Twyford PhilHon PHIL TWYFORD (Minister for Economic Development): What a nasty toxic and bitter and twisted contribution that was from David Carter the member for the landed gentry. It was notable in his attacks on Government policy that he was very concerned to defend the role of speculative offshore housing investment which actually shows how far we've come in the last two years in reallocating the economy towards a much more productive focus on firms that generate jobs and exports.The whole problem that we inherited when we became the Government was that the whole strategy for economic growth under the former National Government was based around immigration and housing speculation and cashing in the insurance cheque from the Christchurch rebuild. There was really nothing going on other than that and if the former Minister had actually taken the trouble to read extensive commentary on the positive effect of our Government banning offshore foreign speculators from buying and selling houses in our residential housing market it's actually contributed to the quietening down of the Auckland housing market which saw house prices double under the National Government.There's an enormous amount of work and reform going on across the economic development programme of this Government. My colleague Chris Hipkins is in the process of reinventing the entire vocational education system that has been utterly broken. Chris Hipkins is fixing it and that's a good thing because we desperately need to grow the workforce that the new economy requires. Shane Jones is overseeing the Provincial Growth Fund a $3 billion boost to infrastructure workforce and sustainable job growth in regions that have been neglected for far too long. Megan Woods is developing our whole strategy around research science and innovation and work to develop affordable and sustainable energy for the future; and there's David Parker's Resource Management Act reform process cleaning up fresh waterways. We are determined to see the best land use possible without depleting our natural capital for future generations.There is a huge amount of work going on and one of the critical pillars in our economic development plan is deeper pools of capital so that we can invest in a growing and productive economy. I want to acknowledge the leadership that David Parker has shown in developing this bill. It was his thinking they were his ideas and it was his analysis when he was Minister for Economic Development that saw the development of this bill designed specifically to plug the gap in our venture capital system that currently sees the shortage of series A and B capital driving New Zealand firms offshore sooner than they otherwise would have because of the capital constraints in our system. David Parker gave quite a good history of the development of the Venture Investment Fund under the Clark Government. The SCIF the Seed Co-investment Fund I think has performed well. We're seeing actually pretty good pretty healthy investment in New Zealand by angel investors in the very early stage firms.But the clear gap is in series A and B investment. International research shows that a market that's performing properly should have a 25 percent conversion rate between seed capital and venture capital stages. So that would mean that for every 100 start-ups 25 of those firms would successfully go on to raise a series A round investment. Now in New Zealand the current conversion rate is only 10 percent. Twenty five percent's the benchmark for a healthy market; in New Zealand we're only achieving 10 percent and that's largely because of the lack of venture capital investment funds in New Zealand for firms that are at this stage. Where around 30 to 40 firms should be expected to be closing their first venture capital funding round annually there are less than half of them achieving that in New Zealand and most of those go abroad to get that funding. So that's the problem that this fund is trying to solve. I want to acknowledge the work of the Finance and Expenditure Committee. Their report has only really three significant things that I think rate a mention in this debate. There are a number of small technical improvements that they've made and I thank them for that. But the three things that they've recommended that we change are that we set out more explicitly in this bill what we mean by developing New Zealand's venture capital markets. And in clause 24(b)(iii) they've recommended inserting reference to this in the purpose statement of the bill.There has been some interesting debate as this bill has gone through the House about the extent to which the investment of $300 million will make a difference to New Zealand - based funds. And there's no question—let's be really clear about it; there's no question—that's what we're trying to achieve. The fund will take a fund of funds approach by investing in New Zealand - based funds and some offshore funds who will be required to invest that money in New Zealand firms. We are trying to grow the venture capital ecosystem in New Zealand. That's what we're trying to achieve. Putting some of that money through Australian and other offshore funds in order for them to then invest in New Zealand firms is part of actually leveraging and stimulating a much bigger investment much bigger than the $300 million that we're talking about investing in the Venture Capital Fund.Secondly the select committee has helpfully invested clause 32 which would require the Guardians of New Zealand Superannuation to use best practice investment management when investing the fund's capital. And some submitters expressed concern with the limited scope of directions that the policy statement could contain. And the committee has very helpfully recommended that we amend clause 35 so that the policy statement could include the Government's commitment to an inclusive economy and the possible directions that that policy statement could contain.And lastly again sort of I think mindful of the statutory independence of the Guardians the committee has recommended that we should allow an amendment to clause 56 to give the Minister the power to direct the Guardians to report on additional matters in their annual report—for example the work that they are doing in managing the Venture Capital Fund.So those are all fairly small amendments but I think they are well considered. I thank the select committee for them and I look forward to the further progress of this bill through the House. I commend this bill to the House.