan Delta 65 a household plan of a 65 square metre house which is described as a cottage for holiday accommodation. 
Mr SPEAKER 
: The source of this document is? 
Hon Annette King 
: The source of this document is investorhomes.co.nz—plans minor dwellings. 
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. 
Simon O’Connor 
: Has the Minister received any reports on how many sections in Auckland are currently being advertised on TradeMe for under $100000? 
Hon PHIL HEATLEY 
: Yes. I did ask for a report on section prices in Auckland under $100000 because I understood there could be many under $50000. However I have discovered that in Auckland there are sections under $100000. The number of those sections is eight—eight! 
Economic Growth International—OECD Forecast 
2. 
PAUL GOLDSMITH (National) 
 to the  
Minister of Finance 
: What reports has he received on the global economic situation and its expected impact on the New Zealand economy? 
Hon STEVEN JOYCE (Acting Minister of Finance) 
: 
 The Organization for Economic Cooperation and Development this week issued its updated forecast for the world economy. As the OECD Secretary-General said the world economy is far from being out of the woods. Accordingly the OECD has revised down its outlook for the world economy from its previous forecast in May. It now expects economic growth of only 1.4 percent across the OECD in 2013 which will match the expected growth for this year. This is forecast to rise to only 2.3 percent in 2014. The weaker position across developed economies is expected to moderate growth in this country with a forecast growth of 2.4 percent next year which would make us in a stronger position than many other countries we compare with. 
Paul Goldsmith 
: What are some of the factors behind the OECD’s weaker forecasts for global growth? 
Hon STEVEN JOYCE 
: There is a range of factors. If we look around the OECD according to the OECD’s latest forecasts the US economy will grow by 2 percent in 2013 with the Japanese economy expanding by only 0.7 percent while the euro area will remain in recession until early next year. The OECD has observed that if the US fiscal cliff materialises it could tip in fact an already weak US economy into recession. The OECD says that Governments in the euro area and the US must act decisively using all the tools at their disposal to turn confidence round and boost growth in jobs and that is exactly what the New Zealand Government is doing in this country. 
Paul Goldsmith 
: What observations does the OECD make about the New Zealand economy and its outlook for the next few years? 
Hon STEVEN JOYCE 
: The OECD observes that the New Zealand economy is likely to continue expanding at a moderate pace. It notes that there will be headwinds from weak external demand a resulting strong currency high household indebtedness and fiscal consolidation. However I have said that its forecast growth of 2.4 percent for New Zealand in 2013 and 2.9 percent in 2014 would leave us relatively well placed against other countries in the OECD. That relatively good position was confirmed today by Statistics New Zealand which showed average household incomes increased by 2.3 percent in the year to June 2012 while housing costs for example were unchanged in that year. So times remain challenging for many households but on average incomes are rising faster than the cost of living. 
Andrew Williams 
: What is his response to a report from the New Zealand Institute of Economic Research this week that warns that New Zealand exports to Australia our largest export market declined sharply by almost 10 percent in the last 6 months; and how does he expect this to impact on the New Zealand economy? 
Hon STEVEN JOYCE 
: My understanding is that is partly in the petroleum space so I would need to go back and have a look as to what is driving that particular figure. But I would say to the member that yes it remains a challenging time and of course we all watch with close interest what is happening with Australia because the eastern states of Australia particularly New South Wales and Victoria are showing signs of struggling and a lot of our goods do go into those markets whereas the states such as Western Australia and particularly central Queensland are where most of the Australian growth is occurring. So I think that underscores the challenging nature of the economy that we are in and the constant work we all have to do to improve the competitiveness of the environment that our businesses operate in. 
Paul Goldsmith 
: What can New Zealand learn from the experiences of other countries in light of the latest OECD forecasts? 
Hon STEVEN JOYCE 
: Well there are probably three main lessons. Firstly we must continue with the Government’s wide-ranging economic programme which is focused on responsible fiscal and economic management and also improving the competitiveness of our businesses through the Business Growth Agenda. Secondly New Zealand is better placed than most other countries in the OECD and now is not the time for risky and untried economic experiments. And the third lesson is probably that promises of more borrowing and more spending including say for example a very large housing programme that was uncosted or perhaps doubling paid parental leave should simply not be approached at this time given the fragility of the world economy. 
Greenhouse Gas Emissions—Rate of Change and Current International Ranking 
3. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
 to the  
Minister for Climate Change Issues 
: How does New Zealand rank internationally in terms of net emissions in the latest United Nations national greenhouse gas inventory data for the period 1990-2010? 
Hon TIM GROSER (Minister for Climate Change Issues) 
: 
 The latest UN report on inventory data for this period shows that New Zealand’s net emissions in 2010 are ranked 29th out of the 42 annex 1 countries—roughly developed countries—in a recent summary by the United Nations Framework Convention on Climate Change. 
Dr Russel Norman 
: Was the report accurate then when it showed New Zealand had the second-largest increase in net emissions of the 41 annex 1 countries in the report? 
Hon TIM GROSER 
: It is a different issue about the rate of change going back over 20 years and six or seven Parliaments. All I can say is that in the course of the life of this Government net emissions have decreased. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. It was a very straight question. I asked whether the report was accurate when it said we had the second-largest increase in net emissions. 
Mr SPEAKER 
: The member’s point is correct in that it was a very simple question. If the Minister does not have that information then that is one thing but I think he should attempt to answer the question. 
Hon TIM GROSER 
: The answer is straightforward. As far as I understand the answer is yes over a 20-year period. The point I am making is that in the period for which this Government has had responsibility New Zealand’s emissions in net terms have decreased. 
Dr Russel Norman 
: Are not New Zealand’s net emissions going to increase even further because his Government gutted the emissions trading scheme and is he aiming to become the country with the biggest increase in emissions a race this Government seems determined to win? 
Hon TIM GROSER 
: I am confident that the one commitment that we have taken which is to reduce our emissions according to our original Kyoto Protocol commitment will be fully met. 
Dr Russel Norman 
: Does the Minister think that Kiwis will be “loving it” in the words of the Prime Minister that New Zealand’s net emissions which increased by 60 percent in this period are now going to go through the ceiling because the bottom has fallen out of the emissions trading scheme and New Zealand now faces another chainsaw massacre in forestry job losses? 
Hon TIM GROSER 
: I think New Zealanders will be “loving it” that they are run by a Government that is putting the interests of households jobs and industries first. 
Dr Russel Norman 
: Well does the Minister think that Kiwis will be “loving it” in the words of the Prime Minister that his changes to the emissions trading scheme are going to cost taxpayers $328 million according to Treasury’s paper that went to Cabinet—$328 million that has been transferred from polluters on to taxpayers? 
Hon TIM GROSER 
: This is treading over very well trodden ground. That represents a figure of revenue that would have occurred had we decided to increase charges to taxpayers and households. Eighty percent of that figure would have been borne by households and businesses. 
Dr Russel Norman 
: Does the Minister think that Kiwis will be “loving it” in the words of the Prime Minister that the Small Island States chair Nauru’s Marlene Moses has said that she is disappointed and mystified by New Zealand’s refusal to sign up to a second commitment period under the Kyoto Protocol? 
Hon TIM GROSER 
: I think we will be able to clarify the situation when we have the opportunity to speak directly to the Nauruan delegation. 
Dr Russel Norman 
: Will the Minister agree to sign this letter to the future generations of New Zealanders saying “I am sorry. I knew what the right thing was to do but I chose not to do it. Tim Groser.”? 
Hon TIM GROSER 
: I do not think I can possibly answer the question. I have no idea what this letter is or what the organisation he has referred to is—unless it is the delegation of New Zealand youth leaders to the conference in Qatar which is going to include as a so-called youth leader a political adviser of the Green Party. 
Dr Russel Norman 
: How—[ 
Interruption 
] Did you pick him? 
Mr SPEAKER 
: Order! I have called Dr Russel—[ 
Interruption 
] Order! I must hear the question. 
Dr Russel Norman 
: How can we ask the rest of the world to make the necessary cuts to avoid out-of-control climate change when we ourselves are refusing to reduce our greenhouse gas emissions and we have the second-largest increase according to the United Nations? 
Hon TIM GROSER 
: The whole purpose of this conference that Mr Bridges and I will be going to is to try to ensure that the future agreement encompasses 85 percent of countries outside the Kyoto Protocol so that we have a serious opportunity for the first time of getting on top of the problem. I think that is an entirely reasonable position for any New Zealand Government to take. 
Dr Russel Norman 
: I seek leave to table a draft letter from the Hon Tim Groser apologising to future— 
Mr SPEAKER 
: Order! The source of this document? 
Dr Russel Norman 
: I wrote it for him. 
Mr SPEAKER 
: No we do not— 
Dr Russel Norman 
: I seek leave to table the United Nations’ latest update on greenhouse gas emissions. 
Mr SPEAKER 
: That is available to all members—the latest document. 
Todd McClay 
: Has the Minister come across any other recent reports on New Zealand’s current international standing in respect of our relative environmental impact? 
Hon TIM GROSER 
: Yes. I have seen another report the so-called  
PLOS ONE 
 report which attracted media comment this week called  
Evaluating the Relative Environmental Impact of Countries 
 which notes I have to say that we are well off the pace set by the top 10 best performers which include Tajikistan Djibouti the Central African Republic and Swaziland. But I am sure that we could achieve parity with these leading performers if we adopted the economic policies pursued by the Green Party. 
Youth Unemployment—Statistics and Limited Service Volunteer Programme 
4. 
JACINDA ARDERN (Labour) 
 to the  
Minister for Social Development 
: Does she stand by her statement “No one wants to see young people floundering on benefits and we will keep the focus on our youth however evidence tells us the programmes this Government has introduced are making a difference”? 
Hon PAULA BENNETT (Minister for Social Development) 
: 
 Yes. In fact since I made that statement in July 2011 the total number of young people on benefit has fallen by 4100 and 33648 young people have cancelled their benefit to go into work. 
Jacinda Ardern 
: Can she confirm the answers provided to questions to the Ministry of Social Development that of the 1300 young people who participated in the Limited Service Volunteer course in the last year more than 1000 either failed to complete the course or were still on a benefit 3 months later? 
Hon PAULA BENNETT 
: Yes I can. It is for a variety of reasons. We have some who fall out early because of medical reasons. I mean it is quite an active and quite an intense kind of course particularly in those first few weeks. We also have a number who fall out because they get homesick to be honest—because they get away from home for the first time. We also have some it does not suit. We are getting those numbers up as far as those we are getting into training and to work and have got a completely different way of looking at it. 
Jacinda Ardern 
: Does she consider more than 50 percent of young people still being on a benefit after completing that programme evidence that her programme is not making a difference or evidence that her Government is not making a difference and that the jobs just are not there? 
Hon PAULA BENNETT 
: Actually Limited Service Volunteer is making a difference and we have seen the numbers—[ 
Interruption 
] Well if you want to listen to the answer then just zip it sweetie I am getting there. So what it is is that actually what you have got is you have got a number of people who do fall out in the first few— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I think you heard what the Minister said. 
Mr SPEAKER 
: I certainly did not hear what the Minister said because the noise level was too high. 
Hon Trevor Mallard 
: Well we could hear it on this side and I suggest that if you had listened you could have heard it. It was exceptionally offensive. [ 
Interruption 
] 
Mr SPEAKER 
: Order! I did not hear what the Minister said—I honestly did not—because the noise level was too high. When members interject excessively they may get a reaction. However if the Minister said something that has caused offence I would ask her to withdraw it. But I do not know what she said. I leave it to the Minister. 
Hon PAULA BENNETT 
: Speaking to that point of order Mr Speaker what I said was “zip it sweetie” because she had said—and within three words— 
Mr SPEAKER 
: Order! No I did not actually call the member to speak to a point of order. I actually asked her—[ 
Interruption 
] Order! That will do. I asked the Minister if she had said something offensive to withdraw it. It appeared though it was not. Compared with other language I have heard used around this House it would appear that it was not that offensive. [ 
Interruption 
] Order! It related to excessive interjections and the Minister says she said “zip it”— 
Hon Trevor Mallard 
: No no no—she said “zip it sweetie”. That’s what she said. [ 
Interruption 
] 
Mr SPEAKER 
: Order! Can I ask the—[ 
Interruption 
] No order! Order! I am now on my feet. Thank you. If we get too offended by that sort of thing—had it come out without provocation I would have treated it far more seriously. But given that there was so much interjection that I could not even hear it—and members have got to think about this. If they interject excessively they may get comments back that are not great. If it was outrageously offensive I would have required it to be withdrawn. But no one can say that was outrageously offensive. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. [ 
Interruption 
] 
Mr SPEAKER 
: Order! A point of order has been called. 
Hon Trevor Mallard 
: Mr Speaker if that term was used to a member who was not a younger woman member—in that sort of approach—I think you would find it offensive. We certainly found it offensive here and I ask you whether that term is something that is appropriate. “Zip it” might have been all right but— 
Mr SPEAKER 
: Order! Look there is a myth that there are certain terms that are ruled out in this House. It is a myth—there are none. Members should treat this place this House with respect and members should treat each other with courtesy. If members interject in a rude manner they may get a less than perfect reaction from the Minister. The level of interjection was so high that I did not hear what the Minister had said. I accept my hearing is less than ideal. I fully accept that and I apologise for it. But I believe that if we allow ourselves to get worked up over that we are just being unnecessarily petty. The solution is simple: do not interject so much. It was not necessary. The member had asked a question and should be interested in the answer. It was difficult to hear the answer so the Minister felt provoked and said something that was less than ideal but under the circumstances I am not going to ask the Minister to withdraw and apologise for it. 
Hon PAULA BENNETT 
: I am going to answer the question if I might. So for the 50 percent what we have seen is an increase in the numbers that have actually been going into work and training in the last 12 months. What we have tried to do is get better connection into training establishments and into the workforce so they now hold workforce seminars which are making a bit of a difference. We are seeing more connection into jobs. We have Work and Income working with them over the whole 6 weeks while they are in Limited Service Volunteers. These are people who have been on benefit. It is not easy for them to find work but we have been getting better results more recently than we ever have and I think we can continue to grow on that. 
Jacinda Ardern 
: If there are jobs out there why did the Prime Minister recently write letters to employers asking them to take on Limited Service Volunteer graduates with the sweetener that they can be paid less? 
Hon PAULA BENNETT 
: Well that sweetener is actually about our connecting them with the Job Streams which means that they can get a part subsidy which is something that the Opposition is constantly calling out for. So it is effectively a wage subsidy that helps those people in the first 6 months in their jobs or even through to a year now when we individualise it more. The Prime Minister is pretty passionate about getting young people into work. The fact that he is now shouting out to employers and saying: “Here are some young people who are ready who are active who are turned on to the facts of going on to jobs. I would like you to give them a chance.” I think is absolutely positive stuff and good on him for actually getting ahead of it. 
Le’aufa’amulia Asenati Lole-Taylor 
: How can she stand by her answer to the primary question when unemployment among Pacific youth has reached up to 40 percent under this Government? 
Hon PAULA BENNETT 
: The number that the member is talking about is actually around the household labour force survey and not about those who are on benefits. But we know there is work to be done. We have seen improvements with those numbers on the unemployment benefit since January 2011 when it peaked under the recession. We have been making headway with the numbers of those who are stuck on benefits over longer periods of time and we think that we can continue to do that. 
Jacinda Ardern 
: Does the Minister believe that the job market is so bouncy that it is justification for her decision to change the number of times she reports on benefit figures from 12 times a year to just four times a year? 
Hon PAULA BENNETT 
: Let us be clear: we have got a whole new way of reforms that are going through under welfare. So what we are going to be seeing is an investment approach. We are going to be getting much better information out there. It will be far more robust. And yes actually things do change month to month. Reporting on a quarterly basis—which we have been signalling for more than 12 months now I might like to say to the member—will show that we are being more robust and show more information I think that will make more sense. 
White Paper for Vulnerable Children—Mentoring Programmes and Financial Support for Education Initiatives 
5. 
Peseta SAM LOTU-IIGA (National—Maungakiekie) 
 to the  
Minister for Social Development 
: What opportunities does the Government’s White Paper for Vulnerable Children provide for New Zealanders to get involved? 
Hon PAULA BENNETT (Minister for Social Development) 
: 
 The white paper Children’s Action Plan looks to all New Zealanders to get involved—individuals communities and corporate organisations. They have their part to play in supporting these vulnerable children. We want to set up an independent trust to support education and training awards and scholarships for vulnerable children. The trust will be tasked with growing the scholarship programme and attracting support from individuals communities but also corporate organisations. 
Peseta Sam Lotu-Iiga 
: What progress has she seen of mentoring programmes that are working with children? 
Hon PAULA BENNETT 
: Last night I attended the launch of Big Brothers Big Sisters in Auckland. It currently has 15 locations around the country and is now moving there. It has already made 25 matches of big brothers or big sisters with young people who really need that kind of support. It has also partnered with UBS and I want to congratulate UBS on that corporate partnership which I think makes a big difference in seeing the dollars going to those young people who really need it. 
Peseta Sam Lotu-Iiga 
: How can these mentoring programmes make a difference for children and young people? 
Hon PAULA BENNETT 
: The fact is we know that there can be a powerful impact on young people if they are connected to an adult who mentors them and stays with them over a period of time. We have some fantastic organisations throughout this country that head up those mentoring programmes like TYLA Project K First Foundation Big Buddy Challenge for Change and many others. I am going to support them as the Government will support them more when we see that connection with young people and those mentors that they need most. 
Public Transport Auckland—City Rail Link 
6. 
PHIL TWYFORD (Labour—Te Atatu) 
 to the  
Minister of Transport 
: Does he still “take big issue with the suggestion that the City Rail Link is useful or popular”? 
Hon GERRY BROWNLEE (Minister of Transport) 
: 
 Yes. 
Phil Twyford 
: What will be the impact on productivity and economic growth in Auckland with rush hour traffic slowing to walking pace within 10 years under his transport policies? 
Hon GERRY BROWNLEE 
: I think the first point is that if this project were to go ahead it would make around about a 20 percent difference to some traffic coming in as low as a 10 percent difference to traffic that would be coming by way of cars and around about a 20 percent difference to people travelling by buses. When you have a growing problem with a projected big number at the end of it yet relatively manageable percentages around the size of the problem I think you have got to be very careful before you commit $3 billion minimum or around about $1 million per metre for a tunnel project that will do so little. 
Phil Twyford 
: What is his plan to ease central city congestion and remove the network constraints on Auckland’s public transport system? 
Hon GERRY BROWNLEE 
: The Government will work with Auckland Transport which has a very important role to play and when we have all of the information in front of us the Government will be able to work out exactly what we might do. What I can say to the member is that I would be prepared to consider any information that does come to us. 
Phil Twyford 
: Why does his Government refuse to listen to the Auckland Employers and Manufacturers Association which says that building a city rail link is a no-brainer and the 64 percent of Aucklanders who say they support building the rail link? 
Hon GERRY BROWNLEE 
: Sixty-four percent of Aucklanders do not make that comment but 100 percent of Aucklanders will notice how much the Government is spending to try to improve both the roading network and public transport in Auckland. The 64 percent figure the member refers to was from a HorizonPoll which previously predicted a very bad result for this current Government in the last election. It was wildly inaccurate as I believe it is on this. 
Phil Twyford 
: I seek leave of the House to table Horizon Research results that say that 64 percent of Aucklanders support the city rail link project. 
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. 
Phil Twyford 
: Why does he rule out funding options for Auckland’s transport agenda including a regional fuel tax congestion charging and funding by central government when he is doing everything he can to add funding options for his roads of national significance like borrowing public-private partnerships raising the petrol tax and raising road-user charges? 
Hon GERRY BROWNLEE 
: To make that assertion without all of the information yet compiled on what would be the most effective way to ease Auckland’s projected congestion in the future is rather silly. What I will say to the member is that I would consider hiring Lyle Lanley and associates to do a scoping study for us on the city rail link. I know that they have done very good work on similar projects in Brockway Ogdenville and North Haverbrook and if they think this stacks up we will give it some further consideration. 
Warm Up New Zealand: Heat Smart—Number of Houses Insulated and Extension of Policy 
7. 
MARK MITCHELL (National—Rodney) 
 to the  
Minister of Energy and Resources 
: What recent announcement has he made about the Warm Up New Zealand programme? 
Hon PHIL HEATLEY (Minister of Energy and Resources) 
: 
 It was my pleasure to announce today that the insulation programme has reached its original target of insulating 188500 homes ahead of schedule and ahead of budget. This successful programme has directly improved the living conditions of many thousands of New Zealanders. The programme has also supported manufacturing in New Zealand and created approximately 2000 jobs. Anecdotal evidence tells us that tenants and homebuyers are now far more likely to ask about the insulation of a house they want to buy or rent because they know it will be warmer drier and healthier. I would like to thank the Maori Party and the Green Party for their support of this worthwhile programme. 
Mark Mitchell 
: What does the Government now expect to deliver for the budget of $347 million? 
Hon PHIL HEATLEY 
: Earlier this year the Government announced that the scheme will be extended to insulate a further 41500 homes taking the total to 230000 for the original funding of $347 million. In particular I would like to highlight the difference the scheme has made to low-income New Zealanders. Under the original target 60000 low-income homes were to be insulated. This target was increased to 88000 homes. We now expect to insulate 105000 low-income homes in total—45000 more than the original target. 
Rt Hon Winston Peters 
: Could the Minister tell us what role he had to play in agreeing with the Maori Party to have pilot programmes for Ngati Porou on the east coast of the North Island and Ngapuhi in Northland two of the warmest areas in the country where Maori live while leaving the rest of the Maori population in freezing cold places freezing? 
Hon PHIL HEATLEY 
: One of the beauties of this programme is that it is open to every family in New Zealand to take part because we believe that regardless of their geographical position in this country or their income they deserve to live more warmly if they choose to do so and take up this subsidy. 
Mr SPEAKER 
: Supplementary question Te Ururoa Flavell. 
Te Ururoa Flavell 
: Kia ora tatou. 
Mr SPEAKER 
: I beg your pardon. The Maori Party has actually already used its allocation of questions this week. Is National meant to have— 
Hon Trevor Mallard 
: No you are not allowed to do a late notification. That is what you told us sweetie. 
Mr SPEAKER 
: Order! I have to be absolutely fair in this and the members on my left remind me that I did not allow a question to be transferred that I had not been advised of in reasonably recent time. It would be unfair to allow a transfer that I had not been advised of from the members on my right. I accept the member’s point. 
Te Ururoa Flavell 
: I seek leave of the House to allow for this question to be put to the House. 
Mr SPEAKER 
: Leave is sought for that course of action. Is there any objection? There is objection. 
John Hayes 
: What specific progress has been made in reaching the milestone negotiated by the Maori Party in the 2011 relationship accord with National for 20000 low-income homes to be targeted for home insulation in the Warm Up New Zealand: Heat Smart programme? 
Hon PHIL HEATLEY 
: Of the 20000 homes that the Maori Party negotiated to insulate we have done 16000. Clearly—and this is to help David Parker—that means there are 4000 left to do. I am just helping him with the maths there. But actually overall we will be doing about 105000 low-income households—if David Parker can deal with those calculations. 
Inland Revenue Business Transformation Project—Registration of Interest 
8. 
Dr DAVID CLARK (Labour—Dunedin North) 
 to the  
Minister of Revenue 
: Before the launch of their September 2011 “Transformation Programme Planning Services” Registration of Interest how many companies did IRD expect would comply with the mandatory requirements listed in 4.3 of the Registration of Interest and of those how many were expected to be New Zealand-owned companies? 
Hon PETER DUNNE (Minister of Revenue) 
: 
 The purpose of the registration of interest was to identify companies or consortiums regardless of where they were based that have the capacity and the capability to provide the services necessary for that particular phase of Inland Revenue’s transformation programme. Inland Revenue had no expectation of how many New Zealand based businesses would register their interest either individually or as part of a consortium. 
Dr David Clark 
: I raise a point of order Mr Speaker. That was a very straight question on notice and I do not feel that it was adequately addressed. It was not clear that there was no expectation. 
Mr SPEAKER 
: The Minister has indicated in his answer that he simply does not have that information. I take it the Minister is telling the House there was no record of expectation in respect of New Zealand - owned or foreign-owned companies. 
Hon PETER DUNNE 
: There was no question of an expectation. We simply asked for a registration of interest and we did not have a figure in mind at the outset as to how many from New Zealand or elsewhere would seek to register. 
Mr SPEAKER 
: I think that seems to be a pretty clear answer. 
Dr David Clark 
: Unbelievable. What conversations has the Inland Revenue Department or its project consultant Capgemini had with Accenture about its Aspire system; and given the close working relationship between Capgemini and Accenture in previous projects overseas how will its consultants manage conflicts of interest in tender processes? 
Hon PETER DUNNE 
: I think the problem is that the member fundamentally misunderstands what is going on. Capgemini’s involvement with this particular aspect of the project ceased with the presentation of its report in July and in fact it did work in partnership with a local company Tenzing management and technology consultants. The next phase of the project will be subject to an open tender process. 
Dr David Clark 
: What involvement has David Butler a former Commissioner of Inland Revenue who subsequently managed the troubled change programme in the Australian Taxation Office had in advising on the Inland Revenue Department’s business transformation programme; and is the Minister aware of blowouts in the Australian experience that doubled the cost of implementation of the Accenture package costing hundreds of millions of dollars after David Butler had gone on record saying the Australians would be crazy not to go with Accenture? 
Hon PETER DUNNE 
: Can I answer that question in two parts. Firstly when we began this transformation process work under the previous Government in about 2007 a very conscious decision was made not to go down the path that the Australians had gone down for precisely the feared reasons at that point that the member has now advanced. With regard to Mr Butler’s involvement or alleged involvement I am not aware of any role that he has played in respect of this process. 
Dr David Clark 
: Why has the Inland Revenue Department blocked access to anything but the title and date of 80 documents relating to the department’s business transformation programme including its engagement processes and does the Minister not think it is in the public interest for transparency of process to apply in the case of a project where Ministers in his own Cabinet have estimated costs at between $700 million and $1.5 billion of taxpayer money? 
Hon PETER DUNNE 
: For precisely the reasons again implied in the member’s question. These are commercially sensitive matters. The process is ongoing and has not yet been finalised. It has been a longstanding practice supported by the previous Ombudsman that where papers relating to work that is currently under way have been sought it is perfectly appropriate for the Government to withhold those until such time as the projects and the decisions have been made and that is exactly the practice that has been followed in this particular instance. 
Dr David Clark 
: Did Capgemini or any of its recent employees have any formal or informal role in shaping the department’s September 2011 registration of interest? 
Hon PETER DUNNE 
: To my knowledge the answer to that question is no because we were inviting an expression of interest from various potential suppliers at that time. Capgemini through the consortium that I referred to earlier became the preferred operator after that process. It would have been illogical for it to have had any involvement in its design. 
Dr David Clark 
: I seek leave to table the registration of interest document for the provision of transformation programme planning services—the source is the Inland Revenue Department; it is no longer available as far as I am aware on the website—with particular reference to the mandatory requirements under 4.3. 
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. 
Courthouse Security—Improvements 
9. 
ALFRED NGARO (National) 
 to the  
Minister for Courts 
: What progress can he report in improving safety in our courts? 
Hon CHESTER BORROWS (Minister for Courts) 
: 
 Court in New Zealand is becoming a safer place. Since we came into Government we have tripled the number of people who are being screened before going into the courthouse and this is delivering great results. It has resulted in a 35 percent drop in security incidents in courts in just 2 years and has produced a 63 percent drop in serious security incidents such as serious assaults. 
Alfred Ngaro 
: What mechanisms have been used to achieve these improved results in courthouse security? 
Hon CHESTER BORROWS 
: In this Government’s first Budget we recognised the need to improve court security and made an investment of $9 million over 4 years for this. This has allowed the Ministry of Justice to add 45 new court security officers eight new metal detectors and 10 new X-ray machines to courts around the country and has also funded a complete redesign of the entrance to the Manukau District Court the busiest criminal court in the country. 
Human Rights West Papua—Community Policing Project 
10. 
CATHERINE DELAHUNTY (Green) 
 to the  
Minister of Foreign Affairs 
: Does he consider that New Zealand’s community policing projects in West Papua have improved adherence to human rights and access to justice in West Papua; if so why? 
Hon JUDITH COLLINS (Minister of Justice)  
on behalf of the Minister of Foreign Affairs: A small-scale pilot community policing project was conducted in Papua between 2009 and 2010. It involved four New Zealand police officers. The objective of the project was to improve the professionalisation of the Indonesian National Police in a place that has had significant challenges. Overall the assessment is that the project has had a positive influence in a very difficult environment. 
Catherine Delahunty 
: I raise a point of order Mr Speaker. I appreciate the Minister’s answer but I did specifically ask whether the programme had improved adherence to human rights and access to justice. 
Mr SPEAKER 
: The Minister implied in her answer I believe that it had. She said the evaluation had indicated positive outcomes. The member has got further supplementary questions. I think that we cannot be that pedantic. 
Catherine Delahunty 
: I seek leave to table the country summary of Human Rights Watch 2012 which documents the State violence against citizens of West Papua. 
Mr SPEAKER 
: The source of this document? 
Catherine Delahunty 
: The Human Rights Watch library 2012. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Catherine Delahunty 
: Will New Zealand continue to train Indonesian police in West Papua in light of their recent and well-documented human rights abuses; if so will he ensure the training includes education on torture as is required under international law? 
Hon JUDITH COLLINS 
: My understanding is that the New Zealand Police has undertaken a scoping design in terms of whether or not it could provide more community policing assistance. But in terms of torture and training in it I think the member may have meant training in not using torture. 
Catherine Delahunty 
: Thank you for that. Has the New Zealand Government raised any concerns with Indonesia regarding the recent killing of civilians by police in West Papua or does he agree with the Ministry of Foreign Affairs and Trade that the issue of West Papua is not one that causes any friction between Indonesia and New Zealand? 
Hon JUDITH COLLINS 
: I am not aware of the answer to that question. 
Catherine Delahunty 
: I seek leave to table the Official Information Act response from the Ministry of Foreign Affairs and Trade its advice to the Prime Minister this year showing that the ministry has no real concerns about Indonesian human rights. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Catherine Delahunty 
: Will he seek out the input of West Papuan leaders regarding any future deployment of our police in West Papua prior to any deployment; if not why not? 
Hon JUDITH COLLINS 
: Since the matter is actually subject to a scoping design by the New Zealand Police and the New Zealand Police is operationally independent I would have thought that the answer would be no. 
Catherine Delahunty 
: Why is the New Zealand Government considering sending our police to work with a police force and judiciary that arrest and jail West Papuans for up to 15 years for raising the Morning Star flag? 
Hon JUDITH COLLINS 
: I thought I had made it plain that the scoping design is currently being undertaken or is about to be completed. On that basis I would have thought that any interaction of the New Zealand Police which I believe is the finest police anywhere in the world would be of advantage and I would have thought that member would support it frankly. 
Catherine Delahunty 
: I seek leave to table the Morning Star flag of West Papua. 
Mr SPEAKER 
: Leave is sought to table that flag. Is there any objection? There is objection. 
Mental Health Services—Performance 
BARBARA STEWART (NZ First) 
: 
 My question is to the Associate Minister of Health—[ 
Interruption 
] 
Mr SPEAKER 
: Order! I want to hear this question. Order! I want to hear the question—Barbara Stewart. 
11. 
BARBARA STEWART (NZ First) 
 to the  
Associate Minister of Health 
: Is he satisfied with current mental health services in New Zealand? 
Hon PETER DUNNE (Associate Minister of Health) 
: 
 Yes I am. Although I believe we should always strive for improvement I have got the utmost respect for the work that is being done by our mental health professionals in what is a highly complex field. 
Barbara Stewart 
: How can he be satisfied with mental health services when we have seen many cases recently of mental health unit outpatients committing serious crimes and committing suicide yet district health boards are usually underspent in this area? 
Hon PETER DUNNE 
: With regard to the incidence of suicide that the member refers to last year’s figures were an unusual blip and in fact the trend line revealed this year shows a much lower rate. I am not satisfied with any suicides in those situations but obviously events like that will occur from time to time. 
Barbara Stewart 
: What is being done to ensure that when patients are discharged from a mental health unit or facility they can cope independently in the community? 
Hon PETER DUNNE 
: We are currently reviewing the Mental Health and Addiction Service Development Plan and I expect to release before Christmas a new service development plan covering the next 5-year period. That will be spelling out clear responsibilities for district health boards greater involvement of the NGO sector as well as the work of the Ministry of Health in terms of ensuring that our mental health patients get the care and the treatment that they deserve. 
Education Associate Minister—Confidence 
12. 
CHRIS HIPKINS (Labour—Rimutaka) 
 to the  
Minister of Education 
: Does her Associate Minister’s handling of his delegated responsibility for Novopay give her confidence in his ability to fulfil his other duties? 
Hon CRAIG FOSS (Associate Minister of Education) 
 on behalf of the Minister of Education: Yes the Minister has full confidence in the Associate Minister’s ability to fulfil his other duties. She thinks he has done a good job of a hard job. 
Chris Hipkins 
: Is she satisfied that Craig Foss carried out proper oversight of Novopay’s implementation and that he fully considered all of the risks when deciding that Novopay should go live on 20 August; if so why? 
Hon CRAIG FOSS 
: Yes. 
Chris Hipkins 
: I raise a point of order Mr Speaker. I did ask him “if so why?”. It is not an unreasonable question to expect an answer to. 
Mr SPEAKER 
: Well it is a second part to the question. It is a supplementary question and the Minister is not obliged to answer both parts. 
Chris Hipkins 
: Why? 
Hon CRAIG FOSS 
: As the Associate Minister noted in the House yesterday he took advice and recommendations from the Ministry of Education and the Novopay board. 
Chris Hipkins 
: Has she seen the comment this morning from the Ministry of Education’s group manager who said: “There were functions of the system that simply weren’t working when we went live”; if so why does she have confidence in Craig Foss’ decision to sign off on the implementation? 
Hon CRAIG FOSS 
: I cannot say whether she is aware of that particular comment or not. 
Chris Hipkins 
: I raise a point of order Mr Speaker. The question was on notice. I appreciate that the Associate Minister is answering on behalf of another Minister. But it is not unreasonable to expect that he would prepare and have that answer. 
Mr SPEAKER 
: Well—[ 
Interruption 
] Order! A point of order has been raised. The dilemma is that in the absence of the Minister I guess the Associate Minister cannot if he has not been able to get hold of her tell the House whether or not she has heard that comment this morning that the member raised. That is why I think the House has to accept the Associate Minister’s answer in that regard. 
Chris Hipkins 
: Does she believe that the role of Ministers is to simply sign off whatever recommendations officials present to them or does the role extend to questioning that advice and making sure that officials have done their jobs properly; if so does she believe that this Government has executed that responsibility appropriately in signing off on the implementation of Novopay before the results of system testing were even known? 
Hon CRAIG FOSS 
: The Minister has full confidence in the Associate Minister’s ability to do and continue to do a good job of a hard job regarding Novopay. 
Mr SPEAKER 
: Order! On this occasion I think I can assist the honourable member. I do not think that answer answered any part of the question. So I invite the member to repeat his question. 
Chris Hipkins 
: Does she believe that the role of Ministers is to simply sign off whatever recommendations officials present to them or does their role extend to questioning that advice and making sure that officials have done their jobs properly; if so does she believe that this Government has executed that responsibility appropriately in signing off the implementation of Novopay before the results of the system testing were even known? 
Hon CRAIG FOSS 
: No. 
Mr SPEAKER 
: If the member just said no I take it that it was the first part of the question to which the answer was no. So if the Minister is going to answer only one part of a question he has got to indicate which part he is saying no to. I invite the member to repeat his question and the Minister if he continues to give the answer no to indicate which part. 
Chris Hipkins 
: Does she believe that the role of Ministers is to simply sign off whatever recommendations officials present to them or does their role extend to questioning that advice and making sure that officials have done their jobs properly; if so does she believe that this Government has executed that responsibility appropriately in signing off on the implementation of Novopay before the results of system testing were even known? 
Hon CRAIG FOSS 
: No to the first part. 
Chris Hipkins 
: Did she sign off on the decision on 5 June to go live with Novopay; if so why has she tried to create the impression that it was all Craig Foss’ fault? 
Hon CRAIG FOSS 
: I reject the second part of that question. 
Chris Hipkins 
: Did she sign off on the decision on 5 June to go live with Novopay? 
Hon CRAIG FOSS 
: The Minister received recommendations from the Associate Minister of Education regarding his accepting of recommendations from Novopay and the ministry to go live with Novopay. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. It was a very straight question: did she sign off? We still have not had a yes or no; we heard that advice was taken but we did not get a yes or no on whether she signed it off. 
Mr SPEAKER 
: I think the member makes a valid point. That last question was a very clear particular question: did the Minister sign off on Novopay going live? The point is well made that whether or not the Minister took advice does not answer whether or not she signed off on it. 
Hon Gerry Brownlee 
: I raise a point of order Mr Speaker. That would depend entirely on what the delegation leader says— 
Mr SPEAKER 
: But the Minister is perfectly capable of answering that. [ 
Interruption 
] Order! Well it is just that members are meant to treat each other in this House with some courtesy. OK if I provoke the honourable member and he responds that way I guess that is my fault but I was actually assisting the honourable member and therefore a little courtesy might be a little more appropriate. 
Hon CRAIG FOSS 
: Yes the Minister received advice from the Associate Minister who followed advice as outlined earlier to go ahead and go live with Novopay. The answer is yes. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: No the Minister said the answer is yes. The Minister said the answer is yes and I believe that brings to a close questions for oral answer. 
State Sector and Public Finance Reform Bill 
First Reading 
Debate resumed from 28 November. 
Mr SPEAKER 
: Order! I ask members leaving the House please to do so a little more quietly. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 There are really a couple of points I want to make and I will make the first point briefly. I think the Finance and Expenditure Committee will have to look really carefully at the question of whether powers delegated to chief executives by this Parliament should in fact be sub-delegated to persons outside the Public Service. I think there is a clear implication there is a clear understanding that where statute has given a chief executive a particular power that can be delegated within the department but not to someone outside. 
The second and more important point that I want to make and make it by warning to Jonathan Coleman the Minister of State Services and the Leader of the House is to ensure that the Government does not intend to ride roughshod over the Standing Orders Committee. It is the role of this Parliament to set some rules for the department and for executives but it is not the role of statute law to organise the running of this House. According to our Standing Orders we have arrangements whereby we have reviews and we have estimates procedures. No statute—no statute—that this Parliament passes can change those Standing Orders and the difference is in the processes that we have agreed to in the past that the House does legislation on a majority basis but the Standing Orders Committee does it on the basis of near consensus. So if a major party objects to a change then that change will not occur and I want to give notice at this point that it is not the intention of the Labour Party to support a change in the Standing Orders that would adversely affect the rights of this Parliament to examine the actions and the proposed actions of departments in the way that is being proposed by this Government. 
The right to scrutinise the executive the right to scrutinise departments is the main function of this Parliament. It is certainly the major role of Opposition parties and when there is a backbencher from the Government who is awake it is part of their role too and to suggest that we will take away from members of Parliament effectively half their rights to scrutinise the activities of the executive and the Government departments is something that is not acceptable. I see the Minister of State Services is now listening to the debate. I want to repeat the offer from Chris Hipkins last night and to indicate to him that it is our intention—it has always been our intention in these State sector matters—to get legislation that will work whoever is in Government. There is part of this bill that we think is really good there is part of it that we think is rotten and there is some stuff in the middle that we might be able to be convinced on. Although we will oppose this bill now what I am hoping for is a flexibility on the part of the Government so that we can work together to get legislation around which there is at least near unanimity. I think we will not always get the entire House to agree with it but what we have got to know is that whichever party is leading the Government it is relatively comfortable with the State sector legislation of the time because you could be dealing with it basically at a month’s notice. 
So I want to emphasise to Jonathan Coleman that it is not the intention of the Labour Party to assist him to change the Standing Orders to facilitate a reduction in the scrutiny of Government and he needs to take that into account when he considers whether or not he cooperates on this legislation. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I call the next speaker I advise the House that this is actually a split call. We got a little bit out of kilter so it should have been called from another side but in this case it has already happened. 
KEVIN HAGUE (Green) 
: 
 I think I am probably one of the few members of this House who has been a State sector chief executive and as such has some direct—I am sorry Dr Prasad. Dr Prasad and I I am sure will have shared the experience of working under these various Acts that are being amended by the State Sector and Public Finance Reform Bill: the State Sector Act the Public Finance Act and the Crown Entities Act. As such I think I have probably got some interesting perspectives to make. 
One of the things that I would have observed from my experience as a chief executive in the State sector was that the sector was not well geared up to work together to facilitate a whole-of-Government response. Although we had very many I guess meetings across Government where we sat around and spoke about the problems and agreed that some joined-up response would be the appropriate way of responding to those problems sadly this very seldom came to pass because agencies were not well set up or not well instructed by Ministers to be able to collaborate across their traditional boundaries. 
From that point of view I am a person who welcomes any initiative to make the State sector work better as a whole and deliver on that whole-of-Government response. Very many of the issues that this Parliament wrestles with are ones that demand a more sophisticated response than the fragmented one that we all too often are able to deliver. 
Having said that and noting that that forms the central theme in the explanatory note of this bill—facilitating that whole-of-Government response—those are provisions that the Green Party could support. But we find ourselves in that dilemma that is often posed by Governments that have taken omnibus approaches to law reform where there are parts of the bill that are worth supporting but others that simply are not. Other colleagues have spoken about some of the deficiencies of this bill. I want to mention a few others. Certainly various members have spoken about the issue of making the boundaries around the State sector more porous and ill-defined to facilitate the privatisation of State services. That is one of the things that this bill will do if enacted. 
There is another function that is worthy of discussion and that is that this bill will facilitate Ministers appointing people into departments otherwise than on merit. What that is code for is appointing ministerial observers in departments. That is a development that runs counter to the central aim of the State Sector Act. The State Sector Act was about separating out functions and clarifying responsibilities. What this bill does in this part and in another that I will mention in a moment is it actually facilitates those boundaries becoming blurred. So that is another of the effects of this bill that the Green Party certainly opposes. 
But the one that I want to mention lastly is the effect of the bill to establish these departmental agencies within Government departments. What that will do is confuse the lines of funding accountability and performance accountability. So entities will receive their funding from one source but be accountable to another Minister. Again what that does is take lines that were separated by the State Sector Act and wrap them and tangle them up altogether. So the bill is good in parts but undermines in others the very tenets of the State Sector Act. We oppose it. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I call the honourable member David Bennett. 
Andrew Williams 
: Why? 
DAVID BENNETT (National—Hamilton East) 
: 
 It will be good Andrew Little. This bill the State Sector and Public Finance Reform Bill is about recognising the Public Service. I think we need to do that first of all—recognise the good work that many people do in the service of our communities through the Public Service. When you think of all those people out there who give extra time and work hard for our communities it is very sad that the Opposition in this Parliament will create fear in those good people try to put up conspiracy theories and say that things are being done against their nature. It is the true nature of the left that those members try to use fear tactics on the most vulnerable people in our community and they try to do it to the people whom they purport to support. It is a shame and a disgrace for this House to see the left wing do that. 
When we look at the Opposition members they have talked about the amalgamation of estimates and financial reviews and that scrutiny. It is just not true. It is just not true at all. How can somebody like Trevor Mallard come into this House and say things like that? The other person here is Andrew. Andrew Little is it not from the New Zealand First Party. He came in here last night and said that there was a new Soviet-style power grab by the Prime Minister in this bill. What was it? Was it new section 6(j) that Andrew brought into this House— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! The member’s full name. 
DAVID BENNETT 
: Yes well I do not even know his surname. He has not been here long enough. The member from New Zealand First came in— 
Andrew Williams 
: Mr Williams to you. 
DAVID BENNETT 
: Mr Williams came in and said that. The good thing is that—just for Mr Williams’ knowledge and you should not put a press release out unless you check the facts—that section already exists in the State Sector Act. It has been there since 1988. So it is not a new clause Mr Williams; it actually exists. He did a lovely press release today saying that this section is a new clause. Well stick to the facts get your facts right and do not try to patronise and take advantage of those people who are giving good work to our community. Thank you. 
LOUISE UPSTON (National—Taupo) 
: 
 I am pleased to take the final call on the State Sector and Public Finance Reform Bill. Minister Coleman the Minister in charge of this bill very widely covered what this bill does cover but I just wanted to cover a couple of things that this bill does not do. 
Unfortunately we have seen many examples this week of Labour members of Parliament who are innumerate and cannot count. We have also seen New Zealand First members who are illiterate and cannot read. My colleague David Bennett has already mentioned the fact that there is a clause in the bill that has been there for many many years and unfortunately Andrew Williams the member for New Zealand First cannot read and completely missed that point. So it does not make any changes to what the Prime Minister can do. 
The other area the Labour members have been severely disillusioned about and completely off the planet on is changes to the estimates scrutiny process or the financial review process. There are no changes to that. The Standing Orders of the Parliament are what dictates the scrutiny for Parliament. This bill does not make any changes at all to the estimates and the financial review scrutiny. It also does not affect any of the timing of when those reviews take place. 
I am happy with those few points about what the bill does not do because if you had heard the debate yesterday you would have thought otherwise. But it is just more scaremongering from that side of the House. I am proud of this bill. I am proud of making our public services better and more efficient and delivering more to hard-working New Zealanders. 
A party vote was called for on the question  
That the State Sector and Public Finance Reform Bill be now read a first time. 
Ayes 63 
New Zealand National 59; Maori Party 2; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Bill read a first time. 
Bill referred to the Finance and Expenditure Committee. 
Local Government Act 2002 Amendment Bill 
Third Reading 
Hon MAURICE WILLIAMSON (Minister for Building and Construction) 
 on behalf of the Minister of Local Government: I move  
That the Local Government Act 2002 Amendment Bill be now read a third time 
. This bill marks the first phase of the Government’s Better Local Government reform programme. It is a significant bill that aims to improve the effectiveness and the efficiency of local government in New Zealand. Local government is of great significance to New Zealand communities and to the New Zealand economy. Local government makes up 4 percent of GDP spends $7.8 billion per year of public money and manages $120 billion of assets. Councils provide critical services to households businesses and communities right across New Zealand. New Zealand communities are affected by the decisions and the actions of their council on a daily basis and are certainly affected when they receive their rates bills. This is why local government reform is so vital. The Better Local Government programme will mean that local government is better positioned to create the environment for local businesses and industry to emerge and grow and for communities to flourish. This bill is a vital first step to allow for this. 
The bill refocuses the purpose of local government. Having a clear and defined purpose statement will focus councils on the things that only they can do. It will encourage councils to take a fresh look at the services and infrastructure that their communities want and are willing to pay for. The bill introduces financial prudence benchmarks to be set by regulations. The purpose of these regulations is twofold. They will encourage councils to exercise greater financial discipline. They will also provide a system that the average ratepayer can understand to assess the financial prudence of their council or to compare their council’s performance against other councils. The amendments of the Local Government and Environment Committee to require the inclusion of the benchmarks in councils’ annual reports will further enhance the transparency of councils’ financial management. 
The bill strengthens local authority governance tools. There will be a simpler more responsive mechanism than is currently available for central government to assist struggling local authorities and intervene before situations become critical. The leadership roles of mayors will be strengthened. Mayors will be given governance powers that will match the level of public responsibility they have for council’s decisions and that will support clear strong leadership by mayors. Elected councils will have an additional tool to control council costs through being able to clearly set policies on staff numbers and remuneration. Ratepayers will have better information on council labour costs as councils will be required to report annually on numbers of staff employed by salary bands. 
The bill streamlines the procedures for the reorganisation of local government arrangements. Currently the reorganisation process is ineffective. There have been improvements to this process made since the bill was reported back from the select committee. The Local Government Commission must now assess whether a proposal has demonstrated community support in each affected territorial authority area. The time frame for delivering a petition calling for a poll has been extended from 40 to 60 working days and a petition calling for a poll now needs to collect the signatures of only 10 percent of electors in any affected territorial authority area. The bill also allows for large urban areas to utilise the two-tier local board model if the community decides that this is the best option to organise its local governance arrangements. 
The Opposition members will no doubt attempt to portray this bill as an attack on councils and claim that this bill cuts across local democracy. I completely reject this view. I encourage those members to actually go out and listen to the people in their communities because if those members did go out and listen to the people in their communities they would hear how New Zealanders especially those on fixed and low incomes are tired of ever-increasing rates bills. Over the last decade rates have increased on average by 7 percent per annum. Over this period local government debt has quadrupled from $2 billion to $8 billion. These trends have to stop. They simply have to stop. 
If those Opposition members did go out and listen to their communities they would hear ratepayers saying that they do not want to be put in the situation that the Kaipara District Council ratepayers are currently in where a council with a population of 18000 people runs up debt of $80 million and the community is left with a crushing rates increase as a result. And if those members did go out and listen to their communities they would be told that it should be communities that decide how they want their local governance arrangements to be structured and if communities want to change they should be allowed to change. Since 1989 no local government reorganisation has taken place under the existing rules. The barriers for communities to effect change are just simply too high. 
This bill addresses the concerns of ratepayers. It is a significant and important bill for New Zealand communities for businesses and industry and for individual households. I believe that these changes will improve the efficiency and effectiveness of local government and help the local government sector to play its part in growing the New Zealand economy. I commend this bill to the House. 
Hon ANNETTE KING (Labour—Rongotai) 
: 
 I have to say that this side of the House is very disappointed with the debate on this very important bill the Local Government Act 2002 Amendment Bill. First of all we had a second reading speech when this bill was reported back to the House by Chester Borrows. We then had the Committee stage of this bill when four different Ministers sat in the chair and never answered a single question—not a question. They responded to nothing. Now we get to the third reading of this significant bill which affects local government in New Zealand and the Government puts up Maurice Williamson. 
The Minister of Local Government has not fronted on this bill at all. The Minister has not fronted. Why? Why has the Minister not fronted? What he has done is send the perpetrator of this unwanted unnecessary and untruthful bill to do his bidding for him—Nick Smith. This is a Nick Smith special created out of a false crisis that he developed when he became the Minister of Local Government. You see Nick Smith has got a pattern as a Minister. He got ACC he developed a crisis and he cut under some falsehoods funding and services to people who had been sexually abused—and found out later he had to change it because he got it wrong. He slashed services at ACC and then he was found to be wrong. 
So what does he do with local government? He creates the same crisis: “There’s a problem with debt.” And we heard it from Maurice Williamson then: “Debt has gone from $2 billion to $8 billion.” Well Maurice Williamson have you taken the time to find out what its debt has gone on? Have you taken the time to find out? No he has not because if he had he would not have made the stupid speech he has just made. Its debt is overwhelmingly due to infrastructure that it needs in its communities. So Maurice Williamson and his mates over there are saying: “Let the stormwater drains fall apart. Don’t fix your local roads. Don’t do the infrastructure changes that you ought to.” But you see local government listened to the National Government. What happened in 2009 was that the National Government held an employment summit I think it was called— 
Andrew Williams 
: Job Summit. 
Hon ANNETTE KING 
: The Job Summit. It was set up by the National Government as a little exercise because it has done nothing about jobs and what happens? The Prime Minister comes along and he says to local government: “You’ve got lazy balance sheets. Bring forward your infrastructure. Start helping in this global economic crisis and start doing some of that infrastructure. Put it on your balance sheets because they’re lazy.” So what did local government authorities do? They went out and they started to address some of their infrastructure issues and now they are called—well I do not know what the Government is calling them—incompetent lazy— 
Hon Maurice Williamson 
: I didn’t call them anything. 
Hon ANNETTE KING 
: Yes you were accusing them Mr Williamson of not being responsible local government and saying that that is why they have to change. Well this bill is based on shonky figures and Nick Smith was caught out. He hates this part so I am going to repeat it. He was caught out telling porkies on the figures—caught out. He put out his  
Better Local Government 
 document and he put up the figures in the back of the document. He set out all the figures as to why he was making the changes across New Zealand. Five days later it was taken off the Department of Internal Affairs website—removed blank nothing there. You had to be quick to get the two copies. Fortunately we were quick. We did get two of them. He left his job the day after he put out the document—sacked from his position—and the new Minister of Local Government took over. 
So I wrote to the new Minister and asked: “Why have you removed the figures from the  
Better Local Government 
 paper that were published at the time Nick Smith announced it?” and he wrote back to me and said there were problems with those figures and they did not accurately reflect what was going on in local government. 
Hon Dr Nick Smith 
: Did not say that. 
Hon ANNETTE KING 
: Yes he did and I have tabled that letter. I have tabled that letter— 
Hon Dr Nick Smith 
: Making it up. 
Hon ANNETTE KING 
: I resent that. I have tabled the letter and actually read out the words of the now Minister—the person who constantly makes things up in this House is Nick Smith—and he said they did not accurately reflect the situation of local government. And in a moment if I may I will table it again. We need to get it on the record because this bill is based on those shonky figures—untruths—and in my view it was a total attack on local government for some petty revenge from Nick Smith. They are shonky figures. 
Then we had the cheek of Maurice Williamson asking why we did not go out and listen. Well Maurice Williamson why did the National Party not go out and listen to the submissions because they overwhelmingly said: “Do not change the purpose of the Local Government”— 
Maggie Barry 
: No they didn’t. 
Hon ANNETTE KING 
: They overwhelmingly said it. All right let us have a look at some of those who did say “Don’t change it.” In fact it was unanimous from Local Government New Zealand—that is all local government. Then we have got the Salvation Army. What did it say? It was opposed to changing the purpose of the Local Government Act. Why? Because it works in the community and it works with people in local government. 
Then we heard from Auckland Disability Law. What did it say? It said that disabled people will be worse off if Parliament changes the purpose of this Act. This is not self-interest from local government; these are submissions from those in the community. What did Alcohol Healthwatch say? It was opposed to changing the purpose of the Act. But what did Jacqui Dean say about this particular submission? What did Jacqui Dean say about this particular— 
Jacqui Dean 
: I don’t know. 
Hon ANNETTE KING 
: Well I wrote it down Jacqui. It is lucky I did because she said: “This is a wonderful submission.”—a wonderful submission. Here it is “wonderful submission”. Why was it a wonderful submission? It was because the submission said that the purpose of the Act should not be changed. That was from Alcohol Healthwatch. 
OK so what did the Environmental Defence Society say? It said that changing the purpose of the Act will create significant uncertainty and costly litigation. That is not from local government. What about this? What did the Ethnic Peoples Advisory Panel say? It said: “We are opposed to getting rid of the four well-beings in the purpose of the Act.” 
What did the Maori organisation Te Ora o Manukau say about it? It said it was opposed to getting rid of the four well-beings from the Act. What did Grey Power say? It said it was very important to keep the four well-beings because they were needed for a diverse multicultural community. It said: “We are not in favour of the new definition because it removes the very elements that allow for social cohesion”. 
So I have brought some submissions from organisations that are not local government—which they are all chirping out about on that side of the House—but are decent organisations in our community that said to the Government: “Listen to us. Please do not change the purpose.” Then Maurice Williamson said we have the cheek of not listening. Well we did listen. I can tell the National Party that when we become the Government in 2 years’ time the four well-beings will be returned to the Local Government Act. And I will be very happy to do that because we have listened to the people. 
If those members wanted to listen to just one local council maybe they could have listened to poor old Kawerau the smallest council in New Zealand. It has got no debt. This is what the council said when it came to assets. It said it had fixed assets worth $57.2 million and over the next 10 years it intends to undertake renewals of $22.7 million including inflation. This is for roading for water supply for waste water and for stormwater. That is what it is spending its money on over the next 10 years. Is that not what local government is meant to be doing? But what this bill does is say that councils are not responsible and that they have to be reined in and controlled from central government. This bill attacks the very democratic basis of local government. It is a bad bill. It ought to be opposed. Unfortunately those who could have stopped it did not even take part in the debate—did not even take part. 
Darien Fenton 
: Shameful. 
Hon ANNETTE KING 
: I say it is shameful. This bill is shameful on local government and it is going to come back and haunt the National Party. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 That speech from Annette King showed the House that Labour has learnt absolutely nothing from the global financial crisis and its period in Government when New Zealand’s external borrowing increased by $100 billion and when our public sector grew uncontrollably while our private and exporting sectors stagnated. It reinforces that Labour and parties opposite believe in the nirvana of a big-spending big-borrowing all-encompassing public sector with no thought for those who pay the bills or those who have to repay the debt. 
I want to focus my comments on the changes that I initiated to the purpose of local government in New Zealand. The background is that in 2002 the then Labour Government required councils to provide for the economic social environmental and cultural well-being of communities. Labour’s assurances that this new expansive purpose would have no impact on costs have been proved horribly wrong. As my colleague Maurice Williamson has said average rate increases which in the previous decade had averaged just over 3 percent have averaged 7 percent per year council expenditure as a proportion of GDP has grown by a third and debt has quadrupled from $2 billion to $8 billion. And if you add up the 10-year plans that councils have just published they are intending to take that debt from $8 billion to over $19 billion. 
No one should be surprised that National does not support this expansive and expensive purpose for local government. Firstly we opposed it in 2002. Our fears about the impacts of costs proved to be absolutely correct. Secondly the global financial crisis makes the case for change even stronger. Excessive spending and debt are driving both central and local government in Europe to their knees. New Zealand households businesses farms and central government are all tightening their belts and being more focused and disciplined—so too must councils. 
Thirdly there is a philosophical dimension to this issue. National believes in limited government. We do not look to government whether it is central or local to meet every human need. Government and councils play an important role in society but so too do the private and community sectors. We on this side of Parliament do not believe it is either possible or desirable for councils to try to meet every single economic social environmental and cultural issue in their communities. 
The fourth justification is very practical. For any organisation success requires that we are clear about who does what. Everybody doing everything does not work. It is true for successful businesses and organisations and it is true for a country. We have a Ministry of Education to run our schools we have a Ministry of Justice to run our courts system we have the Department of Conservation to run our national parks and we have a health ministry to run our hospitals. It makes no sense for councils to duplicate the role of public agencies yet the broad current purpose section suggests they have a role in absolutely everything. 
As the Minister said previously councils should focus on things that only they can do and then do them really well. That is why the new purpose clause focuses on very important local infrastructure like roads important local services like libraries and parks and those all-important regulatory functions like building and resource consents. 
This new purpose clause for local government does not pedantically constrain councils. It rightly leaves locally elected councils with considerable flexibility in defining the right level of infrastructure and public services for their communities. But the change is still significant. No longer will there be that false expectation on councils that they have to meet every economic social environmental or cultural need in their communities. 
Two considerations will be important for councils in complying with the new purpose clause. Councils will need to think carefully about what is a public good or service and what is better done by the private sector and they will need to think carefully about what the responsibilities of local government are as compared with central government. 
These robust arguments for reform have been met by the shallowest of reasons for opposition. Labour has never attempted to argue the big picture. It cannot challenge the global figures from Statistics New Zealand on the record rate increases and the quadrupling of debt. Instead it has delved into the minutiae. Take the 2000 figures that were published by the Department of Internal Affairs on councils’ numbers where there were a small number of errors. None of these changed the national figures but Labour then used them to argue that the whole reform was flawed. 
This bill will make an important change for local government. It is the first step in a significant change that is part of this Government’s wider plans to make New Zealand more competitive and productive and to build the brighter future that National promised. 
PHIL TWYFORD (Labour—Te Atatu) 
: 
 I seek the leave of the House to table some correspondence between the Hon Annette King and the Hon David Carter in which the Hon David Carter says “as noted on the website this was because there were issues with data”— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! Is the member seeking leave? Is there any objection to that course of action? [ 
Interruption 
] I am asking the question. Is there any objection to that course of action? There is. 
PHIL TWYFORD (Labour—Te Atatu) 
: 
 We oppose the Local Government 2002 Act Amendment Bill because of its effect: it will weaken and undermine local government. We oppose it because it is based on a lie: Nick Smith’s fiction that somehow councils are out of control and doing things that are racking up all sorts of debt. And we oppose it because it is a textbook study in how not to legislate rushed through without evidence and without proper consultation. 
The National Party is a stranger to the principle of “do no harm” and I wonder whether one of the doctors in the National caucus should run a little workshop for those members on the Hippocratic oath—principle No. 1 do no harm—because this bill will do harm to local communities and it will do harm to the institution of local government. 
The first big harm that this bill will do is by replacing the four well-beings with a narrow purpose clause that talks about providing “good-quality local infrastructure local public services and … regulatory functions” at least cost. It will limit the ability of councils to meet the needs of their communities. We have heard some speculation from the likes of Jacqui Dean and others during the stages of the debate on this bill that these words will have no effect and they can stretch to accommodate anything that councils want to do but we have little doubt that the effect of this provision will be chilling on the activities of local government. 
Every council has to choose between competing priorities. None of them are so flush with money that they can do everything they want to do. The threat of legal action by the chamber of commerce or some vexatious ratepayer will be enough to deter councils from undertaking activities that do not tightly fit the new definition. This bill tilts the playing field in favour of a narrow 1950s vision of roads rates and rubbish for local government. Action on affordable housing the Pasifika Diwali and lantern festivals economic leadership by councils desperately trying to cling on to services and jobs in their communities—a question mark is put over all of those things by this bill. 
In the last term of Parliament Rodney Hide tried and failed to impose a definition of core services on local government. He gave up because one mayor after another beat a path to his door and persuaded him it was an illogical nonsense to impose a straitjacket—a one-size-fits-all policy—on every council in New Zealand. Rodney Hide rubbished councils that were working on educational achievement in their communities and then he visited the City of Manukau Education Trust or COMET in South Auckland and he was so wowed by its work that he changed his mind. That was all it took but I am sorry to say that Nick Smith who is the real architect of this abomination of a bill does not even have the intellectual honesty of Rodney Hide. 
The National members in this House even though many of them represent rural and provincial communities either do not care or have turned a deaf ear to the pleas from local councils that it is precisely the rural and provincial communities that need the flexibility of the four well-beings to respond to the needs of their communities. Small and isolated communities do not have big local economies. They do not have a multitude of public services and private providers who can step in when the market does not deliver. The battle to hold on to services in local communities is a fight for survival and often local councils are the last line of defence whether it is running a medical clinic in Rakaia or a banking outlet in Bluff or supporting a community festival that attracts visitors into that town. All over this country councils are supporting their communities promoting economic development and looking after their people. Someone has to do it because this National Government as sure as hell is not. 
The second big harm of this bill is the bill’s confiscation of the rights of New Zealand citizens to vote in a binding referendum on a reorganisation proposal of their local council. [ 
Interruption 
] That is right. Under the law currently every citizen has the right to vote in a binding referendum if there is a proposal to disestablish or amalgamate their council. Under this bill that right is gone. If you do not want to be part of some super-council if you do not want your community to be swallowed up by some larger local government entity where your community will have less say and less voice then the only way you can get a vote is by getting 10 percent of the citizens in that area that total area to sign a petition and that is a very big ask. 
Whether or not you think the current law is working—and I think most people would agree that the current legislation is far from perfect: it makes it too difficult to get an amalgamation—I put it to this House that this bill creates a much worse problem. It disempowers citizens by taking away their vote. Is that something that the National members in this House do not care about? Is it just that the democratic principles are not important to them? The bill takes the power from citizens and gives it to unelected bureaucrats in the Local Government Commission. It is just one more step in this National Government’s unfortunate treatment of local government. 
The National Party does not give a damn about local democracy. It is not even a “nice-to-have”. It is more a case of who gives a toss. When democracy gets in the way of its dairy-farming mates in Canterbury getting their free water consents down comes the axe on the elected members of Environment Canterbury. Then National members did not trust the people of Auckland to vote for the super-city so what did they do? They legislated to take away the right of Aucklanders to vote on the super-city and then they handed over 75 percent of the new Auckland to hand-picked corporate boards. Well you can only conclude that the National Party does not trust the people. It prefers to have our communities and their assets managed by faceless bureaucrats commissioners the great and the good and their shoulder-tapped mates. 
This is a broken promise by John Key. He said very clearly before the last election that there would be no forced amalgamations under his Government. He said it again when these proposals were released. And this is the most cynical thing about this bill: National members can say “We’re not forcibly amalgamating anybody. Our hands are clean.” But this bill creates the very mechanism that allows for communities— 
Hon Dr Nick Smith 
: Communities can change. 
PHIL TWYFORD 
: —to be forcibly amalgamated Mr Smith. The chamber of commerce or anyone can present a proposal and the faceless bureaucrats at the Local Government Commission can shepherd it through without the local community ever having a vote. That is shameful. This is the cynical jaded and duplicitous ratbag behaviour that we have come to expect from the National Party. 
We also oppose this bill because of the way it has been done. It is based on a lie. In fact it is based on three lies. The first is that councils are out of control and are doing all sorts of non-core activities as a result of the 2002 Local Government Act. Never mind the Minister’s own officials saying in the regulatory impact statement that there is no clear quantitative evidence to suggest that the Local Government Act 2002 has resulted in a proliferation of new activities or that local government is undertaking a wider group of functions. Dr Smith you might like to listen finally in the third reading of this bill—you might like to listen— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
PHIL TWYFORD 
: I said “Dr Smith”. He might like to listen to this evidence from the Minister of Local Government’s own officials. There is no evidence that because of the Local Government 2002 Act local councils have proliferated their activities. 
The second lie from Dr Smith is that all this so-called non-core activity has resulted in an explosion of debt and this is perhaps the most galling and outrageous thing that this National Government has done in recent times. This National Government is the biggest borrower in New Zealand history ever. Labour ran nine surpluses in a row and reduced Government debt from 40 percent to 18 percent of GDP. Net debt fell to zero under the Labour Government. This National Government in the last 4 years has increased Government debt by more than $50 billion and the Minister has the gall to criticise the entire local government sector for increasing debt to $8 billion. This National Government should take a look at itself in the mirror. But no Nick Smith has peddled the line that council spending and council debt is out of control. He has shamelessly used a handful of egregious examples—as if the financial mismanagement of Kaipara District Council is a justification for reforming the entire local government sector. 
The third lie is that this bill will keep rates down. There is nothing in this bill that will make a blind bit of difference to the rates bills that New Zealanders pay. Dr Smith and his National Party colleagues should be utterly ashamed of themselves. 
EUGENIE SAGE (Green) 
: 
 Tena koe Mr Speaker. The Green Party continues to oppose the Local Government Act 2002 Amendment Bill. The passing of this bill will be a very sad day for local government and democracy in New Zealand. That is partly because of what it says and what it symbolises about the relationship between central and local government. As I said at the second reading of the bill National does not understand it does not respect and it does not trust local government and the communities that councils community boards and local boards represent. Given the breadth of services and responsibilities that local government provides its role in environmental management of our lands our coasts our air and our water and its massive contribution to shaping the places that we live work and play in it is deeply disappointing that the Government does not understand local government and has made such an attack on it through this bill. 
It is local government decisions about what sorts of services should be provided that are often the most direct and concrete expression of democracy. It is very disturbing to see the changes that this bill makes to that and to the relationship between central and local government. In New Zealand we have a fragile democracy. We may have a proud history of suffrage our country being the first where women gained the right to vote but we do not have a written constitution we do not have a second Chamber and we do not have a supreme court that can overturn legislation. The fact that Parliament is sovereign means that at the moment when we have a strong and independent local government arm that represents a check and a balance. This bill in undermining the independence of local government by increasing the powers of ministerial interference and intervention compromises that independence and compromises the check and balance that local government provides. 
It puts councils under the thumb of Wellington. It will have them looking through the benchmarks to see how they are performing in relation to the Minister of Local Government’s opinion rather than directing their relationship primarily to the communities that they represent and that elect them. As the Auckland District Law Society said in its submission “the proposals for intervention are not only unnecessary they are constitutionally untenable and strike at the heart of the notion of a separate institution of local government.” Local government should be accountable primarily to its community through the consultation it does through the representation function and through the election and the power of the ballot box every 3 years. It is elected councils that work closely with their communities that are best placed to decide the services and the range and scope of those services that they should deliver not central government. It was the Local Government Act 2002 that recognised that by putting at its core the purpose of enabling democratic local decision-making by and on behalf of communities and by promoting the community’s social economic environmental and cultural well-being. 
National is taking an axe to both elements of this purpose and to the operation of local government through this bill. It is doing that through the deletion of the four well-beings and through the new purpose which requires councils to meet the need for good quality infrastructure which is defined through cost-effectiveness as if dollars were always the fundamental assessment of value. Of course cost-effectiveness is important but it should not be the sole criteria by which local councils make their decisions about what sorts of services they provide because that risks the decisions being focused on what is cheapest it risks challenges to those decisions and it risks an under-investment in infrastructure and infrastructure maintenance. The change that this bill represents to local government is potentially the most significant change in the sector since the major reorganisation in 1989. 
The other major change is these powers of ministerial intervention in relation to “significant problems” as defined by the Minister and the ability for the Minister to appoint a Crown observer a Crown review team a Crown manager or of course commissioners. It should be the local councils deciding where they need assistance and getting it from independent agencies not the Minister intervening. We know that the Government has included this part of the bill because it wants to spare itself the embarrassment of bringing to the House legislation like the Environment Canterbury (Temporary Commissioners and Improved Water Management) Amendment Bill which we have before the Local Government and Environment Committee at the moment and the 2010 bill which interfered in a council and replace elected councillors with its self-appointed commissioners so that it can ensure it gets the right decisions at the regional and local level. It is very rich for Minister Williamson to talk about listening because the Local Government and Environment Committee had over 500 submissions and the submissions overwhelmingly opposed the change to the purpose of local government. It is enormously corrosive of people’s faith in the democratic process when those submissions are given so little weight. 
The other major thrust of the bill which we have heard from the Hon Dr Nick Smith is about rates rises and debt rises and the need for the benchmarks to improve financial management. By international standards there is a very high level of financial management in terms of the rigour and transparency of that in local government. We have draft annual plans being put out for public consultation—draft 3-year plans. Councils have to do an annual report. A financial strategy has to be prepared in terms of changes to and increases in rates. All of those measures and the fact that they are reviewed by the Office of the Auditor-General promote transparency and rigour. We do not have a draft Budget being put out by central government for consultation by people. The focus on rates is partly because these rates are paid out of people’s net after-tax income. It is not like the PAYE tax which is paid before people receive it. That is why there is so much focus on rates in the community—because they come out of the net income. 
 This whole proposal of establishing benchmarks—fortunately by a Supplementary Order Paper there has been a change so that the benchmarks are no longer tied to the intervention powers. But the Auckland Council was very clear that the benchmarks and the soft cap that they will potentially impose on rates will not improve the council’s financial management. Potentially they make it much more difficult because they will degrade rather than enhance the council’s ability to manage its affairs in a financially and fiscally prudent manner because they potentially lead to a change in the credit rating. The security against which councils borrow is their ability to raise rates to meet their debt obligations. If you have soft caps that reduces the value of that security and potentially leads to a change in the credit rating and an increase in the cost of borrowing. As we keep saying to the Government borrowing spreads the cost of new infrastructure across several generations. Councils’ costs would not be rising if they were not investing in infrastructure which helps provide the basis of the economy. It makes sense to invest in infrastructure. 
The other reason this bill is wrong is that it is completely out of step with what is happening internationally. In the United Kingdom with the Localism Act you are building a capacity in local government to facilitate the building of stronger communities you are getting stronger community governance and you are getting more commitment to participation by the community in everyday decision-making. This bill runs completely counter to international trends. This bill is about the centralisation of Government. It is about having councils that are more distant from their communities and it is about trampling on local democracy through the reorganisation provisions. 
In conclusion the proposal in the bill for the changes to schedule 3 is eroding the democratic rights of citizens to decide how they will be governed. It will shift the onus from local government consulting with its citizens about whether reorganisation should occur to putting the burden on citizens to seek this petition to get a poll. It is much more onerous and it puts a great deal of power in the hands of the Local Government Commission rather than leaving the major decision-making in the community’s hands. That is why we oppose the bill. 
JACQUI DEAN (National—Waitaki) 
: 
 The Local Government Act 2002 Amendment Bill provides clarity around the role of councils. It provides for stronger governance. It provides for improved efficiency and more responsible financial management by local authorities. The reforms in this bill are intended to sharpen councils’ focus on what they appropriately provide rather than the wide-reaching responsibilities brought in by the 2002 Act. This Government is drawing the focus back to providing local infrastructure local public services and regulatory functions. 
The new purpose of the Local Government Act has been much debated both in this House and during the select committee process. So I want to remind the House of section 12(2)—members opposite might care to have a look at that for the first time—of the 2002 Act which says: “For the purposes of performing its role a local authority has—(a) full capacity to carry on or undertake any activity or business do any act or enter into any transaction;”. Sections 11 and 12 are not amended by this bill. The contention that local authorities will be prevented from undertaking new activities or litigated endlessly are simply not true. They will however after consulting with their communities be able to continue supporting activities like their community house albeit with an enhanced weather eye on its ongoing cost and impact on its ratepaying community. 
The debate on this bill particularly in the Committee stage has taken on a Chicken Little aspect. If one believes the Opposition the sky is about to fall in on local government. I can tell New Zealand First the Greens and what is left of Labour that it will not. Although I can accept that the spendthrifts opposite cannot get their heads around the need to focus on the provisions of good local infrastructure regulatory functions and public services this Government can. Local government like central government needs to deliver better services for New Zealand within tight financial constraints. When talking to the president of Local Government New Zealand last night Lawrence Yule I was assured that local authorities will be getting on with it and good on them. 
I want to finish by acknowledging and thanking Nicky Wagner the chair of the Local Government and Environment Committee—she is unable to be here today; I am probably not allowed to say that—for her excellent work in shepherding this bill not only through the House but also through the select committee. Thank you. 
ANDREW WILLIAMS (NZ First) 
: 
 I rise to take a call on behalf of New Zealand First on the Local Government Act 2002 Amendment Bill and to give the members on the other side of the House the members of the National Party perhaps a small history lesson. I hope they have got their pens ready and I hope they are ready to take notes so that when they go back to their National caucus next week they can perhaps recite some of these quotes. 
The first quote I have is from the Local Government New Zealand conference of 16 July 2012. It was the Rt Hon John Key Prime Minister of New Zealand who said: “the relationship between central and local government is incredibly important. There are many areas where we work together productively. You are also responsible for administering many of the laws we write such as the Resource Management Act.” He then went on to say: “New Zealand’s 78 councils make up 4 per cent of GDP spending $7.5 billion of public money each year.”—so we know where Maurice Williamson got his speech from—“And they manage $100 billion worth of assets.” He then said: “They also perform a huge range of regulatory functions that affect households and businesses—from granting resource and building consents to issuing dog registrations. Councils have a role to play in creating an environment that is conducive to sustained economic growth—just as central government does.” That was this year. 
I then jump back 1 year to 11 July 2011—the same Rt Hon John Key Prime Minister of New Zealand and former money trader of Merrill Lynch in New York but now Prime Minister of New Zealand. He said on 11 July 2011 to the Local Government New Zealand conference: “Local government already makes a valuable contribution to our economy. You contribute four per cent to New Zealand’s GDP. You have infrastructural assets worth $89 billion. And you employ more than 22800 people. Our”—listen to this the Hon Nick Smith—“joint commitment to economic growth is crucial for New Zealand’s success. Together we are an enabling force for the private sector to generate jobs and economic growth. New Zealand needs a more competitive economy to grow.” So there was the deal—the partnership between central and local government. That is 2 years in a row. 
Let us go back a year to 26 July 2010 when the same Rt Hon John Key the Prime Minister of New Zealand and former Merrill Lynch trader from New York said: “You in local government can also contribute significantly to economic growth. As we look to improve infrastructure and go for growth we’re conscious of the role that local government also has to play. … I know that the actions”—this is what he said—“of central government have a direct impact on local government. Sometimes that can mean increased costs as we’ve seen in the past.” So there he was in 2010 admitting that local government is taking on increased costs from central government. 
We go back a year earlier to 27 July 2009 at the Local Government New Zealand conference—same person same John Key the same money trader from New York. He said: “We appreciate the challenges you face. Both central and local government need to keep improving”—need to keep improving—“the services we provide to our constituents at a cost that is affordable. I’d like to thank Local Government New Zealand for the constructive work you are putting into this review. I am confident that with your help we can make some real progress. Infrastructure is another area where we can achieve a lot together. Boosting infrastructure investment is a priority for the government.” That is what he said: boosting infrastructure investment is a priority for this Government. 
He said: “Meanwhile councils expect to spend somewhere around $30 billion over the next decade on roads water services and other assets. By working together we can maximise the return our communities get from these investments.” Then he went on to say: “The Government knows that councils face”—[ 
Interruption 
] Hang on listen to this. Listen to this. This is a good one. He went on to say: “The Government knows that councils face a big spike in costs over the next decade in infrastructure investment. And some of this will quite rightly be financed by debt.” Oh! Is that not incredible? 
So in 2009 the Rt Hon John Key said: “My goodness some of this joint thing between central and local government is going to have to be financed by debt.” But what did we hear from the Hon Nick Smith just a short while ago? He was criticising local government for going from $2 billion to $8 billion of debt. Boy I think you need to go and speak to your Prime Minister your leader and say: “Excuse me leader—excuse me leader—but I went down and actually sort of stabbed you in the back a bit by criticising your comments from these conferences because I said that debt is bad.” 
Anyway let us go back a year earlier to 26 July 2008 when he was not the Rt Hon John Key. He was just John Key Leader of the Opposition and former Merrill Lynch trader from New York. So he was pretty fresh off the block then. He was the Leader of the Opposition and trying to become the Prime Minister. He said: “In particular central and local government face the challenge of investing in infrastructure to secure New Zealand’s long-term sustainable growth. We have to get this right because if we want to enjoy living in a First World country we need to have First World infrastructure. Right now we have a serious backlog in infrastructure investment.” Are you listening to this Dr Smith? He said: “Right now we have a serious backlog in infrastructure investment. Much of our infrastructure needs upgrading or replacing. Some is at the end of its expected lifespan. Low-quality infrastructure has become a bottleneck to a growing economy. Local authorities have identified in their Long Term Council Community Plans a required investment of around $30 billion over the next 10 years. Most of this”—this is John Key who was the Leader of the Opposition at the time and who was wanting to become the Prime Minister—“goes to pay for roading and the so-called ‘three waters’: drinking water waste water and storm water. Central government is also facing an infrastructure spend of about the same magnitude over the next decade. This makes infrastructure a $60 billion issue and we have to have the right approach to dealing with it. It’s my view that central government has much to learn from local government when it comes to infrastructure planning investment and management.” 
Is that not interesting? Over 5 consecutive years—5 consecutive years—you have got the Prime Minister and the Leader of the Opposition absolutely begging local government to respond to help economic growth to grow jobs to grow opportunities in the country to improve our standing and to bring us back into First World status and it does—it responds. It tries to leverage its lazy balance sheets as I recall and it responds. And what happens? This National Government just kicks it in the teeth and puts it down. The former local government Minister Nick Smith—who is going to be the future local government Minister as soon as Dr Lockwood Smith goes off to London and David Carter the current Minister goes and takes up the chair with the sheepskin up there—will be back and he will have his hand so far up the back of Lawrence Yule and all the other mayors of New Zealand and all the councils. He will be so far in there he will be you know doggy deep—doggy deep—in local government and he will be telling them and he will be putting in his Crown managers his Crown spies his Crown advisers and you name it and half of them will be from Federated Farmers because it was really only Federated Farmers and Business New Zealand that came along and supported the bill. Of the 775 submissions that came along to the Local Government and Environment Committee only the chamber of commerce Federated Farmers Business New Zealand and a few other National Party shonkies came along to support it. The vast majority opposed it. 
What I am saying is this bill is going to go through—it is going to go through—but rest assured the communities of New Zealand need to be aware that they are not going to be hung out to dry. The minute the Hon Nick Smith becomes the local government Minister we are going to be watching him like a hawk. If he tries to interfere and pull the puppet strings of local government and if he thinks that we are going to an Eastern bloc regime where central government basically controls every little local town and authority in New Zealand then he has got another think coming and we will constantly remind him that his leader—his leader—for more than 5 years set the challenge. Local government picked up the challenge and it will continue doing that. 
I can in closing just say well done to all the councils of New Zealand. You are doing a very good job and if you keep going the way you are going—and of course we always look for efficiencies and economies wherever we can and all councils do that—then New Zealand can perhaps get back to a First World country and be a great place to live. But it certainly will not be if we are going to have some sort of Stalinist central government that is absolutely going to control everything from the office of Nick Smith. 
JAMI-LEE ROSS (National—Botany) 
: 
 That was a speech from the failed former Mayor of North Shore. The mayoralty of Andrew Williams was a failed mayoralty. The good people of North Shore in the last election he stood in gave him a grand total of 900 votes. Maggie Barry got 22000 votes in that same election. The good people of North Shore appreciated his mayoralty so much that they gave him 900 votes. I can understand why he is so fixated on John Key. It is because John Key would not reply to his text messages at 3.30 in the morning—3.30 in the morning after a hard night out on the town interacting with trees along the way home. 
We are passing this legislation because the ratepayers of New Zealand are crying out for help. If Mr Williams wants to give us a history lesson let me give people a history lesson on the North Shore. Mr Williams likes to talk on his website about the rates increases he had under his mayoralty. During his mayoralty in 2009 the CPI was 1.9 percent. The CPI in 2010 was 1.8 percent. Mr Williams increased rates in North Shore in those years at three times the rate of inflation—three times the rate of inflation. We are dealing with problems in this country in local government because local government in the past 10 years has been spending up large under legislation that was passed by the Labour Government in 2002. 
I want to read out some of the submissions because we heard from Annette King and Phil Twyford about submissions on behalf of individuals who submitted to the Local Government and Environment Committee. If you listened to their comments you would think that everybody is allowed a view in this matter except the poor people actually having to pay the rates bill. 
Let me read out some of the comments from the people paying the rates bill. I have got one here from Grey Power in Waitakere—the very area that Mr Twyford is from. It said in its submission: “We call on The Government to restrain local government spending …”. It also said that the spending problem could be remedied by the removal of the power of general competence and the four well-beings. 
What about Wellington? Annette King is from Wellington. What do the ratepayers down there say? The Wellington Chamber of Commerce said: “The four wellbeings have been a factor behind this explosive”—I will use the word again explosive—“growth in council spending rates and debt over the past decade …”. 
I want to say congratulations to the Hon Dr Nick Smith and the Hon David Carter on the work they have put into this bill and on the relief that ratepayers in this country are going to be getting after this bill passes. Ratepayers want councils to focus on good quality local infrastructure good quality public services and the maintenance of their regulatory responsibilities in an effective and an efficient manner. That is what we are delivering to the ratepayers in New Zealand. 
The decade of bloated council rate increases the decade where we saw debt quadruple from $2 billion to $8 billion is coming to an end. The ratepayers in New Zealand the people paying the bills are welcoming the Local Government Act 2002 Amendment Bill and I look forward to it passing its third reading. 
MOANA MACKEY (Labour) 
: 
 It has been an extraordinary year for legislation in the House. Just when you think it cannot get any worse just when you think you have hit a real legislative low along comes Dr Nick Smith with his spade and digs even deeper because this bill the Local Government Act 2002 Amendment Bill is just about one of the worst pieces of legislation I think we have had before the House. I say to Jami-Lee Ross that clearly he was not on the Local Government and Environment Committee because if he was he would know that in fact the submissions we received in favour of the bill were about as apathetic and lukewarm as you could possibly get. Yes submitters liked what Dr Smith said the bill was going to do but when they were actually pressed by members of the committee to show how it would achieve the claimed outcomes they all had to admit that in fact they had no guarantees of that. I do not think I have ever seen some of these groups as underwhelmed about a piece of legislation that they support as they were about the Local Government Act 2002 Amendment Bill. This will do nothing about rates increases—absolutely nothing. The great claim that it is somehow going to reduce rates and make it more affordable is a load of codswallop and Dr Smith knows that. There is no mechanism in this bill to reduce rates and there is nothing in this bill that is going to result in a reduction of costs to councils. 
Let us be clear. Where have the increased costs on councils come from that have been passed on to ratepayers? From infrastructure. They have come from infrastructure and from requirements put on councils by central government to meet new standards without the attached funding—without the attached funding. So when you look at the infrastructure as Mr Williams pointed out John Key has been telling local government for years that it needs to spend more on infrastructure that its debt levels are so prudent that it is in the position that it can do that in a responsible manner that our economic development as a country cannot go forward if local government does not come to the party and increase its spending on infrastructure and that he wanted to partner with it to ensure that both central and local government were investing in this infrastructure. Local government went ahead it did what the Prime Minister asked it to do it did it in good faith and then what happened? Nick Smith turns round and kicks it in the guts for doing exactly what the Prime Minister asked it to do and uses it as a reason to pass a piece of legislation that will completely gut local government in New Zealand. 
Was John Key setting up local government? Was this all part of some big plan to set local government up so that it increased its debt because the Government asked it to spend more on infrastructure and Nick Smith could then swoop in and blame it for increasing its debt to pay for the infrastructure that John Key asked for? Or is this just complete ineptitude where one hand of Government does not know what the other hand is doing? Well I always favour cock-up over conspiracy so I suspect that Nick Smith and John Key just did not even talk about this. While John Key was travelling around the country asking councils to be more responsible and to invest in infrastructure Nick Smith was slowly crawling along behind him wringing his hands in pleasure thinking “This is going to give me the reason I need to do what I have always wanted to do which is to centralise power and control over local government in New Zealand.” 
And it is a tragedy because this bill removes the four well-beings. We heard from Jacqui Dean who said: “Oh it does not matter because they can still do everything they already wanted to do under the new purpose clause.” Then why remove the four well-beings? If the intent was not to limit what local government can do then why did we have to remove the four well-beings? The fact is that Jacqui Dean knows very well and Nick Smith knows very well that this is all about telling councils what they can and cannot do. This is all about restricting their activities. Dr Smith is nodding. He might want to tell his colleague Jacqui Dean who said the exact opposite of that. 
Dr Smith as well as being the former “Minister for Manufactured Crises” is also the former “Minister for Manufactured Outrage”. He stood up today and he gave a great speech on just how dreadful it is that local government has gone into all these areas that it should not be going into that it is out of control and that it is just crazy what it is doing. What a load of nonsense. As Nick Smith well knows the figures that he used to justify this legislation were so shonky that the Department of Internal Affairs had to take them down off the website but not before we managed to print off a copy of them to show just how shonky those figures are. He constantly refers to the one council that is having financial difficulties at the moment—and very serious financial difficulties—which is the Kaipara District Council. One out of 78 councils. One out of 78 councils and apparently we have to gut the entire system because one council at the moment is in trouble. It is no wonder that 100 percent of local authorities voted against this legislation—all oppose it all say it will not work and all say it will do more damage than good. 
And it is all apparently to arrest rates increases which this bill will not do. It will not do that at all unless the message that the Government is now sending to local government is “Stop investing in infrastructure because we don’t want you to do it.” Let us just remember that this is at a time when the Government is pulling back support for local government. It used to help out provincial councils with their local roads. Well that funding has been cut. That funding has been cut right back. Where does Nick Smith think that those councils are going to get that money from? In order to bridge that gap where central government did partner with local government it will have to turn to ratepayers. Then Nick Smith will blame local government for having to turn to ratepayers to bridge the gap in funding that his Government has cut. Well there is a word for that. 
Local government knows very well the dangers of this piece of legislation. Nowhere is the impact of this going to be more serious than in provincial and rural New Zealand where the councils rely on the flexibility of the four well-beings so that they can determine for themselves what their priorities should be as a council in consultation with their communities. It is not Nick Smith sitting in Wellington telling them what their priorities will be; it is those councils deciding for themselves. So you look at the example of the Ashburton District Council which is providing health services in Rakaia because the Government is not doing that. Those communities would not have access to those services without their council. Look at the running of festivals around the country for communities of interest; look at the work Mayor Meng Foon in Gisborne has been doing trying to support the Gisborne to Napier rail line; and look at Mayor John Forbes in Opotiki who has been running an economic development strategy to get more aquaculture to provide hundreds and hundreds of jobs to employ the people of Opotiki. Todd McClay should know. The Mayor of Kawerau is an absolute advocate for that community and the work he has done leading a response to youth suicide in that community has been incredibly valuable in that community. If you look at the Mayors Taskforce for Jobs— 
Todd McClay 
: What’s his name? 
MOANA MACKEY 
: —Malcolm Campbell—that is a scheme that has had far more success in addressing rising youth unemployment than anything this Government has done in its 4 years. Look at the work that Dale Williams has been doing the Mayor of Otorohanga in running that. All these things I have mentioned are now no longer going to be the mandate of local government. Well actually it should be up to local government. It is democratically elected. It is democratically elected just like members of this House. It should be up to them to decide what is right for their communities not for the National Government and its support parties to dictate down from on high. 
One of the most worrying parts of this legislation—and Canterbury members know this all too well—is that when we have a reorganisation of local government at the moment where a council is being removed or amalgamated currently all the communities involved have the right to a referendum. So if you are amalgamating four councils they will have a referendum in each of those councils. If one of those councils votes against it it does not go ahead. What this means is that all that groundwork has to be done beforehand to address all the issues all the concerns of the communities involved before it gets put to a referendum. They know that if there is one district that feels as though its views and priorities and needs are going to be overlooked in a much larger council then the whole thing could fall apart. That is what happened in Dr Nick Smith’s own area of Nelson-Tasman. Now that is going. Now there is no longer an automatic right to a referendum. So we will see—or we could see and I think we will see—the subsuming of the interests of smaller councils by much larger councils without that protection that was in law to ensure that no community no matter how isolated it is and no matter how small it is will have its needs overridden by the views of a much larger voting bloc somewhere else in the district. 
You only have to look at Canterbury where the Canterbury Regional Council is not democratically elected. My colleague Megan Woods who represents the electorate of Wigram tells me that her constituents would love to be allowed to have an election for their regional council next year. 
Dr Megan Woods 
: Please. 
MOANA MACKEY 
: Please sir Dr Nick Smith can we have an election like everyone else in the country is going to have? But what we are actually seeing in this legislation if you look at the Wellington region is that it is clear that Dr Nick Smith is setting this up so that he can defer the Wellington election next year. So you will not be alone Canterbury in not having an election because I suspect Wellington will also not have elections. The voters out there in Wellington at the moment could have under this legislation a power handed to the Hon Dr Nick Smith when he takes back his role as Minister of Local Government whereby he could just say: “You know what? Be damned with democracy. You don’t get to have your election because I am on a tight time frame and you’re actually interfering with it with all your needs for elections and elected members and such annoying things. So I’m going to defer your elections.” And who knows when they will get their election back? Who knows when they will get their election back? 
This is not how local government needs to operate in New Zealand and the worst aspect of all of this is that there is no mischief that needs addressing here. Local government ain’t broke. Dr Nick Smith has broken it now. It was not broken. It was working well. It was meeting the needs of all communities around New Zealand not the ideological desires of one man the Hon Dr Nick Smith. 
MAGGIE BARRY (National—North Shore) 
: 
 We on this side of the House support effective responsible local government and that is why this piece of legislation the Local Government Act 2002 Amendment Bill is so important. The four well-beings have really been a tool that has enabled irresponsible and incompetent and inept local councils. It has given them the excuse that they need to overspend and to put ratepayers in a difficult position. 
The spectacularly failed former Mayor of North Shore knows a lot about that. As my colleague pointed out earlier rates went up under his watch much faster than the CPI. So frankly for the guy who has put the North Shore in such a bad position and who then congratulates the most profligate spenders in local government I think his credibility is suitably well defined. My constituents on the North Shore tell me repeatedly that they are completely sick of the rates rises and the difficulties that they are facing. They are on fixed incomes they are hurting and they need some relief. 
 This legislation will give responsible local governments the ability to actually manage their resources and to manage what they have well. If they do choose to support events activities or anything of that kind then they are able to do so but it must be financially sustainable. Focus and discipline are what the ratepayers of New Zealand require of their local councils. They have the right to do that. But focus and discipline unfortunately are pretty well unknown territory for the Opposition parties. Local government really needs to take a grip and to be refocused and we are giving it the tools to do that. 
I must say that it has been entertaining really listening to the contributions of the Greens. We had one member the other day who called this piece of legislation “eee-vil”. I think that was how it was pronounced—“eee-vil” it was. This was from an individual who never once came to a meeting in all of the submissions and all of the hearings yet she gets— 
Jami-Lee Ross 
: Who was that? Who was that? 
MAGGIE BARRY 
: Oh I do not know. She is someone over there. Denise somebody or other—I cannot quite recall. 
Anyway “Ms Evil” has really not looked too carefully at things because what is evil about being clear about the role of councils in our communities? What is evil about being concerned about the escalating level of council rates and debt? What is evil about enabling the Government to intervene earlier with councils that have got it wrong so that we do not end up with the appalling situations like the poor ratepayers of Kaipara are currently being forced to endure? What is evil about giving elected councils far more control over the salaries of their executives and requiring more open disclosure of staff salaries? They have got it out of kilter. They have got it all wrong. This is a very important piece of legislation. It is only the first of the reforms that we are going to bring in to allow local government to do what it does best and also to relieve ratepayers of the terrible burden that profligate spenders are giving to them. 
So for the third time—this is the third call that I have taken on this bill—I would really like to commend this bill to the House. I believe in it. I believe in the John Key - led Government and that we are heading to a brighter future. The Opposition parties have proved once and for all that they are out of touch that they are not listening to the people. I commend this bill to the House. 
Mr DEPUTY SPEAKER 
: This is a split call—5 minutes. 
DARIEN FENTON (Labour) 
: 
 What is evil is Maggie Barry in her usual scathing way dismissing questions about what is going to happen on the North Shore. What she has not answered what her party has not answered and what she will need to answer to her constituents on the North Shore is whether the vast amount of council and local board funding will continue for arts and culture centres in her electorate. Will they be safe? Will there be money for flower gardens and events and— 
Maggie Barry 
: Yes if they’re viable. If they’re viable there will be. 
DARIEN FENTON 
: Well she says they will be. Can the member guarantee that? Will there be Sculpture OnShore? What about the art house what happens to that? That is council-funded. What happens to the art house? What happens to the Michael King Writers’ Centre? Maggie Barry needs to tell the truth. Will Devonport’s heritage be protected? Will the Lake House Arts Centre be secure? These are legitimate questions that people in her electorate have been asking me because she has been out there bullying them and telling them that the Government knows best. Sam Lotu-Iiga and Alfred Ngaro turned up for the North Shore Pasefika Festival last week another festival with funding help from the local board. Will it go ahead next year? I have been to the North Shore Pasefika Festival every year since it began 6 years ago. Will it be able to go ahead if the local board cannot help fund it and if Nick Smith says from Wellington that it is not a priority? Will Jonathan Coleman still be able to come to the Chinese New Year and moon festivals at Northcote Central and sit on the stage like he does every year even though his Government does not believe that councils should be involved in the cultural well-being of communities? 
Who is going to pay for the citizenship ceremonies that they front up to? Who is going to pay for the Anzac Day ceremonies? Are they priorities for councils? Do they come before local infrastructure which the Government has forced local councils to pay for? We do not know. Should the local board give funding to the Northcote Point Community Creche for example? You see Jonathan Coleman said yes and he has a special interest in that. I think he should be a little bit concerned about that. The Birkenhead Northcote Glenfield (Kaipatiki) Community Facilities Trust—run by Jill Nerheny who received a QSM last year—is council-funded and it fits under the four well-beings. How safe is the work it does? What does it do? It organises events it does education it does crime prevention and it has Ministry of Social Development contracts for strengthening families. It is run out of its council-funded building. All of her work and all of the work that I have listed helps save ratepayers and taxpayers money because it makes our communities great places to live and work in. It ensures that our local areas are vibrant socially inclusive and active. 
The biggest lie around this bill is that the four well-beings are costly. There is no evidence of that. The evidence does not stack up. Rates are still going to go up—rates are still going to go up—and communities will lose their hearts and souls. What this bill is—as we all know—is another Nick Smith - manufactured crisis. It is part of his agenda that he has managed to convince the rest of the Government is a good idea. The Minister of Local Government David Carter who succeeded Nick Smith has not been seen anywhere near this bill. He has not participated in any of the debates. He has been lazy. He has just picked up the work that Nick Smith did. The Minister has just picked it up and gone along with it because he cannot be bothered listening to what people said. 
I think the saddest thing about this bill is that the Government has not listened. All 78 councils throughout New Zealand oppose this bill. Of nearly 500 submissions the majority were overwhelmingly in opposition to this bill. I cannot express enough my disappointment about this bill but I am not surprised. The descriptions that have been given about the Government’s determination to destroy this part of our democracy have been many and varied but for me it is just a demonstration of how this Government has become arrogant smug and know-it-all and the people in our communities will end up paying for it. 
DENISE ROCHE (Green) 
: 
 It is my privilege to take a short call on this bill the Local Government Act 2002 Amendment Bill for the Greens. As the House will be aware we will be opposing this bill. The reason for opposing it was determined by a financial crisis that is not happening. It was purely fabricated and other speakers have actually spoken about that. There is no financial crisis in local government. The level of debt that is frequently referred to was imposed by central government on most local governments and the ability of councils to be able to find income to augment that infrastructure build was actually dismantled by this Government. So for example in Auckland one of the first things that the National Government did when it came into power was to remove the ability of the Auckland Regional Council to develop funds through a regional tax raised on petrol. This is not fair. 
This is not a fair bill. This is a bill that the Government is pushing through despite the fact that it is deeply unpopular. As referred to before by colleagues on this side of the House not one single council has actually said it wants this to happen. 
It has been really clear through the process of this bill travelling through the House that this Government does not understand what local government does. Certainly that was the impression I was getting from Maggie Barry and from other members on that side of the House who think that rates will go down because they will not. That is not what this bill is about. It is about the Government getting control of the spoils if you like. If this Government did have an understanding about what local government was about there would be no way that this Government would remove the four well-beings out of the Local Government Act because when you take those out you rip the heart and the guts and the soul out of local communities—you take it away. 
What does this mean for Auckland? What it means for Auckland is that having been through an undemocratic amalgamation—which again this bill wants to force elsewhere—all the work that it was required to do under the legislation that this Government passed to force that amalgamation will be for nothing. 
I have here the Auckland Plan—one part of it. It was a requirement of the legislation that Auckland Council would develop a 30-year vision for Auckland City for those seven amalgamated councils. It is fantastic. The legislation set time frames. There was a huge amount of work that was done by both councillors and local board members and by the staff who were under incredible pressure and this is what they delivered—an amazing 30-year plan. 
The cornerstone of this plan is the four well-beings: the cultural the social the economic and the environmental well-being of the citizens of Auckland. It says in the preamble by the mayor: “The gap between those who have and those who don’t is growing by the day. This is not the society Aucklanders want nor does it auger well for the future. The Plan contains strategies and actions that address these socio-economic trends. There is a particular focus on our children and young people—our parents and leaders of the future.” It is visionary stuff. It is amazing stuff. It is the four well-beings in action. If you take away the four well-beings you take away the ability of Auckland Council to deliver on what it has set out to do—what it was actually originally forced to do—and when you do that you undermine the communities in Auckland. 
Not only that but we need Auckland to do this. We need the council to do it because the Government is not doing it and that is what the rates are paying for. The rates in Auckland in Maggie Barry’s electorate are also paying for the forced amalgamation that this Government forced on to her electorate. 
We will be opposing this bill not only because of that but also for all the other reasons that have been listed by my colleague Eugenie Sage and by the people on this side of the House too. We are also really worried about what this does to local government staff and what it does to good-faith bargaining in this sector. Thank you. 
PAUL GOLDSMITH (National) 
: 
 It is my pleasure to speak on the third reading of the Local Government Act 2002 Amendment Bill which is all about showing that local government like central government needs to deliver better services to New Zealanders within tight financial constraints. These Better Local Government reforms provide clarity around the role of councils strong governance improved efficiency and more responsible financial arrangement. 
A lot of the debate has been around these mysterious four well-beings and I sat through a very large number of submissions on these through the select committee process. I remember them well. There were a lot of submissions as has been said from mayors and councillors saying: “There is no problem. No need for change. Local government should continue to be free to promote social economic environmental and cultural well-beings. No problem here look the other way.” We also heard a lot of scaremongering about a great list of things that local government has been doing for decades well before 10 years ago when these four well-beings materialised and that somehow they would not be able to do those. Well they did them in the 1960s and 1970s so why would they not be able to do them now? 
But we heard some very different stories from the ratepayers’ associations. I remember very well a little old lady from Howick who came along and wept in front of the select committee— 
Dr Cam Calder 
: Wept? 
PAUL GOLDSMITH 
: —wept she did—because her rates had been going up skyrocketing over the last few years. She is on a fixed income like many people. She had lived in the house that her husband had built after the War. She did not have extra money to keep on paying 10 percent more a year because Len Brown had chosen to distribute the rates in such a way as to see her rates going up by 10 percent. She was at her wit’s end and that is what this Government is about doing. That is why I am so focused on restraining local government spending. Of course before anything can be spent it must first be taken from people’s pockets unwillingly. 
The point about the four well-beings as stated in the 2002 Act is that they do not just allow councils to get into every activity under the sun; it is more than that. It is that councils have to promote the four well-beings. I have been a councillor on Auckland City Council and I have seen how it works. It is not just an invitation to do these things; it is an incitement. It is an instruction to broaden the gaze of local government into a whole lot of new areas—mostly areas that have been dealt with by central government already. That is why rates have gone up well beyond the rate of inflation over the past 10 years since these well-beings were introduced it is why debt has quadrupled and it is why if unchanged rates will continue to rise. Bringing in this bill is an important way to stop the gusher that we have seen in local government spending over the past 10 years and I commend it to the House. Thank you. 
A party vote was called for on the question  
That the Local Government Act 2002 Amendment Bill be now read a third time. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 59 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Maori Party 2; Mana 1. 
Bill read a third time. 
Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill be now read a first time. 
 I nominate the Finance and Expenditure Committee to consider the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill. Like most economies ours has been battered by the global financial crisis. Consequently the Government’s focus has been on positioning it for the future to take advantage of global economic recovery. In that context it is right that the tax system should ensure that all taxpayers pay their fair share of tax thereby reducing our national debt burden. At the same time it is also appropriate that the tax system seeks to minimise the burden it places on business. This bill contains measures that are aimed at both those objectives. To that end the bill proposes to tighten the rules relating to the tax deductibility of expenditure relating to assets such as holiday homes boats and aircraft that the owner uses both privately and to earn income. 
The Government has no argument with people owning and enjoying such assets. These tax changes are not a form of envy politics but really about getting a fair outcome. It is a principle of our system that a person is allowed a tax deduction for expenditure if it is incurred in deriving their income or in the course of carrying on a business. But unfairness arises because owners claim that the house is available for rent during significant periods of the year when it is actually unoccupied. That provides them with a basis for claiming tax deductions for expenses relating to the period the property is empty. If the owner holds the asset primarily for private enjoyment this is simply a taxpayer-subsidised asset and it is very difficult to justify. Members may recall that this proposal was part of the Budget 2012 announcements. 
Also raised at the time was a change to livestock valuation rules which made elections to use the herd scheme generally irrevocable. That again was a question of fairness. So a key component of this bill includes supporting provisions proposed to the livestock valuation rules that made elections to use the herd scheme generally irrevocable. We had made the policy decision earlier; this bill puts that decision into effect. What this bill does also is propose one exemption to the core herd irrevocability rule that we enacted as part of Budget 2012 and sets out new rules for the disposal of herd scheme livestock. 
The bill also makes some important GST changes to rectify a problem with our tax laws that disadvantage businesses that compete globally. Under the existing GST rules a non-resident doing business in New Zealand can incur GST as an economic cost and this makes our goods and our services less competitive. Our international competitors provide ways of reducing this cost and frankly so should we. So the bill proposes to allow certain non-resident businesses to register for GST and claim import tax deductions for GST incurred on approximately the same basis as a resident registered person. Also of note in the bill are changes to the time periods for claiming refunds under the Income Tax Act 2007; provisions to ensure that expenditure on trees and plantings for erosion shelter and water protection purposes is tax deductible; and some provisions to address anomalies that have been highlighted by the kiwifruit Psa virus issue. 
Donee status is proposed for three organisations: the Hunger Project New Zealand OneSight New Zealand and the Fund for Timor. 
Finally the bill introduces a range of remedial amendments including a better alignment of the primary sector amortisation rules with the general depreciation rules the elimination of tax treatment mismatches to certain foreign currency hedges and correcting a minor and unintended change to the tax treatment of MPs’ allowances. 
I want to advise members that I intend to release a Supplementary Order Paper to this bill which will cover two main matters. Broadly speaking those matters are changes to the tax treatment of car parks and the inclusion of more non-cash benefits in social assistance calculations and lease inducements and surrender of payments. The Government has already made announcements in respect of its intentions with regard to both of those matters. My intention is that the Supplementary Order Paper will be released in sufficient time to allow it to be considered by the select committee alongside the other provisions of this bill and for submissions to be called on those provisions as well as the provisions in the bill. 
So these are the main features of this legislation. Taken together they will help strengthen our tax system and support our economy. They are consistent with our overall objectives of making the tax system fairer modernising its provisions to keep pace with the times and making it easier for taxpayers both personal and corporate to comply with and meet their obligations. Against that backdrop I am very pleased to commend this bill to the House. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 The Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill is a bill that Labour will support albeit within the wider context of concern that this Government lacks real vision for making the changes that are needed across the economy to get our economy back on track. 
This Government has the worst economic record of any Government in the last 50 years and here we are debating a bill that makes minor changes across the tax framework. It will be interesting to see what things come up at the Finance and Expenditure Committee because some of the rules prescribed could well be questioned—and I am sure they will be—by those with an interest and there are alternative ways of going about skinning the cat of tax avoidance in terms of assets that are privately owned. 
This bill makes changes that are important in relation to the livestock valuation methods. Switching methods of livestock valuation has provided farmers with an unfair advantage in terms of tax for a very long period of time. Those farmers who followed the rules as they were intended to be used were placed at a competitive disadvantage. The Labour Party supports this change because it is a fair change that makes sure these rules are applied in a fair way. I understand this bill provides some exceptions and no doubt that is around tidying it up so that it is a policy that can be implemented for the benefit of our country. 
There is some rich irony of course in the Minister talking about all New Zealanders paying their fair share. Today I have released information that makes it clear that multinationals like Facebook are not paying their fair share in this country. We have seen it pay $5000 in tax in New Zealand in 2010. It has gone up a little to $14500 in 2011. When it has 2.2 million users it seems unbelievable that in 2010 it paid less tax than your average New Zealand labourer. When we do not make progressive changes to our tax system and we do not close loopholes we end up with a system that is unfair and that undermines the credibility and fair functioning of our tax system. 
This bill could go a long way further to address the big issues in our economy but it is stuck addressing one or two sensible matters without progressing the bigger picture. We will certainly be supporting the changes proposed in terms of livestock valuation because they make the system fairer. 
I am sure the changes in respect of mixed-use assets will be hotly debated at select committee. Businesses that use an asset for fewer than 62 working days—if the asset is simply used on working days—will find it is considered a mixed-use asset and the tax rules applying to that asset will change. There are other ways of addressing this problem such as applying rules in a similar way to which the fringe benefit tax rules are applied in respect of cars. It is a fair question to ask why we are not going down that track and why we are instead creating some complex rules that will be difficult to police. 
Of course these mixed-use assets are close to Kiwis’ hearts. We know that the home boat bach and aircraft—if you are fortunate enough to have these assets—are things that will be looked after and valued both for private use and public use and these things are dealt with very directly in this bill. I do not want to go too far down the route of exploring whether these rules will be applied to cabbage boats or whether helicopters owned by German billionaires will be captured within these rules such as the helicopter owned by Kim Dotcom that flew the member for Epsom to and from the Dotcom mansion in John Key’s electorate. 
Hon Trevor Mallard 
: It landed beside the giraffe which he then forgot. 
Dr DAVID CLARK 
: Mr Mallard tells me that the helicopter landed beside a giraffe which Mr Banks must have forgotten. He certainly forgot about the money in the brown envelopes he was handed. You know all of this sounds a little bit implausible and one hopes that the Government will be able to remember how to apply these laws if it is fortunate enough to pass them through the select committee process and refine them in an appropriate fashion. 
These issues are sensible to address but as I said at the outset there are many ways to skin this cat. There are other things that could be done that we know will not be done because the Inland Revenue Department’s computer systems are ageing. The core FIRST IT system is over 20 years old it can no longer handle big changes and so this Government is in the process of backtracking on various changes it has realised it cannot make. It is also highly likely that the Government would not currently be able to introduce a pro-growth capital gains tax should it see the light and understand the benefit of sending a neutral investment signal to business people rather than one that implies tax avoidance through investment in housing. 
That problem alone probably limits the scope of this bill in a way that is incredibly unfortunate. The current Minister of Revenue has been aware of this problem for all the 7 years that he has been Minister and yet he has failed to lay out a credible time line for fixing the computer system and failed to be transparent about costs and processes. We saw today in the House at question time his refusal to release any information on 80 documents directly relating to the business transformation process that the Inland Revenue Department is undertaking in order to eventually—one hopes—update those IT systems but we do not know. Mr Key said on Valentine’s Day this year—on 14 February—that Kiwis need an IT system that works in their Inland Revenue Department. That is a sensible thing to wish for. I support him in that. 
Dr Rajen Prasad 
: He was loving it. 
Dr DAVID CLARK 
: He was loving it. I support him in that because every country in the Western World needs a functioning tax system. But we have seen no action since. 
The Government has not announced any changes has not announced any credible time line or a change programme. Instead we are left tinkering with legislation that will not change much. It will plug a little hole here or there it will debate what the best way to do things is or it might change some of the GST rules and we have seen of course the Government doing that before. Mr Key said he would not put up GST to 15 percent—then I think he said we live in a dynamic environment—and next thing you know it was 15 percent. Kiwi families have been struggling ever since because those GST changes hit those families in the middle and on low incomes the hardest. Those who are best-off are doing pretty well. We understand 90 of the top 100 earners in New Zealand do not declare tax that is consistent with being on the top tax rate. Although they may have hundreds of millions of dollars they are not declaring income that is above $70000. So those who are very well-off carry on as they were without being challenged by a proper functioning tax system. 
Tax revenue has dropped 4 percent under this Government’s watch. That is partly because it has overseen the worst economic growth record of any Government in 50 years and partly because of policy changes it has made and in small part it is due to the impact of the global financial crisis. That is the advice that has come from its own department—that the global financial crisis is only a small part of that picture. The Government is mismanaging the economy. 
As I come to a conclusion I want to point out that Labour will support this bill going to the select committee because we can see the benefit in addressing some of these loopholes. But we think that this is a lost opportunity for Kiwis to have a better fairer tax system to implement pro-growth tax reform that would include a capital gains tax and would increase savings through universal KiwiSaver and to introduce research and development tax credits. We would put in monetary policy changes that would give the Reserve Bank the tools to manage the exchange rate in the interests of an export-led recovery. We would also build 100000 affordable homes over 10 years. We would be converting the dole into a subsidy for apprentices. These things would actually grow our economy unlike the tinkering we see time after time when bills come before this House in the Government’s name. 
This Government is out of ideas and out of plans. John Key is disappointing New Zealanders. He is not delivering on the promises he made and he is out of touch. It seems that Mr Key is content to see New Zealand decline. He continues to oversee the worst economic record of any Government in the last 50 years. 
TODD McCLAY (National—Rotorua) 
: 
 This bill the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill continues the Government’s focus on ensuring that everybody pays their fair share of tax whilst at the same supporting our economy. I want to thank the Minister of Revenue Peter Dunne for his work in developing and bringing this bill to the House because I think it does a number of very important things. It is also good to see members opposite saying that they are going to support it. It is a long time since I remember them supporting something the Government is doing that is so important to New Zealand. Therefore that is a good thing. Perhaps we are all learning here in this House. 
There are a couple of things I want to touch on in particular. The first is that Budget 2012 made a number of changes to the way that livestock in New Zealand is valued. This bill further supports those changes with provisions to enact that to a greater degree. There is a tightening of rules for reducing the cost of assets that are used privately by the owners who also seek to gain revenue from them. I think it is very important that we have a debate around this. As with the last person who spoke in this debate Dr David Clark I am sure we will receive a number of submissions in the select committee on this very issue. There are several GST-related changes and importantly there are changes to the time period in which entities or individuals are able to claim refunds. 
The last speaker in the debate said that the Government was out of touch and I want to absolutely tell you that that is not the case. There is one change that is coming about in this bill that is not only extremely important to many hard-working New Zealanders but also extremely important to my electorate in the Te Puke area where we grow kiwifruit. Of course all members of the House will be as concerned as I am about the effects the Psa virus is having upon the kiwifruit industry. This bill will also have rules concerning the tax treatment of certain capital payments and receipts and capital losses in the horticulture industry. It will clarify those and these are generally of assistance to the kiwifruit orchards that are affected by Psa. What does that mean? Well it means actually that the kiwifruit industry some time ago came to the Government and made a case for the difficultly it would have as it moved through dealing with Psa and the tax treatment where there are likely to be losses where crops are wiped out and the growers need to reinvest. 
I want to thank the Minister for understanding the growers’ concerns and listening and for bringing this bill which will assist them to get back on their feet. It will better align amortisation rules for primary sector businesses with the general depreciation rules as a result of Psa in kiwifruit. That is not a Government that is out of touch; that is a Government that is listening and delivering direct assistance to an industry that very much needs that assistance. It is saying that this House’s thoughts and the Government’s support are with the growers in the industry around Te Puke and in other parts of New Zealand at the moment. I look forward to their submissions on the bill. Thank you. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 I want to reaffirm the statement made by Dr David Clark that Labour will support this bill the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill. Tinkering bills like this generally do no harm so there is no harm in supporting them. This bill does clear up a few loopholes in the tax system and it will be good to have the discussion at the select committee about exactly which loopholes need to be tidied up. 
But frankly this bill just reflects more muddled thinking from the muddled orcs of “Muddled Earth” over there on the Government benches. On the one hand Government members are saying to their base their core the farmers of New Zealand “You need to pay more tax and stop rorting the tax system farmers. We are going to close the loophole on you.”—on the farmers Mr Assistant Speaker Robertson not on you; I am sure you are not evading any tax. On the other hand multinational corporations like Facebook get to continue their tax rort. Facebook gets an effective tax rate in New Zealand of 2 percent. That is a tax rate that Mitt Romney can only dream of. Google gets to carry on with that tax rort. Facebook is rorting the system as well unabated untouched by this bill. A multinational corporation is left alone and left untouched while the poor farmers of New Zealand whom the National Party claims to be the champion for are getting attacked once again by this disappointment of a National Government. 
They will not be the only group who are going to be disappointed by this bill in the name of the National Government. All those poor doctors and vets and other students who were promised a great deal out of the Voluntary Bonding Scheme from this National Government now learn that the income they earn from the Voluntary Bonding Scheme will not be applied to KiwiSaver thanks to this bill. So their KiwiSaver contributions from their employer are going to drop. They are losing out because this Government cannot keep its promises. It cannot keep its promises so the poor medical students when they graduate and the vet students from Massey University when they graduate are going to go out there and are just going to have one more disappointment from this very disappointing National Government. This is muddled muddled thinking from this Government. 
On GST well we are going to see again that foreign corporations and foreign businesses get to register for GST now. So they can reduce the hit that they have to take on their GST bill. Meanwhile the hard-working people of New Zealand every time they go to the supermarket every time they go to the petrol station every time they go to buy clothes for their kids and every time they go to get the school uniforms are paying more GST. So the citizens of New Zealand are paying more GST whilst the foreign corporations are being given another free ride just like Warner Bros. They get to dictate to us in New Zealand what our laws are and now what our tax laws are as well. I think that this bill really sums up the way this Government thinks. 
It is good to see some loopholes being closed on some major assets—holiday homes for instance. I do not know whether or not this impacts on holiday homes in Hawaii—probably not because this Prime Minister likes to make sure that any additional tax changes do not affect him personally but that would be interesting to know. As for boats and aircraft I wonder whether in order to register your aircraft for this taxation you have to remember whether or not it exists. Even if you sign a document saying that you have one of these aircraft I wonder whether signing it actually matters any more because we know that with John Banks he could not remember the helicopter ride and when he signed his election return that did not mean anything because he had not read it and his signature was not worth anything. So I would like to know what the criteria will be around those assets such as aircraft and holiday homes. 
But of course what this does not do is have a real change in the tax base which would be a real opportunity to make sure that everybody is paying their fair share and have a growth-focused tax regime because there is no mention of a capital gains tax in this legislation. Of course that would be too bold for this Government. That would be too much about economic growth for this Government. That might actually show some signs of a plan which is the last thing that we are going to see from this Government. More muddled thinking from the poor muddled orcs across the other side there. Of course there is no sign of the research and development tax credits that might grow our productive sector. No they are missing from this bill. Nothing about monetary policy and nothing about dealing with our fluctuating exchange rate which makes it so difficult for our exporters to actually budget and plan ahead because this Government does not think or know about planning so that is not an issue for it. Certainly there is nothing as bold as a plan to build 100000 new homes which would actually get our economy moving again and make sure that there is affordable housing for people. No sir none of that. 
This bill symbolises a continuation of what we saw on Budget day with the paper boy tax. It is petty penny-pinching to make up for the unaffordable and ill-conceived income tax cuts that the Government brought in a couple of years ago. It is desperately short of revenue and now Government members are hunting around looking under the couch to see whether there are any coins there and tipping up the paper boys and shaking their pockets out. You know it is good to see that they are even going to try to tip up Kim Dotcom—good luck with that—and shake his pockets out as well. 
This bill just signifies what poor muddled thinking was behind the income tax cuts that this Government gave to the rich and of course offset by increasing the GST on the poorest New Zealanders. It is just another disappointment from John Key. Here is a slogan for you because we know that New Zealanders are not loving this. Here is a slogan for you: “John Key: 100 percent pure disappointment.” That is what this Government has been. It is a 100 percent pure disappointment and this legislation is just another example of what this Government has come to stand for. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on behalf of the Green Party on the first reading of this Government bill the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill that has come before us this afternoon. The Green Party will be supporting the bill going to the Finance and Expenditure Committee. This bill makes a large number of changes to the Income Tax Act. Some of them are remedial in nature; some of them are in line with the changes proposed in Budget 2012. It covers such things as—and I am not going to go through all of them but some of them—tightening the rules for deducting the cost of assets such as holiday homes boats and aircraft used both privately and for business purposes. It also covers changes to the way livestock are valued which has been quite controversial; some significant changes to GST especially the way non-resident companies can claim GST credits; changes to the tax treatment of foreign currency hedging which I think I might get back to; a reduction to 4 years from 8 years of the period during which people can claim tax refunds; changes to the way that some farm capital expenditure is accounted for; and removal of the historic tax concessions for Tiwai Point—amongst many other remedial matters such as clarification of the term “dividend” for example. 
From our point of view this bill is a pretty complicated bill and covers a whole bunch of issues many of which we can support and that is why we are supporting it going through to the select committee. We do support a large number of the measures in the bill. Although I agree with the previous speakers that this certainly does not address some of the fundamental changes we need to make in tax policy in order to get a more productive economy none the less many of these changes are very sensible. Those that we query are those with significant fiscal risk. Some are in the order in terms of risk to the tax base of $10 million to $15 million per year so we will be looking at that legislation in the select committee to figure out whether we think those changes are worth it. 
The kinds of areas of concern for the Greens are around the tax treatment of foreign currency hedging. The concern here is that it will open up further opportunities for tax avoidance unless the Inland Revenue Department commits more resource into the area for monitoring and compliance. Secondly there is concern around the passing on of the cost of foreign companies claiming GST refunds back on to those companies. The question is whether we should be offering them a more transparent regime like they are doing in the UK. The participants in the Government’s Voluntary Bonding Scheme have gained a financial advantage and we want to have a look at that. Of course there is the reducing of the time in which you can claim a tax overpayment and whether it is fair in fact to reduce the time during which you can claim a refund. 
Many of the changes in this bill make a lot of sense and we will be supporting them through to the select committee. Some of them we are not so sure about which is why we want to have a closer look at them in the select committee. But we will be voting for the bill going through to the select committee. Thank you. 
PAUL GOLDSMITH (National) 
: 
 I want to take just a very short call on this the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill. One of the Government’s four priorities for this term is building a more competitive and productive economy and part of that is having an effective tax system. Only by lifting our economic performance can we create jobs boost incomes improve living standards and provide the world-class public services that Kiwi families need. This bill promotes fairness and integrity across the tax system and strengthens our economy by doing just that. 
I will not go into the details but it is building on the livestock valuation rules in the Budget 2012 legislation tightening the rules for deducting the cost of assets—I see we have widespread support for that across the House—and also changing the timing periods for claiming refunds. Any successful economy has an efficient tax system and this is a bill that is doing a number of small things that are keeping the tax collectors one step ahead of the more inventive of our fellow citizens who are out there trying to do their best. I commend this bill to the House. Thank you. 
Hon DAVID PARKER (Labour) 
: 
 As prior speakers on behalf of the Labour Party have already said the Labour Party will be supporting this bill the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill to the select committee. 
I want to make a contribution in respect of two issues in particular. The first is livestock valuation issues. This is long overdue for remedy. At the moment we know that one of the most successful sectors in New Zealand is the dairy sector and yet the dairy sector pays very low rates of taxation. That is for a number of reasons. One is that we have a gaping hole in our tax system—it is not fixed by this legislation—which is that capital income is not taxed in New Zealand whereas income earned through other means is and that produces distortions as well as unfairness in the tax system. This bill does not fix that despite the fact that it drives unusual and economically inefficient and unproductive outcomes in our rural sector as well as in other sectors. 
A second reason why taxable profits are reduced in the farming sector is that we have got a very unusual situation in that farming companies can opt into different livestock valuation schemes. They can switch from having livestock on capital account to having it on income account and then change that decision again in the future. 
David Bennett 
: They can’t. 
Hon DAVID PARKER 
: They cannot Mr Bennett? 
David Bennett 
: No they can’t. 
Hon DAVID PARKER 
: They cannot? Well actually I thought that is what this bill was doing. 
David Bennett 
: Listen and learn. 
Hon DAVID PARKER 
: Well the advice that I have and I thought that was advice that was coming from the Minister of Revenue was that the livestock valuation methodologies can be changed— 
David Bennett 
: You can change them but the first part of your thing is wrong. 
Hon DAVID PARKER 
: Sorry the first part of my thing? Sorry I misinterpreted what you are saying. The Government members now agree that under the existing law you can change the livestock valuation methodology and as a consequence you can change the tax consequences. As I understand it and I might be wrong here but I was informed that under current law you can effectively treat increases in your livestock as being on capital account for which you are not liable for tax and then the taxpayer can change it and put livestock on income account even capital stock and they can claim a deduction for a decrease in the value of that stock. That is my understanding of the current legal position but Mr Bennett I think is suggesting that it is not. 
Dr David Clark 
: That’s what the changes in the Budget were all about addressing. 
Hon DAVID PARKER 
: I thought that is what the changes referred to in the Budget were about changing and that is what this legislation is meant to do. If my understanding of that is wrong— 
Dr David Clark 
: The legislation refines that. 
Hon DAVID PARKER 
: This legislation refines that and if I am wrong then I will learn about that at the select committee. That is a good thing because that should be fixed. 
In respect of mixed-use assets this again is a bit of a rort at the moment. This can be used for things like superyachts. A superyacht could be used mainly for private purposes but it could have a sign put on it that says it is available for rent. It might be used by someone who rents it for 1 or 2 days a year. It might be used by the owner who has it for mainly recreational purposes for 30 days a year. The rest of the time i.e. 11 months of the year it could lie idle. Under current tax law the rental income for those 2 days is fully taxed but 11/12ths of the expenditure 92 percent of all costs relating to the yacht are deductible resulting in a very significant loss for tax purposes. So in effect taxpayers at the moment under current laws are subsidising superyachts. 
Dr David Clark 
: It’s a rort. 
Hon DAVID PARKER 
: It is called a rort. That is just unfair and it needs to be closed down as a loophole. What this legislation does is address that problem by effectively apportioning what can be deducted as an expense so that there would not be significant losses that could be offset against other income. 
This will apply also to holiday homes. I am informed that many people do this even though it is a pretty disreputable thing to do. This is an example of where this Government beats up on beneficiaries—and of course beneficiaries who act fraudulently ought to be brought to account but so too ought wealthy people who effectively use tax devices so that they do not pay their fair share of income tax. Indeed some of the wealthiest people in New Zealand currently pay lower rates of tax than a single person on the minimum wage. 
We agree with both of those intentions. We are not sure whether the mechanism being used in respect of mixed-use assets is correct. I think there is a proper question to be asked as to whether the fringe benefit tax arrangements or the principles that lie behind fringe benefit tax would be a better method of remedying this than the approach that is being used. 
 There are other changes made by this bill including changes to the period for which you can claim a refund. At the moment that period is longer than the Inland Revenue Department would like it to be; it would like to limit that to a period of 4 years. At the moment refunds can be claimed for up to 8 years where there is a clear mistake or an oversight. We are not sure why this change is being made and I am not sure that it is fair. I do not know how it relates to the reciprocal right of the department to go back and claim underpaid tax—whether it can go back further than 4 years—but I thought there should be some reciprocity in respect of that requirement. 
There are changes to cross-border GST transactions. I have not got my head around those properly and that is one of the things that we will be looking at in the select committee. 
The general direction of this bill is a good one. The quarantining of some interest deductions that are being used on mixed-use assets is appropriate. I look forward to considering the detail of this bill at the select committee. 
ANDREW WILLIAMS (NZ First) 
: 
 I take a call on behalf of New Zealand First on the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill. New Zealand First will not be supporting this bill as we do hold a number of reservations concerning it. Although New Zealand First does support good policy and does support moves to improve taxation we do believe there are some reservations concerning this bill in regard to two factors—the first being new farmers having reduced autonomy by having purchased herds and secondly due to debt stacking. 
Firstly on the new farmer situation herd scheme valuations began in the late 1980s and the idea was to effectively treat livestock as a capital asset. Under the herd scheme changes to the value of their livestock were not subject to tax. In 2003 and 2009 many farmers left the herd scheme predicting that livestock values would decrease. They did not want to pay a higher tax rate than what their livestock was actually worth and that is understandable. This Government this National Government has since announced that farmers cannot elect to exit the herd scheme. The National Party—you know it is surprising considering that a big chunk of its support comes from the likes of Federated Farmers as we heard earlier in the Local Government Act 2002 Amendment Bill debate—likes to pride itself on individual responsibility but it will not allow individual farmers this fundamental control over their assets. Under this new piece of legislation herd scheme livestock that is sold to an associated party will also be required to remain under that same scheme. So someone’s new asset will be subject to a scheme that was either accepted or rejected by a previous owner. We in New Zealand First do not believe that that is fair and once again we feel that the Government is doing a disservice to its very constituents the farmers of New Zealand by adopting this and that has been the feedback from many farming circles in respect of it. 
Secondly in regard to debt stacking KPMG has also come out and advised that it has concerns about the debt-stacking aspect to this bill. It says: “For mixed-use assets held by a close company the concern is that all interest deductions in respect of the asset will be allowed (under the general interest deductibility provision for companies) and/or the debt might not be in the company itself. Therefore an interest apportionment rule is proposed to address situations where debt is in the company or its shareholders’ hands.” It goes on to give examples of debt-stacking complications and how it would not necessarily work. So when you have the likes of KPMG on the one hand raising some doubts about the debt-stacking side of this and when you have some in farming circles saying that they do not feel it is right that they cannot withdraw from a herd scheme that is somewhat historic and that they do not want to be in any longer—but this Government is requiring them to stay in it—then we feel that there are some errors in the way this legislation has been brought to the House. 
But perhaps it is symptomatic of a wider rust or rot in terms of this bill because we have heard about some of the other bills where the Government is focused on tinkering around the edges such as taxes for paper boys and paper girls in this country. You know it is attacking those who can least afford taxation changes while at the same time giving huge tax relief several billions of dollars to its rich mates the wealthy and the top 10 percent earners of New Zealand: the $5 million Telecom man who got $4000 or $5000 a week in tax relief and the Prime Minister who got $1000 a week more in tax deduction. Those sorts of things are all very well but then National goes and attacks its very own supporters the farmers of New Zealand with their herds and other aspects which is not right. This is at a time when New Zealand has record unemployment. We have got massive overseas debt and rising the balance of payments is appalling and predicted to rise even further and the manufacturing sector is in crisis and indeed in meltdown. What does this Government do through all this? It just basically tinkers around the edges with the taxes such as this bill and really does not get on with the bigger picture of growing the pie in New Zealand growing the economy growing the opportunity for jobs and employment and giving younger people an opportunity in this country to actually leave university or leave school leave education and get into a worthwhile career. It tinkers around the edges with silly little bills like this herd management scheme. New Zealand First will not be supporting this bill. We oppose it. 
JOHN HAYES (National—Wairarapa) 
: 
 The last three speeches from Opposition members have demonstrated a complete lack of understanding of what the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill is about and I have got to say that they have not read it. Can I say to the New Zealand First member who has just spoken Andrew Williams that if he wants to make changes to this bill the smart thing to do is to come and support it through to the select committee process and contribute to the collective wisdom of the House to get the legislation changed. 
The fact is that this legislation fits one of the four priorities of this term of Government particularly that of building a more competitive and productive economy. The centrepiece of the Budget in 2010 was a major tax package reforming the tax system to make it fairer and more sustainable and providing better support for economic growth. That is what this bill does and I support it totally. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: This is a split call as I understand it. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 It give me a lot of pleasure to follow the new questioner for the Maori Party John Hayes known as Hone Kuti Taru these days but it is a pity that he could not have applied some of his experience in kuti taru lifting to thinking about this bill. [ 
Interruption 
] It is cut grass or hay. 
There are a number of points that have to be made here and the first from my perspective is that the Government was very quick to hammer the paper boys in the Budget—very very quick to hammer the paper boys—but is taking its time to close what is a much bigger rort. 
I will say to my colleague Andrew Williams from the New Zealand First Party that I think he does have it wrong here. The ability of people to switch their tax systems to pick and choose to say one day that they are dairy farmers and the next day that they are fattening their beasts and to switch back again the next year because their stock numbers are different or the valuations are different is just wrong. It is a rort. It has been a rort for far too long. Frankly it should have been closed off when we were in Government and if the Minister of Revenue had been more active back in those days it would have happened then. But we all know that he is a lazy Minister. He does not work very hard. It should have been fixed at that stage. But I do say to New Zealand First members that I think they are wrong on that. 
I actually agree with John Hayes’ advice on this. On tax matters where there are not enormous principles at stake it would be better to get the bill off to the select committee to hear the submissions to get it tidied up and then if a party is still against it to vote against it at a later stage especially where there is clearly revenue to the Crown involved. 
The point that I would like to make is that there are a lot of areas that should be in here that are not. What we are seeing is a massive reduction in the potential GST revenue as a result of the way the world is changing with internet trading and with the loss of GST that is occurring on transactions of under $400. I will use as an example the importation of bicycles. People are importing a frame valued at $395—[ 
Interruption 
] Well not me. I would not know how to put them together. Wheels are valued at $395 each braking systems are valued at $300 and gearing systems are valued at $300. They are importing them as separate items all under the threshold but avoiding GST and at the same time causing New Zealand wholesalers and retailers to go out of business. All over the country there are retailers going out of business in a variety of areas because the way that commerce is done these days people are avoiding the retailer not only for a matter of convenience but also for a way of avoiding the GST that would otherwise be applicable if they went to their local shop. 
It is a matter of fairness that we get this issue sorted out. Australia is getting it sorted out. Australia is getting a number of areas sorted out. It is for example working on the Google problem and the Facebook problem. The massive companies that come to New Zealand use all of our services but do not pay their tax in New Zealand. Companies that are paying under one-tenth of 1 percent of their New Zealand profits in tax are wrong—companies that do not recognise the revenue in New Zealand. People who take a Facebook ad out in New Zealand take it out with an Irish company in order to avoid tax. Facebook does it completely it does it deliberately it does it for the vast majority of its New Zealand revenue and it does it in order to avoid paying tax in New Zealand and that is wrong. It cannot use our resources without paying its tax. 
I tell the lazy Minister of Revenue not to take as long fixing that one up as he did fixing up the fat cow tax. 
Dr KENNEDY GRAHAM (Green) 
: 
 I take a short call just to reaffirm the Green Party’s support for this Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill but also to remind the House that our support is contingent only. It is support through to the select committee and it is contingent on clarification of a number of issues. 
In brief to review what this bill is aiming to do it is to tighten the rules for deducting the costs of assets such as holiday homes and so on; obviously to change the way livestock is valued which has been discussed here a little; make changes to GST especially on the way non-resident companies can claim credits; make changes to the tax treatment of foreign currency hedging; make a reduction to 4 years instead of 8 years for retroactive tax refund claiming; make changes to the way some farm capital expenditure is accounted for; clarify the term “dividend”; and remove historic tax concessions to Tiwai Point and one or two other companies. 
It is a complex bill. There are nine regulatory impact statements. It is arguably as New Zealand First said tinkering at the margin but its intent is sound—basically to improve the New Zealand tax base. Yet it potentially puts tax revenue at risk to the tune of perhaps up to $15 million which is not insignificant. So we do need to be confident as a House that what we are doing here is worth it in terms of improvement to the tax law. 
We have specific issues of concern. We think that the changes to the tax treatment of foreign currency hedging could open up further opportunities for tax avoidance unless the Inland Revenue Department commits more resources to monitoring and compliance. We think the Inland Revenue Department is perhaps passing the cost of foreign companies claiming GST refunds back to those companies requiring them to register for GST rather than offering a more transparent and simple refund scheme such as for example the British VAT scheme. 
We are concerned that participants in the Government’s Voluntary Bonding Scheme may have through oversight gained a financial advantage if enrolled in a KiwiSaver scheme. Government departments are required to match contributions and this match may not have been budgeted for. We are concerned about the reduction as I mentioned down to the 4 years for claiming refunds. I recall David Parker’s concerns about what he called the “rorting of the system” for superyachts being taxed which is an issue that should never have arisen in the first place. So there are a number of complex issues and each one is not simple and needs to be considered in the select committee in some depth. 
Just to round off—it is a broader issue. I think there have been various comments from the Opposition both Labour and New Zealand First that this bill in a sense holds up a mirror to the current Government’s overall economic policy and you might say world view. I think it was David Clark who lamented that this New Zealand Government lacks a real vision of getting the economy back on top. I think that is fair comment. The answer was Paul Goldsmith’s mercifully short defence of the bill to the effect that it was building a more competitive economy—building a more competitive economy—and it was going to do this by improving the tax system. 
How are we going to do that? How are we going to improve and make a more competitive economy by just tinkering at the margin with this bill? Andrew Williams noted that the balance of payments is in a mess that the manufacturing sector is in crisis and here we are tinkering at the margin with the tax improvement system. 
What we need to do if we want to make our economy properly competitive is to look to the underlying drivers that the Government is claiming—six main drivers to improve the economy. It has omitted the fundamental drivers which is that we are an inefficient fossil fuel - driven economy and we need to bring in adequate climate change policies that allow us to convert to a low-carbon green economy. That is the main problem not this bill. 
DAVID BENNETT (National—Hamilton East) 
: 
 It is good to see that most parties are supporting this and I would have to agree with Trevor that I think New Zealand First has got it completely wrong here— 
Hon Trevor Mallard 
: Who? 
DAVID BENNETT 
: —Trevor Mallard—in not supporting the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill. There is a problem in the tax system in this area. This is a capital gains tax. It is one of the few capital gains taxes that we actually have in our system. Effectively normally when you pay tax it is on profit which is revenue minus expenses. But when it comes to livestock there is a capital gains tax in our system now. There were different valuation mechanisms that have been used effectively for some people to not pay tax and to reduce their tax liability. So it needs to be changed. 
This is a good bill. It is in the right interests of New Zealand and the industry. It does show the difficulty that when you try to put capital gains taxes on like the Labour and Green parties want to you do set up a system that people will try to use to their advantage. Thank you. 
A party vote was called for on the question  
That the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill be now read a first time. 
Ayes 112 
New Zealand National 59; New Zealand Labour 34; Green Party 14; Maori Party 2; ACT New Zealand 1; Mana 1; United Future 1. 
Noes 8 
New Zealand First 8. 
Bill read a first time. 
Bill referred to the Finance and Expenditure Committee. 
Human Rights Amendment Bill 
First Reading 
Hon JUDITH COLLINS (Minister of Justice) 
: 
 I move  
That the Human Rights Amendment Bill be now read a first time 
. I nominate the Justice and Electoral Committee to consider the bill. The current role and structure of the Human Rights Commission was created by the Human Rights Amendment Act 2001. That Act sought to address concerns that the human rights institutions that existed at that time were small fragmented and complaints-driven. There was also concern that the commission’s education and advocacy roles were overshadowed by the focus on complaints. The 2001 reforms combined the Human Rights Commission and the Office of the Race Relations Conciliator into one organisation. The new Human Rights Commission included the specialised positions of Race Relations Commissioner and Equal Employment Opportunities Commissioner. This ensured that the new commission kept an adequate focus on race relations and equal employment opportunities. 
The commission’s primary role is to advocate and promote respect for human rights in New Zealand. It has encouraged harmonious relations between individuals and among diverse groups. It promotes all human rights not just the right to be free from discrimination as was the case before 2001. I would like to acknowledge the work that the commission has done to promote and protect human rights in New Zealand. In 2004 and 2010 the commission conducted two comprehensive reviews on the recognition and respect for human rights in New Zealand. It also developed the New Zealand Action Plan for Human Rights. The commission has held two public inquiries one with a focus on disability rights and public transport and the other on discrimination against transgender people. The commission has advanced the rights of the disabled in New Zealand and internationally with the introduction of the United Nations Convention on the Rights of Persons with Disabilities. New Zealand was one of the first countries in the world to implement preventative mechanisms under the optional protocol to the Convention Against Torture and Other Cruel Inhuman or Degrading Treatment or Punishment. The commission has played a key role in this work. The commission has proven to be highly effective in its resolution of discrimination complaints and is respected both nationally and internationally for its strong advocacy of fundamental human rights. 
The commission could achieve more if we amend aspects of its founding legislation. The Government considers that the role and structure of the commission needs to be strengthened. In particular the commission needs to be able to respond better to emerging human rights issues and to do so in line with the Government’s focus on better results from public services. A stronger performing commission will enhance New Zealand’s ability to comply with our international human rights obligations and domestic human rights legislation. It will deliver better results for the most vulnerable groups and ensure that everyone benefits from a society that respects and understands fundamental human rights. 
This bill amends the Human Rights Act 1993 to give the commission a stronger decision-making team and a clearer focus on the services it delivers. Firstly the bill replaces the current mix of full-time and part-time commissioners with full-time commissioners only. The commission usually consists of three full-time commissioners and five part-time commissioners. On average the part-time commissioners work one-third of a full-time position each. The part-time commissioner positions were created by the Human Rights Amendment Act 2001. Each of them has done an outstanding job representing the commission and promoting human rights in New Zealand. However the part-time nature of their positions limits their ability to carry out their roles effectively. Much of their time is spent on their governance role rather than on specific projects. This makes it difficult for the commission to adequately exercise its functions and places a heavier burden on full-time commissioners. The Government considers that having fewer commissioners who are all full time will promote more focused discussion and swifter decision-making. The bill provides for a minimum of four and a maximum of five full-time commissioners. 
The second thing the bill does is to enable the commission to respond better to emerging human rights issues. The Act currently allows commissioners to work in a variety of human rights areas. However the formal leadership roles are limited to race relations and equal employment opportunities. The Act does not allow the creation of formal leadership positions in other areas of human rights such as disability rights. To address this inflexibility the bill provides for the appointment of a chief commissioner and up to four full-time human rights commissioners. The commissioners will be appointed as general commissioners and then allocated portfolio responsibility which must include race relations equal employment opportunities and disability rights as well as other priority areas of human rights. Race relations equal employment opportunities and disability rights generate the most inquiries and complaints to the commission. It is important that the Act emphasises these areas. It is equally important that the Act allows for the creation of other formal leadership roles so that the commission has the flexibility to deal with other priority areas that emerge in the future. 
The requirement that one of the commissioners is responsible for disability issues will formalise the arrangement made last year when two part-time positions became vacant and were consolidated into a single role for an interim Disability Rights Commissioner. This role was created to implement the Government’s decision to give the commission a broad role in promoting and monitoring the implementation of the United Nations Convention on the Rights of Persons with Disabilities. Having a full-time commissioner responsible for disability issues will enable the commission to exercise that role more effectively. As a result of the proposed change to the commission structure the chief commissioner will have ultimate responsibility for ensuring that activities undertaken by the commission are consistent with its strategic direction. Previously the chief commissioner was required to act jointly with the Race Relations and Equal Employment Opportunities Commissioners. This change will strengthen the chief commissioner’s leadership role and help the commission to meet its long-term goals. 
I appreciate that some sectors of the community may feel that the bill downgrades the profile of race relations and equal employment opportunities compared with the current situation. This is not the case. The leadership role of the commission protecting and promoting race relations and equal employment opportunities will remain the same. There will still be full-time commissioners leading these areas of work but the commission will also be able to focus on the other important areas of work as they emerge. 
The third area of change relates to the functions and powers of the commission. The bill provides more certainty about the commission’s mandate to undertake some activities. The bill will provide a function of promoting compliance with New Zealand’s international human rights obligations and the development of new international human rights instruments. It will clarify that the commission can express an opinion on any situation in which human rights may be infringed including expressing an opinion about the position of the Government. It will also clarify that the commission may report on existing legislation policies and administrative provisions affecting human rights matters. 
Finally I want to acknowledge that the bill and the policy underlying it have been developed in close cooperation with the human rights commissioners. Their input has been invaluable and I thank them for their contribution. I commend the bill to the House. 
CLARE CURRAN (Labour—Dunedin South) 
: 
 Labour will support the referral of this bill the Human Rights Amendment Bill to the Justice and Electoral Committee but we have serious reservations and concerns about it which I am going to outline to the House today. Despite what the Minister of Justice has just said—and in having the bill go to the select committee we will be able to tease these issues out—we do have a number of serious concerns. It should be the intention of the Government to have the agreement of the whole House on human rights legislation and I think that is a very important matter to raise up front. So our support post the select committee will depend utterly on what we hear from the submitters. 
This bill as we read it does two things. It enables the full-time establishment of the Disability Rights Commissioner within the Human Rights Commission and it purports to make changes to the role and structure of the commission to “strengthen its performance.” In essence the current number of three full-time commissioners—i.e. the Chief Human Rights Commissioner and the two other commissioners—and up to five part-time commissioners will be changed to a number of no more than five commissioners including the chief commissioner. Our contention is that although formalising the role of the Disability Rights Commissioner is a good thing the rest of what the bill does or seems to do is very worrying on the face of it. The first significant warning sign can be noted in the regulatory impact statement which noted that “consideration of complex substantive human rights issues … was outside the scope”. In other words the actual role and work of the Disability Rights Commissioner and the position of the United Nations Convention on the Rights of Persons with Disabilities—or the call for a disability Act which some believe is required for the role of the Disability Rights Commissioner to be effective—could not be taken into account because this bill changes the structures to be more “efficient”. Our fear is that in doing that the actual work of these important commissioners will be watered down and weakened and that is our major problem with this bill. 
The next warning sign came from the Human Rights Commission’s media release when the bill was first introduced. While welcoming the bill the Chief Human Rights Commissioner David Rutherford noted that “While the proposed changes will not affect the leadership role the Commission has protecting and promoting race relations and equal employment opportunities … the Commission will need to ensure that the proposed abolition of the specific titles of these specialised commissioners does not lead to a lessening of those roles or the particular character and visibility of these human rights areas.” Commenting on the increase to four full-time commissioners Mr Rutherford went on to say: “However as there will be fewer commissioners those who appoint Commissioners will need to ensure those in key roles reflect the diversity of New Zealand.” In other words there is deep concern that people with generic skills and not specific skills may end up in these roles which will affect their ability to perform their functions and there are issues around how they may be appointed. 
Some disability sector groups sounded alarm bells at the time including the IHC. Ethnic organisations and some minority groups also spoke up about the weakening of the Race Relations Commissioner role and the absorbing of the function within the Human Rights Commission. This amendment effectively removes the three designated specialist commissioners and their functions in preference for the ability of the Chief Human Rights Commissioner to delegate all or part of these functions to one or more commissioners. So we lose the race relations brand which was the first human rights position in New Zealand and has been very well accepted by the public. New Zealand society sought and seeks confirmation through this role the race relations brand that the focus will always be on positive race relations and that there is a person they can identify with to represent this focus. The same could be said about the roles of the Equal Employment Opportunities Commissioner and the Disability Rights Commissioner. 
If the problem is the relationship between these commissioners and the chief commissioner then we should have no problems with clarifying in this bill the responsibility relationship of these commissioners to the chief commissioner. The regulatory impact statement’s articulation of the problem being addressed was to do with the inefficiency and lack of effectiveness of the part-time commissioner positions the inflexibility of the way the specialised commissioner roles were provided for in the Act and the sometimes unclear and incomplete description of the functions of the Human Rights Commission in the Act. We think that that was what the Human Rights Commission sought but we fear that the ministry and the Minister in writing the amendment have thrown the baby out with the bathwater. 
This seems to be an attempt to strengthen the hand of the chief commissioner by neutralising to some extent the respect that these specialist commissioners command amongst sections of the public. The Australian Human Rights Commission maintains specialist commissioners. Our fear is that by scrapping the individual officers such as the Race Relations Commissioner and by having the commissioners appointed as Human Rights Commissioners first and foremost and then appointed a lead portfolio with the commissioners appointed to the priority areas of disability rights equal employment opportunities and race relations this waters down those specialist functions. 
These appointments will be made by the chief commissioner and commissioners will report back to him not to the Governor-General. The regulatory impact statement notes that a potential disadvantage of having the commissioners as Human Rights Commissioners first and foremost is that those with specialised skills and experience in certain areas such as disability or race relations may be deterred from applying and that only generalist human rights experts may apply. So technically this may also mean that the Disability Rights Commissioner could be a generalist appointed to the job could have more than one portfolio and could be working only part time as the Disability Rights Commissioner. If that is the case then we do have some serious issues. 
Another serious concern is the potential for limiting the scope on what the commissioners can comment on. I listened carefully to what the Minister said in her speech before and we have a number of questions that we will want addressed around this in the select committee. Under this bill which is amending the Human Rights Act clause 5(3) amends section 5(2) by inserting “(ca) to make public statements promoting an understanding of and compliance with this Act or the New Zealand Bill of Rights Act 1990”. This has the potential to limit what the Human Rights Commission and its commissioners can comment on. Clause 5(3) also removes the legislative function “to make public statements in relation to any matter that may affect … human rights” restricting it to the amended Act or the New Zealand Bill of Rights Act 1990. So my question is whether that function of the Disability Rights Commissioner will be wide enough to tackle the important work that must be done in this area. And just to be very clear what the bill says in theory means that the commissioners can comment only on matters relating to two Acts rather than what has been wider in the past. For instance I note that the United Nations Convention on the Rights of Persons with Disabilities is not referenced in this bill so potentially the Human Rights Commission and the lead commissioner on disability issues might not be able to comment on this if a narrow reading of this clause is taken. 
Debate interrupted. 
The House adjourned at 6 p.m.