Volume 685 Week 26 - Thursday 25 October 2012 
Text is incorporated into the Bound Volume 
Volume 685 Week 26 - Thursday 25 October 2012 
[Sitting date: 25 October 2012. Volume:685;Page:6203. Text is incorporated into the Bound Volume.] 
Thursday 25 October 2012 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 Next week the House is in a 1-week adjournment. When the House resumes on 6 November the Government will look to complete the Committee stage of the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill and the Legislation Bill and begin other second and third readings on the Order Paper. Wednesday is a members’ day. 
Questions to Ministers 
Job Creation—Minister’s Statements 
1. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Finance 
: Does he stand by his answer on Tuesday regarding jobs “I think that the number of 170000 may come from the initial Budget forecast for 2009 perhaps. I cannot remember the year exactly.”? 
Hon STEVEN JOYCE (Associate Minister of Finance) 
on behalf of the Minister of Finance: Yes the Minister stands by that number of forecast jobs. I can confirm for the member that in fact in both Budgets 2010 and 2011 Treasury forecast around 170000 additional jobs over the respective following 4 years. 
Hon David Parker 
: Does he now remember that National’s 2011 election promise to New Zealanders advertised repeatedly on television was that under National there would be 170000 more jobs by 2015? 
Hon STEVEN JOYCE 
: I thank the member for assisting us with our advertising and recognising it so well. That is indeed correct and to help the member— 
Hon Member 
: How’s it going? 
Hon STEVEN JOYCE 
: I will tell you how it is going. So far we have gained around 40000 jobs since that date. The Budget predicted 59000 so we are a bit behind at this point but of course there are another 2½ years to run. [ 
Interruption 
] 
Mr SPEAKER 
: Order! Just before I call the member I remind members that visual aids can be used by the member speaking not by others. 
Hon David Parker 
: Given that only 13000 more people have been employed over the last year does he understand why so many disappointed New Zealanders say his Government’s policies are not working? 
Hon STEVEN JOYCE 
: I am not sure exactly how Mr Parker has obtained that number but I can confirm for him that according to the household labour force survey there has been a gain of 40000 jobs between December 2010 and June 2012 and 57000 jobs between June 2010 and June 2012. 
Hon David Parker 
: Why does he pretend to forget his own promise of 170000 more jobs and then pretend his Government is on track when the majority of New Zealanders in last night’s TV3 poll say that his Government has failed on jobs? 
Hon STEVEN JOYCE 
: I think the member will find that is incorrect. The survey question was in regard to full employment and nobody would predict or claim that any country in the OECD has full employment post the global financial crisis. But I think the public of New Zealand understand that because I understand that the same poll rated the National Party at 48.8 or 48.9 percent and the Labour Party at around 33 percent. So I suspect that says the same group of people understand the challenges that the Government faces. 
Hon David Parker 
: Who does he think is right on jobs: him or the majority of New Zealanders who say his Government has failed on jobs? 
Hon STEVEN JOYCE 
: I think that the assertion the member makes is simply incorrect. What I would point out is that I think every New Zealander knows that we are in very challenging economic times. Every New Zealander knows that New Zealand is actually performing better than most countries in the OECD. Every New Zealander knows that the unemployment benefit uptake has dropped significantly over the last 2 years— 
Kris Faafoi 
: Is it working? 
Hon STEVEN JOYCE 
: —and every New Zealander knows that most countries in the OECD have a far worse unemployment rate than New Zealand’s. We are all working hard to get it better. I can tell the member what would not work—reverting to Fortress New Zealand and printing money flat out. 
Darien Fenton 
: Given that he and his Government deny any responsibility for the job losses at Spring Creek Mine will he at least admit that the 220 job losses confirmed today are part of a wider pattern? 
Hon STEVEN JOYCE 
: Obviously it is a very difficult day for those people who have lost their jobs in Spring Creek and nobody is pretending that it is not. But I would say that if the Opposition did care about the possibility of jobs for those miners it would join the Government in calling for the objectors to the mine just up the road to drop their objections— 
Eugenie Sage 
: I raise a point of order Mr Speaker. 
Hon STEVEN JOYCE 
: —to the development of the Bathurst mine— 
Mr SPEAKER 
: Order! 
Hon STEVEN JOYCE 
: It is very important Mr Speaker. 
Mr SPEAKER 
: Order! A point of order has been called. 
Eugenie Sage 
: I understood that it was the practice in this House not to refer to judicial proceedings because they are sub judice. There is a proceeding in the High Court on the Bathurst mine. The Minister has previously alluded to that. I did not understand that it was the practice of the House to be able to do that. 
Mr SPEAKER 
: I may have to concede to the member’s superior knowledge to mine. But I will check. I will take a little advice on that because obviously such matters are quite important matters. Because I consider this matter to be an important matter—the relationship between this House and the courts—I have taken advice on the matter. The advice is that the Minister was really making a political statement and was not referring in any way in any detail to any matter before the court and therefore it should not be ruled out on that basis. However I think the Minister—is the member seeking to raise a further point of order? 
Eugenie Sage 
: I raise a point of order Mr Speaker. The Minister was going on to say that members of this House should join with the Government in encouraging objectors to desist. So that is actually giving a strong message to parties to those proceedings. 
Mr SPEAKER 
: I think it is simply a political statement and has got nothing to do with the detail of any case in front of the court whatsoever. The Minister has not argued the merits or otherwise. I think he is just arguing politically that he believes—I do not want to repeat what he said. I do not think I should be ruling that out. 
Emissions Trading Scheme—Collaboration with Other Parties on Changes 
2. 
Dr KENNEDY GRAHAM (Green) 
 to the  
Minister for Climate Change Issues 
: Given the recent loss of Maori Party support for his Climate Change Response (Emissions Trading and Other Matters) Amendment Bill will he consider working with opposition parties on amendments to improve it? 
Hon SIMON BRIDGES (Acting Minister for Climate Change Issues) 
: No because this Government has no intention of imposing an artificially high price of carbon on New Zealand households and businesses as is being proposed by Opposition parties. 
Dr Kennedy Graham 
: Why is it that the only people still favouring the amendments now to further gut the emissions trading scheme are one major greenhouse gas polluters; two Government MPs; and three the sole ACT MP acting under the coalition agreement which says that “ACT has agreed to support legislation to reduce the impact of the Emissions Trading Scheme …” and it believes that “the ETS should be repealed however it believes some progress will be made through the Government’s initiative.”? 
Hon SIMON BRIDGES 
: What the member said is absolute nonsense. There will be many struggling households that that member says he cares about in this country that do not want increased petrol costs and energy costs and that will be disproportionately affected by the kinds of loopy changes that the Green Party wants. 
Dr Kennedy Graham 
: Why is the Government so determined to push through changes that will render the emissions trading scheme utterly useless now rather than working constructively with other parties to get a scheme that will actually reduce gross emissions? 
Hon SIMON BRIDGES 
: That is not what we are doing. What we are doing in fragile economic conditions around the globe is steering a steady course and not costing the jobs that the Labour Party says it cares about by ramping up a scheme and putting the cost on struggling households and businesses. 
Dr Kennedy Graham 
: Speaking of jobs why is he undermining 4500 forestry jobs while subsidising big polluters? 
Hon SIMON BRIDGES 
: That is not what we are doing. What the Green Party wants is to rob Peter to pay Paul. It wants to see the cost of petrol and energy go up and disproportionately affect the poor in this country who it says it cares about and disproportionately affect businesses which are struggling and which it also says it cares about. 
Dr Kennedy Graham 
: Is he concerned the crash in the carbon price to €1 means there is little incentive to plant forests and those who own permanent sinks may well sell as we heard on  
Morning Report 
 today making it harder to achieve a reduction in gross emissions? 
Hon SIMON BRIDGES 
: As the member well knows we already have under current law—section 30G—the ability to restrict the quantity and the quality of overseas units. We keep a watching brief on that because we take these issues seriously. 
Dr Kennedy Graham 
: Why did the Government not take seriously the recommendations of the Emissions Trading Scheme Review Panel and phase up the price cap phase in agriculture and phase out the one-for-two surrender obligation? 
Hon SIMON BRIDGES 
: Because we care about struggling households and the poor who that member says he cares about but does not seem to and because we want to keep people in jobs unlike the Labour Party. 
Dr Kennedy Graham 
: Why is he undermining our clean green image with a bill that will harm tourism and agriculture and will cost jobs? 
Hon SIMON BRIDGES 
: That is arrant and disgraceful nonsense. 
Dr Kennedy Graham 
: Is he not ashamed with his own arrant and disgraceful nonsense to push through such an important bill on climate change with such a blatantly divided House with a razor-thin majority of just one vote? 
Hon SIMON BRIDGES 
: As I have already said we are doing the right things in very difficult times globally when frankly basically no one in the world is doing as much as we are. As I have said before we are providing some global leadership in this area and I think the way we are calibrating this right now is precisely the right thing to do for the times. 
Moana Mackey 
: What evidence does he have that the benefit of the low carbon price and the Government’s transitional provisions is being passed on to struggling households and businesses? 
Hon SIMON BRIDGES 
: It is very clear that a higher carbon price per unit leads to higher energy and petrol costs. That is clear beyond any doubt and that is precisely what we do not want to do for struggling households and for businesses in this country. 
Moana Mackey 
: I raise a point of order Mr Speaker. I asked what evidence he had that it was being passed on. 
Mr SPEAKER 
: Well— 
Moana Mackey 
: It was a very straight question deliberately. 
Mr SPEAKER 
: In fairness the Minister gave what he believed was a reasoned answer as evidence. The member did not ask what external evidence or what outside evidence; it was just what evidence. The Minister in answering has used his own logic as evidence and I cannot second-guess that. 
Moana Mackey 
: What external evidence does he have that the benefit of the low carbon price and the Government’s transitional provisions is being passed on to struggling households and businesses? 
Hon SIMON BRIDGES 
: The people I talk to every day my constituents—unlike that member who does not have any. 
Mr SPEAKER 
: Question No. 3 Louise Upston. [ 
Interruption 
] Order! I have called Louise Upston for question No. 3. 
Business Growth Agenda—Reports and Role of Infrastructure Investment Programme 
3. 
LOUISE UPSTON (National—Taupo) 
 to the  
Minister of Finance 
: How is the Government’s infrastructure programme contributing to building a more competitive economy? 
Hon STEVEN JOYCE (Associate Minister of Finance) 
 on behalf of the Minister of Finance: Infrastructure is one of the six key areas of the Government’s Business Growth Agenda. This is aimed at ensuring the Government remains focused on what matters to businesses so that they have the confidence to invest grow and create jobs. The Government’s multibillion-dollar infrastructure programme is providing the transport telecommunications energy and water platforms required by a modern economy. It includes massive investments over several years across all infrastructure sectors including the roads of national significance and ultra-fast broadband. This will help businesses and the economy to grow as well as supporting thousands of additional jobs in the New Zealand economy. 
Louise Upston 
: What are some examples of jobs being supported by the Government’s infrastructure programme? 
Hon STEVEN JOYCE 
: The Government’s infrastructure programme is supporting many thousands of jobs across New Zealand—for example nearly 2000 jobs in the roll-out of ultra-fast broadband an estimated 1000 jobs over the next 4 years on the Waterview motorway nearly 1600 jobs in 2011-12 alone on the Transpower grid upgrade 1000 jobs at the peak of the Wiri Prison construction and an expected 1300 jobs at the peak of the horizontal infrastructure rebuild in Christchurch. Those are just some examples of the jobs being supported by the Government’s multibillion-dollar infrastructure programme. 
Louise Upston 
: What reports has he seen on progress being made in creating a competitive business environment in New Zealand? 
Hon STEVEN JOYCE 
: I am pleased to report that the work we are doing on the Business Growth Agenda including in such areas as exports skills infrastructure and innovation is helping New Zealand to perform very well by international comparisons. The latest  
Doing Business 
 report published by the World Bank this week measures regulations and the ease of doing business for small and medium sized enterprises across 185 countries. It shows that New Zealand has again retained third place in 2012 ahead of the US at fourth the UK at seventh and Australia at 10th. The reality is that we do not get real growth until one more business has the confidence to invest to grow and to employ one more person. So I am pleased to see this report come out this week. 
Louise Upston 
: What alternative economic approaches would put this progress in building a more competitive business environment at risk at the cost of thousands of jobs across New Zealand? 
Hon STEVEN JOYCE 
: There are a number of approaches that would do that—for example opposing and stopping the roads of national significance opposing the ultra-fast broadband project opposing responsible mining for oil and gas and other resources and opposing the Wiri prison. On the other hand when you are proposing to print money and build Fortress New Zealand I suppose you could jettison all the infrastructure jobs because— 
Mr SPEAKER 
: Order! Order! 
Economic Growth and Unemployment Rate—Forecasts and Effect of Exchange Rate 
4. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister for Economic Development 
: Does he agree with the NZIER shadow board that “the growth outlook for the second half of 2012 looks weak and unemployment remains stubbornly high.”? 
Hon STEVEN JOYCE (Minister for Economic Development) 
: 
 Their view is one view. The jury is in fact out on what growth will be in the second half of this year. It was pretty strong in the first half of this year by world standards currently. It was 2.6 percent for the year to June which is higher than predicted given current global financial conditions so it would not be any surprise if growth in the second half of the year was not as strong but it is still likely to be stronger than in many other advanced economies. I would agree that unemployment is higher than we would like. I would point out that it is again though lower than in other developed countries—for example the US and the UK. I would also note that in countries like Croatia and Kyrgyzstan which were two of the examples championed in this House yesterday unemployment is 18 percent and 8.6 percent respectively. Of course I have also seen a statistic from 2004 for Kyrgyzstan and it was 18 percent. And in Zimbabwe of course where they follow the Norman plan it is over 80 percent unemployment. 
Hon David Parker 
: I raise a point of order Mr Speaker. I think that is probably the sixth time this week when that Minister in response has broken the Standing Orders by accusing the Green Party of something that it is not proposing. The Zimbabwe comparison that is being used in respect of the Greens—the Minister was warned earlier in question time that—[ 
Interruption 
] 
Mr SPEAKER 
: Order! [ 
Interruption 
] Order! Both members will cease. I have listened for a moment to try to pick up the point of order. I realise that the member does not like the Minister’s answer. I do not believe that the Minister was transgressing too far this time. I think that where I do owe the House an apology personally is that earlier on I let another Minister get away with a jab that was unfair. I apologise to the member for that happening. It beat me in timing. That was unfair and I apologise to the member where I let that happen. However on this occasion I think this sort of stuff is contestable information. I think he had gone on long enough though. 
Hon David Cunliffe 
: Given the Minister’s admission that growth forecasts are lower in the second half of the year with one at 0.8 percent per annum does he now agree with shadow board members Cameron Bagrie ShamubeelEaqub Dominick Stephens Phil O’Reilly Viv Hall and Stephen Toplis among others that “Inflation is below the bottom of the band … The exchange rate continues to be overvalued … placing greater weight on lower rates as the economy fails to ignite”? 
Hon STEVEN JOYCE 
: I certainly think that the exchange rate is challenging for some exporters. I do not have any disagreement with that although there are other exporters that are doing very well. I would also note though for the member that I read a report from economists this morning I think that said that even if for example the Governor of the Reserve Bank had taken the view of dropping interest rates today it was unlikely to have a significant impact on the exchange rate. That is because what is going on with the New Zealand exchange rate is that much larger forces are at work and ultimately it is about what the world thinks of the respective opportunities for different economies around the world. 
Rt Hon Winston Peters 
: It’s not! It’s about high interest rates that they can’t get in Europe. Everybody knows that. 
Hon STEVEN JOYCE 
: If you think that is a high interest rate Mr Peters then I think you are on another planet. 
Hon David Cunliffe 
: In light of the Minister’s extensive reading list does he now agree with the Bank for International Settlements which says of the New Zealand currency trading environment that the rate of inflows and outflows in the New Zealand dollar is 400 times that justified by its trade flows? 
Hon STEVEN JOYCE 
: No I have not seen that particular statistic although I sense a tension developing between Mr Cunliffe and Mr Parker. Mr Cunliffe wants— 
Mr SPEAKER 
: Order! The Minister will resume his seat. The question was an absolutely straight question. Ministers get plenty of opportunity to give that kind of answer but not to that question. 
Hon David Cunliffe 
: What is the Government doing to reverse the results of the most recent performance of manufacturing index which shows the manufacturing sector contracting for the fourth consecutive month and at its lowest September level in 4 years and the New Zealand performance of services index which shows that the service sector is also going backwards for the first time in more than 2 years and do they demonstrate the Minister’s words that he thinks the economy is “heading in the right direction”? 
Hon STEVEN JOYCE 
: I think the absolute sense that the economy is heading in the right direction is the actual physical activity that has occurred over the last 2 years. We have had 57000 more jobs in the economy; the economy is 2.6 percent larger than it was a year ago; the New Zealand stock market is at record highs at this point in time; and we are seeing a significant amount of jobs being added in a whole range of manufacturing and information and communications technology industries. I will give the member a few examples to help him with his confidence in that regard: 300 new jobs at the Tegel plant in Henderson; 350 jobs about to start at Marsden Point for the expansion there; 400 jobs for IBM and Unitec in Auckland; about 1500 jobs at Fonterra’s new Darfield plant; and new jobs at organisations such as Orion and Douglas Pharmaceuticals and at a range of information and communications technology companies and manufacturing companies around New Zealand. 
Mr SPEAKER 
: Order! I think that is sufficient answer. 
Hon David Cunliffe 
: Given the ability of members on both sides of this House to quote companies that have either hired or fired—and we do not need to go back through Solid Energy Tiwai Point Kawerau and others—would an economy “heading in the right direction” have contracting employment in the manufacturing sector contracting employment in the services sector and fewer total hours worked than the year before? 
Hon STEVEN JOYCE 
: The member should recognise contraction in the manufacturing sector because it actually occurred primarily between 2005 and 2009. The member does not like to hear it and Mr Parker does not like to hear it but in the last 2 years the number of jobs in manufacturing has actually stabilised and slightly grown. I think that is very encouraging for the New Zealand economy as it is the first time since around 2005. 
Hon David Cunliffe 
: I seek leave to table the New Zealand Institute of Economic Research shadow board’s statement of 24 October indicating that it believes the exchange rate was overvalued and the economy had failed to ignite. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? Is there any objection? There is no objection. 









Document by leave laid on the Table of the House. 
White Paper for Vulnerable Children—Review of Child Youth and Family Complaints Process 
5. 
IAN McKELVIE (National—Rangitikei) 
 to the  
Minister for Social Development 
: What announcements has she made to review Child Youth and Family’s complaints process? 
Hon PAULA BENNETT (Minister for Social Development) 
: 
 As part of the White Paper for Vulnerable Children we have committed to undertaking an independent review of the Child Youth and Family complaints process. This is an issue that came up at the green paper meetings and in a number of public submissions. We felt it was important that we get an independent reviewer to look at whether there needs to be an independent complaints authority for Child Youth and Family. 
Ian McKelvie 
: Who will undertake the review of Child Youth and Family’s complaints processes and what will they look at? 
Hon PAULA BENNETT 
: I have appointed former Police Commissioner Howard Broad to undertake this review. The terms of reference include the current arrangements for members of the public to have a complaint about Child Youth and Family heard providing a view on how the current arrangements are or are not working and considering options for independence and reporting on the financial legislative and accountability implications of these options. 
Ian McKelvie 
: When is the review of the Child Youth and Family complaints process expected to be reported back? 
Hon PAULA BENNETT 
: All the changes that arise as a result of the white paper and the Children’s Action Plan that we have in place will have clear time frames over the next few years. The review is due to be completed certainly by next year but I think that he will be getting back earlier next year which would be a good thing. 
Jacinda Ardern 
: Does she plan to put in place a complaints process or an independent review for Work and Income in light of ongoing breaches such as the man who had his sickness benefit cancelled after Work and Income lost his medical certificate only to have it anonymously returned to him in the mail by another client who had accidentally been sent it— 
Mr SPEAKER 
: Order! I believe this question is asking the Minister a question in respect of a totally different ministerial role and to try to link it that way I think is a bit of a stretch. Does the member wish to actually ask the Minister responsible for social development a question more related to the primary question? That is all right. 
Mental Health Services Youth—Prime Minister’s Project and Youth One-stop Shops 
6. 
Hon MARYAN STREET (Labour) 
 to the  
Minister of Health 
: What progress has been made in the delivery of the Prime Minister’s Youth Mental Health Project announced in April of this year with an extra $11.3 million provided to support it? 
Hon PETER DUNNE (Associate Minister of Health) 
 on behalf of the Minister of Health: I need to advise the member actually that her figure is wrong. She has looked at only one part of one agency’s investment in what is a multi-agency project. The actual total investment package in the Prime Minister’s youth mental health initiative is $62 million over 4 years. Vote Health is funding $33 million of that including the $11.3 million the member has mentioned. There is another $10 million for the expansion of nurses in schools and $2.7 million for an online e-therapy tool. Vote Social Development is funding $12.2 million and Vote Education $16 million. Against that backdrop excellent progress is being made. Examples of that progress include the 12 youth one-stop shops receiving interim funding of $50000 each and up to 30 decile 3 schools having nursing-led services established during next year. This is a comprehensive programme there are a range of initiatives being developed as part of it and good progress is being made with all of them. 
Hon Maryan Street 
: Why did New Plymouth’s youth one-stop shop Waves—one of 12 such youth facilities nationwide that was meant to benefit from the $11.3 million referred to in the primary question—close last week and is he anticipating the closure of any more youth one-stop shops? 
Hon PETER DUNNE 
: Let me take the second part of the question first: absolutely no. The reasons relating to the cessation of activity by Waves are particular to the relationship between that organisation and the Taranaki District Health Board. It would be inappropriate for me to start to talk in more detail about that at this stage. But what I can say to the House is that it is not a funding-related issue and that there are discussions under way between the district health board other providers and Waves to resolve the situation. 
Hon Maryan Street 
: Is he aware that 50000 young people are registered with the 12 youth one-stop shops across New Zealand which provided approximately 150000 interventions over the last year; if he is how does the closure of the youth service 198 Youth Health Centre in Christchurch a while ago and now Waves in New Plymouth square with the Prime Minister’s commitment to better faster and more youth-friendly primary health care? 
Hon PETER DUNNE 
: I am not sure where the member gets her information about Christchurch from. I have actually been to the opening of the 298 Youth Health service just a few weeks ago. In fact that service is flourishing. In respect of the Taranaki situation let me make the point again that it has nothing to do with funding. There are particular issues involved there that it would be inappropriate for me to canvass further at this stage but they are being worked through and the services that that agency provides are expected to be picked up. Can I make one other point. We have given an instruction to the district health boards that as they approach their next funding round they need to take into consideration the best ways of continuing to fund youth one-stop shops on an ongoing basis. 
Dr Megan Woods 
: Given the fact that the New Plymouth service provided assistance for over 3000 young people with mental or sexual health problems unplanned pregnancies or drug and alcohol abuse issues was any of the $11.3 million announced by the Prime Minister in April provided to enable nationally consistent funding for these youth one-stop shops as recommended by his ministry in a report in 2009? 
Hon PETER DUNNE 
: I said in the primary answer that there were funds of around $50000 for each of 12 youth one-stop shops set aside in that original announcement. So the answer to the member’s pressed question is absolutely yes. But I make the point again—and I am sorry that it seems to be taking a long time to sink in over on the other side of the House—that the issues relating to Waves have nothing to do with funding. They relate to the particular circumstances of that organisation. It would be inappropriate to discuss those further at this stage while other discussions regarding the future of a youth one-stop shop type of facility in New Plymouth are under way. 
Dr Megan Woods 
: Given that can he confirm that similar youth service centres in Kapiti Christchurch and Invercargill are under threat of closure because of funding issues; if so what does he intend to have to replace their essential and effective service in a youth-friendly way? 
Hon PETER DUNNE 
: I am afraid the member was not listening to my earlier answer either when I made the point that we have directed the district health boards as part of their ongoing funding arrangement in addition to the funds that are already available to make funding provision for the continuation of youth one-stop shop services. 
Resource Management Act—Processing of Notified Consents 
7. 
JACQUI DEAN (National—Waitaki) 
 to the  
Minister for the Environment 
: What reports has she received on the time taken for decisions on notified consents issued under the Resource Management Act 1991? 
Hon AMY ADAMS (Minister for the Environment) 
: 
 I have seen a report from the Ministry for the Environment that indicates that the average time-frame for a decision on a notified consent is nearly 9 months. In the study period three decisions took over 1000 working days with the longest taking 3528 days or nearly a decade. It is simply unacceptable that some of these projects take longer to consent than they do to build. Medium-sized consents involve projects that can collectively contribute hundreds of millions of dollars to the economy and create a significant number of jobs. It is the Government’s intention to continue to reduce unnecessary costs and delays from these consents. 
Jacqui Dean 
: What is the impact of delays in receiving decisions on applicants and submitters? 
Hon AMY ADAMS 
: Delays create uncertainties for the applicants but also importantly for the submitters and local communities. No one benefits from a drawn-out process waiting for a decision under a cloud of uncertainty and with mounting legal fees. In terms of the economics of delay one estimate has put the cost per day of delay of a hypothetical $10 million project at $2200 which for a 3-month delay could mean $140000 of extra costs to say nothing of the additional cost in stress on the submitters. That is why the Government is committed to finding ways to ensure that notified consents are dealt with in a timely and cost-effective manner. 
Ross Sea Protected Area Proposal—New Zealand Involvement 
8. 
GARETH HUGHES (Green) 
 to the  
Minister of Foreign Affairs 
: Why did New Zealand pull out of a joint proposal with the United States to create a marine reserve in Antarctica’s Ross Sea? 
Hon CHRISTOPHER FINLAYSON (Minister for Treaty of Waitangi Negotiations) 
on behalf of the Minister of Foreign Affairs: The underlying premise of the question is wrong. New Zealand did not pull out of a joint proposal with the United States to create a marine reserve in the Ross Sea. 
Gareth Hughes 
: Did the Minister take a recommendation to Cabinet to support tabling either a joint New Zealand proposal or just a New Zealand proposal at the Convention on the Conservation of Antarctic Marine Living Resources meeting this week? 
Hon CHRISTOPHER FINLAYSON 
: The matter was discussed at Cabinet. There are two proposals as the member recognises: there is the United States proposal and our proposal. They have a lot in common. There are some differences. For example there is one area where the United States wants to engage in krill fishing—we do not. As it turned out we did not pull out of any proposal. We said there are two proposals on the table and they can be taken to Hobart for discussion which is carrying on as we speak. 
Gareth Hughes 
: I raise a point of order Mr Speaker. It was a good answer with lots of detail. The question was what the recommendation was that the Minister took to Cabinet. It would be good to get some information on the recommendation. 
Mr SPEAKER 
: It seemed to me the Minister did answer. He said it seems that the decision was that both papers would go forward to the conference in Tasmania and that is I think what the Minister’s answer was. 
Gareth Hughes 
: Given that New Zealand sent the first boats to fish in the Ross Sea and takes half the current toothfish catch does the Minister acknowledge that New Zealand might be seen by some countries to be acting in our vested fishing interests at the expense of this pristine last ocean? 
Hon CHRISTOPHER FINLAYSON 
: No. 
Gareth Hughes 
: Does he accept that New Zealand will shoulder the blame if no agreement to protect the Ross Sea is reached at the Convention on the Conservation of Antarctic Marine Living Resources given our refusal—which has been quoted in the media by Ministers Brownlee Carter and Joyce—to stop working on a joint US proposal? 
Hon CHRISTOPHER FINLAYSON 
: No. New Zealand is a sovereign country. It has put forward a proposal. I do not necessarily think we should be slavishly pro-American in all respects. The member is disclosing some pro-Americanism and I imagine Russel Norman will be counselling him after question time. 
Gareth Hughes 
: Does the Minister want New Zealand’s legacy to be the protection of Sanford’s fishing interests in the Ross Sea or the preservation for current and future generations of this amazing pristine environment? 
Hon CHRISTOPHER FINLAYSON 
: I think the member’s position is as off-the-wall as Holly’s lobbying legislation— 
Mr SPEAKER 
: Order! Some attempt to answer the question prior to any such comment would have been helpful. 
Hon CHRISTOPHER FINLAYSON 
: No New Zealand’s position is that it is anxious to establish in the southern oceans a reserve that will be nine times the size of New Zealand’s waters and that will be a tremendous legacy which our great Minister of Foreign Affairs will achieve. 
Gareth Hughes 
: I seek leave to table a media document. It is from the  
Australian 
 newspaper which is not often available in New Zealand where the chairman of the Convention on the Conservation of Antarctic Marine Living Resources said that the failure of New Zealand and the US to have a joint proposal has made it more difficult to reach an agreement. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Dotcom Case and Hon John Banks—Prime Minister’s Statements and Views 
9. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Prime Minister 
: Does he stand by the answers he gave yesterday to supplementary question 5 on Oral Question No 7 and supplementary question 3 on Oral Question No 12? 
Hon GERRY BROWNLEE (Leader of the House) 
 on behalf of the Prime Minister: Yes. 
Rt Hon Winston Peters 
: Can the House infer from his words “that has always been the test” that as a matter of principle if any Minister were found to have knowingly misled him as Prime Minister he would sack him or her? 
Hon GERRY BROWNLEE 
: That is the Prime Minister’s position. 
Rt Hon Winston Peters 
: Given that the Hon John Banks told the Prime Minister’s chief of staff that the reason why his witness statement is not public is that the police decided not to release it when in fact Mr Banks himself told the police not to release it does that not mean that he Mr Banks knowingly misled both the Prime Minister’s chief of staff and him as Prime Minister? 
Hon GERRY BROWNLEE 
: It simply means that that is a view held by the Rt Hon Winston Peters. 
Rt Hon Winston Peters 
: OK! Is it correct that he as Prime Minister on at least three occasions gave false information to the House in relation to the Dotcom case; if so how can he expect the New Zealand public to believe that he as Prime Minister is telling the truth? 
Hon GERRY BROWNLEE 
: On each occasion every attempt has been made to factually give a position to the New Zealand public. Mr Dotcom does not consume all of the Government’s time. 
Rt Hon Winston Peters 
: Is it not the case given the previous answers in respect of the Hon John Banks that if he as Prime Minister is proven to have misled the House then he will resign as Prime Minister; if not why not? 
Hon GERRY BROWNLEE 
: That is in fact not the case. 
Grant Robertson 
: Can he confirm his answer that the first he heard of Kim Dotcom was on 19 January 2012 despite the fact that a US arrest warrant on Mr Dotcom was put out on March 2011; his Ministers Williamson Power and Coleman all dealt with aspects of his move to New Zealand prior to 19 January; the US Department of Justice said that it had substantial and critical assistance from the New Zealand Police the office of the Solicitor-General and Crown Law in the lead-up to the raids; and that Dotcom had funded the biggest New Year’s fireworks in New Zealand’s history in 2011? 
Hon GERRY BROWNLEE 
: Yes. 
Canterbury Recovery—Repair of Housing and Infrastructure and Employment Opportunities 
10. 
NICKY WAGNER (National—Christchurch Central) 
 to the  
Minister for Canterbury Earthquake Recovery 
: What progress has the Government made to support repairing damaged houses and infrastructure following the Canterbury earthquakes? 
Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery) 
: 
 To date 24884 houses have been repaired in the Fletcher Construction - led programme to repair Canterbury homes at a cost of $967 million. Over the past month the programme has been completing around 450 homes a week and the weekly spend of around $15.5 million has been reached. The Stronger Christchurch Infrastructure Rebuild Team is also making good progress in the $2.2 billion project to repair road and water infrastructure. To date it has laid 19 kilometres of freshwater pipes 70 kilometres of waste-water pipes 108000 square metres of pavement and 4.6 kilometres of stormwater pipes. Over $40 million a month is being spent on horizontal infrastructure projects which will leave Christchurch with a highly resilient and high-quality infrastructure. 
Nicky Wagner 
: What impact has this had on employment in Canterbury? 
Hon GERRY BROWNLEE 
: Very significant. Across the Fletcher EQR and Stronger Christchurch Infrastructure Rebuild Team programmes alone there are some 7000 people working every day to improve the lives of Cantabrians. Around 6200 of these are employed by the Fletcher Construction - led house repair programme. Up to 580 Fletcher staff work in 20 local hubs supported by 90 Earthquake Commission estimators. There are 125 accredited building firms with an average of five employees each working on the project. And another 865 contractors are working on the Stronger Christchurch Infrastructure Rebuild Team’s horizontal infrastructure repair with that number expected to rise by around 1300 in coming months. In addition to that there is considerable activity in the individual insurer project management offices. There is a lot of employment. 
Hon Clayton Cosgrove 
: Why has the Government spent only $7 million of the $42 million of funding for training apprentices that was announced back in May last year as part of his reconstruction programme given that there are 84000 young people not in education or training who could be productively participating in the rebuilding today if they were being engaged in training? 
Hon GERRY BROWNLEE 
: The first point is that there are a lot of jobs available for young people in Canterbury. Of the money that was set aside the $43 million for training— 
Hon Clayton Cosgrove 
: They need training to get them just like you trained as a woodwork teacher. 
Hon GERRY BROWNLEE 
: That is right—that is right. What the member will find is that a lot of people will enter training post going into work and that is a good thing. What we can say is that although there has been $7 million spent out of the $43 million there is a further $24 million that has been reprioritised inside existing programmes. What the member needs to do is actually read some of the very positive messages coming out of Canterbury about employment and training for young people so that he does not go around with such a gloomy outlook on life. 
Paid Parental Leave—Prime Minister’s Statements 
11. 
SUE MORONEY (Labour) 
 to the  
Prime Minister 
: Does he stand by his statement on 3News last night on the subject of Business New Zealand’s assertion that women need retraining when returning to employment after extended parental leave that “no. It wouldn’t be my view”? 
Hon GERRY BROWNLEE (Leader of the House) 
 on behalf of the Prime Minister: The Prime Minister was asked whether he thought women lose their skills after 3 months and need to be retrained. His answer was: “No. That would not be my view.” The Prime Minister stands by that answer. 
Sue Moroney 
: Does he agree with the statement on extending paid parental leave that Business New Zealand attributed to UK member of the European Parliament Godfrey Bloom that “It will single-handedly turn back the clock to the 1920s by forcing employers to avoid exposure to the penalties by not hiring young women.”? 
Hon GERRY BROWNLEE 
: The Prime Minister does not stand by anybody else’s statements on this particular issue. 
Sue Moroney 
: Does he agree then with National MP Tim Macindoe who told the  
Waikato Times 
 on 11 April this year that any rise in costs would have business owners looking to cut spending and that one way of doing that would be to employ men rather than women? 
Hon GERRY BROWNLEE 
: There are big costs that need to be met. It costs the Government $163 million a year to meet this programme. The Prime Minister is not responsible for Mr Macindoe’s comments on these matters. 
Sue Moroney 
: Given that Paul Mackay was reported by Radio New Zealand as stating that Business New Zealand’s paid parental leave submission was based on political discussions did those discussions involve the National Party? 
Hon GERRY BROWNLEE 
: We do not speak for Business New Zealand and Business New Zealand does not speak for us. 
Sue Moroney 
: I raise a point of order Mr Speaker. My question was very carefully crafted. It was about whether there were discussions between the National Party and Business New Zealand on the issue of its paid parental leave submission. 
Mr SPEAKER 
: I think the member still has a further supplementary question. Given the Minister’s answer there is a pretty obvious further supplementary question. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. The question was whether there were discussions not whether someone spoke with someone and somebody else spoke with somebody else. The question was very narrow—were there discussions—and that goes to the core of it. 
Mr SPEAKER 
: I am very interested in the right honourable gentleman wanting questions to be answered. I am very gratified by that because it certainly did not use to happen in this place. I invite the member to repeat her question. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. What on earth did that mean? That you are criticising every previous Speaker? 
Mr SPEAKER 
: Order! 
Rt Hon Winston Peters 
: That you are a paragon of virtue? 
Mr SPEAKER 
: Order! I meant what I said. I have called the member to repeat her question—Sue Moroney. 
Sue Moroney 
: Given that Paul Mackay was reported by Radio New Zealand as stating that Business New Zealand’s paid parental leave submission was based on political discussions did those discussions involve the National Party? 
Hon GERRY BROWNLEE 
: I am not able to answer that but what I can say is that Business New Zealand talks to many many groups including the Engineering Printing and Manufacturing Union and I would hope the Labour Party. 
Canterbury Recovery—Employment Opportunities and Prioritisation 
12. 
JAMI-LEE ROSS (National—Botany) 
 to the  
Minister of Immigration 
: What is the Government doing to ensure that New Zealanders have first priority for jobs in the Canterbury rebuild? 
Hon NATHAN GUY (Minister of Immigration) 
: 
 On 9 October nearly 3 weeks ago Minister Bennett and I announced the new Canterbury Skills and Employment Hub a one-stop shop for employers to list vacancies and recruit from Work and Income or various trade training centres or where needed labour from overseas. Soon employers will be required to engage with the hub to ensure that no Kiwis are available or are in training before being able to recruit workers from overseas. This balanced approach will ensure that Kiwis will have first priority for jobs in the rebuild but the reality is that the scale of the Canterbury rebuild will require some migrant workers. 
Jami 
-Lee Ross 
: What reports has he seen on approaches to ensuring New Zealanders have priority for jobs in the Canterbury rebuild? 
Hon NATHAN GUY 
: Interestingly I have seen a report about 2 weeks ago after our announcement of a vague proposal to limit foreign workers available for the rebuild. Such an approach would significantly impact on the rebuild. It would affect families and businesses in Canterbury and slow the overall economic growth. Such a move would deter migrants coming to Canterbury and the rest of New Zealand and that would overall impact on the $1.9 billion per year that migrants contribute to the wider economy. This of course was a stupid proposal— 
Mr SPEAKER 
: Order! That is enough. 
Denis O’Rourke 
: If the Minister’s claims that New Zealanders will be favoured for jobs in Christchurch are true why are there so many advertisements circulating in Ireland the UK and Asia for workers in Christchurch? 
Hon NATHAN GUY 
: As I have said and I alluded to it in the answer to those two previous questions the rebuild is on such a significant scale that we will require some migrant workers. 
Darien Fenton 
: If the Government is doing everything possible to ensure New Zealanders have first priority for jobs in the Christchurch rebuild why is it estimated that half of the 30000 workers needed for the rebuild will be brought in from overseas? 
Hon NATHAN GUY 
: Well we are doing everything possible so that Kiwis come first for our jobs in New Zealand and as I have said the scale of this rebuild—some $20 billion over the next few years—will require some migrant workers. I have just made the point that if Labour wants to close down migrants from coming in to New Zealand that is a detriment to our $1.9 billion a year. It is a shameful policy. 
Te Ururoa Flavell 
: Tena koe Mr Speaker. Given that the impact of the recession has been disproportionately higher for Maori and in some cases unemployment figures have been triple the national average what has the Minister done to ensure that priority is given to Maori in the Christchurch rebuild? 
Hon NATHAN GUY 
: I am aware that NgaiTahu are playing a significant role in the overall rebuild of Canterbury and the Government has invested $43 million into extra trade training places in Canterbury. Of course the Canterbury Skills and Employment Hub which we are going to introduce in the next few weeks will help every New Zealander including Maori. 
Jami-Lee Ross 
: What reports has he seen on the need for foreign labour for the rebuild of Canterbury? 
Hon NATHAN GUY 
: I have seen a number of reports on the need for foreign labour in the rebuild. One shows that as many as 30000 extra workers in total will be needed and even with Kiwis fully engaged a significant number will be needed from overseas. Another report describes a dismal desperate and half-cocked plan to limit the number of foreign workers involved in the rebuild and the wider economy. This plan is described as “blithely ignoring the economic realities to pick up a few redneck votes.” and of course that came from— 
Mr SPEAKER 
: Order! Ministers should not be attributing to other parties policies that are not remotely the responsibility of Ministers. It is a pattern that is getting—[ 
Interruption 
] I know members use the report as a means of doing this but the problem with it is that rarely is the description of the policy that accurate. That is the difficulty and it leads to disorder. And where—[ 
Interruption 
] The member should not be interjecting when I am on my feet but where members ask questions that are provocative Ministers get plenty of opportunity. For questions from their own colleagues to then describe policies in a way that may not be accurate and attribute them to other parties is not fair. That is not fair. 
Urgent Debates Declined 
Solid Energy Spring Creek Mine—Job Losses 
Mr SPEAKER 
: I have received a letter from Darien Fenton seeking to debate under Standing Order 386 the announcement of job losses at Solid Energy. The announcement relating to Spring Creek mine workers today is a case of recent occurrence involving ministerial responsibility. However not every such announcement will warrant an urgent debate. There must be an element of urgency for the matter to take precedence over other business. There will be other occasions on which this matter can be examined such as the upcoming financial reviews of State enterprises. In these circumstances I am not persuaded that the setting aside of the House’s business for an urgent debate today can be justified. The application is therefore declined. 
Climate Change Response (Emissions Trading and Other Matters) Amendment Bill 
Second Reading 
Hon SIMON BRIDGES (Acting Minister for Climate Change Issues) 
: 
 I move  
That the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill be now read a second time 
. The bill includes major amendments to the New Zealand emissions trading scheme that the Government intends to make in response to the recommendations of the New Zealand Emissions Trading Scheme Review Panel in 2011 as well as international developments and includes a number of technical and minor amendments that will improve the operational effectiveness of the emissions trading scheme. The bill was referred to the Finance and Expenditure Committee on 23 August 2012. The committee received 758 written submissions from interested groups and individuals and heard from 73 submitters who indicated that they wished to appear before the committee in person. I would like to take the opportunity to thank the chair Todd McClay and members of the Finance and Expenditure Committee for their work in considering this piece of legislation. My thanks go also to the submitters for the effort and thought that went into their submissions. 
The emissions trading scheme is New Zealand’s main mechanism for meeting its international commitments to reduce greenhouse gas emissions. The emissions trading scheme was originally designed in the context of New Zealand’s pledge under the first commitment period of the Kyoto Protocol which finishes at the end of this year. 
Rt Hon Winston Peters 
: How about some excitement? 
Hon SIMON BRIDGES 
: There is still much uncertainty—this is exciting enough—in international negotiations over how progress towards reducing global emissions will play out especially during the transition period from the existing Kyoto Protocol framework to a new framework covering emissions from both developing and developed countries which is expected to come into force in 2020. The Government’s main objectives with these amendments are to ensure that the emissions trading scheme supports the Government’s economic growth priorities more effectively to ensure that the emissions trading scheme is flexible enough to cater for various potential international outcomes in the period from 2013 to 2020 and to improve the operation and administration of the emissions trading scheme. 
I am pleased with the committee’s recommended changes to the bill to build more flexibility into the emissions trading scheme—specifically the proposed changes that give the Minister for Climate Change Issues the ability to retain the exportability of units generated by the forestry sector in response to possible future international scenarios and greater discretion in setting the levy rate for synthetic greenhouse gases. I also note that the broadening of the eligibility criteria applying to the use of pre-1990 forest land for offsetting will create greater flexibility for pre-1990 forest owners. 
I would now like to address another couple of topics that were raised by submitters and considered by the Finance and Expenditure Committee. Many submitters raised the option of putting restrictions on the type and quantity of international units that can be used in the emissions trading scheme—specifically where they had concerns over the environmental integrity of certain types of units. It is important to note that the Government reserves the right to restrict access to units that have specific environmental integrity concerns and it has already done so in some cases. Minister Groser has recently asked officials to look into the environmental integrity of certain units so that their eligibility under the emissions trading scheme can be reviewed. I would also note that overall the emissions trading scheme is designed to ensure that New Zealand can meet its international climate change obligations at least cost to the domestic economy. A key part of this is ensuring that the scheme is open to international units so that the price emitters pay reflects the international carbon price which in turn reflects the level of international ambition to reduce emissions. 
Another topic that was raised by a number of submitters was the limited time allowed for consideration of the bill in the select committee. I note that although the time allowed in the select committee was short the committee fully considered all of the 758 written submissions it received and it heard from all of the submitters who indicated that they wished to be heard in person. In addition there were two rounds of consultation on possible changes to the emissions trading scheme before the select committee process: the first in relation to the 2011 review of the emissions trading scheme and the second in April in relation to the Government’s proposed response to it. 
The amendments proposed in this bill will support the Government’s growth priorities ensure New Zealand is in a position to cater for various potential international climate change negotiation outcomes and improve the operation and the administration of the emissions trading scheme. For these reasons I am pleased to commend this bill to the House. 
MOANA MACKEY (Labour) 
: 
 Only a National Government could pass a piece of climate change legislation that will actually see our gross greenhouse gas emissions as a country dramatically increase. Apparently on “Planet Key” you have not only its plentiful golf courses but also an emissions trading scheme that will result in mass deforestation the death of the carbon forestry sector and increasing gross greenhouse gas emissions. Apparently on “Planet Key” that makes good environmental and economic sense. Well it does not at all and Labour will be opposing this bill the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill all the way through. 
What I think people need to realise and what the Minister for Climate Change Issues clearly does not understand is that we no longer have an emissions trading scheme once this law is passed. We have a fig leaf. A fig leaf—that is all we have. I want to comment on the process as well because instead of going to a select committee for what should have been 4 to 6 months this bill went to a select committee for 7 weeks—7 weeks. The Minister did take on some consultation before the select committee process but he did not consult with environmental organisations he did not consult with Opposition parties he did not consult with concerned New Zealanders and in fact there was a lot that ended up in the legislation that was not actually part of the consultation. The select committee process was a rubber-stamping exercise from start to finish. I do want to thank the officials who worked on the bill because they were put under really unfair time pressures and time constraints. 
One of the things this bill does is it extends indefinitely the subsidies the Government has put in place for greenhouse gas polluters and it removes indefinitely agriculture from the scheme. I want to start with agriculture. New Zealand’s emissions trading scheme is designed to be an all sectors all gases scheme. It does not work if all sectors and all gases are not in the scheme. When agriculture represents half of New Zealand’s greenhouse gas emissions and the Government says that agriculture is never going to come into the scheme then the emissions trading scheme simply does not work. The Government needs to ask itself whether or not in that case the emissions trading scheme is actually an appropriate instrument for dealing with New Zealand’s climate change commitments. If it wants to keep agriculture out then that is its choice but in that case this emissions trading scheme is not the instrument that is going to help New Zealand meet its targets and the Government’s own targets. 
I want to be quite clear because the reason the Government says it is keeping agriculture out is that the cost would make agriculture uncompetitive. Well let us talk about that because no one is suggesting that agriculture should face the full cost of its emissions on day one of entering the emissions trading scheme. Under the Labour Government’s proposal which was a lot tougher than the National Government’s at a carbon price of $10—a carbon price of $10—the average dairy farm a typical dairy farm in New Zealand would have an annual cost of around $1000 per year per typical dairy farm and that is at a carbon price of $10. As of this morning UN offset units could be purchased for $1—$1. So if the Government were to bring agriculture into this scheme under this piece of legislation with its one-for-two surrender subsidy where UN offset units can be purchased for $1 and then subsidised a further 50 percent because of the one-for-two subsidy we are looking at an average cost to a typical dairy farm of $57 a year. If the agriculture sector is going to be driven over shore and made uncompetitive by an annual charge of 50 bucks a year then I would suggest that the agriculture sector has much bigger problems than the price of carbon. And it does—it is called an uncompetitive exchange rate. If the Government was really serious about helping agriculture it would do what Labour and the Greens have been talking about and look at monetary policy and the tools the Reserve Bank has for helping to control an uncompetitive exchange rate. This is not going to destroy the agriculture sector in New Zealand and agriculture should be coming into the scheme. 
Federated Farmers often make the point—and it is a fair point—that the agriculture sector is already paying a carbon cost through fuel and electricity. That is true. Well I want to know why Federated Farmers are not holding this Government to account and asking why the benefits of the low carbon price as well as the benefits of the Government’s transitional subsidies are not being passed on through fuel and energy prices because they are not. The Acting Minister for Climate Change Issues confirmed that today. He said that he just went out and asked a random man on the street in Tauranga whether or not the benefits of the low carbon price were being passed on at the petrol pump and in energy prices. He must have been talking to John Banks as that man on the street because they are not. 
I want to read to the Acting Minister the submission that we got from Gull Petroleum. What it said was “Gull notes that when it tendered to make fuel purchases from opposition oil company terminals in the Wellington Region as recently as October 2011 one of the companies priced carbon at $25 per tonne despite the market at that point being at $14 per tonne … This $11 per tonne difference between response to tender and actual market is approximately 1.5 cents per litre … Note if the same deal was offered now with the market at under $7 per tonne the effective price difference would be 2-3 cents per litre.” That is for the consumer. Well the price now is $1. No one seriously believes that those benefits are being passed on to consumers. They simply are not. 
Why is that important? It is important because this bill has serious implications for the forestry industry in New Zealand. There are two things that affect the forestry industry: one is what the bill does and one is what it does not do. Mr McClay can roll his eyes but I know that the forestry industry in his electorate is very very angry about this piece of legislation as it told me when I recently visited. The first thing it does is restrict the market for New Zealand forestry units because now agriculture does not have to purchase any units to offset its emissions and those who do have to purchase units have to purchase only half because of the one-for-two surrender obligation subsidy. So suddenly there is a much smaller market for these credits. That is not what the National Government promised the forestry industry when it was elected in 2008. It said it was going to support the industry. It said agriculture was going to come into this scheme and it did not talk about all these subsidies. 
The second thing is what the bill does not do. What the bill does not do is put any restrictions on the UN offset units which are currently priced at $1. I do not know whether the Acting Minister who gave the first speech in the second reading debate understands that there is no international price of carbon and that there is no international market. They are a series of schemes which have their own units and we accept all of them in New Zealand. All those other schemes that are currently being planned or are currently in place have restricted these units. What they have said is that a percentage has to be domestically sourced from within their own scheme and then people can go outside of the scheme. There are further restrictions. For example in Australia the next 35 percent can be sourced only from Europe or Australia so only 12.5 percent in Australia will be able to come from these UN offsets which are currently priced at around $1. So all this talk about how we just need to leave the market ignores the fact that there is no market. I am not sure the Acting Minister who answered questions in question time today and who spoke in the second reading actually understands that that is the case. 
The problem we have is that New Zealand’s gross greenhouse gas emissions are increasing. The Government is going to get up and say “Well you know what? We have met our Kyoto Protocol targets. We are on track.” Well yes we have but only because of the forestry sector. It is only because it planted enough trees to offset our growing emissions that we met the target. Without the forestry sector we are in serious serious trouble. We have the added problem that the forests that were planted in the 1990s are due to be harvested in 2020. The wall of wood as it is so called is coming down. Because of the long lead-in time for forestry—it takes a couple of years to secure the investment and go through the consenting phases then it takes 4 to 5 years for trees to start sequestering carbon at any real rate—we need to be planning and planting trees and forests now in order to undercut that wall of wood coming down and that is going to be very difficult even without this piece of legislation. 
This bill is devastating for the carbon forestry industry. I really hope that Peter Dunne does a little bit more consultation beyond the National Party on his position. I understand that he can vote for the bill—that is in line with his party policy; that is fair—but he can still support the amendment in my name that would restrict international units. That would not be out of step with his own party policy and it would be literally a lifeline for the carbon forestry industry. He needs to talk to more people than Tim Groser on this issue. He needs to talk to the very foresters who are going to be laying people off shutting down and exiting the emissions trading scheme before he puts his vote in this House to kill off the carbon forestry industry in New Zealand. 
You know what is even more bizarre about this? This restriction of international units which the National Party is battling against so hard now. Tim Groser promised that he would do this in April. In a speech to the Climate Change Iwi Leadership Group in April this year he said “The government proposes to enable in legislation the introduction of a mechanism that would place a restriction on the proportion of international units a participant can surrender to meet their ETS obligations. Under current settings there is a serious danger of NZ essentially exporting capital for no good reason resulting in a loss of economic welfare.” That is very true and the mechanism does exist. When will it kick in? If the Government is saying that at some point it will intervene—we currently have an effective carbon price of 50c you can buy UN offset units for $1 the Government will subsidise you for 50 percent and that is 50c—how much lower can the carbon price go before this Government intervenes and realises that it needs to live up to the promises that Prime Minister John Key made to the forestry sector back in 2008? 
TODD McCLAY (National—Rotorua) 
: 
 It is a pleasure to rise and speak on this bill the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill. It is hard to sit here and listen to the observations made from the other side when it comes to records around deforestation. Indeed I ask the last speaker in this debate Moana Mackey what Labour’s record around deforestation was—deforestation before we came to Government. It was absolutely appalling—absolutely appalling; the worst it has been in the country since records began. 
So now that they are saying what we are going to do well I am happy to speak to this. This piece of legislation meets a commitment we made to New Zealanders in the election last year to make sure that we did not impose greater cost upon New Zealand households that we protected New Zealand businesses that we continued with an emissions trading scheme that does our part—does not lead the world but so that New Zealand is doing its part—and that it secures jobs. 
You see during the select committee consideration of this bill when we were hearing submissions I remember members opposite talking about their great concerns. At the same time different parts of the Labour Party were screaming and yelling about power prices and the effect the emissions trading scheme was having upon jobs or could have upon jobs at the Tiwai aluminium smelter down in the very south of the South Island. So on the one hand you have got the Labour Party saying: “Do something about the prices of electricity we are losing jobs in the manufacturing sector.” and then somewhere else in the Labour Party they are coming to the select committee and saying: “Make these changes. Ramp up the cost upon New Zealand businesses. Forget about the jobs.” Well you cannot have it both ways unfortunately. We made a commitment to New Zealanders during the election last year that we would modify the emissions trading scheme to secure jobs to hold down the cost upon businesses and this piece of legislation does that. 
We have also heard from members opposite about the great rush that was going on at the select committee hearing. I want to give the House some facts around this as opposed to the rhetoric we hear so often in this place. The Finance and Expenditure Committee met and considered this piece of legislation on nine occasions. There were 803 submissions received from 758 submitters. We heard 19 hours of evidence. So for 19 hours the select committee sat and heard evidence from submitters—73 submitters in total. Some of those submitters were able to take up to 45 minutes of time with the committee because the committee was keen to have a full frank and open discussion. In total our consideration—after the submissions were heard—took therefore 8 hours and we met the time line that was imposed by the House to report back within 7 weeks. 
 Interestingly this is not the first time an emissions trading scheme has come before the House nor a review. When last the Finance and Expenditure Committee and the House considered legislation in this area in fact it did have longer to consider it but the number of submissions was about the same and the period of time to consider the number of submissions the hours to hear submissions was less. So I would suggest to this House that actually the select committee gave as much time as submitters wanted. There were 803 submissions received and 19 hours of evidence heard in parts of the country. We have taken this issue seriously we have listened to New Zealanders and we have given them the chance to come forward and discuss this issue with us—and this is not going through in urgency. 
I think this is quite different from the first piece of legislation which was put in under a Labour Government with the support of the Greens which we now know has been of great effect to the New Zealand economy did much more than they said it would at the time and has now imposed great great cost upon New Zealanders and upon New Zealand households. 
I want to touch upon just one part here that has been raised by submitters—and certainly the forestry industry and the last speaker in this debate—and that is around overseas carbon credits and their effect upon the New Zealand carbon market. Last year the price of carbon was much higher than it is now. I think it was around more or less $18 to $20 a unit. Today certainly it is down to around $3 to $4. It has moved; it has fluctuated a little bit. It is there for a number of reasons here in New Zealand. They include that we have a recession; the world’s economies are down. But it is also around overseas credits and their availability within New Zealand. 
The select committee looked at this in detail and considered the issue and our report says—and the report is correct—that it is possible to have an effect upon foreign credits entering the New Zealand market. That currently exists in legislation. It still is there in legislation and we believe that is an appropriate mechanism. There is an example where under this Government we have already limited some credits coming into New Zealand. So what I say to the member opposite who spoke last and the forestry sector is that we have ensured that the tools are here in this legislation to have an effect to have an emissions trading scheme that will be robust for the future and there will be more discussion around this. I commend this bill to the House. We have done our job properly. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Every now and again colleagues around the House get the opportunity to make contributions on debates that they feel really matter. I am the proud dad of two wonderful young sons and every week when I come down to this place like many other colleagues occasionally I feel a little wistful about leaving them behind in Auckland or wherever members come from. But the reason that I am keen to take a call in this debate is actually for them because climate change is a fact—not a philosophy not a political statement; a scientifically verified fact. 
There is debate about whether we are going to get 1 degree or 6 degrees’ difference over the next century or so and that may make the difference between the continuation of the human species or not. It is a small point extinction—for us. It just happens to be in the lifetime of my two little boys or their children. So we have the bizarre and frankly disgusting picture of a Government so craven to its traditional agricultural and big-business backers that it is selling out the future of my children and your children and even their own children because it is somewhere between being confused about science that puts a 95-plus percent confidence in this change and being craven to the business interests that it serves in this House. Neither reason is good enough neither reason is right and actually neither reason is even in the long-term interests of this economy. 
Weakening the emissions trading scheme to the extent that there is no minimum floor on a carbon price to the extent that half of our emissions—the agricultural and primary sectors—are left out and to the extent that there is a one-for-two giveaway subsidy on our carbon debits are changes that gut the emissions trading scheme. They are going to result in clear-felling of more timber and the destruction of more sinks. They are going to result in an under-investment in clean technology. They are going to result in New Zealanders paying more in our lifetime and our children’s lifetime to adjust to the climate change that is certain—not probable but certain—to come. We have a choice. We can use integrity science and a dash of political courage to say what we know to be true—that our future will not be easier than our present. 
Our future in relation to climate change will be a damn sight more difficult. New Zealand it is true and others have said it will be relatively—relatively—less affected than many other countries but it is little cheer to know that we will be relatively less affected than countries like Chad or Somalia which are going to face mass famine. People will die in their millions. Here we will just put up with tornadoes thunderstorms droughts floods reduced agricultural production and may I say more turbulent flights into Wellington. That is known as a First World problem—more turbulent flights into Wellington. It is not one I enjoy particularly but hey no one is going to die we hope. But people are going to die around the rest of the world and we are going to face refugee flows into New Zealand as a result. We are going to find our markets contracting on us. And we are going to find it more difficult to export to people who have far bigger problems than we do. 
So what can we do? In the face of a party that has rolled over and said “tickle my tummy” to traditional business interests that has flown in the face of established science Labour is proposing four important Supplementary Order Papers. The first of those is to restore the entry date of agriculture to the legislation so that it will continue to enter in 2015. That will provide certainty it will provide some incentives for proper investment in clean technology and it will help agriculture to adjust by giving it a longer time period to adjust over. 
Nearly 70 percent of submitters to the Finance and Expenditure Committee were opposed to excluding agriculture from the emissions trading scheme. Bring it in on schedule all sectors all gases and let us have an emissions trading scheme that actually achieves its objective which is to achieve a given level of carbon reduction at the minimum economic cost. That is what an “all gases all sectors” scheme will do. 
 The second Supplementary Order Paper is to restrict international limits to 50 percent so that New Zealand units are preferred over international ones thus protecting sinks in New Zealand like the forestry industry. That is the same standard that is applied to the Australian scheme. It is well known that many of the carbon credits that are sourced from offshore—particularly one might say Eastern Europe and other places—are perhaps worth less than the paper that they are milled on. 
To make the transition period changes recommended by the panel the carbon price cap would increase under Labour’s Supplementary Order Papers by $5 each year to $50 rather than remaining at $25. The one-for-two deal would be phased out over 3 years rather than being continued indefinitely. Finally our Supplementary Order Papers would have the Environmental Protection Authority publish annually the amount industries charge their customers for carbon and that would allow the public to know when they are being overcharged. 
We acknowledge that both the world and the domestic economies remain weak. We understand that there is turmoil in world carbon markets and that the carbon price has substantially declined. But if people look closer than today’s price they will see that the price of carbon futures is high relative to the current price—that is the markets are betting that carbon is going up again. When it does New Zealand will face substantial international debit liabilities because the current Government has failed to take the opportunity to put in place a scheme that is robust workable and coherent let alone comprehensive. Instead what is happening here is we have a Government that is knowingly selling out the future of all our children. It is knowingly flying in the face of established science. 
The Intergovernmental Panel on Climate Change is the largest research body behind climate change. It involves thousands of scientists. It is mandated by the United Nations. Its fourth assessment report in 2007 found that the probability that the climate change that is already well documented is simply natural is less than 5 percent—that is we know with a 95-plus percent confidence interval not only that it is happening but that human endeavour is causing it. Therefore human endeavour has to change unless these lovely kids up in the gallery are going to pick up the price tag for stuff that we failed to do—that we failed to do. We look them in the eyes and we say: “Kids I’m sorry. Your life is going to be more difficult because adults today failed to have the foresight and the courage to write laws that would make our economy and our environment better when you grow up.” 
I look to every parent in this House and I ask you to ask yourselves whether that is right. Is that the best we can do? Is that why we get up on a Monday or a Tuesday morning and fly to Wellington? I hope not. I hope that all of us whatever our party whatever our persuasions in this House have the foresight and the courage to ask ourselves how as a country we should respond to this challenge which is inevitably coming at us like a rushing freight train through a tunnel. We can see a light ahead. We know the noise. We know we are in a rail tunnel. We know that climate change is happening. We know that half of our emissions are from the agriculture sector. Yet this Government wants to leave agriculture out. 
We know that in the long term it is better for the economy as well as the environment if business has appropriate prices signals but this Government is giving a one-for-two discount and seeing the carbon price go to zero. We know it is going to be in our fiscal interests—that is it is going to cost New Zealand less as a country—if we build up our carbon sinks so that we have a positive net balance; our sinks outweigh our sources. This bill does not do that; it does the reverse. By gutting the carbon price and leaving out agriculture it leaves our foresters with no incentives to plant. 
We know that it will be better if business itself invests to mitigate the worst challenges and to give itself a decent long adjustment curve. This bill does not contain any incentives for any chief executive to go to their board and say they want to install a scrubber on their smokestack they want to invest in clean technology they want to invest in research and development that will help their processors work better as well as being better for the environment or they want to become a clean green exporter and help New Zealand to be a clean green and clever country. There are no incentives. In fact it will be harder and harder for businesses to do what is right. Think of our children; think of these children. Government you should be ashamed. 
Dr KENNEDY GRAHAM (Green) 
: 
 I commend David Cunliffe for his impassioned speech—something that is conspicuously lacking from the Government. The Finance and Expenditure Committee has held its foreshortened hearings and deliberation. It has returned its report by majority only to this House. The Green Party still opposes the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill and explains why in our minority report. Part of the reason has to do with the global reality out there that David Cunliffe has just spoken about: the gathering reality of climate change already better termed climate disruption possibly turning to climate chaos sooner rather than later. But I will address that later in the final reading. Today we focus on the intense unreality that is the New Zealand emissions trading scheme and the sad irony and sad history that have led up to the mess that we are now in. My purpose is not to damn the past for its own sake but to seek what we can learn from the experience before it is too late. 
In understanding this amendment bill and why the Green Party opposes it so strongly it is necessary to recall what has gone before: the litany of bold pronouncements faint-hearted gestures deliberate self-deception and downright chicanery. It is breathtaking in its political cowardice and it brings no credit to New Zealand as a nation. It reveals governmental failure on a monumental scale. We find over the past two decades eight about-faces in the history of New Zealand’s renunciation of its fair share of climate change obligation. In 1990 the Government declares an interim goal of a 20 percent drop in gross emissions below 1990 by 2005. We would explore a goal of 35 percent by 2005—a brave new world long since abandoned. 
Feint No. 1: in 1992 just after signing the Framework Convention on Climate Change the Government drops the 20 percent target promising only to reduce emissions to 1990 levels with no specified period. No. 2: in 1994 the Government moderates its ambition again to a target of equalling 1990 levels by 2000—this time not gross emissions but the new concept of net using forestry sinks to help meet our emission obligations. No. 3: in 1997 New Zealand signs the Kyoto Protocol with the legal obligation to cut our total emissions to 1990 levels not by 2000 but in the period 2008 to 2012 a whole decade later. Fast-forward 5 years to No. 4: in 2002 the Government implements the Kyoto Protocol on the understanding it will meet its obligation on a net basis not gross. This accords us freedom to increase gross emissions without constraint. No. 5 is coming up. The Government having declared in 2002 a goal of peak gross emissions by 2012 revises that 3 years later by predicting continued growth in emissions after 2012. The goal is now simply reducing the rate of growth by that year. Here comes No. 6: in its 2008 legislation the Government takes the goal of reducing the rate of growth by an unspecified amount over an unspecified period. The target year of 2012 drops from sight. 
Enter the Key Government and No. 7: in 2009 the Government accepts the 450 part per million threshold of carbon atmospheric concentration with the associated 2-degree limit but announces a mid-point target for 2020 of 15 percent—half of that required to meet the threshold. No. 8 coincides: the 15 percent will not be a mitigation target in which we actually reduce our gross or even our net emissions but rather a responsibility target that can be met also by the unlimited purchasing of international credits and it is qualified by a number of essentially unattainable conditions. Bravo! It is an exquisite irony that the European Union is committed to an unconditional 20 percent target by 2020 which is virtually what New Zealand declared as a goal for 2005 back in 1990. 
The history of the 22 years has shown New Zealand to have now become a laggard in climate change. We have downgraded our promises to make things easier in the short term forgoing the opportunity of switching to a smart green low-carbon economy that would benefit us all in the medium term and ensuring dangerous perhaps catastrophic climate change in the long term. What we have constructed over 20 years is a madhouse of self-deception of which this amendment bill is the latest shiny model. 
The select committee received 803 submissions and heard from 73 submitters. Many reflected corporate self-interest. That is valid enough as far as it goes even if it is occasionally myopic on its own terms. But it is never the national interest and it surely is not the global interest. Others reflected the broader interests expressing alarm from the most recent scientific findings of polar ice melt. That has in no way derailed the Key-Groser regime in fudging the matters further. The result is an emissions trading scheme that will celebrate the end of the first Kyoto commitment period 20 years after the Framework Convention on Climate Change by encouraging emissions. The amended Act will not respond to the challenge of climate change. It will busy itself with transfers of monetary coupons circulating with near total futility inside New Zealand as the planet’s climate begins to wreak its havoc upon us. What titanic stupidity. 
The Government has come to regard the Kyoto commitment period as a transition period—a 5-year transition period that is a prelude to an 8-year transition period to a global agreement that begins too late. With its weakened emissions trading scheme New Zealand is becoming a safe haven for dirty emissions. Carbon leakage may transform into carbon importation. The emissions trading scheme originally designed to be a stimulant to behavioural change has become a prophylactic against that change. Our gross emissions continue to rise and we are saved in Kyoto accounting terms by the forestry sector which incidentally has been given a bad deal. The Government fails the child’s test of logic that today’s forest sinks are tomorrow’s emissions—not too bright on the IQ scale for intergenerational justice. This Government plays up the free market as its ideological underpin then interferes with the market at its political discretion. The price gap a 50 percent surrender obligation sectoral favouritism free allocations and non-convertibility of most local units—not too bright on the IQ scale for socio-economic harmony. 
The New Zealand scheme has become a magician’s trick: self-deception by numbers. The presiding officer is Minister Groser chief wizard of neo-liberal orthodoxy in trade—an art translated directly into climate change as if the climate is a tradable commodity. His devolved Prime Minister looks on not entirely familiar with the drama or cognisant of the content knowing enough not to want to know more careful not to read the documents or recall what might have been said. Like the blighted captain of the  
Rena 
 Mr Key sails on courting disaster but hopeful that his tenure will run its course before nature exacts its revenge. In the greatest brain fade of a career he said in 2005 he was “suspicious” of global warming. That was 13 years after all the Governments of the world had agreed to a binding legal obligation to avoid it. Eighteen months later he said “I firmly believe in climate change and always have.”—as if science is a matter of belief. 
Our emissions trading scheme has become so degraded relative to the original theory of cap and trade that some think it is beyond rescue as a framework for a real climate change policy. What we need is a policy regime that effectively prices carbon and thereby reduces emissions—something above the UN offset price which fell 30 percent 2 days ago with certified emission reduction units and emission reduction units below €1. That is a carbon price here of NZ$1.30 or NZ65c after the one-for-two deal. Brilliant! It may be time now to visit the whole edifice of New Zealand’s climate change policy. Whatever the future holds it is critically important we strengthen not weaken the New Zealand policy for we are now lagging behind other countries. The Green Party will oppose this bill all the way through and we shall before long advance new ways of restoring New Zealand’s climate change reputation through a strengthened national mitigation policy. 
PAUL GOLDSMITH (National) 
: 
 It was very interesting to hear that latest speech on the emissions trading scheme from the member from the Green Party Kennedy Graham. It was interesting. On the emissions trading scheme the Greens are not interested in what the rest of the world is doing; New Zealand should strike out on its own regardless of what the rest of the world is doing. At the same time a couple of days ago when it came to other issues like— 
Dr Kennedy Graham 
: I raise a point of order Mr Speaker. The member just incorrectly alluded to the Green Party not being interested in other countries. It— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! [ 
Interruption 
] Order! The member is an experienced member. He knows that that is a debating point. 
PAUL GOLDSMITH 
: They are very happy to see us strike out on our own on emissions trading scheme issues. Then when you come to the issue of quantitative easing for example—watering the milk or debasing the currency—the attitude is that everybody else is doing it so we should just go along with the flow and do what the rest of the world is doing. It is funny. There is no need to be consistent on these things but that struck me as unusual. 
I was fortunate enough to go the Kyoto Protocol meeting in December 1997—I was working with Simon Upton at the time—and it was a very interesting conference that they had there and a hugely ambitious thing that the world was trying to achieve. It was the first time we were getting a whole set of countries across the world to accept something that would materially lower living standards today in order to ameliorate a problem in the future. That was a heroic undertaking and there was always a tension between those in mainly the developed world and those out mainly the developing or growing economies. 
Sadly 15 years later there has not been much progress internationally. The first period is coming to an end at the end of the year and no agreement is in place thereafter. The tension between those in and those out has become much more relevant now given the epoch-making shifts in the global economy in the last 15 years. It was hard in 1997 to justify New Zealand taking significant actions when China was not doing anything. In 2012 it is absurd. The Government has always said that New Zealand should do its fair share and New Zealanders expect us to be positioned on the green end of the spectrum but few would support New Zealand striding out on its own riding its little pony while the rest of world hangs back. 
It is interesting to hear everybody talking about what Europe is doing as if it was the role model for everything in life but that is not where we live. We live in the Asia-Pacific region and when we look amongst our trading partners in the Asia-Pacific region where do we fit in? What is China doing? Not much—nothing. What is the US doing? It does not have much of a scheme. Canada—nothing; it has pulled out. I think Japan has a little scheme that involves about 1 percent of the economy. Korea Singapore—nothing much there. Australia has something but there is a huge question mark over its scheme politically. 
I found it very difficult when for example we had the Parliamentary Commissioner for the Environment coming in and being very critical of our legislation but admitting to the Finance and Expenditure Committee that she had given no consideration whatsoever to what the rest of the world was doing. I am afraid I do not think that is good enough. New Zealand does operate in a competitive global economy and we need to know where we sit in the world and to adapt to the situation. 
The options are that we could just carry on in the direction set in 2007 and become the only country in the world where agriculture is directly drawn into an emissions trading scheme. That seems to be somewhat reckless. We could drop the scheme entirely like Canada but we have decided to hold more or less steady in the meantime not doing too much damage to the New Zealand economy but having an emissions trading scheme still in place ready to ramp up if and when the rest of the world joins with us in combating what is a real issue for the globe. It is true that the Government will not get some of the income that it expected but it is absurd to call that a subsidy as some members of the House have done. 
When we look at the other side of the House we have the Greens really wanting New Zealand to immolate itself on a pyre of self-righteousness on our own and I do not think anybody who is concerned about New Zealand’s jobs and the productiveness of our economy in an open world of competition can stand up for that line of reasoning. On that score I commend the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill to the House. Thank you. 
ANDREW WILLIAMS (NZ First) 
: 
 I rise on behalf of New Zealand First to take a call on the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill. As we have already said in this House—and our leader the Rt Hon Winston Peters spoke on this a couple of months ago—New Zealand First does not support this emissions trading scheme or this Climate Change Response (Emissions Trading and Other Matters) Amendment Bill. 
Basically the emissions trading scheme is just another tax on the people of New Zealand and the businesses of New Zealand. New Zealand First does not subscribe to a Wall Street takeover of New Zealand. The Merrill Lynch money traders of this world should not be standing to gain hugely from any sort of emissions trading scheme. We have money-launderers around the world in the likes of New York London and Shanghai and they are the ones who stand to make more money from any emissions trading scheme that is put in place. I can recall that when I was in the export field the big thing at the time was international standard ISO 9000 another scheme that was going to supposedly be the big bee’s knees of everything. New Zealand companies and corporates—and corporates all over the world—were going to become international standard ISO 9000 accredited. It was going to mean that you met all these new various standards and schemes in terms of all sorts of things including environmental controls on your companies to ensure that you were a good corporate citizen in the environment. 
Again it was a bit of sham because everybody did it but at the end of the day nothing really came out of it. It was just a way for the people who were running the standards scheme who were also the people who were coming and doing the audits on the companies and the corporations to make a huge amount of money. But at the end of the day it really did not have any great outcome for New Zealand New Zealand exporters and New Zealand corporates. We said at the time that it would simply have been better if New Zealand companies had had better internal audit systems rather than having to spend a huge amount of money on this tradable scheme around the world in order to have international standards. 
This emissions trading scheme and what we are looking at today serve to turn environmental protection into a carbon credit bank; to make environmentalism a speculative business. In other words they are issuing tradable credits verging almost on a Ponzi scheme so that good money that is taken from New Zealand ends up paying for the wrongs of other countries and other polluters around the world. There are much better mechanisms for New Zealand than uncontrollable financial machinations such as an emissions trading scheme. This could end up costing this country more than $2 billion—$2 billion that New Zealand simply cannot afford—again to be a supposed world leader in the emissions trading scheme. Why would New Zealand put itself out on a limb put more than $2 billion into something when we simply cannot afford it at this stage and when so many other countries are not having a bar of it? 
These funds should be retained in New Zealand as is New Zealand First’s policy in order to provide funds to tackle our own emissions and our own pollution here in this country. We should be applying environmental levies here in New Zealand to ensure that New Zealand is kept 100 percent pure. 
I lodged a written question today to the Associate Minister of Transport as an example. It asked what the percentage breakdown is of New Zealand’s bus and truck fleet in each of the Euro 1 Euro 2 Euro 3 Euro 4 and Euro 5 engine categories and what initiatives the Associate Minister is taking to introduce available technologies to reduce diesel emissions from the older Euro 1 and Euro 2 powered buses and trucks. 
It is amazing the response from the Minister. This was a response to a letter from a constituent last week. It said “I understand that air pollution is important but I am currently looking at the process of amending the 2007 vehicle exhaust emissions rule. However I understand the previous Minister of Transport and officials of the Ministry of Transport have already advised you that it is not the role of the ministry to test products regardless of their potential benefits. I am also told that you have been advised that there are no funds available to carry out any testing or research in this area.” 
So here we have New Zealand citizens New Zealand corporates trying to look at ways that emissions can be controlled and trying to get on top of something like that. Diesel emissions are a major problem for this country and old buses and old trucks are polluting our environment. We are basically being told that it is not really something that the Government has any interest in. So in other words what we are seeing is that on the one hand the Government wants to get into all these various schemes to send New Zealand’s money offshore to Ponzi schemes around the world in emissions trading. But here in this situation where people come out with practical solutions to address our own emissions in this country the Government really does not want to give much credence to it at all. 
New Zealand First maintains that the State must strike a balance between economic progress and appropriate environmental goals. The emissions trading scheme does not decrease emissions; it just trades them and moves them around to those economies that can afford to buy carbon credits. The emissions trading scheme devised by this Government is totally unsustainable. It is nothing more than another tax on the people and production of New Zealand. New Zealand First does not support this bill and once again we are seeing good New Zealand money going down the drain. 
JOHN HAYES (National—Wairarapa) 
: 
 Can I say to the public listening to this debate on the Climate Response (Emissions Trading and Other Matters) Amendment Bill that if you want to have an argument talk to your neighbour about whether or not they think climate change is real. It is an issue that polarises people. The issues are complex and at the centre of the debate is a conflict between First World environmentalists and those in developing countries who want to leave poverty behind. 
What I think is interesting as we have listened to the debate this afternoon is that everybody has a view but very few people have the technical understanding of the issues. People seem inclined to hide behind their prejudices and as you can hear from across the House they shout at those with a different point of view. Anger inevitably becomes the currency of debate. 
Well there is a broad consensus that we need to slash greenhouse gas emissions but there are many points of view on where the knife should fall. The Greens and New Zealand First want to cut back our lifestyles but they underestimate the value of economic progress advancing health advancing education creating wealth and creating opportunity in our daily lives. What they want to do is draw all that to a halt. 
I think it is crucial to recognise that the cost of decarbonising our economy will be a function of available technology. With effective technology—more efficient clean-energy alternatives better batteries electric cars and cheaper and safer nuclear power—the cost of decarbonisation will be relatively low. Without technological change however the costs are going to be high. That is why the Government is exercising leadership and that is why it has created the global science partnership involving 25 countries to try to find new technology to lead us forward in a cheaper way. There is a link between climate change and development—the twin challenges of our age. Making energy costs more expensive in our country is simply going to reduce incomes. 
I support this legislation. It is very sensible and it is going to cause least economic damage to communities in the situation we are in at the moment of global recession. Thank you. 
CHARLES CHAUVEL (Labour) 
: 
 There have been some interesting contributions in this debate on the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill. I think it would be useful if we just reminded ourselves of where we have been in this topic before. What we should do is go back and remember what we were told by the experts about what the evidence actually is. 
Way back in 2007 the Intergovernmental Panel on Climate Change which is the body that Governments from across the world appointed and which was filled with experts met and was then asked to report back to the Governments about what the issues were. This is what it said: “… world temperatures will rise between 1.1 and 6.4oC [during this century] … sea levels will rise between 18 and 59 cm …”. There will be more frequent warm spells heatwaves and heavy rainfall and probably an increase in droughts tropical cyclones and extreme high tides. Those are big ranges in those numbers but that is what the evidence says is likely to happen. That is the challenge that we are asked to meet. 
How have we tried to meet this challenge? First there was the Kyoto Protocol which preceded the intergovernmental panel. It recognised that there was an extremely important issue here that needed to be met and 191 countries came together to seek to do so. New Zealand signed the protocol in 1998 when the Rt Hon Jenny Shipley was the Prime Minister and New Zealand ratified it some years later under the leadership of the Rt Hon Helen Clark. If the protocol is not replaced by an international agreement this year there will be a lapse in international obligations and that lapse could be permanent despite the challenges of the science that we were told about only 5 short years ago. 
 My colleague David Cunliffe when he made his contribution spoke a bit about the sorts of challenges that New Zealand will face if climate change of the scale predicted by the expert scientists becomes a reality. I know he did not mean to downplay the issue—he talked about First World problems—but we actually have some serious issues that we do need to concern ourselves with. There will be higher temperatures in the North Island; the risk of new pests and diseases for plants animals and humans; more frequent droughts and floods more rain in the west and much less in the east and that will affect our farming; and retreating snow lines in glaciers and changing river flows in the South Island which will have an effect on hydro generation. 
There will be concerns that we need to very much worry about in New Zealand and in our region in our neighbourhood the Pacific there will be major problems such as rising salinity in the water table rising sea levels—issues in an area where already there are major issues around the economic viability of the nation States of the region. Guess who is going to have to pick up both the tab and the responsibility if we are going to be good neighbours as we like to say that we are in this region? New Zealand and Australia and our friends and allies. These are the problems that we are going to have to face. 
How did New Zealand begin its legal response? After a number of attempts to forge cross-party consensus Labour in 2008 passed the emissions trading scheme. We nearly got to consensus between the two major parties but in the end—and I chaired the Finance and Expenditure Committee that heard the evidence on this bill—the National Party decided to stand apart from the 2008 legislation. But that was I think a genuine attempt to bring about an emissions trading scheme to create an economic instrument that would cover the major causes of greenhouse gas emissions in New Zealand. It was an attempt to extend an economic mechanism to all those gases in all the sectors that mattered. Polluting industries would basically pay one carbon credit per tonne of carbon equivalent gas produced. De-polluting industries like forestry would get carbon credits that they could sell on the international market to polluters and as we hoped the international market would assist us to provide a mechanism where we could start to reduce New Zealand’s carbon position over time. 
We said that we would get sectors in over time. Forestry went in from January 2008. Agriculture our single biggest emitter would come in in January 2013. The big trade-exposed industries were given 90 percent subsidies by what we termed a free allocation of New Zealand Units that they could rely on instead of having to buy carbon credits. We said we would phase that out at 8 percent a year—a very very gentle phase-out ending in 2030. 
So that was the world-leading emissions trading scheme that Labour brought into being. It was actually a pretty moderate measure and yet it could not survive the onslaught of the incoming National Government in 2008-09. Again there was an attempt to get some consensus across the House. National came in having campaigned on—as it put it—moderating the scheme. We sought to negotiate with National so that it could achieve its aim but in a way that did not completely wreck the emissions trading scheme. Despite that and despite discussing with Nick Smith in good faith ways in which the scheme could be moderated National ended up relying on the Maori Party on that occasion and managed to introduce some changes that diminished yet did not completely gut the scheme. It did things like postpone agriculture’s entry until 2015 water down the carbon price on what was called a one-for-two deal basically bring in subsidies for New Zealand Units at either 60 or 90 percent and bring in an intensity-based allocation model. 
What the experts said at the time was that the emissions trading scheme would certainly fail on the basis of those emission reduction targets that would be brought into place as a result of those modifications. But just when we thought nothing could get worse we now see the present bill. 
I just want to put on record what the Parliamentary Commissioner for the Environment said about what this legislation will do if it manages to pass but before I do that I actually want to praise the Maori Party for pulling its support from the bill. Those members made a big political mistake back in 2009 by writing a blank cheque for National and allowing it to do the first gutting of the emissions trading scheme. But they are not making that mistake now and good on them. And this is why. The Parliamentary Commissioner for the Environment said: “The ETS is the main system New Zealand has for reducing our greenhouse gas emissions. Hollowing it out like this makes a farce of our climate change commitments.” 
If the best that we can do now is trade slogans the way we heard in question time when Simon Bridges talked about lowering petrol and electricity costs at a time when the carbon price is at an all-time low and the emissions trading scheme is simply irrelevant to that exercise—if the best we can do is hear that Acting Minister perform his audition for the front bench in the mid - next year post - John Key reshuffle—if that is going to be climate change policy in New Zealand and if we are going to have to rely on Peter Dunne to do the right thing and not vote for this legislation then this Parliament deserves an absolute F for meaningful action on climate change. 
DAVID BENNETT (National—Hamilton East) 
: 
 That speech from Charles Chauvel deserves an absolute F for failure to actually deliver any arguments around the issue. It is pretty pretentious of the Labour Party the Green Party and New Zealand First in this Parliament here this afternoon when they come in here and do not actually talk about the real issues. The real issues are that they want to increase the costs of living for ordinary New Zealanders. That is what the Opposition wants to do. 
Charles Chauvel 
: That’s absolutely right! 
DAVID BENNETT 
: It is. It is. It is exactly what the Labour Party wants to do. They will hide behind the guise of the international price of carbon but the reality is that the Labour Party Green Party and New Zealand First Party want to set a price for carbon. They want to set a price at $10. They do not want to have the international price at $1; they want to set a price at $10 because they have been going— 
Charles Chauvel 
: No we want the market to do it actually. 
DAVID BENNETT 
: Yes they agree. They say that they are going to set a price. That is the whole reasoning behind why they want to do it and that will put costs on ordinary New Zealanders. If this Parliament was to set a price at $10 or $12 or whatever those parties think is satisfactory to promote the forestry industry and to make them go to bed at night thinking that they have saved the world when they actually have not that will hurt ordinary New Zealanders in their power bills and in their cost of living. 
Look at what has happened in Australia. In Australia you have got inflation at 2 percent now. The Government there has gone and put these kinds of carbon taxes on its communities and it has delivered high inflation. Ordinary Australians who are trying to make a go in very difficult times are finding it very very difficult. That is what you would get under the Opposition parties here because the direct impact of their policy would make it harder for ordinary New Zealanders to get by. That is a real disgrace for those parties in this House. None of them talk about the price and none of them talk about the impact on New Zealanders; they talk about these high and mighty ideals of saving the world and how we need to do that. Well get in the real world. Get out there and see how it is to earn some money and see how it is to actually pay the bills because you will not be so high and mighty there; you will be looking at what is the best and the balanced way to deliver for your people. Thank you. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I understand this is a split call. I call Dr David Clark. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 Goodness! What a speech. What a load of nonsense from the previous speaker David Bennett. It was disappointing even by his own standards. 
This is a shameful piece of legislation. I have heard members in this House in previous speeches describe it as a fig leaf. I think that that is too much to say. This piece of legislation the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill is dangerous. It gives greater assurance to emitters. It is not a neutral thing; it is not simply a cover-up. It is actually giving those people who are engaged in the industries of today and of yesterday greater assurance about their prospects than those businesses that are engaged in the business of today and tomorrow. This is the wrong thing to be doing. You cannot use prices to influence behaviour without having a price. That simple fact seems to be lost on the Government. It is not really clear why it wants to do this for any other reason than political expedience. 
This scheme when it was originally designed was a modest scheme—a very modest scheme. It was designed to send an investment signal for future endeavours. In one sense it was bold because it included all sectors and all gases and it was the first in the world to do that. But it began modestly. It wanted to make sure that all businesses could adapt that New Zealanders were not put out of work but that we could start on the road to reducing emissions for the good of New Zealand and for the good of the planet. 
The National Party when it came into power immediately weakened it. At the same time it removed the renewable preference legislation which would have seen no new baseload generation built and no unnecessary baseload fossil fuel generation built. National also removed the biofuels sale obligation which meant that the biofuels industry has all but departed from New Zealand. Instead it has given greater and greater assurance over time to polluters that the taxpayer will subsidise them. 
The taxpayer currently pays for 100 percent of emissions in the agricultural sector. That is for agricultural emissions. The system as it was originally proposed would have seen polluters paying for 5 percent. After they had paid 5 percent it would have seen the taxpayer still pick up 95 percent of the bill. I think that is modest but it sends a signal. But that was too much for the National Party. It has pulled back from that position. It has continued to water down the scheme and now it is indefinitely suspending agricultural emissions from the emissions trading scheme. It sends all the wrong signals. 
There are plenty of other ways we could be looking out for industries in New Zealand. We know that we need pro-growth tax reform. Research and development tax credits would make a big difference to this industry. We know that we need better savings policy so that businesses have access to the capital they need to expand. We know that the Reserve Bank needs stronger tools and a stronger mandate for ensuring that the economy is in favour of our businesses. But unfortunately the National Government is using this tool wrongly in order to achieve friendship with some industries. It should be instead focused on making a difference in the climate change space and addressing the issues for industry through progressive policies that support those who want to grow business in New Zealand. And it can reduce other taxes. There are ways of going about making positive change without watering down this scheme and making New Zealand an international embarrassment. 
This bill modifies the emissions trading scheme. It weakens it by extending the transition period for polluters indefinitely along with the entry of the agricultural sector into the scheme. Aside from that it makes a range of technical changes that will also see the forestry sector worse off. It is a disappointment and it reflects National’s delusion that the environment and the economy are contrary forces. We need both. 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Speaker. I rise to oppose the destructive Climate Change Response (Emissions Trading and Other Matters) Amendment Bill. Climate change is the biggest global threat. It is happening faster than we expected and we are nearing those dangerous tipping points. We stand at the precipice of catastrophic climate change. But this is not a problem just for future generations any more; it is a problem now. Recently former UN Secretary-General Kofi Annan said in a report that 300000 people are dying every year predominantly amongst those who have caused it the least. The fact is though we have a chance. The window is still ajar. We can still avoid the worst of climate change. 
But in this debate I do not want to talk about the Carteret Islanders the Bangladeshis or the Tuvaluans—the real face at the front line of climate change. I do not want to talk about the penguins or the polar bears on the cusp of extinction. I want to talk about why I am opposing this bill. It is because of my kids. It is because when my son Arlow is expected to enter intermediate school we will see the complete failing according to experts of the Arctic Sea ice in summer months. When my son is thinking about starting a family we could see tens of millions of climate refugees from those countries around the world I talked about. At the time of him thinking about retiring from work we could see the extinction and complete destruction of island countries around the world. 
This is not just a political a scientific or an economic issue; at its heart this is a moral issue and New Zealand has a responsibility to act. We have to act. We have got one of the highest per person emission rates in the world. Our emissions are going through the roof—25 percent above what we promised in 1990. Under our current system we are not standing out front. This is not a story about us marching out in front of the world; this is about us doing our fair share. Mr Goldsmith said the Greens were not looking at other countries around the world. The fact is we have got a huge document here which we have tried to table—which National members refused—showing all the countries that are making pledges. Countries are doing stuff. We are the ones being left behind. As we debated in this debate the emissions trading scheme is the Government’s main response to climate change. What this bill does is weaken an already weak ineffectual scheme. 
What are the experts saying about the National Party’s bill? My colleague Dr Kennedy Graham says it is weakening it to an irrelevancy. Brian Fallow says it is putting the emissions trading scheme into an induced coma. The Parliamentary Commissioner for the Environment calls it toothless and a farce. Rod Oram says it most bluntly: “You’re killing it.” This bill will see more cheap offshore scam credits flood our carbon markets. This bill will see only some firms covering only 5 percent of their carbon costs. This bill maintains that one-for-two deal beyond 2012 indefinitely. This bill maintains the $25 price cap indefinitely meaning that those involved in the scheme will face no incentive to reduce their emissions. This bill defers agriculture indefinitely again meaning that the taxpayer will continue to subsidise for years to come this industry which is responsible for half of our emissions. This bill will see emissions rise deforestation accelerate and our country’s reputation erode even further. 
Many of these criticisms are valid of the Government’s existing emissions trading scheme and what it is doing here is making a bad situation even worse. The fact is there is a cost to our kids and the future generation but also it is a cost to the taxpayer. This bill is destructive. It is destructive for our climate future it is destructive for our carbon markets and it is destructive for a clean economy and green jobs. Under this ineffectual scheme the taxpayer has had to pick up the tab of $1 billion in the last financial year and now the Ministry for the Environment predicts that this amendment bill will increase it by another $330 million over the next 4 years. What is the point of a trading scheme if it is not sending a market signal to invest in clean energy when it is in fact sending the wrong signal—to keep investing in polluting technology and old-fashioned practices? What we have seen around this bill is a shocking rushed process. Only 2 weeks were given for submissions on one of the most technical controversial economy-wide policy debates. If only the Government would act with the haste with which it comes to passing bad legislation when tackling climate change. 
This bill is going to go down thanks to the vote of one man. That one man is Peter Dunne. He is going to go down—his legacy in this House—as the man who sold the assets and now he is also going to be the man who sold out our climate future. The fact is the environmental bandits in our Government are selling out all of our kids’ futures. When the world is crying out for clean energy we could be providing it. This is not a cost this is not a risk; this is a business opportunity. It is a moral imperative to act. Tackling climate change is about investing in clean energy it is about energy efficiency it is about public transport it is about smart farming and it is about building jobs. When the world is crying out for jobs and we have got tens of thousands of New Zealanders out of work and leaving the country let us invest in our kids’ futures. I want to look my son in the eye— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I am sorry to interrupt the honourable member. His time has expired. 
MAGGIE BARRY (National—North Shore) 
: 
 I rise as a member of the Finance and Expenditure Committee to talk about this Climate Change Response (Emissions Trading and Other Matters) Amendment Bill in its second reading. 
I must say I find it a bit rich to hear the Greens talking about chicanery when their idea about printing money must be the ultimate piece of political trickery to achieve political gain—a piece of nonsense much like their notions around the submitters that came before us. As our esteemed chair of the Finance and Expenditure Committee Todd McClay outlined earlier we did receive 803 submissions we heard 19 hours of evidence and there were 73 submitters. The Greens have dismissed those who do not agree with their dogma. I would not be so arrogant and in fact I reject what they have said because we as a party and we as a select committee have indeed listened to the submitters and taken note of them. 
Let us have a little look at some of them. Business New Zealand represents a mere 76000 employers. It thought the bill and its amendments were excellent. It said that the bill reflects New Zealand’s contribution to global emissions and our specific emissions problem. It is well-balanced between the needs of taxpayers business and consumers. It also says that it avoids a knee-jerk short-term fix based on current low carbon prices—something that Labour and the Greens seem very preoccupied with. 
Export New Zealand also made excellent points which once again were ignored by the Opposition because they did not suit its particular dogmas. Export New Zealand said that it was very concerned about maintaining the international competitiveness of our exporters and was very opposed to any strengthening of the emissions trading scheme. It commended the bill because of the increased stringency in the scheme which if it did go ahead would increase costs and undermine our international competitiveness at a time when exporters are struggling with a high and volatile dollar. These were all excellent points and unlike the arrogance of the Opposition we listened to them carefully. 
In this speech I will give the last word to the sponsor of this bill the Minister for Climate Change Issues the Hon Tim Groser. When the bill went through its first reading he said that “The objectives of the Bill are to ensure the ETS is flexible enough to cater for a range of international outcomes between 2013 and 2020 improve the operation and administration of the ETS and change the current treatment of the synthetic greenhouse gases sector in the ETS.” I agree with the Minister and I support this bill and commend it to the House. 
The question was put that the amendments recommended by the Finance and Expenditure Committee by majority be agreed to. 
A party vote was called for on the question  
That the question be agreed to. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 59 
New Zealand Labour 33; Green Party 14; New Zealand First 8; Maori Party 3; Mana 1. 
Question agreed to. 
A party vote was called for on the question  
That the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill be now read a second time. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 59 
New Zealand Labour 33; Green Party 14; New Zealand First 8; Maori Party 3; Mana 1. 
Bill read a second time. 
Taxation (Annual Rates Returns Filing and Remedial Matters) Bill 
Third Reading 
Hon PHIL HEATLEY (Minister of Energy and Resources) 
 on behalf of the Minister of Revenue: I move  
That the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill be now read a third time 
. I will provide a brief recap of the main features of this bill. The bill addresses the costs of record-keeping for businesses by allowing electronic tax return filers to retain copies in an electronic rather than a paper format thus modernising record-keeping requirements and reducing record-keeping costs. 
Mike Sabin 
: Very good. 
Hon Maurice Williamson 
: A thoroughly modern Minister. 
Hon PHIL HEATLEY 
: The bill will bring greater equity to the tax returns filing system by tightening the rules which currently allow salary and wage earners who are not required to file a tax return to select individual advantageous years in which to square up their tax obligations—that is the years they are entitled to a tax refund. When selecting a favourable year for a tax square-up this bill proposes that taxpayers will be required to have their tax obligations squared up for each of the previous 4 years as well. 
Mike Sabin 
: Very good. 
Hon PHIL HEATLEY 
: Another proposal in this bill will give businesses greater certainty over the tax treatment of costs incurred on software development projects— 
Hon Maurice Williamson 
: Now you’re talking. 
Hon PHIL HEATLEY 
: —that are unsuccessful by allowing an immediate deduction for expenditure incurred in the year the development is abandoned. Changes are proposed to KiwiSaver to make the scheme more sustainable by increasing private contributions. The employer and employee contribution rates will increase from 2 percent to 3 percent from April 2013. The bill also addresses the tax treatment of profit distribution plans proposing that shares issued under profit distribution plans be treated as a taxable dividend. This will ensure consistency of treatment with other similar arrangements while also improving the integrity of the tax system. A number of GST-related changes which largely deal with technical matters resulting from rules introduced last year to prevent phoenix fraud schemes are included in the bill. These are the main features of this omnibus bill. 
In addition a Supplementary Order Paper to this bill Supplementary Order Paper 98 made a number of amendments. These included earthquake-related measures to address issues raised by Canterbury people—Cantabrians. In particular these issues relate to the tax treatment of damaged or destroyed assets and insurance payouts. The Supplementary Order Paper also contained a number of remedial items to ensure that the international tax rules are working as intended. In particular changes have been made to relieve overtaxation of interests in controlled foreign companies by better aligning the tax treatment of income and related deductions. 
I would like to express my grateful thanks to the many submitters to this bill whose efforts have helped shape the bill before us. My thanks go also to the officials and drafters for their work on this bill which will help improve the integrity of the tax system and improve fairness. Thank you also to the Finance and Expenditure Committee for its good work on this bill and for its recommendations. Thank you to the Hon Maurice Williamson and Mike Sabin for their support for this bill. Once again I commend the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill to the House. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 This bill the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill is one that the Labour Party will support. We are always keen to see the loopholes in the tax system plugged. We are supportive of this tinkering—it is not a bad kind of tinkering generally—but we would prefer that actually the Government was taking the big choices making the big changes that are necessary to get our economy back on track. 
Look the Government has a problem. It has a hole to fill. It knows that the tax take has dropped by 4 percent. Its own department the Inland Revenue Department tells it that 1.5 percent of that can be attributed to the global financial crisis and that 2.5 percent of that can be attributed to policy changes. The Government described its 2010 tax package as broadly fiscally neutral but that has proven not to be the case. This Government is looking to fill that revenue hole and some of the changes we see in this bill are an attempt to do just that but the bill will not change the fundamental outlook for our economy. It is a missed opportunity—another missed opportunity—by a National Government that has no plan. 
We need pro-growth tax policy in this country. We need research and development tax credits. We need a capital gains tax that neutralises the investment signal and encourages money to go toward the productive sector. This is a Government that has abandoned our exporters. Aside from refusing to implement pro-growth tax policy it is also refusing to give the Reserve Bank the mandate to act in the interests of jobs and employers. It is more interested in interest rates and the profits at the big end of town. 
This Government has also failed in the area of KiwiSaver although this is one area in the bill where the Government is to be commended. Having previously dropped the rates of contribution from 4 percent to 2 percent in this bill the Government now puts them up from 2 percent to 3 percent. It is a U-turn. It is a small one but it is one in the right direction. But again it must be said that the Government is tinkering. 
When this Government does want to make those big changes how is it going to do that? This is a hypothetical question and if it was a Minister in the House at question time he or she would probably refuse to answer this question on the basis that it is hypothetical. We do not see any plan for the changes that are needed to get our economy back on track. All we see is New Zealanders leaving at a rate of a thousand a week for Australia. 
However we know that even if the Government wanted to make the big changes and wanted to put them through in a bill like this it could not. The Prime Minister said in February this year on St Valentine’s Day—he made a promise to New Zealanders on St Valentine’s Day—that tax policy was being held back because the Government computer systems “can’t actually support radical changes from Government.” That is why we are being asked here to make these tinkering changes. The Prime Minister said that at that stage he did not want to make any radical changes and so on but he has admitted that if the Government wanted to make the big changes that the economy needs it could not make them. I will quote the Prime Minister further. He said: “You don’t want to be in a position where Parliament is held hostage to a lack of technology.” That is what Mr Key said. That was 8 months ago. We still have not heard how he is going to fix the tax system which is failing us as a country. 
Voluntary compliance is dropping in New Zealand. That is part of the reason the tax take is down. These little gap-pluggers and minor changes that the Government is putting through are in the right direction broadly—we will be supporting them—but they are not going to get our economy back on track. 
We need a plan from the Government as to how it is going to address the inadequacies of a tax computer system that was designed 20 years ago—before Facebook before Google and in fact before the internet as most of us know it. This is a computer system that is out of date. It is held together by sellotape people who have worked at the Inland Revenue Department say. A huge amount of its resource goes into maintaining a computer system that cannot cope with the kinds of changes we need in our economy to get it back on track and the Government is not addressing this issue. We are seeing more and more privacy breaches in the Inland Revenue Department which is one of the symptoms of a department under pressure. This is a pattern across Government. Of course we have seen it in ACC and Work and Income. It is a systemic problem that the Government is not addressing. It means that we are getting this kind of legislation that we have got here in front of us. It makes small changes that are in the right direction but that are not going to fundamentally give us the kind of economy that we need. 
I want to talk about KiwiSaver which is directly in the bill in Part 3. Part 3 talks about how that rate is going to go from 2 percent to 3 percent. But let us remember that in 2008 National cut the minimum contribution rates for employees and employers to 2 percent as I have just said and then it discontinued the employer tax credit. It also capped the employer superannuation contribution. It discontinued the fee subsidy of $40. At the same time it repealed the Employment Relations Act. 
The National Government is not really in favour of this increase. It is reluctantly waking up to the fact that we have a savings issue. It is beginning to address it but it is not addressing it in a way that is going to see substantive change. We would not even be having to do this if it had not cut the rate in the first place. That is the most important thing to note. This is extra work for the Parliament that would not have had to happen if the Government had not cut that contribution rate for employees and employers in the first place. 
This is a bill that illustrates more about what the Government is not doing than about what it is doing. The Labour Party has a plan. The Labour Party has a clear plan and has enunciated it. We need pro-growth tax reform. We need reform of our monetary policy so that the Reserve Bank has the powers that it needs to support our exporters. We need savings. We need procurement policies. Labour in Government has policies that would be transformative of the New Zealand economy and would ensure that the industries in our country are well supported but here all we see is more red tape for business and it is consistent with other areas. Here we see a few tinkering solutions to small tax issues. 
We also see in this bill a write-off for software development. This is one of the positive things and I do want to compliment the Government on the small positive steps that are in this legislation because it is good to encourage the little steps forward that are in the right direction. We see in the bill software development write-offs. This is a sensible move—this is a sensible move. It will make sure that the risk is taken out of software development so that we get more innovation in our country and we have more successful industry in that regard. I am not sure whether it will be something that Kim Dotcom can access. That might be a question for the Minister to answer at the end of this—whether Kim Dotcom can access the software development write-offs whether that is a possibility. 
We know that what is really needed is a change in the way our tax system is structured. We could have called this bill a lot of things. We could have called it the “Tinkering While Wages Plummet Bill”. We could have called it the “National Flip-Flops on KiwiSaver Bill”. We could have called it the “Can’t Make Big Changes Because Computer Systems Aren’t Up To It Bill”. We could have made it the “Fifty-three Percent of Children of Sole Parents are in Poverty Bill” because the economy is not growing and tax settings are not right. We could call it the “Confirming the 2010 Tax Switch Rates Which Saw 44 Percent of the Value of the Tax Cuts Go To the Top 10 Percent of Earners While Just 2 Percent of the Value of the Tax Cuts Went To the Bottom 20 Percent Bill”. We could call it the “Confirming the GST Rise That Bit into Low Earners Bill”. 
We have seen the median wage drop further. We know that those tax changes that were made in 2010 have made our economy so much less fair. We have seen those who are already wealthy prosper further and those who are struggling struggle more. That is what this bill is asking us to confirm. We know that that is something that we on this side will have to swallow as a bitter pill because the other measures in the bill are reasonable if somewhat moderate but could do better. 
When 90 of the 100 wealthiest New Zealanders are not on the top tax rate we know something is wrong. We need pro-growth tax reform and we need a capital gains tax that makes sure that all New Zealanders are paying their fair share. That is what New Zealand needs. New Zealand needs big changes to help our economy grow. We need savings policies we need monetary policy reform we need procurement policies and we need pro-growth tax reform. 
TODD McCLAY (National—Rotorua) 
: 
 That was an appalling speech from that last member David Clark. It was full of doom and gloom and that was it. Anybody would think we were back to the dark old days of the Labour Government. I was about to pick up the telephone and ring my doctor and say to the doctor: “If I listen to David Clark speak for 10 minutes will I live longer?”. And his answer would have been: “No but it surely would seem like it.” It was an appalling speech. 
This piece of legislation the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill is about a Government that is building a more competitive and productive economy for New Zealanders. It is about lifting economic performance. It is about creating 70000 jobs so far with many more to come and boosting incomes for improving living standards for people from the very north of the North Island to the south of the South Island. 
This is great stuff from a good Minister of Revenue and a good Government. It is no wonder that was an appalling speech from the last man on his feet David Clark because there is nothing that those members can add that would do any more or any better than what our Minister is delivering for us today. 
What will this bill do? In brief it simplifies tax filing requirements for individuals and supports businesses and the way they handle their taxes—something that Labour could have done when it was in Government for 9 years but no apparently Labour members think that is tinkering. They were not interested in it then. The bill brings in measures to ensure that expenditure on software development is now deductible. Those members could have done that in the 9 years of the Labour Government but no it was not done then. They could not be bothered with it back then and today they say that it is tinkering. The bill also changes the thin capitalisation rules for foreign-owned banks. I bet you that this issue has not arrived just now or happened just now. I bet you this was an issue during the 9 years of the Labour Government. Did those members do anything about it then? No and today they call it tinkering. The effect of these rules is to limit foreign-owned banks’ interest deductions against the New Zealand tax base. That is good for New Zealand taxpayers because it makes the taxes paid broader and more people share in this as they should do. 
Two measures announced in the 2011 Budget were an increase in the KiwiSaver minimum contributions for employers and employees and an increase in the minimum equity holding for foreign-owned banks. I want for a moment to speak about KiwiSaver—a very important policy that a lot of New Zealanders are involved in and enjoy. I bet you they are glad there is a National Government. We have done a lot to reinforce strengthen and future-protect KiwiSaver for all New Zealanders who are involved. 
The Government is committed to lifting the national savings rates to reduce New Zealanders’ longstanding debt to overseas lenders and to deepening our capital market so that businesses can access the funds they need to grow. This was not something that happened under a Labour Government over 9 years. In fact one need only do what the Labour Opposition likes to do—ask the Parliamentary Library for some research and come to this House to quote it and table it—and one will see that New Zealanders borrowed more and became more indebted than at almost any other time that I can remember or research in the 9 years that Labour was in Government. 
 So KiwiSaver is very important. There are 1.9 million New Zealanders involved in KiwiSaver. It has had about 17500 new members a month for each month over the last 12 years. Under a National Government KiwiSaver funds have grown from $9 billion to $12 billion in the past year. KiwiSaver funds are estimated to be worth $60 billion by 2025. That is our commitment to this. This is not tinkering as the Labour Opposition would say. These are good hard-core facts. It is a commitment on behalf of the National Government to New Zealanders. 
The final point I want to raise is around Supplementary Order Paper 98 which has been brought before us to benefit quake victims—victims who are still facing real and ongoing difficulties. It is 18 months since the tragic and devastating events on 22 February the earthquake in Christchurch and this Supplementary Order Paper is another way the Government is supporting the people of Christchurch by providing all the practical help that we can. 
This is not tinkering. This is a robust piece of legislation. It is a very big piece of legislation. I am glad that the Labour Opposition has said that it will support it. It surprises me because anything of worth that this Government does Labour members are not onside with. They want New Zealanders to think that things are much worse than they are. This is a good piece of legislation. I look forward to them joining us finally on doing something that is good for New Zealanders. Thank you. 
Hon DAVID PARKER (Labour) 
: 
 We heard from the last speaker Todd McClay that New Zealand is doing well from the far north to the far south. Well from the north to the south people are losing jobs—from the north to Bluff. Today on the West Coast another 200 people lost their jobs. There are 160000 people seeking jobs and 170000 people under this Government have left for Australia after National’s election promise in 2008 ran on the slogan “Wave Goodbye to Higher Taxes. Not Your Loved Ones.” Since then more people have moved to Australia than is the combined population of Dunedin and Invercargill if you want a South Island comparison and more people than live in Hamilton if you want a North Island comparison. Yet this bill the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill does nothing substantial to change the economic fortunes of our country. 
What could this bill have done? Well this bill could have done something substantial but of course you never get that from a National Government. All National Governments have ever done through history—and this National Government is no different—is trim Government expenditure. That is appropriate; we are not arguing against that. Trimming Government expenditure to get back into Budget surplus is an important thing to do. National Governments deal with labour laws in the way they think fit which is always to reduce wages. Other than that National Governments never never embark upon substantial economic reform—never. They are conservatives and conservatives around the world trim expenditure cut back labour laws and do nothing else. It is always the progressive side of politics around the world whether it is in New Zealand Australia or Great Britain that pulls the levers that change the economy. If you look back at the history of New Zealand when New Zealand has been in the doldrums it has been progressive parties that have come in and made the fundamental changes that were necessary to the New Zealand economy. That was true following the Great Depression. What did the National Government do in relation to the reforms of the then Labour Government following the Great Depression? It followed them. We then got into a period of stagnation under Mr Muldoon and it was a progressive Labour Government that made the case for change and changed New Zealand’s economy fundamentally for the better. What did National do following that? Well what it always does: it attacked labour relations it did not change economic settings and it cut Government expenditure a little bit but it did nothing substantial to alter the shape of the economy. Here we are again with a global financial crisis and the greatest recession that the world has faced since the Great Depression in the 1930s and what is the National Government doing? Very little. 
What has happened to New Zealand? Well slowly we are getting back towards Budget surplus. That is the Government’s part of the equation. But New Zealand is getting poorer every year because we have a balance of payments deficit that is already second worst in the developed world after Greece. 
Hon David Cunliffe 
: What? 
Hon DAVID PARKER 
: The second worst in the developed world after Greece. Last year alone it was $10 billion. That $10 billion hole was plugged through more borrowing from overseas and the sale of assets and what is the Government’s plan for this 3-year cycle? Its big plan for this 3-year cycle is to sell what already exists to privatise our already profitable and successful power companies—what you do when you do not have a plan. Even that has gone amiss. What was its plan for its last 3-year term? Mining in national parks. Look where that is. What has been the big centrepiece of the Budget this year? Increasing student performance through larger class sizes. The Government is so bereft of vision and this bill amplifies the point. 
I see Dr Nick Smith there. I actually think Dr Smith has a good environmental ethic. I think he actually wants to make a difference to the environment. What is the measure that we have in New Zealand to control the growth in our emissions under this National Government? It is meant to be through pricing emissions to create an economic incentive for people to go green rather than pollute more. In this bill we have changes to emissions units law relating to forestry. The last bill we heard reduces the carbon price in New Zealand to 50c a tonne. As Brian Fallow estimated today for a major emitter if it has $1 million of turnover its emissions cost would be $200—$200—a fraction of a fraction of a fraction of 1 percent. How can you rely on a price to alter behaviour if the price is meaningless? 
What else could be done here? Well the International Monetary Fund the OECD the New Zealand Treasury the Reserve Bank the Labour Party the Greens just about every other Western country in the world and virtually all of the economists in New Zealand say that people should be investing in our economy on the basis of the profitability of investment not because of a tax bias. In New Zealand at the moment we lament the fact that we have got this enormous trade deficit and current account deficit—both—and the current Government refuses to pull the levers that will fix that including to bring forward some pro-growth tax reform either through a research and development tax credit or through a capital gains tax. The most important of those two is a capital gains tax so that people invest on the basis of the profitability of an enterprise rather than a tax bias driving too much investment into the speculative economy. It is not just the Labour Party saying that. It is not just the history of 30 years of current account surplus because we speculate too much in houses and do not invest enough in our productive export or import substitution businesses. It is the IMF the OECD Treasury and the Reserve Bank and yet it is not in this bill and the Government has put it off limits. 
What else is not in this bill? KiwiSaver. We heard the National Party talking about KiwiSaver. Actually it was not National’s policy; it was a Labour Party policy. I think the Budgets that introduced it were opposed by National from memory. Everyone knows that the biggest difference economically—or I believe the biggest difference economically—between New Zealand and Australia and its increasing rate of earnings compared with New Zealand over the years is not mining. It is not mining. Those gaps in earnings arose when mining was in the doldrums. Those gaps arose because Australia invests more in its productive enterprises whether it is in mining or in other parts of the economy and it does that because Australians save more. Its KiwiSaver equivalent is compulsory for everyone in the workforce except for the self-employed and the occasional exception for hardship. That is what the Labour Party proposes for New Zealand. What does this bill do? As Dr David Clark says it reverses the Government’s earlier reversal. Previously it reduced the rate of contribution to KiwiSaver; now it is increasing it again to “3 plus 3” but still it has not grasped the big nettle which is making it universal. We heard the last speaker say that the average number of enrolments to KiwiSaver was so many thousand per month. What a misleading use of statistics. In just the last week it has been announced that the rate of new sign-ups to KiwiSaver is dropping—dropping very substantially. It will not increase again until we have a stronger economy under a Government led by a party other than this backward-looking National Party and until we have a universal KiwiSaver scheme. 
Let us reflect on what this tax bill also does not do. It does not reverse the increasing inequality that we have in New Zealand. Whether it is income inequality or asset inequality it is going up under this Government. It is going up in part because 40 percent of its income tax cuts went to the top 10 percent of income earners. This bill does nothing to reverse that. The latest issue of  
The 
Economist  
magazine says there is a need for more progressivism in the world because of rising asset and income inequality in the world. New Zealand has had a higher rate of increase in inequality in recent years than America. We started from a better place and therefore we are not yet as unequal as America but we are heading in that direction because of policies brought forward from this National Government that gave 40 percent of its income tax cuts to the top 10 percent. We had the audacity of the Deputy Prime Minister the Minister of Finance turning up in the House this week and saying that average after-tax incomes had gone up. Well that is true but only if you include that top 10 percent. For more than half of all New Zealanders real incomes are down—real incomes are down. This bill is a missed opportunity. It only tinkers. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill on behalf of the Green Party. This bill amongst many other things sets the annual income tax rates. The Green Party does not agree with the changes that the Government has made in income tax rates and for that reason will be voting against the bill. 
When you think about the changes that the Government made in terms of setting income tax rates fundamentally what it did was cut income tax for high-income earners and increase the taxes paid by low-income earners in the form of GST. That was a fundamentally inequitable change in the tax system. What it meant was that lower-income New Zealanders found themselves having to pay more for their food and groceries at the supermarket because of GST and upper-income earners found themselves with a whole bunch of spare cash. The Government has got a plan for what it wants to do with that. It wants to give those people the assets that it wants to privatise. It wants to give them to the people whom it gave the income tax cuts to because they are the only people in New Zealand who will be able to afford to buy the shares in the State-owned enterprises. 
Of course from a theoretical point of view if your objective with income tax cuts was to stimulate the economy you would do the exact opposite to what the Government did. If you want to stimulate the economy you give tax breaks to low-income earners because they tend to just spend the money rather than to upper-income earners. So the Government did the exact opposite to what you would do if your purpose was to assist the economy. 
I think it is also illustrative to compare what the Government is doing around carbon taxing and income taxes. I think an interesting comparison is what has happened in Australia. In Australia what they did was they brought in a carbon tax of A$23 a tonne. It is applied to the largest emitters particularly coal-fired electricity which is one of the critical areas and they used the revenue they gained through a carbon tax to increase the tax-free threshold from A$6000 to A$18200. I think that that is the alternative proposal that we could have had in front of us. 
When you look at the overall tax system the Government has made a choice to have an emissions trading scheme that basically means that taxpayers are subsidising pollution. It is a very expensive scheme from the point of view of the taxpayers because they have to pay a lot of money to subsidise pollution. At the same time the Government has given big tax cuts to upper-income earners and basically lower-income earners are faced with an increased GST. That produces an outcome that is highly unequal but it is also an outcome that subsidises and encourages greenhouse gas pollution because it is heavily subsidised in the New Zealand system. 
Compare that with the Australian system where they introduced a real price on carbon A$23 a tonne and then used the revenue to increase the tax-free threshold. Tax-free thresholds by their nature benefit those who are on lower incomes because everybody gets the same tax break the same quantity of money if you like in the form of a tax break when you introduce a tax-free threshold. So that was the alternative model which we have not gone down the path of. The model in Australia was put in place because of the influence of Greens working with the Australian Labor Party and I congratulate the Greens over there on that. 
The reality here from the point of view of a business that is efficient in the way it uses carbon is that that business has to pay higher tax rates in order to pay the cost of the emissions trading scheme so that it can subsidise those businesses that are inefficient in the use of carbon. I think it is very important to get this through—there is no free lunch around the emissions trading scheme. Someone has to pay the taxes to pay for the subsidies for pollution. That means that a business that is doing the right thing by becoming more efficient and reducing its greenhouse gas emissions per dollar of output—doing exactly what we need them to do—effectively has to pay higher taxes in order to subsidise the business that is producing more pollution because this money has to come from somewhere; it does not come from nowhere. 
If we had a system where the polluters actually paid then it would mean that we would have a signal to the business that is highly polluting that it should reduce its pollution. Instead under our system a signal goes to the efficient carbon producer the business that we should be encouraging. We say to them: “No you have to pay higher taxes because the subsidies through the emissions trading scheme are very expensive many billions of dollars and so we have to have higher taxes to pay for that.” That is the path we have gone down. 
We have gone down a path of a highly inequitable tax system in which there is no tax-free threshold effectively at the bottom and at the same time we have cut the top rate. So we have lower rates at the top compared with the Australian system for example and then that runs in parallel with the carbon pricing where effectively we are subsidising carbon pollution rather than putting a price on it. It is the exact opposite to what you would do if you wanted to use the tax system to produce more equitable outcomes. It is the exact opposite to what you would do if you wanted to use the tax system to encourage behaviour that would reduce carbon pollution. That is what this bill is making sure carries on by setting the annual rates. That is what this bill is putting in place to carry forward a tax system that not only makes our society more unequal but encourages greenhouse gas pollution. I just think it is amazing that the Government thinks that that is a sensible approach—that we should be subsidising pollution. 
The other part of this tax bill that is really missing I think is a crackdown on the foreign tax trusts. I must confess that until a couple of months ago I did not really understand the way foreign tax trusts work. I understood the domestic trust system. The way a foreign tax trust works is that if you are a foreigner from outside New Zealand you can set up a trust here and as long as all the income comes from outside New Zealand then you can have that trust here. Your identity is not known to anybody except the New Zealand - based trustees. Your income is completely tax-free inside New Zealand because the income comes from outside New Zealand. So there is no New Zealand tax on your foreign trust and that money and those assets are completely hidden. 
 When you register a foreign trust in New Zealand you have to register only the names of the New Zealand trustees of the trust. Nobody knows who the actual beneficiaries—the people who really own and benefit from the assets—are. That matters because there is an international problem of tax avoidance by very wealthy individuals. Internationally nobody is quite sure of the size of this problem. It is trillions of dollars. The way these people avoid paying tax is by using things like the New Zealand foreign trust regime. 
There is no way that say the Government of Mexico knows that one of its citizens is hiding their assets in New Zealand because there are no identifiers on the New Zealand foreign trust. There is no way for the Mexican Government to know that one of its citizens has parked a billion dollars in a foreign trust in New Zealand and is paying no tax on any of that. When the Minister of Revenue was asked about this he said it was a legitimate tax-avoidance. He said that this is legitimate tax-avoidance. I guess it is lawful in New Zealand but whether it is lawful internationally is a different question. 
We have responsibilities to other countries to try to reduce international tax-avoidance because if we do not do it then there is nothing to stop very wealthy New Zealanders using other structures in other countries to avoid paying their tax in New Zealand. What that means is that middle-class and working New Zealanders who pay PAYE tax have to pay more tax to cover the hospitals the schools and everything else that tax pays for. Working people end up paying more tax because the ultra-rich are avoiding paying their tax by hiding it in structures like the New Zealand foreign trust regime. 
Because we have under our legislation established a foreign trust regime that enables foreigners to avoid paying tax in their domestic countries—they can avoid it by hiding it in New Zealand—we are helping with international tax-avoidance by the ultra-rich. That means that ordinary workers—people who pay PAYE tax—have to pay more tax to cover the tax that is not being paid by those at the top end who are using things like these foreign trusts as instruments to avoid paying their fair share. That situation has not been addressed by this bill. 
When the Minister of Revenue and the Prime Minister were asked about it they said it was legitimate tax-avoidance. It is not legitimate tax-avoidance. It is completely immoral and wrong and the fact that the Government is not addressing it is immoral and wrong. We need to crack down on tax avoidance so that ordinary working people do not have to carry the full burden and the ultra-rich are made to actually pay their share of tax as well. 
This bill sets the tax rates for the next year. They are highly inequitable and for that reason we will not be supporting this bill. 
PAUL GOLDSMITH (National) 
: 
 It is my pleasure to speak on this bill the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. I was pleased to receive and listen to David Parker’s history lesson on tax a couple of speeches ago. He talked about the great contribution that the Labour Party made in the 1940s and 1950s to New Zealand. Back then of course Labour bequeathed top tax rates in the high 70 percent range—78 percent I think it was. Company tax was also up around that region. That really is what David Parker I think wants and would hope for— 
Hon Clayton Cosgrove 
: Remember Muldoon? 
PAUL GOLDSMITH 
: —and so does Clayton Cosgrove. Why do they not come out and scream it and say: “Let us go back to those limits.” like our friend the French President is trying to reassert today? That is what they stand for and I am sure the Greens would support that as well—getting it back up into the 70 percent range. That is what we need to get the economy going again! 
I suppose tax is an important thing. It is a big part of politics. Taking money off some people in order to give it to other people is nine-tenths of what politics is about and there are a lot of moral hazards in the process of taking from one to give to the other. It all comes down to perceptions of fairness. What is fair? On the other side they tend to concentrate on fairness being about smoothing out incomes in order to help the poor. There is a strong element of redistribution in our tax system reflecting that view. On the other hand it is also fair to reward effort. I am sure the people over there will understand that if they were doing a good job as a caucus member they would expect to be rewarded with promotion and that leads to all sorts of arguments. 
It is also a question of whether it is fair to debase the currency by printing money for example which would dilute savings. I do not think it is. Is it fair to tax capital gains as Labour and the Greens want to do so much when half of capital gain is purely inflation? Why should you be taxed for that? That does not seem very fair to me. 
It was also interesting I thought to hear Russel Norman talking about the signals that the tax system sends through the emissions trading scheme and all that. He understands the logic that if you do not want something you tax it and if you are trying to steer people away from something you tax it but again he does not seem to accept that same logic when it comes to high income tax rates which he always advocates for. He does not accept that if you have high income tax rates you may undermine people’s incentive to work which is a pretty strong signal to send through the tax system. 
So by way of those broader comments I want to draw a little bit closer to the bill itself. This bill is really the latest piece of tax legislation aimed at making the tax system simpler and fairer for people and businesses. It comes after some very substantial changes to the tax system that this Government brought through a few years ago and continues with maintaining and keeping the tax system fit and healthy. 
It also responds to circumstances. Supplementary Order Paper 98 which relates to benefiting quake victims is an important part of this legislation. It has been nearly 18 months since that earthquake and this Supplementary Order Paper brings in the whole issue of tax depreciation roll-over rules changing the year in which income or expenditure is recognised in some circumstances because of the earthquake and extending roll-over relief for properties held on revenue account that have not been demolished. I think these are all important things to be introduced. I support this third reading and the sooner this legislation becomes law the better for the country. Thank you. 
ANDREW WILLIAMS (NZ First) 
: 
 I take a call on behalf of New Zealand First for the third reading of the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. As I have said in the House in the two previous readings perhaps we would not be tinkering around the edges with these tax matters had the National Government not provided the several billions of dollars of tax deductions and reductions to the wealthy individuals in this country 2 years ago—the very wealthy individuals like the head of Telecom who got $5000 a week back in his pay packet in tax reductions the Prime Minister who got $1000 a week back in tax reductions a couple of years ago and many many other very well-heeled individuals in New Zealand who got many thousands of dollars per week back from their PAYE—in terms of National giving the incentives to its mates. As a result of giving those billions of dollars away 2 years ago—and we continue to feel the pinch across New Zealand in many areas—the Government now of course is having to look at every last cent in the tax take to try to balance the books including as we saw just a few months ago picking the pockets of the young schoolboys and schoolgirls in this country delivering newspapers and leaflets to get $14 million in tax revenue back from those young children in order to try to cover the Government’s other imbalances. 
This bill is about more than just some of that tinkering of the taxes. The main thing I see in this is actually a concession from the Government that it was wrong on the KiwiSaver scheme. Two years ago it reduced employer contributions from 4 percent to 2 percent; it is now admitting that that was a huge error on its part. This bill moves those employer contributions back up to 3 percent—not all the way back to where they were several years ago but it is a big improvement to get them back up to 3 percent. I was just looking at some comparisons today and I note that in Australia employer contributions are 9 percent. We do wonder at times why they are doing so much better in Australia. Why are they saving far more money in Australia? Why are people generally better off in Australia? Why are those who retire in Australia on a higher average standard of living and seem to be that much more comfortable? 
John Hayes 
: No they’re not. 
ANDREW WILLIAMS 
: Well they are. They certainly are and that is why more New Zealanders are going to Australia as well—to try to get on to the Australian bandwagon. You can understand why when the Australian Government sees fit to have its laws such that employers contribute 9 percent to its scheme while this Government 2 years ago was so miserable as to reduce our employers’ contributions from 4 percent to 2 percent. 
Again what did it do that for? It did it to help out its mates. There would have been pressure from Business New Zealand—you know its old mates at Business New Zealand—from the chambers of commerce from the Employers and Manufacturers Association and from all its usual mates who would have said: “Oh! We need some help here guys. We helped get you into Government. We helped put you on to the Treasury benches. We helped put you there. We helped give you the BMW limousines. So it’s time for you to give us something back.” So the Government did. Two years ago it gave those employers the opportunity to reduce their contributions to the future of New Zealanders’ savings from 4 percent to 2 percent. And now it admits in this House today—and the third reading finally confirms it—that it was wrong and employer contributions are going to go back up to 3 percent. Not all the way because National can never ever admit that it is fully wrong but it has to admit and concede in this case that it got it wrong on that occasion. That was an own goal in terms of that. 
Other aspects of this bill include changing the tax deductions in respect of software that goes wrong. I guess the Government is probably doing that for its mates as well because there are bound to be people such as Dotcom and Hollywood people and all sorts of people who will benefit. If the Government invests in software—and software is very much part of the IT economy much of which is involved in Hollywood movies and in doing things in terms of Megaupload and all sorts of other things—I am sure that again it will be helping its mates to ensure that if something goes wrong with their software it will be tax deductible. It will be tax deductible so they will not have to go down. I guess somebody in that industry has got into the Prime Minister’s ear or Bill English’s ear or somebody’s ear and said: “Hey give us a hand. You helped the employers 2 years ago when you knocked back the KiwiSaver employer contributions. How about giving us a hand in the software industry as well?” So there is another thing—and do not worry because the paper boys and the paper girls in this country have helped with their $14 million to help subsidise those IT companies to do that. 
But there are lots of other little things in this bill that basically do not mean a lot. There are things such as conferring charitable status on a few charities. Well that is great but again it is just tinkering around the edges. The bill prevents liquidators and receivers from switching the basis on which they account for clients’ GST obligations. It also means that things like Working for Families entitlements are removed from having to file a tax return. It also requires taxpayers who choose to file a tax return to file in all the 4 previous years. They cannot just cherry-pick the particular years when they want a tax rebate and not other years when they are owing tax. 
New Zealand First will support this bill because in the main there are things in this that are required to help sort out our tax system. It does not go far enough. New Zealand First still believes that our whole tax system does need a complete review and it does need an overhaul. It needs an overhaul in terms of what will benefit all New Zealanders—every one of us not just the mates of the National Government. So New Zealand First will be supporting this bill in this third reading. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I wish to make only a brief contribution on this bill the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. It contains very sensible measures around software around supporting those businesses that have been affected by the earthquakes in Canterbury around making sure that our banks pay a fair share of tax and also around lifting the KiwiSaver contributions. 
Just in response to that contribution from New Zealand First it was absolutely sensible for this Government at the peak of the global financial crisis to pull back on those KiwiSaver contributions in 2009 and 2010. The costs that they would have imposed on business would only have driven up unemployment at the worst time. As the economy is now recovering it is time for us to lift those contributions. 
But my challenge is to the next Labour speaker. I have listened in this Parliament over the last 12 months and heard Labour members saying that they are going to increase paid parental leave costing hundreds of millions of dollars and that they are going to have more welfare spending—nearly $2 billion providing for the in-work tax credit to be made available for beneficiaries. I have heard that in health I have heard that in education and I have heard that in so many areas Labour is going to spend more. Well I have got a question for those members. Are you going to tax more? 
I ask that question because every single Labour Government has put taxes up—every single Labour Government. There are really only two choices for members opposite. Either they are going to borrow more or they are going to tax more. Those are the only ways in which they can fund their extravagant spending promises. My simple challenge to the next Labour member in voting on the tax rates that are going to be set is to say by how much a left-wing motley coalition opposite would put taxes up and ruin the recovery that New Zealand is now experiencing. I hope the next Labour speaker will give an answer to that important question. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The answer to that question is that more and more New Zealanders are disappointed with the performance of this Government. It was in the last 2 weeks that something historic in the life of every Government happened. The right track wrong track polling crossed over. More New Zealanders now believe New Zealand is on the wrong track than think it is on the right track and that was confirmed in a TV3 poll this week which showed that 49 percent think the Government does not have a plan for jobs or growth and only 46 percent think it does. Fifty-eight percent think the Government is ruining education and 40-odd percent think it is doing OK. That is a very important sea change in New Zealand’s politics. 
For the first time since 2008 New Zealanders are saying that they are losing confidence in this Government. The reason is very obvious: the economy is going backwards. It is going backwards in any number of dimensions and I am going to mention a few of them. Firstly unemployment is back up to 6.8 percent and 162000 New Zealanders are currently employed. Over 40000 jobs have been lost in manufacturing since 2008. If someone does not have a job not only do they not have an income that they can be proud of but they do not have dignity. It is very very difficult for New Zealanders who have lost their jobs to maintain hope. That is why they are amongst the many New Zealanders who are saying to the National Government: “You have disappointed us. You have not lived up to expectations.” 
This bill the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill—and Mr Deputy Speaker I appreciate your allowing a pretty broad remit in the way we approach it—is an enormous non-entity. The only thing Dr Nick Smith could say about it was that it tweaked the KiwiSaver contribution rate. It tweaked the rate down from 4 percent to 2 percent and tweaked it back up again to 3 percent. How visionary is that? 
Hon Clayton Cosgrove 
: Inflation hadn’t kicked in though. 
Hon DAVID CUNLIFFE 
: Maybe it was that Mr Cosgrove. Compare that with Labour’s KiwiSaver plan which would have made KiwiSaver universal by now. It would have increased the savings rate four times faster than National’s plan. Under Labour the burden of KiwiSaver contributions would shift to a more employer-based scheme the rate would increase gradually over time at a rate that businesses and workers could afford and we would have an enormous pool of capital available for investment in New Zealand businesses. That is one of the reasons the Australian economy is doing better than New Zealand’s. 
When John Key was running for office he told New Zealanders: “Kiss goodbye to higher taxes not your loved ones.” What happened? They got higher GST the richest 10 percent got 40 percent of the tax remission the gap between rich and poor went up and we added $1.1 billion to the fiscal deficit because National was spending more than it was taking. 
In answer to Dr Smith’s last question about fiscal management National has nothing to be proud of. When National took office expenditure as a share of GDP was around 30 percent. By last year it had grown to 34 percent partly because the economy was stagnant while revenue had declined from 30 percent to 26 percent and it is forecasting raising it to only 28 percent. Why is it that revenue went down so fast? Well partly because the economy tanked and partly because those who could afford to pay more got a one-off Christmas gift from their mates in the National Party. Jobs are down inequality has grown the fiscal position has worsened and so many of our regions are doing worse—East Coast Northland. The Deputy Speaker is nodding at me to get back to tax matters and I will. But can I just add into this that you can tax what people are getting only by way of income and the median income in New Zealand for all New Zealanders has fallen by $18 a week. That is down 3.7 percent over the last 3 years. So New Zealanders are in real terms poorer now than they were 3 years ago. It is no wonder they are feeling disappointed—no wonder they are feeling disappointed—and it is no wonder it is harder to make ends meet. It is no wonder they are getting sick and tired of smug MPs like those opposite who say: “Hey tough it out. She’s OK. It’s worse in countries overseas.” Well where is it worse? New Zealand has the second-highest current account deficit in the entire OECD predicted by the IMF to be the single worst current account deficit in the OECD by next year. What does that mean? It means we are not paying our way in the world. We are building up foreign debt every year at a rate faster than any other country including Greece Spain Portugal and the so-called southern European basket cases by next year. What a record of shame. 
So what role does tax policy play? The first issue is courage. The Labour Party has shown time and time again that when New Zealand is in need of change we can deliver it. We did it in the 1930s we did it in the war years we did it in the Kirk Government of 1972-75 we did it in the Lange Government of 1984-90—we might not agree with everything today but that was still a Government of change—and we did it under the Clark-Cullen Government as well. The country is going to call upon the Labour-led Opposition once more to offer progressive and pragmatic change for a better future. What will that mean in terms of tax? It will mean pro-growth tax reform. It will mean a capital gains tax system that rewards investment work and productive business not capital gains or farming for capital gains. It is not right that the only way you can get wealthy in New Zealand is just to invest in property because it does not make anything. It does not export anything. It does not enrich our country. It is just a Ponzi scheme where one person is betting off another. The tax system needs to change. 
We need to reward innovation and investment in innovation. That is why we are looking at accelerated depreciation for short-life investments. That is why we are looking at research and development tax incentives—very popular with the private sector which is resentful and disappointed that it has been replaced by National putting them through the bureaucratic hoops of a grant-based scheme. National cannot understand it. When we go around the private sector and we are talking to it about innovation people are saying: “Well goodness me why was it that National was the one that made the bureaucrats the masters of our investment decisions? Why couldn’t we just have an R and D tax credit so that we could make the business decisions about what is best for the growth of our companies and we could get a little bit of help a little bit of remission from the taxpayer in terms of recognising the risks of R and D?”. That is fair enough. 
We need pro-growth tax reform capital gains tax research and development tax incentive and short-life depreciations. KiwiSaver needs to go on steroids. Labour’s scheme would have four times the rate of savings growth as the one under National’s KiwiSaver amendments. And it is disappointing that the only practical measure in this bill that Dr Smith could refer to was the tweaking of National’s KiwiSaver incentive from 4 percent to 2 percent and back up to 3 percent. 
At least Rob Muldoon said: “Think big.” This lot say: “Think small.”—when they think at all. Actually what New Zealand needs right now is a few big ideas. We need a bit of guts. We need a bit of courage. We need to be unafraid to say this is not good enough. Why is it that our colleagues on this side of the House get up every morning and come to work? You know why it is? It is because we refuse to accept decline. We refuse to accept that our best days are over. We refuse to accept that New Zealand will be managed into statehood of Australia. We refuse to accept that the best thing you can do in a tax bill is to tweak some minute KiwiSaver incentive rather than showing a visionary path to pro-growth tax reform. 
There are 160000 people out of work and Mr Bennett thinks it is a joke. Mr Bennett thinks it is a joke and Mr Bridges spent most of question time today insulting the Green Party to boost his run for Cabinet. How shallow was that? How shallow was that? So where is National’s economic dream team in this debate? Is Mr English taking a call? Hark—not so. Is Mr Joyce taking a call? “Mr Mobie”—is he here? I could not possibly comment on that but I have not heard him take a call and I can comment on that. Where is National’s commerce dream team? You know the redoubtable Craig Foss—has he taken a call? No no National members have left it to the brilliance of Nick Smith the man they themselves sacked from Cabinet to lead their debate. They do not even trust Simon Bridges with a call. I think it is a bit harsh. He may be a little smarmy but I actually think he would be worth a shot. He has got to be better than the other lot. But no they are not trusting even him with a call. What about some of their thrusting young blood like Jonathan Young— 
Mr DEPUTY SPEAKER 
: Order! The member’s time has expired. 
JOHN HAYES (National—Wairarapa) 
: 
 I would like to rise and say a few words on this excellent piece of legislation the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. It has been interesting as I have sat here in the House this week watching that last speaker David Cunliffe and his colleague Clayton Cosgrove doing the numbers. What are they doing the numbers for? Because they are going to have a go at Mr Shearer. They know that with their present leader they are not going to get across the line and they will not be able to implement this tax legislation bring in their capital gains tax and hammer the people. 
Did you notice what that last speaker did? He invented the word “smug”; he lives the life of “smug”. What did he do? He forgot to talk about that wonderful leader. Yes he mentioned Lange he mentioned Kirk and he mentioned Clark—his mate Clark—but did he mention Nordmeyer? This country knows about Labour Party tax policies and you forgot to mention— 
Mr DEPUTY SPEAKER 
: Order! 
JOHN HAYES 
: —that un-smug man Mr Nordmeyer. The changes in this bill are in addition to the biggest tax reforms in 25 years which are helping families to get ahead. They are boosting growth they are creating jobs they are lifting incomes and they are encouraging savings. You know we lived through 9 years of that Government—9 long years of a Labour Government—and what was it doing? It was encouraging us to spend $1.10 or $1.11 for every $1 we earned. Suddenly we hit the wall and this Government has had to restructure the economy so that now we are in a situation where we are spending 97c or 98c of every $1 we earn. 
You have got to restructure the economy. Of course people are going to lose jobs. There are some businesses that are sunset industries and we need to get people into other industries like the IT industry like the film industry like the energy industry— 
Kris Faafoi 
: Speaking of energy— 
JOHN HAYES 
: —speaking of energy—and like lots of other businesses that are being developed in my electorate. That is where jobs are being created. And they are being created because we have built a competitive tax system. It is lifting the economy away from the borrowing and spending of the 9 years we had with those people and towards saving and investment. 
It is a simple fair tax system. It is going to reward hard work. It is going to protect the vulnerable. Across-the-board tax cuts are delivering more money to working New Zealanders. About three-quarters of earners are paying no more than 17.5 percent personal income tax. We cut company tax to 28 percent ensuring New Zealand businesses remain competitive. A husband and a wife with two children can earn up to $50000 a year and effectively pay no tax. 
 After-tax wages are increasing faster than prices under this National Government. If Labour were to be returned to power under the wonderful leadership of either Clayton Cosgrove or David Cunliffe the first thing we would see in this country is a capital gains tax on all businesses and farms which would penalise our productive industry. We would see a more than doubling of employer KiwiSaver costs. In fact I thought I heard Mr David Cunliffe say in the House this afternoon that Labour would actually increase KiwiSaver contributions by four times and we would see a big gap between the company rate and the top personal rate which would encourage tax avoidance. 
I absolutely support this bill. It is a good piece of legislation and we should vote on it immediately. Thank you. 
Mr DEPUTY SPEAKER 
: This is a split call. The Hon Clayton Cosgrove. 
Hon CLAYTON COSGROVE (Labour) 
: 
 Well we know after that contribution that John Hayes was never a paper boy—never a paper boy. We know after that contribution that Simon Bridges I am told recently made a speech in Tauranga and got mistaken for a paper boy. 
Let us do some analysis based on John Hayes’ speech. John Hayes painted this rosy bizarre view of the New Zealand economy that exists in his little world—or probably big world actually—but does not exist here in New Zealand. He talked about employment. Well here are a couple of figures for Mr Hayes as he sort of—I think the word is—shuffles to the corner of the House. They are 84000 young people not in work or training—that is a great legacy for Mr Hayes—an unemployment rate of 162000 of course and 40000 manufacturing jobs lost. What a wonderful legacy this Government provides! There was a tax switch—which of course was actually a tax swindle—which they in Government say was fair where the top 10 percent got 40 to 44 percent of the tax cut. What do we know—I think Russel Norman referred to it in a different way—that people at the top generally do if they get a windfall tax cut because they have got enough discretionary income anyway? They either pay off debt or put it in the bank. It is not spent generally it is not recycled and it does not provide the blood into the body of the economy that we need. And by the way more important it is not fair. 
A few of those people over there benefited and I think given our incomes in this place we are probably in the top 5 percent or top 10 percent. We all in this House benefited given our salaries. The top 10 percent got 44 percent of the tax cuts and the rest of New Zealand languished. Then the Government whipped up GST. And guess who that hit? It was not its mates of course—not those on the top 10 percent. Yes they paid the increase in GST but of course if you are on incomes like ours in this House and above you have a bit of discretionary income and a bit of an income cushion unlike those at the bottom. 
Then you look at this Taxation (Annual Rates Returns Filing and Remedial Matters) Bill which is as others have said all about simple tinkering. The paper boy tax is not in this bill of course but that was the great reform the big economic and taxation hit. This was a great reforming visionary Government—put the boot into the old paper boy or paper girl. It cut the contribution to KiwiSaver and then its great reform was to put it back up again—all over the show. What does that do? As in Muldoon’s time back in the 1970s when the Muldoon Government bribed people with their own money—and that is the truth; that is the truth—it bribes people with their own money in superannuation. All that does is undermine confidence in KiwiSaver when actually I would have thought that across the House what we wanted was to bolster the numbers in KiwiSaver and give people the confidence to enter that scheme and contribute. But they are not going to get that from a Government that tinkers slashes burns reinstates and messes around with that particular policy. 
What a great legacy this crowd leaves! They have a thousand people a week going to Australia—a thousand people a week. We know that 17000 tradespeople—people whom apparently and they are right we need in this country—in my province of Canterbury for instance technically trained highly skilled New Zealanders are heading across the Ditch because this crowd will not train anybody. They say they are going to bring people in from overseas. Of course eventually we are going to need people from overseas but we need them now because this crowd refused to train anyone. You cannot expect a business person to take on an unemployed person with no skills without training. 
David Bennett 
: The Labour Party took you on. 
Hon CLAYTON COSGROVE 
: Oh we did not abolish the Modern Apprenticeship Training Act—no no no—we introduced the Modern Apprenticeships scheme and trained thousands of people. That was that mob. In fact it was the Hon Lockwood Smith who actually put that little doozy in. You cannot expect a business person to employ somebody for a skilled job when they are not trained. So what is going to happen is that business people will take people from overseas because they cannot wait—and nor can earthquake victims wait—another 2 years to train a young person to become a plumber or a carpenter to build and reconstruct a house. 
What a great legacy these people leave: no plan no strategy except to flog some assets off and the second-worst current account deficit in the OECD. Who is ahead of us on that? Greece—what a wonderful place to aspire to. And the projections from the IMF are that we will go from No. 2. We will be No. 1 in something— 
Mr DEPUTY SPEAKER 
: Order! Your time has expired. 
Dr KENNEDY GRAHAM (Green) 
: 
 The Green Party rises again to address this Taxation (Annual Rates Returns Filing and Remedial Matters) Bill in the third reading. This bill has essentially run its course in this House. We have had our quota of mutual vitriol between the merits of Greece and Zimbabwe and whichever other role models we can hurl at each other in a negative way. 
Just to try to put it on a constructive basis so that Mr Bennett if he is following can respond in a like manner—constructively—let us just recognise what this bill does. It sets the annual rates of income tax for the current year it extends Working for Families tax credits to surviving spouses of deceased ACC claimants it allows deductions for expenditure on unsuccessful software development it clarifies that late payments are subject to GST and it increases tax rates on foreign-owned banks. 
 Among these provisions there are a few measures in the bill that the Green Party supports. For example the Inland Revenue Department found that the amount of tax currently paid in New Zealand by foreign-owned banks does not clearly reflect the economic reality of their banking business in New Zealand—true. But by and large the bill is symptomatic of the systemic failure of this Government’s fiscal policy. 
It reflects firstly regressive tax cuts that will result in the promotion of further inequality in this country. Secondly it is not succeeding in being fiscally neutral which is what this Government trumps as one of its main objectives. Thirdly it will push this country further into debt and into a worse fiscal position. It is for those fundamental reasons of basic fiscal policy that the Green Party will obviously continue to oppose and vote against this bill. 
What we need—and what we will have within a few years I think—is some green tax reform where we broaden the tax system bringing in a capital gains tax— 
David Bennett 
: Green tax for me! 
Dr KENNEDY GRAHAM 
: Yes Mr Bennett bringing in a capital gains tax and you will ultimately benefit. It will make it easier for income tax payers to live with less of a burden when we broaden the tax base. Secondly we will broaden and introduce eco-tax reform with resource rentals on the use of water. Thirdly we will make sure that the principle “pollution pays” means something. The day will come when this country will undergo substantive serious and far-reaching eco-tax reform and I know that the public are waiting for that to happen. The Green Party will oppose this bill in the third reading. 
DAVID BENNETT (National—Hamilton East) 
: 
 To follow on from the “Roll it Smoke it Print it Party” is something that is actually quite nice. It is a bit sad when the Green Party comes into this place and tries to teach us economics. This is the party whose great economic theory from a couple of weeks ago is to print money. It actually wants to go and print money and hurt New Zealand consumers by having inflation and putting prices up so that it can invest that money overseas. That is the great Green policy of building up capital in case we have another tragedy. It wants to put that money overseas. Great economic policy! Did Russel think of that by himself or did you guys sit around and actually talk about it? The Green Party cannot come into this House and talk about looking after New Zealanders on one hand and then at the same time say that it wants to print money to hurt New Zealanders to send that money overseas and invest it somewhere else. That is what your policy is and that is a great policy! 
I think members of this House have been in for a very very special debate this afternoon. On the Labour Party side Mr Cunliffe was asked what taxes the Labour Party would put up and by how much and he would not answer that question. He would not answer that question. The Green Party went out there today and said that it was going to put a— 
Hon David Cunliffe 
: Capital gains tax. 
DAVID BENNETT 
: —capital gains tax. We got that one but there is more. There is more. There is income tax as well. 
Hon David Cunliffe 
: R and D tax credits. 
DAVID BENNETT 
: Income tax? 
Hon David Cunliffe 
: R and D tax credits. 
DAVID BENNETT 
: Research and development tax credits. Yeah OK. So there are two. There are two. Income tax? 
Hon David Cunliffe 
: Reducing depreciation rates on qualified investments. 
DAVID BENNETT 
: Reducing depreciation is three. Income tax? 
Hon David Cunliffe 
: Or we might have a Fast Forward Fund for primary sector R and D. That’d be good wouldn’t it? 
DAVID BENNETT 
: And income tax? 
Hon David Cunliffe 
: Haven’t decided. 
DAVID BENNETT 
: Have not decided. Those members will put up income tax. In the next 2 years we can go around saying that the Labour Party will put up income tax because you have not denied it. The Labour Party has not denied it. The Labour Party has not said that it will not put up income tax. Every New Zealander out there—every New Zealander—should be worried because the Labour Party wants to tax you more. The Labour Party will not deny in this House that it will put up your income taxes. The Labour Party will put your taxes up because that is what it wants to do. Well come here David. Now is your chance. Mr Cunliffe say that you will not do it. Say that you will not do it. Say— 
Hon Clayton Cosgrove 
: I raise a point of order Mr Speaker. Far be it from me to interrupt a speech but on about nine occasions in the last 30 seconds to 1 minute you have been brought into the debate. I waited and waited and waited. I do not know whether he knows the rules but I think you should not be brought into the debate. 
Mr DEPUTY SPEAKER 
: In the course of this debate—[ 
Interruption 
] Order! In the course of this debate he is not the only offender in that regard and I have probably showed more lenience than I should have. I just ask members to mind their pronouns. 
DAVID BENNETT 
: Well I do not have to say much more. We know that the Labour Party is going to put taxes up. The Labour Party will put New Zealand income tax up. 
Hon David Cunliffe 
: Sit down. 
DAVID BENNETT 
: Mr Cunliffe wants me to sit down because we have hit a raw nerve I know. The reality is that New Zealanders now know what they are facing: higher income taxes under the Labour Party in coalition with these Green taxes. Thank you Mr Cunliffe for telling the public what they should expect at the next election when we campaign against you because the people do not want higher income taxes. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I raise a point of order Mr Speaker. Under the Standing Orders of Parliament when a member feels that they have been misrepresented the rules are that they should not interrupt the speaker as you know and they should wait to take a point of order at the end of the speech. That is what I am so doing. The member is of course fabricating the idea— 
Mr DEPUTY SPEAKER 
: Order! So— 
Hon DAVID CUNLIFFE 
: Mr Speaker you have not with respect heard the point I am about to make which was the source of the misrepresentation. 
Mr DEPUTY SPEAKER 
: Continue. 
Hon DAVID CUNLIFFE 
: The member is simply making it up that Labour has— 
Mr DEPUTY SPEAKER 
: Order! [ 
Interruption 
] Order! I am on my feet. I am just looking for the relevant Standing Order but it is where a member has been misquoted. The member has the opportunity only to correct the misquote not to enter into another debating phase. So if the member wishes to do that he should state where he was misquoted and tersely correct it. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I was misquoted because although I did say that we would encourage pro-growth tax reform including a capital gains tax I have made it very clear that Labour has made no decisions about income tax and our colleagues would say exactly the same thing. 
A party vote was called for on the question  
That the Taxation (Annual Rates Returns Filing and Remedial Matters Bill) be now read a third time. 
Ayes 105 
New Zealand National 59; New Zealand Labour 34; New Zealand First 8; Maori Party 2; ACT New Zealand 1; United Future 1. 
Noes 15 
Green Party 14; Mana 1. 
Bill read a third time. 
Business of the House 
MICHAEL WOODHOUSE (Senior Whip—National) 
: 
 I seek leave for members of the Foreign Affairs Defence and Trade Committee John Hayes the Hon Phil Goff Dr Paul Hutchison and Su’a William Sio who are travelling to Europe on a trip funded by the Ministry of Foreign Affairs and Trade from 4 November to 11 November to investigate greater engagement with the European Union parliaments to be regarded as present for the purpose of casting party votes. 
Mr DEPUTY SPEAKER 
: Leave is sought. Is there anyone opposed to that? There is no objection. Leave is granted. 
Financial Markets Conduct Bill 
Second Reading 
Hon CHESTER BORROWS (Minister for Courts)  
on behalf of the Minister of Commerce: I move  
That the Financial Markets Conduct Bill be now read a second time 
. The Financial Markets Conduct Bill is a major overhaul of financial markets law in New Zealand. It has been referred to by me and others as a once-in-a-generation opportunity to make New Zealand’s financial markets more effective. Its main purposes are to promote the confident and informed participation of businesses investors and consumers in the financial markets and to promote and facilitate the development of fair efficient and transparent financial markets. These are crucial objectives that we must promote in order to achieve long-term growth in our economy. 
The bill has been through an extensive consultation and collaboration process to get this far. It stems from reform work begun in 2005 and it gained momentum from the Capital Market Development Taskforce particularly its excellent 2009 financial report. It was informed by the global financial crisis and the failures of our financial companies sector. It owes a nod to our Australian cousins and I expect that it will facilitate greater harmony in financial market regulation in our single economic market. It has been supported by all or almost all submitters at every stage in the process with the divergence of views being limited mainly to the detail. 
In the course of the bill’s development the most urgent and clearly needed reforms were split out by this Government. This critical work included the establishment of a new regulator the Financial Markets Authority; key reforms of KiwiSaver governance and disclosure; better regulation of non-bank deposit takers; and licensing of trustees statutory supervisors and auditors. This process has ensured that this bill which contains the core—the complex detail the hard stuff—would not be rushed. In June 2010 a 200-page discussion document was released which was followed up by a 400-page exposure draft of the bill that was released in 2011. The bill was introduced to this House in October 2011 at 560 pages plus the explanatory note. 
The bill has been reported back by the Commerce Committee with a unanimous recommendation that it be passed with amendments. The committee has done excellent work. Dealing with a bill of this size and complexity is not easy. It is pleasing that the select committee unanimously supported the bill continuing a tradition of cross-party support for financial sector reform. 
I wish to make some brief comments about the committee’s amendments and some key matters in the bill. The committee’s proposed amendments improve clarity of the bill particularly around liability. It is crucial that the bill strike the right balance between holding people to account and encouraging businesses to come to the market. The bill places more focus on civil liability and compensation and reserves the main criminal sanctions for those users and directors who are guilty of serious wrongdoing. The changes made by the select committee essentially set criminal liability at the same level as for the Crimes Act and provide broader defences to civil liability. These are important improvements. 
I wish to reiterate that the bill is intended to encourage capable and prudent people to become directors. We want companies to be able to attract directors with diverse skills and backgrounds. Although directors should supervise capital raising and exercise due diligence regarding offer documents their primary focus should be on devising business strategy and supervising management rather than on compliance and liability. For that reason I agree with the committee that directors should be liable for civil pecuniary penalties and should compensate investors when they fail to perform their duties but should not be liable for imprisonment where there is not a criminal fault element. Likewise accessories such as senior staff and advisers should be directly liable to investors only if they are truly involved in the contravention in the sense of being an intentional participant in the primary contravention with knowledge of the essential facts and all those who are civilly liable including directors should have appropriate and consistent defences to that liability. The select committee has made important clarifications in this area. 
The final liability issue I would like to touch on is the fraud on the market concept in the bill. This approach which borrows from US law creates a rebuttable presumption about the causation of loss. Under the bill the court will first determine whether there has been a misstatement in an offer document that is materially adverse to investors. Then if the products have declined in value the court must presume the misstatement to have caused the loss to the investors unless the contrary is proven. The reason for the presumption is that it is unrealistic and wrong to require each investor to prove that they have personally relied on a misstatement. Investors get their information from a variety of sources including market commentary financial advisers the media and friends as well as offer documents. A disclosure misstatement can influence these sources causing the market to misprice the risk thereby causing the loss to the investor. It is important to note that the amount of compensation is still a matter for the court’s determination and that the presumption is rebuttable. 
 The bill also sets out the basic standards of conduct expected in financial markets and by financial markets participants. These rules replicate key provisions of the Fair Trading Act but are paired with the enforcement and liability scheme in the bill. These basic rules will be enforced by the Financial Markets Authority. As a result the core rules need to be kept in sync with the Fair Trading Act. So as noted by the select committee changes proposed in the Consumer Law Reform Bill will result in equivalent changes to the fair dealing provisions in the bill. 
This bill will be a success if investors are in a position to make confident judgments about the potential risks and returns from their investment decisions informed by high-quality disclosure and where they want it quality advice. The key part of the reforms to achieve this is to improve disclosure through the use of single-product disclosure statements that tell investors what they need to know backed by a public register that contains richer detail and facilitates comparison between products. 
But improved disclosure and conduct rules are not sufficient. The bill also seeks to implement consistent and reliable governance rules that will be enforced by a proactive regulator. For example managers of all retail managed investment schemes will both have direct fiduciary duties to investors and be supervised by a licensed supervisor who is responsible for the custody of the assets of the scheme. 
I want to reiterate that all investment carries risk and part of taking risks is that sometimes investments fail to deliver a return and regrettably there will also always be fraudsters. The rules in the bill are intended to provide a boundary to these risks so that investors can focus on business and investment risks. Investors should at the very least expect that the people in charge of their investments are required to comply with best-practice governance obligations and these obligations will be promptly and effectively enforced. 
As part of this improved governance the bill introduces licensing of key financial markets participants most notably fund managers. Licensing brings New Zealand into line with internationally expected norms of financial markets regulation making these institutions more internationally recognisable and therefore internationally competitive. Licensing does however bring risks of high barriers to entry and of insulating incumbents from competition. Because of these risks licensing under the bill is expected to be relatively light. It is primarily focused on ensuring that the unscrupulous are excluded from the industry rather than ensuring that every participant has a gold-plated compliance regime or that no one fails. 
I would like to conclude by thanking members of the select committee for their work in considering the bill and to acknowledge the contributions of those who provided submissions on the bill. I commend the bill to the House. 
Hon CLAYTON COSGROVE (Labour) 
: 
 I join on behalf of the Labour Party with the Minister for Courts in respect of his comments on the bipartisan nature in respect of this bill the Financial Markets Conduct Bill. It is indeed about promoting efficient markets investor confidence in markets and fair market outcomes and to the best extent that this Parliament can attempting to ensure that those who are charged as company directors with facilitating the investments of others take that duty of care very seriously—and in large part they do of course. 
I think it is noteworthy to touch on the nature of directorships. There was a time when being a director of a company was a reasonably blasé sort of option to take and by that I mean that people did it it was done in good faith and there was not a huge set of Draconian responsibilities around a directorship. That is going back some years. We now know that becoming a company director can be an onerous task that it is a specialist task and that now even prior to this bill but certainly post this bill being a director comes with a huge burden of responsibility and a large amount of accountability and even more so in terms of disclosure and transparency through this legislation. 
We know the history of this. We know that in the last 4 years there have been 61 finance companies that have failed the most recent being of course South Canterbury Finance which was bailed out to the tune of $1.6 billion of taxpayers’ funds. 
 It was interesting that in the Commerce Committee meeting this morning on another piece of legislation—without getting into that—whilst we were in public session we had an interesting discussion about risk and entrepreneurship and how the balance has to be struck. You do not want to cauterise or strangle entrepreneurship. You do not want to cauterise or strangle entrepreneurship in terms of legitimate business risk-taking. Running a business owning a business and participating in the investment market is by its very nature risky. It is not a sure thing. Very few things in life are sure things. As the old adage goes if it smells and tastes like a sure thing it generally is not. So this bill seeks to strike a balance in terms of allowing entrepreneurship and appropriate decisions to be made—for instance by directors and others. 
That does not negate the fact that those decisions may not have a positive outcome. That is the nature of making business decisions. You risk you get reward and sometimes those decisions and those risks do not pay off because that is the nature of business. I think it is appropriate as we go through this to just note that. There is no such thing as I say as a sure bet a sure investment a sure thing. If there was I am sure we would have a far wealthier population generally than we do now. It is important to note that this country is built on entrepreneurship and built on appropriate levels of risk by appropriate and qualified risk takers. 
If we look back in history of course the Capital Market Development Taskforce which was set up under the previous Government in 2008 moved to develop a blueprint and an action plan for the development of New Zealand’s financial system. That is the original genesis for ultimately this bill. We are pleased that the Government has taken this on. I know that investors given the sort of investment carnage that we have had are crying out for appropriate levels of disclosure as the Minister said and transparency and accountability. Without confidence in our financial markets we will not achieve the level of investment that is required and we will not prosper and grow as an economy and as a country. And it is important as the Minister said that these legislative frameworks are as best as we can make them in line with our Australian brothers and sisters across the Ditch because effectively in commercial terms we are almost—almost—one market. So we had the financial task force. 
We have now moved of course to the 61 finance company collapses and no one wants to return to those days. It is interesting if you go through the history of some of them in terms of the criminality that we have seen from some in the recent past. A couple of my colleagues have noted and I think the record would show it is probably correct that when it comes to white-collar versus blue-collar criminals if you will—the burglar versus the white-collar criminal who loses millions and millions of dollars of the funds of the citizenry—it could be argued I think with a high degree of validity that throughout our history the burglar has got a hell of a lot worse sentence and has been dealt with in a far more severe way than many of our white-collar criminals of the past. 
The bill as the Minister said does a number of things. It offers regulated financial products that are categorised as equities securities debt securities managed investment products and derivatives based on the economic substance of the financial product not just the legal form—in essence again attempting to simplify and also create confidence in the market. The offer process as I have said is modelled in an equivalent way to the way it is in Australia bringing us in line. There is a requirement for issuers to prepare a prospectus and investment statement; that requirement will be replaced with a requirement to prepare as the Minister noted a single-product disclosure statement tailored to retail investors. 
That leads us to a point that I made I think in a previous debate that although we have these pieces of legislation and we can tailor-make our documents so that retail investors can understand them so that they are simple and so that they are relatively transparent or as simple as you can make them whilst meeting legal obligations there is also—and I note that Simon Power did some work on this when he was Minister of Commerce—an ongoing need for a higher degree of resource into financial literacy in this country. I mean no disrespect by that. For some of us who have had experience in commercial areas when interpreting documents and business investments we have a level of confidence that we could make judgments and perhaps have a greater understanding of the strictures and documentation surrounding these investments. For others in our community who have not had that visibility or that experience it is tougher for them to make judgments. Again I think where you see the 61 finance companies that collapsed many in the community thought that these were appropriate investments that these were going to provide wonderful financial riches and it just smelt too good. It is also incumbent upon this House I think and the Government to ensure that we have and that we are putting some resource into financial literacy—not just for our adult population but also for those people who are at school so that they can grow up having the confidence to manage their own affairs and participate in investments. 
The Financial Markets Conduct Bill provides for instance for regulations to be made that will prevent products from being structured to avoid regulation. This happened of course in the infamous case of Mark Bryers and the infamous Blue Chip case. Because the investment scheme offered interests in land it was exempt from the Securities Act to the significant detriment of course of investors. Your average Joe in the street looked at an investment like Blue Chip and thought this was a great deal—there was a great sell job on that—and people invested in good faith. I think that there is always an element when you come to investment decisions of—I would not say greed but obviously people want to maximise their investments and that often clouds judgment in terms of whether it is an appropriate risk and an appropriate level of investment. However in the case of course with Blue Chip this was built as some great gilt-edged deal and people were hoodwinked. You could not blame the citizenry for that. 
What this bill will do not only in that case but in others is simplify make transparent and make more accountable a lot of the frameworks and a lot of the schemes of arrangement so that investors can have greater confidence. Many I am sure on both sides of the House will know constituents who have been burnt and who will not be participating in an investment market in these sorts of ways as they have in the past either because they lost their life savings or because their confidence is shot to pieces. Those people will look for simplified investments either in property or in other areas that they know and trust. 
Hon Chester Borrows 
: A Government guaranteed scheme like Mighty River Power. 
Hon CLAYTON COSGROVE 
: We will not destroy the atmosphere— 
Mr DEPUTY SPEAKER 
: Order! The member’s time has expired. 
JONATHAN YOUNG (National—New Plymouth) 
: 
 Thank you very much for the contribution of the previous speaker the Hon Clayton Cosgrove. What a very convincing argument for investing in products that have got such strong guarantees as some of those available in the mixed-ownership model. 
This Financial Markets Conduct Bill is as you see one of the bigger bills that have been in this Parliament this year. It is over 500 pages in length; 300 or so are pieces of legislation that have been brought forward from other Acts and quite a number of pages represent new legislation. As we know the backdrop to this bill is the global financial crisis and the collapse of finance companies which have had a traumatic effect on the lives of many New Zealanders and have impaired the confidence of investors in our financial markets. We understand that having confidence and having a robust financial market are incredibly important for the ongoing expansion of our economy particularly around those listed companies. 
This bill largely completes the comprehensive programme of reforms in the financial sector that this Government has implemented over the past few years. These reforms include the introduction of the financial advisers’ regime the licensing of trustees and statutory supervisors and the establishment of the Financial Markets Authority. The Financial Markets Conduct Bill completes this comprehensive suite of reforms of financial market regulations. The bill will replace the financial market conduct regulations contained in a number of statutes— 
Mr DEPUTY SPEAKER 
: Order! The time has come for the House to rise.  
Debate interrupted. 
The House adjourned at 6 p.m.