Volume 660 Week 34 - Tuesday 16 February 2010 
Volume 660 Week 34 - Tuesday 16 February 2010 
[Volume:660;Page:8863] 
Tuesday 16 February 2010 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Resignations 
Jeanette Fitzsimons Green Party 
Mr SPEAKER 
: I wish to advise the House that I have received a letter from Jeanette Fitzsimons resigning her seat in the House with effect at midnight on Thursday 11 February 2010. 
List Member Vacancy 
Mr SPEAKER 
: I have been advised by the Chief Electoral Officer that pursuant to section 137 of the Electoral Act 1993 Gareth Thomas Llewelyn Hughes has been declared to be elected a member of the House of Representative in place of Jeanette Mary Fitzsimons. I understand that Gareth Hughes is present and wishes to affirm. Would he please come forward to the Chair on my right. 
Members Sworn 
Gareth Hughes was presented to the Speaker made the affirmation required by law and took his seat in the House. 
Visitors 
India—Sir Edmund Hillary Fellow Lok Sabha / House of the People 
Mr SPEAKER 
: I have much pleasure in informing the House that Mr Rahul Gandhi MP—the inaugural Sir Edmund Hillary Fellow from the House of the People the Lok Sabha of India—is present in the gallery. I am sure that members would wish that he be welcomed. 
Questions to Ministers 
GDP Growth—New Zealand’s Performance 
1. 
CRAIG FOSS (National—Tukituki) 
 to the  
Minister of Finance 
: What does the latest GDP data show about New Zealand’s recent growth performance? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Revised GDP data up to the September quarter of 2009 was released just before Christmas. It revealed that the economy had for a number of years been growing more slowly than was previously reported. In fact GDP output in 2009 was barely above the level 4 years before—that is 2005. In the 3 years to September 2008 the economy grew under the revised figures by less than 1 percent per year through the third term of the last Government and before the impact of the global crisis. 
Craig Foss 
: How should the economy have performed over this time? 
Hon BILL ENGLISH 
: The years 2005-08 were the best of times internationally and we should have done much better than 0.9 percent growth per year. Inflation was low our terms of trade were high— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I sat back because I thought you might have intervened. The question asked: “How should the economy have performed over this time?” and that is something for which that Minister has no responsibility whatsoever. 
Hon Rodney Hide 
: It is quite clear that the present Minister of Finance had no responsibility for that and I do not think he would want to have it. I can also see Trevor Mallard’s point—trying to avoid responsibility. But the question was about the reports that were received and the obvious supplementary question is what the Minister of Finance having received those reports thinks about them. It follows directly from the primary question. 
Mr SPEAKER 
: When a point of order is being considered the House should be silent. The point of order raised by the Hon Trevor Mallard is marginal. I will be carefully listening to make sure that the Minister of Finance does not get into criticising or commenting in particular on the policies of the previous Government for which he has no responsibility. He does have some reporting responsibility for what happened during that period so he can comment on what happened and what maybe should have happened but I do not want to hear criticism of the previous Government’s policies. 
Hon BILL ENGLISH 
: During that period the economy should have grown at the same rate as the economies of other developed countries did but it grew at less than half the growth rate of Western economies. It should have grown at the same rate as Australia’s economy did but it grew at less than one-third the rate of Australia’s. To deliver so little growth through that period of such favourable times was a remarkable underachievement. 
Hon Jim Anderton 
: Can the Minister tell the House whether the GDP growth of New Zealand has caught up to or passed that of Australia over the 15 months under the National-led Government or has it fallen further behind? 
Hon BILL ENGLISH 
: It has not caught up and that is not so much because of the global crisis—everyone has had to suffer from that—as because the New Zealand economy was in such a weak and lopsided position when the global crisis came along. 
Craig Foss 
: To what does he attribute this performance of low GDP growth over recent years? 
Hon BILL ENGLISH 
: In the first case it is important to understand that the revised GDP figures show that an economy that we thought had been performing poorly was actually performing very poorly. For instance at that time Government spending rose by 50 percent over 5 years causing persistently high interest rates and depriving our export sector of the resources it needed in order to thrive. The result is that we have a very anaemic export sector which has been in recession for 5 years. 
Craig Foss 
: What steps is the Government taking to improve New Zealand’s GDP growth? 
Hon BILL ENGLISH 
: The Prime Minister’s statement last week laid out a comprehensive plan to lift economic performance and to shift economic growth towards savings and exports and for there to be less reliance on borrowing and consumption. In recent years the New Zealand economy has been far too dependent on spending more than we earn and borrowing to fill the difference and we have an export sector that has now been shrinking for the last 5 years. 
GST Increase—Prime Minister’s Statements 
2. 
Hon PHIL GOFF (Leader of the Opposition) 
 to the  
Prime Minister 
: How many times if any has he told New Zealanders that he would not increase GST? 
Hon JOHN KEY (Prime Minister) 
: 
 Before the last election I was asked whether National would raise GST in order to increase overall tax revenue to fund Government deficits. I said we would not be doing that and if a reporter asked me the same question today I would give the same answer. I can also say that prior to the advice of the Tax Working Group increases in GST as well as changes to the taxation of property were not on the Government’s radar. On that basis if I were asked directly about raising GST in good faith I would have said no. 
Hon Phil Goff 
: In addition to saying as was clearly shown on the DVD that he would not raise GST does he recall telling Radio Dunedin that there was no prospect of National raising GST? 
Hon JOHN KEY 
: No. 
Hon Phil Goff 
: Point of order—[ 
Interruption 
] 
Mr SPEAKER 
: If the honourable member was sitting very close to her leader she would have heard him call a point of order and know it must be heard in silence. 
Hon Phil Goff 
: I seek leave of the House to table the transcript from Radio Dunedin yesterday where the interviewer said clearly that Mr Key did make the promise not to raise GST. 
Hon JOHN KEY 
: Is the member saying that he is tabling a transcript or a transcript of a reporter saying he thinks he remembers that? 
Mr SPEAKER 
: I do not need this debate to go on any further. I will not seek leave because I do not seek leave for the tabling of recent media reports. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. Can I seek clarification? My understanding of your ruling to date was that something that is easily accessible to members like a newspaper article could not be tabled. This is a transcript of a radio station that most members of this House would not have seen. I do not believe that that is within your ruling earlier. 
Mr SPEAKER 
: I hesitated a moment because the honourable Leader of the Opposition has raised a perfectly fair and serious point of order. My ruling did refer to recent media articles from major daily newspapers and national weeklies or their websites and from major television and radio broadcasters or their websites. I am sure people from Dunedin would consider Dunedin to be a fairly major place. It is one of New Zealand’s major cities. I feel I have to stick with my ruling or I start to unwind a very important ruling that I have made. 
Hon Phil Goff 
: Which of the various statements that the Prime Minister has made about GST is the accurate one: his promise not to raise it his comment last week on Newstalk ZB that he would raise it or his comment on Radio New Zealand last Friday that he might not raise it? 
Hon JOHN KEY 
: Well firstly none of those are actually accurate transcripts of what I have said. They are an interpretation from the Leader of the Opposition and therefore should be taken with a grain of salt. I tell the member that the one he should take accurately is the one in my statement last week which was written in black and white. It said that the Government is seriously considering a move to increase GST to 15 percent. 
Hon Sir Roger Douglas 
: How much revenue would a hike in GST to 15 percent raise taking into account the automatic adjustments that would be made to benefits levels as well as the compensation for other low-income earners which he has guaranteed; or does he not know? 
Hon JOHN KEY 
: We know that the increase in GST raises about $2 billion. There is clearly an offset. I can say to the member that it is an extremely complex calculation but if one looks at the net effect of raising GST lowering personal taxes right across the board—the top lower and middle end—and taking into consideration the other moves the Government is making it will make the bulk of New Zealanders either better off or a lot better off and on a straight GST income tax no one will be worse off. 
Hon Phil Goff 
: Does he stand by his statement reported on Radio New Zealand last week that he would not put the rate of GST up if that put the Government’s relationship with the Maori Party at risk which apparently gives the Maori Party a veto power? 
Hon JOHN KEY 
: That was not the statement I made. 
Hon Phil Goff 
: I raise a point of order Mr Speaker. I seek your guidance on this. One of the reasons for tabling documents in the House is to substantiate a question such as I asked. I asked a question based on a transcript of a Radio New Zealand programme. The Prime Minister has denied that he said that. It is easy to resolve that by tabling the document. 
Mr SPEAKER 
: Points of order cannot be used to litigate the answer the Prime Minister has given. The Prime Minister denied making a certain statement. That is the end of the matter as far as the Speaker is concerned. 
Hon JOHN KEY 
: I raise a point of order Mr Speaker. It is very simple. If the Leader of the Opposition wants to read out the exact quote and ask me a question about it I am happy to answer any of those questions. That is not what the Leader of the Opposition is doing. He is— 
Mr SPEAKER 
: I apologise to the honourable Prime Minister. The Prime Minister will resume his seat. The Speaker will deal with these issues. He does not need assistance from the backbenchers. These matters cannot be litigated by way of point of order. I have ruled that the Prime Minister’s answer was a perfectly fair answer. The Leader of the Opposition can ask further questions if he wishes to challenge that answer but not by way of point of order. 
Hon Sir Roger Douglas 
: Given that the Tax Working Group estimated that a hike in GST to 15 percent would raise $1.9 billion after automatic benefit increases which after a compensation package for low-income earners he has promised would likely leave only $1 billion could he not afford to pay for personal tax cuts by lowering the various expenditures that he opposed while in Opposition such as the Working for Families programme which he labelled “communism by stealth”? 
Hon JOHN KEY 
: When someone loses 100 percent of what he or she earns that is communism by stealth. The answer to that question is that there are a lot of other benefits involved—[ 
Interruption 
] 
Mr SPEAKER 
: I apologise to the Prime Minister—[ 
Interruption 
] I am on my feet. I apologise to the honourable Prime Minister but I cannot hear his answer and if I cannot hear it then I am sure that many other people cannot hear it. It is fair enough to make interjections but they must be reasonable. That was just out of all proportion. 
Hon Trevor Mallard 
: Point of order— 
Mr SPEAKER 
: I am calling the Prime Minister and I fail to see where the point of order can be raised here. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. My suggestion to you is that you might be assisted in hearing if you followed the normal practice of asking Ministers to address the Chair. 
Hon Annette King 
: Yes—not turn his back on you. 
Mr SPEAKER 
: I am considering a point of order. The member Trevor Mallard makes a perfectly good point. The Prime Minister should address the Chair and then the Speaker can hear. Although it does not have to be at all times it is a little bit helpful now and then. 
Hon JOHN KEY 
: Maybe I am the only one with amnesia but I remember Helen Clark spending 9 years looking out here at some sort of picture in the distance but anyway. It is quite clear—[ 
Interruption 
] Well that is the answer. If we play the footage she was looking out there into the distance for 9 years. I do not think she ever looked at me while she was answering a question. 
Mr SPEAKER 
: I am on my feet and someone will be taking an early shower if I see who is interjecting. We will just take a deep breath and settle down a little. What the Prime Minister must not do is to comment on my rulings. But a question was asked by the Hon Sir Roger Douglas and I ask whether the Prime Minister recollects the question. 
Hon JOHN KEY 
: Yes. 
Mr SPEAKER 
: I invite him to answer it. 
Hon JOHN KEY 
: I do. If one were to look at the Tax Working Group’s recommendations one would see that the recommendations and the belief behind why a change in the GST versus income split could be beneficial were manifold. They include the benefits of encouraging New Zealanders to save more—which we know is a real issue—giving New Zealanders much greater choice about their own money making sure that there was equity in the system and making sure that there was more sustainability in the future tax system. That is the range of reasons why we are considering such a move. It is not just about redistribution. 
Hon Sir Roger Douglas 
: I raise a point of order Mr Speaker. With respect I do not think the Prime Minister tried or endeavoured to answer the question that I asked. The question was— 
Mr SPEAKER 
: What I will do because of the large gap between when the honourable member asked his question and when the Prime Minister got to finally answer it is to invite the member to repeat his question without penalty so that the House can be satisfied that a reasonable answer has been given to it. 
Hon Shane Jones 
: Excellent decision. 
Mr SPEAKER 
: There will not be any comment on my ruling. 
Hon Sir Roger Douglas 
: My supplementary question was given that the Tax Working Group estimated that a hike in GST to 15 percent would raise $1.9 billion after automatic benefit increases which after a compensation package for low-income earners he has promised would likely leave only $1 billion could he not afford to pay for personal tax increases by lowering the various expenditures that he opposed while in Opposition such as the Working for Families programme which he labelled “communism by stealth”? 
Hon JOHN KEY 
: The Government is addressing that issue in relation to cutting expenditure. For a start we have saved over $2 billion with our value for money exercise; secondly we are increasing Government expenditure by about a third of what the previous Government did; and we are continuing to look for areas where there is waste. So the member is right; of course one could just slash expenditure to pay for tax cuts but that would have significant implications for New Zealanders in terms of the delivery of their health education welfare and retirement services and that is not a place that I particularly want to go. 
Hon Phil Goff 
: When he said in the House last week that he had not said he would raise GST when on the DVD and in the transcript he clearly does say that—it is in his own words? Why did he not follow the lead of his deputy leader and simply come clean and say “Yes I have broken my word; I’ve reversed my policy.”? 
Hon JOHN KEY 
: There are a couple of things. In answer to the primary question today I made it clear that if someone had directly asked me that question prior to the election—[ 
Interruption 
] Members opposite should not cry. I know it is not all going well for them but the basic point is that if someone had directly asked me I would have said no because that was never considered at the time. But members should go to the DVD and have a look. The question was in relation to raising GST to cover deficits. I was also asked whether I would raise the top personal rate to 45 percent to cover the deficit. The answer then was no and it remains no. [ 
Interruption 
] I know that the Leader of the Opposition does not like it when I directly answer a question because he has spent a lifetime not doing it but that is the way we operate on this side of the House. 
Hon Phil Goff 
: Which assurance has greater credibility: the Prime Minister’s promise not to raise GST; the Prime Minister’s promise that he will raise GST but it will be fair to all; or having been caught out in a conflict of interest on his Tranz Rail shares his promise to sell his mining shares and his uranium shares? 
Hon JOHN KEY 
: Well let us sort one thing out. No one thinks Phil Goff is sexy anyway. [ 
Interruption 
] If we are going to go down to that sort of gutter material we might as well sort it out. I stand by my statements. 
Mr SPEAKER 
: I say to the Hon Parekura Horomia and many other members—he just happened to be the member I saw—that I am on my feet and members will cease interjecting. I must say to the Prime Minister that that is not an acceptable way in which to start to answer a question. He may have a view on the quality of the question and that is why I hesitated to get to my feet immediately but the Prime Minister should attempt to answer the question. 
Hon JOHN KEY 
: I stand by the statements I have made in the House. 
Warm Up New Zealand: Heat Smart—Retrofitted Houses 
3. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
 to the  
Minister of Energy and Resources 
: How many New Zealand homes have been retrofitted through the Warm Up New Zealand: Heat Smart scheme and is he satisfied with the quality of that retrofit work? 
Hon GERRY BROWNLEE (Minister of Energy and Resources) 
: 
 I am advised by the Energy Efficiency and Conservation Authority that 30003 homes have been insulated in the 7 months since the scheme began. That is 30000 homes that are warmer and drier for thousands of New Zealand families. All retrofits have been subject to a 100-point audit. The checkpoints range from safety issues to the removal of debris. I am assured by the Energy Efficiency and Conservation Authority that all installations have been checked and rechecked to ensure that all safety requirements have been met. The audit is rigorous and New Zealand families can be assured that the Government wants and expects high-quality work from installers. I am satisfied that they are making every effort to comply with that. 
Peseta Sam Lotu-Iiga 
: Has the Minister seen reports regarding faults in the Australian home insulation scheme? 
Hon GERRY BROWNLEE 
: Yes and I can assure New Zealand families that we do not use either macerated paper or foil installation in the Warm Up New Zealand: Heat Smart scheme. We use fibreglass batts and wool installation both of which have a much higher fire-retardant capacity. 
Charles Chauvel 
: Is the Minister aware that according to the  
New Zealand Herald  
this morning 359 of the 570 houses initially audited or fully 63 percent were found to have insulation problems half of which were described as serious; if so what will he do to find out whether 63 percent of the entire 30003 homes retrofitted so far that he has just mentioned—some 19000 Kiwi homes—have received shoddy insulation jobs and to help those householders get a remedy? 
Hon GERRY BROWNLEE 
: I think the report this morning although factual does not take account of the fact that we are working off a 100-point audit document. We have right from the start made sure that there was high quality in the system; for example debris left on a site would mean that on a quality issue the audit failed. We are doubling the number of audits. We have made it very clear to installers that if they fail an audit on more than three occasions then they will be out of the scheme. We hold back payments until audits are sent in. The check-audit system as I said before is being doubled. Some firms will be required to pay a $300 fee for a further audit. I say to New Zealanders who have had insulation installed under the scheme that firstly we have checked to ensure that there are no safety issues and secondly if they have concerns they should phone their installer. If after that they are still unsatisfied they should phone the Energy Efficiency and Conservation Authority. 
Vulnerable Citizens—Prime Minister’s Statements 
4. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Prime Minister 
: Does he stand by his statement “This Government is not prepared to turn its back on our most vulnerable citizens”? 
Hon JOHN KEY (Prime Minister) 
: 
 Yes. 
Hon Annette King 
: Does he still consider the people living at McGehan Close to be the underclass of New Zealand; if so why after saying the vulnerable will be his priority in Government has he failed to deliver on his promise to improve their lives leaving many of them disillusioned and underwhelmed? 
Hon JOHN KEY 
: Actually things have improved as the article in the  
Sunday Star-Times  
made quite clear and in a moment probably in answer to some of the other supplementary questions I will go through the list of what this Government has achieved in a short space of time. 
Hon Annette King 
: Does he agree with social worker Vince Tuisamoa that “His biggest mistake was coming here. … He’s used the street this is the street he names all the time and yet the street is still the same we haven’t got anything.”; if not why not? 
Hon JOHN KEY 
: No for two reasons. First I front up when I make statements and second—[ 
Interruption 
] Actually I do. Second let us just quote from the article so we can get a few facts—quoting directly from the article and not making it up. The article states: “some things have improved on the street. There is no outward sign of the street gangs that had plagued the area—residents say they have disappeared … There is less graffiti and a brand new footbridge … And the homes are looking smart. One woman who would give her name only as Mary showed the Star-Times new carpet curtains and bathroom she has received through a state housing upgrade programme.” That was part of—and I congratulate the Minister—the $125 million upgrade undertaken by this Government. 
Hon Annette King 
: Why did he exploit Joan Nathan and her daughter Aroha for political purposes; and does he agree with Joan Nathan who said that she feels used by him that he has not made things better and that her daughter does not want anything more to do with him? 
Hon Rodney Hide 
: I raise a point of order Mr Speaker. I ask you to reflect on the language of that question and whether it is appropriate to insert the word “exploit”. A question that starts by asking why a member exploited a particular person is a bit like asking: “Have you stopped beating your partner?”. An unfounded allegation is being put forward by the member asking the question; it is not a factual question. 
Mr SPEAKER 
: I hear the point the member has raised. Certainly on a strict interpretation of the Standing Orders I would have to agree with the honourable member. I felt that the Prime Minister was probably capable of handling the question and I did not want to insert myself as Speaker into this question and answer exchange too much. But I must acknowledge that on a strict interpretation of the Standing Orders that kind of assertion should not be built into a question. It gets a bit technical; if it is essential to convey the meaning of the question then one could argue that it does fall within the Standing Orders and that is why it is a fairly tricky area. I accept the thrust of the point being made but I invite the Prime Minister to answer the question because I do not believe that it was intended in a particularly unacceptable way. 
Hon JOHN KEY 
: All I can say is that I would encourage the member to go and speak to Joan directly take with her a journalist with a tape recorder—and be prepared to play the whole tape—and ask Joan those questions directly. I have not spoken to her for the last 10 days or so so I have no vested interest in it but let us just see whether the member is right. I would make one other comment and that is to repeat a direct quote from Joan in that article. She said: “I could have voted for Labour and we’d be going through the same old bull—” excrement. 
Hon Annette King 
: Who is right: the factory worker from McGehan Close who said that the promises made to vulnerable New Zealanders were lies and that the Government puts something into one pocket and takes out of another or the Prime Minister who said that dealing with the underclass is a priority for National? 
Hon JOHN KEY 
: The last statement. 
Accident Compensation—Government Actions 
5. 
MICHAEL WOODHOUSE (National) 
 to the  
Minister for ACC 
: What steps is the Government taking to secure the long-term future of ACC and why are these necessary? 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 The Government has strengthened the financial governance skills on the Accident Compensation Corporation’s (ACC’s) board and reversed the decisions of the previous Government in costly areas like physiotherapy and suicide coverage extensions. We have taken steps to improve rehabilitation rates and we have extended the full-funding date for the scheme to 2019. These steps are necessary to address the steep rise in the accident compensation scheme’s claim costs large losses and the huge increase in the scheme’s unfunded liabilities. 
Michael Woodhouse 
: What reports has the Minister received on the claims made today by former ACC Minister Maryan Street that the corporation was in financial good health at the change of Government? 
Hon Dr NICK SMITH 
: The audited accounts of ACC for the year 2007-08 signed by Ms Street and ex - Council of Trade Unions chair Ross Wilson declared a loss of $2.4 billion—the largest in ACC’s 35-year history. Those reports also showed that the scheme’s unfunded liability during the previous Government’s term ballooned by $9 billion and that claim costs were growing at five times the rate of inflation. Labour is clearly in denial on the scheme’s mismanagement. 
Michael Woodhouse 
: What message does he take from today’s protest on Parliament’s steps of about 150 people over accident compensation when it is compared with the 6000 who protested last year? 
Mr SPEAKER 
: I apologise to the honourable Minister but I could not hear that question. I ask Michael Woodhouse to repeat it. 
Michael Woodhouse 
: Thank you Mr Speaker; I would be delighted to. What message does he take from today’s protest on Parliament’s steps of about 150 people over accident compensation when it is compared with the 6000 who protested last year? 
Hon Dr NICK SMITH 
: The message I take is that the public now well understands the reasons for the changes the Government is making to the scheme. The bikers today were taken for a bit of a ride by the unions. It was an ideological protest led by those responsible for the scheme’s financial woes against a pragmatic Government determined to make the scheme affordable and fair and to secure it for the future. 
Tax System Changes—Fairness 
6. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: Does he stand by his statement: “any move with tax tax affects everybody any move with it has to be not only fair but seen to be fair”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes. 
Hon David Cunliffe 
: Does he agree with John Key’s statements that either the “bulk” or the “vast bulk” of New Zealanders will be better off as a result of the Government’s tax package including the full impact of new taxes and their flow-on effects or does he stand by his statement that the tax package is an opportunity only to ensure that people are not worse off? 
Hon BILL ENGLISH 
: Yes. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. With an either/or question surely a Minister cannot simply answer “Yes.”? 
Mr SPEAKER 
: I listened to the member’s question quite carefully and I have to acknowledge that Ministers are entitled to answer just one part of a question. Although I accept that the thrust of that question was either/or the member asked fairly bluntly whether the Minister agreed with a certain statement and the Minister in answering said “Yes.” I cannot really do a lot about that. I think it is within the member’s ability to reword the question in order to pin down the Minister a bit more tightly if he wishes. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. You are therefore interpreting the Minister’s answer as confirming that the Prime Minister’s statement was correct and the Minister’s was not correct? 
Mr SPEAKER 
: No no—that is not a point of order. I ruled that the Minister had answered the first part of the question. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. How can it be that the Minister has addressed the question when he was given two alternatives and he has not chosen—apparently—either one? 
Hon Rodney Hide 
: It is clear in the Standing Orders that we cannot expect a Minister to answer a yes or no question and say it has to be a “Yes” or a “No”. An either/or question is in the exact same category. A member can ask a question; it is then up to Ministers to frame the answer as they best see fit as Ministers and in the public interest. It is also quite within the wit I think of the front bench of the Labour Party to ask that question in two parts. 
Mr SPEAKER 
: I invite the Hon David Cunliffe to ask a further supplementary question should he wish. 
Hon David Cunliffe 
: Has the Minister seen reports that say that almost two-thirds of New Zealanders oppose an increase in GST; does he think that that is an indication that the vast bulk of hard-working Kiwis see the increase as unfair? 
Hon BILL ENGLISH 
: No I do not agree with the last statement. As to whether people agree with the increase or not will depend on two things: one what changes the Government actually decides to make; and two I think the vast bulk of hard-working Kiwi families know they need a stronger economy that produces new jobs sustainable jobs and higher incomes. If we keep doing what that member’s party did when in Government we would be strangling the export sector and running up unsustainable debt. We are not willing to do that. 
Amy Adams 
: What steps is the Government considering to make the tax system fairer? 
Hon BILL ENGLISH 
: Under the previous Government a proliferation of loopholes was created by a wide range of differential tax rates particularly for people on higher incomes with the effect that for instance half of the Inland Revenue Department’s wealthiest taxpayers reported taxable incomes of under $70000. The number of people paying tax on a million dollars did not change in the whole time Labour was in Government. That means high-income New Zealanders are not paying their fair share of tax and we are going to fix that. 
Hon David Cunliffe 
: Can the Minister confirm on that point that the net effect of his proposed tax cuts now will result in more tax reductions for the top few percent than the tax cuts he cancelled in Budget 2009; how can that either be fair or do anything for the New Zealand economy? 
Hon BILL ENGLISH 
: No I cannot. The member needs to take into account any changes the Government makes in respect of the taxation of property. It is clear from the data the Government holds that the ownership of property is in the hands of higher-income people so calculations on GST and income tax paint only part of the picture. If there is revenue that comes from property it is almost certainly revenue coming from higher-income New Zealanders. We will have to wait and see how the numbers shake out. 
Mackenzie Country—Government-owned Land and Dairy Farming 
7. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
 to the  
Minister for Land Information 
: How many hectares of land does the Government own in the Mackenzie Country and has the Government given consent for any of this land to be converted to irrigated dairy-farming? 
Hon MAURICE WILLIAMSON (Minister for Land Information) 
: 
 The Mackenzie District is 744000 hectares of which approximately 323000 hectares are in Crown pastoral leases. It is not the Government but the local authority acting under the Resource Management Act that consents to a land-use change. 
Dr Russel Norman 
: Does he consider that converting the Crown’s high country land to irrigated dairy-farming land to be an activity that would affect or disturb the soil? 
Hon MAURICE WILLIAMSON 
: I am not going to offer a view on that matter. I know that the statutory independent Commissioner of Crown Lands makes the decision on any disturbance to the soil not the Minister for Land Information. 
Dr Russel Norman 
: In light of the fact that it is hard to see converting land to irrigated dairy-farming as doing anything other than disturbing the soil is it not the case that a lessee of Crown pastoral land must not undertake any activity affecting or disturbing the soil without the express consent of the Commissioner of Crown Lands? Has that consent been applied for? 
Hon MAURICE WILLIAMSON 
: The member is right. There are two instances where consent is required: the first is for soil disturbance and the second is where there are changes to the stocking of that land—that is moving from sheep to dairy or whatever. In both cases those applications are made to the Commissioner of Crown Lands. I am aware of only one application for soil disturbance consent being made and that was for a pipeline that passes over three successive pastoral leases. 
Dr Russel Norman 
: Has he discussed with the commissioner the fact that in spite of around 5000 hectares of Crown land currently being before the regional council to be converted and irrigated none of the pastoral land lessees has asked permission from the commissioner to actually irrigate this land in the Mackenzie Country? 
Hon MAURICE WILLIAMSON 
: My understanding is that because the Commissioner of Crown Lands is a statutory independent authority I would be acting ultra vires if I were to discuss such a matter with him. 
Dr Russel Norman 
: Is it not the case that the Commissioner of Crown Lands must take into account the objectives of ecological sustainability and protecting significant inherent values in the land—the public’s land—when deciding whether the land should be allowed to be converted to intensive dairying? 
Hon MAURICE WILLIAMSON 
: I understand that the conditions that the Commissioner of Crown Lands must take into account are very very well laid out in the Crown Pastoral Land Act 1998 which some of the conditions the member referred to are part of. 
Dr Russel Norman 
: Does the Minister believe that in losing 5000 hectares of dry tussock country—a native ecosystem that is habitat for many species of endangered birds and plants such as the black stilt—we will be losing ecological values? 
Hon MAURICE WILLIAMSON 
: Again I ask the member to be very careful about asking for my opinion. I am very very careful not to act ultra vires on such matters. A resource consent for land use should go through the proper Resource Management Act consent for the local authority; for soil disturbance or a change to stocking rate an application should be made to the Commissioner of Crown Lands. I can get myself into a lot of trouble if I start expressing in this House opinions that I am not allowed to. 
Dr Russel Norman 
: What steps will he take to ensure that the public which owns approximately 40 percent of the land that is affected by these proposals in the Mackenzie Country will have a right to decide what happens on that land? Will he support any changes to the legislation to enable the Government which represents the people of New Zealand to have a say over what happens on the public’s land? 
Hon MAURICE WILLIAMSON 
: I am very sure the public especially the members of the public in this part of the Mackenzie District are very very well aware of the law and how it operates. I am sure lots of those people will make their views well known whenever any resource consent soil disturbance or stocking change applications are lodged. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. My question was not about the people of the Mackenzie; my question was about the Government’s position—whether it would support legislative change to enable the people of New Zealand to have a say over these land-use changes. The Minister talked about the people of the Mackenzie which is fine but my question was specifically about the Government of New Zealand. 
Mr SPEAKER 
: I have to confess I did not pick up on that part of the member’s question. I will take his word for it and therefore invite him to repeat his question because I did not hear that part of it. 
Dr Russel Norman 
: Thank you Mr Speaker. Will the Minister support a legislative change to enable the public of New Zealand via their Government to have a direct say over the future of these 10000 hectares which they consider to be extremely valuable? 
Hon MAURICE WILLIAMSON 
: One of the things I have learnt in this House over many years is to never say I will support something until I have seen the details and the specifics and I know the exact proposal rather than something that Russel Norman may be proposing by way of legislative change on the minute and on the hoof. 
Iain Lees-Galloway 
: Given that uses such as intensive dairy-farming now appear possible in the fragile Mackenzie Basin will the Minister consider placing caveats on environmentally significant land released into private ownership under tenure review to prevent these activities? 
Hon MAURICE WILLIAMSON 
: The process of tenure review will take a long time probably 2 to 3 years in the case of those that are right down the pipe already and 5 to 7 years for some of the ones that are only just having applications made. During that very long long process a huge amount of consideration will be given to the issue. Those factors will certainly be taken into account. 
Accident Compensation—Legislative Changes 
8. 
Hon MARYAN STREET (Labour) 
 to the  
Minister for ACC 
: Does he stand by his statement “This legislative reform is part of the Government’s objective to secure the long-term future of ACC as an efficient and fair 24/7 no-fault insurance scheme for all New Zealanders”? 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 Yes. The legislation is needed to push out the full-funding date and reverse scheme extensions that were introduced by that member Maryan Street but never funded. The alternative was excessively high levy increases for workers motorists and business. 
Hon Maryan Street 
: Which part of the accident compensation scheme bill is fair when Te Puni Kokiri advice is that it will have a disproportionate effect on Maori who are frequently employed in more dangerous and lower-income occupations; and can he tell the House whether the Maori Party will vote for the bill? 
Hon Dr NICK SMITH 
: It is also important to recognise that Maori are levy payers. As a consequence of the quite reckless mismanagement of the accident compensation scheme the levies on Maori—those low-income workers—who are struggling with families— 
Hon Parekura Horomia 
: Oh rubbish! Come on Nick; come on Nick. 
Hon Dr NICK SMITH 
: Well Mr Parekura Horomia’s mind obviously was not on that when he was in Government. Actually Maori pay accident compensation levies— 
Mr SPEAKER 
: I apologise to the Minister but this is getting very messy. What led to the messiness was that the Minister was asked whether he stood by a statement. He could have said yes but he went on to give a lot more information which the primary question did not ask for. It did not ask for a reason; it asked just whether he stood by his statement. I did not intervene then. The member then asked a supplementary question which was not an unreasonable supplementary question. I believe that it did not deserve to be treated quite like that. I think the questioner should be treated with a little more respect. 
Hon Dr NICK SMITH 
: The issue for Maori and the accident compensation scheme is that Maori are substantive payers of accident compensation levies. In fact the accident compensation levy is quite regressive. It impacts on lower-income households more than it does on others. That is why the Maori Party’s concern has been as much about the viability of the scheme and the levies as it is about the claims from accident victims. 
Michael Woodhouse 
: What advice has the Minister received on the 12 extensions to the scheme’s entitlements introduced in October 2008 just 3 months after the Accident Compensation Corporation (ACC) declared its record $2.4 billion loss and what funding was set aside to fund these additional benefits in areas like suicide seasonal workers and superannuitants? 
Hon Dr NICK SMITH 
: Absolutely no funding was set aside for those extensions. It was quite frankly reckless after ACC had declared a loss of $2.4 billion for Labour just prior to the election to extend the scheme and amazingly also promise cuts in levies. It was reckless it was irresponsible and it is why some of the changes are required today. 
Carol Beaumont 
: How can the Minister say his legislative reform is fair when overwhelmingly submitters have said that the shutting out of those below an arbitrary hearing-loss threshold that particularly affects the elderly is “a breach of faith with older people.”? 
Hon Dr NICK SMITH 
: The 6 percent threshold for hearing loss is exactly equivalent to that in overseas schemes. For instance in Australia where they have 6 percent thresholds— 
Hon Annette King 
: So what? They don’t have accident compensation like ours. 
Hon Dr NICK SMITH 
: Annette King says that it does not matter. Let me tell Annette King something: if our economy is smaller and less able to provide incomes then the benefits— 
Hon Maryan Street 
: Is that called catching up with Australia Nick? 
Hon Dr NICK SMITH 
: Members opposite think they can afford a whole lot more social benefits without the incomes. In my view the huge increase that has occurred in the scheme’s hearing costs is part of the problem and that is why to be fair to levy payers we need to get those cost increases under control. 
Darien Fenton 
: How can it possibly be fair to force injured workers to use holidays to recuperate in and will he not even listen to Treasury which raised concerns in one of his own Cabinet papers that that was unfair? 
Hon Dr NICK SMITH 
: It is a very simple principle. Should people be able to receive accident compensation simultaneously with holiday pay? My view is that our social services schemes were never meant to make people better off than they would be if they were working. This change was made only at the last moment by the previous Labour Government after a $2.4 billion loss. Members on this side of the House say accident compensation was never about people being able to double-dip with both accident compensation and holiday pay simultaneously. 
Hon Maryan Street 
: Does the Minister agree with consultant advice to ACC that it is “too customer focused” and that there is a need to “drain the swamp” to exclude people from cover; and does he think it is appropriate that ACC is being advised to view injured New Zealanders as swamp-dwellers? 
Hon Dr NICK SMITH 
: Not at all. What I would say though is that over the last 5 years and during that Minister’s tenure the scheme’s rehabilitation rates constantly declined. That had a huge negative impact on the scheme’s liabilities. Members on this side of the House make no apologies for wanting the scheme to improve its rehabilitation rates and wherever possible to get people back to work and independent again. 
Hon Maryan Street 
: I seek leave to table the section from the Morrison Low report to ACC  
Cost Savings Review: July 2009 
 which recommends to the Government that it should “drain the swamp”. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Darien Fenton 
: I seek leave to table page 28 of the Cabinet paper to the social policy committee outlining the proposal for the Injury Prevention Rehabilitation and Compensation Amendment Bill which contains the Treasury comment referred to in my supplementary question. 
Mr SPEAKER 
: Leave is sought to table that page of a document. Is there any objection? There is objection. 
Young Offenders—Supervision Orders 
9. 
CHESTER BORROWS (National—Whanganui) 
 to the  
Minister for Social Development and Employment 
: What reports has she received on the effectiveness of current supervision orders for young offenders? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 A report released yesterday by the Ministry of Social Development shows that the current sentencing orders available lack effectiveness in dealing with our worst young offenders. This report is the first of its kind despite the fact that judges have been asking for an evaluation for more than 10 years. The report shows that 80 percent of young people reoffended after sentencing and over half of those who reoffended committed two or more offences. That is exactly what we said when we were in Opposition: the youth justice system is working for the bulk of our young people but for the 1000 worst offenders things have to be done differently. 
Chester Borrows 
: How is the Government addressing the issues raised in this report? 
Hon PAULA BENNETT 
: The report makes it clear that longer sentences and greater supervision are needed if we are to make a lasting impact on the behaviour of our worst youth offenders. Under our Fresh Start legislation we are doubling the Youth Court orders increasing supervision periods increasing mentoring increasing drug and alcohol rehabilitation plus introducing parenting education programmes to ensure that these young people have every chance to change their lives. 
Jacinda Ardern 
: Does she agree with the report’s finding that 84 percent of reoffenders went on to commit offences as early adults although proportionally fewer young people who had been in a youth justice residence did so; if so why has her Government closed Te Hurihanga a residential programme that led to an 82 percent reduction in reoffending? 
Hon PAULA BENNETT 
: We will be taking the learnings and the best from the Te Hurihanga programme and delivering a Fresh Start programme that will reach more young people. I think that that is important. There will be more mentoring and there will be more rehabilitation. As Mr Goff would say—although I never thought I would quote him—it’s “the many not the few.” 
Whanau Ora Task Force—Recommendations 
10. 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
 to the  
Associate Minister for Social Development and Employment 
: Does she agree with all the recommendations proposed by the Whanau Ora task force in the report released to her last week; if so when does she intend to release the report? 
Hon TARIANA TURIA (Associate Minister for Social Development and Employment) 
: 
 The Government is currently considering all the recommendations of the report and the report will be released once it has gone through the appropriate process. 
Hon Nanaia Mahuta 
: Does the Minister believe that the integrity of Maori Party policy regarding Whanau Ora will be compromised when the concept is 
implemented by the Government or had she always intended that there be a one-size-fits-all approach to Whanau Ora? 
Hon TARIANA TURIA 
: No I do not believe that the integrity of the Whanau Ora programme will be compromised because it was always believed that this particular concept could be translated into any community within Aotearoa. I have been very clear about that right from the beginning. 
Hon Nanaia Mahuta 
: I did not think integrity was in the Maori Party’s vocabulary. Does the Minister still believe that she retains support from the Ministers of Health and Pacific Island Affairs to initiate her original Whanau Ora policy and will this support extend to a preferred-provider pathway to implement Whanau Ora? 
Hon TARIANA TURIA 
: I am very happy to report to the House that all of the Ministers involved in this particular project have been supportive and that it is my firm belief that it will be rolled out as soon as possible. 
Te Ururoa Flavell 
: Tena koe Mr Speaker. Kia ora tatou e te Whare. Has the Minister heard any reports about how Maori have received the concept of Whanau Ora? 
Hon TARIANA TURIA 
: I have been advised that over 600 people attended the 22 hui held throughout the country by the task force to discuss Whanau Ora and that there were over 100 submissions. Overall the responses indicated enormous enthusiasm. 
Hon Parekura Horomia 
: Does she agree with the Prime Minister who likened Whanau Ora to a waterbed and suggested “If you push down on one side if you don’t address the problems it’s going to rise on the other side.”; if not why not? 
Hon TARIANA TURIA 
: I am hoping that the bed has just the Prime Minister in it and not the member who asked the question but I think—[ 
Interruption 
] 
Mr SPEAKER 
: I apologise to the Minister. The House has enjoyed a bit of fun on this but I cannot hear the Minister and I think it is only reasonable that I should be able to. I ask members to please be a little more reasonable with the noise. 
Hon TARIANA TURIA 
: Of course I always agree with what the Prime Minister says. 
Hon Nanaia Mahuta 
: When was the Minister informed that her comments to  
Q+A 
 suggesting that Whanau Ora was guaranteed $1 billion in funding were incorrect given that yesterday the Prime Minister confirmed that her desired funding was clearly not possible as the bulk of the funding will need to come from baseline budgets? 
Hon TARIANA TURIA 
: There was never any agreement by the Government that it would hand over $1.2 billion. In fact that amount was suggested at the economic conference that was held in Auckland—that 1 percent of the Budget might be a fair amount to look at changing the way in which services are provided in the social and health sector. 
Te Ururoa Flavell 
: Does the Minister know of any organisations that will be able to run with Whanau Ora? 
Hon TARIANA TURIA 
: There are too many to mention but what I will be supporting is an expression of interest process that will be rolled out seeking expressions of interest from those providers that are interested. 
Hon Nanaia Mahuta 
: I seek leave to table a document of a preferred-provider pathway model that was presented to the Minister so that the House can have access to it. 
Mr SPEAKER 
: Would the member mind telling the House where the document is from? 
Hon Nanaia Mahuta 
: Te Whanau o Waipereira Trust. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Te Ururoa Flavell 
: For the purposes of the House could the Minister explain why Whanau Ora is needed? 
Hon TARIANA TURIA 
: Because the results for w’anau have been disappointing because of the poor performance across the State sector. There have been inconsistencies fragmentation overlaps in service delivery duplication of effort and frequently confusion and frustration for those who have sought assistance. 
State Housing—Independent Advisory Group 
11. 
KATRINA SHANKS (National) 
 to the  
Minister of Housing 
: What steps is the Government taking to get the best out of State housing for those most in need? 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 I am pleased to announce the formation of an independent group that will advise on how we can get the best out of 69000 State houses worth $14 billion for those most in need to address the mismatch of housing size and location to demand and all within the current income-related rents environment. 
Katrina Shanks 
: Who are the members of the group and what skills do they bring to the table? 
Hon PHIL HEATLEY 
: Ministers were keen to bring together individuals with strong business and property backgrounds like Dr Alan Jackson from Fletcher Building as well as those from the social housing sector such as Major Campbell Roberts from the Salvation Army and Diane Robertson from the Auckland City Mission. We are confident that this team can help us make sure that the Government’s investment in social housing is getting to the right people. 
Moana Mackey 
: Has he made it clear to the Housing Shareholders’ Advisory Group that any privatisation of the Housing New Zealand Corporation’s State housing stock is categorically out of the question? 
Hon PHIL HEATLEY 
: We are yet to brief the shareholders’ group; it has only just been set up today. Ministers will make it clear to the group that income-related rents will stay. We will be increasing the number of State houses but as we do that we want to make sure that the 69000 State houses we currently have are being used to the best effect—for the most needy. That is what we will be doing. We are not privatising State housing. 
Mining in Conservation Areas—Prime Minister’s Interest in Company 
12. 
Hon PETE HODGSON (Labour—Dunedin North) 
 to the  
Prime Minister 
: Did he declare his interest in Jackson Mining when any Cabinet papers concerning mining in the Department of Conservation estate were discussed; if not why not? 
Hon JOHN KEY (Prime Minister) 
: 
 Jackson Mining is an Australian company that does not currently operate in New Zealand and to the best of my knowledge has no plans to do so. There cannot therefore be any conflict of interest between my shareholding and any decisions the Government may make in relation to exploring options for new mining on Crown land in New Zealand. But for the member’s benefit I advise that I sought confirmation from the Cabinet Office this morning and I have been advised that a conflict of interest does not arise in this case. 
Hon Pete Hodgson 
: Why has he declined my official information request seeking details about which Ministers have declared any conflict of interest; and does he still stand behind the argument that it would take too long? 
Hon JOHN KEY 
: Yes and because that has been a longstanding policy. 
Hon Pete Hodgson 
: Can he assure the House that his other overseas investments are not investing or considering investing in New Zealand? 
Hon JOHN KEY 
: Yes. I am more than happy for anyone to read my pecuniary interests. I own some shares in a company called The Little Nell which happens to be a ski-in ski-out resort in Aspen—and I doubt that it will be doing much in New Zealand anytime soon. I own some Bank of America shares that used to be Merrill Lynch shares. They were converted over there and because of my long-term contract with Merrill Lynch from when I was employed there it is hard to transfer them. But to the best of my knowledge the Bank of America has no operations in New Zealand. 
Hon Pete Hodgson 
: As a shareholder how was he not aware that Jackson Mining merged last year and sold its non-uranium interests? Was he simply not advised? 
Hon JOHN KEY 
: There was the small technical issue—I have been busy running the country. But I am the first to admit it was a bit sloppy. I bought the shares in 2001 and the last time I looked at them from memory was 2007 or 2008. At the time they were trading at 3.5c and when I offered them to my son who was 12 at the time even he did not want them. 
Debate on Prime Minister’s Statement 
Debate resumed from 11 February. 
Hon NATHAN GUY (Minister of Internal Affairs) 
: 
 Thank goodness for John Key! Just over a week ago the Prime Minister rolled out his statement to the House. It was a big bold vision for New Zealand to get our economy moving again. The Leader of the Opposition Phil Goff thinks that now is an appropriate time to say that he does not support GST. But we know—we have trolled back through the archives and the  
Hansard 
 records—that he supported a GST rise when he was in Cabinet during the 1980s. 
I have sat through five of these addresses addresses by the previous Prime Minister Helen Clark and by our very good Prime Minister John Key. Three of them were made by Helen Clark and they were very sleepy dreary affairs. They struggled to make any traction on the 6 o’clock news. In 2006 the first time I heard Helen Clark’s statement she was using the buzzword “economic transformation” which delivered nothing. Then in 2007 Helen Clark’s catchphrases were “sustainability” and “carbon neutrality” which struggled to deliver anything. In 2008 Helen Clark’s statement was all about lifting living standards but in that year the Labour Government upped spending and increased debt. Also we should not forget to mention the Electoral Finance Act. 
But now we have a very bold Prime Minister’s statement which was delivered just over a week ago by the Prime Minister the Hon John Key. It creates incentives for people to work hard improve their skills and get ahead. It encourages savings to boost our productivity and it is fair to all New Zealanders. 
Another important thing is that a big part of the Prime Minister’s statement focused on boosting infrastructure and the Government has a big work programme this year as we carry on delivering that. 
One of the roads of national significance was the road from Wellington to Levin which of course was significant to my electorate of Otaki. A sum of $2.2 billion was invested there. Transmission Gully is part of that package which was met with a huge amount of applause from my constituents in Kapiti and Horowhenua. 
The Government will also be focusing on putting ultra-fast broadband into New Zealand homes—$1.5 billion will be rolled out. 
For those who are interested and who are listening today I point out that a big part of the statement was about water storage and food innovation. There will be more investment in research and development and in science. 
Let us think back to what we have heard from the Opposition leader since the Prime Minister delivered his speech. We heard Phil Goff the leader of the Labour Party criticise the National Government for sitting on the sidelines during the period of recession last year. The prudent management of the Prime Minister John Key and his Minister of Finance Bill English means that we have managed to come through that period with some certainty and confidence. 
We know that Labour would have wanted to spend more if it had been in power. We know that Labour members would have wanted to borrow more which would have racked up debt. We know now having sat through Mr Goff’s speech that those members have very few ideas and no policy. We know full well that under the leadership of Phil Goff it would have been a case of “Just put it on the bill Phil and we will go down to the pixie at the bottom of the garden to see whether we can print some more money.” 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. You may well have been distracted when an unparliamentary expression was used. 
The ASSISTANT SPEAKER (Eric Roy) 
: I do recall that the member used a term that has been ruled out. All members are honourable members and proper names will be used. 
Hon NATHAN GUY 
: If we think about proper names we see that the Labour Party has a bit of an issue with trying to rebrand the image of its leader. Labour members have tried to ramp up their leader as “bikie Phil” “freezing worker Phil”—I have seen the brochure —“blokey Phil” and of course “robotic Phil”. At times we have seen “angry Phil” but nothing really works. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. Do I need to— 
The ASSISTANT SPEAKER (Eric Roy) 
: Well I did miss it. 
Hon Trevor Mallard 
: About seven times I think in the last couple of sentences the member has breached your ruling. 
The ASSISTANT SPEAKER (Eric Roy) 
: The member will desist from using terminology that has been ruled out of order previously. 
Hon NATHAN GUY 
: Thank you Mr Assistant Speaker. I think it is worthwhile focusing now on the GST debate which is very very important. We will reincentivise the economy and give more of people’s hard-working money to get the wheels turning on the economy. 
Hon Trevor Mallard 
: Hard-working money? 
Hon NATHAN GUY 
: It is interesting that Mr Mallard wants to pull me up about criticising Phil Goff. I know that Labour struggles to take the medicine but if we think about— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I think the member used to be a senior whip. He knows that members cannot refer to a ruling you have made or to a matter on which you have ruled. 
Hon NATHAN GUY 
: I am not referring to a ruling you have just made Mr Assistant Speaker. This is a very robust debate. It is the debate on the Prime Minister’s statement and I should be allowed to continue. 
The ASSISTANT SPEAKER (Eric Roy) 
: I did not pick up the comment that the Hon Trevor Mallard made reference to. I have now attended to the matter that occupied me and I will be paying greater attention to the member. 
Hon NATHAN GUY 
: I was alluding to the debate on GST. When we think back to 1986 when Phil delivered a speech in the House about GST we recall that he stated: “Every New Zealander will be better off under the proposals announced last night. It introduces a fairer system for New Zealanders. … It reduces the burden of personal taxes which wage and salary earners have to pay.” It was a great little speech by Phil Goff but I think that he has forgotten that message so we will be reminding him that he was part of the Cabinet that raised GST in 1989 with no compensation for workers or beneficiaries. I am proud that the National-led Government will not be carrying out those sorts of dirty tactics. 
Also Phil Goff the leader of the Labour Party has some kind of amnesia over chief executives’ pay does he not? He wants to pay our top public servants less but he was part of the Cabinet that gave them huge pay increases. Maybe he was asleep at that particular part of the Cabinet meeting. 
Labour members have resentment towards members on this side of the House. They resent effort and success. We need only look at the issue of national standards. 
When Helen Clark was in Opposition in 1999 she rallied against the fact that there were poorly performing students. She said it was shocking that 20 percent of our kids leave school being unable to read and write to a decent standard. Of course she is right; it is shocking. But the previous Labour Government had 9 years in which to sort that out. What happened over that period of 9 years? Lo and behold kids were still failing—and 20 percent of kids are still failing. 
That is why I am publicly supporting Anne Tolley and the great work she is doing towards the introduction of national standards. She has the support of the Prime Minister and the whole of the caucus. We cannot afford to have our kids slip through the cracks. If we want a modern economy then we want our children to perform and get a job. If we do not incentivise those kids to ensure that they can read and write to a decent standard then they will continue to slip through the cracks. 
It is also worth commenting on the bold programme we have. The Prime Minister delivered a very very bold statement. I alluded before to the fact that I have sat through five Prime Minister’s statements now. Two have been fantastic and I particularly applaud this one which outlines the massive work programme that the Government has laid out for this year. All the work is sitting in the pipeline. There are already 44 bills on the Order Paper. We have a Prime Minister and a Minister of Finance who will deliver a step change for our economy. We have a vision for New Zealand and a vision for our country. So I say let us bring on the Budget in a little over 90 days on 20 May for a brighter future. 
Over the next few months we can bet that Labour will be trolling around the countryside and trying to ramp up the GST debate but we know that those members are a very pathetic Opposition. We know that the phone is off the hook as Labour members go up and down the country trying to ramp up opposition to the increase in GST. We know that the Labour caucus is split. We know that those members have all sorts of leadership issues in their caucus. I believe that there is a four-way split currently. 
It was interesting to hear Simon Power allude to the fact that the only Labour member licking his chops after Phil Goff’s speech was Shane Jones the honourable member across the House. I believe he is another aspirant lining up behind Phil Goff to challenge him sometime between now and the election. We also know that many other candidates are lining up. There is the Cunliffe camp and the Parker camp. 
The Prime Minister’s statement was a bold statement that will deliver a step change for every New Zealand household. I stand here in support of that today. 
Hon PAREKURA HOROMIA (Labour—Ikaroa-Rawhiti) 
: 
 The previous speaker Nathan Guy was supposedly a great shearer. He made a whole lot of outlandish statements about the leader of the Labour Party and his speech stunk like the shitty dags that we have in the— 
The ASSISTANT SPEAKER (Eric Roy) 
: We have just spent some time on establishing with the previous speaker some protocols about what is acceptable in this House and that kind of terminology is not. 
Hon PAREKURA HOROMIA 
: I apologise Mr Assistant Speaker. I thought that as a farmer you would appreciate that. That is what the member’s speech was. It was outrageous outlandish and full of statements that represented a warped and bent speech. It was not a speech for this time. How dare he talk about the leadership of the Labour Party when we know that he is trying to unseat John Key and that he wants to have my relation Hekia Parata as the deputy? That is one thing I do agree with the National Party on; that would be wonderful. We know about that because we are watching the situation. 
We ask Mr Guy what he is going to do about the people at Carter Holt Harvey in Otaki who are being put off. He is silent. He is not saying anything and he will not do anything. This is the same person who used to mistreat fleece-oes and give the workers in the shed a hard time and that is what he has continued to do on coming to Parliament. 
Hon Nathan Guy 
: I raise a point of order Mr Speaker. I take offence at that and I ask the member to withdraw and apologise. 
The ASSISTANT SPEAKER (Eric Roy) 
: I will determine what the appropriate course of action is. I had difficulty in picking up the exact diction so I cannot recollect exactly what was said. Let us all just have a breath and attempt to be a little more courteous on both side of the House in our conduct towards members across the House. 
Hon PAREKURA HOROMIA 
: Tena koe Mr Assistant Speaker. E mihi kau ana ki a koe mo toku tu ki te maka korero atu mo te tangata ra. 
[ 
Thank you Mr Assistant Speaker. I really commend you in respect of my standing up and casting aspersions at that person over there 
.] 
I thought I would go into Maori so that it could be translated well for you Mr Assistant Speaker though I have learnt the English language reasonably well. But the member opposite along with other members has continued to bastardise the opportunities of workers in this country. He has done that. He has ignored workers. 
National members have flip-flopped around and puffed about their GST change and what the increased rate will do for people. We do know that 70 percent of the benefit of changing the tax system will go to 3 percent of those who are paying tax. National’s mates at the top end will certainly get away with the benefits of that while the working class is being punished. I suppose that at the end of the day when National says it is trying to increase employment we have to ask why youth unemployment has doubled on National’s watch. There is an uncanny practice continuing that was prevalent when you were last in Government—when National was last in Government. 
The ASSISTANT SPEAKER (Eric Roy) 
: The member knows what his error is. He is not to do it again. 
Hon PAREKURA HOROMIA 
: My apologies Mr Assistant Speaker. When National was last in Government it put the minimum wage up by 37c. The benefit to Maori taxpayers 204000 of whom are on an income of under $38000 of the latest change will be between 33c and $1.31. What a laugh! What a crock! But that is what the Prime Minister is trying to sell to the working class in this country. National increased the minimum wage by 37c last time it was in Government. Labour increased it eight or nine times and we ensured that the economy was strong and surviving and that people were employed. 
I ask this question quite bluntly: what will the Government do about the 550 Maori in Hastings who have lost their employment over the last 9 months? What will Chris Tremain do about that? You know about it you see it and you were at the Motown Event on Saturday night— 
The ASSISTANT SPEAKER (Eric Roy) 
: Can the member be just a little more careful in his use of pronouns. He is including the Speaker in his speech. 
Hon PAREKURA HOROMIA 
: Mr Tremain was at the Motown Event trying to imitate the indigenous people. What has come out of the Prime Minister’s speeches is platitudes and a patronising of the indigenous people the tangata whenua. Tariana Turia knows full well that she has a battle on her hands. The Prime Minister preached about providing $1.2 billion but Tariana Turia knows she will be lucky if she gets a couple of a million. He starts talking about pressing waterbeds and he gets the notion that he is so sexy that when he smiles everybody falls over. What a crock he is. Is the Prime Minister aware that over 240000 Maori earn less than $30000 a year; if so why is he not doing something about it and why is there objection to a rise in the minimum wage to $15? 
I tell Georgina te Heuheu that this GST programme will put more people into hardship. The National members should be ashamed of themselves and Paula Bennett knows that. 
John Hayes 
: Wrong! 
Hon PAREKURA HOROMIA 
: It is not wrong and the member knows that in the Wairarapa it is time. Here is a person who has been siding with Bill English. Bill English has alleged that all of the problems are someone else’s. That is what he started off by saying. He was blaming us but the previous Labour Government left the books in the strongest position ever. In his first year in office he hid behind the global economic crisis. Everything was the fault of everybody else offshore. He did nothing to respond to the crisis other than cutting superannuation pre-funding. 
Bill English bleats that the situation is all Labour’s fault but the facts are that under Labour gross Government debt was cut in half. That is what happened and Chris Tremain knows that. Under Labour net debt was reduced to zero and members opposite know full well about that. Under Labour New Zealand achieved the lowest unemployment rate in the Western World; at 3.4 percent it was outstanding. When we came into office Maori unemployment was tracking at between 21 percent and 24 percent. We took it down to 7 percent. That is the best performance for a long time. Now I say to Mr Tremain in Wairoa in your area it is 38 percent. What are you going to do about that? That is in your area. You should not just go for a ride in the flash truck that you are using as free advertising in the airport parking lot; you should visit the Maoris and do something about that. You know full well— 
The ASSISTANT SPEAKER (Eric Roy) 
: Order! 
Hon PAREKURA HOROMIA 
: —it is a disgrace; it is a real disgrace. 
Under Labour economic growth was about 1 percent per year and that was healthy. That was outstanding. It was good for families it was good for the economy and everybody got there. People were getting educated; there was lifelong education. That shearer was talking about education. Do members know that half of the providers of community programmes have now signed off or been pushed out? So communities do not matter in the sense of the things that people go to: night classes and whatever else. I tell members not to huff and puff about education when the youth unemployment rate has nearly doubled. Does that mean that there are no real challenges today? No it does not. What it means is that Labour has a proud record that Bill English wishes was his. 
We do not see enough in relation to research and development. What has happened with regard to research and development? There has been a lot of preaching about innovation yet one of the things National did was to cut back research and development. It was like what happened to Te Waka Toi. I ask all of those Maoris over there on the other side of the Chamber why they are cutting back Te Waka Toi. Why are they knocking it over? I thought we were proud of our culture our arts and whatever else. I ask those members to tell me why that cut has been made. They are getting desperate when they are pulling funds from areas that do not really matter. 
Hard-working Kiwis deserve to be treated better than they are being treated by National and we know that. It is really important to understand that everybody has seen through this GST trick. You know there was a whole lot of ranting and raving about the gap between wages in Australia and those in New Zealand. But the last time that the National Government was in power it created a gap of nearly 15 percent and the same thing is starting to happen now. The gap held steady at that percentage. That is what happened then; there was an increase in the wage gap. 
John Hayes 
: 15 percent of what? 
Hon PAREKURA HOROMIA 
: The member knows full well what the gap is. It is the difference between the income per week of every household here measured against that of every household in Australia. National is sticking it to working-class people. It is ignoring them and it is playing footsie with all its well-off mates at the top end. That is a disgrace. That is outlandish. 
Paul Quinn 
: Who owns a farm? 
Hon PAREKURA HOROMIA 
: That is right. I own a farm because I worked hard for it; that is why I own it. I have been to cut scrub on the side of the hill and fenced in the rain to make sure I could get there. Our people do not even get that chance any more because National has denied them that through its slippery GST programme. That is what it has done. And Mr Tremain knows that that is outrageous. The Speaker did what I did. He worked in the rain; that is why he has a farm. That is why the fellow who has disappeared out there has a farm. But we had a chance and because we had successive great Labour Governments we had the opportunity. 
It is a sad day when we start to hear a Prime Minister’s speech like that one. He said today that if people are 100 percent without income that is communism. Is that what has happened to beneficiaries? That is what he said— 
Hon Member 
: He didn’t say that. 
Hon PAREKURA HOROMIA 
: That is what he said. He said he was sexy; he said that too. Paula Bennett was looking at me because she knew he had slipped up. For a change it was John Key doing that and not her. [ 
Interruption 
] That is right. She was looking at me and she knew that he was really up the pole. 
I want to mention Hone Harawira. You know Hone Harawira and I worked together for a long long time and he has been chastised— 
The ASSISTANT SPEAKER (Eric Roy) 
: The member’s time has expired. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Tena koe Mr Assistant Speaker. Hoi no me mihi atu ki a koe e Parekura mo ena korero rangatira hei manaaki i wa tatou nei iwi wa tatou whanau e noho mai na i te pohara i tenei wa. No reira tena koe. Hakoa rere ke ana taku korero i tenei wa hoi no he mihi tonu ra ki a koe. 
[ 
Thank you Mr Assistant Speaker but I must commend Parekura for those noble words about caring for our people and families who are living in poverty at this time. Well done. While my talk has changed somewhat at this point in time I really acknowledge you 
.] 
The Prime Minister did not talk too much about the foreshore and seabed in his speech last week so I am glad that my bro Te Ururoa raised that matter in his reply. Te Ururoa’s line was basically that the Maori Party is happy to allow this matter to be settled by the Iwi Leadership Group as the best group to represent Maori in negotiations given that every member is an elected member of his or her own iwi. There is undoubtedly considerable support for that point of view but if I can be so bold I suggest that that is not necessarily the view held by the tens of thousands of people who have voted for the Maori Party over the past 5 years. In fact going back to when the Maori Party was still just a twinkle in somebody’s eye I bet that if I had asked the 40000 people who marched on Parliament back in 2004 whether they thought the foreshore and seabed debate should be settled by the iwi leaders 39500 of them would have probably said no. 
You see the march on Parliament was not exactly loaded down with iwi leaders. In fact quite a few stayed away: some because they had plans to do their own deal regardless of what it might mean for other iwi some because they were offered a sweetheart deal by Labour to break ranks some because they were genuinely scared that being seen on the march might mean their iwi contracts got the chop and some because they were not sure whether their mana might be compromised by hanging out with the marchers. Certainly there were those who were not there but did their bit by helping out with the cost of transport for their people and organising trains buses etc. But given the fact that every man and his dog knew what day the hikoi was going to be marching on Parliament the absence of iwi leaders at Parliament was noticeable—and I know that because I know most of them personally and I saw very few of them there on the day. 
One who was there and prominently so was Sir Tipene O’Regan who told me that he had come up with his people from Te Wai Pounamu and that he was “bloody proud” to be there. Undoubtedly others were there as well. 
The ASSISTANT SPEAKER (Eric Roy) 
: I want you to consider the sort of adjectives you are using because they are out of order. 
HONE HARAWIRA 
: That was a direct quote. 
The ASSISTANT SPEAKER (Eric Roy) 
: I am on my feet. Please sit. It is not a matter of whether you are quoting something or any other situation. In this House those sorts of words are not acceptable. 
HONE HARAWIRA 
: Speaking to the point of order— 
The ASSISTANT SPEAKER (Eric Roy) 
: I have ruled on it. 
HONE HARAWIRA 
: Hoi na no hakoa tau nei whakaturengia e tika ana kia korero ahau i nga korero o nga tangata i korero mai i wa ratou whakaaro ki a matou i aua wa. 
[ 
However regardless of what you have ruled it is right that I convey what the people said back then when they expressed their views to us. 
] 
Undoubtedly others were there as well but in fact the leaders of the march itself were not the iwi leaders at all; they were mainly the hardened activists of the past 20 years who understood immediately the racism inherent in the foreshore and seabed legislation and made a snap commitment to be part of a national team stitched together at the last minute to organise the march and to ensure that as many people as possible were aware of the potential threat to our status as tangata whenua and our rights to our takutai moana. 
Yet for all the commitment made by the activist brigade the march would still have been a total flop if the people themselves had not stepped forward and they did—in their hundreds in their thousands and indeed in their tens of thousands. They came from everywhere: from the backblocks from the small towns from the streets of our cities and from Maori homes throughout Aotearoa—men women teenagers kids mokopuna kaumatua and kuia. Everyone was there. Regardless of what iwi or hapu they came from thousands marched to Wellington who had not even read the legislation and did not understand all of its technicalities; they probably did not even know what iwi they were. But they knew that something was wrong they knew that they were getting shafted they knew that their tupuna’s rights to the foreshore and seabed were about to get torn up and they wanted to do something about it. They did not wait for the iwi leaders or the activists to give them the nod; they jumped in and marched for their rights to the foreshore and seabed because they knew it was the right thing to do. 
The Maori Party has a commitment to respect those people because they are the people who helped us ride a wave of freedom and independence all the way into Parliament on a promise to be true to our kaupapa by taking major decisions back to them. I have always tried to include them in the dream that they have asked us to realise. They are the people who pin their hopes on the Maori Party getting the Foreshore and Seabed Act repealed and they want us to do our best to get a good result for everyone. We know who they are: they are the kaumatua and kuia who have known decades of deceit and dishonesty and who voted for the Maori Party because they wanted something fresh something honest and something Maori. They are our generation—a generation made cynical by stories handed down of politicians who talk up a storm but never deliver. They are the kids who want anything but te ropu teka rawa atu [ 
the most untruthful party 
] 
of yesteryear. And they have chosen us to carry this kaupapa. It is we the Maori Party members of Parliament who have been asked to carry this battle. It is we who have the honour of speaking up for our people on this take and in my view we do our people a grave disservice by passing it on to someone else to handle. I have no intention of treating my people with such disrespect. 
So what exactly does the Maori Party want to see after the repeal? Well folks I am happy to say that the kaupapa that I have been touting all around the place over the past few months was approved by our caucus last week as the basis for a new deal on the foreshore and seabed. It is based on a paper written for us by Moana Jackson which proposes the notion of tupuna title. That paper basically says that if the whole world already knows that Maori people were here first then let us stop being ridiculous by making Maori go to court to prove it. Let us simply accept it is true and build on it. It is also based on discussions I have had with a number of other people both Maori and Pakeha who agree with the Maori Party that we need a solution that shows we are serious in our intention comfortable with justice and mature enough to act with hope and with optimism. 
So here it is: three simple steps. The first is Maori title. If the Government can assume ownership of the foreshore and seabed with one Act they just as easily give it back to Maori with another. That step will put an immediate end to all the anxiety angst and anguish from the past and the decades of discord that will surely await us in the future if we do not act honourably now. The second is inalienability. In the same legislation we should include a clause ensuring that Maori can never sell the foreshore and seabed. That step fits with the Maori world view that we do not own land as a commodity but rather we hold it as a taonga for future generations. It will also put an end to all the rubbish about Maori only wanting it so we can sell it. The third is full access. Again in the same legislation we should guarantee full access to all New Zealanders because in the same way that Maori do not want it to keep it for ourselves neither do we want it to keep Pakeha out. As kaitiaki we must be able to set limits on access in order to protect seafood stocks promote conservation and control behaviour but granting access to Kiwis is an easy deal. 
There you have it: it ain’t rocket science but it will work. The technocrats have already pointed out some problems but they are not insurmountable. The vision is the important thing and if we can buy into that the rest will be easy. We are planning to take it out on the road because with a kaupapa as big as this we need to know that our people understand it that they agree with it and that they believe in it. 
In closing I thank the Iwi Leadership Group for its efforts and for the really positive outcomes that it has been striving to achieve. It has played an important role in bringing a different perspective to the whole debate. Although I say this very rarely I also thank the Minister for Treaty of Waitangi Negotiations Mr Chris Finlayson for his sincerity and his commitment in trying to achieve a result that comes close to realising our people’s expectations. On Waitangi Day the Prime Minister asked the following question: why can this not be the generation of New Zealanders who open the next chapter in our history? Well I say to the Prime Minister that the Maori Party is ready to take up the challenge. All we ask is that he and his Government be bold enough to take it up as well. Kia ora tatou katoa. 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 We have a Prime Minister who knows what matters a Prime Minister who is about getting the incentives right recognising hard work and getting the best out of New Zealand and New Zealanders. What is Labour focusing on? Well the salaries of 16 chief executives. I tell my colleagues that I have here a written question addressed to me recently. It asks about how many Pakeha Work and Income employs. There was a written question about who pays my coffee account over the road. I mean is Chris Hipkins so ridiculous that he hears me ordering a cup of coffee and putting it on an account and then decides that that should be a written question? He wanted to know whether we had been throwing lavish parties. I am happy to inform him and anyone else who wants to know that “SingStar and bring your own casserole” night was quite a success at my apartment and my staff and I thoroughly enjoyed it. 
Let us get this straight: last year in a bid to freeze my office and stop us from getting on and doing the job that we wanted to do Labour addressed literally thousands of written questions to my office—thousands; more than to any other Minister. You would think that would make Labour members sound hard-working but I ask how many stories they actually got out of it. How much traction did they get from all of those thousands of questions? 
There were the questions about how much money my office spends on stationery. Did they hope that would be the great paper scandal of 2009? How many stories did they get out of that? They have to do the follow-up work. They have to actually read the answers. The Opposition has to read the reports to make a difference. What Labour members did not know and what they were not used to was that they did not have all those people to read them for them; they have to do the hard work and they have to do the grind to make a real difference. 
Take last week in the House for example. Annette King said that I snuck the January benefit figures through and she stood up in question time all indignant. No I say to Mrs King I released them in a press statement that went to everyone the week before. Yes I did release them early because I thought they were relevant to the discussion that was being had around the household labour force survey and I asked the department to fast track the analysis but they were released. Quite simply Mrs King had not done her homework or read the news about the department that she is Labour spokesperson for. 
Labour members have set off on their attacks again this year. Members have to ask themselves what it is with Labour women and their hatred of National women. Do they set the girls on because they think it might look a bit bullying— 
Hon Steve Chadwick 
: I raise a point of order Mr Speaker. I take offence at that remark as I am sure other Labour women do. We have never expressed a hatred at all of National women. I do not want that on the record. 
The ASSISTANT SPEAKER (Eric Roy) 
: I know that the member has taken offence but the question is whether an offence has been committed. I am trying just to work through the context in which that was said. It was a collective statement and not levelled at any individuals. I think the safest thing is if the member Paula Bennett ceases to make those inference in the future. Is that OK? 
Hon PAULA BENNETT 
: My point was though that we get a real sense of bitterness. That was an example of it. Members know it—the venom is sort of crying out and they are getting themselves so worked up about it— 
Dr Rajen Prasad 
: I raise a point of order Mr Speaker. I also as a man took offence at the earlier statement. I respect your ruling. I think the member is persisting with exactly the same message couched in different words and I suggest that you advise her to desist. 
The ASSISTANT SPEAKER (Eric Roy) 
: I am not sure that I agree that the two terms that have been used rank in the same category. I have cautioned the member; I will be listening carefully to what she says. 
Hon PAULA BENNETT 
: My point is that what we get is a certain level of venom that is coming across from the Opposition and I just wondered whether it was sort of a gender thing that they did not want it to look like the boys were bullying or something. Well I say they should bring on the blokes man! First they are not going to be any better and second they might actually do some homework—they might actually read press statements and they might actually stick with the issues that matter to New Zealanders. 
Let us get to the real crux with a recent story that shows just how off the mark Labour can get. It is about Ivan from Nelson. Labour sees him as a victim; I see him as an awesome survivor. Ivan was working without pay at a brewery in Nelson after volunteering in the hope of getting a job there. He applied and he never heard back so he just marched on down there and offered to work for free to show what he could do. Well Phil Goff said it hurt poor Ivan’s confidence to get knocked back but I say good on Ivan. I say good on him for getting off his backside for taking some initiative and for not giving up at the first hurdle. Labour sees him as a victim—we can hear Labour members yelling it out as I speak—but I see him as one of life’s real heroes and a young man who will go far. 
When times were good we settled for below-average results for Maori and Pacific Islanders in our schools and now the Opposition wonders why they are hardest hit by a weak labour market. After 9 years of a Labour Government 49 percent of Maori children left school without level 2 of the National Certificate of Educational Achievement the minimum requirement for Modern Apprenticeships. There is a lot to turn round but where Labour gets it wrong is that our people have courage our people have aspirations. They do not sit around waiting for answers from the Government; they themselves get out and seek them and drive solutions that meet their own needs. This Government will support them in that. 
I ask why the whole Whanau Ora thing is so hard for Labour to understand. For years we have seen that Labour’s solution is “Let’s throw more money throw more programmes. Let us just chuck that at the problem and hope that it goes away—goodness help us if we actually stand up for accountability!”. Labour would micro-manage and get picky on ticking those boxes but not actually trust iwi or organisations to know what was best for them to see their own problem in all its totality and to get on with the job that really needed to be done. 
You know Whanau Ora has been developed by the Maori Party via the taskforce that went out and by all those other means—for example by going out and speaking at hui—but the concept is one that can apply to all New Zealanders. It is about seeing them in all of their individuality seeing them as they fit in with a family and seeing how that family fits in with a community in addressing all of those needs. It ain’t rocket science to know that it is about putting the strength back with the people—it is about putting that back with the people. It is a new innovative approach and one that this Government is very excited about. 
The welfare changes that the Prime Minister indicated as coming up are about fairness. The Prime Minister outlined some of the changes we are looking at and I cannot help but have a particular bias towards the work we will be doing with sole parents. We are backing them to back themselves knowing that a lifetime on welfare is one of dependency and limited income. But more than that I think that over time long periods on welfare erode one’s own spirit. If we ask what prevents beneficiaries from going back into work and what stops them from taking that step forward and finding out how they can get there they may not tell us directly. But they often will and if we take the time with them they will tell us that it is about fear—about putting themselves out there to employers and telling those employers that they are worth something. It is about trying to juggle kids and a household and the demands of running everything else around that and a job. It is no easy feat but it is one that these women are really capable of doing and one that I back them to do. I will not see them as victims and I will not see them as intergenerational welfare dependants; I will back them to back themselves every time and I believe that they can make a fundamental difference both to themselves and to their families and children. 
What will happen over a long period of time? We will see the changes coming incrementally as that work happens. We have heard concerns about how long it will take but by the time a bill is actually introduced goes through its select committee process and comes back to the House we will see some quite major changes in that and they are changes we absolutely believe in. 
In relation to the unemployment benefit after 1 year I think that it is often forgotten by the Opposition that that benefit is there for those who are temporarily unable to find work. There is the assistance there to help them back into work—seminars are going on access to training is there when they need it and there is assistance with CV writing interview skills and the right sorts of skills to get them back to employment. But the financial assistance is for those who are temporarily unable to find work; it is not for those who want to live a lifetime on welfare over long long periods of time and we will be addressing that. It is about getting tough on those who do not respect the fact that this is taxpayers’ money and that there is a whole bunch of people out there working really really hard to hand over their dollars to this Government in order for the Government to distribute them fairly. That is what these welfare changes are about—they are about getting it right. 
What the House heard the other day from the Prime Minister was a message about how we grow that pie not just about how we should divide it up. The argument for so many years has been about who should get which piece and how and how big that piece should be. We want to see New Zealand prosper we want to see it going ahead and that is what the Prime Minister’s statement tells us. 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
: 
 That was the Minister for Social Development and Employment—unbelievable! Under her watch unemployment has increased. Under her watch one in three Maori and Pacific young people are unemployed. Under her watch the community social services sector has been gutted because she has done away with Pathways to Partnership funding which was aimed at strengthening the whole sector. That was not a contestable fund from which only a few providers could get funding. Under her watch she operates under the dictum that more must mean more: the more she talks then the more she believes what she says. But that just does not wash in many communities because in terms of Maori and Pacific youth one in three young people are unemployed. What will she do about that? 
That Minister has introduced Community Max into communities that know that for only 6 months at best they will be able to provide an opportunity for young people. And now she has walked out because she knows that what people are saying to her is absolutely true— 
The ASSISTANT SPEAKER (Eric Roy) 
: The member cannot refer to the absence of a member from the House. 
Hon NANAIA MAHUTA 
: The Minister might wish to turn away from what I am saying. However she understands that what I and the community are saying to her is true about a 6-month opportunity for young people to be employed. Yes it is an opportunity but it is not a sustainable one. So she backs those people who volunteer and work in community organisations but does she look for sustainable opportunities for those young people? No. One in three Maori and Pacific young people are unemployed right now. I tell the Minister that and I ask what she is going to do about it. Unemployment has increased under her watch; what will she do about it? 
The Minister for Social Development and Employment points to the Prime Minister’s statement as being a great statement of hope and opportunity and of aspiration but what did the Prime Minister say? He said the Government will increase the GST rate and revamp the tax system but all the while there is no detail provided to low modest and fixed-income New Zealanders about just how that will increase job opportunities for people out there who want to work. This party here the Labour Party in Opposition believes that people want to work—yes we do—but we also believe that the Government should take a proactive role in ensuring that jobs are out there to be got. When we see 3500-odd people turn up in South Auckland for jobs at a supermarket there we know that people want to work but nowhere in the Prime Minister’s statement has he spelt out very clearly how this Government will create extra jobs. 
I say “Shame on the Minister for Social Development and Employment!”. One in three Maori and Pacific young people are unemployed as we speak. What is the plan there? Raising the GST rate certainly will not help them or their families but increasing the minimum wage to one that they could live on would help. Yet that Minister has the gall to say to this House that what she is doing is working. I say to her that clearly it is not. She should listen to people in the sector because they do have solutions out there. They want to work in a collaborative way; they know that by working together they can provide better opportunities but that those opportunities have to be sustainable. Those people are not into short-term fixes and they are not into glossy plans or marketing speeches from that Minister. 
I will also comment on the korero from Hone Harawira. I tenei wa ka mihi atu ki a koe Hone ahakoa “Kei runga te korero kei raro te rahurahu”. Ko tenei Whare he wahi hei taupatupatu i nga tino kaupapa o te wa. No reira ka nui te mihi atu ki a koe. 
[ 
At this point I acknowledge you Hone despite the saying “Words above but mischief underneath”. This House is a place where the really great issues of the day are debated. So I commend you greatly 
.] 
In many of Hone Harawira’s korero and on a number of other topics Hone has raised the fact that it is time to put away the past and that we need to look forward. I say that is indeed right because Maori deserve to have that type of leadership in this House. However when we come to the foreshore and seabed that is a difficult issue. No matter how much members of the Maori Party may continue to raise the issues of the foreshore and seabed in this House the political reality is very simple: they will not be able to deliver on the expectations they have raised out there in many Maori communities amongst iwi that Maori will own the foreshore and seabed outright. So the Maori Party members should just call a spade a spade and say their coalition arrangement with National will not deliver on that. But then that gets the Maori Party back to the point the very hard rub the position that it is in right now: how do its members deliver something better than what is already there? 
I acknowledge that the process that was undertaken to get what we have now regarding the foreshore and seabed was an imperfect process but let us look at the outcome. Maori have an avenue for iwi now to go into direct negotiations with the Crown to be able to strengthen their claim to and interest in the foreshore and seabed. They have an avenue now for iwi to be able to go to the Maori Land Court to get a range of customary rights recognised. They have an avenue now for Treaty claims that have foreshore and seabed issues as a component within them to be protected from that legislation if it is the wish of iwi. Maori have an avenue now that protects access to our beaches for everybody. They have an avenue right now under the existing legislation to protect and preserve existing Maori reserves that go into foreshore and seabed areas. 
So I ask the Maori Party members in a very serious way what they will do that is better and stronger than the position that we have now. They need to come clean and tell the truth to many of the iwi out there who have been led to believe from leadership within the Maori Party that Maori will own the foreshore and seabed outright no matter whether in the past it was sold or confiscated or whether for some reason or other they lost their mana over their particular area. That foreshore and seabed will be a very interesting landscape to observe and Labour will be happy to do so. But I tell the Maori Party members that they have to come clean with iwi about the expectations the party has raised that absolute title and confirmation of ownership will be given to iwi in terms of their foreshore and seabed spaces. I tell Hone Harawira that if he comes into my area and promises that he had damn well better deliver on it. People there will not take anything less than that and they certainly will not be happy if raised expectations are not delivered on. 
Let us go to the other issues because some very important issues were raised in the Prime Minister’s speech. At the heart of my korero I will focus on where the issues hinge together for the Maori Party. Prior to the election the Maori Party said it did not agree with GST being imposed on food costs. In fact it made a lot of comments about the fact that it did not agree with raising the rate of GST at all. I think raising the GST rate will be a coalition deal-beaker. In the electorate when I campaigned against my Maori Party counterpart that issue got a lot of attention from my constituents because in my electorate an average of 70 percent earn $40000 a year or less. They knew that if GST was increased they would have less discretionary money to spend on consumable items. It is simple. So a raise in GST will be a big issue for my constituents. I think it is a coalition deal-breaker but the Maori Party is saying right now that it is not. Well the simple fact is that even though that party has a member’s bill in the ballot that would remove GST from food the party can just deny support to the Government and squash the proposed GST increase there. But no the party’s co-leader said it is not a coalition deal-breaker. I say that issue will come back to haunt the Maori Party. 
The Maori Party members have not delivered on the issue of GST. They have not delivered on a policy of no tax for people on incomes of under $23000 a year. They have not delivered on a one-off payment of $500 at Christmas time for kaumatua. They will not be able to deliver on a repeal of the Foreshore and Seabed Act and deliver absolute title to Maori in that area. They are not allowed to introduce legislation to entrench the Maori seats. They are not able to achieve a rise in the minimum wage to $15. In fact our member Darien Fenton has vociferously advocated for that pathway not the Maori Party. Nobody seems to know what the Maori Party’s flagship policy Whanau Ora means. There is one definition from Paula Bennett the Minister for Social Development and Employment but that is totally different from the version of her colleague outside Cabinet. I am sure it is also totally different from the definition used by other Ministers around the Cabinet table. 
This is an interesting horizon. It is not one that offers the opportunity in jobs and growth that the Prime Minister outlined at the opening of Parliament. A simple rejigging of taxation does not deliver to low fixed and modest-income earners in New Zealand—most of all it does not deliver to young people. More important where are the jobs for the one in three Maori and Pacific young people who are unemployed in our country? This Government should be ashamed of itself. 
Hon GEORGINA TE HEUHEU (Minister for Courts) 
: 
 First of all I pay tribute to Jeanette Fitzsimons. I think she and I came into Parliament at the same time—1996. Over all the years that she has been here—and I think she will be a loss to the Parliament and a loss to the Green Party—I want to commend her for her integrity her absolute focus on the issues never a focus on personalities or politics in the sense that that sometimes goes on in this Chamber and her absolute belief in the things the Green Party stands for. I am not a supporter of many of its beliefs but I did always admire the way that she was clear she was consistent she was thorough and she worked hard. I think her contribution to this House has been pretty amazing. 
I also make a comment about a colleague of ours the Hon Parekura Horomia who came into the House in I think 1999. I was a little disappointed in the offering he gave this afternoon. He is better than that but he seemed intent on using unacceptably bad language and I know he has probably apologised for that. He still commands respect obviously from those who originally put him into Parliament. He still is an electorate MP and I am sure those people can rightly expect better of him as well. 
I am very proud to stand in the House this afternoon and support the Prime Minister as part of the National Government that he leads. I am very proud to be part of it and to speak in support of the statement he delivered to the House last week. In listening to the contributions made by the two previous speakers on the Labour side it is very easy to pick out bits and pieces that might suit one’s argument but in the end the wisest thing to do is to focus on the package that the Prime Minister outlined last week. Just to repeat what he said and he said it many times before that and has said it many times since: “In 2010 we will have a firm focus on growing the economy.” 
Hon Steve Chadwick 
: How? 
Hon GEORGINA TE HEUHEU 
: I will come back to that. That reminds me of what happened in the decade that the Labour Government was in power and ran up huge surpluses; when the National Government took over we certainly faced a global turndown but in fact the recession had started to set in before that time. Labour should be ashamed of itself about the surpluses that its Government was running in a buoyant economy because it did not lay up for the bad times ahead. A very good example is the fact that we inherited a number of legacies and ones that were not at all advantageous to the New Zealand public. But one of the things that was there when we came into Government was that over half of young Maori girls and boys were not achieving level 1 in the National Certificate of Educational Achievement. That is an indictment on a Government on a party— 
Hon Steve Chadwick 
: That’s not true. 
Hon GEORGINA TE HEUHEU 
: That is absolutely correct. That is an indictment on a Government that had every opportunity to make sure that young people were trained were educated and were skilled. We now have to deal with that legacy— 
Moana Mackey 
: Unemployment has gone up. 
Hon GEORGINA TE HEUHEU 
: They are right: unemployment has risen in the last 12 months but I do not know whether Labour has noticed that there was a global recession. Ultimately if a Government does not lay up educate support and nurture its young people then they will be the ones who will be hard hit when a global downturn comes. That is what happened. The members on the other side need to think seriously about what they did not do when the times were good and be a little bit more analytical about what it is we intend to do in this year and the years going forward. 
As part of our plan that was announced last week the Prime Minister laid out the following: a world-class tax system— 
Hon Steve Chadwick 
: There was no plan. 
Hon GEORGINA TE HEUHEU 
: We have signalled some of the things that we are going to do that we are thinking about. That is good. Going around New Zealand up at the Big Gay Out on Sunday moving around the grounds with the Prime Minister there was no one who said that they did not agree for instance with the Government raising GST. Nobody said that. They said they could see what we are trying to do and they were open to it because by gosh we have to do better with the New Zealand economy. That is what New Zealanders are saying. That is what they know. That is what they know needs to be done. 
We wanted a better Public Service when we came into Government. The previous Labour Government had built up the Public Service. Services were not necessarily the best. The people in Wellington—those numbers were just huge. We want a better-performing Public Service. We have put a huge emphasis on education and skills investing in infrastructure taking away regulation—red tape that was absolutely built up during the time of that Labour Government—and investing in science and innovation. There is a package. Members should look at the package. Members need to wait until the Budget and then they will see how this package comes together. People are at the heart of that economic plan—there is no doubt about it. 
I shall refer if I may to the emphasis on Maori and Pacific young people. The House will have heard many times already the Prime Minister’s absolute commitment to young Maori and Pacific children and young people—[ 
Interruption 
] Yes they have been hard hit by the recession but as I said that is what happens when we fail to nurture and educate them which is what happened in the period of the previous Labour Government. 
Hon Steve Chadwick 
: The creative industries are where they thrive. 
Hon GEORGINA TE HEUHEU 
: The member can say that but she knows very well that there is a legacy of underachievement uneducated and unskilled young people. Our emphasis will be on them. That is why national standards are so important. Those members should be ashamed that they would be happy to continue to see that one out of every five young people in New Zealand leaves school without literacy and numeracy sufficient to enable him or her to contribute to the economy. That is what members on that side are saying when they criticise national standards when they criticise what we are intending to do. 
We need all of our young children going through early childhood education. We need to make sure that young people leave school with qualifications. We need to ensure that the skills they need to help us grow the economy are theirs to be had. Labour would do well to encourage the schools the teachers or their colleagues and associates out in the public arena to support what this Government is doing. There is no point in raising— 
Moana Mackey 
: No we listen to them. We don’t treat them like idiots. They know what they’re talking about. We don’t treat them like they’re idiots. 
Hon GEORGINA TE HEUHEU 
: We do not. That is the problem: a Labour Government does. We do not treat them like they are idiots. People want better from our economy they want better from New Zealand and they deserve better. Our ability to engage with them is important. The ability of the Prime Minister to listen and engage with them is hugely important. They appreciate that. That side would do well to encourage the same. Thank you. 
Hon CHRIS CARTER (Labour—Te Atatu) 
: 
 I am not ashamed that the previous Labour Government ran surpluses because it used that money wisely to invest in the future of our country. Unlike the existing Government we had a plan. Under Labour we had the lowest unemployment rate in the OECD. That was part of our plan. It was by means of active engagement on the part of the Government that that was achieved. Was that not an amazing achievement in today’s world? Under the previous Labour Government we had the lowest unemployment rate in the OECD. We had a lower unemployment rate than Australia’s. Today after 15 months of the National Government we have a higher percentage of people unemployed than Australia does. I am not ashamed that we in the previous Labour Government used that surplus to pay off our Government debt. We had by the time we left office the lowest per capita Government debt in the developed world. 
I am not ashamed that we doubled education spending. We put it into everything ranging from an enormous boost of $1 billion that went into early childhood education developments over 9 years to interest-free student loans. I think something like 22 schools were built in the last year that I was the Minister of Education. It was an astonishing investment in education which I will talk a little more about in a minute. We doubled health spending. We focused it at the grassroots. Primary health care was a major focus of the doubling of that money from the surplus about which we were just criticised by the previous speaker Georgina te Heuheu for running up under the Labour Government. That surplus was used and invested for the benefit of our country. I am not ashamed that an extra $1 billion went into State housing. It went into income-related rents— 
John Hayes 
: Not in my electorate. 
Hon CHRIS CARTER 
: Oh did I hear that it did not go into that member’s electorate? That simply would not be true I say to Mr Hayes. Everywhere the State housing stock the largest asset that the Government owns was expanded and modernised. Most important of all we provided affordable rents to the poorest New Zealanders which lifted up the quality of their lives and the quality of their children’s lives. That had direct impacts on their health as well as their lifestyles. 
Those are things that I am very proud of. No Government would be ashamed of having made that sort of investment in the future of our country. 
The member Georgina te Heuheu kept making reference to Maori. Indeed it was under the previous Labour Government that Maori Television was set up and a whole host of other culturally and practically related things: employment education health and income-related rents for State houses 60 percent of whose tenants are Maori. Those things had a direct and positive impact on the lives of Maori people. 
We heard a lot in the Prime Minister’s statement about national standards. What a joke! I was the Minister of Education before the election and I think the National members came up with a slogan: national standards. They did not know what it meant. They have done no work on national standards at all. That is obvious because we are still going through the process of trying to discover what they are and how we are to implement them. National came up with a slogan; it sounded very attractive to parents did it not? It said we should make sure that someone’s 5-year-old 7-year-old or 9-year-old had reached a literacy and numeracy standard. Of course if National had bothered to do a bit of investigation it would have found that as the Ministry of Education told it straight after the election we actually already had those standards. They were called the Literacy Learning Progressions and the Numeracy Development Projects. They established a benchmark that each child was measured against. They did not establish league tables. League tables happened in the UK and the USA where schools’ achievement rates were set one against the other. 
All of the experts around the so-called national standards will tell us that they are the wrong way to go in measuring students’ success. We can put aside the whole debunked and ridiculous idea because as I said we already have a record in schools that is available to parents. Under the National Education Guidelines all schools have to report in simple language to parents. That is the other thing National members talked a lot about but actually it was already required to be done and the Education Review Office checked on it. That is interesting. 
One of the interesting things that National seems to love to do is to liberate accountability. One of the first steps it took in its new administration of education was to reduce the amount of checking that went on at schools. Now many primary schools will have children going right through the school without any review by the Education Review Office taking place. So parents actually will now have less ability to find out whether their child is being well educated than they did prior to the election. Under the Labour Government all schools were required to undergo a review by the Education Review Office every 3 years so that the community as well as the teachers could know what sort of job the schools were doing. They could get advice about doing things better and there were better educational outcomes. 
It seems to me that slogans have been used to sabotage what is a world-class education system. You know our education system is not failing; it is succeeding. By any international comparison New Zealand students have the highest the best scores overall in literacy numeracy and science in the whole English-speaking world. There are only a couple of countries Finland and Singapore that beat us in numeracy and literacy. We came best in the world in science. Out of the whole OECD scores those of New Zealand students at age 15 were the best in the world in science. Do members know what this Government has done? It did not want to put any more resources into education so it cut science music and art advisers. They were chucked out; they were all sacked so that the Government could employ a few more literacy and numeracy advisers. Our students are the best in the world in science at 15 years of age but now our schools do not have science advisers and 15 months after the election we still do not know what national standards are or how they will be implemented. 
Schools and principals have asked whether we could have a trial so we could have an evidence-based process to see whether national standards would work. For everything else that we do we have an evidence-based process. We have experts work out a programme and we test it to see whether it is working. We leave that in the hands of specialists. But is that good enough for the current National-ACT Government? Oh no it is not. National came up with a slogan during the election campaign. It did not know what it meant. All that it wanted to do was to push some buttons. I think it is called dog whistling politics whereby it was said that if people voted for National there would be national standards against which children could be measured and the schools would have to tell parents all about that. 
Of course as I said we have an education system that is among the best in the world. People come from all over the world to look at the work we do in literacy and numeracy in this country as well as at that in science and in the creative arts. I constantly dealt with delegations of educational experts who came from overseas to New Zealand. Indeed when I was at the education Ministers’ conference 2 years ago in London the education secretary the top civil servant in Finland the country that came top in literacy and numeracy in the OECD scores said to me that we were doing great things in New Zealand and she wanted to come and have a look. I asked her how things were going in Finland and she said they were not going as well as previously. She told me Finland had just elected a new conservative Government and it was starting to erode the processes. Is that not interesting? The chief bureaucrat not a politician but the top expert in education in Finland told me 2 years ago in London that she was really worried about where Finland’s new conservative Government was going in education. Sadly I am afraid we will have to repeat that advice to Finland now because our standards too will be eroded by the divisive process of so-called national standards. 
I heard the Prime Minister speak the other day. He said we need to get the students at the other end of the school those who are leaving school without sufficient achievement into apprenticeships and trades training—alternative paths for education. Then an amazing flash of déjà vu came to me. I thought of Schools Plus the programme that Labour came up with in its last year in Government. We developed it with the education sector with business with trade unions and with industry. Under that programme students staying at school were to explore different paths of learning and every high school in New Zealand was to expand on its Gateway programme which is its taster programme for work. Students were to have the opportunity to be based at a school and supervised by it but to be out working for maybe 3 or 4 days a week and the very able students were to go into tertiary education but be supervised by the school. Schools Plus was a comprehensive plan that was designed to deal with the tail end of underachievement which every developed country has. We have a smaller rate of underachievement than most other countries but we came up with that plan. 
What happened to the Schools Plus plan? It was ditched in the first month. Silly old Anne Tolley is a total embarrassment to the Government. She has recently been demoted and lost the tertiary education portfolio thank goodness. I cannot wait until she loses the rest of the education portfolio because then education might have a chance. Anne Tolley ditched Schools Plus straight away. She ditched another thing right at the beginning of the process. Labour had done an audit to find sites for new early childhood centres in Auckland as land is very expensive there. Twenty-seven schools put up their hands and said they would like to have an early childhood education centre on their land and the centre could have the land for free. But she cut that as well. 
DAVID GARRETT (ACT) 
: 
 Some have said that the Government had a relaxed first year free of fundamental reforms and that the real work begins now. I would like to at least partially dispute that. In my specialist area of law and order the change in Government has brought with it a major change of attitude. In the past year there has been a renewed focus on getting tough on our worst offenders on cracking down on criminal gangs and on looking after victims rather than paying lip-service to their rights. The ACT Party has played a key role in this. Without our input and support much of this could not have happened. 
The Prime Minister in his speech talked about the need for sensible Government spending to help grow the economy. The key to growing the economy and catching up to Australia is to allow the private sector to get on with the job free of excessively high taxation free of senseless red tape and free of crime. A firm law and order policy is not just sensible social policy; it is good economic policy too. If we practise zero tolerance on crime we reduce the cost of crime. A safer society is more productive and everyone will be better off. Locking up some people for longer will cost the Government a bit more but this is more than offset by the reduced cost to the private sector. 
A Treasury report  
Estimating the Costs of Crime in New Zealand 
2003/04 
 is an excellent piece of research and I wish such research were produced more often. The first few sentences of the abstract to that article are most revealing: “We estimate that the total costs of crime in New Zealand in 2003/04 amounted to $9.1 billion. Of this the private sector incurred $7 billion in costs and the public sector $2.1 billion.” It is easy to see that the costs of crime fall primarily on the private sector. The cost of dealing with offenders—processing them sentencing them and locking them up—is a fraction in fact about a quarter of what it costs the private sector. 
Crime costs the private sector $7 billion a year and 80 percent of the cost Treasury calculates is the physical and emotional effect of crime on the victims. It comes in their health costs their emotional costs and the impact on their way of life and also on lost output. I am not talking about burglary or theft; I am talking about serious violent crime. I quote again from the abstract: “Offences against private property are the most common crimes but offences against the person are the most costly accounting for 45% of the total estimated costs of crime.” Crimes against the person include serious violence sexual offences and aggravated robbery—all soon to be covered by the “three strikes” law recently announced. 
It is crucial that we continue to reduce crime in all its forms. The social and economic costs of not doing so are painfully obvious. If we go soft on crime the nation loses at least $74 million a year that could be better spent elsewhere. Is it economically speaking worth raising the costs of the Department of Corrections and the Ministry of Justice a little to reduce the burden on the productive sector? Absolutely! Morally speaking is it worth spending more to punish the worst offenders and prevent them from creating more victims? There is no question. The “three strikes” legislation will lock our worst criminals away for much longer. When they are in prison they are not out on the streets reoffending. Meanwhile the deterrent effect of the policy will stop others from committing more crimes. Some claim that crime is an irrational behaviour. Well overseas experience shows that a law like this causes people to think before they act. 
The Government has increased the number of police on the beat and is paying greater attention to both ends of the offending scale. It has got tough on gangs and drug dealers and made common-sense decisions regarding double-bunking and prison management. Keeping our citizens safe is the most important function that a Government can undertake. ACT has always recognised this. It is in our constitution very prominently. No better example of our impact in this Parliament can be found than in the “three strikes” policy. [ 
Interruption 
] Sir Roger pointed that out to me I say to that member over there. ACT campaigned for “three strikes” for many years and I am pleased to say that I could play a part in making this policy a reality. For too long successive Governments have given our worst criminals too easy a ride. That ride is shortly to be abruptly closed. Gone are the days of countless chances. We owe the victims of violent crime a far better deal than we have provided them up until now. 
However criminal apologists are spreading myths about the “three strikes” policy. Peter Williams QC has been painting a world for us where scores of mentally ill and homeless people are filling our prisons beyond overflowing. If he spent more time reading the legislation and less time reading Charles Dickens he would realise as most people already do that the “three strikes” policy targets the worst of the worst. Loitering or pickpocketing will not be found anywhere in the list of 36 offences that constitute a strike. I challenge Mr Williams and his ilk to explain why a three-time violent offender should not get 14 years for kidnapping 20 years for rape or life without parole for the most serious cases of murder. I wish him luck; he will need it. 
Meanwhile the eternally confused Mr Kim Workman first claimed that the “three strikes” policy would cause the prison population to triple. Similarly outlandish claims were made in California. When challenged Mr Workman quickly revised his claim and said the increase would be 3000 not a tripling. The reality is that in the first 5 years an estimated 56 of our worst criminals would be affected by the “three strikes” policy. This rises to 142 after 10 years 288 after 20 years and 433 after 30 years which is just over 10 percent of Mr Workman’s revised figure. One can expect the actual figures to be lower. If results from overseas are anything to go by we can expect a substantial deterrent effect. 
For those who blindly claim there is no such thing from laws like this there is plenty of material out there to prove otherwise. I draw attention to two of those the first being the summer 2007  
Journal of the Institute for the Advancement of Criminal Justice 
. It states: “The number of third strikers in California declined every year from 1997 to 2003.” Members should note those dates. In 1997 there was a plummet in the numbers 3 years after the law was introduced. A 1999 FBI study also shows that since the “three strikes” policy was implemented in 1994 overall crime in California decreased by 27 percent and violent crime decreased by more than 50 percent. It is true that the “three strikes” policy will imprison more people and the costs to the Government will modestly increase but because of deterrents this initial cost has been shown to be temporary. 
I am proud as my ACT colleagues are to have played a key part in this renewed focus on making and keeping New Zealand safe. It has been a good first year for this Government but there is much more left to do. 
Moana Mackey 
: What about the link with unemployment and crime? 
DAVID GARRETT 
: I tell the member that we had low unemployment under the previous Labour Government. Did violent crime decrease as the theory would have it? No it kept rising. 
We most certainly can create a low-tax high-growth economy that leaves no one behind. Our next target zero tolerance on crime has a crucial role to play in that and I look forward to playing my part in this process. Thank you. 
Dr RAJEN PRASAD (Labour) 
: 
 I am pleased to take a call in the debate on the Prime Minister’s statement. It is the first time I have responded to a plan from the Prime Minister. 
A few speeches ago we heard from the Minister for Social Development and Employment. I would have expected the Hon Paula Bennett to take the opportunity available to her to take the social development content of the Prime Minister’s statement further. It certainly was a glorious opportunity—a set piece if you like. We expected Paula Bennett to explain her social policy and social development direction a little further. That would have given us a sense of what the Government is trying to achieve in its social development programme as reflected in the statement. 
She could have at least taken the opportunity to explain her own philosophy about where she wants social development to go. A great opportunity was made available to the Minister. Perhaps she could have shared with us some of her own doubts and ambivalences about what her Government is trying to do and the problems it is trying to address in this country in terms of social development. I would have respected such a speech. I would have listened to it very carefully probably very quietly and even respectfully. That opportunity was there but it was missed. In its absence my women friends from this side of the House were railed against for no good reason at all. I would have thought that the opportunity might be taken but it was an opportunity lost. 
One looks for certain things in the Prime Minister’s statement. I would have thought the Hon Paula Bennett would have told us about the markers she was looking for. For me I looked for some kind of balance in the statement some kind of measure of fairness and also for solutions to the pressing social and economic needs of our society. I especially looked for comments on solutions to the needs of the most vulnerable in our community. This Parliament stands as their champions—and everybody else’s. For me there are two primary components that one looks for. They are the two components of national development and the core business of this House: the economy and the people without whom the economy would not exist. Those are the two components. Put another way one would have looked for the statement to address national development which is a result of the combination of economic development and social development. That is what I was looking for in the statement. 
I was also looking for solutions that benefit the many not the few. Let me take two examples. One is the policy framework for GST. The plan is to raise GST to 15 percent and colleague after colleague from this side has got up to demonstrate what the effects of that will be on a particular section of our society. The idea is to increase GST to provide some tax relief and at the same time to use a significant amount of that money to decrease tax at the upper end. In that statement and subsequent statements we are also promised that no one will be worse off. Well I think we should interrogate that proposition in some detail. Others have done it but I am trying to gauge for myself whether there is balance in that particular statement and I will use that proposition as an example. 
For those on low incomes the increase in GST even with some compensating tax relief means their situation gets no better. I do not understand how the Prime Minister can say that their situation will get somewhat better. It is not possible to see that occurring. However [ 
Interruption 
]—I will explain to the member how that is so and I invite him to do this exercise in his own electorate with people who fall into this particular category—for the other end of the spectrum for those earning above $70000 the benefits will be enormous compared with the benefits for those who are on a limited income. For an individual or a family on a low income for low-income people who work hard for their wages any increase in GST in the cost of food clothing petrol rates etc. raises enormous burdens. 
After paying for the basics those families end up— 
Hon Dr Wayne Mapp 
: Haven’t you heard about the compensation provisions? Don’t you listen? 
Dr RAJEN PRASAD 
: The member may not want to listen to the analysis. There are not many people of that nature in his electorate but there are in an electorate not far from his. For them the benefits will be nil but for many in his electorate there will be significant benefits and perhaps that is where his interest lies. My interest is in seeing a balance between the two. After paying for the basics families on low incomes will end up with no spare cash at all. Even with tax breaks there will be no benefit to them at all. They spend 100 percent of their income—the member knows that—on just living day by day. Is that the step change we have been promised in the statement? It is not a step change. It actually is a continuation of the kinds of policies that National Governments have pursued for generations—privilege the rich and punish the poor in one form or another despite the rhetoric. For those on high incomes a smaller percentage of their income goes on the basics and the tax cuts will give them quite good relief. So GST increases will be a huge burden for low-income households. 
If we deconstruct the proposals on GST in the Prime Minister’s statement we cannot be satisfied with them. If members opposite were intellectually honest and applied their minds to the exercise they could not be satisfied that that policy is fair to the human input into national development. Therefore it is a policy that is not balanced. Therefore it is not fair. It is to the contrary; families at the lower-income level will still struggle. It is really a shift of resources from the poor to the rich. 
There is another matter that I want to raise. A lot is said in the statement about social services. It purports to address the emerging underclass. The Prime Minister plans to improve social services. We do not know where Whanau Ora will lie. I hope it will lie in a place where it does improve social services beyond where they are today. I will not bag the social services of today because the people who do that work day in and day out go out and do work that nobody else in our society wants to do. 
Te Hurihanga was a programme that was actually working and working successfully. 
Hon Member 
: Aw! 
Dr RAJEN PRASAD 
: If that member would like to identify himself and say that it was not I would question that. It was not social engineering I say to my good friend. That programme was working and working for the most difficult 20 cases or so. Last week Mr Power challenged us that we do not know what we are talking about. Well I challenge Simon Power to take a call and tell us the real background to tell us what it is that Judge Caroline Henwood does not understand. The newspapers report daily that that was a stupid decision. Somehow Paula Bennett turned it round in a perverse cynical kind of way. Her argument today was that by closing down that facility those resources can be used for the many not for the few. That is what she said three speeches ago. That is very cynical because that programme’s clients were the very people whom those on the other side say they are concerned about. They are the ones who create a lot of difficulty. 
By my two factors by which I judge the Prime Minister’s statement it is not balanced and it is not fair. It will not work in the long run. 
ALLAN PEACHEY (National—Tamaki) 
: 
 What a debate on the Prime Minister’s statement this has been! It is significant because of what it tells us about the state of the Opposition. During the Prime Minister’s address it was interesting to watch the way the Labour members reacted. There were the usual shrill squawking squeaking members who as we all know speak up and shout out without putting their minds into gear and without thinking. But the great bulk of the Labour members spent their time looking down and shuffling their shoes because finally some of them have come to the realisation—and that speech last Tuesday by the Prime Minister really brought it home to them—that this country has had 9 wasted years. 
The Labour Party came into office during the best of times and was kicked out in the worst of times. New Zealanders understand that New Zealand was well into recession as a result of the Labour Government’s policies long before the international financial crisis set in. In 2000 Dr Cullen and Miss Clark could not wait to put up taxation—they could not wait. What was it all about? It was all about driving initiative out of the New Zealand economy. It was all about punishing people who were successful. That is the fundamental tenet of socialism: people must not be allowed to succeed. 
Socialism thrives only when mediocrity is imposed upon the people. Dr Cullen and the Labour Party were saying to New Zealanders: “We know how to spend your money better than you do.” I wonder how many New Zealanders were denied the opportunity to pay a little bit more off their mortgages and to do a little bit more for their children because the previous Government drove up taxation. 
The Prime Minister’s statement foresees significant adjustments in the way that taxation is paid. It comes down to one word that the socialists hate: “choice”. Socialists dislike any form of choice whether it is about how people spend the money they earn whether it is about where people get their medical treatment or whether it is what school people send their children to. Above all else Labour denies our citizens choice. 
The Prime Minister’s statement begins to open up choice for New Zealanders. I welcome the prospect of more New Zealanders having more control over the money they earn. On this side of the House we believe that the person who earns the money is the person in the best position to decide how it is best spent in their interests and in the interests of their family. I look forward to New Zealanders soon having greater choice and a greater opportunity to do what is best for them and their families. I look forward to reducing the ability of big Government—the big Government that the last Government created; the big bureaucracies—to control the lives of ordinary citizens. 
I must also comment on the contribution of the Green Party in this debate. It occurs to me that to describe that party as a green party is a major misnomer. Any elements of any sort of constructive environmental policy have gone—that is now the domain of this side the governing side of the House. I humbly suggest that it is time we rename the Green Party the deepest dirtiest “Red Party” which is in effect what the Green Party has turned itself into. It has turned into the extreme left-wing of the Opposition. Let me tell Labour members that New Zealanders have got it worked out. New Zealanders see no future at all in the sort of mediocrity “do as you’re told” no-choice policies that are advocated by that party. 
Let us for a moment very briefly turn to education. Why have Mr Mallard and other Labour members been so timid in their opposition to national standards? Let me tell the House why. It is because the teachers’ union does not like and do not want accountability. We know that when the teachers’ union speaks Labour jumps. It has happened so many times. When the leadership of the teachers’ union speaks—it does not matter what is good for the country the economy the parents or the children—Labour jumps. 
We know that Mr Mallard is committed to standards in education. In 2002 he said: “We need to keep the focus on high expectations for all students.” The problem was of course that teacher unions did not allow him to deliver on that statement. Well I can tell the House this afternoon that National will deliver on those statements. 
I will look now at another aspect of Labour’s desire to control the people of this country. It wants to control the people who create the wealth and the jobs who make the economy work and who generate wealth for our people. In 2005 Labour signed off on salary increases of 5 percent a year for 5 years for the chief executives of the Government ministries. It signed off on salary increases of 5 percent a year for 5 years for some of the highest-paid people in New Zealand. 
I invite any Labour member opposite particularly the member who is yawning to visit my electorate of Tamaki and tell the people of Glen Innes that the Labour Party cares for them. The good people of Glen Innes—who supported me so strongly in the 2008 election and I thank them for that—are sick and tired of having academics and union organisers telling them what is best for them and their families. All those people want is to live their lives make things a bit better for their families and be responsible. 
I repeat the invitation. Any member on that side of the House is welcome to visit Glen Innes and talk to the people about their aspirations and about the fact that they have moved beyond the socialist control of the previous Labour Government. In fact I will go further; I will escort them. I will escort any Labour members. I will put them in my car I will take them around and I will introduce them to the people whom the Labour Party has stopped meeting: the ordinary man and woman on the street trying to make a go of it and trying to support their families. 
What about the huge increase in the Wellington-based bureaucracy? One of the great difficulties that this Government has foreshadowed it has to deal with is how to shift the backroom bureaucrats into front-line services. There have been huge increases in the size of the health bureaucracy—huge increases—and they have in no way been commensurate with increases in the number of front-line health professionals. It is the same in the education sector. Huge increases have occurred in all the ministries here in Wellington but we have very few extra teachers. There have been huge pay increases for the bureaucrats but not a lot for the people working at the front line. 
I summarise by saying that this is a very simple matter in the eyes of the New Zealand electorate. The National Party—the governing party—and its coalition partners want a better New Zealand. National has a vision for a better New Zealand and it is delivering on that vision. The Labour Party the deepest dirtiest “Red Party” wants to hold New Zealand back. It wants to strangle and stifle economic growth and the initiative of the individual. 
DAVID BENNETT (National—Hamilton East) 
: 
 It gives me great pleasure to rise and follow Allan Peachey’s speech. I think that he hit it on the head when he said Labour is the party that is trying to hold New Zealanders back. The New Zealand public have been held back for 9 long years and now they are finally getting some leadership. They are getting some direction they are getting a path forward and they are getting a Prime Minister who actually delivers and listens to what they want. This Prime Minister has taken on board the concerns of New Zealanders and has addressed them in a way that New Zealanders feel they have some support and empathy with. New Zealanders now feel that they have a part in the future and that they have a Government that listens to and delivers on their needs that has a purpose and direction and that is willing to make decisions for the benefit of this country. 
Before we look forward to what the Prime Minister said let us look back at the last year. It was a very difficult year for New Zealand as most economic indicators show with the change in the world’s circumstances because of the recession. But the National Government led the New Zealand economy through those difficult times. We took an approach that listened to the people and delivered a system and structure that meant New Zealand could sustain itself through the most difficult times. That is in contrast to what the previous Government would have done. It would not have been able to portray that or build New Zealand through a very difficult time. We need to give a lot of credit to the Prime Minister and his Cabinet and to the political parties that supported the Government through that time. It was difficult but now we have to make some more and bigger choices as we move forward to build a stronger country in hopefully better times in the next decade or so. The Prime Minister’s statement sets out the plan for how we intend to do that. 
National wants to build a New Zealand that emphasises the ability of people and our communities to succeed and prosper. We want to make sure that there is an attitude out there whereby people want to go for it and take advantage of their opportunities. We want to see New Zealanders have faith in their future and see the reward to be gained from taking the risks and doing the hard work that is necessary to make that future a reality. That is what the National Government is doing in the Prime Minister’s statement to Parliament. It is sending a message to New Zealanders that the time has come for them to follow their destiny and take advantage of what this great country can be. We will give New Zealanders the tools so that they can become what they deserve to be. We will not hold our people back we will not hold our country back and we will not tell people that we know everything. We are letting New Zealanders build their own future. 
That is why we have concentrated on many economic issues in the statement to Parliament and we have also focused on some other issues that are of a more social nature with regard to education and social well-being that are fundamental to building that attitude change. If we look at some of the economic issues that the Government has focused on we see that a big one is with regard to taxation changes. Most people out there are quite aware of the situation in the property market. New Zealanders have made an investment in that market that could be quite detrimental to the growth of this country. New Zealanders have not had the incentives to go out there and look for higher-income earning jobs or to get the skills and attributes that would give them higher incomes. Instead they have looked upon property as an investment vehicle. 
We want to change that attitude. We want to show New Zealanders that the attitude that people need in order to succeed in this world is one where people get the skills and they go into high-income earning jobs where they build not only their own personal wealth but also the wealth of this country. That is what we are looking at doing. We want to send the right incentives out there so that people make those choices. We are not trying to get people to make choices on the basis of what they see as tax incentives in the system. We want people to make the right choice on the basis of education and an understanding that they can build a career and find success. 
That is important when we see that the previous Government had the opportunity to do that for 9 years and it did nothing. All it did was to keep those incentives there so that people would invest in other structures rather than investing in themselves and in this economy. National is not afraid to make the hard decisions in order to change that investment philosophy so that people invest in their education and skills. When we look at the skills of New Zealanders we see that it is a very important part of what we need to have a fundamental change in attitude. 
We need to see that New Zealanders have the fundamental skills in their schooling system that will give them the opportunity to take advantage of the modern world. That is what we are doing with the national standards approach. It brings about a fundamental look at what we need in our schools for our young people so that they can achieve at school. Once again the National Government has shown itself as not being afraid to make the tough decisions and to go out there and provide leadership so that parents students and our schools will understand that we have a desire to see people attain their full potential. So just in those two elements of taxation and education we can see the philosophy that this Government is portraying through this statement to the public. [ 
Interruption 
] 
Labour members are trying to change the subject. They do not want to hear about education or tax cuts. What they want to hear about is how the top 16 executives in our Government departments should have their wages cut reduced or held. That would be the step change for the Labour Party. Labour members are now very quiet because they have no vision and no direction. The public saw that for 9 years and the public did not want it. It wanted to see direction a step change and some choices. The public wanted to see some decisions and to see the Government move ahead and that is what they are getting with this statement. 
What pleases me the most about this statement though is that it takes New Zealanders along on that journey. It does not force New Zealanders into one camp or another. We give New Zealanders the option of taking advantage of the process the Government will set up. We are not being dogmatic and saying that this is the be-all and end-all of all things. We are giving New Zealanders the tools to make that future for themselves. John Key will go down as one of the great Prime Ministers of New Zealand and as the leader of his generation because he has taken the people along with him. He has understood the psyche of the New Zealand public and has managed to incorporate that in his future delivery of a vision for this country. Bringing together a vision that people are part of means that one can actually have success because the ownership of that vision is not with the National Party or this Government. Far be it for the 120-odd people in this room to tell New Zealanders how they should live their lives. The vision and the purpose are owned by the people of New Zealand and that is the leadership John Key is providing. 
He is taking everybody together so that we can deliver a system and a structure that will enable New Zealanders to achieve. I think that is something that many of the politicians on the Opposition side need to take a good hard long look at because unless we can drive a country through itself rather than trying to drive it out of Wellington we cannot achieve what we want to achieve in Government. I think the key to what New Zealand is doing through this new National Government is that change is being driven through New Zealanders and their vision of what they can achieve and not necessarily the vision of this room. I think that is an important part of the step change that will come to New Zealand. 
We are giving faith to New Zealanders. It is about building the attitude of a new generation so that New Zealanders have faith in their ability in their Government in their institutions and also in their future. We are giving New Zealanders the brighter future that they sought at election time 2 years ago and the way to do it is by delivering not only specifics but also a future and a policy that people can buy into accept and have ownership of. 
It gives me great pleasure to be able to support this statement to Parliament. It is a very important start in the process of delivering that new vision and attitude for New Zealanders as we go forward. If we look at the statement we will see that it also includes a couple of comments that are very relevant to the Waikato that we need to be supportive of and they are around our Crown research institutes and our infrastructure developments. They are very pleasing for our region as well. Thank you. 
JOHN HAYES (National—Wairarapa) 
: 
 Thank you for the opportunity to support the Prime Minister’s speech and his vision for this country. I bring a message from the Wairarapa electorate and provincial New Zealand because the message was given to me very clearly over Christmas. The message was: “We got rid of those Labour jokers because we want change.” So I stand here tonight as a very strong supporter of the visionary statement of our Prime Minister. 
John Key and his Government are trying to do something very ambitious. He is trying to be more ambitious than Sir Roger Douglas or Ruth Richardson. His vision and aim for this country are to engage in economic reform but in such a way that the whole country comes with him. In contrast let me say that Labour lost office because it spent its last 9 years locked in the tail of the 20th century. It had no forward vision; it had no ambition. 
Hon Steve Chadwick 
: Instead of bouncing on a waterbed. 
JOHN HAYES 
: Contrary to those who would prefer to spend their life cushioned in a waterbed the key to New Zealand becoming wealthier lies in enticing all New Zealanders not just the elite and the well-off to think about a common future and working together. 
I listened to the words of the past Minister of Education Chris Carter and the wonderful things he had done for the people of New Zealand and why we do not need national standards. I would like to tell the former Minister that I was in Dannevirke on Saturday afternoon tracking back to Greytown from the 150th birthday celebrations in Waipawa and I ran into a couple of young boys on the street in Dannevirke—actually they were in a small cafe—and I asked one of them: “What’s 6 multiplied by 6?”. 
Moana Mackey 
: Oh you didn’t. 
JOHN HAYES 
: I did. 
Hon Chris Carter 
: Oh I bet you did! Ha! 
JOHN HAYES 
: Does Chris Carter know what his answer was? Fifty! This was from a boy who will be 12 next month and he does not know 6 times 6. But it gets worse. I then said to them: “Well we don’t know 6 times 6 how about 2 multiplied by 3?”. They could not answer that question. I tried to make it even easier. I said to them: “Look what is 2 multiplied by 2?” and I got a wrong answer. This is the legacy that the Labour Government has left us to sweep up. The dismal truth in this country is that those boys and their parents have been living in a fool’s paradise for the last 9 years. They have been protected by the spending patterns of Helen Clark and Mr Michael Cullen who increased Government spending over those 9 years by 45 percent. 
Let us not talk just in percentages. I heard on the weekend from a recently retired public servant and I do not want to embarrass this person by mentioning his name that over the 5 years of his tenure— 
Moana Mackey 
: Which means that they are made up as well! 
Iain Lees-Galloway 
: Is this person real as well? 
JOHN HAYES 
: OK that person was from NZAID. Over the past 5 years its staff numbers have gone from 250 to 500. My constituents in the Wairarapa—and Parekura Horomia’s constituents in the Wairarapa—are picking up the bill for this nonsense. It is Government spending out of control. The result is that we have bled our skill base to Australia and to other countries. 
Prime Minister Key has enunciated ambitious measurable long-term goals for all New Zealanders to strive for. All of us are crucial to achieving those goals but each of us must help paddle the waka until we reach the targets of John Key’s aspiration. 
His vision has six drivers: first a world-class tax system; second better public services; third improved education skills; fourth investment in infrastructure as we are seeing on the Rimutaka Hill road at the moment; fifth regulatory reform to get rid of red tape; and sixth innovation. We need a tax system that creates incentives for people to work hard to improve themselves that encourages their saving and that boosts the productivity of investments. The aims of John Key’s tax reform will first of all create incentives for people to work hard to improve their skills and to get ahead. It will encourage them to save because we borrow far too much money outside New Zealand. The tax system needs to be fair to all New Zealanders. I was very pleased that the Prime Minister ruled out a land tax a comprehensive capital gains tax or a risk-free return method for taxing residential investment properties. We are committed to changing the way property is taxed. We are committed to reducing personal income tax. 
There will be no major changes to Working for Families. I 
will say again for the benefit of all beneficiaries that there will be no major changes to Working for Families. I have heard a lot this afternoon from various Labour speakers who are trying to put petrol on a fire that does not exist by saying that GST will put costs on all of us. Let me say loud and clear that people on low incomes will be compensated for any GST increases if that compensation is required. There is no fairer tax. I was told all weekend out in my electorate that this is the fairest thing we can do and people were supportive. 
Moana Mackey 
: You were not told that. 
JOHN HAYES 
: Yes I was. I was told in Waipukurau I was told in Waipawa I was told in Dannevirke and I was told in Pahiatua not to mention Greytown. 
The public service will continue to require savings because we are spending 45 percent more on public services than we were spending 9 years ago. We want to see stronger performance from Government agencies and we want to see an improvement in the way Crown assets are being managed. When I see the people without business skills whom Labour stacked on the boards of Crown entities I say that there is a very fast way of improving the return on those assets and that is by putting in new boards. 
I remember when Labour signed off a formal policy in 2005 to increase chief executive officers’ salaries in the public service by 5 percent each year for 5 years. Well let me tell the House that we cancelled that arrangement in 2009. By 2007 the second year I spent in this Parliament there was a 375 percent increase in the number of public servants earning $100000 or more since Labour came to power in 1999 and the constituents in my electorate found this absolutely abhorrent; they did not understand. The Labour Government let bureaucracy get out of control in this country in the 9 years that it was in office and the public service grew by 50 percent or by 30702 people in 1999 to 45934 in June 2008. 
Our focus this year will be on science and technology and on research grants. In the context of my work in the foreign affairs trade and defence area I am very pleased that we will be signing trade agreements this year with Malaysia Hong Kong and the Gulf Cooperation Council States while working on trade agreements with Korea India and I hope America. 
We have a vision for this country. The Prime Minister has articulated it and I am absolutely confident that not only members of Labour but the whole country will get behind his programme and will pursue that vision with its breadth and its very very wide base. I am quite sure this country will achieve Australia’s levels of income within the next 10 to 15 years and I look forward to being a part of the process that creates a step change in this country that moves us in that direction. Thank you. 
CAROL BEAUMONT (Labour) 
: 
 As I rise to speak I begin by wondering about the purpose of the Prime Minister’s statement. We have heard a lot of rhetoric from Government members on the other side of the House about vision and so on. Perhaps naively I thought that the statement would contain some sort of vision and perhaps a work programme aligned to that vision. But instead typically from that Prime Minister we have had a lot of political opportunism political rhetoric and the usual spin which has probably been tested on focus groups. And the statement lacks vision it lacks specifics it lacks empathy and it certainly lacks ambition. I thought that given the appallingly high level of unemployment in this country which continues to rise and disproportionately affects some groups—Maori Pasifika and young people—there would perhaps be some acknowledgment of the human cost of unemployment. In fact I think it behoves the Prime Minister to actually recognise that unemployment is about people. It is about people being without jobs; it is about people struggling to make ends meet. There was no empathy from Mr Key and there were no concrete plans in that speech to assist unemployed New Zealanders. 
I compare that with President Obama’s state of the nation speech which I will quote from: “If you haven’t been personally affected by this recession you probably know someone who has—a friend; a neighbour; a member of your family. You don’t need to hear another list of statistics to know that our economy is in crisis because you live it every day. It’s the worry you wake up with and the source of sleepless nights. It’s the job you thought you’d retire from but now have lost; the business you built your dreams upon that’s now hanging by a thread; the college acceptance letter your child had to put back in the envelope. The impact of this recession is real and it is everywhere.” President Obama went on to state that his agenda starts with jobs. There was nothing like that in the speech of the New Zealand Prime Minister. Unlike countries such as Australia the United Kingdom and Canada where there has been a real focus on stimulus packages that create and save jobs investment in people through skills and other training opportunities there is nothing like that here. 
I work in the Maungakiekie electorate in Auckland and I talk to people all the time. In fact I talk to people in Glen Innes—the people Mr Peachey was referring to earlier. I talk to people in the Panmure market on the streets of Onehunga and in my office. People are struggling. They have lost their jobs and they have lost hours of work. They have had small or no pay increases; 56 percent of people last year did not have a pay increase. This Government of course responded very generously by lifting the minimum wage by 25c an hour. Members should ask Aucklanders about that. 
Hon George Hawkins 
: How much? 
CAROL BEAUMONT 
: It was 25c. Even the poll in the  
New Zealand Herald  
overwhelmingly showed that Aucklanders believe the minimum wage needs to be $15 an hour; people know that one cannot live on the minimum wage. People are struggling and what do they have to look forward to? There are rises in accident compensation levies of course. Very likely there will be an increase in the GST rate which will disproportionately hit those on low incomes. To the members across the other side of the House who maybe do not bother to do this I suggest that they talk to budget advisers in their area. I suggest they talk to the good volunteers at the citizens advice bureaus and to some church ministers. They will reinforce that everything I have just said is true. 
The Prime Minister’s speech talked about the gap between income in Australia and New Zealand. When was that gap created? That gap in wages in GDP per capita was actually created under the last National Government. In fact interesting enough that Government over there is paying Dr Brash to come back with the same tired old policies that created that gap. Government members say they will not bother to use those policies but they are still paying him to keep trolling them out. 
Phil Twyford 
: What a waste of money that is. 
CAROL BEAUMONT 
: Absolutely! I can think of better things to use it for; that is for sure. 
We need to focus on other gaps as well. First and foremost is the gap between rich and poor in New Zealand. I was lucky enough the other day to be at the launch of the Salvation Army’s state of the nation report  
A Road to Recovery 
 in Royal Oak in the Maungakiekie electorate. In that report this comment was made: “But there is no denying that the recession is taking a social toll. Unemployment is at a five-year high gains made over the past five years in reducing child poverty have probably been lost and there are signs of a widening income gap between the well paid and the poorly paid.” Is there any recognition of that in the Prime Minister’s speech? The answer is none at all. 
Increasingly there is recognition globally that fairer societies are more successful societies. In the past New Zealand has been held up as a model of a fair society. Unfair societies are not sustainable; there is the cost of the health system of the prison system and to the victims of crime. Recently—in fact today—the Human Rights Commission was quoted about the costs of the very high unemployment rate faced by young Maori and Pasifika people. Instead of addressing inequality this Government is building on the inequalities that it has already put in place: the cuts to adult and community education while funding private schools; and tax cuts for the rich which are soon to be followed by more tax cuts for the rich. 
Mr Key in his speech did make a number of comments about lifting our economic performance. This Government is good at mentioning the word “productivity” but it is very poor at doing anything about it. Where is the plan around industry and regional economic development? Where is the recognition of the need to lift the quality of our workplaces: the wage rates the work conditions the quality of interaction and the opportunity for people to have a say? Productive employment relations—where are they? This Government sees workers and their rights as costs to be reduced. We have only to look at the double-speak in the Prime Minister’s statement. Under the heading “Better regulation” it reads: “… look at whether labour laws are imposing excessive costs on the country and holding back opportunities to create jobs.” Holidays and personal grievances are of course specifically mentioned. We also know that the Minister of Labour is looking at things like union access to workplaces and collective bargaining. I ask the people of New Zealand to remember what all of that kind of double-speak meant last time there was a National Government in place—the very same time that the gap in income between Australia and New Zealand grew so dramatically. 
The thing that I find very very upsetting and disheartening for our country is that skills are only mentioned once in passing in the Prime Minister’s speech and twice in his statement. That is one of the most appalling aspects of this Government’s performance. It does not understand the importance of lifelong learning that 80 percent of the workforce we will have 10 years from now is already in the workforce and that investing in skills is critical to lifting productivity and innovation. Investing in skills can be used to lift literacy an issue the Government is supposedly very concerned about and that can also help parents with their children’s literacy and learning needs. It is appalling. The lack of concentration on this issue is just mind-boggling. We cannot afford not to invest in our people our children or communities and in our economy. 
We have major skills deficits; technical and literacy skills are two of the key areas. A Government with some vision would invest substantial resources in training people in order to upskill our workforce. We should consider ideas like paying unemployed people to train and working with businesses to help them retain workers while they are being upskilled. By doing things like that we would be positioned to transform our economy at a time when we are perhaps coming out of the recession. The benefits would apply to individuals to their families to their communities to their workplaces to our society and to our economy yet this Government sits on its hands. It is just unbelievable that we have fallen so far behind the rest of the world in that regard. 
In this area the Government is not only lacking in ambition and vision but also very arrogant. Some very good work was indeed done by the previous Labour Government. There was Schools Plus. There was the Skills Strategy a comprehensive strategy agreed to by unions business the Government and the Industry Training Federation—by everybody. The National Government failed to pick it up because it was something from Labour. Well that is just arrogance in my opinion. There was the retraining allowance for those who have been made redundant after having been in their job for 5 years or more—I could go on. 
I will talk about listening to people though. Mr Bennett said this Government listens to people. I say he needs to come to Auckland and tell that to the people of Auckland. One of the areas in the Prime Minister’s statement was about Auckland’s governance. What a shambles! Everybody I speak to from every walk of life is angry worried and concerned about what is going to happen in respect of the Auckland super-city. We have had meetings across Auckland and I tell members that people are concerned about the lies—the fact that they were told that the powers of the local boards— 
Mr DEPUTY SPEAKER 
: I am sorry to interrupt the member but her time has expired. 
NIKKI KAYE (National—Auckland Central) 
: 
 I am delighted to rise and speak today. First I want to focus on the state of the nation that this Government was left. It is really important. When I get around the electorate one of the key things people say to me is that they are realistic—they understand what we inherited and they know that we will not be able to turn round the boat from day one. 
One of the key points I will raise today was highlighted in the Deputy Prime Minister’s speech. That speech highlighted the state of the economy we inherited. We found out today that in the 3 years to September 2008 spanning Labour’s term the economy grew by less than 1 percent a year. So despite all the rhetoric from the other side the previous Government did not deliver an economy that was healthy. That fact is really important because it demonstrates what we have had to turn round in terms of the economy. It is demonstrated by the fact that our economy grew by less than half the growth rate of the Western world and by less than one-third of the rate of Australia. I think that demonstrates from an economic perspective the state of the economy that we inherited. 
The second point I want to make is in relation to the bloated and inefficient public sector we inherited. I have a couple of statistics here. We have heard a lot from the Opposition—from Phil Goff actually—about what chief executives in the Public Service should or should not be paid. A report in 2008 stated that in just 2 years there was a 43 percent increase in the number of Public Service staff earning six-figure incomes—not including chief executives. 
Between June 1999 and June 2008 the Public Service grew by 50 percent and that was not due to a whole lot of front-line doctors and nurses—we know that. We know that between 2000 and 2008 we gained 28 percent more frontline doctors and nurses but 51 percent more people were working in the Ministry of Health. So we inherited a very bloated and inefficient public sector and we have had to do a number of things to turn that round. I am proud of the work that each of the Ministers is doing in that area. 
We inherited from the last Government a very soft law and order system. I see the effects of that in my electorate particularly in the central business district. Many people across the political spectrum—poor people and people who are on higher incomes—are disgusted with the level of crime they have been subjected to. So I will reiterate some of the things we have done—which the Prime Minister mentioned in his speech—and some of our achievements in law and order by the fantastic team led by Judith Collins and Simon Power and supported in that effort by many other members of Parliament and Ministers. 
We have clamped down on the gangs and on P. We have taken action on violent crime including tougher sentences for crimes against children. We gave police the power to DNA test offenders arrested for imprisonable offences and we put in place stronger bail laws. That is a really important point because the previous Government really softened bail laws. A number of the situations I have experienced through my electorate office related to people who have been affected by the changes made by the previous Government. I am very proud of the fact—and my electorate has benefited from this—that we have put $200 million into putting 600 extra police on our streets. 
We have had to turn round what I would call a soft law and order system. We are also doing a heck of a lot in the area of justice and youth crime. That is a really important area and it is an area that is close to my heart. As someone who has a family member who has been involved in that area and has been through our prison system I can say that we have many issues in that area. There are many young people in New Zealand who have felt they have no other choice but to end up down that road. 
This Government will be vigilant about giving young people other options. We will do so through reform of the criminal justice system improving legal aid improving court processes and improving the treatment of victims and through actually saying to these young people that there is another way. We will give them other options including education and having real role models in their lives. We will actually be doing something to assist those young people. 
Moana Mackey 
: But not a job. 
NIKKI KAYE 
: I heard a little bit of a heckle from Ms Mackey about jobs. I will mention at this point some of the schemes that people in my electorate have benefited from. 
I wrote to 4000 young people in my electorate to let them know about the Job Ops and Community Max schemes that we have put in place. I know personally of people who have benefited from those schemes. Yes youth unemployment is an issue in New Zealand at the moment but I stress again what a young person said to me in my office. That person told me the people understand what we are up against that we inherited a very difficult economic situation and that we inherited an economy that was growing at less than 1 percent. People understand the economic conditions that we have been under. 
The other area I will talk about is education. There has been a lot of discussion about national standards but again what really strikes me is the number of parents who come into my office and tell me it is their right as parents to know how their children are doing in reading writing and maths. It is the right of parents in New Zealand—and I will fight for that right—to understand in plain English how their kids are doing in reading writing and maths. 
The polls show that parents absolutely support the national standards policy when it is explained. However I do understand that the challenge for us is to ensure that we can get people within the school system to support the policy. But I will fight for the fact that it is not acceptable in this country to allow one in five children to leave school without skills and qualifications. 
At this point I would like to reflect on many of the speeches made by Opposition members. Often we hear speeches that do not even lock into or debate particular issues but one core point of difference between members on this side of the House and members on the other side is that we will fight for the right for parents to be able to understand how their kids are doing in terms of reading writing and maths. It is a point of difference and I am proud to be a member on this side of the House who will fight for that right. 
In summary I stress that the challenge we have is that we inherited a bloated and inefficient Public Service and a soft law and order system. We inherited a country where one in five children are not in my view in a position to get a decent job when they leave school because they did not get the education to do that. I will fight for everything that we are doing to turn that round and to turn round the good ship that is New Zealand. 
I think we are at a really important point in New Zealand’s history. National has done a lot in the last year as I said to stop the ship from going over the waterfall but now we have to make the boat go faster. The Prime Minister has identified six key areas that we will focus on to make the boat go faster: a world-class tax system better public services education and skills investment in infrastructure and regulatory reform. 
A key point is that of tax. The Prime Minister has been very clear and many people have discussed the issue of GST. Again I make the point that some of these proposals will be announced in the Budget so we will hear an amount of scaremongering from the Opposition. We have heard that already today; it has made various assumptions. But one thing is very clear: we are committed to ensuring that if there are tax changes our most disadvantaged will not be worse off. We are trying to ensure that we create a tax system that gives incentives for people to work hard and improve their skills. We need a tax system that is fairer. The current tax system is not fair enough. 
I am proud to be part of the Prime Minister’s Government; I am proud to be a National MP. We are fighting for some very important policies. We are fighting to ensure that kids are able to leave school and get a job. We are fighting to give them a better education. We are fighting to ensure that the money that goes into public services goes into front-line services. We are fighting to ensure that victims of crime get a decent deal and we are fighting to ensure that our justice system is not weighted towards the offender rather than the victim. I am proud to be part of Prime Minister John Key’s Government. 
PHIL TWYFORD (Labour) 
: 
 As we sat in this House a week ago and listened to the Prime Minister mangle his reading of his speech to the House we could hear another sound apart from the mangling of those words. It was the sound of rushing air as New Zealanders’ expectations and hopes were deflated. 
This year was to be the year of governing boldly. The Prime Minister spent the days leading up to the Christmas holidays going out and briefing journalists about how this year was to be the year where he would shake off the shackles. He was going to do something he was going to be bold and he was going to unveil a plan for New Zealand. I think that “Governing Boldly” was part of a headline in  
North and South  
magazine. He was finally going to silence his right-wing critics—journalists like Fran O’Sullivan who had just got sick and tired of that do-nothing Prime Minister. He was going to show them that he was not in this job just for the fun of meeting Barack Obama. Well what a cruel deception! What did he deliver 1 week ago? It was a “non-plan” a medley of reheated old announcements and broken promises. 
Let us talk about unemployment. It is at levels not seen in this country for 16 years and record numbers of young people are in the dole queues. Our unemployment rate is 2 percent higher than that of our neighbours across the Tasman and the number of unemployed is growing at the fastest rate in a decade. But what does Paula Bennett say? She says we should not panic; there are jobs out there so we should not panic. I call that the  
Dad’s Army 
 approach to fighting unemployment: “Don’t panic Captain Mainwaring! Don’t panic!”. What did Paula Bennett say when the latest figures came out that showed there had been a huge increase in the number of young job seekers? She blamed it on a growing population. Whoops! She did not see that one coming. Well that is Paula Bennett; that is our Minister for Social Development and Employment. 
Mr Key talked about encouraging innovation skills and employment. Let us see what Mr Key said. He said: “I have also asked Ministers to look closely at … where we could do more to encourage innovation skills and employment.” Well how about not cutting the research and development tax credits? That would be a really good policy. How about not cutting teacher professional development in important areas like science? Yes that would be worth considering. We could also consider not gutting the Fast Forward scheme and not cutting tertiary scholarships like bonded merit Step Up and Top Achiever Doctoral Scholarships. 
Mr Key also said in his statement: “Science and innovation are therefore key elements of the Government’s economic agenda both this year and into the future.” Well how is this Government demonstrating its commitment to science and innovation? It has dumped $700 million in funding for innovation in the primary sector and has cut $300 million out of the research and development tax credits. That is how it is showing its commitment to innovation and economic development. 
This Government is very keen on the idea of three strikes but I think that the three strikes we should be thinking about are jobs strike one; innovation strike two; and tax strike three. Tax shows this Government’s absolute poverty of ideas. It promised an economic plan a strategy for growth but what did it deliver? It delivered the longest Dear John note in history addressed to the New Zealand public: “Tax cuts for the rich and the rest of you can go hang.” You see National knows only one tune; it sang it in Opposition and now it is singing it in Government. National cannot tell the difference between tax cuts for the rich and a growth plan for the New Zealand economy or else it thinks that New Zealanders are really dumb. Either way it will not work. 
If the Government raises GST it hits everybody but proportionately it hits low-income New Zealand workers and New Zealand families harder. Then the Government cuts income tax rates especially at the top end in such a way as to put $500 into the pocket of the Prime Minister every week and $2500 into the pocket of Paul Reynolds at Telecom but virtually nothing for anyone earning less than $48000 a year. Why would a Government inflict that on New Zealanders? Why would it push up the price of bread and milk when ordinary Kiwi families are struggling as it is to get through to the end of the week and have something left over? Why would it increase the power bills of Kiwis when an approaching winter will make it even harder for people to stay warm during those months? Why would a Government make it even harder for New Zealand families to fill up the car with petrol so that they can get to work every day? 
When we look at the Government’s plans on GST and take into account the calculations of the Tax Working Group we see that there is a projected net saving of only $200 million when the compensations that the Tax Working Group recommended are factored in. That shows that the GST increase is a sideshow; it will be destructive to Kiwi families. But that is not where the action is in this plan; the real action is to be found in the Government’s plan to cut the top tax rates and deliver a dividend to the wealthiest New Zealanders. Mr Key thinks that high-income earners pay an unfair share of income tax in this country. 
Well news flash! They pay a large proportion of income tax because they earn a larger proportion of income. The basic fundamental principles of progressive taxation have been the foundation of Government in New Zealand for 80 years yet this Government is intent on whittling it away. The top 3 percent of income earners pay approximately one-quarter of all income tax but they earn according to the Tax Working Group approximately one-fifth of all income. The cost of living is the issue that is preying on the minds of New Zealand families up and down the country and an increase in GST will hardly make their lives better. 
But spare a thought for Aucklanders who are staring down the barrel of a super-city that is likely to significantly increase their cost of living. A  
New Zealand Herald  
poll taken a couple of weeks ago showed that nearly two-thirds of Aucklanders believed that the super-city would lead to a substantial increase in their rates and some of them said it would probably lead to rates increases of up to 30 percent. It is hard to say with any certainty whether that will happen and the reason is that the Government has not given the people of Auckland any estimate of the costs of the transition process or any estimate of the likely cost of the new super-city or the rates burden. All they have told Aucklanders is that Auckland ratepayers will be picking up the tab. 
Mr Hide the self-styled “Minister for Ratepayers” does not talk too much these days about the cost savings of the Auckland super-city. We do not hear him saying much these days. But it is not just the rates that Aucklanders worry about in relation to the cost of living in the super-city. They would not be so grumpy about the super-city if they thought they were getting value for money but they know that when the super-city rolls out volumetric pricing for water across the city they will be getting a pig in a poke. Our analysis of comparative water pricing across Auckland indicates that if Metro Water pricing rates are applied across the city a family of four in west Auckland or South Auckland will pay an extra $700 a year for their water. 
Carol Beaumont 
: That’s on top of increased GST and increased accident compensation levies. 
PHIL TWYFORD 
: That is right. Michael Barnett the head of the Auckland Regional Chamber of Commerce and Industry came out today with some stinging criticisms of the Government’s super-city plan. He is not alone and we will hear more in the coming days as the submissions to the Auckland Governance Legislation Committee are published. Is it any wonder that Aucklanders fear that their rates will go up while they watch local democracy go down the gurgler? 
I think Aucklanders would feel less grumpy if it was not for the fact that they see their local communities losing their voice and losing a say in local democracy. They see gerrymandered boundaries right across the city which is blatantly unfair. They see that the number of elected representatives in Auckland City has been cut in half at a time when local government unelected officials have grown by 30 percent in the last 5 years. They see the business of local government being wrapped up in corporate entities and their assets being readied for privatisation. That is no reassurance to Aucklanders that they are getting value for money. 
TIM MACINDOE (National—Hamilton West) 
: 
 I am very proud to take a call this afternoon in support of the Prime Minister’s statement and to be a member of a Government that is facing up to the major challenges that our country faces. I commend our Prime Minister for delivering such a comprehensive statement of intent. 
Carol Beaumont 
: Really? 
TIM MACINDOE 
: This Prime Minister leads by conviction and with integrity and I tell Ms Beaumont that the public are right behind him. 
His statement last week struck an excellent balance between having the courage to make some tough choices in the face of a very serious set of economic hurdles and a pragmatic and compassionate approach that reflects the very best principles of caring conservatism. Let us not forget that we are borrowing $240 million per week just to meet existing Government expenditure commitments. That is $12 billion of borrowing per year in a country of just over 4 million people. That is $12 billion without having one extra dollar to spend on new projects or to meet new demands. Every decision that we make as a Government must bear that grim reality in mind. So we must grow the economic cake. Not for the National-led Government unfortunately the luxury of sailing with a strong following wind. Labour members conveniently overlook the fact that they squandered the best economic conditions of a generation. 
Hon Steve Chadwick 
: Oh for God’s sake! 
TIM MACINDOE 
: I tell Ms Chadwick that Labour’s record in office was irresponsible in the extreme and its legacy is hurting the ordinary New Zealanders the Labour Party used to claim it represented. What was that record? Government spending was out of control and bureaucracy was the country’s fastest-growing industry. The causes of crime were ignored. The consequences of crime are felt ever more seriously in every town and city the length and breadth of this country. Education statistics which the Labour leader described as “shocking” when she came into office were worse when she left it. Labour’s 9 years of record surpluses were squandered lost and gone for ever. 
So I am very proud to support our Prime Minister’s vision and ambition for our country. It is not enough simply to lament the lost opportunities of Labour’s 9 years in office and I am certainly not prepared to accept as the members opposite clearly do that this is as good as it gets. Our goal as a Government must be and is to lift the long-term performance of our economy. Without creating the right incentives for the private sector to create jobs and enabling them to produce goods and market them profitably and affordably we will never rise up the OECD rankings never shorten our dole queues never again boast world-class health and education opportunities and never provide the world-class social services that New Zealanders want and deserve. 
Hon Steve Chadwick 
: Who wrote this? 
TIM MACINDOE 
: I tell Ms Chadwick that I wrote this speech and I am very proud of it. I bet the member is wishing she was delivering it because it is good and on our side of the House we know that the message is right. I tell Ms Chadwick that it is the message I get every day from my fine constituents in the Hamilton West electorate. Back in Hamilton West we are not greedy. We are not selfish as members opposite always want to infer whenever they are confronted by people who do not share their own ostrich political philosophy. The people of Hamilton West just want a fair go not just for themselves but for their families their neighbours and their friends. They know that we have to make New Zealand a more prosperous country that is capable of providing well-paid jobs and a better standard of living across the board. They know that John Key and the National-led Government with the important support of our minor party support partners are the team to lead us in that direction. We are facing up to the challenges and we are getting on with the job. We will not shirk from it and I am very proud to be a part of it. 
The people know that the six main policy drivers that our Prime Minister identified in his speech in this House just 1 week ago are the right priorities for us to focus on as we battle through the headwinds into calmer winds and better conditions. One of those drivers is a growth-enhancing tax system—one that is fair and rewards honest endeavour and encourages savings. The members opposite groan when they hear that which just demonstrates their economic illiteracy and frankly their cruelty as they condemn New Zealanders to more of the same—more of the dross that Labour delivered more of what we on this side of the House say cannot continue and will not continue. 
The programme includes better public services that meet our expectations especially when we send our children to school or face time in hospital and that will ensure that the vulnerable the frail and the elderly in our communities can live in dignity and with security. The programme supports science innovation and trade to ensure that we maximise the opportunities provided by our natural resources and the entrepreneurial gifts of the great New Zealand people. And what a gift we have as a people with our get-up-and-go attitude our Kiwi know-how can-do approach! We need to liberate enhance and encourage that gift and that is what the Prime Minister’s statement is all about. 
The programme also includes better regulation instead of more and more red tape which stifles every creative endeavour as we saw under the last Government. The regulations will give the right incentives and encouragements and protect our natural resources to ensure that the best decisions are made and that the conditions are created for sound development and best business practice. We had not heard of that for a long time under Labour but it is now fortunately coming back into vogue in this country. 
This programme is about investment in infrastructure. What a fine job the Minister for Infrastructure and his associate are doing for us! It is one of the real success stories of the first year in office. The people of New Zealand are delighted by it and they know that we are on the right path. We have to ensure that we can move around our regions our cities and our country safely and in an environmentally friendly and efficient way. That is good for the economy it is good for health it is good for safety and it will ensure that our economy is liberated and able to grow. 
We have to rebuild the schools that were falling down while Labour members looked the other way. What an appalling record they had in their school maintenance programme! It was absolutely shocking. They should all hang their heads in shame. 
Moana Mackey 
: What a load of rubbish! 
TIM MACINDOE 
: Miss Mackey knows that it was true. She absolutely knows that it was true. It was happening in the electorate that she one day wants to represent but because of that record probably never will. 
We need the best broadband and other technological services available to help us to meet the challenges of the modern economy. We want improved education and skills without which no real progress will be possible. I congratulate and thank the many fine teachers in the Hamilton West electorate who are working with the Government to achieve those outcomes. They are a vital link in the chain— 
Moana Mackey 
: Listen to them on national standards then. 
TIM MACINDOE 
: I can promise Miss Mackey that they are very happy with national standards. I have met with them they support them and they are working hard to implement them. I tell Miss Mackey that I will be working alongside them to ensure they are given the support and the tools they need to do the job that 73 percent of New Zealanders agree with. New Zealanders recently urged them to make those standards and the raising of our educational achievements in schools a top priority. 
Kelvin Davis 
: Teachers teach kids not standards. 
TIM MACINDOE 
: Mr Davis is chipping in. What a shame he is not back leading a school! I acknowledge he did it well. We know that he would be one of the most enthusiastic people to embrace the national standards. He would give good leadership in his school. It is a great shame he is not there doing just that. 
In the time remaining to me I will briefly endorse the Government’s intention to reform our welfare system in line with the commitment that we made to New Zealanders at the last election. This year alone New Zealand taxpayers will fund an estimated $7.6 billion of benefits and income support. That figure quite rightly does not include our ever-growing number of pensioners drawing superannuation. 
Moana Mackey 
: Do something about unemployment. 
TIM MACINDOE 
: I tell Miss Mackey that that figure amounts to $20.8 million spent on welfare a day in a country of just over 4 million people. Typically whenever this subject is raised members opposite—as they are doing now—resort to tired slogans and empty rhetoric. I urge them to consider the consequences of continuing in the direction that they took us down over the past decade. We have to be able to tell hard-working New Zealanders that an honest day’s work is an important and admirable objective. We have to instil the work ethic. We have to reward all those young and not-so-young people who are out looking for a job. We have to assure them that if they are genuinely in need of income support we will provide it. The welfare system will be there for those who need it. That is what caring conservatism is all about and I will fight for that throughout my career. But equally we have to structure our welfare system to encourage self-reliance and to not encourage and trap people in long-term dependency. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 When the Prime Minister delivered his speech last Tuesday he was at great pains to insist and to convince us that he had a plan. Every Government member who has got up and spoken since then in this debate has insisted to us that they have a plan and that John Key has a plan. 
Tim Macindoe 
: We do have a plan. 
IAIN LEES-GALLOWAY 
: Well where is this plan? Where is the plan? This plan is more secret than the activities of the SAS. We know more about what Willie Apiata is doing in Kabul than what the Prime Minister is doing for New Zealanders. There is no plan. That is becoming more and more apparent. If there was a plan if the Government was serious about doing something for this country then the plan would be about relieving unemployment. A few weeks ago we saw some stunning statistics. I think John Key and the Government were actually quite taken aback at just how much the unemployment rate has gone up in this country since they came to Government. 
Kelvin Davis 
: That’s 15.4 percent of Maori. 
IAIN LEES-GALLOWAY 
: That is right. In my electorate of Palmerston North the unemployment rate is now at 8.2 percent. That does not sound an awful lot next to 15 percent of Maori but it is very high for our region. It is higher than the national average and it is very unusual for our region to pop up above the national average. So where was John Key when the unemployment rate was rising? Where was his plan? What was he doing? Well he was probably talking to himself in the mirror congratulating himself on being voted the sexiest politician by a condom company. But that is kind of appropriate is it not? Because he was not brought in to lead; he was brought in to be the smiling waving acceptable face of the National Party. He smiles and he waves as jobs get cut—jobs like frontline services at MidCentral District Health Board in my electorate and jobs like delivering diabetes intervention and support services. 
When it comes to health care this Government does not have a clue. There is an old saying—it is common sense it is a bit clichéd but a lot of common sense sayings are—that prevention is better than cure. But prevention is well and truly out of fashion with this Government. Any programme that teaches people to take control of their health and to take control of their lives has been cut. Healthy Eating - Healthy Action has been cut. Fruit is out; pies are in. Targets to reduce obesity to maintain good oral health and to vigilantly monitor the mental health of our communities were all cut—every single one. Prevention is out of fashion with this Government. What do we get instead? Surgery is what the Government is focused on. When it comes to obesity what is the latest plan? Stomach stapling gastric bands gastric bypass whatever we want to call it the answer is the same and that is basically to take no personal responsibility. The Government is not going to help people take any personal responsibility it is not going to help people out but maybe if they are lucky it might offer surgery further down the track. 
Why is the Government so obsessed with surgery and this curative instead of preventative approach to healthcare? Well it is easy to measure. That is why. It is not looking for ways to improve New Zealand’s health it is not looking to improve population health but it is looking for things that are easy to measure—waiting times for example. I have not met a single clinician who thinks that emergency department waiting times are what we should be focusing on but they are easy to measure. Immunisation is actually quite a good thing. Thank goodness immunisation is easy to measure because the Government has stuck with it. Smoking cessation again is easy to measure. It is not the best approach; we should be preventing people from taking up smoking. But with smoking cessation we can tick the box give an extra piece of paper to the nurses doctors and the front-line healthcare workers and say they have done their bit on smoking cessation. 
The House knows that I have an interest in preventive strategies on tobacco. One of those areas that I have an interest in is tobacco displays. Scotland has recently banned tobacco displays the UK has banned tobacco displays Canada has banned tobacco displays and yet for some reason we continue to drag our feet in this country. Why? Because it is a difficult-to-measure preventive measure for trying to deal with long-term health issues. It is actually Tariana Turia’s preferred approach. She is the Minister responsible for tobacco control in this Government who does not get a say obviously; her preferred approach is down the gurgler as long as Tony Ryall is in charge. 
The other area we have been talking a lot about in trying to prevent people from taking up smoking is tax. Now would it not be ironic if this Government’s first move to try and curb smoking rates in this country was to increase tax? This from the Government that absolutely rock-solid promised not to increase GST before the election. Whoops there is another broken promise. But hang on; the Government did say that it would not have to increase GST if it was doing a half-decent job. So finally an admission from John Key that he is not actually doing a half-decent job. I think we should actually explore the issue of taxation as a tobacco-control method. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Debate interrupted. 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 I move  
That this debate be now adjourned 
. 
Motion agreed to. 
Financial Service Providers (Pre-Implementation Adjustments) Bill 
First Reading 
Hon SIMON POWER (Minister of Commerce) 
: 
 I move  
That the Financial Service Providers (Pre-Implementation Adjustments) Bill be now read a first time. 
 At the appropriate time I intend to move that the Financial Service Providers (Pre-Implementation Adjustments) Bill be referred to the Commerce Committee that the committee report finally to the House on or before 4 May 2010 and that the committee have authority to meet at any time while the House is sitting except during oral questions and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). 
The objective of this bill is to make a number of necessary and desirable amendments to the Financial Advisers Act 2008 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008 before being fully implemented by the end of this year. I recognise that that is a short time frame and I appreciate that this will put pressure on the committee and on stakeholders seeking to make submissions. However the register of individual financial advisers and other financial service providers is due to go online in the middle of the year with the regime to be in place in early December. It is critical that the industry has clarity about its obligations so that these timetables can be met. 
The Financial Advisers Act and the Financial Service Providers (Registration and Dispute Resolution) Act 2008 together with the Reserve Bank of New Zealand Amendment Act 2008 were part of a suite of reforms introduced by the previous Government and agreed with by this Government that were aimed— 
Hon Lianne Dalziel 
: That’s the first time you’ve actually mentioned us. 
Hon SIMON POWER 
: —I am getting the hang of that actually—at promoting confidence in the financial sector. I want to emphasise to those who may have an interest in this bill and to the chair of the Commerce Committee who is in the House this evening that this bill is not an opportunity to relitigate the fundamental policies of the regime upon which there is broad agreement. Rather the changes proposed in this bill are aimed at balancing our two objectives of encouraging confidence and promoting efficiency as we implement the new regime. Any submissions from stakeholders should keep this limited scope in mind. 
A number of the amendments in the bill are technical in nature and are intended to resolve uncertainties and create clarity for both industry and regulators such as by clarifying some of the product classifications under the Financial Advisers Act and by removing uncertainty over the territorial scope of the Financial Service Providers (Registration and Dispute Resolution) Act. These are matters that have been raised with me since I became Minister and I know that my colleague opposite has also had these matters raised with her as the previous Minister I suspect but certainly since that time as well. 
There is one specific area of the bill I would like to focus on regarding the qualifying financial entity framework. The qualifying financial entity framework is intended to improve the efficiency of regulation for large institutions so they are able to take responsibility for both the products being advised on and for the advice itself. Many large institutions such as the registered banks and the larger insurance providers have argued that the framework for the qualifying financial entity model does not balance the two objectives of public confidence and efficiency in the most effective way. At present the Financial Advisers Act allows qualifying financial entities to cover only products that they issue. I propose to widen this to include other products for which the qualifying financial entity has clear responsibility. In this regard I note that the Securities Commission has stated that it will use the terms and conditions of qualifying financial entity licences to ensure regulatory neutrality—and this is quite an important point—between qualifying financial entity advisers and non-qualifying financial entity advisers. 
Furthermore the Act currently distinguishes between financial advisers who are employed by a qualifying financial entity and those who act as the qualifying financial entity’s agents. Only employees are permitted to advise on their qualifying financial entity’s complex products. Provided the Securities Commission as regulator is satisfied that a qualifying financial entity knows who all of its agents are and has adequate control over the advice they offer this distinction is not necessary. I therefore propose to remove it thus allowing employees and agents to advise on their qualifying financial entity’s complex products. However as I noted this equal treatment depends on clarity over exactly for whom the qualifying financial entity is responsible and on the qualifying financial entity having good systems in place to manage the advice offered by its advisers. Although the Securities Commission already has quite broad powers to ensure that this is the case the bill clarifies the situation of financial advisers who are working for qualifying financial entities but who are not their employees by replacing the slightly unclear concept of a qualifying financial entity’s agents with a transparent system of so-called nominated representatives. 
I have been discussing the broader qualifying financial entity framework with industry and I expect that a number of stakeholders will make submissions on it. By following the principles of responsibility for products and responsibility for advice—and it is critical to emphasise that—the qualifying financial entity model should accommodate a variety of business models provided always that adequate supervision and oversight remains in place. My view and the Government’s view is that as long as the oversight of the advisers within these entities is not compromised the framework should be enhanced to improve its flexibility where possible. 
I will also respond briefly to some of the other issues that have been raised by industry in recent months but that do not appear in the bill. There have been calls for the Financial Advisers Act to be amended to allow some entities to provide certain types of financial advice but the cornerstone of the legislation is that the professionalism of financial advice is best encouraged by ensuring that it is delivered by competent and ethical individuals. Although it may be appropriate that changes be made to improve business efficiencies such changes must be consistent with this fundamental principle. I have also received requests for wholesale advice to be excluded from the regime. My view is that all financial advisers should be broadly inside the framework but that may be achieved through other avenues. Those discussions are continuing. Both Acts already contain a number of mechanisms that can be used to ensure that the obligations imposed on wholesale advisers are not out of proportion to the benefits of regulation—obligations including the option of tailored disclosure obligations separate standards of client care through the code of professional conduct and the recognition of entities as qualifying financial entities. The committee may want to consider whether these obligations are sufficient. 
Finally I would like to address the regime’s coverage of what are termed investment transactions in the Financial Advisers Act. These provisions are important as they relate to the protection of client money and property when this is handled by financial intermediaries. The mishandling of client funds has the potential to seriously undermine confidence in the financial sector. However the current framework established by the Act leads to an impractical outcome whereby natural persons alone can make investment transactions but not companies and other entities. This will create significant compliance costs for businesses without creating much benefit for the public. I intend to write to the select committee with additional proposed amendments to the Acts to ensure that that situation is rectified at the time the committee is dealing with this bill. 
Although I am still in the process of preparing my proposal it is likely to reflect the following features: it will allow both entities and natural persons to make investment transactions it will be a registration-based regime that leverages off the existing framework set up by the Financial Service Providers (Registration and Dispute Resolution) Act and the Financial Advisers Act it will maintain the minimum money-handling standards set up by the Financial Advisers Act and of course the Securities Commission will be the enforcer of that regime. Most important in designing this framework I want to ensure that the level of oversight is proportionate to the risk posed by the relevant transactions. 
I take this opportunity to thank the various stakeholder groups that have had input into this bill which will go a long way to improving confidence in New Zealand’s financial sector. I look forward to continuing to work alongside the select committee to ensure that the time frames originally set for the implementation of this legislation are not wavered from and we will make every endeavour to ensure that that is the case. I commend this bill to the House. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 Labour will be supporting the first reading of the Financial Service Providers (Pre-Implementation Adjustments) Bill. I thank the Minister for advising me prior to this evening of the shortened report-back period. Unfortunately he did not mention the extension of the hours of business but we will see what we need in terms of the select committee and of meeting the report-back date that has been set. I am quite comfortable with the underlying reason behind asking for this report-back period and that is the stated commitment to implementing the underlying policy framework as introduced by the previous Government and as agreed in a relatively non-partisan way across the House. 
I say also to the Minister that I feel very strongly that that principle of collaboration is very important in this area. There are other areas where I think it is important as well but I think this is an area where we need certainty. This is about confidence in our capital markets and it is vital that we can work closely together on getting a good outcome. Certainly I think the objectives on both sides of the House are the same. 
I want to pick up on one of the last phrases that the Minister used in his comments and that was the question of proportionality in response to the risk that is faced. I have always been very determined in my approach to regulation in this area to look at that question of proportionality. There are several layers of proportionality that I think we need to take into account. One is that there is a risk that when something bad has happened there is a tendency to over-compensate for that situation and over-regulate thereby creating a disproportionate response to the actual level of risk. Therefore I think it is important to assess what that risk is right from the outset. A good regulatory impact approach to regulation is one that will always define the mischief that one is intending to remedy and then looking at the variety of options that are available to remedy that fault and looking at what the costs and opportunities the risks and benefits might be in any particular case. 
One of the concerns I have heard expressed is that passing quite complex legislation in quite a tight period in the lead up to a general election is not ideal in terms of getting the detail absolutely right. I am very comfortable with the idea that we will be looking at the detail rather than at some of the fundamental policy drivers that lay behind the framework we introduced. 
The qualifying financial entity framework was designed with the concept of proportionality in mind because it was not the same as an individual financial adviser who is essentially accountable to no one other than by voluntary membership of an organisation that ultimately ended up showing that it had no teeth if the individual withdrew from that organisation prior to the complaint being lodged by a disgruntled client. For the banks and other institutions that would be very tightly monitored it enabled the Government to look at a different framework for those large organisations that could take on the responsibility for ensuring that the right people were providing the right advice in an appropriate manner and that consequences would fall back on the whole of the institution if those standards were not met. 
Labour introduced legislation with the qualifying financial entity framework in it prior to the disclosure of the appalling example of ING and ANZ. That particular case made me think very carefully about the detail of the legislation that we passed. If anyone had asked me at the time we were introducing the legislation whether I thought that a registered bank in New Zealand would be responsible for allowing individual advisers working within that bank to provide recommendations—not just advice but also recommendations—to ordinary Kiwis that they should move their money out of their bank accounts and into this new diversified yield fund or the—I cannot remember the name of the other one— 
John Boscawen 
: Regular income fund. 
Hon LIANNE DALZIEL 
: —I thank the member; I know John Boscawen knows the names off by heart. I think they are etched on his forehead. 
The point I am making is that if anyone had asked me whether a bank adviser would make the recommendation to shift funds from one account to the other without having the knowledge the experience and the back-up of the independent analysis for those products I would have said that it could not happen in New Zealand; I really would have said that. That was coming off the back of finance company failure after failure. I would have stood by the banks and said that there is no way that a New Zealand - registered bank would have allowed that to happen; and it happened. The consequences have been far-reaching because they certainly have undermined confidence in what would otherwise be a very very strong sector. It has proven to be a very strong sector in New Zealand and Australia say compared with the international experience over the credit crunch and the complete loss of confidence in the banking system internationally. 
This position has made me relook at some of the stuff around qualifying financial entities. I heard the Minister say that the Securities Commission has already provided some advice that it will be looking for regulatory neutrality in terms of how it will be approaching the question of advisers—whether they are working for qualified financial entities. That possibly is giving me a positive steer that the Securities Commission will not allow a bank to get away with the sort of thing we saw that bank get away with on that particular occasion. I am sure there will be more opportunities to debate that particular matter. I have drafted a member’s bill that I will be introducing into the House when hopefully it is drawn from the ballot. [ 
Interruption 
] Yes I have good luck with ballots so maybe I will be in for some good luck here too. The bill is designed to add a provision within the Illegal Contracts Act to prevent people from being put into a position where essentially they kneecap the role of the regulator in determining whether there has been a breach of the regulatory framework which was the case for those who signed the settlement offer from ING. I am very hopeful that my bill will be drawn from the ballot and that there will be another opportunity to debate what has happened. Hopefully it will provide some comfort in the future to those investing in any sort of financial product that the Commerce Commission the Securities Commission and the dispute resolution services which will be established under the prior legislation will not have their jurisdiction ousted or limited in any way. 
I agree with the Minister’s comments on financial advisers that they must be competent and ethical individuals. I think there is still an issue with the distinction around the client base and whether the client base is more sophisticated on one level. I think there is a difference so we would like to work on that. I noted the recommendations of the Capital Market Development Taskforce on this which I think are very relevant to that particular issue. 
The final comment I want to make is that I hope the Minister will ensure that officials are able to continue to dialogue with stakeholders over the period that the bill is before the select committee. I am very comfortable for that to happen and I know that as Minister I liked that to happen. It means that we have up-to-the-minute advice as we consider very complex issues and that will assist the process. On that note I certainly commend the bill to the House. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 I rise to support the Financial Service Providers (Pre-Implementation Adjustments) Bill. The thoughts of both the Minister of Commerce Simon Power and the chair of the Commerce Committee Lianne Dalziel have been expressed: it is about the efficiency of our financial markets. Like most countries around the world in the past year and a half we have suffered turmoil in goods and services markets but particularly in financial markets. This bill goes some way to addressing some of the concerns around public confidence in the financial industry. 
Some of the key changes as pointed out by the two prior speakers relate to the qualifying financial entity model. Those entities are regulated by the Securities Commission first and foremost to take responsibility for advice provided by employees and contractors on an extended range of products but not for advice provided by people who require individual licences to give such advice. The key change is the naming of individual contractors who provide such advice for which the entities take responsibility instead of their automatically being responsible for advice from all contractors. I think that is particularly important. It allows a degree of disclosure by those entities that provide advice. It allows investors and consumers alike to understand who is providing the advice and their responsibilities. 
This bill allows the entities’ employees and named contractors to provide advice on category 1 products which are complex products such as shares and various other instruments and financial products without being individually licensed. Under the current legislation this is permitted only for the employees of qualifying financial entities. 
This bill is part of a suite of reforms aimed at promoting confidence in the financial sector. The suite includes the Financial Advisers Act the Financial Service Providers (Registration and Dispute Resolution) Act as well as the Reserve Bank of New Zealand Amendment Act 2008. Some of that legislation was passed by the previous Government and the chair of our committee was the Minister of Commerce at the time. We are continuing much of the bipartisan attitude towards this part of our law. It is encouraging to hear from the chairperson tonight that she will be working constructively across party lines with our ACT and Maori Party members on the committee to ensure that this legislation is reported back on time and facilitates the purpose for which we are putting it forward. 
It is really critical that we go online in the middle of the year in terms of the register of financial service providers. Compliance is compulsory by early December—that goes without saying. We will welcome submissions by all stakeholders across the industry not just providers of financial advice but also consumers and investors who have been hurt by some of the finance company failures that have occurred in the last 2 to 3 years. 
If people are wondering whether there is a problem in the industry they have only to look at the  
Consumer 
 magazine article last year that outlined a mystery shopping expedition by the magazine that found that a number of key areas in the financial service advisers industry were particularly lacking. Those areas included lack of advice poor analysis by certain advisers inappropriate advice and questions around some of the costings provided by those advisers. 
This legislation aims to improve standards of disclosure which would ensure that consumers are better placed to assess the extent of an adviser’s independence. I think that is a critical point. It certainly has come through in the Commerce Committee’s finance company failures inquiry. 
The regime will ensure that advisers meet minimum standards of competency to ensure that they are able to provide the high-quality advice that investors expect. We all know that we cannot necessarily legislate for ethics and a certain competence and standard of behaviour. But we will certainly look at a regime that is regulated by the Securities Commission. I obviously support this bill going to the select committee. Thank you. 
CHARLES CHAUVEL (Labour) 
: 
 The previous Labour-led Government especially in its 2005-08 term was concerned to remedy the reputation that New Zealand had developed over many years for its severely under-regulated financial services market. That determination arose before some of the finance company failures and the other less than desirable conduct that we have seen in this country from that sector over the last few years. It was largely motivated by a concern about the stability of our financial company sector and a general lack of proper consumer protection. Those were some of the symptoms that the legislation promoted by the last Labour-led Government targeted. Much of that legislation went through the parliamentary process under the sponsorship of Lianne Dalziel as Minister of Commerce so it was good to hear her contribution on the Financial Service Providers (Pre-Implementation Adjustments) Bill tonight. 
There were three laws of particular note. All of them had major-party bipartisan support. The first was the Reserve Bank of New Zealand Amendment Act 2008 which provided for Reserve Bank prudential supervision of non-bank deposit takers rather than simply relying on the trustees of those non-bank deposit takers to exercise the necessary oversight. That is a major clean-up in the sector and it seems to be functioning extremely well. The second reform was the Financial Advisers Act 2008. The third was the Financial Service Providers (Registration and Dispute Resolution) Act 2008. It is the second and third of these three Acts that would be amended by the bill that we are now reading a first time. 
In 2008 Labour sponsored the Financial Advisers Act to ensure that financial advisers were subject to tighter rules of professional conduct and competence. The Act was just one part as I have said of the effort to bolster investor confidence in anticipation of the global credit crunch and as I said because of concern about finance company liquidity in New Zealand. The regulations that were authorised to be made under the Act were required to focus on financial products not financial decisions as was the original proposition in the first draft of the bill circulated for comment. 
A tiered approach to the regulation of advisers was taken. First authorised financial advisers were to be allowed to provide advice on complex products for example securities or futures contracts—the really tricky stuff. There were to be stringent requirements in that first category as is appropriate. Advisers falling into the second category faced only a basic code of conduct and reasonably minimalist disclosure requirements but in return for those pretty light-handed regulatory requirements on them they were permitted to provide advice on only simple products like insurance or consumer credit contracts. But even the second tier of advisers was required to be registered and to belong to a dispute resolution scheme. Those two requirements had never existed before and this absence contributed to the Wild West nature of our financial services regime. The legislation enabled a qualifying financial entity or QFE to reduce compliance costs for institutions with large numbers of advisers. There had been concern that those institutions would be subjected to enormous administrative costs if each of their advisers had to register and be subject to the provisions of the Act so the qualifying financial entity mechanism was established to effectively provide for group registration. 
The Securities Commission was the regulatory body empowered to oversee the new rules. The Act established a Commissioner for Financial Advisers to be a specialist member of the Securities Commission the code committee and a disciplinary committee. The Financial Service Providers (Registration and Dispute Resolution) Act in turn established an independent and free dispute resolution service for consumers with problems with financial advisers or service providers. That Act basically set up a co-regulatory model under which industry groups would develop their own schemes which would then be subject to approval by the Ministry of Consumer Affairs. The schemes would have to meet certain minimum requirements such as accessibility independence fairness accountability efficiency and effectiveness. The Act also established a reserve scheme for providers that did not belong to any of these particular industry dispute-resolution schemes. They would default into the reserve scheme so that no customer of a financial service provider would go without the protection of an industry dispute-resolution scheme. 
The intention of this amendment bill which was introduced on 8 December last year is to make technical amendments to the Financial Advisers Act 2008 and to the Financial Service Providers (Registration and Dispute Resolution) Act 2008. The amendments largely involve changes to the qualifying financial entity model that I have just described and that other speakers have mentioned. Basically the bill would make three significant changes. First a qualifying financial entity will be required to name individual contractors whose advice it will take responsibility for instead of automatically being responsible for advice from all of its contractors. Secondly the changes will allow a qualifying financial entity’s named contractors as well as its employees to provide financial adviser services on the qualifying financial entity’s complex products without their having to be individually licensed. At the moment under the legislation in its current form that is permitted only for the qualifying financial entity’s employees as opposed to the contractors that it might retain as well. Thirdly employees and named contractors of a qualifying financial entity will be able to provide financial adviser services for products for which the qualifying financial entity is a promoter under the Securities Act. At the moment that is permitted under the Financial Advisers Act only if the qualifying financial entity is actually the issuer of the product as opposed to also being its promoter. Effectively line calls were made about many of these matters in the select committee process. I was the chair of the Finance and Expenditure Committee when we considered those issues. Those calls could have gone either way. Frankly it is probably useful to try out the changes that are suggested in this bill particularly in light of the prevailing economic climate to see whether they will be improvements on the current legislation. As I said in the select committee the evidence could have gone either way. 
Part 1 of the bill amends the Financial Advisers Act and Part 2 amends the Financial Service Providers (Registration and Dispute Resolution) Act. Basically clause 6 deals with matters of interpretation. The most notable change there is the amendment to the definition of a “nominated representative”. A nominated representative will be an individual who is formally nominated by a qualifying financial entity in accordance with the new section 68A to perform financial adviser services in respect of the qualifying financial entity. Clause 8 amends section 12 of the Act to provide that activities performed by certain classes of person do not amount to financial adviser services. Clause 10 amends sections 17 to 19 to make the changes relating to nominated representatives—that is contractors—that I have already referred to. Clause 11 places nominated representatives in the same position as employees. Clause 12 extends the restriction on the term “sharebroker” and the rest of Part 1 is largely concerned with replacing terms changing implementation dates and simplifying wording. There is really only one significant change in Part 2 which is in clause 35. It extends the list of people who are not held to be financial services providers. The two new categories are those who are nominated representatives under the Financial Advisers Act and employers that offer services to employees to enable them to join schemes like KiwiSaver and there are some other technical amendments. 
No regulatory impact statement is required for this bill because according to the bill’s explanatory note “the proposals are minor and machinery in nature.” Labour envisages supporting the bill for that reason and because it amends legislation promoted by the previous Labour-led Government in a way that will hopefully enhance its effect. 
JOHN BOSCAWEN (ACT) 
: 
 The ACT Party will be supporting the Financial Service Providers (Pre-Implementation Adjustments) Bill. I will comment on the speech given earlier this evening by the Minister of Commerce Simon Power and also on the comments made in response by Lianne Dalziel. The Minister made the point that the bill is aimed at promoting confidence in the financial sector; that is absolutely fundamental to a growing and developing economy. Lianne Dalziel in her speech in response made the comment that the consequences of financial failure have been far-reaching. Well that has to be the understatement of the year. At last count some $4 billion or $5 billion either has been lost or is tied up in moratoriums on money invested in finance companies. Lives have been ruined people have committed suicide and couples—grandparents who have worked their whole lives believing that they were setting aside sufficient funds to live off in their retirement—have been left destitute. People have been left homeless and have had to move in with their children or with their parents. Huge amounts of money have been lost. 
Yes it is very important that we have confidence in the financial sector and it is very important as the Minister said to create clarity for regulators and the industry but I would like to comment on the importance of enforcing that regulation—actually enforcing that law. Some 3 weeks ago prior to Parliament resuming I was surprised to read on the front page of the  
New Zealand Herald  
that the new head of the Serious Fraud Office was committing the resources of his office exclusively to the investigation and possible prosecution of losses in the finance industry. I say that when one looks at passing legislation like this it is important to have the law in place but it is more important that the law be enforced. Yes it is great that the Serious Fraud Office is putting in the effort but I ask why it took a change of chief executive and why it took until November of last year when this Government had been in place for the previous 12 months to create that focus and create that priority. I think of the thousands of families mainly elderly people who have lost money in the many finance company collapses reading that some 15 months after a change of Government the priority of the Serious Fraud Office has shifted and it is making this matter its first priority and is putting resources into it. If we are to set up a framework such as this it is very important that the regulators be well resourced that the resources be there to investigate breaches of the law and to prosecute and uphold the law. 
Lianne Dalziel referred earlier this evening to the situation of ING and ANZ. Let me remind members of the House who are not fully aware of the circumstances what they were. The ANZ bank owned 49 percent of ING and it actively promoted and sold products on behalf of ING. The client advisers of the ANZ—qualified bank tellers financial advisers—actively sought out clients of the ANZ and encouraged them to shift their money from safe deposits into the two ING funds that are at fault the regular income fund and the diversified yield fund. What is interesting is that for the most part I do not believe there was malice on the part of those ANZ staff. I do not believe that those staff knew what they were actually selling. So when I heard the Minister say this evening that this law will require the qualifying financial entity to assume responsibility for the advisers and for that advice I thought that that had to be a good thing. It is important. Those people hold themselves up as experts. People and in particular the elderly look up to banks and respect them. They believe that they can rely on their advice. 
There were many disgraceful things about the ING-ANZ situation not least of which was that when it first came to light the people who invested in that fund were offered a derisory 10c in the dollar. I acknowledge the protest group that set out to try to get a better deal for investors. The tragedy is that most of the people who invested in that product were offered 62c or 64c in the dollar; that offer was made to all ING investors and as Lianne Dalziel pointed out to get their 62c back they had to sign a piece of paper and sign away their rights. 
That brings me to my next point. While the Serious Fraud Office seems to have taken far far too long to put effort into investigating the collapses that have occurred the Commerce Commission has been beavering away for more than 12 months looking at whether ING and ANZ misrepresented the situation and breached the Fair Trading Act. I ask again whether sufficient resources are being put into that investigation. What is the point of bringing a bill like the Financial Service Providers (Pre-Implementation Adjustments) Bill to Parliament to pass it into law if the Government bodies are not prepared to enforce it and the Government is not prepared to make the resources available? It is a fact that those people who invested in those two ING products on the advice of ANZ bank advisers had the option of applying to the Banking Ombudsman for additional compensation but the many clients who invested in them on the advice of ING advisers did not; they did not have the benefit of that extra advice. If the qualifying financial entity is required to take responsibility not just for its employees but for its agents—for the independent financial contractors who hold themselves up as experts and sell these products—that has to be a good thing. 
In conclusion I am trying to say to the House that it is all very well to have laws and regulations in place but it is important that the regulatory bodies are resourced and that they are prepared to enforce the law. I believe that that is the very minimum that the people of New Zealand can expect from this Parliament and this Government. Thank you. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 A kia ora mai ano ra tatou katoa e te Whare. It is good to hear that the new head of the Serious Fraud Office has made checking out these finance companies one of his main priorities although that is likely to bring no joy to the 14500 investors who lost more than $460 million after the collapse of Bridgecorp a couple of years ago or to people like Jack and Ngaire Williams a couple of senior citizens who lost more than $200000 in the collapse of Blue Chip. Last year they were told that their house would be sold off to pay their debt which led to the heart attack of Mr Jack Williams. 
Exactly how underhand some of these arrangements were came to light in the Auckland District Court as recently as yesterday when a former staff member told the hearing against the Bridgecorp directors that staff were advised to lie to angry investors who rang the finance company asking why they had not been paid and to say that the lack of payment was because of a banking glitch. It was a fairly significant glitch—$460 million. But there was even more gloomy news from KPMG which reported that fraud in this country last year rose to record levels. Its forensics expert said that committing fraud was likely to reach even greater levels in the future. 
It is in this context that the Financial Service Providers (Pre-Implementation Adjustments) Bill before the House is a welcome respite because it aims to change the Financial Advisers Act to better monitor financial service providers in order to tidy up the sector and make it more accountable to investors. We all know stories of people who have lost precious savings to dodgy finance companies believing there were standards in place and proper monitoring procedures when in fact the brutal reality was that they just were not there. Thankfully most Maori businesses did not get too caught up in the fast finance fiasco to backstop their growth because the security that was often required was their land whereas banks are now securing loans over cash flow stock equipment and machinery rather than the land itself. 
I also take this opportunity to thank Iria Whiu of Ngati Ranginui the first Maori national president of the New Zealand Educational Institute back in 1995 who helped set up the group that Mr Boscawen was talking about formed after the Blue Chip collapse. Exposing Unacceptable Financial Activities was formed to help victims of the collapse with slim hope of ever retrieving their funds. In following on from the ACT speaker I guess I have to raise the whole issue of the “three strikes” bill and the fact that a person can go to jail for the rest of his life for bashing people yet those guys can steal $460 million which no doubt has directly resulted in the heart attacks deaths and suicides of a number of people. They are in court now and the chances are that the maximum sentence they will get is maybe 2 years probably down at Ohura which is the country club prison that most of these guys go to. 
It is kind of a sad society when people can get away with this kind of thing and I do not know that this bill will do enough to teach them a lesson. This is just the first reading so there will be the opportunity to raise it again. Of course at the select committee we might write into the legislation that when these companies fall over the directors will also be held accountable for the health and lives of any of the investors they have diddled. Quite frankly it is not just about a loss of product it is about ripping people off. I think we have to be honest enough in this House to say that this is not about just investment—a lot of it clearly is not. The directors did not backstop themselves with alternative funding arrangements. They set out specifically to rip people off. They got their staff to lie to investors to try to cover their backsides until such time as some of them could skip out of the country. 
Mr Boscawen also quite rightly mentioned that of all those companies that have gone to the wall it looks like only about two or three directors will end up going to court on it. In fact a whole heap of these people should be going to jail. The problem of course is that all of the jails are full and even if they were double-bunked there are not that many cells in Ohura. Certainly none of these guys would be put up in Paremoremo the Mount or Ngawha because they are likely to get their just desserts. 
We need to start saying that this kind of crime given its spread right across society is far more dangerous to the health and welfare of our society than those who are charged with just assault. Yes assault is brutal but no more brutal than $460 million worth of straight-out theft from investors most of whom are probably Pakeha older kind of the age group of some people around here and wealthy kind of like the people on this side of the House over here. But be that as it may I sincerely hope that during our select committee hearings we can investigate ways and means of making it even tougher for these guys to even contemplate pulling scams that will rip people off. Kia ora Mr Assistant Speaker. Tena tatou te Whare. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to stand here today to support the Financial Services Providers (Pre-Implementation Adjustment) Bill because this Government is about solutions and this bill is one more example of another solution that this Government has put forward to fix a gap. The bill fixes a technical error in previous legislation and provides a solution for it; that is why it is called a pre-implementation adjustment bill. 
It is my pleasure to stand here tonight to support this bill and to support our hard-working Minister of Commerce Simon Power. He is one of the most hard-working Ministers of Commerce that we have seen in this Parliament in a long time. But at the same time I need to acknowledge Lianne Dalziel the previous Minister as she is the chair of the select committee that I sit on. I acknowledge the work that she did in the previous term towards financial services and the solutions that we are looking at right now. 
What does this bill do? It simplifies the Financial Advisers Act reduces costs and encourages public confidence. But really it is just a technical amendment bill. It focuses on a very narrow area; that is the changes to qualifying financial entities. For those of us in the sector who are chartered accountants by trade and know a bit of the jargon that is a QFE. So what is a qualifying financial entity? It is a company that is approved by the Securities Commission to take responsibility for advice that employers and contractors provide to mums and dads out there—to anybody looking to invest in a product. There had been a technical glitch in that in the bill put forward in 2008 qualifying financial entities protected only employees but we know that many industries and many companies out there employ contractors whom the bill did not cover at all. An example of a company that would be a qualifying financial entity—not that there are any at the moment because that Act has not been implemented yet—is a bank or an insurance company that has many financial advisers on site and has its own training in place. It would mean that not every adviser would have to be licensed; they would be under the umbrella of the qualifying financial entity and the qualifying financial entity would be monitored by the Securities Commission and a regulatory board as well. 
We have these changes in place to name individual contractors so that they will be covered by this umbrella to ensure that these contractors and employees under a qualifying financial entity can give advice on complex products such as shares whereas in the previous legislation they were not allowed to do that and can also provide financial services for products that they are not an issuer for. Before they could promote a product only if they were the issuer; under this legislation they are now allowed to promote any product even if they are not the issuer. 
This bill is addressing an issue of a very technical nature so I will take a very short call on this. At the end of the day this is about getting back the confidence in the market and allowing people to be able to invest with confidence and believe that the advice they are receiving from financial advisers is good advice. We know there has been a track record for a number of years now as financial advisers have not been regulated of the advice they have given not always being spot on; in fact in many cases it has practically been negligent. This bill aims to give confidence in financial service providers because there is a whole generation of investors in New Zealand the mum and dad investors who are not sophisticated investors and do not understand financial products but want a return from their money. A lot of these people are now in their late 50s 60s and 70s. They got burnt in the share market they got burnt in managed funds they got burnt with finance companies and there is not a lot now for them to invest in that they feel safe about. It is important that over a period of time we get these regulations in place so that investors are sure that the advice they are getting is good solid advice so they can have confidence to go and invest out in the market just a little more as opposed to just leaving their money in the bank and getting a smaller return because a lot less risk is attached to it. 
There is no silver bullet for getting confidence back in these markets and there is no one answer. This is one step in a number of steps one tool out of a number of tools in the tool box to ensure that confidence returns to our markets in New Zealand. Thank you. It was a pleasure to endorse this bill tonight. 
RAYMOND HUO (Labour) 
: 
 The Financial Service Providers (Pre-Implementation Adjustment) Bill amends two Acts of Parliament passed by the previous Labour Government in 2008. Both Acts passed with support from National and Labour supports this bill too. In contrast to Ms Shanks who has just resumed her seat I can see and appreciate why a bipartisan approach has been taken. The previous Labour Government passed the Financial Advisers Act 2008 to ensure that financial advisers were subject to tighter rules of professional conduct and competence. The Financial Services Providers (Registration and Dispute Resolution) Act 2008 established an independent and free dispute resolution service for consumers who have problems with financial advisers or service providers. This bill as the Hon Simon Power stated this evening is aimed at simplifying the implementation of the Financial Advisers Act and reducing costs while encouraging public confidence in the industry. 
A media statement released by Workplace Savings NZ in December 2009 is very helpful in understanding the difference between what it called a real provider of financial services such as a bank and an employer who merely promotes for instance a superannuation scheme for its workers. Its executive director Bruce Kerr said the concern of his organisation was about employers who make retirement savings arrangements available to their employees through the workplace being caught by the definition of a financial service provider. He said the organisation had worked hard with officials to develop appropriate relief mechanisms without which such an employer would need to register as a financial service provider and join a dispute resolution scheme. For employers who want to help their employees save through a registered superannuation scheme or KiwiSaver scheme the proposed changes will help to exempt them from the need to register as financial service providers. 
The Hon Lianne Dalziel in her third reading speeches on the two bills in 2008 explained the purposes of the two pieces of legislation. The Financial Advisers Act 2008 was one part of the Labour Government’s effort to bolster investor confidence after the global credit crunch and a string of finance company failures in New Zealand. The regulations contained in that Act focus on financial products instead of financial decisions as was initially proposed. A tiered approach to advisers was taken and the legislation enabled the adoption of a qualifying financial entity or QFE model in order to reduce compliance costs for institutions with a large number of advisers while ensuring there was an appropriate regulatory coverage of advisers within those institutions. The Financial Services Providers (Registration and Dispute Resolution) Act 2008 as its name suggests established an independent and free dispute resolution service for consumers. A co-regulatory model was also created in which industry groups were to develop their own schemes which then had to be approved by the Ministry of Consumer Affairs. 
Why does the legislation need to be amended? The Minister responsible for this bill the Hon Simon Power has stated that the new legislation will reduce costs and encourage public confidence in the industry. The bill proposes a number of technical amendments. The main amendments to the Financial Advisers Act relate to the regulation of qualifying financial entities. The proposed changes include first that a qualifying financial entity will be able to name representatives namely individual contractors and agents whose advice it will take responsibility for instead of the entity being automatically responsible for advice from all its contractors; and second that the ability to provide financial advice or conduct investment transactions in relation to a qualifying financial entity’s category 1 products without being an authorised financial adviser will be extended to the qualifying financial entity’s named representatives. That is currently permitted only in respect of the qualifying financial entity’s employees. The third change is to permit the employees and named contractors to provide financial adviser services for products for which the qualifying financial entity is a promoter under the Securities Act. Currently the Financial Advisers Act allows that only if the qualifying financial entity is the issuer of the product. 
Those changes are generally welcomed in the industry for the flexibility that they are supposed to provide. Potentially those changes will help to make the qualifying financial entity model more appealing for many of those involved in the industry. 
However some concerns are worth noting at the bill’s first reading. The law firm Kensington Swan in its financial law updates listed two reservations with regard to the extension to the qualifying financial entity model. Firstly it is unclear whether it is intended that an individual can be nominated by more than one qualifying financial entity. The firm foresees some major complications ahead with the roll-out of such a model. Secondly at a policy level these changes risk undermining the Securities Commission’s stated desire for there to be regulatory neutrality or at least they create that perception. Expanding the relief from liability under the Financial Advisers Act for nominated representatives runs counter to the objective of individual adviser responsibility. 
With the help and active involvement of the financial service providers the wider sector and the public in the development of the bill I am confident that the bill will meet its objectives and—if members will let me borrow what the Hon Lianne Dalziel said in 2008 in the third reading of the Financial Advisers Bill—I hope this bill “brings financial advice regulation into the 21st century aligns us with international best practice and provides for an appropriate level of investor protection in New Zealand.” Thank you. 
MELISSA LEE (National) 
: 
 It is a pleasure to rise in support of this Financial Service Providers (Pre-Implementation Adjustments) Bill—what a mouthful! I take this opportunity to wish everybody in the House and also people listening at home and watching television through Parliament TV a wonderful New Year—the Year of the Tiger. In my language it is “Se hae bok mani baduseyo.” which means: “May you receive lots and lots of blessing in the New Year.” And to the previous speaker who has just taken his seat Mr Raymond Huo I say xin nian kuai le which means happy New Year in Chinese I believe.  
The purpose of this bill is to simplify the implementation of the Financial Advisers Act to reduce costs and to encourage public confidence in the industry. Both of those things I am sure everyone in this Chamber would agree are good and need to be done to promote confidence in the financial sector. It is wonderful to see everybody across the whole Chamber in support of this bill. We all know someone who has suffered through the collapse of finance companies. I know more than one who has lost all of their retirement savings in their twilight years. The large numbers of finance company failures affected me personally. I panicked and cashed in even my son’s education fund thinking that I was going to lose all of that money. I put it under my bed like a not-so-very-sophisticated investor would do— 
Dr Paul Hutchison 
: Is it still there? 
MELISSA LEE 
: No it is not actually. It is not still there; it stayed there for a couple of days and I decided that perhaps the best thing I could do was put it in the bank in a high-interest-earning savings account. 
The bill makes technical amendments to the Financial Service Providers (Registration and Dispute Resolution) Act and the Financial Advisers Act. It was introduced into Parliament by the Minister of Commerce the Hon Simon Power. Let me take this opportunity to say what a great Minister he is. The number of bills he put through this Parliament last year was nothing but phenomenal. 
Hone Harawira 
: Phenomenal! 
MELISSA LEE 
: Sorry? 
Hone Harawira 
: Phenomenal! 
MELISSA LEE 
: Fantastic phenomenal; that is right. The Minister expects the changes to take effect in the middle of this year giving financial advisers about 6 months to implement them before legislation is made compulsory at the end of the year. The amendments to the bill focus mainly on changes to qualifying financial entities; as Katrina Shanks said people in the industry call it the “QFE” model. Although I am not from the financial sector I am starting to get the hang of that—“QFE”. A qualifying financial entity is a company given the thumbs up by the Securities Commission to take responsibility for the advice provided by its employees and contractors on a limited range of products instead of having all those people each requiring their own licences. This means that a qualifying financial entity has to name individual contractors whose advice it will take responsibility for. That means both qualifying financial entities’ employees and named contractors can provide financial services on category 1 products like shares without individually having to be licensed. At the moment only employees of qualifying financial entities can do that. 
The bill brings transparency and clarity into the sector as qualifying financial entities are not automatically responsible for advice from all of their contractors but are for those they name as contractors employees and the products they advise on. The changes also permit those employees and named contractors to provide financial advice or services for products for which the qualifying financial entity is a promoter under the Securities Act—not just the issuer of the product. At the moment that is allowed only if the qualifying financial entity is the issuer of the product and not the promoter. We need competent and ethical individuals to deliver professional financial advice as the Minister said and as other members in the House agreed. I look forward to the submissions through the select committee stage from both financial advisers and consumers to make sure we have a robust process in progressing this bill. 
I take the opportunity to give you an example of the climate of the industry. I will share a story if I may. There was a  
Consumer 
 magazine mystery shopper investigation into the industry last year. It was interesting to note that among other things out of seven pre-retirement plans investigated six provided little practical help and were found to have lacked meaningful advice. That is appalling. That is an 85 percent failure rate in my view. Only one Trustees Executors had a detailed plan and gave good reasons for the advice given. That was the only plan rated as “good” by the mystery shopper panel. The magazine article identified disclosure competency and independence as three areas where there were shortcomings in the industry. This bill and the new financial regime this Government is implementing will go a long way towards addressing those shortcomings. This bill simplifies the implementation of the Financial Advisers Act and reduces the cost while encouraging public confidence in the industry. It will provide transparency clarity and certainty and for me that is fantastic. I commend this bill to the House. 
STUART NASH (Labour) 
: 
 I must admit that it is humbling for me a poor boy from Hawke’s Bay to follow the second most sexy woman in Parliament but I will do my best. I rise in support of the Financial Services— 
Melissa Lee 
: You could be No. 3. 
STUART NASH 
: Well I have to ask myself if Bill English is No. 3 what the validity of that poll is I must admit! We cannot believe every poll we read. Jacinda Ardern must be No. 1 and there is no doubt about that but let us get on to the substance of this bill. 
Hone Harawira 
: You’ve got to be No. 3—the sexiest woman. 
STUART NASH 
: It is worth noting I tell my friend that this bill is designed to further tighten the rules and regulations around financial advisers. I congratulate the Hon Lianne Dalziel on her excellent work as Minister of Commerce in the previous Government and now as chair of the Commerce Committee. It is her work that has got us here today; let us not beat around the bush and let us be clear about that point. 
But why are this bill and the overall tightening of regulations governing financial advisers important? Quite simply they are right for the people of New Zealand. There are many many sad sad stories of ordinary New Zealanders who have worked incredibly hard all their lives only to have someone masquerading as a financial adviser provide them with advice that has cost them their savings. There is a fundamental difference amongst the groups of people who have lost their money in the spate of very public finance company collapses. There are savers and there are investors. Investors are those who have or should have knowledge of risk and who seek advice from different sources to make decisions after weighing up the odds. But what they have not assessed as a risk is the negligent behaviour of people who had no financial knowledge except for the knowledge that the more they sold the better off they were. Advisers have been conflicted in the extreme. Savers however are people who have put their hard-earned dollars which they had built up over 20 30 40 and 50 years of working hard and paying their taxes into the hands of unscrupulous operators only to see their life-savings vanish. And with their savings have gone their dreams of a retirement with dignity a retirement spent enjoying the fruits of their labour. They have seen what should have been that reality cruelly taken away. 
Savers do not necessarily price risk as investors do; they pay others to assess risk and expect competency diligence and honesty. Is that too much to expect? No it is not. Investors understand that risk equals return whereas savers—mums and dads grandmothers and grandfathers—who have lost all their money in the financial sector were not pricing risk. They have been putting their money away ready for their retirement and for their grandchildren’s education. This travesty has resulted in an increase in ill health and a decrease in the well-being of a huge cohort of New Zealanders. 
Last year I spoke in this House of at least two people who had committed suicide because they had lost their life-savings. I spoke of the tremendous hardship and mental anguish of those New Zealanders. I spoke of the tremendous loss of wealth from the nation’s bottom line of over $5 billion. I cannot imagine being 65 and losing my life-savings. I cannot imagine the feeling of utter devastation. It is no wonder that ill health has plagued these unfortunate Kiwis. So Labour did something about it and passed the Financial Advisers Act and the Financial Service Providers (Registration and Dispute Resolution) Act. 
This current bill under debate makes minor proposals that are machinery in nature but that does not make it any less important in protecting the most vulnerable in our society. This bill is important for other reasons too. One of the problems in this country is the do-it-yourself or DIY attitude or mentality to investment and savings that many of us have. We think we know how to earn our own optimal return on our savings without seeking advice from those who are expected to know the markets and the different investment options. The level of investment in the housing market is evidence of this trend because we all know how to buy a house do we not? Now we are told that as a nation we have to invest in the productive economy—buy into stocks invest in capital markets and put our savings into areas that will lift New Zealand’s economic growth. I agree with this advice but the problem which has been recognised by this bill and by the other two bills I mentioned beforehand is that the level and quality of advice from financial advisers has been of such poor quality—and I think we know that we are talking here about the finance company sector—that many New Zealanders have now had their worst fears realised: no one can be trusted with their money. 
The stereotypes and generalisations that people had about financial advisers have been realised. I feel sorry for those in the sector who acted with competence and who always advised their clients in their best interests because they have been tainted with the same brush as those who advised that a balanced portfolio meant investment in five different finance companies. However not all who acted in an unscrupulous manner were those who operated out of the back of a tin shed; there were those in glass towers who also gave advice that was as devious and self-serving as that found anywhere. This bill will be I am hopeful another step in the process of rebuilding the confidence of ordinary New Zealanders in the investment advice sector because it is exactly what is needed. 
If we are to grow our country it will not be because this current Government is giving tax cuts to the top 9 percent who earn the top marginal rate and is giving very little of anything to the other 91 percent who are not. It is interesting that the  
New Zealand Herald  
poll on Saturday said that only 22 percent believed that the proposed increases to GST—so that the Government can give tax cuts to those most privileged in our society—will be good for economic growth. Do members know that in the Napier electorate over 75 percent of people earn under $40000 a year and that only 5 percent earn over $70000? So three out of every four people in the Napier electorate got no tax cut last year but this year they will get an increase in GST to pay for tax cuts for the top 5 percent of income earners. That is not fair in any language. 
These proposed tax cuts will not do anything for economic growth;  
New Zealand Herald  
readers know this. As mentioned more actually said that the proposed cuts were unfair than said they were fair. Do members know why the cuts will not do anything for economic growth? Well the Government obviously does not. It is because they are based on outdated and disproved economic theory. Friedman and his supply-side free-market approach to macroeconomic theory died with the downfall of the Thatcher and Reagan Governments. It is rather interesting that other countries that we are very very fond of comparing ourselves with like Australia have adopted a Keynesian approach— 
Hon Simon Power 
: Don’t go picking on Ronald Reagan; it’s an outrage! 
STUART NASH 
: —I tell Mr Power—where they provide tax relief to the most vulnerable not the most affluent. 
This bill is absolutely necessary because it starts the process of rebuilding the confidence of ordinary Kiwis in the financial advisory market. Kiwis need to know that when they take their hard-earned money to a financial adviser they will get independent competent advice from a person who will walk them through all the risks and benefits in a transparent and meaningful way. The past was the Wild West; a city full of cowboys is not a good place for the vast majority of Kiwis to be. As a collective we need to ensure that people are encouraged to diversify through their portfolios into the productive economy and that they are encouraged to save and invest in a prudent manner. Anything that helps to ensure that process we are duty-bound to support. There is a long way to go I tell Mr Power before the industry will have the full confidence of the investing and saving public again but this bill along with Lianne Dalziel’s two Acts is at least a start. Thank you. 
JONATHAN YOUNG (National—New Plymouth) 
: 
 The Financial Service Providers (Pre-Implementation Adjustments) Bill seeks to bring public confidence and industry efficiency into this particular area. The bill is based on the backdrop of a global credit crisis. This Government is rightfully encouraging New Zealanders to move from consumption to investment and from spending to saving which will bring great strength into our economy. It will enable us to build a stronger export base which needs investment and through savings to create a great pool of capital from which credit can be accessed and interest earnings retained within the New Zealand economy. We believe that that will be good for New Zealand. 
To make those changes we need to have strength within our financial markets and strength within the mechanisms that protect investors. We have had a real hit here in New Zealand as many countries have. Members have mentioned time and again tonight the mum and dad investors and the many ordinary Kiwis who have had a little set aside or a little available at the end of every week. Under this Government they will have more available at the end of every week to invest for their future. Much of this has happened through the advice of financial advisers. It was reported in the Commerce Committee last year that approximately $6 billion disappeared from our economy when investors lost money in a number of instances through the failure of financial companies. That $6 billion is not in the portfolios of New Zealand investors and is not working for New Zealand in credible companies. This bill will build efficiency and confidence within our financial market. 
It has been noted tonight that the  
Consumer 
 magazine has done some investigation and review of what we have on offer from financial advisers. It came to the clear understanding that there is a mixed report out there. Some are good some are bad some are helpful and some are useless. Who knows what to believe about financial advisers? We want this country to have confidence in those who undertake that profession. It is very important that we have appropriate levels of regulation and legislation. 
A cornerstone of the Financial Advisers Act is that the professionalism of financial advice is best encouraged by ensuring that it is delivered by competent and ethical individuals. This is common sense is it not? Financial advisers ought to be competent and they ought to be ethical. These are the people who advise us what to do with the money that we are investing for our future. Of course we would like the adviser to be competent and ethical. It is critical that we have this regulatory framework right so that it fosters confidence in the sector and enables the sector to get on with the job. A lack of confidence means that good financial advisers in our country are viewed with a degree of scepticism. We want to remove that scepticism and to ensure that the advisers who comply and do a great job in terms of all of the regulations are indeed approved of. 
It is my delight to commend this bill to the House. Thank you. 
Bill read a first time. 
Hon SIMON POWER (Minister of Commerce) 
: 
 I move  
That the Commerce Committee consider the Financial Service Providers (Pre-Implementation Adjustments) Bill 
 that the committee report finally to the House on or before 4 May 2010 and that the committee have authority to meet at any time while the House is sitting (except during questions for oral answer) and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c) 
. 
Motion agreed to. 
Unit Titles Bill 
Second Reading 
Debate resumed from 11 February. 
MOANA MACKEY (Labour) 
: 
 I was saying last week that this legislation is very good Labour legislation; it is nice to see it back in the House. It has been a bit of a night for Labour legislation has it not? We have just dealt with the Financial Service Providers (Pre-Implementation Adjustments) Bill— 
Hon Clayton Cosgrove 
: Shouldn’t it be referred to Judith Collins? 
MOANA MACKEY 
: That is a very good question. We have this Unit Titles Bill; here we are 15 months into this new Government and we are continuing to pass Labour legislation. 
Hon Darren Hughes 
: It’s time for a change. 
MOANA MACKEY 
: That is right. I hope that Minister Simon Power acknowledged Lianne Dalziel’s work on the financial adviser bill. 
Hon Darren Hughes 
: He did tonight. 
MOANA MACKEY 
: I have been told that he did tonight. I wish Phil Heatley had acknowledged the role that Labour had had in doing all the work on the Unit Titles Bill before he picked it up put it in the House and sent it to the Social Services Committee. I often refer to Minister Phil Heatley as a bit like a cuckoo bird; the cuckoo bird is one of those birds— 
Chris Auchinvole 
: Oh that’s not very nice! 
MOANA MACKEY 
: —no no hear me out—that jumps into other birds’ nests. The cuckoo bird lets another bird do all the work—build the nest—and then jumps in and claims credit for it. The Minister of Housing Phil Heatley is a little bit like that in that he never acknowledges that he has done none of the work on the legislation he is putting through this House. I have to ask what he has actually done in his 15 months as Minister of Housing apart from progress Labour legislation. But the least he could do was acknowledge the fact that he had nothing to do with the Unit Titles Bill; all the work was done by the previous Government and all the drafting was done by the previous Government. All he had to do was come down to the House and give a speech written for him by his officials which he did and he did very well. He read his speech very well. But I thought he could have perhaps just mentioned in passing that it was the previous Government that had done all the work on that legislation. Of course Labour will be supporting this very important legislation. 
The other thing the Minister said last week was that this bill was so important that it had to be progressed through the House in haste which begs the question why when this bill was reported back from the select committee in September last year has it languished on the Order Paper until now? If it is that important— 
Chris Auchinvole 
: Because we have had very important legislation. 
MOANA MACKEY 
: Well Mr Auchinvole who has once again completely missed the point of what I was saying says that it is because it is incredibly important legislation. My question asked why it was not progressed through the House ahead of some of the useless legislation that we passed under urgency prior to Christmas. This bill could have been passed prior to Christmas if it were so important. It is important which begs the question: where oh where is the Residential Tenancies Amendment Bill? I ask where that has gone because that is other legislation along with the Unit Titles Bill that Labour drafted and did all the work on. Yet Minister Phil Heatley has jumped in and said: “Mine! I did all the work; I take all the credit”. 
Hon Member 
: Again. 
MOANA MACKEY 
: Again—that is right. The Residential Tenancies Amendment Bill was brought into the House and was sent to the select committee; the Minister was going to progress it with the utmost haste because it was incredibly important. But it has disappeared. It too was reported back from the select committee last year but it has not gone anywhere. That bill is particularly important because it extends the protections of tenancy law to boarding-house tenants. We have heard of boarding-house tenants who were asked to shift out of their accommodation over Christmas so that other people could move in for the Rugby Sevens and if those tenants had had the protection of the law under the Residential Tenancies Amendment Bill that would not have happened. It is nice to see the Unit Titles Bill back in the House but we ask where the Residential Tenancies Amendment Bill is which this Government promised to progress. 
The Unit Titles Bill is very important and I want to say how much I enjoyed working on it in the select committee. At first glance the bill is incredibly technical; it is the kind of thing that is plonked down in front of us and we think: “Oh no this is really going to make our heads spin.” It is incredibly important legislation and it is long overdue for an overhaul. As the Minister said in his speech and as I absolutely concur the law that is currently in place was drafted at a time when we probably did not envisage the range of developments that fall into this category or the significant number of people who will be affected by it. It is estimated that within 50 years 500000 people in Auckland will be living in this kind of accommodation. For that reason it is incredibly important that the legislation be brought into the 21st century; it should have been brought even into the latter part of the 20th century. 
We have dealt with even simple things—things that we see coming through our offices and that clarify what most people would think were self-evident. For example there have been stoushes over whether only the people who live in the top apartments should pay for repairs to the roof of a building despite the fact that everyone benefits from having a roof on the development. When we heard those kinds of things coming to the select committee it was almost hard to believe that they had never been clarified before. We have clarified that issue: where there is common property such as a roof then it is the domain of all the residents to pay for the upkeep of that not simply the people who are in those top apartments. That seems simple and like real common sense but I am really pleased that it has now been clarified in legislation. 
The other thing which probably was not envisioned at the time the previous law was written was multi-stage developments. It is really really important to make clear exactly what rights the people who hold a unit title have in a multi-stage development where the next stage may change significantly from what they expected it to be when they purchased their unit title. We have made clarifications on that in this legislation. 
We have introduced a lot more transparency in terms of the financials and the running of the body corporate. Bodies corporate are not cheap. One of the things that a lot of people might find difficult—and we have a lot of retired people who move into these unit title developments—is when they suddenly get whacked with a really big bill. They have been going along and they have been paying their body corporate fee; they are able to do that and they can budget for it. Then suddenly something needs to be repaired—the lift needs to be put back in or the roof needs to be completely replaced—so all the members of that body corporate get a large bill. For some people particularly for those on fixed incomes it is really difficult to come up with the money at short notice. We wanted to set in place management plans and maintenance plans so that these things will have to be planned for. The body corporate will hold the money in reserve so that the immediate impact will be lessened. But during the course of the select committee process we also accepted that bodies corporate did not need to have incredibly large reserves all the time because that in itself might be difficult for some people to maintain. I am really pleased that the select committee was able to take a common-sense approach to that issue as well and to introduce flexibility in that provision. 
I have also been made aware tonight that although I thought we had fixed the issues about retirement villages and made sure that we had clarified the requirements where there was overlapping under their own legislation the Retirement Villages Act and this legislation that is not so. I understand that the Retirement Villages Association of New Zealand has been in touch with the Minister; perhaps we did not get it quite right. A Supplementary Order Paper will be introduced to the House just to clarify that we are not trying to put two entirely different laws which require different things on to the same people. Labour will want to examine that Supplementary Order Paper. Certainly it is our intent that we want to support whatever we can to clarify that we did not intend to duplicate the compliance requirements on retirement villages. 
This is important legislation. I think the select committee did a very good job in making sure that what came out the other end incorporated the common sense that we had heard from submitters in the select committee. I thank the officials for this legislation; they were very easy to work with. They were able to explain very technical things in very simple language and they were able to take the concerns that were raised by submitters and put them through to amendments. I acknowledge the Hon Shane Jones who is in the House for all the work that he did in developing this incredibly important legislation. It is nice to still have a little bit of the Labour Government coming through 15 months later. I wonder when National is going to start to do some of its own legislation in housing and stop doing ours. 
CHESTER BORROWS (National—Whanganui) 
: 
 Thank you Mr Deputy Speaker for interrupting the previous speaker Moana Mackey. 
I must admit that it is refreshing to have the opportunity to partake in a debate on a bill that has bipartisan support and at the end of a process that has been very bipartisan in nature. The members of the Social Services Committee enjoyed interacting with the submitters who educated us who debated with us and who had a full discussion with us all in respect of the Unit Titles Bill. 
The purpose of the bill is to clarify the title and survey processes; improve the governance structures for unit title developments including the rights and responsibilities of unit owners and the powers and duties of bodies corporate; establish a flexible and responsive management and maintenance regime for unit title developments; improve the information disclosure regime for prospective and actual unit owners; and establish a dispute resolution mechanism within existing set-ups. 
The point made by the previous speaker that no one can disagree with is that when empowering legislation for unit title type of premises first came about their popularity was never envisaged and the scale at which they would take off was never envisaged. The legislation was made for small numbers of units maybe fewer than 10 on a single title of land and how they might operate. As huge apartment blocks and other great big developments came about the owners were frequently at the whim of the developers then later on at the whim of the people who were running—or in some cases manipulating—the bodies corporate. Money was not set aside for routine maintenance for instance so every now and then a big lump sum was required. Some of the elderly owners’ savings had dribbled away so they were not able to contribute in the way that they needed to. It put them under pressure; it put all the owners under pressure. 
A number of these issues were raised with the committee which responded to them. There were issues about long-term maintenance regimes. The cost of having to provide a fund rather than just a plan for long-term maintenance was raised. The committee recommended an amendment that allows bodies corporate to opt out of establishing a long-term maintenance fund and to retain the requirement for a mandatory long-term maintenance plan. There were problems with the auditing and monitoring of body corporate funds and changes were made in respect of them. Various changes raised by the submitters were addressed by the committee. We recommended that changes be made to the bill to make it more palatable to owners who live in these circumstances and to give owners especially those who come in early to a large-scale development or a staged development some certainty about where the development would go and some certainty that their interests would be protected into the future. 
As I said it was good to be part of the process. The work was initially kicked off by the Labour Government it was completed under the National Government and it was debated well by all the members of the committee. The committee appreciated the well-thought-out and well-prepared submissions from those who engaged with the committee. I am sure that the legislation we have now will be enduring. I thank the members of the committee for their interaction for the engagement we had with one another and for the legislation that we ended up with. I commend the bill to the House. 
Hon SHANE JONES (Labour) 
: 
 Kia ora ano tatou. As befits the speakers on this side of the House devoid of any extravagant claims of vanity we say with some modesty that the Unit Titles Bill is the work of both sides of the House. We are debating it at a time when there is a lot of unfinished business in the leaky homes area. Some of the most celebrated pieces of litigation flowing from the leaky homes drama pertain to the occupants who live within property covered by unit title. There have been large bouts of litigation far beyond the High Court. There have been cases where people with corporate management responsibilities have not been either objective or respectful of the rights of minority interests. In addition to that there have been minority interests that have tried to hold to ransom a majority of people as they have sought to correct the building defects that leave them living in aquariums. It is important in this context that we provide that kind of background to this bill. 
This bill seeks to upgrade the legal infrastructure around that type of property right. It is given a larger sense of urgency because of the very cruel developments that have happened to people once they had occupied those properties and found that they have not been professionally made or that the materials that were provided by the manufactures—who have largely got off scot-free—have not stood the test of time. The important thing about this bill is that it actually improves the legal definition of the extent of the property rights that individual owners have within those apartment complexes and the obligations and duties on the corporate managers. Levels of disclosure have been improved. That will assist people who have found it impossible to establish whether the fees that they have paid are being dedicated towards maintaining the key capital components of the complex. Whilst I was the Minister for Building and Construction for a short time I heard no end of tales of woe in that regard. 
Let me focus on Auckland or Tamaki-makau-rau—super-city considerations aside. There is an ongoing challenge as to how we in Auckland enlarge the supply of residential housing stock. There is essentially a statutory ring around Auckland maintained through the planning regime which makes it exceedingly difficult for residential property development to take place. It always seemed to me when we were working on this bill that an improved set of duties obligations and rights and an enhanced infrastructure dealing with those types of apartment complexes may improve the prospects of an enlarged supply of residential units going up—and not necessarily out. In my view that is a major cause of the problem of the affordability of property in our largest city although—and no doubt the current Minister would agree—that is not the primary focus of the bill. As the confidence of investors in and occupants of those properties grows and as people’s confidence to live in those types of apartment complexes grows then capital and developers I am sure will be attracted to providing them as a housing option. The situation in relation to Auckland housing at the moment is essentially unsustainable. We have a geometric level of growth in terms of domestic migration. People are going to Auckland; they are not going to the winterless north or the deep south. A few get lost in the verdant pastures of Waikato and Matamata surrounded by racehorses and other such things. But the deeper problem is for the families of international migrants and domestic migrants and I think we ought not overlook that. 
In respect of transparency and the quality and quantity of information made available this bill empowers owners. It clearly provides a process whereby owners have a complaints avenue and they are able to hold accountable the actual statutory agents who have not only a fiduciary responsibility but also now an actual legal obligation. That level of disclosure was in a sense debated in relation to the bill that has just had its first reading the Financial Service Providers (Pre-Implementation Adjustments) Bill in respect of financial literacy financial stewardship etc. When people feel that their access to information is blocked—which has been the case in many of those apartment complexes—and they do not know where to turn the first thing they do is incur unnecessarily large amounts of legal cost. Lawyers from all across the spectrum did say to us—of course they will never agree but that is the nature of the law; it is an adversarial beast— 
Hon Christopher Finlayson 
: Don’t be so discourteous! 
Hon SHANE JONES 
: Well there are a few exceptions. The current Attorney-General is seeking to find common ground but an injudicious answer that he made last week to a very sensible question has begun to cause doubts to sprout in our minds. However we will overlook that small lapse of standards by the Attorney-General. 
I will come back to the quality of information. Where the information disclosure regime contained in this bill is maintained it will enhance confidence. People will not be required to incur unnecessarily large bills and they will be empowered. That is a transition away from the average garden-variety Kiwi experience of those fortunate enough to own a home on something akin to a quarter acre section. Here one has shared space and a shared obligation to maintain the key features of the apartment complex and one trusts the agents who are the corporate managers. Some of them may be associated with the original developers and they may set up an adjunct company to maintain an ongoing managerial role if indeed they have not been able to sell all the units that they have developed. That in itself I was told caused doubt and disquiet because it took them a long time to correct small issues such as lift wells parking or the general deterioration of the complex. Let us not overlook the power and the disinfectant-like quality of disclosure and very good information. 
Unfortunately there will be conflict as I said earlier—lawyers are involved. The jurisdiction of the Tenancy Tribunal is made a lot more lucid. Unfortunately we will see many of those disputes it would appear if the managers continue with their shoddy practices of not being responsive to people. The residents living in those complexes are often in their twilight years and managers should be responsive to their queries and anxieties. Often the apartment is a key asset that residents have after a lifetime of work scrabbling around and maintaining a small nest egg that has not been consumed by Mr Brierley and others. Those legal avenues will be very important. 
The key point I would like to leave members with is that we enjoyed contributing to this bill. It is a prolix and complex area of law and the bill gives a greater level of clarity to duties and rights in law for that type of property. It will expand the opportunities for people to hopefully enlarge the supply of housing in our key metropolitan area of Auckland. I support the bill. Kia ora tatou. 
TIM MACINDOE (National—Hamilton West) 
: 
 I am pleased to take a short call on the second reading of the Unit Titles Bill. It is good some might even say providential to follow the self-proclaimed model of modesty who is the previous Minister for Building and Construction. I am pleased to acknowledge that this bill as he and other speakers have mentioned has attracted widespread support throughout the industry. It is important. Many are affected. 
In the middle of last year when the members of the Social Services Committee were working on this bill and hearing the submitters both here in Wellington and up in Auckland there were an estimated 17908 unit title developments in New Zealand comprising 119287 units. What is very very clear is that high-density living is becoming more popular here as it is around the world. That trend will continue. Indeed it is expected that in Auckland alone 500000 people will be living in multi-unit developments within the next 50 years. 
I was intrigued a little earlier to hear Moana Mackey begin her speech by taunting this Government that it is passing yet another Labour bill 15 months after the change of Government. [ 
Interruption 
] As my good colleague Mrs Adams has just pointed out Labour had 9 years in which to do so and I am astonished therefore that Ms Mackey wants to draw attention yet again to that fact. I have said it before and I will say it again: I am absolutely gobsmacked at how comprehensively the previous Government lost control of its own legislative agenda. Thank goodness there was a change of Government because otherwise the poor owners of the unit title developments would still be waiting for this bill in another 20 years’ time. Nevertheless I do not want to be too controversial because there is a wide degree of unanimity here tonight and that is a good thing. The Unit Titles Bill is an important bill that modernises a very big area of law. I too acknowledge Ministers past and present and the select committee members for their work on this bill. 
The purpose of the bill is to provide a legal framework for the ownership and management of multi-unit developments by communities of individual owners and in particular to allow for the subdivision of land into units that can be individually and separately owned and common property that is commonly owned; to create bodies corporate that comprise all unit owners and are responsible for operating and managing unit title developments; to establish a flexible and responsive regime for the governance of unit title developments; and to protect the integrity of the development as a whole. 
We heard and we have heard again tonight that a large number of problems exist that make this a very important measure. These include issues with joint decision-making building maintenance financial management governance of developments information disclosure consumer protection dispute resolution and so forth. They are all addressed in this bill. We have made very good progress. I am delighted that the House is of a mind to push it ahead. We need to get on with it. I commend the bill to the House. 
TODD McCLAY (National—Rotorua) 
: 
 It gives me pleasure to stand and speak on the Unit Titles Bill. Indeed the Social Services Committee spent some time dealing with it last year. We received extremely interesting submissions from a wide range of submitters who covered a wide range of views. 
I want to touch on a couple of important points that came out of the submission process but I think it is important that we first dispel a couple of myths that came from speakers opposite earlier in the debate. This bill was first proposed by the previous Government and it deals with a very important issue. Unit title developments can be extremely complex and very difficult for people to manage once they are owners and it can be very difficult for people to obtain good information before they purchase such an apartment. However members opposite have said that the bill is their bill. Well I guarantee that when the bill enters into law it will not be their bill any more. They had their opportunity but they did not take the time to have the bill go through in the last Parliament. Therefore it becomes our bill. The draft that was on the table has been significantly improved. 
There are a couple of issues I want to briefly touch on. One issue is the disclosure and provision of information to people when they buy into a unit title development. We heard from submitters who were concerned that when they had bought off the plan before a development had been produced they had not been provided with all of the information that they believed they needed to understand what they were legally entering into. We heard submissions about problems that people had had once they had purchased a unit. One man said to the select committee that had he realised before he purchased that all of the costs for that development in so far as electricity was concerned had been loaded on to his unit he probably would not have purchased it. The committee took a position on that and put in place measures whereby full disclosure to a prospective purchaser is necessary before the act of sale goes through. In the case that the information is not provided to purchasers they have the ability under the law to cancel that sale. I think that is important. 
The committee spoke at great length about and considered the issue of maintenance. There was a view that a mandatory regime for maintenance of the communal areas of a property was necessary. A number of submitters said that they had different arrangements for their properties and that those arrangements were working for them. The committee recommends amending the bill to allow bodies corporate to opt out of establishing long-term maintenance funds but they must retain a requirement for a mandatory long-term maintenance plan. We heard that many bodies corporate have a longer-term view—once the owners are involved—of how they must maintain the communal areas of their properties. 
The issue of time-share developments came up. The bill as originally drafted would have included time-share developments but given the wide range and large 
number of owners of a time-share resort making decisions would have been extremely difficult. I make particular reference to the member of Parliament for Taupo Louise Upston; a number of her constituents who are time-share owners told her that this law may not work for them. Louise made a very strong case to a number of the members of the committee and a very good solution was found for those constituents. 
It is important that this bill enters into force quickly. I fully support the bill and I commend it to the House. Thank you. 
PHIL TWYFORD (Labour) 
: 
 I rise to support the Unit Titles Bill at its second reading. As with so many bills that have been passed over the last year in this House this bill is fundamentally the work of the Labour Government. What an easy life this Government would have had over the last 12 months had the fifth Labour Government not left it a considerable number of bills in the pipeline. I recognise the excellent work of my colleagues Lianne Dalziel and Shane Jones who has already been credited tonight as the former Minister for Building and Construction. We are not petty and we are not mean-spirited. We recognise and acknowledge the work of the Minister of Housing Phil Heatley and the Social Services Committee in bringing the bill to this stage. 
As my colleagues have already said this bill repeals and replaces the Unit Titles Act 1972. The last 37 years have not been kind to that Act and it is high time the Act was overhauled. We need a modern legal framework for the joint ownership of land buildings and facilities. Times have changed. The free-standing bungalow on a quarter acre section is no longer the only option for the aspiring Kiwi homeowner or the humble resident. Growing numbers of New Zealanders especially those living in Auckland choose a more urban lifestyle and choose to live in flats apartments and townhouses. Sometimes those options are the only affordable route on offer for someone wanting to get into the property market. The bigger picture as mentioned by my colleague Shane Jones is that Auckland in particular but also other New Zealand cities must embrace high-density living if we are to stop the endless sprawl of our cities if we are to accommodate a growing population and if we are to build cities that are both livable and sustainable. This bill updates the Unit Titles Act. It is an important step towards encouraging and supporting apartment and townhouse living. 
Shane Jones set out some of the background to this bill in particular in relation to the leaky homes situation. One of the things that has really exacerbated the hard time that many apartment owners have faced when they have had leaky or rotting homes is the outdated governance structures rules and regulations surrounding multi-title buildings. There are scenarios of minorities within bodies corporate holding back action that is needed to remedy structural problems and weathertightness problems and there are scenarios of majorities overriding the legitimate interests of the minority. In the latter case members of the public have approached me in terrible states of distress to seek help with completely unsatisfactory situations within the body corporate unable to get timely and fair redress for their problems. It has to be said that many bodies corporate are not taking responsibility for maintaining in a proper and timely way their capital assets. 
I want to provide a brief overview of what the bill sets out to do. It clarifies how land is surveyed to provide a clear legal framework for ownership by different parties simple and clear processes for building unit title developments and technical details that are essential for developers surveyors and territorial authorities. It takes a holistic approach to the management and maintenance of unit title developments clarifying the responsibilities of owners and the body corporate. It sets out some much-needed minimum standards for the sound management of unit title developments. It sets out a clear and flexible governance structure with reduced voting thresholds down to 75 percent in order to make decision making more easily managed and to prevent minorities getting in the way of actions that the majority of title holders want to go ahead with. 
Speakers before me have talked about the disclosure regime and how important it is so that unit owners bodies corporate and prospective buyers have good accurate and comprehensive information to allow them to make informed decisions before they sign on the dotted line. There is a cost-effective dispute resolution service so that anyone who is embroiled in a scrap can get justice by going in a cost-effective way to Dispute Resolution Services. 
I want to touch briefly on some of those things in a little bit more detail. Bodies corporate will be required to develop long-term maintenance plans to protect the capital value of the development and the capital value of the units owned by the individual owners. This means that owners will not be ambushed with big-ticket maintenance items like the replacement of a roof or in the case of leaky buildings and weather-tightness problems huge structural repairs which has not been uncommon in Auckland in recent times. The body corporate has to be able to act quickly and decisively on behalf of all unit owners for the good of the development as a whole when repairs need to be done. 
The bill provides that the body corporate will own the common property which includes all the parts of the development that are owned collectively. The body corporate is then responsible for doing repairs and maintenance. That means that if an apartment block has a leaky roof it is not just the owners of apartments on the top floor who are immediately affected by it who are responsible for making those repairs; the entire body corporate will be responsible. The second major change will make joint decision-making much more manageable. 
I have already mentioned that there is I think a good balanced regime that empowers a strong majority of three-quarters to go ahead and get things done but a minority always has recourse to Dispute Resolution Services if they feel they have not been dealt with in a just and reasonable way. Many disputes in the unit titles developments are created because people do not know their rights or are unfamiliar with the rules of the road or of the game. Owning and living in an apartment requires a much more detailed understanding of the rules and the regulations than any owner of a free-standing bungalow on a quarter acre section has ever had to contemplate. That is a cultural shift that we need to go through particularly in our larger cities as people live in these new environments. This bill is incredibly useful in clarifying and simplifying the rights and obligations of title owners and in fact the body corporate. So that will be a really useful step towards minimising the number of disputes that arise in the first place. 
The fourth key change is around disclosure. Educating consumers is an important part of this bill—enabling people to make informed and confident decisions. 
I did not serve on the Social Services Committee that considered this matter but there were a raft of detailed and technical issues that were presented to the select committee. I want to follow on from the comments of my colleague Moana Mackey on the concerns that the Retirement Villages Association of New Zealand raised in relation to the bill. I acknowledge that the select committee has reported back the bill with a large number of clauses to be amended. The Retirement Villages Association argued that it is already covered by quite an extensive accountability and regulatory regime under its legislation the Retirement Villages Act 2003. The association says the Act provides a good level of protection for residents. The concern it has is that this bill overlays an additional layer of regulation that duplicates many of the things that it already has to deal with and would create a very and unnecessary complex and costly environment. Its concerns have been largely dealt with but I understand that the association has written to the Minister pointing out that there are still a number of clauses where this problem has not been alleviated in particular clauses 67 68 69 and 71. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to take a call on the second reading of the Unit Titles Bill tonight. I thank the officials for all the hard work they have put into the bill. It is quite complex and a lot of submitters raised some very valid points. We made significant changes to the bill in the select committee process. I thank the officials for their work. They articulated to us on paper how we could implement those changes so I thank them for their hard work. 
National went into the election on a platform to streamline and simplify regulations. This Government keeps its word and delivers on its promise. We are doing things differently. This bill represents how well we are doing things differently. Labour first looked at this legislation in November 2004 which was 6 years ago. We have been in Government for just over a year and we have already progressed this bill to its second reading. 
H V Ross Robertson 
: We did all the prep work for you. 
KATRINA SHANKS 
: Labour might have done all the preparation but it took Labour 4 years to do it. It should not have taken 4 years and even Moana Mackey the former MP for Gisborne got up and said that this bill was well overdue. The previous Labour Government was in slow mode and this National Government is in fast mode. We deliver. That is what we are here to do and that is what members see when legislation goes through the House. 
The Unit Titles Act 1972 was designed for small flats and townhouses. As New Zealand society has developed complexes have become much bigger and there has been much more staged development and multi-level development. It has become very very complex. In fact in 2007 there were 16500 developments and 95000 units. So this legislation affects a lot of unit owners in New Zealand. Not only that; it is estimated that 50 years from now 500000 people—half a million people—will live in units in New Zealand and that is a quite significant number. It is important that we address this matter now. This bill will provide a broader and more adaptable way of setting up and managing multi-unit living. 
I am taking only a short call on this matter today. It has been my pleasure to stand here to support this bill and I look forward to the Committee stage. Thank you. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 Rather than get into the sort of “who did what to whom” exchange that we have had for most of the night I think members on both sides of the House would probably agree that the Unit Titles Bill is good and necessary legislation that will provide a high degree of consumer protection. It is akin I suppose to the old Real Estate Agents Act which was an Act that was way out of date and needed modernisation. The House generally came to the party to bring it into the 21st century. I will make just one comment if I may that is slightly off the bill but pertains to the dissertation of Katrina Shanks the previous speaker and it is this. It was Ms Shanks who said that this Government keeps its word. I would just say to her that that may be so on some things but not with GST. 
Moving back to the bill if we look at this legislation—when I was building and construction Minister I had a hand in this bill as did Mr Jones and latterly Mr Heatley has seen it through—I recall that a major problem was the requirement for bodies corporate to agree in unanimity to basically get anything major or even minor done. This bill corrects that as there now needs to be only a 75 percent majority. I recall that the objective for that part of the legislation was to stop some of the examples of what are known colloquially as hold-outs where in many cases maintenance had to be done on a unit title of it could be 10 units or 50 units and one person would not agree. This was very prevalent in leaky buildings. 
I recall one case where the whole series of unit titles had agreed apart from one gentleman who resided in Spain I think. He rented his unit so the story went and decided that he would not pay or participate in anything or put up any money as a contribution to remedy the situation. That block of flats or apartments in Auckland I think was stymied. The residents could not do anything. Every unit title owner apart from one had agreed and it was self-evident. Nobody disagreed. Maintenance and construction work needed to be done to remedy a leaky building situation and I think the residents were then going to proceed to court but they wanted to get that fixed. One particular unit title owner a Kiwi who resided overseas just said he was not interested that he would not cough up and that he would not vote in favour because that would have been a binding resolution; he would have been forced to make a—from memory I think relatively small—contribution to the overall maintenance fund. Certainly some years ago which is when I recall the case occurring those people were effectively left languishing and could not effect a repair or advance the protection of that block of flats. The so-called leaky building syndrome was not anticipated in respect of the Act of 1972 because we did not have it then. 
Leading on from that one of the impressive things about the protection the legislation will provide is the need for the establishment of long-term maintenance plans to protect the long-term value of the development. That on the surface may again seem self-evident and we may ask why we would we not want to do that but again there were cases of hold-outs where unanimity was required. In many cases in smaller unit titles there was a lack in the skills base of owners or there was a lack of resource because of the body corporate fees to be able to gain the advice and skills necessary to advise on maintenance plans so things just slipped. The problem with the roof that may have needed some maintenance slipped to the point where each of the owners was required to dole out a large lump of money to remedy a major problem. 
This was difficult for those who were purchasing because there was no requirement for disclosure. One of the other pieces of excellent work in this legislation is the requirement for disclosure both in financial terms and in terms of things like the body corporate minutes so that a potential buyer can go in and examine those documents. A body corporate’s minutes can be very revealing in terms of the history of the building and its value and in terms of whether there have been any structural or maintenance problems with it. They can be very revealing to a potential buyer. Before this legislation is passed if the body corporate wishes to it can block access to those documents. Currently one has to get the body corporate’s permission to inspect those documents. 
This bill reminds me as I said of the real estate agents legislation. It is good solid consumer protection legislation. There is an argument that everybody should be responsible for himself or herself and that is predicated on the myth that we all have the skills to analyse these situations and to know which questions to ask to gain the information we need. The truth is and I include myself in this that many many Kiwis do not have a monopoly on knowledge. They do not have the skills they do not know the right questions to ask. They are good-natured people of good faith but they get sucked in by sharks. Of course they are ultimately responsible for their decisions but we need legislation simple rules to provide those consumer protections and to force the disclosure of vital information. 
In the ordinary course of business I would argue that most bodies corporate—good-natured as they are appropriate as they are—would avail a prospective buyer of that information anyway. However the sad thing about the legislative process in this House is that we tend not to pass legislation for the 99 percent of people who will obey the law whether or not it exists. Sadly we have to deal with the lowest common denominator and have to protect people from the 1 percent or 0.1 percent of folks who are hell-bent on ripping off good folk. 
So there are disclosure provisions in this bill as I have said. Equally there is the ability in this legislation for disputes to be dealt with through mediation and adjudication in the Tenancy Tribunal in the first instance rather than disputes being solely rushed off to the courts. Therefore I would argue that this makes resolution faster and cheaper. Again if we focus on the leaky building scene courts are often an option for very very large bodies corporate with a large budget because so many members contribute to it. Often the larger ones as they are today of course will proceed directly to our court system to gain a judgment. They have the resources to do that and they have those resources because of their numbers and their body corporate fees to be able to gain the experts they need. However if it is a body corporate of say 10 members or even 20 it will not have that ballast that financial capital and that capacity to wander off into a court and get justice in perhaps a swift fashion but one that will cost a bucket load of money. 
Often disputes begin as minor disputes and fester. I am sure that constituent MPs on both sides of the House have dealt with many many such cases. They can fester into large legal disputes and arguments if not dealt with. The legislation will provide for mediation and adjudication a modern form of dispute resolution in this day and age and an alternative to the courts. It is not to usurp the courts but is an alternative. I think it will provide for smaller bodies corporate especially to be able to resolve disputes cheaply efficiently and swiftly. That is a major problem that we have. So I support this legislation. 
My colleague Shane Jones noted with some pride that the legislation will also bring the infrastructure into the 21st century. Of course with this legislation we will now have computer registers. Where land is subdivided to create the unit title development there will be the creation of a computer register where the principal unit is subdivided to create a subsidiary unit title development. Again it is an attempt to cut down red tape and to use technology to have swifter and more efficient outcomes. 
In summary despite the “who did what to whom and where and who takes the credit for what” we on this side think that tonight is one of those times when people will look at this Chamber and perhaps agree that a bit of bipartisanship is always appropriate especially when it comes to consumer protection. At the end of the day one’s unit title just like one’s freehold property or stand-alone house is probably the biggest asset that Kiwis will have in their lives. It is one where especially with a unit title where there is common property the risks are different and are often greater than those associated with a stand-alone house. I think this bill will provide protection and I endorse it. 
Bill read a second time. 
Children Young Persons and Their Families (Youth Courts Jurisdiction and Orders) Amendment Bill 
In Committee 
Part 1 Amendments to principal Act 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 Part 1 of the Children Young Persons and Their Families (Youth Courts Jurisdiction and Orders) Amendment Bill deals with reducing the age of criminal responsibility from 14 years to 12 years for a wider range of offences than murder and manslaughter as is the current case. I want the Minister for Social Development and Employment to take a call early on in this debate because this is an area we will be focusing on. It is a major change to important legislation. This issue has been challenged by serious experts including judges in respect of the intent that lies behind it. I want to hear a very simple explanation from the Minister as to why she wants to reduce the age of criminal responsibility for offences other than murder and manslaughter which are already covered from 14 years to 12 years. 
I find it hard to understand what lies behind the thinking in this area because the law accepts that 14 years of age is the defining line between a child and a young person. Under current legislation the definition of “young person” is 14 years and older. Below that age we are talking about children. So we are talking about holding children accountable under the legal framework that was set up for young people. People know that they cannot leave their children home alone before they are 14 years of age. As we know babysitters have to be at least 14 years of age. Parents are held legally accountable for providing the necessities of life for children under the age of 14 years. Criminal law and family law are riddled with this distinction between those who are under 14 and those who are 14 and over. So what possible motive lies behind this particular change? It does not make sense that a child who is not old enough to babysit is actually now old enough to face the consequences that would be faced by a young person under the youth justice provisions of the Children Young Persons and Their Families Act. I think this is one of the very serious issues in this bill—there is more than one serious issue that the Opposition will be focusing on—and the Committee really needs to have some understanding as to what the Government is trying to achieve. 
All of the literature that I have read on this subject—and I have read copious quantities of literature on this subject—tells me that punishing young children who have grown up in adverse environments that have affected the way they see the world and respond to things around them will not make the kind of change that we need to see happen. The whole discussion hopefully is now turning to an understanding of what Whanau Ora will mean in practice and the early intervention approach is what will make the long-term difference. Why when Whanau Ora is waiting in the wings—if it is what it is made out to be; and it will now be extended beyond Maori to the wider community—would one change the age of criminal responsibility and bring in a punishment model that does not identify one of the fundamentals of our family law principles which is that children lie at the heart of all decision making? They should be at the heart of decision making when we are talking about children. 
I have in front of me one of several documents that I have been reading over the last wee while as I look at this whole question.  
Unlocking Potential: Alternatives to custody for young people 
 has been written by a non-governmental organisation in the UK called 4Children. I visited it last year when I was over in the UK and I got an understanding of what it was trying to achieve. The report said that there had to be a different way of finding out how we could address some of the underlying drivers of crime and that that was the best way to move forward as far as young people are concerned. That was I think a defining reality of all the major submissions that were made on this legislation. We have to get to the roots of crime. If we do not get to the roots of these issues we will see them continue. 
There is another thing that the Minister would perhaps like to reflect on in her comments as well. There has been a lot of debate in the media over the last couple of days about the Kahui twins. I know that this is a really hard thing to say but can anyone in this Chamber imagine what the Kahui twins would have grown up to be like if they had survived the treatment that was meted out to them by a family that let them be abused and ultimately killed? If they had survived that if they had not died what would have been the result? That is what I am asking the Minister. How can she sit there and agree to change the age of criminal responsibility when she knows—probably better than anyone else—that children coming from damaged dysfunctional family environments have very little chance of finding their way back into society in a way that takes them forward? This bill takes them backwards. 
Progress reported. 
Report adopted. 
The House adjourned at 9.55 p.m.