Volume 699 Week 75 - Tuesday 17 June 2014Text is incorporated into the Bound VolumeVolume 699 Week 75 - Tuesday 17 June 2014[Sitting date: 17 June 2014. Volume:699;Page:18521. Text is incorporated into the Bound Volume.]Tuesday 17 June 2014Mr Speaker took the Chair at 2 p.m.Prayers.ResignationsHon John Banks EpsomMr SPEAKER: I wish to advise the House that I have received a letter fromthe Hon John Banks resigning his seat in the House with effect from 5 p.m. on Friday 13 June 2014.Questions to MinistersClimate Change Policy—Emissions Trading Scheme and Alternative Approaches1.Dr RUSSEL NORMAN (Co-Leader—Green)to the Prime Minister: Does he stand by all his Government’s policies?Hon BILL ENGLISH (Acting Prime Minister):Yes particularly those that are supporting a stronger economy and better communities.Dr Russel Norman: With regard to the Government’s emissions trading scheme policy does he agree with OECD Secretary-General Angel Gurría that it is easier to deal with carbon emissions via a tax than an emissions trading scheme and that a fiscally neutral tax like the Green Party’s climate tax cut is “a more business friendly labour friendly and a greener friendly tax structure” than an emissions trading scheme; if not why not?Hon BILL ENGLISH: No. New Zealand remains the only country outside the European Union with a comprehensive emissions trading system. I know the Greens believe that the price should be higher because it wants to punish businesses and households for using any fossil fuels but the fact that the price is low indicates that demand for carbon credits is low because carbon emissions are lower than people expected them to be. And that is good news not a problem.Dr Russel Norman: What is his response to the editorial in the Dominion Post on 5 June describing the Green Party’s climate tax cut as “a systematic and intelligent attempt to deal with climate change” and the Government’s response to it as “lazy and arrogant”?Hon BILL ENGLISH: I do not think I read that editorial. I was probably reading the Southland Times editorial. But in this case—[Interruption]Mr SPEAKER: Order!Hon BILL ENGLISH: The Greens did make an intelligent and insightful contribution to setting up the emissions trading scheme. At that time they believed that a pricing mechanism was the best way to alter behaviour—a pricing mechanism that was flexible according to supply and demand for carbon credits. I am not quite sure why they have changed their point of view. Certainly the Government has not been arrogant or dismissive about the emissions trading system. We have been a bit dismissive of the Greens’ policy which is intended to shut down business destroy jobs and make households poorer.Dr Russel Norman: What is his response to business commentator Pattrick Smellie’s description of the Green Party’s climate tax cut as “a good idea” and the Government’s response to it as “mildly hysterical”?Hon BILL ENGLISH: I do not think either the Dominion Post editorial writers or Pattrick Smellie have thought it through quite frankly. The Greens were part of the original debate about whether to have a carbon tax or an emissions trading system. They were part of a Government that decided on the emissions trading system and frankly we think they made the right choice. The emissions trading system is the most efficient way of reducing carbon emissions and that is why we have stuck to it and we do not agree with the Greens’ policy.Dr Russel Norman: What is his response to comments by business commentator Bernard Hickey that “the ETS has been a failure” and the Green Party’s climate tax cut would be a more efficient solution?Hon BILL ENGLISH: He is wrong about efficiency but a number of commentators simply believe that too much carbon is being emitted and they want to deliver as much punishment as possible to those who deliver it. So why limit the carbon price to $25? You could get to a zero carbon economy if you made it $500 a tonne; people would stop using it straight away. So I expect the Greens to follow the logic of their argument. If they are really concerned about climate change they would set that price much higher than they have.Dr Russel Norman: Why do the Government and the Minister prefer an emissions trading scheme where consumers just face increased costs rather than a climate tax cut which is fiscally neutral where the charge on carbon is returned to households and companies through tax cuts—so under a climate tax cut income tax is reduced and company taxes are reduced to account for the fact that households and businesses face those costs?Hon BILL ENGLISH: I would acknowledge that the Greens did in their policy follow some sound logic when they said they would reduce income taxes because up until now they have been strong advocates of increasing income taxes regardless of merit just on a point of principle. The Government favours an emissions trading system because it is a market pricing mechanism that incentivises everyone participating—from consumers to emitters to Governments including the fact that it was consistent with the international regimes that were being put in place at the time. So we agree with the original logic that the Greens applied in supporting and developing the emissions trading system and we have not seen persuasive arguments to change to a carbon tax—and particularly not to a punitive carbon tax where the tax is higher than it needs to be given emissions around the world and it would punish households.Dr Russel Norman: What is his response to the economist John Small’s assessment that the Green Party’s climate tax cut “would stimulate innovation in New Zealand” while the risk of doing nothing as is the case under the failed emissions trading scheme is that “valued trading partners might one day stop buying from us because they don’t like our production methods”? What is his response to the economist John Small’s comments?Hon BILL ENGLISH: He makes the same mistake as the Greens. I mean the emissions trading system was set up to reflect the world carbon price. At one stage we thought it would be $25 or $30. Because of recession and other changes in how industries work in different parts of the world we have ended up with a large supply of credits and therefore a lower price on carbon. That reflects the fact that there are fewer carbon emissions than people thought there were. The Greens are picking a random number as a tax which will punish households and businesses and actually puts too high a price on reducing carbon emissions—higher than it needs to be.Household Savings and Debt—Current Account Deficit and Compulsory Savings2.Hon DAVID CUNLIFFE (Leader of the Opposition)to the Prime Minister: Does he stand by his statement relating to an increased level of household saving that it “is a necessary foundation for more sustainable growth in the medium and longer terms”?Hon BILL ENGLISH (Acting Prime Minister):Yes which is why the Government welcomes the recent improvements in household savings. For example in the 5 years to 2008 household savings averaged minus 4.5 percent and they slumped to minus 7.6 percent in 2003—the worst on record in the history of that series. Under the current Government household saving has average minus 0.2 percent. Higher household saving and improvement in the Government’s books has helped reduce the current account deficit to 3.4 percent of GDP—a significant improvement on the current account deficit when Labour left office of 7.9 percent.Hon David Cunliffe: Since the Prime Minister is so keen on past Governments does he agree that it was a mistake for National to abolish the compulsory savings scheme in 1975—Hon Member: How old were you?Hon David Cunliffe: Well how long is a piece of string? [Interruption]Mr SPEAKER: Order! The member has a right to ask the question and I will judge the Government responsibility.Hon David Cunliffe: —given that the Financial Services Council has estimated that New Zealand has now forgone $278 billion in savings as a result of that short-sighted National Government decision?Hon BILL ENGLISH: If we are talking about mistakes of the 1970s one that Labour made was to make Bill Rowling the leader of the Labour Party—and that member will be finding out what he felt like. No I disagree with the Financial Services Council. I think its calculations are nonsense and we also disagree with Labour’s policy of making KiwiSaver compulsory because it will have to explain to hundreds of thousands of low-income New Zealanders—Mr SPEAKER: Order! That was not the question that was asked.Hon David Cunliffe: Is he aware that after 25 years of compulsory savings Australia has built up a savings nest egg of no less than $1.3 trillion and why does he not think Kiwis should have a similar pool of capital for investment and their futures?Hon BILL ENGLISH: Because the member is using a very partial measure of the Australian economy. Economists all agree that the best measure of our savings-investment imbalance is the current account deficit. Since the Australians brought in their compulsory superannuation scheme New Zealand has on average had a smaller current account deficit than the rest of the world—that is a smaller deficit on domestic savings to fund its investment. There is nothing magic about the Australian compulsory superannuation scheme. In another measure New Zealanders have more money invested in businesses but they do have less in the products sold by the Financial Services Council.Hon David Cunliffe: Speaking of the current account deficit does the Prime Minister accept that Australia’s large compulsory savings pool has enabled it to own its own banks and nearly all of ours?Mr SPEAKER: The Hon Bill English insofar as there is ministerial responsibility.Hon BILL ENGLISH: There is no doubt it has meant that its stock market is a bigger proportion of its economy. As it happens in New Zealand family and cooperative businesses are a much bigger proportion of our economy and we think that is a quite legitimate form of savings and investment. In any case Labour will spend the next 3 months promising carve-outs from its compulsory scheme which will compel hundreds and thousands of the poorest New Zealanders to give up 9 percent of their income when they cannot afford to give up any.Hon David Cunliffe: Given that the Prime Minister is so concerned about the current account deficit and given that 85 percent of New Zealand’s national debt is private debt why is he not prepared to support a policy that will grow private savings shrink private debt and reduce the current account deficit?Hon BILL ENGLISH: Because it will not do any of those things—that is why. There are already 2.3 million New Zealanders in KiwiSaver. The member should take some of the credit for the success of KiwiSaver because his Government introduced it and people are still joining it at the rate of 15000 per month. The people who are not in KiwiSaver generally cannot afford to be in it. I invite the Labour Party to explain to hundreds of thousands of low-income New Zealanders why it is effectively going to take 9 percent of their income off them when they are living from week to week on very small margins.Hon David Cunliffe: Given that the Prime Minister’s party opposed KiwiSaver when Labour introduced it and now supports it and given the crocodile tears the Acting Prime Minister has just cried about low-income New Zealanders will the Minister of Finance and the Prime Minister both stand up and agree with us that the minimum wage should be raised as soon as possible to $15 an hour and if he does not would he like to explain to New Zealanders why he wants to keep their wages down and their savings down and their banks owned—Mr SPEAKER: Order! This is question time not the general debate.Hon BILL ENGLISH: No and the member is trying to tell people that low-income New Zealanders who will be hit by a 9 percent cut in their income will not worry about it because they can get a small percentage increase in the minimum wage. Actually most of them are not on the minimum wage. They have low incomes because they are seasonal workers casual workers or not working at all. The member will spend the next 3 months backtracking from his position of compulsory KiwiSaver—you just watch.Economy—Reports Forecasts and Tax System and Income Support3.Hon KATE WILKINSON (National—Waimakariri)to the Minister of Finance: What recent reports has he received about the outlook for the New Zealand economy?Hon BILL ENGLISH (Minister of Finance):The Reserve Bank last week issued its Monetary Policy Statement for June. It forecast that the economy will expand by around 4 percent in the year to June 2014 with growth increasingly broad-based and increasingly self-sustaining. It also forecast that inflation is expected to remain near the mid-point of its 1 to 3 percent target. However inflationary pressures are expected to increase. It notes that despite recent falls in dairy prices export prices remain high by historical standards. These factors together with an extended period of relatively low interest rates are supporting what the Reserve Bank calls robust growth in incomes and in demand.Hon Kate Wilkinson: In releasing its latest forecasts what key assumptions did the Reserve Bank make about the economy over the next few years?Hon BILL ENGLISH: The Reserve Bank says its outlook for the next few years depends on several key assumptions. It says prices for New Zealand’s exports are expected to fall further from current levels before they stabilise at levels that will remain high by historical standards; the trade-weighted exchange rate is expected to fall gradually over the next 3 years; annual net migration is assumed to peak at the end of 2014 before easing at a similar rate to the last migration cycle in the early 2000s; and annual house price inflation is projected to ease from its peak of over 10 percent late last year to under 1 percent within the next 4 years.Hon Kate Wilkinson: What reports has the Minister received about the Government’s financial position as it moves to return its books to surplus next year in line with its wider economic programme?Hon BILL ENGLISH: Treasury last week released the Government’s financial statements for the 10 months to 30 April. They showed that the operating deficit was $1.37 billion for the 10 months—about $148 million smaller than forecast in the Budget. Core Crown revenue was $12 million below forecast while core Crown spending was $90 million below forecast. The results confirm that the economy is on track to meet Treasury’s forecasts which include a modest Budget surplus in this next financial year.Hon Kate Wilkinson: In setting a track back to fiscal surplus next year how has the Government ensured the income tax and income support systems are fair and continue to help those households most in need?Hon BILL ENGLISH: A combination of decisions over the income tax and support systems provides significant income redistribution from higher-income households to lower-income households. Latest estimates show that households earning over $150000—that is the top 15 percent of households by income—will pay 49 percent of income tax in this year. But when benefit payments Working for Families paid parental leave and accommodation support are taken into account these 15 percent of households will pay 74 percent of net income tax and that is excluding New Zealand superannuation. Households under $60000 a year which is just under half of all households are expected to pay 9 percent of income tax but when we take into account their income support payments they pay no net income tax at all. The $2.5 billion of income tax expected to be paid by households earning under $60000 a year will be more than offset by the $7.3 billion they will receive in income support.Immigration Policy—Parent Category Visa Applications4.Rt Hon WINSTON PETERS (Leader—NZ First)to the Minister of Immigration: Is he satisfied with the current immigration policy settings?Hon MICHAEL WOODHOUSE (Minister of Immigration):Generally yes but I am constantly working to refine policy to ensure New Zealand is at the front of that global contest for skills and investment tourists and international students.Rt Hon Winston Peters: Well if that is so is it fair on all other migrants that one country China is grossly overrepresented in the number of parent category migrants?Hon MICHAEL WOODHOUSE: Well I do not accept that they are but I will go through with the member what I have already said in question time about the time lag between the bringing in of permanent residents and the subsequent applications for parent category visas for their parents. Chinese skilled migrants were rather more prominent under the previous Government which was supported by that member’s party and we are now seeing some coming in but I note also that this Government has removed the centre of gravity provisions that would have made Chinese parents more likely to gain residence under that category. It is a much fairer system.Rt Hon Winston Peters: I seek leave to table two sets of graphs compiled by the Parliamentary Library. One is to do with the year ended May 2014 and one is to do with the parent category pending for which applications are being processed. Both are from the Parliamentary Library.Mr SPEAKER: Leave is sought to table those particular graphs prepared for the member by the Parliamentary Library. Is there any objection to them being tabled? They can be.Documents by leave laid on the Table of the House.Rt Hon Winston Peters: Of the people granted residence in New Zealand as at the end of May 2014 why is one country China so overrepresented in the parent category and what is the Government doing about it?Hon MICHAEL WOODHOUSE: I am sure I explained the reasons for that in my previous answer and I have nothing to add to it.Rt Hon Winston Peters: If that was an explanation we should all believe why is it that the parent applications on hand category shows that one country China has more applications than all other countries put together?Hon MICHAEL WOODHOUSE: That may very well be the case—I have not seen the data—but what is of interest to me is not the applications but the acceptances.Rt Hon Winston Peters: Why is the Minister and his Government encouraging one country to use New Zealand as a retirement home with all the benefits and superannuation and health care and infrastructural investment that New Zealanders work—[Interruption] Mr Speaker can I possibly hear myself—Mr SPEAKER: I can hear you quite—[Interruption] Order!Rt Hon Winston Peters: They’re all shouting at me here.Mr SPEAKER: Order! The member will resume his seat. The member has a right to have his question heard. I was actually having no trouble hearing it because of the loud way in which the member was delivering his question. If he could bring his question to a conclusion rather than making a statement I would be very grateful.Rt Hon Winston Peters: Thank you very much Mr Speaker for your help. It is always appreciated. Why is the Minister and the Government encouraging one country to use New Zealand as a retirement home with all the benefits that most New Zealanders work 40 or more years for and pay for in their taxes?Hon MICHAEL WOODHOUSE: I reject the premise that one country is being favoured over another. I note that since that member’s party supported the previous Government the parent category approvals have dropped the centre of gravity provisions have been removed the sponsorship requirements have been increased the family income thresholds have been increased and I have a bill in the House that would extend the sponsorship period from 5 years to 10 years and that member’s party is not supporting it. So if he is serious about this he would support the Immigration Amendment Bill.Budget 2014—Cost of Canterbury Recovery5.Hon DAVID PARKER (Deputy Leader—Labour)to the Minister of Finance: Does he stand by the Cost to the Crown of the Canterbury Rebuild presented in Budget 2014?Hon BILL ENGLISH (Minister of Finance):Yes. That is Treasury’s best estimate based on current information and according to the criteria it has to apply for the accuracy of the estimates.Hon David Parker: Does he agree with the Prime Minister’s statement last week that the cost to the Crown of the rebuild will increase to around $20 billion?Hon BILL ENGLISH: I think the Prime Minister suggested that it could. Of course that is yet to be seen but the best estimate at the moment is around $15.4 billion. There has been some airing of differences of view for instance around how much of the cost councils should carry compared with the Government and we are engaged in constructive discussions about that. That could possibly see the costs rise.Hon David Parker: Given that even before the Budget the Christchurch City Council said its share of infrastructure rebuild costs was higher and the Prime Minister has lately said that he thinks the costs are going up too why did the Minister present a Budget showing the Crown’s share of those infrastructure rebuild costs had dropped compared with the prior Budget?Hon BILL ENGLISH: Because that is and I have to say remains the best assessment of the cost of the infrastructure. The council has been becoming much more familiar with its current financial circumstances and its outlook. It has some views about what costs it should carry and those of course will be constructively discussed with the Government. But in the end Treasury sets the amount according to the valuations of the insurance liabilities and the best estimates of future costs to the Government.Hon David Parker: Why would anyone have confidence in his numbers when at the last election the Pre-election Economic and Fiscal Update booked the proceeds of asset sales but failed to account for the decrease in dividends?Hon BILL ENGLISH: As was extensively discussed after the last election as part of Labour’s usual relitigation of election results where it thinks the public got it wrong including back in 1975 which it is still relitigating—as part of that discussion it became quite clear that Treasury followed the correct statutory processes as it has for this Budget.Hon David Parker: Can he assure the House that the rebuild figures published by Treasury in this year’s Pre-election Economic and Fiscal Update will be accurate and will fully represent the true and higher costs of the rebuild as belatedly acknowledged by the Prime Minister just last week?Hon BILL ENGLISH: As the member will know the Pre-election Economic and Fiscal Update is prepared by Treasury in its capacity under the Public Finance Act as an independent statutory agency. It will decide what those numbers are and I expect it will apply the same objectivity and integrity it has to the Budget 2014 number. It could be higher. That is up to Treasury. It depends on a lot of moving parts in respect of Christchurch funding.Transport Planning—Government Policy Statement on Land Transport6.DAVID BENNETT (National—Hamilton East)to the Minister of Transport: What recent announcements has he made on funding for transport?Hon GERRY BROWNLEE (Minister of Transport):Last week I released the draft Government Policy Statement on Land Transport 2015/16 - 2024/25. This is a very thorough document which proposes investing $38.7 billion in land transport over the next 10 years. It continues the Government’s prioritisation of economic growth and productivity road safety and value for money. It continues to focus on fixing the infrastructure deficit which this Government has set about rectifying.David Bennett: What specific gains are there for regions in the Government policy statement?Hon GERRY BROWNLEE: Our regional networks are of critical importance to New Zealand’s economy and the draft Government policy statement recognises this by increasing the funding to maintain local roads and replacing regional funding which was scheduled to expire on 31 March 2015. It is replaced with a dedicated activity class for regional improvements of up to $90 million a year and that funding package although contestable is available for both local and State highway projects. There is also an exclusion on it for metropolitan councils.Denis O’Rourke: Why is the Government preventing funding to restore the Napier-Gisborne rail link when the road route cannot be expected to cope in the long term?Hon GERRY BROWNLEE: No we are not.Denis O’Rourke: I raise a point of order Mr Speaker. [Interruption]Mr SPEAKER: Order! This is a point of order.Denis O’Rourke: The Minister seems to have misunderstood the question. He said he was not and that was not the question. The question asked why the Government is preventing funding.Mr SPEAKER: That was the question and the Minister responded by saying it was not preventing funding. That is the Minister’s answer.David Bennett: What other areas of land transport are receiving a boost in funding?Hon GERRY BROWNLEE: The draft Government policy statement also proposes increases in funding for a range of activities including walking and cycling road safety promotion and road policing. It continues increasing funding for public transport as set out in the current Government policy statement. Not all of the Government’s commitments to these activities are included in the Government policy statement. For example the bulk of the $1.3 billion spent on Auckland rail was funded outside the Government policy statement. Walking and cycling also received money outside of this activity class—for example funding the cycleway alongside the Christchurch road of national significance the Christchurch Southern Motorway which is part of the State highway budget.Phil Twyford: Why will he not take a more balanced approach and move freight by whatever combination of rail coastal shipping ports and roads is the most efficient and sustainable for any given route instead of his approach which is just bigger trucks and bigger motorways?Hon GERRY BROWNLEE: We do not support Labour Party policy.Family/Whānau and Sexual Violence Prevention—Government Support7.SUE MORONEY (Labour)to the Minister for Social Development: Will she agree to establish a cross-party taskforce to address the rates of child abuse and domestic violence in New Zealand as described in The People’s Report:The People’s Inquiry into Addressing Child Abuse and Domestic Violence?Hon PAULA BENNETT (Minister for Social Development):No we are 95 days out from a general election and setting up a cross-party task force now would simply be all about politics.Sue Moroney: Talking about playing politics then does she recall that Labour when in Government did set up a multi-party working group on family violence and every party participated except the National Party which withdrew from the group in September 2006 and were invited to rejoin in August 2007 but declined—and that was quite some time before an election Minister?Hon PAULA BENNETT: And what a waste of time that was; it did nothing. So effectively your little cross-party task force did nothing to actually better the lives of the people who are living with domestic violence. You have proved your point—that your cross-party task force was ineffective and inefficient.Sue Moroney: Why did it take an individual businessman to initiate a report into our horrific rates of child abuse and domestic violence rather than the National Government stepping up and taking some responsibility?Hon PAULA BENNETT: Actually this Government has done many reports many reviews. I can point to the Children’s Action Plan as the first one when we did a white paper—actually there were 10000 submissions to that. We travelled up and down the country making sure that we got people to actually address it. The fact that Sir Owen Glenn has chosen to do this is actually a good thing if that is what he wants to do. We take it seriously we are interested in the outcomes of it and we will go forward from there.Sue Moroney: Can the Minister still claim that addressing domestic violence is a priority—[Interruption]Mr SPEAKER: Order! I am having trouble hearing the question. I invite the member to start again.Sue Moroney: Can the Minister still claim that addressing domestic violence is a priority when under National the Task Force for Action on Sexual Violence was shelved the advocates for children and young people who witness family violence were scrapped the Te Rito Collaborative Community Family Violence Prevention Fund was canned and the family violence education services were disestablished?Hon PAULA BENNETT: And is this not the difference? That is all about the adults who pontificate to each other talk about what they want to do. None of it is about what is actually happening in a house and the services that need to really happen. So it is all about the next task force the next report the next kind of talking to each other that Labour would have us do when it is actually about services on the ground that are able to address it. I point to Whānau Ora. I point to the Children’s Action Plan. I point to the work on drug and alcohol abuse that is going through the health and justice systems. Those are the things that will make a difference.Carol Beaumont: What action will she take to ensure women’s refuges can meet the increasing demand from victims of domestic violence given that they are struggling to respond in the face of real cuts in baseline funding?Hon PAULA BENNETT: Women’s Refuge have millions more dollars a year now than it did under Labour. [Interruption]Mr SPEAKER: Order! Question No. 8—[Interruption]—Order!Hon PAULA BENNETT: Is that it?Mr SPEAKER: Yes that is the end of that question.Child Poverty—Government Initiatives to Address8.JAN LOGIE (Green)to the Minister for Social Development: Will she support a Child Poverty Act that sets out targets and measures for eliminating child poverty as recommended by the Tick4kids campaign; if not why not?Hon PAULA BENNETT (Minister for Social Development):No. We already measure poverty in a variety of different ways that are all published in the Ministry of Social Development’s household incomes report. We are focused on getting on with things that will make a difference.Jan Logie: I raise a point of order Mr Speaker. I am not sure whether the Minister heard my question.Mr SPEAKER: Order! I heard the question. I am sure that the Minister heard the question because it has been addressed but the member does have supplementary questions.Jan Logie: Does she think her policies warrant a “tick 4 kids” for September when she will not commit to ending child poverty?Hon PAULA BENNETT: Well that is simply not true. We are getting on with warming up homes we are getting on with immunising kids we are getting on with putting more money into preventing rheumatic fever and we are getting on with making sure that those children are no longer living in welfare-dependent homes. We have got the Children’s Action Plan which fundamentally makes a difference. Those are the things that actually need to be done and that we are doing.Jan Logie: How can she think her policies warrant a “tick 4 kids” when the College of Public Health Medicine says her Government’s investment in children is barely half the OECD average and is “insufficient to reduce the impact of poverty on their health and well-being.”Hon PAULA BENNETT: I would say that for those who are the most vulnerable we have one of the most generous welfare systems in the world. Last year alone we gave out $262 million just in hardship grants let alone what is going to welfare and support for those who need it. So I disagree with those figures but I suppose if the member wants to give me all of the research behind them I can have a look.Jan Logie: How do her policies warrant a “tick 4 kids” when one baby on average dies each week in this country from an illness linked to poverty and yet she refuses to restore real benefits to the level they were before they were cut 23 years ago?Hon PAULA BENNETT: I think the member is making a correlation there that I am not sure absolutely fits. I think we have one of the most generous welfare systems in the world. I have not seen the research behind the figure of 60 children a year. I am not sure exactly where that has come from. What I do support though looking at the Tick4kids campaign is where it says it wants political parties to prioritise children’s access to quality health housing education and welfare to ensure every child has what they need to live a safe happy and fulfilled life. I would argue that so does this side of the House most definitely. That is what we are putting our resources in. As we had a bit more money we put an extra $500 million into those vulnerable children and families just in this past Budget alone.Business Growth Agenda—Future Direction 2014 Report9.MARK MITCHELL (National—Rodney)to the Minister for Economic Development: What announcements has he made about the future direction of the Government’s Business Growth Agenda?Hon STEVEN JOYCE (Minister for Economic Development):Last week the Minister of Finance and I released the Business Growth Agenda Future Direction 2014 report. This report outlines the significant progress the Government has made in creating the conditions for business to invest for jobs and growth. More than half of the 350 Business Growth Agenda actions across the six key areas are either complete or in the implementation phase. The results so far have contributed to New Zealand’s business confidence strong growth increasing employment and improved trade balance stronger productivity growth and real wages rising faster than the cost of living. The challenge for the Business Growth Agenda now is to help reduce further the capacity constraints for the New Zealand economy and help convert a couple of years of good growth into sustained longer-term growth and a lift in incomes for Kiwi families.Mark Mitchell: What will the Government’s Business Growth Agenda now focus on?Hon STEVEN JOYCE: We intend to focus the Business Growth Agenda on around 60 key initiatives that we see as essential to further fostering business confidence and growth. For example in the area of innovation we have an ambitious work programme that will continue to help the business sector double its expenditure on research and development to around 1 percent of GDP. Amongst other things we will implement changes to the tax treatment of research and development to further increase investment. We will support Callaghan Innovation to develop the suite of research and development grant programmes further and establish our new technology-focused incubators all those things that are—Hon David Cunliffe: Labour policy.Hon STEVEN JOYCE: —not Labour Party policy. Mr Cunliffe wishes it was Labour Party policy but he wishes for lots of things. Likewise in the skills space we have a series of initiatives to lift our longer-run productivity growth rate like investing in apprenticeships and vocational skills; encouraging sole parents into higher education; investing more in engineering and sciences; and setting up new information and communications technology graduate schools in Auckland Wellington and Christchurch. We will lift high-quality information and communications technology graduate numbers an area of critical importance to our economic future.Mark Mitchell: What initiatives will the Government focus on in the areas of building export markets and developing our natural resources?Hon STEVEN JOYCE: In the exports area we are working to increase our ratio of exports to GDP to 40 percent by 2025 and we are making good progress there with the big lift in goods exports in the year to March and our areas of focus towards that goal. That means we will keep negotiating of course comprehensive high-quality free trade agreements which the Opposition is pretty ambivalent about these days. We will boost our representation in China ASEAN and other emerging markets and capitalise on the 2013 growth package for tourism and education. We have a large range of initiatives to help manage and develop our natural resource endowment. In the next few years we will focus on increasing value from and improving the quality of water; improving environmental reporting; accelerating petroleum exploration; combatting kauri dieback; and improving the productivity of Māori land.Business Innovation and Employment Ministry—Pay Negotiations10.GRANT ROBERTSON (Labour—Wellington Central)to the Minister for Economic Development: Does he agree with the Minister of Finance that workers “have a right to expect to see some of the benefits” of growth in the economy?Hon STEVEN JOYCE (Minister for Economic Development):Yes and they are. The average wage has increased by $3000 in the past 3 years to $54700.Grant Robertson: No it hasn’t.Hon STEVEN JOYCE: Yes it has and I sense an oncoming labour cost index discussion. Based on the latest strong economic growth forecast the average wage is forecast by Treasury to increase a further $7600 to $62300 over the next 4 years. Wages are increasing faster than inflation. Average weekly earnings rose 3.2 percent in the last year while the cost of living grew 1.5 percent.Grant Robertson: In light of that answer is an effective 1 percent pay increase a reasonable pay offer this year for workers at the Ministry of Business Innovation and Employment in light of his claims about wage growth?Hon STEVEN JOYCE: Well I thought the member actually understood that Ministers do not get involved in Public Service pay negotiations.Hon Members: Ha ha!Hon STEVEN JOYCE: Well it is an important thing and Mr Robertson often comes down to the House and tries to quote the Cabinet Manual or the State Sector Act and both of those make it clear that Ministers are not to get involved in pay negotiations—unless the Labour Party’s approach now is to go back to the 1970s and to the Federation of Labour and the Minister of Labour sitting down and doing the general wage order.Grant Robertson: In light of that answer what pay offer for Ministry of Business Innovation and Employment staff did he suggest or agree to when he met Ministry of Business Innovation and Employment chief executive David Smol on the afternoon of 4 June? [Interruption]Mr SPEAKER: Order! A question has been asked; I want to hear the answer.Hon STEVEN JOYCE: Well firstly if the member would like to have a look at the Cabinet Manual it says the Minister should maintain the independence of the chief executive’s decision-making process and that is what I have done in this regard. Mr Smol updates me on a range of things from time to time. In terms of a particular day I have no idea but in terms of the particular negotiations that is very much the chief executive’s responsibility.Grant Robertson: Has he discussed with David Smol the specific details of the offer made to Ministry of Business Innovation and Employment staff including at a meeting on 4 June?Hon STEVEN JOYCE: I just told the member that the chief executive has kept me updated. I cannot recall a particular date but I am prepared to accept there might have been a date of 4 June. The point is that he has kept me updated. At all times they are his decisions.Grant Robertson: Did he express a view to Mr Smol about what he would consider to be an appropriate maximum offer that should be made to Ministry of Business Innovation and Employment staff?Hon STEVEN JOYCE: No I do not believe I did. The chief executive updated me as to the progress of negotiations. He is making the offer and he gets to determine it and he consults with the State Services Commission.Consumer Rights—Legislative Reform11.JONATHAN YOUNG (National—New Plymouth)to the Minister of Consumer Affairs: How will consumers benefit from the improvements to consumer law that come into effect today?Hon CRAIG FOSS (Minister of Consumer Affairs):The Consumer Law Reform Bill which was passed last year is a comprehensive update of New Zealand’s consumer legislation. The changes that come into effect today will strengthen consumer rights simplify business compliance and ensure consumer protections are clear and accessible. Consumers now have the same rights when purchasing goods and services regardless of whether they buy online in a store by auction over the phone at home or anywhere else.Jonathan Young: What are some of the key changes that will benefit consumers?Hon CRAIG FOSS: Some of the key changes for businesses and consumers include that protection under the Consumer Guarantees Act will include online businesses and auction sites such TradeMe traders will be liable if goods do not arrive on time or are damaged a 5-day cooling-off period will now apply to uninvited direct door-to-door and telephone sales new disclosure rules affecting extended warranties and a new provision will require traders to be able to substantiate any claims they make as opposed to the Commerce Commission having to test that claim. These changes give more rights to consumers and will toughen up on unscrupulous traders.Housing Affordable—Income to Price Ratio and Government Policies12.PHIL TWYFORD (Labour—Te Atatū)to the Minister of Housing: Will New Zealand return to its historic average levels of house prices to incomes and house prices to rents under his Government’s housing policies; if so how long will it take for this to occur?Hon Dr NICK SMITH (Minister of Housing):The ratio of national household income to house price deteriorated from 4.8 to 6.3 between 2000 and 2008 but has improved under this Government to 5.5—that is it got 24 percent worse under Labour and has improved by 15 percent under National. This would suggest it would take about 12 years to reverse the damage of the previous Government in respect of housing affordability and to get back to 2000 levels. The reason I have confidence that the Government’s housing policies will improve affordability is that they are based on the comprehensive report from the Productivity Commission the new house build rate has increased from 14000 houses per year to 24000 per year and new initiatives like the housing accords are freeing up land at the fastest rate in decades.Phil Twyford: Does he agree with the Reserve Bank’s view that a rise in annual net migration to 45200 by mid-2015 under current policy settings would force annual house price inflation up by 4 percentage points and force the bank to raise interest rates by as much as a further 55 basis points or 0.5 percent; if so will this make it harder or easier for Kiwi families to get into their own home?Hon Dr NICK SMITH: There is some relationship between migration and the overall demands on housing levels and that is reflected in the latest OECD housing data which shows that the most affordable houses in the world are in Greece because everybody is leaving there. That makes it very affordable housing. That is not quite the economic plan of this Government but I do understand that members opposite are quite keen on the Greek approach.Phil Twyford: Has he seen new research showing that the average New Zealand house price rose by $98 a day over the past year and by $289 a day in parts of Auckland with the average price in Auckland City now $842000 according to Quotable Value and what is he doing to ensure that Kiwi first-home buyers can save at the rate of $100 a day—or $300 a day in Auckland—with interest rates heading north of 8 percent because of his failed housing policies?Hon Dr NICK SMITH: The official data shows that house prices nationally over the last year have increased by 9 percent. I note that during the previous Government house prices increased in a single year by 28 percent and Labour members insisted that that was not a problem and did absolutely nothing. In contrast this Government has a very wide programme of freeing up land supply dealing with issues of building materials costs and bringing bills before the House to deal with those big increases in infrastructure costs that occurred with failed legislation from the previous Government. That is why I have confidence in this Government’s housing affordability agenda.Phil Twyford: Does the 39000 new affordable homes he has promised Auckland include the 700 to 800 affordable homes the Auckland Council says will actually result from his promise and how will he make up the shortfall between his promise and the actual number of affordable homes needed in Auckland for people to live in?Hon Dr NICK SMITH: I note that the increase in the issuing of building consents in Auckland in the last quarter is the fastest rate of increase in new house build for 12 years. It is the fastest rate of increase in 14 years. We now have 24000 houses a year being built with a good number of those in Auckland and that is a direct consequence of this Government’s measures through the Auckland Housing Accord and other measures to increase both supply and affordability.Phil Twyford: Rather than blaming councils for holding back affordability why does he not implement a national policy statement on affordable housing under the Resource Management Act or split out the Government’s housing affordability provisions in its Resource Management Act reforms so that they can be passed before the election or would he rather just continue to blame other people for his failed housing policy?Hon Dr NICK SMITH: I am actually encouraged by the member’s question because for 10 years Labour has denied there is any connection between the Resource Management Act and housing affordability. But the key problem is this. Labour is saying the answer is a national policy statement on housing affordability under the Resource Management Act. But the advice from officials is you cannot do a national policy statement on housing affordability unless you amend Part 2 of the Resource Management Act which is something that members on this side of the House want to get on and do and members opposite have opposed at every step of the way.Urgent Debates DeclinedHon John Banks—Resignation as Member of ParliamentMr SPEAKER: I have received letters from the Rt Hon Winston Peters and the Hon David Cunliffe seeking to debate under Standing Order 386 the decision of the Auckland High Court in relation to charges that the Hon John Banks filed a false electoral return his subsequent resignation and its implications for confidence in the Government. For there to be an urgent debate there must be a particular case of recent occurrence that involves administrative or ministerial responsibility of the Government that requires the urgent attention of the House. An urgent debate is a way of holding the Government to account for an action for which it is responsible. There must be distinct ministerial responsibility for the particular case for which the debate is sought.There is no ministerial responsibility for the decision of the High Court or the resignation of a member. Furthermore an urgent debate is not an appropriate means of exploring the question of confidence. The House procedures provide regular opportunities to test the confidence in a Government. I understand the Government has today lodged a notice of motion seeking to set aside a by-election in the seat of Epsom and that this is likely to be debated this week. This will provide the opportunity to discuss the issues surrounding the resignation of the Hon John Banks. The applications are therefore declined.Debate on Crown Entities Public Organisations and State EnterprisesIn CommitteeThe CHAIRPERSON (H V Ross Robertson): The debate on the performance of Crown entities public organisations and State enterprises is a series of debates on individual financial reviews of Crown entities public organisations and State enterprises as reported by select committees. A total of 3 hours is allocated for the debate. The debates on the individual financial reviews should be relevant to their performance in their 2012-13 financial year and their current operations. A member may have no more than two calls on each financial review. The compendium of the financial reviews available for debate is available on the Table. Reports on the entities yet to be reported cannot be debated. I understand that members have indicated the Crown entities public organisations and State enterprises they wish to debate. The first entity I understand members wish to debate is the New Zealand Tourism Board.New Zealand Tourism BoardDr RUSSEL NORMAN (Co-Leader—Green):I rise to speak on the New Zealand Tourism Board because I wish to discuss some of the challenges and headwinds that Tourism New Zealand and the New Zealand tourism industry face as a result of this Government.As we know the tourism industry is built on the “100% Pure New Zealand” brand. The founding asset of the New Zealand tourism industry—and of course Tourism New Zealand is an attempt to support that industry—is the natural environment of New Zealand. In particular it is the clean rivers of New Zealand. That natural environment is under attack by this Government. Time after time this Government has attacked the founding asset of the New Zealand tourism industry—an industry built on “100% Pure New Zealand”. For example we now have the problem where more than two-thirds of our rivers are so polluted that they are unsafe for swimming. This is a major challenge to the New Zealand tourism industry—an industry worth at least $6 billion in exports every year. The current Government has proposed new rules that would allow our rivers to be even more polluted—so polluted they would not be safe to swim in; they would be safe only to wade in.What the Government is saying to the tourism industry is that it intends to pollute New Zealand rivers to the level where you would be able to walk in them and put your feet in them but if you put your head under the water then you would get sick and ill. That is the standard that is being proposed by this Government and that is one of the problems that the tourism industry has to face. On top of that the Government is proposing to subsidise irrigation schemes to the tune of $400 million a year. We all know that the major driver of the decline in water quality in New Zealand is the intensive dairy sector. The Government is proposing to subsidise more intensive agriculture which will result in more polluted rivers. This is a challenge that the tourism sector has to face. On the one hand we know that our natural environment is the founding asset of this sector. On the other hand we have a Government that is out to destroy that asset. It is out to destroy the goose that lays the golden egg which is of course the natural environment.Let us talk about the Environment Canterbury region. The elected councillors of Environment Canterbury were removed from there by this Government because they tried to protect rivers and lakes. For that reason they had to be removed by the Government. We know that the water is so polluted now in Canterbury the medical officer of health has issued warnings that if you drink the water from your home bore then it could kill your babies—a thing called blue baby syndrome. The water now in the ground water of Canterbury is so polluted that the medical officer of health has issued warnings that people should not give that water to their children in baby bottles. We now have the situation where water is so polluted. This is a major threat to one of New Zealand’s most important export sectors.The most dangerous threat facing Tourism New Zealand right now is the National Party. The National Party’s constant attacks on the natural environment will destroy the long-term future of our tourism industry. A recent Environment Canterbury report has identified that people with their own wells are at increased risk of campylobacter salmonella cryptosporidium and gastroenteritis in areas of dairy and major irrigation schemes. So the Government is subsidising the very schemes that are destroying water quality and rivers and lakes across our country and in the process fundamentally undermining and destroying the natural asset on which the entire tourism export sector relies. One of New Zealand’s most important export industries international tourism is under attack by this Government as it consistently and constantly attacks rivers and lakes across the country and subsidises their pollution.If we do not change direction we will not just have two-thirds of our rivers so polluted that they are unsafe for swimming we will have all of them. The Government has proposed a new water quality standard that would mean that our rivers could be more polluted than the Yangtze River in China in terms of its nitrate pollution. That is the standard that the Government has recently issued in terms of water quality. If you ever look at any of Tourism New Zealand’s documents you will find that they are full of pictures of our rivers and lakes as key attractions—key attractions for international visitors. Yet this Government is doing everything it possibly can to pollute those rivers and lakes. Right across the country our rivers and lakes are highly polluted. Some of them are so dangerous that if you swim in them you will get sick. They had to close Lake Horowhenua because if you fell into the lake you could get liver damage. Time after time after time our rivers and lakes are under attack from this Government.Report noted.Reserve Bank of New ZealandHon DAVID PARKER (Deputy Leader—Labour):I rise to take a call in this debate. I want to reflect on the mandate of the Reserve Bank and why in the view of the Labour Party we should as a Parliament update it to cater for the challenges of today. New Zealand has not had a current account surplus for 40 years. For 40 years we have run a current account deficit.Hon Steven Joyce: Ha ha!Hon DAVID PARKER: Whenever I say that for some reason Mr Joyce finds it funny. He seems to think that getting back to about minus 3 percent of GDP as a current account deficit is the best that it can ever get. It is the best that it will ever get under the National Government because on these big calls National is always a follower; it is never a leader. It was not a National Government that introduced the Reserve Bank of New Zealand Act in the first place. It was not a National Government that introduced the Cullen fund. National members opposed it—in fact they called it a dog—but now they say it is good. It was not a National Government that introduced KiwiSaver.These long-term changes that make New Zealand a better place are generally brought about by the Labour Party. The last time New Zealand had a current account deficit we had terms of trade that were good. But do you know what? They were not quite as good as the terms of trade that we have just had. So in comparison with 40 years ago when we had terms of trade this good New Zealand had a 2 percent current account surplus and we still have a deficit that is around 3 percent. It might get a wee bit under 3 percent by the time it starts going out again but then it is going to go back out to over 3 percent.Every year that New Zealand has a current account deficit it plugs the gap in one of two ways and generally a combination of both. It either borrows more money from overseas lenders or it sells assets that were previously New Zealand - owned to overseas owners. As a consequence the burden on New Zealand’s economy to pay interest or dividend flows to those overseas lenders and owners grows every year.Of course the control of inflation is important. Prior to our announcements there was concern amongst some of the bank economists and academic economists that we were going to lose that grounding—the target to control inflation. But we have not done that. We have not done that.Hon Steven Joyce: No that won’t change.Hon DAVID PARKER: Mr Joyce chortles away there on the other side but he is a man of so little vision that he does not get the subtlety of any policy. He thinks the way to go about policy is to employ more than 50 spin doctors at the Ministry of Business Innovation and Employment. That is his view of policy. The reality is that we can cause the Reserve Bank to approach monetary policy in a way that best achieves external balance over the cycle and so that is what we have said it should do. If we do that we will also get the Reserve Bank encouraging better policy outcomes from the Government.We know that the reason interest rates are going up at the moment is that we have got enormous house price inflation in Auckland at a time when general price inflation is low. The failure of Government policy around housing is responsible for those interest rates going up higher than they would otherwise need to go. Part of that imbalance in the economy is caused by biases in our tax system—notably the absence of a capital gains tax taxing speculative property purchases.The National Party rattles on that we have already got a capital gains tax. That is not true. We do tax as income some traders in property but the vast majority of investors in property who buy a property and then sell it at a profit do not pay any tax on their economic gains. The IMF the OECD Treasury and the Reserve Bank all agree that these cause imbalances. One of the reasons why the Government gets away with not doing anything to address this—which is plainly in the interests of the economy even if it is not in the interests of the minority of New Zealanders for whom this National Government plainly governs and whose interests it prefers—is that the Reserve Bank is never under its current mandate really strongly incentivised to say “Well look if you don’t introduce a capital gains tax we are going to have to push up interest rates.”That is effectively the trade-off that we have in New Zealand at the moment and yet that is not exposed under current settings. So the changes that we propose to monetary policy would be one of the ways that New Zealand could keep its interest rates lower for longer. We have interest rates that throughout the economic cycle are higher than those of other countries. I am not talking about the variation within an economic cycle the timing of which will be different in New Zealand compared with overseas countries; I am talking about overall New Zealand interest rates being about 1.5 to 2 percent higher than they are in Australia. The difference in respect of some other countries is even higher. We will not get over our current account deficit and we will not be able to increase our wages in New Zealand and grow our export economy unless we address these problems.Hon STEVEN JOYCE (Minister for Economic Development):Well it is an interesting little story that Mr Parker runs. We have actually had in this country an independent Reserve Bank focused on fighting inflation since 1989. It was introduced of course by a Labour Government and in all other respects they are ashamed of it on the other side of the House but nevertheless the members of the Labour Party seem to be a little bit happier with this one.That model is based on transparency and independence and Labour has now decided—or more particularly Mr Parker has now decided—to pretend you can simultaneously have low inflation low interest rates a low exchange rate low house prices and a current account surplus all because David Parker magically says that is possible.The only way you can have a few of those things is if you allow more inflation in New Zealand. Actually it is a law of physics that actually unless you have an independent monetary policy then you will have more inflation. Labour is basically saying that if it is going to change this thing then the interest rates would be different and if the interest rates are different then that means more inflation. All inflation does is destroy the savings of New Zealanders it makes it more difficult for businesses and consumers to invest and it sets off wage and price spirals. And interestingly it hits the people who are struggling the most the hardest.As one commentator said after Labour had announced its policy: “It’s deeply bizarre that the Labour Party would actually actively promote policies that would harm the worst off in society the most.” That is what Labour’s proposed softening of its attitude to inflation would achieve which of course brings me to the small issue of the KiwiSaver idea the interest rate jack-up idea—the “big tool” that Mr Parker likes to refer to—which I respond to today. But the moment you think about that it falls apart because housing is less than half of New Zealanders’ debt. The rest is companies credit cards farmers councils and Government agencies.Apparently Labour is going to tell businesses and councils to carry on borrowing and spending because wage and salary earners will be forced to have more money taken out of their take-home pay to do the belt tightening for them. Weirdly Labour has still not come up with any sort of indication of how much it would require people to put into their KiwiSaver accounts to offset a 1 percent increase in interest rates. So here we are—I think it was the beginning of May that this thing came out—6 weeks down the line and Labour is still shtoom on any suggestion of what the actual trade-off would be between rising interest rates and forcing people to put more money in their KiwiSaver accounts.Well over on this side of the House we actually did the exercise. We reckon that to get 1 percent Labour would have to increase the KiwiSaver contributions by around 6 percent. Those members are out there today saying that they are already going to increase your KiwiSaver—Hon David Parker: Rubbish! Making it up.Hon STEVEN JOYCE: It is true. And if it is not true then the Opposition should actually come up with some numbers.Phil Twyford: You’ve made it up.Hon STEVEN JOYCE: They are not made-up numbers. They are actually worked out and what we know is that the Opposition has come up with nothing. So here we are debating the Reserve Bank of New Zealand Act and the Reserve Bank and the Labour Party is proposing to throw away the independent control of inflation. It is talking about this “big tool” this weird big tool which apparently magically can keep interest rates under control while boosting people’s KiwiSaver rates and it has no idea how that works.It is actually embarrassing in a debate about Crown entities for that sort of ridiculous policy-on-the-fly rubbish that the Opposition has come up with. So fundamentally the good thing about the Reserve Bank policy is that it controls inflation. Inflation is very tough particularly on those people who are struggling the most in society and what we know is that the Labour Party would change that. We know it would relax the control of inflation and we know that its monetary policy approach is to force people to have more money taken out of their take-home pay but Labour says: “Don’t worry. You’ll all get it back when you are 65.”So while you are sitting there with your families under Labour Party - type inflation conditions—which as we know is about 8 percent which is what it was at the last election or higher again; those were the high inflationary times—Labour will be saying to New Zealanders: “Don’t worry. The solution is to whip some more money out of your pay. Don’t worry that prices are going up. You will feel it for oh I don’t know maybe a year but the good news is that in the long run”—the very long run when you are 65—“you will get a little bit of it back.” That is those members’ answer and what a load of rubbish.Report noted.New Zealand Transport AgencyPHIL TWYFORD (Labour—Te Atatū):It is great to be here debating the financial review of the New Zealand Transport Agency because just yesterday we had the Minister of Transport the Hon Gerry Brownlee give one of his famous Morning Report interviews. It was a cracker actually. I am thinking of putting together as a campaign fund-raiser a collected edition CD of Gerry Brownlee’s transport interviews on Morning Report because they are quite remarkable—Hon Ruth Dyson: And the EQC ones.PHIL TWYFORD: That is right—and the Earthquake Commission interviews. He said some amazing things actually. When asked about the draft Government Policy Statement on Land Transport 2014/15 - 2024/25 he said: “The focus is not on roads.” As an example of deny divert and obfuscate it was one of the classics Mr Brownlee and I want to compliment you on that. The other cracker quotation from Gerry Brownlee was: “Until this Government came along no one was much interested in walking and cycling.” It is great to see Gerry Brownlee taking responsibility—taking personal credit—for the growth in public interest in and support for walking and cycling.I mention the Government policy statement because the very interesting thing about this is that the Government policy statement sets out the Government’s transport priorities for the next decade. The reason it is relevant to this debate is that the Government’s policy statement for the next decade is almost exactly the same as the Government’s priorities that we have had to put up with for nearly the last 6 years. It is all about roads roads roads with this Government. What we see in the Government policy statement is a continuation of its spending more than $1 billion every year on its new mega-motorway projects. If you look at the funding there it has allocated $20 billion to State highways and only a fifth of that—or $4 billion—over the same period to public transport walking and cycling. A full 87 percent of the Budget projections in the Government policy statement has been allocated to roads—39 percent for new State highways which are predominantly the roads of National Party significance—10 percent for public transport and only 1 percent for walking and cycling. Yet Gerry Brownlee goes on Morning Report and says that this is not all about roads. Well this Government is obsessed with building new motorways. It has poured more than a billion dollars every year into these projects at the expense of the regions at the expense of the maintenance of local roads and at the expense of public transport in our large cities.Why does this matter? Why does it matter that the Government has this incredibly unbalanced transport policy? Well one of the reasons it matters is that it is structuring into our transport system into the export supply chain gross inefficiencies. This Minister and this Government believe that every freight task can be done—no matter what it is and no matter where it is going—most efficiently by being hauled on huge trucks on brand new gold-plated and mostly duplicate motorway projects. It refused to build a truly sustainably and efficient freight supply chain in this country by investing in and getting the best out of all the different modes of transport and all the different pieces of the transport system. So what it refused to do and what the next Labour-led Government will do is take an intelligent and clinical look at how the ports how coastal shipping and how rail can work together with the roading system to achieve much better connectivity and get our products to market in the most efficient and sustainable way.But this Government is not interested in that and what was I think particularly revealing was that the Government policy statement on transport cannot under its own terms of reference talk about coastal shipping about rail and about ports. Critical elements of the transport system are separated out from the Government’s main policy-making tool and its main statement of priorities because the transport system basically exists in these silos. The Government likes it that way. Gerry Brownlee likes it that way because he does not want to have to consider those other important parts of the transport system. He is not interested in rail he is not interested in coastal shipping and ports; it is all about roads. Under the system that we have got under the transport system that this Government is perfectly happy with New Zealand Transport Agency is the big road builder. It is the deliverer of our transport policy. That will change under the next Labour Government.DAVID BENNETT (National—Hamilton East):I would like to just congratulate the Minister of Transport on the great work that he has done in this area over the last 3 years. He is an exceptional Minister and always welcome in the Waikato. He can come there any time unlike the Opposition members who never come to the Waikato and when they do come they do not have anything to say of any consequence.Hon Ruth Dyson: You can’t say we never come and then say what we do when we do come.DAVID BENNETT: Oh that member is pretty much a non-event when Labour members do come if they do come.As for Mr Twyford we hear this speech every year from the Labour Party saying how it is going to have a multimodal solution using all the terminology about “we’re investing in roads and rail and maritime and all those things and public transport.” There is all that talk but no actual definite details about what the Labour Party wants to do. Why does it not come out and actually say what it wants to do? There is a reason New Zealanders why Labour members do not come out and say what they want to do. It is because they know that what they want to do is in direct conflict with the Green Party and they cannot afford to have that fight before the election.Who runs transport policy in the left wing? It is the Green Party. It is Julie Anne Genter. Julie Anne runs it not Phil Twyford.The CHAIRPERSON (H V Ross Robertson): Order! Members’ full names.DAVID BENNETT: If you were a betting person you would put your money on Julie Anne Genter to have more power over the transport portfolio than Mr Phil Twyford—the nice guy that he may be. That is the reality of the Labour Party policy. It is all hot air and talk and no commitment. Will it commit to the Waikato Expressway? No it will not commit to the Waikato Expressway. It will not commit to building that because it knows that Julie Anne Genter has gone out and said that she wants to review that project. Julie Anne Genter when asked about that project a mere 2 weeks ago said that the Green Party would review that project.What about other roads of national significance around the country? What about the Pūhoi road which I am sure Mike Sabin will want to know about? What is the Greens’ policy on that? What is the Greens’ policy on Transmission Gully? The Green members will tell us the next time. They will be open and honest and tell you what they think. They will go out there and say that they are not doing them. The Labour Party in effect will not be doing them either. So New Zealanders need to listen to what the Green Party is saying because that is the Labour Party transport policy.Then we have New Zealand First the other arm in the Labour - left-wing attempt to try to get seats in Parliament. It came up with this transport policy that I would love to see rearticulated in this Chamber. We had a transport debate last week and we had the New Zealand First transport policy that was for passenger rail from every city in New Zealand: passenger rail from Wanganui to Wellington passenger rail from Hamilton to Auckland passenger rail from Timaru to Christchurch—passenger rail everywhere and anywhere.Denis O’Rourke: That’s right.DAVID BENNETT: Oh and all these trains would have been built in New Zealand of course under New Zealand First policy. But I want to see New Zealand First come up here and say what it said at that transport conference. Denis O’Rourke has got his chance to come out and say it. How is New Zealand going to afford a train from Wanganui to Wellington? Tell me that. How are we going to afford that? That is what the New Zealand First Policy is. The Green Party policy actually pales in comparison with New Zealand First’s policy. The Green Party used to be the party of trains but now it is New Zealand First that is the party of trains and the Green Party now has to up its game to match that.On this side of the House on the Government side we see a party that has good strong leadership and a Minister who has taken a balanced approach to transport funding. Not only have we invested heavily in the infrastructure of our roads but we have invested heavily in our rail networkWe have invested in the KiwiRail Turnaround Plan. We have invested in public transport options in Auckland and we have a plan for that public transport going forward. That is a balanced approach. We have taken action in the maritime and aviation areas where it has been required as well. That is what transport policy demands not the Julie Anne Genter model of transport policy. Thank you.MIKE SABIN (National—Northland):It is fantastic to follow in the wake of the chair of the Transport and Industrial Relations Committee. It is strong chairmanship that he shows as one would expect with such a strong and high-performing Minister of Transport as Gerry Brownlee of course. What a great team. What a great team the National Party has put together on this side of the House. I just want to pick up on a couple of comments that were made by the new comedic home for evening comedy on the Labour Party Phil Twyford who talks about the comment that it is not just about roads.Phil Twyford: Say that again Mike. I missed it.MIKE SABIN: I forget exactly what I said. We will go back to the Hansard.It is not just about roads; it is actually about transportation on multiple levels. If there is one thing that we can say about the efforts of this Government in terms of transportation what we have actually done is we have unwound decades of under-investment in some of the key areas of our transport infrastructure. Significant money has been put into KiwiRail. A Labour Government that sold off—[Interruption] Sorry what is the member Tracey Martin saying? I cannot quite hear. [Interruption] No Tracey Martin has got that wrong because you will find that Marsden Point is in the Whangarei electorate. But is that an important piece of infrastructure? Absolutely and that is why we are making sure when we have discussions with the councils that are looking at the Ports of Auckland Tauranga and Marsden Point that they understand the needs of the transportation infrastructure there. If the member wants to come up to Whangarei and have a wee discussion on it I am sure the new member in Whangarei would be happy to allude to that.Hon Ruth Dyson: Phil Heatley is still there. Don’t be so horrible.MIKE SABIN: No I am talking post-election of course Ms Dyson.We are a forward-looking party and the reality is that when we look at the Government policy statement—let us take just one little small snippet of the programme of work that has been going on here the Pūhoi to Wellsford road. As David Bennett has mentioned the Greens and Labour have both signalled that road will come out. They say they will get rid of that project. This Government has fast-tracked the consenting process alongside Auckland Council which has also 16 votes to four recognised the importance of that road. It is a trade and economic highway to what is the fastest-growing economy in the country. The Northland economy is the fastest-growing and strongest-growing economy in the country. We know that $800 million of primary industries particularly is trundling down that road on an annual basis. That is a significant contribution to this country’s economic fortunes and this Government is investing in that. In fact this Government is ensuring that that programme is given every opportunity to move forward as quickly as possible.When that was signalled in Northland I can tell members across this House that it was absolutely strongly heralded as a fantastic initiative because of the importance of that road. It is not just about the road in itself. It is about the signals it sends about the economy of Northland and the opportunities that exist for other businesses to be involved in growing that economy and being a part of that economy. The road will take some time to build but already with the interest in activity people are looking north and they are looking north because here is a region that is attached to the nation’s largest economy in Auckland and that is a vital link. If we look across the roads of national significance programme that is exactly what we see. We see the arterial routes—the routes that are so often used by so much of the economy of this country. We are ensuring that the under-investment that has occurred for far too long in this nation is actually being caught up with and we are investing where we are going to free up and ensure that that transportation of our economy is going to move far more effectively.We can talk about public transport all we like but—I do not know; call me old-fashioned—I think buses tend to use roads as well. I have not seen too many “hover-buses”. Perhaps the Green Party might want to introduce some of those into the mix—I am not sure. Whether they are highways motorways freeways or single lane roads anything with wheels on it uses them even cycles which I know the Green Party of course is very very interested in. The point is that what the Government has done is establish a programme of work across many facets of our transportation networks to ensure that where the bottlenecks exist where the challenges in that network exist we are absolutely investing in that and investing ahead of the curve which is taking some investment to catch up on because as I said there has been a consistent under-investment in that. So what we are seeing—Hon GERRY BROWNLEE (Minister of Transport):This is a financial review of the activities of the New Zealand Transport Agency over the past year. Naturally when considering that one might look back and one might look forward. I accept that. But I was particularly distressed today by some of the comments in the speech offered to the House by the Labour spokesperson on transport. What he seems to have missed is that this process is guided—that is the process of the Government policy statement and the work of the New Zealand Transport Agency—by the Land Transport Management Act 2003. I would suggest that if he is to be an effective spokesperson he should go and read that Act so that he does not make some of the extraordinary statements that he made in the House this afternoon.Phil Twyford: Overdue for reform.Hon GERRY BROWNLEE: What I would like to hear from him at some point is that if he thinks that Act needs to be reformed he starts to spell out what it is because all I hear from him is about what Labour is not going to do should the unlikely event of its receiving the opportunity to sit on the Treasury benches occur. Labour is not going to continue with the roads of national significance programme. It is not going to invest in cycle networks as we have. It is not going to invest in pedestrian opportunities as we have and it is not going to have an arrangement that allows local communities to choose where they spend some of the funding that comes from the National Land Transport Fund on their own projects. Anyone can stand in this House and tell people what they are not going to do; to talk about what you are doing and what a Government is doing is a different matter.We have over the last short while since 2012 spent a staggering $945 million—a billion dollars effectively—on public transport. That has been matched by local authorities which have contributed another $770 million. So there you see a huge commitment to public transport for a very small part of the transport task required in New Zealand. We have further said that if we can see that the demand for public transport is on the rise we will be there to fund it. I want to know whether in fact the Labour Party is proposing that it would do away with the $800 million package that we have put together for Auckland to bring forward some of its roading projects. The answer would be yes because Labour does not like roads. It somehow thinks that New Zealand should return to a sort of strange community where we do not make use of roads.When it comes to KiwiRail over a billion dollars so far has been reinvested in that company trying to give it the opportunity to contribute more to the freight task throughout New Zealand. But the reality is that the rails do not run into many of the rural communities in New Zealand where the productivity that comes off our agrarian economy is carried out. So there has to be an ability to move freight by road. What I want to do this afternoon is congratulate the management of KiwiRail on collaborating with road freight companies throughout the country to get a better synergy between the opportunity to move goods over long distances on rail with the capacity to take significant loads by truck to the farm gate and beyond. When Mr Twyford stands up and says there is no big thinking going on here I have got to tell him that out in the wide world people do not necessarily look to the Opposition spokesman’s office to see that big thinking. Thank God they do not because there is none.The reality is that we have a dynamic transport industry in New Zealand and we have a Government that is making investments in the transport infrastructure to ensure that it prospers along with the rest of the economy for years to come. It was the Romans who first worked out that if you want to have a dynamic economy provide roads and that is what we are doing.Report noted.Earthquake CommissionHon NICKY WAGNER (Associate Minister for Canterbury Earthquake Recovery):I am very pleased to speak in this debate on the report on the Earthquake Commission. I speak in this debate as the member of Parliament for Christchurch Central. I want to talk about the operations of the Earthquake Commission in Christchurch. Christchurch people love to hate the Earthquake Commission. We love to hate the Earthquake Commission because in the last 3 years things have been very tough in Christchurch. Nothing has been simple about our earthquakes and the Earthquake Commission has had to work under very difficult circumstances.But we are also very aware that New Zealand is in a unique insurance situation because of the Earthquake Commission. When you look at other similar earthquake-prone countries especially those around the Pacific Rim—the US and Japan—only about 15 to 20 percent of ordinary citizens have their homes insured simply because of the cost and no one’s land is insured at all. I visited San Francisco in 2012 and I was horrified to see properties homes that had been rebuilt on the area of the land that had been very hard hit during the 1989 Loma Prieta earthquake. These homes were mostly uninsured and certainly nobody had land insurance. They were uninsured because of the cost of insurance. If you live in an earthquake-prone country unless it happens to be New Zealand it is prohibitive to pay for insurance for normal families. That situation would be the same here except that the Earthquake Commission takes the very high - risk first $100000 of risk so that supplementary insurance is affordable. So although we love to hate the Earthquake Commission in Christchurch I cannot imagine what it would be like in Christchurch if 80 to 85 percent of our homes were uninsured and our land was also unprotected.I acknowledge that there have been issues with Earthquake Commission claims. The size of the event the number of earthquakes the fact that most people have multiple claims the management structure of multi-unit properties and the tough environment for everyone who works in our communities have made it particularly hard. The Earthquake Commission has had to scale up very fast. But I sincerely believe that everyone in the Earthquake Commission is working hard to settle claims and we are now seeing real progress. Ultimately we have to remember that every last claim will be paid out and that the Earthquake Commission will continue to provide New Zealanders with insurance long after Christchurch homes are restored and our city is rebuilt.Let us now have a look at the Earthquake Commission’s statistics. We can get a good idea of the size of the task in hand and of the progress that has been made. Since February 2011 the Earthquake Commission has had 1.64 million interactions with homeowners. That is equivalent to dealing with every single person who lives in Auckland and in Northland. The assessors have done 750000 assessments or reassessments after multiple earthquakes which is equivalent to two assessments for every single person who lives in Christchurch. The Earthquake Commission has paid out $7.4 billion including GST.Let us have a look at how those claims pan out. Eighty-three percent of cash settlement claims have been completed. Ninety-one percent of all claims under $15000 have been resolved. Seventy-five percent of claims between $15000 and $100000 are settled. And 90 percent of overlapped claims are settled. That means that 90 percent of those claims have moved on to the insurance companies for a rebuild or a repair. On top of that 78 percent of properties in the Canterbury Home Repair Programme are complete.I really do want to focus on vulnerable customers because this is a priority area of the Earthquake Commission and it is an area that concerns us all. Eighty-six percent of the claims of vulnerable customers are complete and the Earthquake Commission is absolutely committed to fixing the homes of the rest of these people. One of the issues that we have had in Christchurch is that it has been very difficult to get to the people who most need our help. If you compare an earthquake like the Christchurch—EUGENIE SAGE (Green):One of the few things that I would agree with Nicky Wagner on is that things have been tough in Christchurch. Research out today from Healthy Christchurch shows that 65 percent of Christchurch residents reported feeling tired in 2014 and that is a 10 percent increase on 2012. Certainly dealing with the Earthquake Commission and with insurance claims has contributed to that feeling of tiredness particularly when often you have got very poor communication by the Earthquake Commission so that at least 5 percent of Christchurch households have had to resort to the Official Information Act to try to get some basic information out of the commission. The commission has got a very ambitious target of completing all repairs on earthquake-damaged homes by the end of this year. That is another more than 25000 full repairs that it is yet to do. The claim that that will be done by the end of this year makes many Christchurch residents laugh out loud when they are still dealing with that dance and interaction with the Earthquake Commission.If we had a Green Party in Government we would have had the Earthquake Commission and Housing New Zealand working alongside each other to tackle the housing crisis. We know that the Minister has denied that there is a housing crisis in Christchurch despite the fact that there are regular reports in the press of people surfing on friends’ couches sleeping in garages and sleeping in cars. We do have a housing crisis because so many people have had to move out of their homes in the red zone or because their homes are uninhabitable because of earthquake damage or flooding vulnerability. If we had more joined-up thinking we would have had Housing New Zealand building more State houses. We would have had a progressive homeownership scheme where people in those homes could progressively buy them from the State during their time in the house without getting a big mortgage and without heavy debt just as many of our parents did using the former family benefits. If we had joined-up thinking we would have had the Warm Up New Zealand: Heat Smart programme going at full strength not being savagely cut as National has done.The Earthquake Commission has a winter wellness programme and that is a response to the fact that many homes in Christchurch have lost their primary heating source through damage to chimneys fireplaces and woodburners. Certainly the Earthquake Commission programme has meant that several thousand homes across Christchurch have had new heat pumps installed.Hon Gerry Brownlee: 20000.EUGENIE SAGE: All right 20000 Minister—thank you. But the Earthquake Commission and the Government have missed the opportunity to substantially improve the housing stock in Christchurch through a full Warm Up New Zealand: Heat Smart programme. It has missed the opportunity to substantially reduce the 600000 homes across New Zealand that are cold that are draughty that contribute to health issues for children and that see kids being sick and off school and their parents taking time off work. We want to ensure that all our homes are warm dry secure and healthy. The Government gave the cold shoulder to Christchurch by making a major cut in the Warm Up New Zealand: Heat Smart programme so it was not working alongside the Earthquake Commission to make the most of the crisis in Christchurch. It could have ensured that there was more subsidy assistance available so that people could insulate their homes at the same time as they were undertaking major earthquake repairs. The Green Party’s Warm Up New Zealand: Heat Smart programme would do that by providing subsidies for wall insulation.Instead what did the Earthquake Commission do? Initially it opposed the betterment of homes and then it allowed it but homeowners have to cover the cost of putting in wall insulation while full repairs are under way. The Green Party would provide assistance to enable that to be more affordable. That whole scheme would cost about $35 million in Christchurch for making sure that we improve our housing stock we build it back better post-earthquake and we do not simply replace like with like and miss the opportunity that we have to create much warmer drier and more healthy homes. The Earthquake Commission has done a bit with the heat pumps but it has not used the opportunity that the earthquakes have provided to provide more insulated homes so that everyone has a warm dry and healthy home.National has significantly reduced the Warm Up New Zealand: Heat Smart scheme. Initially in the first 3 years there were over 200000 houses insulated; now its target is only 46000 homes.Hon RUTH DYSON (Labour—Port Hills):Can I first of all say that it is blindingly obvious to anyone that the Earthquake Commission has faced a big job and it is in no one’s interest to do as the current member for Christchurch Central did and assume that challenges to the current system are a proposal to get rid of the Earthquake Commission. That is a nonsense conclusion that Nicky Wagner reached and I know that nobody is proposing that. But we cannot deny the fact that the level of arrogance bullying and incompetence displayed by the Earthquake Commission is having anything other than a negative impact on residents in Canterbury. I think the same goes for the Minister responsible for the Earthquake Commission actually. Nobody has denied that the Minister who has got several portfolios—perhaps two too many—has got a big job in front of him. Nobody is arguing about that. But it does not mean that when somebody challenges it questions it or says that this is clearly not going right we should be subject to bullying or abuse. That shows a level of being out of touch with what people in Canterbury are going through.I want to touch on just three points briefly. The first is the self-imposed time frame that the Earthquake Commission has set for settling claims. The second is its method of cash settlements and the concerns I have about that. The third is in relation to multi-unit dwellings. I think that people in Canterbury deserve certainty they deserve support and they need to know that the Government and Government departments and agencies of Government are on their side and working for a positive resolution of the huge tragedy that everyone has felt in one way or another. It has affected different people in different ways; everyone in Canterbury has been affected by the earthquakes. What they need now is a Government that is clearly on their side and that can help them move to a positive solution and outcome.Let me go back to the first of the three points—the self-imposed time frame. Ian Simpson has written to us all again. He is the chief executive of the Earthquake Commission. He has just written to us and said: “I’ve made a commitment to you to fix your home or settle your claim by December of this year.” Then he says: “While I’m confident of our 2014 target if we have to run into 2015 we’ll do so.” Well that is hugely reassuring. We are committed to fixing everything by the end of 2014 but if we do not make it we go into next year. Well what a reassurance that is! This is in writing from the chief executive. That gives us no reassurance Minister and I think you should be on his case and on the case of the chair of the Earthquake Commission to give us correspondence and give us time frames that mean something or stop wasting the stamps. This sort of dribble does not help anyone.The second thing I want to talk about is cash settlements. In this same letter Ian Simpson says: “We will not be using large-scale cash settlement to meet our December target. We will continue fixing homes until the job’s done.” That is just untrue. The Earthquake Commission is bullying people including the most vulnerable people into taking cash settlements and I think it is an outrage and it is about time that Minister Gerry Brownlee stood up to its bullying tactics and said that cash settlements should be an offer not a compulsion and people who do not want to opt out should not be bullied into doing it. I have got two examples. One is a 95-year-old constituent of mine who still has plywood cladding on the outside of her home—a well-under-cap multi-unit dwelling—and the house next door is going to be demolished. She has been told in writing that the Earthquake Commission has yet to develop its policy on multi-unit dwelling so she is going into her fourth winter in an unclad home and it is cold Mr Brownlee. It is just cold. She is not blaming you. She is pretty generous but I think that the buck stops with the Minister and she should not have to do that. She has been told she can cash settle or join a very long queue. She is 95 years of age. She is competent. She is able. But it is the Earthquake Commission’s job to fix her house not hers.I have got another example that I will just briefly read out to the Committee. This is from a senior claims manager at the Earthquake Commission who says to a person who does not want to cash settle: “I will again insert our rights to cash settle” and quoting section 29 of the Act. A bullying threat to cash settle not an offer is not good enough Mr Brownlee. The Minister needs to take responsibility for stopping that practice.Hon GERRY BROWNLEE (Minister responsible for the Earthquake Commission):I should respond to some of those comments offered by the Hon Ruth Dyson. The first point I would like to make though is that the Earthquake Commission has to date settled 141000 claims and that is an 83 percent settlement rate. Yes Ruth Dyson is right to say that multi-units present a problem. Part of the problem is that where you have multiple buildings—these are blocks of flats apartment buildings or anything else—then there can be multiple insurers over them. There is also the problem which Ruth Dyson illustrated very well by talking about her constituent whom I would like to know a little bit more about I must say because that does cause me some concern—Hon Ruth Dyson: What so you can abuse me again? No way José.Hon GERRY BROWNLEE: Well you see there is the problem. I genuinely stand in the Committee and say that if you have got that person and they need help I would like to be there to help them and I am told that all that is going to happen is that the member will get abusive. This is ridiculous. Here we are. Here is the deal. That lady clearly has got a problem with her house no doubt about that. But what Ruth Dyson said is that the property next door is going to be demolished so that means that the adjoining house—if we look at this box here with all those boxes that is a multi-unit. I do not know where in the units her house is but if one has to be demolished next to it it is going to cause damage to her house. There is no question about that. So the question has to be who pays where and what insurance gets triggered.The worst we have got is a block of 43 flats or apartments all together where there are 16 insurers. The insurers are all saying: “Well hang on a minute. My responsibility is for this bit over here. If you fix your bit you’re going to cause me more expense.” So behind the scenes there has been a huge effort to get insurers to try to sort this out. In the end guess who is truly responsible for this appalling problem? It is the legal fraternity of Canterbury frankly because there have been body corporate laws in place and repeatedly lawyers have conveyed properties ignoring the body corporate laws—willy nilly ignoring the body corporate laws. So when I see some of these flash lawyers around town start pontificating on what the Earthquake Commission should be doing or what private insurers should be doing I just put it back on them and ask about how many multi-units that particular lawyer has conveyed in their time ignoring those body corporate rules.All I am saying here is that this is a very real problem. It is not something that you can fix by standing up and screaming and yelling at people; it takes a lot of work to get through it. We are making those commitments and we are settling those particular issues bit by bit. I have got to say that coming into the House or going on the TV or getting in the newspaper and having a flick at some of the Earthquake Commission people is far too easy. They are Canterbury residents themselves. Many of them have got damaged houses themselves. They know what the reality of living in the city is and they come to work every day and deal with people’s problems. I admire them for doing that and frankly the statistics show that they are doing a very good job.I want to briefly finish on the comment from Eugenie Sage when she talked about the latest wellness index from Canterbury. Firstly the Canterbury Earthquake Recovery Authority contributed to that cost as did private insurers and I understand that the Earthquake Commission did as well. So we want to know what the situation is. The international literature tells us that the third year after an event is always the hardest. We need to know the extent of that problem and we are not walking away from it. There are services available for people who are suffering those stresses in their lives. We know that getting people through this is going to be settling all of the Earthquake Commission issues and getting people back into as much as possible of the groove that their life used to be. That is the commitment the Government has made through the Earthquake Commission and we have not walked away from any responsibility we have in Canterbury one little bit. It is disappointing that people find a need to misrepresent situations to try to paint the worst picture of them.I say again to Ruth Dyson to tell me what that poor woman’s situation is. I would like to look at it because I think something more should be done for her. To suggest that the member has let her sit for 3 years in a cold house and has not told someone who can do something about it is equally disgraceful.DENIS O’ROURKE (NZ First):The Government’s handling of the whole earthquake recovery in Canterbury has been a test for both the Earthquake Commission and the Government. After more than 3 years the conclusion has to be that although some good things have been done there is still far too much that has not been done and still far too many issues that are unresolved. Neither the commission nor the Government has scored a pass mark and their report cards should read “must do better”. The Budget forecast a surplus of close to half a billion dollars but at the same time the budget for Canterbury earthquake matters was reduced by about half a billion dollars. That indicates that the budget for Canterbury earthquakes was reduced not because that was possible given the progress of recovery projects—or more accurately the lack of progress—but because this part of the Government’s Budget was an easy manipulation to create an artificial surplus for election-year purposes.That has been confirmed within the last few days when the Prime Minister indicated that far from it being possible to spend less the Government will most likely have to face an additional $5 billion or more for the rebuild over coming years as the overall cost has escalated. The Government is simply not being transparent about the real size of the contribution it will need to make. This issue alone makes its claimed Budget projections and the forecast surplus an absolute farce.Most people in Canterbury are concerned about the slowness of so many aspects of the rebuild and the dilatory way the Government and its agencies have handled the needs of the city. Infrastructure repairs are taking far too long. Demolitions are still not done after 3 years or more. Rebuilds are only just getting started. Planning gives little cause for confidence to people who need to make decisions about their investments. Insurers are getting away with blue murder. Decisions on Port Hills properties are still not made and the list goes on.But one of the worst performances by all agencies has been the failure to deal with flooding in one part of Christchurch in particular. This was a problem well known soon after the earthquakes but 3 years later and several floods later there has still been no action on the ground. That is not good enough from the Government and it is not good enough for the Government to blame the city council either. Flooding is clearly an earthquake effect and it is a Government responsibility. The planning should have been completed and the work started by now to relieve those flooding problems. Purchase offers without red zoning for those to whom the work would not be effective or would be too slow should have been made by now. This is a disgraceful absence of action by Government agencies and there will likely be more flooding of homes still to come this winter.Another disgraceful performance has been over compensation for red-zoned uninsured or bare land. The offer of 50 percent of 2007 valuations was never justified or justifiable. The courts have now said so and now the red zone quake outcasts have been given leave to apply to the Supreme Court to have the whole red-zoning process for all of Christchurch deemed illegal. That would be catastrophic as a result for the Government and for New Zealand as a whole. The hearing is in July. The Supreme Court bench will not be easily influenced by political considerations. So not only is the 50 percent offer clearly illegal but we face the prospect that the whole red-zoning concept may be illegal too with all the ramifications that that will have.If that is not bad enough the Port Hills people still waiting for a decision have been told that they will have to wait even longer until the court has made a decision on red zoning. These people are still suffering. They have been suffering for 3 years or more. They are paying mortgages a proportion of rates and rents all at the same time. How would you Mr Chairman like to be in that position? The Government and its agencies should have made better decisions in the first place.Report noted.AgResearchDr DAVID CLARK (Labour—Dunedin North):AgResearch is mismanaging public funds and at the same time it is losing some of our top scientific talent. It is proceeding with a $100 million restructure despite evidence that shows that it is a waste of taxpayer funds. The sheepmeat industry has fallen victim to an ideologically driven board a plan that is off the rails and a lame duck Minister of Science and Innovation who has seen the evidence but proven completely unable or unwilling to hold the board to account.Let us have a look at the history. In October 2012 Mr Joyce received the AgResearch business case. It sat on his desk for 5 months—for 5 months it sat on Mr Joyce’s desk while he considered whether or not this document was worthy for him to sign off. We know he then signed it off and subsequently out came the statement of corporate intent which Mr English also signed off. On 30 July 2013 the proposal was put to staff. Submissions closed in August and subsequently an internal report reviewed the restructure plan and advised on the way forward. That restructure plan said that many of AgResearch’s changes were indeed good ideas but that one part made no sense. That was the part that was about disbanding the Invermay Agricultural Centre about pulling apart a successful hub a successful commercial model that has generated productivity gains that amount to pretty much the doubling of sheepmeat productivity in the last 30 years in order to start from scratch—ditching all the commercial partners shifting cities losing all the scientists and starting from scratch. That is the case. The internal review which received no less than 245 submissions found that the case for shifting Invermay did not stack up if AgResearch wished to achieve its goals of improving science improving productivity and improving on-farm returns.Then we have a number of intervention points that have arisen since then. The Minister Steven Joyce has been aware of all of these. There was a Public Service Association (PSA) survey that found that most members would not shift; that top talent would leave the organisation and would return overseas from whence they came or would go to other institutions in New Zealand. There was a financial review that was held where the senior management was unable to answer questions and was deceitful in its responses about the business case. Subsequently a full business case was released but that was not the impression given early on in the process. There has also been a vote of no confidence from one of the most significant breeding bodies in the industry the Texel breeders of New Zealand. PSA staff at Invermay have unanimously passed a vote of no confidence in the board and senior management. And then we have the industry—92 percent of the top ram breeders in New Zealand have opposed this shift and have said that this makes absolutely no sense at all and 6 percent abstained. The industry knows that this is not good for productivity in New Zealand.But Mr Joyce in all of that time has failed. He has failed to intervene on behalf of farmers he has failed to intervene on behalf of science in New Zealand and he has failed in his duty to the taxpayer as he sees hundreds of millions of dollars thrown up in the air for a case that promised only marginal returns. It promised only marginal returns on its original optimistic assumptions but those assumptions as we know have gone by the by. We know that the assumptions were that staff would shift in greater numbers than is currently likely. We know the assumptions were that farms would be sold off; now the timetable has been pushed back by a year. This is a no-hope case and the Minister has failed to intervene on a board that has failed to manage the key risk identified in its own business case which is managing the risk of staff loss of those key scientific staff who are important for productivity improvements of 1 percent per year ongoing into the future.Labour has said that we will save Invermay. It is an easy decision to make. It costs nothing and it improves New Zealand’s on-farm productivity. It improves exports for New Zealand.Hon Michael Woodhouse: I didn’t hear Iain Lees-Galloway say that. You go to Palmerston North and say that.Dr DAVID CLARK: Mr Woodhouse opposite is of course interjecting. He has toed the party line. He has abandoned the case. He has abandoned logic. He has let the economic pace—Hon STEVEN JOYCE (Minister of Science and Innovation):I think the member opposite David Clark first raised the issue of lame ducks and on that note I would first like to say happy birthday to Trevor Mallard. I understand it is a big birthday today. Secondly speaking of lame ducks I see his leader is certainly struggling along in a way that could be described only as a lame duck’s. The member is often guilty of over-egging the story and unfortunately he therefore ends up pretending a case that is not so—in fact he went on this huge conspiracy chat for the last 5 minutes about how it was all some sort of ideological conspiracy which of course it is not. Fundamentally—Dr David Clark: What about staff retention Minister?Hon STEVEN JOYCE: Oh be quiet parrot. Fundamentally—[Interruption] Well Mr Chair I cannot—[Interruption]The CHAIRPERSON (Eric Roy): Order! It is sort of an equal-handed kind of set of events here. The member was perhaps interjecting rather too much and the Minister on his feet should have used appropriate terminology in addressing people. The Minister will continue and let us just keep some decorum.Hon STEVEN JOYCE: I apologise for the avian references Mr Chair. The situation is simply this: as with many of our Crown research institutes we have organisations that have historically had large numbers of assets many of which are old many of which were built around the 1940s or 1950s or inherited from other purposes—Dr David Clark: Invermay are the newest ones; the Minister knows it.Hon STEVEN JOYCE: Shh! You will learn something. Many of them have large amounts of land but they also need to modernise their facilities to attract new staff and that is true of AgResearch it is true of Plant and Food Research it is true of Landcare Research and so on. And so they are all dealing with the challenge of modernising their assets to attract not just the existing generation of scientists but the new generation of scientists that they need to bring into those organisations.So AgResearch has embarked on this process and has proposed $100 million worth of investment in its organisation to bring its facilities up to speed and to be modern facilities. As part of that it has proposed some changes in the configuration of their institutes. It never proposed to close Invermay; it has proposed to move some staff groups. It has been through a long and rigorous process in terms of how it would finalise those particular proposals. It has landed in a space that I think many critics have found to be a significant improvement in terms of what it originally proposed and that is an important part of the process—that you consider and you put forward proposals and you then respond to the feedback on those.AgResearch has proposed at this time to retain the Invermay farms and the Ballantrae Hill Country Research farms. It is going to retain the existing farm systems deer researchers at Invermay which I think makes a lot of sense. It is strengthening the deer team at Invermay. It is retaining the herd obviously at Invermay. It is transferring the sheep flock from Woodlands to Invermay. It is also combining more with Otago University staff which of course was the original promise of the Christie Building—that there would be some Otago University staff located in Invermay. That is now going to happen. AgResearch has invited some of the regional players that have significant science teams of their own in the area of environmental science to co-locate at Invermay as well to build up that. I am hoping that the Southland Regional Council and the Otago Regional Council take AgResearch up on that opportunity because I actually think that would save money for the ratepayers of both regions as well as building a real centre of excellence in this environmental science area. So I think AgResearch has landed positively.I appreciate that Mr Clark will never be happy. Interestingly though we have not had a call from Mr Lees-Galloway who is more than happy about the shifts that advantage the Palmerston North area. That is one of those things where one end of the Labour Party speaks out of one side of its mouth and the other end speaks out of the other side. In fact I think the leader of the Labour Party was in Palmerston North committing to the investment in the Palmerston North campus at the same time as his little friend Mr Clark was down in Dunedin condemning the change. So I think the challenge of all of that is that the Labour Party members are basically saying depending on which part of the country they are in that there will either be no change or lots of change but they do not need any more money. I think that is another circle they are going to struggle to square.The other thing I just note in passing is that this Government is making very big investments in the science sector in Dunedin. There have been two very positive front-page articles in the Otago Daily Times in the last couple of weeks. Two new centres of research excellence are being picked up at Otago University and there is also the doubling—the doubling—of health research that the university has picked up in the current year. These are things that interestingly have not been greeted with great public relations—Report noted.Callaghan InnovationDr MEGAN WOODS (Labour—Wigram):Last week when we had the pleasure of having the Minister of Science and Innovation at the Education and Science Committee for the estimates hearing the Minister told us that he did not see the Government’s investment in Callaghan Innovation as being about creating jobs in the high-value manufacturing sector. He said that he saw this as being about creating jobs in the research sector. Well therein lies the difference between Labour and National and what we see as the purpose of our investment and putting money into science and innovation. This is a Minister of Science and Innovation who I would note in an earlier contribution this afternoon called interest rates one of the laws of physics. But I did think he at least understood innovation and what it takes to translate good ideas and smart thinking into viable products and companies. But when you are divorcing the investment that we make as a country and the commitment of taxpayer money into science and innovation from the creation of high-value jobs in the high-value manufacturing sector we have a problem.National thinks that achieving the Budget surplus is all it is about. But in Labour we have a grander vision of this. We want to make investments that will lead to New Zealanders having higher-paying jobs in the future. That is the reason we invest. If we stop and pause to consider the name of this very new Crown entity Callaghan Innovation we see that it was the vision of Sir Paul Callaghan that the reason we invest was to transform our economy for the good of people—not for the good of companies’ balance sheets but for the good of people and the country as a whole with the purpose being to put more money into people’s pockets. This is not a vision that the Minister shares clearly.But what we do have in Callaghan Innovation is a fledgling Crown entity where really very few people are still sure of exactly what it is what its mandate is or what it is trying to achieve. This is from some of the people who work in the organisation. If we have a look at what could have been if we have a look at the Taiwanese model if we have a look at the Danish model we see two very good organisations that had a clear mandate from their Government and a very well-defined mandate of what it was and what their role was to do. That was the creation of high-value manufacturing to really kickstart advanced technology in those countries.But if we have a look at how we have started out with Callaghan Innovation we see that we have Callaghan Innovation trying to sell important intellectual property in terms of high-value manufacturing through KiwiStar Optics. We saw that last year. This is still something that is bubbling along without resolution. But one of the very fearful things that we have is that this is a Government and a Minister that was willing to sell some of our good ideas offshore and for New Zealand to not realise the benefit of that.But then we have a look at what is happening to many of the companies that are receiving grants from within Callaghan Innovation and actually some of the precursor organisations as well. We ask whether what we have put in place has done anything to turn round the fact that too many of our good ideas get sold and disappear offshore. If we have a look at the figures released in 2012 by Technology Investment Network we see that 32 of our biggest and best high-tech businesses that were created in the last decade have disappeared overseas and Callaghan Innovation is not doing anything to turn that round. We have seen BioDiscovery not being able to receive its full grant because although it would have been awarded it only late last year it has already made a decision to take it offshore. We have had LanzaTech make the decision to go offshore. We have had GreenButton make the decision to go offshore.So what is it that could have averted that and is Callaghan Innovation doing it? And is the Minister pushing along the reason to do it? Well many of these companies have pointed to the fact that the places that they are moving to have research and development tax credits. If we have a look at LanzaTech it pointed specifically to the more positive research environment that it was moving to that would allow its business to flourish. Instead what we have is Callaghan Innovation in its fledgling state and Labour really hopes that Callaghan Innovation succeeds. When we are in Government we will actually put the levers in place to ensure that it can but now we have many in the sector both the science sector and the business sector—GARETH HUGHES (Green):Kia ora. Ngā mihi nui ki a koutou. Kia ora. I rise to take a call in the Crown entities debate to talk about Callaghan Innovation. How we build a smart innovative economy should be one of the key issues we are all talking about in the coming months. At the moment there are some great pockets of excellence happening across Aotearoa. There is some amazing stuff happening by Kiwi firms and I will take my hat off to the Government because there are a few projects that are deserving of public support. But what we see is that despite the pockets of excellence and despite the amazing smart green innovative thinking that is occurring it is happening in a vacuum of Government leadership.We see a Government that is focused on raw logs more oil and fracking and more milk powder exports overseas. We are on a hiding to nothing as a nation economically if we continue to simplify our economy and become more dependent on commodity markets where the buyers are setting the price not us in New Zealand. We risk being stuck at the bottom of the OECD rankings where we have declined year after year over the last three decades if we stay just on raw logs milk powder and oil and this is where the Government is literally throwing tens of millions of dollars of taxpayer subsidies. So although I celebrate and take my hat off to the pockets of excellence and the Government support that is occurring it is tiny compared with the subsidies we see to the fossil fuel industry and to the agricultural sector which is just intensification and raw commodities.If we want to build a richer New Zealand with more Kiwis in employment and more profits staying in New Zealand we need to keep up the focus on a smart green innovative economy. This is where the future is. This is where we can build a richer New Zealand. So although we did not support the initial legislation establishing Callaghan Innovation some of the research has been widely supported. Obviously we did not support it because of the direct ministerial oversight of the Minister sitting in the chair the Minister of Science and Innovation because there is too much control for one person picking winners. What we want to see is a true competitive process where good ideas can flow through not just on the whims of the Minister.We know we have a national problem when it comes to research and development. We spend less than half of the OECD average both at the national and commercial levels. We need to do more. If we look at other nations like Israel and the amount it is investing in research and development we see what we should be striving for that because we can build more jobs—more well-paid jobs—when we focus on innovation.One little policy area in this smart green innovation space that the Green Party will be championing this election is around digital manufacturing additive manufacturing and 3-D printing. This is something that is when you hear from the Government benches more of a border security threat because that is where the officials’ primary focus is going through the Customs Service. What we want to see is a focus on the economic potential. I welcome that Ministry of Business Innovation and Employment has finally supported groups like the Titanium Industry Development Association with some assistance to get a 3-D printer. There is a lot more we can do with the advanced digital manufacturing sector to grow jobs. It is 16 percent of global GDP—an $11 trillion sector—and it will be taking a bigger slice. With other Governments offering substantial support and substantial leadership we cannot miss out. We need more leadership here. We need to set those research and development investment targets much much higher.We need to support those successful Kiwi companies particularly in the green energy space which the Pure Advantage group of successful Kiwi businesspeople says is a $6 trillion opportunity for New Zealand to get a slice of. It is a $6 trillion global market. So a green investment bank would be a great solution in the next term of Government and a good green Government will focus on smart green innovation. We need to not just keep Callaghan Innovation but see a green investment bank established.We need to support our capital markets with things like a capital gains tax because it will focus investment away from the housing speculation market towards the productive economy. What I want to see is Kiwi families and Kiwi investors investing in Kiwi businesses. At the moment under the market we are seeing a signal flowing through to focus on speculation. [Interruption] I am sure that Jami-Lee Ross does not want to see more speculation in the Auckland housing market which is going up and up and up driving the interest rate rises that we see under the Key Government. There are more interest rate rises under the Key Government.What we need to do is see those proper economic signals to invest in productive businesses invest in employing Kiwis and invest in innovation. Ultimately this is where Callaghan Innovation is doing some good things. Where is it failing? It is the Minister in the chair. It is the lack of leadership and the lack of focus on a smart green economy. So this election will be a good opportunity for Kiwis to debate the issues—smart green innovation or more logs and oil.Hon STEVEN JOYCE (Minister of Science and Innovation):May I say that I do not think that the last two speakers get out that much. They really do need to get out some more. I had to laugh at young Gareth Hughes because he literally said that we have to encourage the capital markets and we need a capital gains tax. That is exactly what he said. The answer to encouraging the capital markets is to tax them more! That is obviously the answer; how silly of me! He also suggested that the idea of taxing about a quarter of houses would reduce the investment in housing whereas at the same time taxing 100 percent of businesses with a capital gains tax would increase the investment in businesses. I do not know how that is supposed to work.He also should have gone to Fieldays last week because he acted as if the primary sector does not innovate. He said that the primary sector needs to innovate more and not just sell raw stuff overseas. Well hello! The news is that actually that is what is happening. For those of us who did go to Fieldays I myself was incredibly encouraged by the amount of investment in technology and innovation that is going on there with the assistance of organisations such as Callaghan Innovation. The farming industry is now very much a data-driven industry and the members opposite should get out more and actually learn what is going on out there in the actual market place. But the other thing I would note—Dr Megan Woods: Ask them about a research and development tax credits in the market place while you are out there.Hon STEVEN JOYCE: Oh by the way in terms of the whole LanzaTech rubbish with the greatest respect the research and development grants that it was entitled to in this country were more generous than the ones in the US. The reason it has gone to the US is actually what happened under Labour’s watch when the company was largely sold offshore while Labour was still around. It hired a chief executive based in the Midwest of the US and now she wants to put the company there. That is the extent of it. So actually a little bit of work Megan would be good in terms of before you pick your examples as to why things should happen.What is actually happening is a big increase in private sector research and development supported by Callaghan Innovation. We now have $142 million a year being co-invested alongside private sector companies in research and development growth grants and the Opposition still has not woken up to that because it is still harping on about the policy I think it has announced seven times now and implemented once which is the research and development tax credits. It has got nothing more to say on innovation at all. That is the entire story in innovation since about 2007. Well news—we are in 2014. Something else a little fresh would be helpful.But the other thing I have got to take up with the member opposite Megan Woods is the issue of this whole thing that companies having international investment is somehow bad for them. I can tell her that actually a normal part of the innovation process is that some of the companies are eventually bringing in international investors. The good news about that which Ms Woods has overlooked is that it frees up capital to invest in more companies so people like Sam Morgan and so on who sold their TradeMe shares have now invested in a whole range of other companies and that is part of what encourages the ecosystem in New Zealand.My definition of success in innovation is the increase of innovation that occurs in New Zealand and that is what is happening right now in this country. We have had a big increase in research and development by businesses and it is continuing to grow. We have had a big increase in exports by what is known as the high-tech sector which is the information and communications technology sector high-tech manufacturing and medium high tech manufacturing. That is increasing. That is a factual reality.Dr David Clark: How close to the OECD average?Hon STEVEN JOYCE: Speaking of the OECD Mr Hughes was saying that we are continuing to go down the OECD ladder. Well I have some news for him actually. We stopped going down the OECD ladder as soon as the Labour-Greens crowd went out of office. We stopped. And actually we are now going up. The former Prime Minister Helen Clark talked about being No. 22 in the OECD for years and nothing happened. Now suddenly we are at 20 and going to 19 because of the work done by this Government relative to other countries in the OECD.Here we have a growing high-tech sector that is in really good shape with more and more companies listing publicly and more companies being seeded and growing. We have big support of that from this new entity Callaghan Innovation. If the member Ms Woods is unsure of what it is for I recommend this quite simple page with five bullet points on it. That would be a good summary for her to start with. We are lifting the investment in New Zealand’s technology companies and the Opposition needs to bring itself up to date.Report noted.Tertiary Education CommissionCOLIN KING (National—Kaikōura):It is a pleasure to talk about the achievements of the Government and the Tertiary Education Commission at this particular time. Just for those who are listening we are talking about the Tertiary Education Commission which fundamentally provides the stakeholder funds to the universities the wānangas the private training establishments the industry training organisations and the polytechs. It has been very important to appreciate that on coming into Government National recognised that that area was grossly over-supported but without the products and results coming out. So the Government is to be commended for the wonderful job that it has done in focusing especially the training providers into being accountable to the taxpayer for the dollars that are invested in there—the better part of $2 billion. That has been the work of the Government and the Minister for Tertiary Education Skills and Employment in focusing those particular providers on the job at hand.It is very important that the taxpayer dollars are spent wisely and that the intention of the tertiary education strategy is implemented and we certainly see that over the last two Budgets that has certainly been the case: further improvement. I cast my mind back to when I heard a comment in one of the interviews that we had with the Minister with regard to how much more blood you can screw out of a stone. I thought to myself: “What a wonderful analogy.” That is the difference between the Opposition and the Government. The Government on this side of the Chamber has extracted better value for the taxpayer dollar out of the tertiary education sector—not only in one area but across the whole gambit within the Tertiary Education Commission. It is also focused very much on what the Government can do to pull levers to stimulate and attract people into those areas that are very important for the continual growth in science and innovation of our economy. That is what it has been doing.There has been further investment in those “STEM” subjects—the sciences the technologies the engineering and the mathematics. All those things are certainly opportunities that should not be missed. We have heard a lot of dialogue today about how we are potentially missing opportunities. I would put it to the House that in actual fact the missed opportunities all happened long before National took office in this National-led Government.In respect of innovation we talked about Callaghan Innovation but one of the innovations that is happening inside the Tertiary Education Commission and funded by the Government is the establishment of the information and communications technology graduation schools. These are going to be established in Auckland Wellington and Christchurch. They are really good strong partnerships with business. These will create internships and research with high-tech firms. It is certainly that indication that we are moving into that really connected environment—that digital environment—and as a country it just underlines the principle that for us to maintain our standing in the OECD as was referred to previously every New Zealander needs the best possible education. It is a very long continuum but at the top end of it the Tertiary Education Commission has been greatly improved and refined. The accuracy and the accountability have been improved. We have only to look at the industry training organisations where the Minister has focused on with legislation to add transparency accountability and refinement so that we get better outcomes for those stakeholder tax-funded activities.But just to elaborate one particular area that the Government will be incredibly satisfied with is the apprenticeship reboot situation. It has moved from a provider-based training situation which occurred immediately after the Christchurch earthquakes where there were an amazing number of provisions for people to take up opportunities for training whether at the Christchurch Polytechnic Institute of Technology or with the Southern Institute of Technology or whatever—all of those polytechs. Well what we are now seeing with the growth in the economy with the growth in Auckland with the growth in Christchurch and with the growth in the regions is a far greater uptake of employer-based training. So that is your genuine apprenticeship training model and it is wonderful to see that we have increased that spending by $70 million. This is all very good and it shows that we have got a very appropriately balanced Tertiary Education Commission.HONE HARAWIRA (Mana—Te Tai Tokerau):Kia ora Mr Chairman. The Education and Science Committee’s report on the Tertiary Education Commission made an important point about how the Tertiary Education Commission is having to cope with ongoing cuts to tertiary sector funding rather than manage a stronger budget for the sector. The sector is crying out for support at a time when we have record numbers of young people leaving for Australia record numbers of unemployed young people and a refusal by the Government to properly fund tertiary education for those still living here in Aotearoa.That is why it is important that in considering this report on the Tertiary Education Commission we also consider the research that tells us how the lack of access to tertiary education defines the future for many of our young people. It is research that tells us that high fees stop many from thinking that they can aspire to a tertiary education from even bothering to enrol and from signing on for longer and more costly degree-length courses even though they know that that is the pathway to better employment opportunities. It is research that tells us that many crippled by student debt leave as soon as they graduate to escape a life of indebtedness or drop out early because of the heavy financial commitments of tertiary study. Sadly enough it is research that tells us what most of us already know but many of us refuse to acknowledge and that is that these problems are ever more complex and far more damaging for Māori Pasifika and for those who grow up in communities where poverty is the norm.That is why it is important that we say that if we want New Zealand to become a genuine player in world affairs then instead of trying to bribe our way on to the United Nations Security Council and instead of throwing even more money at Team New Zealand after already blowing $90 million on two failed campaigns to date and instead of constantly cutting funds to what was once a leading international tertiary sector perhaps we should be overhauling our whole education system and rebuilding it based on a full commitment to free education. That would show our young people that we want them to grow here to learn here to live here to work here and to invest here and that we are happy to invest in them because we know that an investment in them is an investment in us all.Of course we know that education is a public right and something that should be paid for from the public purse and that Aotearoa is a better nation with an educated population. We know that student debt is a huge deterrent to people taking up tertiary study and a massive burden in a low-wage economy like ours. We know that we need to be tapping into the nation’s intelligence to become innovators rather than mere consumers for the world’s multinationals and that without a culture of free education we shall become nothing more than the zombies of the world—the dull and dimwitted slaves to a rich powerful and ever greedier elite. That is why we need to increase access to our tertiary institutions to convince parents that their children can get into those places and to get our young people to believe that tertiary education really is available to everyone regardless of the colour of their wallets.That is why one of Mana’s very first policies is free education a position also promoted by our partners in the Internet Party and a position based on our absolute belief that our young people are worth every cent of our investment. That is why we say this. Drop the decision to shut down student associations and let them continue to be voices for change campaigners for student rights and advocates for freethinking. Dump the plan to remove students staff and community members from tertiary governance bodies and let them continue to be the voices of their communities. Write off student debt as the first step in our investment in our own future provide a proper living student allowance for all tertiary students scrap tertiary fees and challenge ourselves to create a world that we want for all of our young people not just those who can afford it. Yes we know that this approach will cost us but in the final analysis Mana still says yes and absolutely yes because we absolutely believe that our young people will be worth every single cent. Kia ora tātou.Hon STEVEN JOYCE (Minister for Tertiary Education Skills and Employment):I just want to make a short contribution in terms of some of the comments made by the honourable member Hone Harawira. Firstly it is important to note that funding has not been cut to the tertiary education sector. In fact the increase in investment in public tertiary institutions since 2008 is 14 percent and the increase in the university sector since 2008 is 18.6 percent. It is also important for him to note that the number of qualifications granted by the New Zealand system has been growing very strongly as a result of our focus on results. We are now up to 162000 qualifications achieved in the 2012 year and also significantly the highest level of qualifications at the degree level and above at around 25000. The other good news given his references to struggles for young Māori and Pasifika is that the numbers of young Māori and Pasifika people studying at university have gone up by around 3000 each from memory. That is good news as well; it is a significant increase.In terms of the cost of student loans to individuals they are currently paying them back if they stay in the country in around 6 to 7 years on average. I think the member pretty much nailed a multibillion-dollar increase in expenditure in the tertiary sector in that short speech including writing off student loans a much larger student allowance and free tertiary education for all so he might need to cuddle up with the Greens and their money-printing machine but at least it will be a 3-D printer and I suppose that is positive.The New Zealand tertiary education system is very high performing. It does a very good job for students. It actually covers 70 percent of the cost of their tuition. It provides student loans which are then written off because there is no interest—of around 40 percent—on student loans if you stay in the country and of course there are also student allowances available for many students as well. It is a very generous student support system given the private benefits that are obtained from tertiary education for example. The slight irony of Mr Harawira commenting about this is that tertiary graduates achieve an income roughly about 50 percent of premium over those who never go to university. The irony of making those who never go to university pay for those who do seems a little bit strange. But of course this is a contest of ideas and that is appropriate.The other point that I would make in closing is that as I say we have a very strongly performing tertiary sector that is delivering great results and we are working to improve it further with a particular interest in some of the skilled areas like information and communications technology engineering science and agriculture where we definitely need more people and that is a programme that is continuing. I think that the Tertiary Education Commission is doing a good job. It is always a work in progress but I think Mr Harawira needs to go and look at some of the facts about the performance that we are achieving in the sector. Thank you.Report noted.Accident Compensation CorporationIAIN LEES-GALLOWAY (Labour—Palmerston North):The Accident Compensation Corporation is a Kiwi treasure. For 40 years now it has been providing no-fault no-liability compensation and treatment for people in New Zealand who are injured. We all pay into it and we all expect it to be there for us when we need it and for the most part it is. There is almost nothing like it elsewhere in the world. It is something that New Zealanders should be immensely proud of. But over the last 5 years under this National Government the faith of Kiwis in ACC has been sorely tested. We know that it has been overcharging people on their levies. We know that it has been finding spurious reasons to avoid paying out compensation to avoid providing treatment and that it has dramatically cut its investment across the board in preventing injuries.We know as well that people have lost their trust in ACC to keep their private details—their medical details—private and available only to the people who really ought to have them. And we know with recent developments that ACC has actually been collecting far too much information. For those people who actually turned round to ACC and said; “I’m sorry but the law does not allow you to collect this much information.” we know that under National they had their compensation cut. That is why people are losing faith in what ought to be an absolute national treasure.But the abuse of the ACC has reached new heights this year as this Government has struggled to prove to New Zealand that it has managed to get the books back into surplus. That was the big goal for the 2014-15 Budget. It was that the National Government would get the Government books back into surplus. My goodness it has stretched the truth in all manner of ways to try to convince New Zealanders of that but the biggest travesty is what it is doing in ACC.ACC came to the Government and said: “You know when you put the fees up when you first came into Government? You know when you racked everybody’s ACC levies up far higher than they needed to be? Well we’ve taken enough money. We’re more than fully funded.” In fact the work account has nearly 140 percent of the funding it needs not just to meet this year’s claims but all the future costs of those claims. It has not just the 100 percent that it needs to meet those claims but another 40 percent on top of that. The earners account is 130 percent funded—Dr David Clark: 130 percent?IAIN LEES-GALLOWAY: —130 percent funded—and yet this Government continues to overcharge Kiwis on their ACC levies. Why? Because the levies that come in go towards the National Government’s supposed made-up phoney surplus. So New Zealanders are paying far too much on their ACC levies and $50 a year too much on their car registration just so that the National Government can pretend that it is doing a good job with the economy and that it has got the books back into surplus. Look getting the books back into surplus was a really positive goal for this Government to have had—we applaud that—but it should have done it through economic growth. It should have done it by getting Kiwis back into work so that it was taking more income tax—so that Kiwis could afford to spend money at the supermarket so they might pay more GST. That is how the Government should have got the income up not by charging people far more than it needed to on its ACC levies.And the Government is not doing it just this year; it is planning to do it next year as well. ACC has said that it can cut levies by $650 million and the corporation would still be sustainable. Is the Government going to do that? No way. No way is it going to cut $650 million from those ACC levies because it still needs that money so that it can pretend that it has got the books back into surplus.New Zealanders love ACC. They love the fact that it is there when they need it. They love the fact that it is more cost-effective than any other insurance scheme anywhere else in the world. They hated the fact that the National Government was going to try to privatise it. Thankfully it has given up on that idea. The National Government needs to give up on overcharging Kiwis on their ACC levies and start giving New Zealanders a fair deal.SIMON O’CONNOR (National—Tāmaki):I am very pleased to be here to speak on ACC in this debate. It is disappointing to have heard Iain Lees-Galloway the last speaker being so angry and frustrated in some ways that the National Government has actually put the ACC books in order and is competently able to actually start returning levies—[Interruption] You see those members are yelling and screaming. They do not like it you see because we know exactly the Labour record on ACC. Like a number of things that we picked up when we came into Government it was in bad shape and in disorder. We know that with the claim costs. I have just got a note here and I was noticing that the cost of claims increased by about 57 percent in 4 years under Labour. It has an inability to actually run ACC properly and appropriately. It is a sort of cash cow approach and it has actually taken the National Government to take the bull by the horns tidy things up fix things up and not only return the books to such a state that we are able to reduce levies in order to return money to Kiwis but to actually line up and put a focus not only on the care that is required through ACC but also on prevention and to have those two line up. So I think we can be very proud of what ACC is doing.I know that over recent weeks actually in the Transport and Industrial Relations Committee we had people from the sensitive claims unit of ACC come in and give us a briefing. It was a really interesting insight into the work that they do. It is really important work. As a constituent MP I often get people coming in on ACC issues. I think it is important to acknowledge that it is a fraught area and more often than not it actually causes difficulty for people. I suppose it is one of the roles as a member of Parliament to try to advocate on those issues. So nothing is perfect by any means but ACC is actually in good shape and in good form.We know that in the most recent Budget we have indicated another total of $480 million worth of levy cuts for Kiwis this year and into next year—really important—and a lot of that is going to actually focus on the motor vehicle account and the levies there on motor vehicles. In fact from next year Kiwis may well find that their registration costs are down by about $130. Why? Once again we have focused on allowing ACC to do its core job and to do it well and therefore to return money to Kiwis where it is due. Unfortunately all we have heard from the Opposition is a lot of angry vitriol that this might be done at all. So that is really important there. The levy cuts though that have been indicated in the Budget are sitting on top of a whole series of levy cuts so far. As of 1 April this year New Zealanders started saving about $387 million in ACC levies over the last year itself. So that has made New Zealand households about $180 better off and actually large employers could have saved up to $6000 a year as well in terms of levies. So when we look at what the Government does it is a broad approach and ACC has been part of that.But a big chunk too is not simply putting the accounts in order. It is not simply trying to provide the best service to Kiwis but also focusing on that preventative side. We know that ACC spends a lot of money in this area because of the old adage that prevention is better than cure and there has been a major reboot in the injury prevention activities of ACC. In fact we have seen a doubling of the investment in this space. We have also seen I think it is important to mention particularly in the light of the report released by Sir Owen Glenn yesterday that a big focus of ACC—and driven by this Government—is on preventing sexual and family violence. There is a lot more work working within the educative space to try to put these messages out. As I said at the start we had the sensitive claims unit come in and talk us through the work that it does. We are also conscious of work that is happening within the integrated services for sensitive claims. This work should go live in November this year. There is really important work in that space.In closing I think one good thing to note in particular around this is the level of care that ACC already provides for people who are seeking assistance because of sexual abuse domestic violence and so forth. They can get 16 hours of immediate support from ACC. A claim has to be lodged but they do not have to wait for the confirmation of that claim to get help. It is just a small example of the activities and the changes that are occurring in this space. So returning to where I was at the start I think we on this side can be rightly proud of the focus of ACC and the work that it is doing and proud that we are returning money to New Zealanders and that they are not having to pay more on their levies than they need to. Thank you.Report noted.Electoral CommissionHon Dr PITA SHARPLES (Minister of Māori Affairs):I take a call on the Electoral Commission including the functions of the Chief Electoral Officer. If one was to look at the 2012-13 financial review that was presented to the Justice and Electoral Committee it would be pretty underwhelming—two sentences in fact—with the emphasis being that there were no matters to bring to the attention of the House. Well I would have thought that the fact that only 58 percent of the indigenous people of this land turned up to vote in the last general election might have been a matter of some concern to the Crown entity charged with promoting public awareness of electoral matters as part of its responsibility for preparing and conducting general elections. In stark number terms although there are 462000 Māori who are of voting age and are eligible to vote fewer than 270000 proceeded to take up that voting opportunity at the ballot box. Forty thousand Māori disappeared at the first hurdle—that is the enrolment table. But when we get to the turnout of the vote the statistics are deplorable.The Electoral Commission is an independent Crown entity. It should operate strategies to increase democratic participation without being accused of a bias towards any political party. In 2012-13 its total revenue was $27 million but here is the irony: in the 2012-13 financial review the Electoral Commission spent only $22 million returning a surplus of close to $5 million—$5 million that could usefully have been spent in investing in the challenge of how to increase Māori electoral turnout and in doing so how to improve the effectiveness of our democracy. I would hasten to say that the issue of low turnout is not only a feature of Māori voting preferences. In a paper by Jack Vowles entitled Down Down Down: Turnout in New Zealand from 1946 to the 2011 Election Mr Vowles reported the views of one commentator who declared the relative absence of voters in the polling booths in 2011 as “the saddest day for democracy in New Zealand”. In fact Mr Vowles concludes that to find a New Zealand election with a lower official turnout than in 2011 one must go back to 1887 well before women attained voting rights.So I am sorry I cannot fathom how the Justice and Electoral Committee found nothing to report on when looking at the financial review of the Electoral Commission. Voting is of paramount importance to the running of a healthy democracy. It is about the people being empowered to take action to cast a vote and to make their voice heard. We need to be out and proud. Casting our vote is our right it is our duty and it is our responsibility. The power of voting is the power of change. It is the power of voicing views and of making a mark in history.The Māori Party has a couple of ideas on how we could make the change our nation needs so clearly in terms of voting participation. We have drafted legislation to enable all Māori to be automatically entered on the Māori roll with an option to transfer to the general roll instead of the other way round. This would take the complexity out of the Māori electoral option campaign given that the majority of Māori are enrolled on the Māori roll. It would make sense to make that roll the default roll and give other individuals a choice to opt out on to the general roll if they see fit. Another key campaign that the Māori Party recommends is encouraging a focus on education for engaged and active citizenship. We need to increase the ease of voting make voting more exciting increase its relevance and make it easier to register to vote.Last week I introduced a new curriculum priority in ensuring Māori history is known taught and promoted in our schools. I am hopeful that with new emphasis on knowing our stories it may well encourage a far stronger reason why all New Zealanders understand the value of the vote and the significance of having a say. Representation in a democracy is not only a basic human right but it is also necessary if we want to make sure our nation moves forward together. I hope that the next time the Electoral Commission comes up for debate before the Committee there will indeed be something to talk about—a new energy and a commitment to making our voices heard. Thank you.Report noted.New Zealand Railways CorporationDENIS O’ROURKE (NZ First):The performance of KiwiRail management has been so poor that it should be fired. This is a company that has spent mega-millions of public money with very little to show for it and this Government has sat back and twiddled its thumbs while things get worse and worse. The Government has seen to it that the New Zealand Railways Corporation gets far too little resources to improve its network. In Auckland the expansion of the city rail network will be far too slow while the Government instead spends more and more billions of dollars on a motorway expansion programme that cannot solve that region’s transport problems.In the Hawke’s Bay the mothballed Napier to Gisborne line has not been repaired for the paltry $4 million required for that purpose despite the Prime Minister’s original statement soon after the slips closing the line occurred that the road would never be enough by itself. The slips that closed the line are one thing but now the slippage by the Government in failing to repair that line is completely another. That is totally unacceptable not only to New Zealand First but also to the majority of people in that region and for good reason. Since those slips occurred that closed that line $4 million—about the same that would be required to repair the line—has been spent on the Gisborne to Napier road on just a few passing lanes. So the Government can find money for that but it cannot find money to keep the line open.But the elephant in the room—or should I say the ship—is the KiwiRail Cook Strait services. Anyone can see that this comedy of errors shows serious mismanagement of this service by an incompetent management and board. We have seen breakdowns and mishaps one after the other in that service resulting from what is best called a floating lemon the Aratere. Then of course it was lengthened and as soon as a laden train was put on it it showed a tendency to flex because the lengthening of that ship was not appropriate for the vessel. Then a series of mishaps followed. Here is a list of just a few of them: the ship bending along the keel and twisting when under load toilets not working properly problems with lifeboats the freight capacity for trucks being reduced the ship breaking down within a few days of arriving back into service the engines not being powerful enough to drive the ship through heavy seas because of the extra weight and length and an infestation of rats. It has had problems with the cargo doors stabiliser ballast and radar and of course with a propeller falling off. And then there are the thousands of litres of fuel that were lost somewhere—a litany of errors as I have said.This company simply does not know what it is doing. KiwiRail’s Cook Strait ferry operation is a chapter of errors and of sheer incompetence and dangerous blunders and the Aratere is now on its way back from Singapore. Let us hope it makes it. What has been the true cost of the ferry? Is it $100 million dollars $150 million or $200 million? It is hard to tell. So it is not just a lemon; it is a longer lemon but not only that it is a very expensive lemon too. When it gets back it will still have restrictions on freight and sailing conditions so it is not just a lemon but a limited lemon as well—all because KiwiRail’s management could not get it right.Now we understand that the company is seriously thinking about buying the Stena Alegra—another lemon a cast-off from another country and not suited to Cook Strait conditions at all. And the price we understand is $8 million—a cheap nasty rust bucket even more prone to breakdowns than the Aratere. This boat uses 20 times the lubricant of other ferries. Why would that be? We all know that a car that is burning oil has a serious engine problem. This rust bucket is at the end of its useful life.Report noted.Solid Energy New ZealandCATHERINE DELAHUNTY (Green):Solid Energy is not a solid story; it is a sad story especially when we know that our environment is our economy. We do need our State-owned enterprises to be solid and no one could describe what has happened to Solid Energy in the last financial term of Parliament as being solid at all. It is a sad story from the failed lignite project through to the recent 170 redundancies at the Stockton mine which is costing families dearly. Solid Energy is in a slump for two reasons: one is mismanagement and the other is that the coal industry globally is in a serious slump. Solid Energy has been badly managed and is wrecking the environment without any employment security for the people of the West Coast. Even coking coal is not holding up as the Chinese steel industry also slows down. We have only to talk to Australia about the state of the coal industry as the basis for your economy to know that it is not a stable basis for a good economy.But as George Monbiot said this week: “An ounce of hope is worth a ton of despair.” There is perhaps not a lot of hope associated with Solid Energy’s current performance and its reliance on fossil fuels. Many people including the Greens recognise that coal is the past and it kills the climate and that clean energy and looking after the environment is our only viable future. We have a beautiful country. We have relied on coal in the past and what we have seen is that the global coal price and environmental damage shows this State-owned asset is in a bad way. I attended the Education and Science Committee when Solid Energy came and spoke about the state of its books and it denied it was thinking of trying to get overseas buyers to take over including some of the Indian State coal people.But whatever is its future its present is very shaky and no one will deny that. Solid Energy like all of us needs to build a future that is based on clean energy renewables and meaningful sustainability. It cannot keep trying to relive the past. If we do what we have always done we will get what we have always gotten and that is a boom-and-bust economy for the mining towns including Huntly and on the West Coast where despite many years of coal extraction there is still severe poverty in those communities. I have driven through those communities and seen the homes. If coal was ever going to deliver it would have. Instead coal has damaged the environment permanently—and Stockton is a dreadful sight—but it has not created the sustainable work that the people deserve. No community should be at the mercy of an international price that can destroy and make the difference between employment and survival or despair.We are for a positive and hopeful view of what companies like Solid Energy could be but in order for them to be that we need change. In a progressive Government the Greens would oppose new coalmines. We are proud to say that we have launched a climate policy that would make polluters like coalminers pay and our climate policy has been well-received. As people would have heard at question time when Russel Norman talked about it there are many commentators from all sides of the political spectrum who do not believe that coal is the future do not believe that fossil fuels can be managed the way they have been managed do not support emissions trading schemes—because they are “clip the ticket” failures—and do support the positive moves that we have made for a transition to a just economy based on a sustainable climate.There is much hope to be had in protecting and valuing our environment. It is a very tough call for coal communities. We can have no illusions about the price of transition but we here in this House have a responsibility to the future and to those communities and we have to build that transition. We can do that. We can innovate. We can set up a Green Investment Bank. We can protect the climate through sensible and fair climate policies that do not hurt people. We can support Solid Energy to change. We can say to Solid Energy that we will support a real genuine investment in those things. We can say to those communities that regional development is a real thing. The Government has a role to play as a partner in supporting the parts of the country that have been dependent on companies like Solid Energy which cannot deliver to them reliable jobs in a clean environment for the future. I am under no illusion how tough that call is. This is not said lightly. This is not said with disrespect to the people who have lost their jobs. I come from a community that was once dependent on mining and we have built our way out of it. We are fortunate to have done that because we can survive on ecotourism. We can survive on—Report noted.Bay of Plenty District Health BoardHon ANNE TOLLEY (Minister of Police):It gives me great pleasure to stand and talk about the wonderful job that the Bay of Plenty District Health Board has done. If you look at the statistics I think they speak for themselves and they deserve to be heard in this House. First of all can I congratulate the Minister of Health because he has overseen a funding increase to this district health board over the last 5 years of an extra $127 million.Dr Cam Calder: How much?Hon ANNE TOLLEY: It is $127 million extra to the Bay of Plenty District Health Board. That has then enabled that health board to deliver some of the most amazing results. We have seen that it has employed more staff. We have had 67 more doctors and 132 more nurses employed by this district health board—again over the last 5 years. More important than even the staff and in any district health board I do not want to underestimate the effect and the work that the staff do but actually health care is all about patients. What we have seen through the extra funding and the extra staff is that over 11000 more patients have been treated for electives than were treated under Labour. That is an increase of 11215 more patients treated than were treated under the Labour Government—over 11000. The particular one that affects many many people particularly in my electorate is orthopaedic surgery and we have seen a 52 percent increase in orthopaedic surgeries carried out by the Bay of Plenty District Health Board. That is people’s hips knees and all the other bits and pieces that they have replaced and I think that that is something to thank all those staff working in the health board for. They have delivered it across quite a big area. It goes right up to the tip of the East Cape so they are large rural areas.The most exciting event I think in the last year was the opening by the Minister of Health last week of the rebuilt Whakatāne Hospital and $67 million was contributed by this National-led Government to rebuild the Whakatāne Hospital. A great deal of planning and hard work went into that. It is quite interesting that when I became the MP for the East Coast electorate there was a lot of talk around what was going to happen to the Whakatāne Hospital. It had severe asbestos and seismic problems and under the previous Labour Government consultation meetings were held and all sorts were talked about the replacement of the Whakatāne Hospital. But when we came into Government when National came into Government what do you think we found? There had been a lot of talk but actually the money cupboard was bare. There was no money allocated. In fact despite all the community consultation and all the discussions that the health board had had with the community the Whakatāne Hospital was not even on the list for capital improvements.I went to work and fortunately the Minister of Health was sympathetic because this Whakatāne area serves an enormous rural area. It is an area that takes in many many small communities that are very low in the social deprivation scales. People have severe transport difficulties but they also have severe health issues. The thought of having to go from the tip of the East Cape to Tauranga Hospital was just ridiculous. The health care of the people of that Eastern Bay of Plenty area would have severely suffered if this National Government had not stepped in and spent $67 million on rebuilding the Whakatāne Hospital. To the Minister of Health I want to say I know that my constituents are exceedingly grateful for the work that this John Key - led National Government has done because we put our money where our mouth is. We did not just talk about it; we got out there and we rebuilt it. The hospital had an open day that attracted over 2000 people to come and have a look through the rebuilt hospital and last week Minister Ryall and I officially opened the hospital. That means our region has high-quality health care.Hon TONY RYALL (Minister of Health):I would like to associate myself with the comments of the MP for the East Coast Anne Tolley on this financial review of the Bay of Plenty District Health Board. Health boards in New Zealand can pretty much be divided into three groups. One is a group that has fast-growing populations another has very stable populations and a third group has depopulations. Each of those groups presents significant challenges.The most significant challenge or strategic issue that the Bay of Plenty District Health Board has faced is actually keeping up with a rapidly growing population and also a growing older population. That is why the district health board together with the almost $130 million of extra funding that our Government has given has been able to invest in significant numbers of extra doctors significant numbers of extra nurses and I think a 52 percent increase in hips knees and other orthopaedic procedures to reflect the ageing population. But at the same time it has not only dealt with that fast-growing population in the west—and there have been significant investments in the new east wing at the Tauranga Hospital and the purchase of the RSA land which is now the clinical school so there have been big investments there in the west—there has also been a need to invest in the east which is a predominantly lower-income community. It has a much higher Māori population than the west. So there are a whole lot of issues that have happened there.Our Government has not only been investing very strongly in primary care. You cannot have strong primary-care developments in isolation from good hospital services. That is the reason why with the very strong advocacy of the MP for the East Coast Mrs Anne Tolley the Government has put $67 million into a new state-of-the-art hospital in Whakatāne. It is a tremendous investment. I had the opportunity to tour the facilities there on Friday. It is fantastic how well that facility integrates with the primary care services in that community. It is very important for the Bay of Plenty.But what makes it more exciting is that the people at the Bay of Plenty District Health Board are recognising that health care changes. Mrs Tolley talked about the people who live way up at the top of the cape. Transport issues are very significant in the Bay of Plenty because of the isolation of the people of Te Whānau-a-Apanui and also of the people of Ngāti Manawa in the Murupara area. There are also issues around Kawerau where there are a lot of low-income people. The Bay of Plenty District Health Board is actually at the forefront of telehealth in New Zealand. A significant investment has gone into providing telehealth. By way of example in Ōpōtiki up the coast and in Kawerau and Murupara patients can go into their general practitioner’s clinic and have an online Skype-type conversation—but higher quality than Skype—with a specialist either from Whakatāne Hospital or from Tauranga Hospital. You can see the significant benefits that they have.Similarly in Ōpōtiki the rest homes are now linked in too. So there was a patient who was a resident in a rest home who had a turn. They were able to use the telehealth Skype-based technology for the general practitioner to be in his home and consulting with the rest home resident in her home over the telecommunication network and similarly with patients up the coast. We are investing very strongly not only in the bricks and mortar but also in the new technology that allows people to have much faster and more convenient access to all this expertise around the health service.Similarly the Bay of Plenty District Health Board has entered into a public-private partnership with the development of private radiotherapy services that will be available there from the end of September. This is a very significant investment. What it means is that cancer patients in the Bay of Plenty who would previously have had to travel to Hamilton for their radiotherapy will be able to receive that treatment at private facilities integrated into Tauranga Hospital. That is really the next big step in services for people of the Bay of Plenty—this really significant investment that has been made by private investors who will be able to treat not only private patients but also public patients and there will be the opportunity over time to have neighbouring district health board patients treated there as well. There are very very good public hospital cancer services in the oncology area there but this radiation treatment will provide just that extra suite of services to benefit patients. It is a pretty smart public-private partnership that enjoys the support of the wider population in that area.So I just acknowledge the tremendous work of the people of the Bay of Plenty District Health Board. With my 24 years as a member of Parliament I can say that I think the service being provided is sterling. There is a real dedication and commitment there and I think we can be very proud of the clinicians there.Report noted.Southern District Health BoardHon ANNETTE KING (Labour—Rongotai):I am very pleased for the people of Whakatāne that they have now got a new hospital. Some may recall that there was a march and a “hands around the hospital” event in 1999 because the then National Government looked to close it. I think it is really important that you do put your money where your mouth is when it comes to building hospitals. I would like to say that when in Government we rebuilt Kaitāia; that was to be closed. We rebuilt Thames; that was to be closed. We rebuilt the new Auckland Hospital and the new Wellington Regional Hospital. We did work on Waikato Hospital. We rebuilt the Wairarapa Hospital. The Wairau Hospital in Blenheim the Invercargill hospital the Dunstan Hospital the refurbishment of the Timaru Hospital the Christchurch Women’s Hospital Murchison Nelson—this was under a Labour Government. So when we get the great applause from members over there for their wonderful work it would be nice if sometimes they recognised that there was a lot of capital work that went on under Labour. Many of those hospitals were in threat of closure under a National Government.I want to talk about the Southern District Health Board. I am glad that the Minister of Health is in the chair because he has been incredibly evasive and elusive of late. He has not been to a single political forum in the last 18 months so it would be nice to actually have him in front of a real crowd where he could be questioned—like the doctors on Friday when he failed to turn up. But the people of Dunedin the people of the south have been I believe neglected by this Government. Six years on this is the worst hospital in terms of need of improvement in New Zealand. We hear about how big the geographic area is in the Bay of Plenty but the biggest geographic area trying to provide health services is the Otago-Southland area.All the Minister has answered with is: “Oh you didn’t do anything when you were Minister.” Well I have to say Minister you were told that this hospital was leaking. I asked you a question Minister about the leaking of this hospital and you gave me an answer claiming that there had been one leak in this hospital. I have the answer. It is to written question No. 1699. You said there had been one leak a one-off leak experienced in 2012 in this hospital. That was your knowledge Minister of this hospital. In fact there had been many leaks in this hospital. There were leaks in theatres—leaking into the electrical cords in the theatre. They said about this leak: “Urgent please come and fix it. Water is dripping through the light fittings in theatre 4. This is urgent. We are undergoing an operation.” There have been leaks dripping through the corridor windows. The Minister overlooked the fact that there had been numerous leaks in this hospital in the operating theatre on their sterile equipment. He said there had been one. When asked if he would help provide some money to fix the leaks he said no he did not intend to give them any money. He said: “I’ve given them $124 million since we became the Government.”So why should the people of Otago have to put up with theatres that are dripping and leaking and he will provide no assistance in terms of fixing them? In fact the district health board has estimated that the rebuild of this hospital is 7 years away—7 years. That will make it 13 years if National is still in Government.Then if that was not bad enough the district health board has such a poor IT system that it lost 3000 mammograms. Three thousand mammograms were lost as a result of IT failure in the Southern District Health Board. That is a travesty. So many women were worried about what had happened to them and there was a very very poor response from the board. I would have thought that the Minister would step in at that point and ask for the report on the IT failure to be released. That report has not been released to the public of Otago and like many things in that area it has been covered up. So I would like the Minister when he takes his call in his skite sheet to tell us about the colonoscopy problem down there and tell us the truth about the number of colonoscopies that have not been done in that region.Hon TONY RYALL (Minister of Health):I would like to thank that member Annette King for her reminiscences from last century. It is so nice to hear about what she was doing when she was Minister of Health last century. She spent all this money when there was more money than the Government knew what to do with and she never did a thing for Dunedin Hospital. All she and her cronies ever did for 9 years was mine the asset replace nothing do no maintenance and run the facilities down. It was so bad that in her last year as Minister of Health she was berating her own Labour appointees for running deficits of over $9 million for years on end. So when the money was raining out of the sky how much money did Annette King give to Dunedin Hospital to fix its buildings? Nothing. She just mined the asset and did nothing. But wait for it—the Budget went up and did it get money for buildings? No.But look at her record on operations for the people of the south. In her first year as Minister of Health 8800 people got elective surgery—8800. When she left office 8400 had got elective surgery so fewer people got elective surgery when she finished being Minister of Health than when she started being Minister of Health. When Annette King left as Minister of Health 8400 operations were done that year at Dunedin Hospital. This last year under review there were 10270 elective operations. She left with 8400; today it is 10270 in 2012-13. She had 6 years and fewer people got operations. I have had 6 years and we have increased the number massively from when she was Minister of Health. We have put an extra $124 million in there 82 more doctors 116 more nurses and an emergency department that Dunedin can be proud of because there are not people lying around the corridors unsafe for hours and hours and hours which I inherited.Hon Michael Woodhouse: What happened to the neonatal unit?Hon TONY RYALL: Oh the neonatal unit—shameful! The neonatal unit—shameful! This was for the most vulnerable babies born at Dunedin Hospital stuck into the smallest footprint you could possibly find. It was not a good service. In 9 years of a Labour Government nothing happened and we put the money in and our Prime Minister was there opening a state-of-the-art neonatal intensive care unit at Dunedin Hospital an investment by this Government when the money was tight. When the money was tight we found the money to put in a new neonatal intensive care unit.I have to say that I get fantastic feedback from Dunedin for the investment that our Government has made in that neonatal intensive care unit. I get amazing feedback from Dunedin on the massive improvements at the emergency department. People in Dunedin now know—Hon Annette King: Tell us about the colonoscopies.Hon TONY RYALL: I will tell you about the colonoscopies. Under Labour people who had a family history of colorectal cancer were denied the ability to go and have a surveillance colonoscopy. Labour stopped surveillance colonoscopy at Dunedin; National has started it again. Labour stopped surveillance colonoscopy; we have started it.Hon Annette King: Where?Hon TONY RYALL: We have started it at Dunedin. So that is the truth of that member’s failure.I am not going to harp on about last century because it is so different now from when that member came in in 1984. The Dunedin Hospital is a much better place. The services are improving. More patients are getting elective surgery. Remember that between 1999 and 2005 fewer patients got elective surgery—fewer patients got elective surgery—and now under our Government record numbers of patients are getting elective surgery at Dunedin Hospital the emergency department is working better the cancer services are fantastic and working faster and we are getting more preventive care for the children of the Otago-Southland region. Right across the board this district health board is delivering on service and this Government is giving it the money and the staff to improve care for people in Dunedin.Hon ANNETTE KING (Labour—Rongotai):I wish to table an Official Information Act request on the number of leaks at Dunedin Hospital—The CHAIRPERSON (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection. It can be tabled.Document by leave laid on the Table of the House.Report noted.New Zealand Teachers CouncilCHRIS HIPKINS (Labour—Rimutaka):There are not many clearer examples of the mismanagement of the education portfolio than the way the current Government is handling issues around the New Zealand Teachers Council. Those following along at home—and I am sure there are many people avidly following this debate at home and reading along with the volumes of the report—will note that there is only a relatively short somewhat pro forma report on the New Zealand Teachers Council in this particular volume of reviews. That is because the Education and Science Committee is currently dealing with major legislative change relating to the Teachers Council and so it was decided not to do a more comprehensive report back to the House on the current state of the Teachers Council.However there are significant issues—significant issues at least in part because although on the one hand the Government talked about wanting to raise the status of the teaching profession on the other hand it has proposed legislative change to the New Zealand Teachers Council that will completely remove all teacher representation from the governing body of that organisation. So on the one hand it says it wants teaching to be a high-trust profession and it wants the best and brightest going into teaching but then on the other hand it says it does not trust them to actually make any decisions about their own profession.I think that is somewhat ironic coming from this National Government because this National Government seems to have a higher view of real estate agents than it does of the New Zealand teaching workforce. So for example we had the debate in the House on regulating real estate agents where we got quotes from the National Government along the lines of: “We trusted the lawyers to come up with suggestions that would make their industry more user-friendly.” I suggest that the rational calm approach adopted in that instance would have been a good model to use in this instance. Those were comments it made in defence of real estate agents. So it thought that real estate agents should be trusted to regulate their own affairs but it was not willing to offer the teaching profession that same degree of trust and support.Actually there was a comment by Simon Power that I thought was very interesting when it came to real estate agents. He said “we are not in favour”—and of course the royal “we” he is talking about is the National Party—“of the vilification of an entire industry off the back of some scattered examples …”. Well the same thing can apply to the teaching profession. So often when we talk about the Teachers Council and the very difficult job it deals with the entire teaching profession gets marred by a few bad apples a few bad examples. Actually by and large those in the teaching profession in New Zealand are absolutely top-notch. They are trustworthy and dependable and we should place a very high value on them.It is going to be very interesting to see how this legislation progresses because of course the critical vote in this legislation may well be the vote of the Hon Peter Dunne. Peter Dunne made some comments on the real estate agents. He said: “In this instance this bill effectively nationalises the real estate industry because it says ‘We do not trust you to regulate your affairs and the conduct of your members in a way that is appropriate. We will therefore put in place a statutory environment that you will not have control over but that will be independent’—and that is a double-edged word at the best of times—‘so that we can ensure’ allegedly ‘a standard of public performance.’ ”That was Peter Dunne talking about real estate agents in defence of the real estate industry and their ability to have a say in the regulation of their own profession. I am going to be very interested in seeing where Peter Dunne lands on the legislation relating to the Teachers Council because the Teachers Council legislation that the current Government has proposed does the same thing to the teaching profession that Peter Dunne opposed being done to the real estate agents industry. So if he adopts that same position and I hope he does I look forward to his opposing that legislation along with the Labour Party and I am sure the other Opposition parties in the House.We do believe that teaching should be a high-trust profession. It should be one of the most respected professions in the country. We want the best and brightest to go into teaching and that means we should have some trust in them to regulate their own industry their own profession and that is what is not going to happen if the legislative changes that are proposed to the Teachers Council are enacted when that bill is reported back to the House. It will take away from the teaching profession the ability to appoint its own governing body. What is more it is not even guaranteed in the current drafting of the legislation that there will be any teachers on the body of the new Teachers Council which is being called EDUCANZ or the Education Council of Aotearoa New Zealand. There is no guarantee whatsoever that in fact teachers will have any control over that body. I do not think that is right. I think that when the time comes we should put a great degree of trust in teachers. We should recognise that teachers are the best people to be making the decisions about the regulation of their profession and we should trust in them to run their own profession.Dr CAM CALDER (National):It is a great pleasure to take a call on the Teachers Council. Delivering changes to meet the needs of 21st century children and young people and a system that focuses on lifting achievement and getting the best outcomes for our young people is a crucial part of this Government’s concentration on the education field. Of course it is also an important part of any Crown entity such as Careers New Zealand the New Zealand Qualifications Authority and the Teachers Council that is involved in the education space. What does the future hold? All our entities need to be aware. They need to be flexible in their thinking and shift their thinking in response to the changing global and digital environments we are working in.The Ministry of Education has been working with the Crown entities to make sure they are doing the right things in the right way to support the system that exists and to get the best outcomes for our young people. There does have to be change. That is clear. The Government has a relentless focus on raising achievement for all children and young people. It has been said in this House before but it is worth repeating again that if we keep on doing the same old things then we will get the same old results. That is not what we in this Government are prepared to do. We want to lift achievement for all New Zealanders.With our Better Public Services target we have nailed our colours to the mast. We want to have 85 percent of all 18-year-olds with a National Certificate of Educational Achievement level 2 or better or an equal qualification to ensure that our young people have the qualifications they need to be successful. At the secondary school level we have invested in a number of flexibilities around funding and timetabling to support students to make choices of pathways. Careers New Zealand helps students plan and guide themselves through their learning work journey so that every child can achieve educational success. The other Crown entity if I just briefly mention the New Zealand Qualifications Authority is ensuring that New Zealand qualifications are valued as credible and robust both nationally and internationally.But let us concentrate on the Teachers Council. A key part of the Government’s plan to raise achievement for all is our commitment to strengthen and value the teaching profession in the 21st century—to strengthen and increase the way the teaching profession is valued in the 21st century. As my colleague Chris Hipkins observed currently before the Education and Science Committee we have got the Education Amendment Bill (No 2) on which we have heard many hundreds of submissions over previous months in Christchurch Wellington and Auckland. This committee often sat three four or five times during a particular week to ensure that we could hear the submitters who wished to be heard. Currently we are considering the Education Amendment Bill (No 2) and this will make a number of legislative changes to the profession including transforming the Teachers Council into the Education Council of Aotearoa New Zealand or EDUCANZ.There is overwhelming international evidence of the critical role that teachers play in educating children and young people. We know it is a tripod: you have got the school you have got the child and you have got the home. It is a tripod: the school with all the teachers in it; the home and we are doing an inquiry into parental engagement; and of course the child. So we are aiming to strengthen the teaching profession to give it the support it is needing. That is what the select committee is currently considering: legislation to transform the New Zealand Teachers Council into being a hallmark professional body for teachers—a hallmark professional body for teachers. This is the cornerstone of the Government’s work to raise improve and strengthen the value we place on our teachers and to back them to win. There are a number of strands in this cable that we have to lift student achievement and doing this valuing our teaching profession is one of them.It is too early to discuss at this stage what the format of EDUCANZ—the new renamed Teachers Council—will be because it is still before the select committee. But what we are aiming to do is ensure that the body that results after the committee has deliberated will be in a position to improve outcomes for our students and also improve the esteem with which our teachers are held. So as part of the consideration of the bill—Report noted.Children’s CommissionerBRENDAN HORAN (Brendan Horan):Thank you for allowing me a call on the performance and current operations of the Children’s Commissioner. The commissioner Dr Russell Wills in his annual report reminds us that his office has four priorities: one for more children to grow up healthy; two for children to grow up with access to adequate resources; three for more children to achieve their educational potential; and four for more children to be free from all forms of neglect. I would go further and say that each of these priorities should be for every child in New Zealand and should be a spur to action for this Government. But as I learnt from the Social Services Committee report on the financial review of the Children’s Commissioner although Dr Wills has done sterling work on child poverty the Government has failed to take any action on 55 of 78 recommendations.Rather than address the symptoms of poverty we must act on the cause. Let us take an example and look at something as simple as weaning. If a child is on the correct milk the next stage is being weaned on to solid food. If that solid food is highly artificial sweet or preservative-laden food then that sets the template for life—the scourge of obesity and associated disease.Poverty seems to be increasing. In the United States 145000 workers at Kodak were put out of a job because of their industry’s digitising of manufacturing and the industrial internet. Companies such as Instagram which employs 30 people take the role in production consumption and distribution that Kodak previously did. We are having a hollowing-out of the world’s middle class’s ability to earn money. The industrial internet ushers in a completely new economic model. Where are the systems in place to serve middle-income families as they lose their occupations due to digitalisation robotics and the industrial internet? Poverty is not just about money. Surely the issue is about creating pathways to prosperity not just for children but for existing workforces.As an independent member of Parliament I believe in safe children safe whānau safe society. When we drill that mantra down it is three pairs of words with one commonality: safe. Safe is the name of the game—emotional safety occupational safety family or whānau safety vocational safety societal safety. Good responsible governance and sustainability are paramount. People recognise that the only mobility out of poverty is education.So where are our educational systems? Intergenerational learning starts pre-birth with the mother to be. Let us not hide behind the word “poverty” as many politicians and parliamentarians do. Poverty does not mean that you are unhappy. Poverty does not mean that you do not care for your children. Poverty does not mean that you cannot feed your children. But as a country we need to provide ladders and pathways to prosperity—clear vocational pathways clear educational pathways and clear health pathways. Life is about learning. We are on the brink of the greatest industrial revolution the world has seen. If we have a safe society then we have safe families and therefore our children cannot be impoverished. But we need to plan and operate with open and transparent processes. When we empower the Children’s Commissioner to report surely we should heed those warnings. Surely we should adopt more than the 29 percent of the commissioner’s recommendations that were adopted by the Government.But most important let us be the safety net at the top of the cliff rather than the ambulance at the bottom. Let us tackle the cause. Let us set up ecosystems for healthy children. Free medical care for children under 13 is a great initiative but it needs to start now not in a year’s time. Education in being a parent is critical and needs action now. Educational upgrades of parents teachers seniors children young people and existing workforces must become a priority. New skills and competencies give preparedness to existing workforces. We cannot continue to walk and stumble blindly into 2020. We need to prepare. As an independent member of Parliament I call on—Report noted.Housing New Zealand CorporationPOTO WILLIAMS (Labour—Christchurch East):Just to bring everyone in the Chamber up to speed with what is currently happening in Christchurch around housing I just want to kind of set the scene for those of us in Canterbury who are experiencing some pressure around housing issues at the moment and the Government’s response to that. There is an overwhelming need to get vulnerable people into homes that are warm and dry. We have got huge pressures on our housing stock. As people are leaving their homes for them to be repaired and rebuilt it puts pressure on the rental stock. Insurance money is coming into play as well which is adding pressure to the rates being charged on rental properties. People are getting payouts that are insufficient to rebuild their homes which means that they are putting more pressure on the rental market as well. People are being put in difficult financial positions. We have got pressures on our resources. We have got pressures on our land pressures on our construction workers and pressures on materials that have pushed up the costs of construction. We are pushing people who are unable to afford housing out of the market.Homeownership in Canterbury which was one of the highest in the country is now slipping way down. Canterbury needs 12000 to 15000 new homes to meet its pre-quake levels. We have had 1000 built—1000—according to Deloitte’s estimates. The Minister of Housing has stated quite clearly that it will take until 2016 to return to pre-quake levels and until 2018 for the housing market to cease being under pressure. Given the Minister’s overpromising and under delivery these deadlines are at risk of being viewed as ridiculous. Frankly they are ambitious. But let us look at the social housing component to this because we have divested social housing in the guise of adding more social housing providers to the mix with minimal addition to the housing stock. So we have a Social Housing Unit where we are looking not just to the Government but to other people to provide housing as well. We have looked quite clearly to the Canterbury Community Trust to partner with social housing providers and the Government to do that. That is not a bad thing.However I believe that it is the Government’s responsibility to take a firm hold of the social housing crisis in Canterbury and in this regard it appears that we are failing. Resources from the community are already woefully underfunded and stretched. Housing New Zealand stopped providing social support some years ago. There are benefits to having property managers closely connected with the tenants in more ways than just social support. Your housing stock is being viewed often. You have got a relationship with your tenants which is important to the overall look and cost of maintenance because you are there visiting your folk and because you are there more than just to check the property; you are there to have a relationship with the people who are ultimately going to care for that property.Housing New Zealand’s priority waiting list has also become a bit of disgrace. Let me just quote you some of the latest figures on the waiting list. In March Housing New Zealand had a record 5204 priority applicants on the waiting list. This is 1049 higher than when National took office in December 2008. In Canterbury it is particularly bad with 495 priority applicants on the waiting list up from 288 in December 2008 when National took office. So there is no market lever that you can pull that will change this situation. It requires intervention. Examples from our particular office in Christchurch East show that in one week the number of people who had come to us to request emergency accommodation went up from 48 to 63. We are also providing hats and scarves and sending them to the blanket bank so that they are warm when they are sleeping in their cars.At the same time the regions have been pillaged of their housing stock. Let us just have a look at what has been happening in our regions. In almost every town and city in regional New Zealand there are dozens of empty State houses—MIKE SABIN (National—Northland):I very much appreciate the opportunity to take a call and knock back on a couple of statements made by the previous speaker Poto Williams. The work that is being done in Christchurch on behalf of Housing New Zealand has been outstanding.Sitting suspended from 6 p.m. to 7.30 p.m.MIKE SABIN: I am happy to close out this debate. It is actually quite appropriate that we do it on this particular area of the Government’s business because if we look at the housing stock that this Government took over it pretty much personifies what we saw from the Labour Government which was not a lot of investment not a lot of effort and a derelict State house stock essentially that needed a whole lot of work and a whole lot of investment. There has been some significant work that has gone on in the course of the last 12 months. I will just rattle over a few points of interest. There were 6960 applicants of which 96 were of high priority. There were 18000 needs assessments and over 1.4 million calls through the customer service centre. There were 282 properties freed up for investigations where tenants had been behaving in a fraudulent manner. It actually dovetails into many other areas of work that this Government has done to reflect to people who deserve the support of the State that if they are receiving that they have certain obligations. Certainly the taxpayer does not expect to be ripped off by people whom the State is happy to support in a time of their need. In this portfolio we have seen some good work carried on there and that obviously frees up houses for people who are in genuine need and are not there simply to rip off their fellow taxpayer.There has been some significant work in improving the turn-round time from a house becoming vacant. Certainly in a previous life I saw some Housing New Zealand homes that were left in a disgraceful state to be quite honest and the amount of repair that was required to bring them up to standard was significant. But what we do know is that if we take a Broken Windows approach to coin a phrase from Rudi Giuliani—if we maintain a good standard and we have expectations that that standard is maintained—then in the main that is exactly what we get. I think we can be very proud of the work that has gone on from the chief executive of Housing New Zealand in terms of his leadership and the way in which areas that have needed improvement have shown improvement. The turn-round times are actually above target in terms of reoccupying houses that have been vacated. Some 390000 maintenance actions have been completed which is a substantial investment. In fact this Government’s investment in that housing stock has been substantial but it is to meet need—it is to meet need.The CHAIRPERSON (Eric Roy): The time for the debate has expired. The debate on the performance in the 2012/13 and current operations of Crown entities public organisations and State enterprises has therefore concluded. I will report the debate to the House presently.Debate to be reported presently.Taxation (Annual Rates Employee Allowances and Remedial Matters) BillIn CommitteePart 1 Annual rates of income taxDr DAVID CLARK (Labour—Dunedin North):Thank you for the opportunity to speak on Part 1 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill which as you have rightly pointed out confirms the annual rates. It is important to note upfront that these tax rates that will be confirmed correspond in greater part with the changes brought in by the National Government in 2010 in its tax package where 40 percent of the value of its so-called tax cuts back then went to the top 10 percent of earners. If we think back we will remember also that the bottom 20 percent of earners got just 2 percent of the value of those tax cuts. That is the time as well as those following the debate at home will remember when GST went up from 12.5 percent to 15 percent.If people can cast their minds still further back they will remember Mr Key saying that he would not change GST at all. He made a promise.Iain Lees-Galloway: I remember it well.Dr DAVID CLARK: My colleague Mr Lees-Galloway remembers it well. Then Mr Key came in and changed things. He said that it was a dynamic environment and he was going to make the change. What we saw there was that the Government was very keen—very keen—to lighten the tax responsibility of the wealthiest New Zealanders those who earn the most. We know that 75 percent of those with a net worth of over $100 million in New Zealand do not pay the top tax rate. We know that in New Zealand inequalities are growing and are at their highest levels ever in recorded history. So we know that we are living in an unjust situation and that we can trace that back to those tax changes that were brought in by the National Government opposite on those benches in 2010.That is why we are here today being asked to confirm a set of tax levels that see the wealthiest 10 percent growing ever richer while the rest of New Zealand struggles to keep up. We know that median wages have dropped over time in real terms that the cost of living keeps going up and that ordinary everyday middle New Zealand is struggling. We also know that those who are at the bottom end are struggling even more than before and that that is restricting the opportunities they have to participate. Kids going to school hungry do not learn as well as kids with a full stomach. We know that. It is not rocket science. But today in Part 1 of this bill we are being asked to confirm the tax rates that see that ever-widening gap with those at the very top having that greater concentrated wealth that we know is getting greater and greater and greater by the day. There have been studies that have come out in the last 2 days confirming that that wealth that those at the very top hold is increasing that the 1 percent right at the top hold an increasing level of wealth in our society. And then there are the rest of us: the other 90 percent who are really struggling to get by to make ends meet. We know we have the lowest rate of homeownership now in New Zealand in 40 years slipping below 50 percent.We know that that is another signal of this growing gap between rich and poor. The current tax rates that we are being asked to confirm are 10.5c on income up to $14000 17.5c on income from $14000 to $48000 30c on income from $48000 to $70000 and 33c for income of $70000 and over.The other thing that we are not being asked to do here interestingly is to introduce pro-growth tax reform. So this bill has as much in it as it does not have in it. We learn as much about this bill from what is excluded from the confirmation as from what is included. Once again that is about protecting the interests of the very wealthiest. We know that in fact almost every Western country has a capital gains tax. New Zealand is in a minority in not having a capital gains tax. The joke used to go that it just us Switzerland and Turkey and we know Switzerland is a tax haven and does New Zealand really want to be another Turkey? Why on earth do we not have a capital gains tax? We know it is fair. We know that the OECD Treasury the IMF—those big international agencies—and all respectable economists think that it is important to have a broad tax base as broad as possible to neutralise investment decisions and signals in the economy so that people make rational choices about where they invest their income. Instead in New Zealand where we do not have that capital gains tax we have the situation where people are choosing to invest heavily in the speculative sector.As they invest in the speculative property sector they are making houses less and less and less accessible to New Zealanders who are struggling each day to make ends meet. The flip side of that of course is that our businesses are also struggling because that capital is not available to them. I use the example of a plumber. Let us imagine a plumber who has worked hard scrimped and saved and has two rental properties. He has actually done quite well over the course of a lifetime. We will not go into the plumbers and drainlayers debate today but if we imagine this plumber who has worked hard who has scrimped and saved and who has two rental properties right now it is a no-brainer for that plumber to buy a third because there is a tax advantage potentially in buying that third house.What ought to be the case is that that plumber ought to be thinking about whether they should invest in their friend’s innovative business down the road that needs a new die cast for a new plumbing device that could be exported. It is a high-risk opportunity and it has a tax almost certainly attached to it and therefore it is a different proposition from buying another rental house. As I have said it is obvious right now that that plumber should go for the tax advantage that is presented in the additional rental property in terms of the economically rational thing for them to do. It should not be that way. It should be the case that that person has got a real decision on their hands. They may still choose to invest in the rental property but they should have a real decision about whether they support our export industries and whether they are supporting the future prosperity of New Zealand with it.Unfortunately the Government does not seem willing to go near pro-growth tax reform. It does not seem to want to have the research and development tax credits that we know would give us a lift in our economy. It does not want to adopt the capital gains tax that we know would make the investment signals neutral across the economy and would make it a fairer tax system. It instead is wedded to these tax changes it made in 2010 which see the wealthiest few get ever wealthier at the expense of the rest of New Zealand.So we on this side of the House are disappointed with Part 1 of this bill no doubt because it is a missed opportunity. We know that if we grew the economy and made the most of the opportunities here we could actually have more of the pie to share. We could afford to fund our schools and hospitals better. We know that this Government has an atrocious economic growth record—the worst economic growth record of any Government in the last 50 years. That record of this Government is its shame because its trading partners have enjoyed some very mild conditions through the global financial crisis. Australia never really went into recession. China was just off the double digits.Simon O’Connor: How do you believe this?Dr DAVID CLARK: Right the way through—right the way through. The member opposite might like to consult the facts which might give him a new world view. If he looks back to the global financial crisis he will see very healthy economies that we were trading with and New Zealand not making the most of that opportunity and in fact really struggling under the guidance of a Government that will not go near pro-growth tax reform and a Government that seems wedded to protecting the interests of the wealthiest few at the expense of the rest of New Zealand.So that is why the Labour Party on this side of the House has trouble with Part 1. We want a more positive New Zealand. We want a New Zealand where everyone has the chance to get ahead. We on this side of the House want to work for change that takes us forward over the generations that makes opportunity for every New Zealander that means that every New Zealander can aspire to owning their own home and aspire to a decent income and decent work and that means that they can look after their families and brighten their prospects under a Government that puts people first and looks positively to the future—the opportunities that we know are there and ought to be there for every single New Zealander.Instead opposite it is just business as usual and politics as usual. The Government keeps just reconfirming these same tax rates year after year and watching that gap between rich and poor get wider and wider and wider as the very wealthy get wealthier and wealthier and the other 90 percent struggle to get by. That is what we have when we are stuck with this Government. That is what we have stuck with in Part 1 of this bill. It is a real shame—a missed opportunity. It could be so much more positive.A Labour-led Government will lead positive change for New Zealand. We will make a difference. We will work together with New Zealanders to ensure that everyone has decent work that their families can get ahead and that they can really aspire to own those homes that are getting further and further out of reach with the property speculation and the absence of support for small business. This Labour Government will make these changes and we look forward to the upcoming election when voters will have their chance to say that they do not want this business as usual. They do not want this politics as usual. They do not want Part 1 of this bill which just confirms the status quo and just confirms that the gaps get bigger and bigger. They want positive change. They need a Labour Government.ANDREW LITTLE (Labour):It is a great pleasure to speak at this very important stage on the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. I want to say how utterly disappointed I feel—betrayed I think—on behalf of the hundreds of thousands of New Zealanders who once upon a time looked to this Government to do constructive things not only for the business sector but for the people who make up our great population and who are the citizens of this great country.They looked to this Government to exercise responsible sensible constructive management of the economy. Every citizen in New Zealand—every voting citizen every working citizen every citizen who wants to work but cannot because of conditions running against them—wants to know that we have in place a Government that acts sensibly and properly when it comes to the revenue that the Government needs to create the wonderful country that we all aspire to. They look to this Government to make sure that the taxes that the citizens of this great country responsibly pay every time they work every time they line up at the shops or buy things that enables the Government to gather GST every time they do something that adds to the Crown’s coffers—they want to know that the rates that are struck are right and proper for the age in which we live because the demands of the citizenry have changed. The demands of the citizenry have changed.People now want a country with a State that exercises and plays a proper role one that does a number of things. They want a State that encourages investment in the regions that supports people into housing and that tides them over through those difficult times when they are out of work when they need income support when the mother or father of a child finds themselves on their own with those child responsibilities and needs to be supported and when they put their children through school—through primary school high school early childhood education and even on to university. They want a Government that sees its responsibility to ensure that it has enough revenue to meet those costs so that we have a country that can properly and proudly boast it is fair and equal for all.But the rates that we are confirming in Part 1 of this legislation do not allow us to say that. When we come to pass this bill—or certainly this part of it—and when we have struck the tax rates for this particular year we will not be able to say that this Government has struck tax rates that ensure that it will have the correct revenue to create a country that is fair and equitable and to fix the dream of every young citizen in this country to have the opportunity to excel to reach their potential and to do the best for themselves their family and their country. This was an opportunity for this Government to do something different—not to do business as usual not to do more of the same not to say “Nothing to see here citizens. Move on.” but to do something different to give hope and courage to people who are looking for something new and for something different.This Government is not there. This Government wants to rest on whatever laurels it might once have had. It no longer has a vision for a fair and equitable New Zealand. This Government is quite happy to stand by and see inequality grow and inequity continue and do nothing about it. The Government says that the rates that we are striking in this part of the legislation are enough to generate a surplus and that somehow this is a positive thing for the country. We of course all know that the surplus in this year’s Budget is not a real surplus at all. It is achieved through manipulating things like leaving ACC levies unnecessarily high and it has a range of other tricks up its sleeves as well.Darien Fenton: Loans to Auckland.ANDREW LITTLE: And of course it is describing what funding is for Auckland roads as a loan to Auckland so that it is on the balance sheet but it does not come out of the profit and loss or the income and expenditure. What a silly Government. What a silly Minister of Finance who dreams up that sort of thing and pretends he can say to the people of New Zealand the good citizens of New Zealand that we have a surplus. What the Government is too afraid to do is to confront the challenges we have got to face reality square on and to say we have to do something different and we need tax rates that allow us to do something different—tax rates that mean that as a Government we can do things that will rebuild this country and its sense of fairness opportunity and equality.The rates that we are being asked to agree to and to strike in Part 1 of this legislation will not allow that. Every member of the Government opposite knows that which is why they are looking down with a sense of deep shame and embarrassment. They know that they have let down the people of New Zealand. They know that they have let down the people of New Zealand. The tireless hard-working Government backbenchers opposite know that. They will tell us—and they may well even be believable—that they have tried to put pressure on their Cabinet colleagues in their caucus to do something different. But oh no—nothing has changed. Nothing has changed. The Government sails on into the death months—the last 3 months—of this Government on the ropes without a vision and no longer willing to offer hope to the great citizens of this country. That is where we are now. What an unhappy state we are in.It does not need to be this way. The people of New Zealand know that come 20 September when there is a change of Government they will elect a Government that is prepared to deliver a fresh vision—a vision at all—and a sense of hope with new tax rates that will mean that we can have a Government that can do good and positive things for Kiwis and that we can have good schools more teachers higher-quality schooling good hospitals and people who can get actually getting their operations when they need them. Elderly people who are hanging out for their hip operations and young people who are hanging out for their operations to enable them to have a life ahead of them will actually get those operations and there will be a health system that works for people.We will actually have roads—not just in Auckland and Christchurch but around the country. We will have a roading network that we can boast about and be proud of. We will have roads in Taranaki that actually have a shoulder so that if you need to veer away from somebody on the other side of the road you have got somewhere to go. We will have roads that are actually smooth and do not cause trucks to go out of control; roads that do not crumble and fall on vehicles as they have now done twice in the last 6 weeks on State Highway 3 in Taranaki.People will want to see a Government that is responsible enough to levy fair taxes—reasonable taxes—on people so that it can do the job of a proper and responsible Government. Well that change is coming as we all know. That change is coming and it is only a few months away. The people of New Zealand have to hold on for only a little bit longer. This legislation will no doubt pass. These tax rates will pass but people will be able to see that there will be an alternative way and an alternative approach. That approach will ensure that the people of New Zealand will have a Government collecting the right resources and devoting those resources fairly across all of New Zealand and all New Zealanders not just favouring those in the metropolitan areas in Auckland and in Christchurch—which desperately need it of course—but in all areas as well particularly in regional New Zealand which has been starved.You have only got to listen to the voice of regional New Zealand as in a Taranaki newspaper on the weekend. The civic leaders of Taranaki were calling out to say that we need a different approach. Every issue that they identified is an issue that members on this side of the Chamber have been talking about because we are in touch with the people and we know what is needed but they were not issues the Government opposite has talked about or even thought of because its members are out of touch and out of time. These rates will not help New Zealand. These rates will be more of the same business as usual but change is afoot and change is a-coming and well may that day come.DARIEN FENTON (Labour):I am happy to take a call on Part 1 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. My initial interest in this bill was in the issues around employee and employment rights but I am also keen to take a call on Part 1 which basically sets the annual rates of income tax for the 2014-15 year. I agree with my colleagues. I think this is a missed opportunity. I think that Part 1 does not describe what we should really be doing in this bill.The first thing that comes to my attention is the fact that we are not in this bill and in Part 1 dealing with the 107 out of 161 high-wealth individuals who own or control more than $50 million worth of assets and declared that their personal income in the last financial year was less than $70000—the starting point for the top tax bracket of 33c in the dollar. What we are not dealing with in Part 1 and in the rest of this bill is the fact that these multimillionaires used a variety of 6800 tax planning devices such as companies trusts and overseas bank accounts to avoid paying tax. I can see the Minister in the chair Todd McClay pulling faces and he may not agree with me. Maybe he wants to take a call after me and give us the facts if they are not correct. Apparently according to our statistics one individual had a network of 197 entities. So I am a little bit confused about setting the tax rates for 2014-15 in a bill that deals with employee allowances and accommodation and a range of other things but does not deal with the fundamental problem that we seem to have in New Zealand which is around tax avoidance by the top 1 percent—or is it the top 10 percent—of people who are not paying the tax that needs to be paid and that should be paid to allow the rest of us in New Zealand to have a decent life to allow young families to enter into homeownership and to allow young families young workers and middle-income workers to save for their retirement. We are ripping off New Zealand at the moment.The problem that we have also got in Part 1 of this bill is the fact that we are not addressing the issue that we have had from this Government almost 6 years later where—I know you are agreeing with me Mr Chairman; you are totally agreeing with me I know—a huge number of people actually received the highest tax deductions under this Government. So a huge amount of money was taken out of the tax take by this Government giving tax breaks to the very well off.Let us not forget GST of course. This Government as I remember promised that there would be no increase in GST but what happened?Dr David Clark: John Key?DARIEN FENTON: John Key promised that there would be no increase in GST but the tax rates for 2014-15 include GST which has gone up to 15 percent. That has an impact on ordinary families. What is really interesting when we look at the record of this Government is that we have actually had the biggest reduction in taxes in the OECD. Some people might think that is something to be proud of. Sure we do not want ordinary working people to be paying more tax than they should but the record of this Government is that it taxes ordinary people and it gives its rich mates a break. That has resulted in the biggest reduction in the OECD of Government programmes since 1986.Let us talk about what those Government programmes are. We are talking about health care we are talking about education we are talking about people being able to buy their homes and we are talking about child poverty. What a disgrace that is. What a disgrace it is that we are now in a situation where we have a quarter of a million of our children living in poverty. How disgraceful is that and how did we get to that? I believe that we got to that by reducing the tax take and the distribution of that tax take under this Government and under previous Governments in the 1990s so that they could look after their friends—their friends at the big end of town—and make sure that they earn bigger profits and ordinary people pay the price.We have had a bit of a debate and discussion in Parliament today about the outcome of that and we have seen the Glenn report. It is a shameful record for a country like ours—a relatively wealthy country—where we are now in a situation where domestic violence is pervading our families. It affects everybody. It is not just those at the bottom. It is not a poor people’s issue; it is a middle-income issue as well. That has an ongoing influence and creates a problem for future generations. If our children today are being beaten up by their families and if they are living in poverty who is going to be paying the price for that? When they grow up they will pay the price for it and the next generation and the next generation after that. I was surprised to learn that one of the results of the reduction in our tax take is that we have the sixth-highest level of infant mortality in the OECD. How can that be? How can that be in a country like New Zealand which has a proud record of a great health service? How can we have got into that situation? It has not really made any difference when it comes to things like the current account deficit. We have the third worst current account deficit after Iceland and Turkey. What a proud record for this Government—what a proud record this tax bill is entrenching!There are many many things that this tax bill in Part 1 entrenches. It entrenches the policies of a failed approach to taxation over the last 6 years a failed understanding that taxation is actually about redistribution or it should be so that we look after the people in most need in our society and so that we make sure that we continue the tradition of good health and education so that people can earn a decent income and earn a decent living.Those things are not contained in this bill. Instead we are dealing in this bill with employee entitlements—which I am of course very interested in—and accommodation entitlements but we are fiddling around the edges. We are fiddling. As my colleagues have said—and as I am sure my colleague David Parker will spell out soon—Labour has a much different approach to taxation and redistribution. It is a much more progressive approach so that we get away from this record that we have now of having high infant mortality high child poverty the highest tax reduction in the OECD since 1986 and the biggest reduction in collective bargaining and unionisation which of course has had a huge impact on the redistribution—[Interruption] Of course the member over there laughs because you are not allowed to mention the “u” word in this Parliament without the National members showing their cynicism. Unions are about redistribution as well I say to the Hon Jo Goodhew.Hon Jo Goodhew: I’m sorry I wasn’t actually in control of peoples’ minds.DARIEN FENTON: Well you did. You sniggered. I saw you snigger. Of course we have come to expect that from the members opposite.You know you cannot mention anything about redistribution about poverty or about the really serious issues that are facing our country. You cannot mention them without this kind of high-handed sniggering that we get from the members opposite. We know that their whole agenda is about looking after their mates. It is about looking after the 10 percent who are doing really well. They still believe in trickle-down that failed policy from the 1980s. They are still living in the last century. They are still trying to push the neo-liberal agenda of the 1980s which has failed right across the world. Yet when it comes to taxes they expect ordinary people to pay more than their fair share and expect their mates not to pay their fair share as well.As Andrew Little said change is coming. We have a progressive agenda around monetary reform around tax reform around collective bargaining and workers getting their fair share around child poverty and around doing something about the really really difficult problems that we have in this country. If members opposite think that they can just turn their backs on these problems and pretend they are not happening I think they are going to be facing some very very serious issues in the future when their children cannot afford to pay their pension and when their children have children in poverty as well. Thank you.Hon DAVID PARKER (Deputy Leader—Labour):I rise to take a call on Part 1 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill which sets the annual rates of income tax payable by New Zealanders for the forthcoming year. Before we finalise our consideration of this part I would like the Minister of Revenue to take a call to explain what proportion of property transactions attract income tax under these provisions.The reason why I am interested in this is that at the Finance and Expenditure Committee on the financial review just a couple of weeks ago the Minister said that we have a capital gains tax in New Zealand. Well we actually do not but we do have some classes of property transaction that are taxed as income on the gain. So if you are a trader in property or if you buy with the disclosed intention to resell at a profit then that is on your income account and you pay income tax at the annual rates of tax that we are setting in this clause 3 in this Part 1 of this bill. At the select committee I challenged the Minister to tell me what proportion of property transactions are taxed in that way and having pontificated as he and his fellow members do that we already have some notional capital gains tax—according to them—he said that he did not know. So I then asked the Minister “Well do you know whether it is closer to zero percent of those property transactions than it is to 100 percent?” and he could not answer that either. We on this side know that it is closer to zero percent than it is to 100 percent but the Minister to give him credit said to the select committee at the financial review that he would answer what percentage of the investment properties that are bought and sold in New Zealand are taxed for their capital gain.I have not read that answer to the Finance and Expenditure Committee yet but I expect that this very assiduous Minister would want to know having recognised the failing of his knowledge at the select committee when he came to talk about tax policy and about why the Government should vote him money to run the Inland Revenue Department and given that we have got this rampant house price inflation and no capital gains tax. The capital gains tax has been a source of some controversy across the House with the National Government opposing it and the Opposition saying that we are in favour of it—a source of some controversy added to by the OECD saying that we need it and a source of controversy added to by the IMF another of the international advisers saying that we need it in New Zealand. So I would have thought that the Minister would at least want to know what percentage of existing property sales are actually caught by our income tax provisions already and therefore would not be caught by a capital gains tax. It would bolster his argument as to why we have not had it.I suspect that we are not going to get the Minister rising in this Chamber to take advantage of this heaven-sent opportunity to clarify for the country what percentage of investment properties are purchased and then onsold—people get tax deductibility for all the interest payments. They often offset their taxable losses against their other income. In fact in a recent year that investment class got a tax refund from other taxpayers because overall they ran at a loss but they still got taxed on their capital gains. So I am looking forward to the Minister leaping to his feet and telling us what percentage of sales of investment properties are taxed for their capital gains because I know that the percentage is far closer to zero than it is to 100 even if the Minister does not.Dr DAVID CLARK (Labour—Dunedin North):I may have beaten the Minister of Revenue to his feet and I apologise if that is the case. I want to build on what my colleague David Parker has said because it is also interesting that the National Business Review was recently asking the very same set of questions. We know that members on that side of the Chamber are fond of the argument that a capital gains tax already exists in a certain form and that capital gains are being collected and that there is no real need to change the law even though the Minister is not able to say whether that percentage is closer to 100 or closer to zero.But what was also interesting was that when the National Business Review put in an Official Information Act request to the Inland Revenue Department it found that the department was not able to say the extent to which it follows up on these transactions the extent to which it looks for stagging the extent to which it investigates nor the extent to which in dollar amounts it collects revenue from following up on these stringent rules that the Minister is so fond of and is so fond of putting forward as an example of why a capital gains tax should not be introduced.It is curious that we have a Minister who trumpets the benefits of a broad-based tax system but is not yet convinced of the merits of a capital gains tax despite the world’s leading economists recommending it and despite the IMF the OECD Treasury and every other tax advice expert recommending broadening the base. The Minister in a speech that he delivered recently to a learned audience trumpeted the benefit of the broad base but seemingly he was not able to make the connection to broadening that base further to ensure that we have a level playing field for everybody who is interested in investment.So when the Minister steps to his feet I would like it if he could add to the bit of information that David Parker asked for but I would be grateful if he could also address the questions around prosecutions by the Inland Revenue Department for tax avoidance on that capital gains legislation or default legislation to which he referred in the Finance and Expenditure Committee. And I am sure that many of those following the debate at home would be delighted to learn that the wealthiest property investors were also being asked to pay their fair share of tax because the statistics that we have that are recent show that indeed a very very low proportion of those with high net worth in New Zealand pay tax—that is they do not declare wealth that sees them on the top tax rate. They do not declare income that sees them on the top tax rate despite having a significant amount of wealth. Above $75 million the majority do not declare themselves to be on the top tax rate.So when the Minister steps to his feet we will all appreciate his explanation on that front. The tension is building. I shall not talk too much longer because we are all waiting to hear what the Minister has to say. He has been remarkably quiet in Part 1 of the debate despite belonging to a Government that trumpeted the tax rates that we are now confirming. Once upon a time it trumpeted those tax changes that are now widening the gap between rich and poor. Suddenly Government members have gone quiet. They seem content to see the wealthiest few get ever richer while the other 90 percent struggle to achieve the Kiwi dream of owning a home struggle to achieve a decent paying job—we know that median wage rates are going down—and struggle to get ahead for their families.While all of that is going on we have a Minister who seems to be sitting silent not arguing for the changes that need to happen to make the New Zealand economy grow that get the settings right and that develop the big change that is needed for New Zealand to prosper so that everyone can get ahead and everyone can have a positive start in life. I will sit down now and await what the Minister has to say on this and I think that will be very telling for us all and I expect we will all learn a lot about what the Government really believes in.Part 1 agreed to.Part 2 Amendments to Income Tax Act 2007The CHAIRPERSON (Eric Roy): This is a debate on clauses 4 to 126 and the schedule.Dr DAVID CLARK (Labour—Dunedin North):I am surprised the Minister of Revenue did not beat me to his feet again. The Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill which we have in front of us does introduce a number of changes. He was very keen to rush it through the select committee announcing it just before Christmas with a report-back date in early February that saw many of the larger tax agencies huffing and puffing because they were not happy that the changes made in this bill were being rushed through this House. This Minister is keen to see these changes go ahead. He is keen to see his tax legislation put through.It is a wonder that he did not have with him also a Supplementary Order Paper to introduce the changes that he announced by press release last Friday which would see double taxation on some bodies corporate in terms of their GST payments which will cost some of them millions of dollars and interestingly is very similar to the case that was taken against Muldoon when he cancelled the superannuation scheme in the 1970s. Muldoon announced of course by press release that he was going to roll back the scheme and that members did not need to contribute to it any more. And we know that that saving scheme would today be worth $200 billion to $300 billion had it been kept and that New Zealand’s retirement savings would be a lot sounder and a lot deeper and a lot more beneficial if that had happened.Simon O’Connor: Forty years ago.Dr DAVID CLARK: This Minister is doing the same things that Muldoon did and it is a shame that he cannot learn those mistakes of history from 40 years ago as my colleague opposite says. It is a shame that he is repeating those same mistakes of 40 years ago and making tax policy changes by press release. Certainly tax practitioners have spotted it. They are uncomfortable with it. It is not good practice to try to change the law without actually having the checks and balances.That is also reflected in this particular law that we are passing through the Committee now because we see already that the Minister is bringing some Supplementary Order Papers to correct mistakes that were in the bill already that the Finance and Expenditure Committee did not have time to process. We had through the select committee process various people—learned tax people—saying to us: “Look if we had a bit more time we might have ironed this out or we might have debated the principles a bit more. Why on earth are we introducing these strange rules around trusts around employee allowances and so on that do not seem to add up and have not had the full input that they should have in a tax bill that is properly consulted on?”. What happens then is that Parliament ends up spending a whole lot of time correcting mistakes.Another recent example of that of course is with the child support legislation that this Minister had to reverse out of. After the Government had put through a law that said that child support payments will be calculated on a different basis we had the Government taking more of Parliament’s time to reverse those changes out because it was decided that it was too hard to put them into effect. That of course cost millions of dollars of taxpayer money to do that to bring in a law and to take it out again. That is irresponsible frankly and it shows that the Government does not really have a vision for where the tax system could go and should go it does not have an oversight of the development and implementation of policy that it ought to have and we know a lot of that goes back of course to the Inland Revenue Department computer system.I am worried about some of the changes here in Part 2 and whether in fact they will be able to be implemented because we know that the technology that the Inland Revenue Department relies upon was put in place in 1993. The technology that the Inland Revenue Department relies upon is a lot older than Google. It is a lot older than Facebook. In fact the technology of the department’s computer system is a decade older than Facebook and very few companies businesses or Governments rely on computer technology that is over 20 years old to collect taxation. That means that it is very hard for customers to interact for ordinary taxpayers to interact with the tax department. And voluntary business compliance is dropping. It is interesting to note that on the Inland Revenue Department website the statistics for voluntary business compliance run out in 2012 when other statistics are carried through to 2013 and one wonders why that might be. It is a trend that is not happy. It does not reflect well upon the Government.I have recently heard more reports of people not getting through on the phone lines finding it incredibly frustrating to get through to the Inland Revenue Department and a lot of this hinges on a department that has not been well supported by this Government. The Minister knew that the Inland Revenue Department computer system needed upgrading when he came into office. And this computer system is what will be relied upon when this legislation is introduced. When it is put through the House it will be relied upon to make it happen for people in the world outside. But 5 years on nearly 6 years on under this Government we know that over $50 million has been spent on international consultants to try to work out what needs to be done there and they have reached the point that they are now saying at the Inland Revenue Department that what the National Government was told when it came into office 6 years ago is in fact what needs to happen now. It has got nowhere—nowhere effectively—in 6 years.Back in 2012 John Key said: “You don’t want to be held up by a lack of technology. You don’t want your tax system held to ransom by a lack of technology.” Mr Key promised that he would be getting on to it straight away. Well over 2 years have passed since he made that statement and still no progress. We have a new Minister who is getting up to speed with the system with the portfolio. We hope for good things although in Part 1 he is hiding his lamp under a bushel in presenting advice to this Parliament about why these changes are good. We will look forward to him in Part 2 perhaps explaining how they will be implemented with this dated technology in place and we look forward to what assurances he can give us that they can actually be implemented so that we are not back here in Parliament again removing the legislation because it embarrassingly cannot be implemented because the Minister has not given the Inland Revenue Department the support it needs to get on with the project of redeveloping that computer system that we know we all need.New Zealand of course is not the only country in the Western World that needs a tax system. We are not unique in that regard. Western countries replace their tax systems. This Government for some reasons has sat on its hands for 6 years knowing when it came into office that it was already dated technology and it has seemingly done nothing except hand over money to contractors from offshore to big multinationals to develop plans to rehash those plans and to really take us not very far at all. This Government needs to get on with that because it is a problem that future Governments will hold. If the tax system cannot do its duty we will not be able to afford the schools the hospitals the roads and the infrastructure that we all rely upon in this country to have a prosperous future. We have had those things in the past. We have had a functional tax system in the past. This Government has been neglecting it. I worry that the items listed in Part 2 of this bill will not be able to be implemented because of this Minister’s lack of attention to the Inland Revenue Department’s tax system.And he is not unique there. His predecessors must carry most of the blame. But I would like to hear from this Minister a credible time frame and some kind of indication about when our tax system is going to be working properly when tax simplification is going to happen and when a capital gains tax could be practically implemented. So far from this Minister there has been nothing except platitudes and a commitment to the status quo. Even his Prime Minister has said that change could not be made in the system. Even his Prime Minister has said that over 2 years ago. So I am looking forward to his contribution.Of course we also know that alongside that ancient computer system is an increasing record of privacy leaks. There was the big privacy leak issue in 2012 where 32 serious breaches happened at the Inland Revenue Department and we know that a year on there was a 500 percent increase. So that is also about this computer system which is the computer system that will be implementing this legislation which will have privacy implications. Mr Chair you are rightly bringing me back to the bill itself. These privacy implications in the bill because we are dealing with employment matters with wages and with other items that are significant tax rates the amounts of tax paid Inland Revenue Department numbers—all of those things are intimately entwined in the legislation we are passing and affect each and every New Zealander. The Inland Revenue Department holds our most sensitive information and so when it is enacting these parts of the bill we see that the department will be handing over its information. The department will be required to make disclosures—the department holds that information—about the nature of a charity for example about its records. Everything that is in this bill—housing trusts and their nature and so on—is all held by the Inland Revenue Department and can be released improperly if the computer system is not up to date.We also heard in the select committee a number of presentations where concerns were raised about the trust rates for housing—the discretionary ability of the Minister to choose which tax rates should apply to which trusts and which would be deemed to be worthy housing trusts with a social benefit which are charitable and which would be deemed not to be. This discretionary power is very very unusual in terms of the Minister’s responsibilities. I am interested to hear what the Minister will say about that what his view about it is and why that discretion should be allowed for a Minister. It seems pretty odd that the Minister should be having such arbitrary powers and certainly that was raised by tax experts along the way.This Minister as we know is new to the role so he will have some fresh thinking. We are looking forward to hearing what that is. We have already challenged him to tell us about the default capital gains tax that he has said stands in place of the capital gains tax that Labour would introduce. He has not engaged on that in Part 1 but by the way he is scrawling notes now I am hopeful that we will get a more fulsome response in Part 2 and some pearls of wisdom from a new Minister keen to make his mark keen to show that this Government will make a difference will upgrade the computer system and give some kind of clarity around time frames around the nature of the upgrade and around the costs involved. Even that has not been clarified yet—whether it is going to be $700 million as Bill English once said or a billion dollars as I think Mr Dunne said or up to $1.5 billion as somebody else maybe Mr Key once said. These are things that we need some certainty about as taxpayers to know that our tax system is being looked after that our private details will be secure that the tax system will be functional into the future flexible able to respond to a changing international tax environment where multinational tax avoidance is becoming a bigger and bigger issue and functionally able to do the very basics that it has historically done.When the Minister speaks about community housing entities I do wish to hear him explain why there should be such a wide range of discretionary powers to approve or disprove charitable exemptions. That really does give the Minister the effective right to confer lower taxes on some but not all taxpayers and that seems to be bad law. Frankly that is bad law. This is to be done under guidelines that are not even proposed in the legislation. Mixed housing areas look set to be excluded. This cuts across the efforts to attract teachers doctors and other professionals into areas with prohibitive housing prices. These changes made in the legislation will have social impacts and the Minister is responsible for making decisions about who pays what rate of tax. That is not defined in the legislation. It is very unusual—it is very unusual—and the tax experts said that with some more time these things could have been ironed out. But the Minister has been rushing this through the House. Perhaps there is a lack of back-planning and perhaps there is a bit of a shambles in the handover as his predecessor lost his ministerial role over an issue around privacy ironically when we also have these privacy breaches at the Inland Revenue Department.But the Minister will tell us I trust about how these anomalies are in there like a trust supplying housing to teachers in a remote housing area appearing to be granted an exemption while a school that houses teachers will not. If one set up a trust for tax accountants it may well have a tax-exempt status and yet it would be hard to argue that there was a social good or a charitable purpose although the tax accountants might argue that.Andrew Little: Make it a religion.Dr DAVID CLARK: A religion. Yes well tax is a religion for some so I guess there are possibilities there. But seriously I do look forward to the Minister explaining why he should have these discretionary powers why he should be able to confer lower tax rates upon some citizens and not others and where this will all end. This is a piece of legislation that could have been better. It is a piece of legislation that will no doubt come back to the House to be amended over time because of the rushed nature and because of the inability of the department at times to implement things because that computer system is out of date because of this Government’s lack of attention to detail.On this side of the Chamber we want a more positive future. We want every New Zealander to have the knowledge that this tax system is functional. We want it to be collecting the taxes fairly where they are due as they fall including from multinational companies. We want a New Zealand that has the resources to support good schools hospitals and all of those other basics that New Zealand needs.DARIEN FENTON (Labour):I am happy to take a call on Part 2 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. As I indicated in my speech on Part 1 I am particularly interested in the issues around the changes to the tax treatment of accommodation and Canterbury migrants’ meals and rest breaks and clothing. I am particularly interested in those because although we support them and I think the Finance and Expenditure Committee had a good look at these issues it does bemuse me somewhat that we are able to do something in a tax bill that we are not able to do in other bills. For example in the accommodation area there are pages and pages describing what “accommodation” means. It seems to me to be fairly interesting that we are going to the extent of having to describe the accommodation the purpose of the accommodation what a workplace is and so on.But the particular thing that I am interested in and the Minister of Revenue might be able to help me is why accommodation is tax deductible under this bill for people who have temporary accommodation because of work but why it is not—I might be wrong; you might be able to correct me on this Minister—tax deductible for workers who come here and work under the Recognised Seasonal Employer scheme. In fact what happens with workers who come here and work under that scheme is that they are paid the minimum wage minus accommodation. That is something that this Government changed I think under Minister Coleman when he was the immigration Minister. Under Labour it used to be that it was the minimum wage plus accommodation so it could not be deducted in the way it is. I am interested in why the Minister thinks that is acceptable and why there should be a difference for those workers when you are talking in this legislation about people who work in agriculture in particular.I think the other things that are interesting about these provisions are around meals. I would be interested to know a little bit more from the Minister about why he thinks it is acceptable that we have meal provisions or tax deductions for meals for workers who are working outside of their normal hours. I am pleased to see that you did away with the requirement for them to work 7 hours—for that to be acceptable. But I am interested in why he thinks meals are tax deductible or should be tax deductible for these workers yet we have another bill on the Order Paper which luckily thanks to John Banks—I never thought I would utter those words—will not see the light of day before the end of this Parliament and that actually does away with meal breaks for the majority of workers throughout the country. It makes it very difficult for them.So on the one hand we have one set of treatment in terms of taxation for people who work away from home and are required to have meals and then we have a totally different approach to workers who work in their normal workplace. The Government will be campaigning and John Key said he is going to campaign on it actually on whether those workers are actually entitled to meal breaks and rest breaks at all. So I am quite interested in that. I would be interested in some responses about why there is a different treatment for one group of workers and not another. Do not get me wrong—overall we support these changes.The other thing is about clothing. There is some interesting stuff starting to occur with the legislation that the Government is proposing around health and safety changes and clarification about what health and safety clothing requirements are. I had someone contact me the other day who said that he works in a car cleaning service and a lot of the time he spends his time outside in the snow often in Queenstown and outside in the rain or during the day and his employer is arguing with him saying that he should not have any sort of clothing provided to him and he does not give him a clothing allowance. Arguably many of us would say that that is a breach of the Health and Safety in Employment Act. But again what I am saying here is that under this bill there is one set of rules for one set of workers and under another piece of legislation that seems to be completely inconsistent with this there is another set of rules. So I am interested in the Government’s approach to this.I am also interested in how it has described workplaces in Supplementary Order Paper 455 which is being proposed by the Minister and would exempt offshore crew. I would appreciate an explanation about that why that was necessary and why that was not included in the original legislation. I genuinely want to understand how this will work and how it will work for people who are required to work away from home on vessels perhaps on trains and aeroplanes flying around the country but also on how it would work if it has any impact on people who are just doing their ordinary day’s work trying to earn a living many on minimum wage and who get no tax exemptions for any of these things at all. As I say I genuinely want to understand why there seems to be an inconsistency in the approach of this Government between one set of workers and another. I would really appreciate the Minister’s explanation.Maybe it is because the workers you are talking about here tend to be people who are able to stay away. I am looking at section CW 16D which is about “Accommodation expenditure conferences and overnight stays”. Are you sure those things should be tax deductible? The fact of the matter is that there are not many people on the minimum wage who actually get to have any tax benefits when it comes to issues around overnight stays and conferences. In fact most of them will be working all sorts of hours having to get on the bus and go home after working 12-hour working days and they get no tax deductions.Or take another case of the home-care workers whom I have talked about before in this House who go from home to home looking after older people or people with disabilities and in between their jobs they hop in their cars and they drive from one place to another. They pay their own petrol. They do not get paid wages for that and they get no tax exemptions for that. So there is nothing for those workers. Yes the Minister is looking confused but it is actually true. It is actually true.Andrew Little: The Minister doesn’t understand workers.DARIEN FENTON: Well that is true—that is true. That horrifies me because these are the women whom we are relying on to look after people in their homes so that older people or people with disabilities can stay in their homes. They get paid for the hours they are actually in the home. It might be 1 or 2 hours. In fact those workers cannot even have a tea break. They are not allowed to have a meal break because it would be considered an abuse of their powers to sit down and have a cup of tea with the client so they do not get tea breaks at all. As I said there are some inconsistencies.Overall I always support things that move in the direction of making sure that workers are better off. I do think that Part 2 of this bill does that. But I am interested as I said as I keep saying in the inconsistencies. Another group of workers are farm workers. Mr Chair I am sure you are familiar with them. We have a lot of issues—[Interruption] You are not? OK. You are from Invercargill but you are not familiar with all those Filipino farm workers down in South Canterbury who had been imported to New Zealand to do their job. There is a real issue around farm workers as well and accommodation comes into that. Accommodation is often seen as part of the wages. There are some appalling stories starting to emerge from that and it does shock me that we are relying in primary production on migrant workers being paid low wages and actually being ripped off.So I think there is a lot for us to consider in Part 2 of this bill. As I said it is great that we are making some progress on it and Labour is supporting it even though we have questions about it but I do think the Government needs to think about a whole lot of other things.Hon TODD McCLAY (Minister of Revenue):It is a pleasure to take a call at this stage in the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. I am certainly happy to provide some clarification and answer a few of the questions that Darien Fenton raised. Can I start though by saying that in particular Part 2 of the bill is where most of the change in the tax system held in this bill will take place. I am pleased to hear that the Opposition is supporting it because this is about fairness both to those taxpayers who will be provided greater clarity and in some cases will not need to pay tax where they are currently but also to other New Zealand taxpayers who now will be sure that everybody is paying their fair share of tax. I thank David Clark for his contribution. His heart did not seem quite in it though because I know he is very supportive of this part of the bill but I guess that when one is in the Opposition one needs to oppose more than one supports. At least the votes will be on the right side of the ledger when it comes time to vote on this bill.There are just a couple of points here for Darien Fenton and for others around accommodation. Largely the tax system says that when one earns income one must pay income tax on it. If you receive something in kind instead of a cash payment in lieu of the income you would have earned then that is also taxable. So somebody who earns a set amount every week but has an employer who says: “Well you can have accommodation and I’ll pay you a little bit less and you’ll be better off because you won’t be declaring the accommodation because I’m giving it to you rather than cash and charging you for it so you won’t pay tax on it.”—well that may be of benefit to that worker but not to all other workers who are not in that situation. They just receive their wages and have to pay tax on it. When they go home and pay their mortgage or rent they are paying from the position of using money that is already taxed. So what we do is say that when you look at all of the income you earn be it cash that is received weekly or fortnightly or other things that are given in kind instead of receiving that cash payment it is treated as if it was cash and must be taxed. As Ms Fenton has said that is fair to taxpayers who may not receive some of these benefits—although I am not sure they will always be benefits—that some other workers or taxpayers will.The challenge we have though is what happens if you are living in a house you are receiving a wage you are paying tax on it you are paying your rent from income that has been taxed and your employer says: “We need you to go away for 6 months and work away from your home.” Well you would have two places of work and therefore you would have to pay tax twice or your employer says: “I’m sending you away for 6 months; I will meet the cost there.” Well we do not want to double tax that person because they still have their home that they are paying for. They will often have their family there. So what we are doing with this bill is providing clarification that if they are away for up to 2 years if the employer is providing them with an accommodation benefit and it is to meet the actual cost of accommodation—no more than that—then that will not be taxed. We do not want to tax them twice; that would be unfair to them.The reason we have said 2 years is because that is a reasonable period of time. There is enough flexibility so that the employers and employees will not be overburdened with having to deal with the tax system. We also believe that after 2 years if you are still away working coming back on the odd weekend actually at that point your relationship with the place where you work has probably changed and therefore to be fair to other taxpayers there could or should be a tax implication there. But we have also recognised that there will be situations where maybe somebody does need to be away for more than 2 years and if it is a special project it can be up to 3 years. This will change during that period of time if you move your family and that becomes your new place of residence or if you actually say: “I am living here now not at the last place.” Then your situation will change and you would be taxed on that and that is an obligation the employer has.We have also recognised the great challenges in Canterbury. This is a unique and different situation—very difficult—and we have put in place rules that say that for up to 5 years workers who are involved in the rebuild in Canterbury can be tax exempt for their accommodation. It steps down over a period of time.Darien Fenton: Does that include migrants?Hon TODD McCLAY: That is anybody who will be in Canterbury for the rebuild purposes—not if you are there selling a car but if you are part of the rebuild; anybody employed there will be availed of this.Where it is slightly different though is the Recognised Seasonal Employer Scheme which was raised. Somebody who comes to New Zealand on a Recognised Seasonal Employer Scheme will have a place to reside and work from and that is their place of residence while they are in New Zealand. As with any other taxpayer in New Zealand if they are receiving accommodation instead of income it must be taxed. In this case if they then have to move down the road to work and there is overnight accommodation they are put in a motel they say they have to go for a conference—I know they would not but it is the same principle—we would not expect them to be taxed twice in that case if the employer is providing them with a benefit. They are not earning extra income; they are just having some of their costs met.When it comes to valuation it is very fair. We have said it is fair rental value. We do not want the Inland Revenue Department to overestimate or the taxpayer or their employer to underestimate; we want to strike a balance that is fair to all taxpayers and I believe that has been done. Two other changes particularly are specific valuation rules for ministers of religion. They have relied upon an accommodation or an agreement with the Inland Revenue Department for many years. We have decided to take any uncertainty away and to put that into law—to codify it for them—and we have also provided clarification for the New Zealand Defence Force.When it comes to meal payments if you are provided with meals or you are provided with an allowance for meals for up to 3 months because of work-related travel or something else that is different that is tax exempt but thereafter it would not be. The reason for this is that if you are at a conference and you have to have a meal we would not expect you to pop home and make your lunch. But after 3 months I think that is fairly reasonable. When it comes to clothing the Inland Revenue Department and the Income Tax Act are interested in the tax situation. So whether or not an allowance is provided is secondary. If it is we now have clearer rules that will decide where taxation is appropriate and where it is not. Primarily if you are provided with an allowance or a uniform for that allowance then actually that is part of the nature of your work and you are not taxed on that. It is a tax-free allowance.There are some exceptions to this though and certainly in the case where somebody is provided with an allowance for plain clothes where they might also have a uniform or they have the uniform they are tax exempt for that but they are provided with a plain clothing allowance. Previously there has been uncertainty about whether if you have a uniform and receive funds for other clothing it should be taxed but there will be situations including with the New Zealand Police where I think that is not appropriate so we are providing clarification there so that only those who should be paying tax will be.The final point I want to raise is around deregistration of charities. There has been a lot of confusion. This too is about providing certainty to charities so they know their obligations should they be deregistered choose to be deregistered or are deregistered because they are no longer of charitable purpose. This really goes to what those obligations are. Primarily the most important thing for other taxpayers is if there are a number of assets that have been acquired by that charity that had a tax-free status and is no longer a charity what happens to those assets? Well simply they either have to be passed to another charity or tax must be paid on them and so this just clarifies that.This is an important part of the bill. It is extremely taxpayer-friendly and in many cases reduces red tape in compliance but in providing certainty it also provides fairness to those who avail themselves of some of these tax concessions. Equally it will also be fair to taxpayers who do not so they can be sure that those who are receiving those allowances are only doing so specifically because it is different in their everyday life and where it is not we expect them to pay tax and they will be paying tax. Thank you.ANDREW LITTLE (Labour):I want to comment on just two aspects of Part 2 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. One is relating to out-of-town accommodation for limited duration projects or for out-of-town secondment which the Minister of Revenue referred to. The other part I want to talk about is the confusion that will arise in relation to the tax-free status of some meals paid for by the employer and the conditions surrounding that.I will turn briefly to the first point I want to talk about which is the issue about out-of-town accommodation which an employer can provide for employees if they are on a project of limited duration or on a secondment. The Minister pointed out as the bill says that whereas provision of accommodation of this nature would be taxable as income to the employee providing it meets the conditions of a limited duration project out of town or a secondment out of town it would not be taxable according to this bill in one case for 2 years for the secondment or 3 years for the project of short duration that is out of town and there is an exemption or at least the possibility of an extension in exceptional circumstances.The problem with that is there is nothing in this bill that says that an employee in that situation cannot for example take their spouse with them on that secondment or for that period out of town. They can get their accommodation tax-free rent their own home that they own in the town of their origin and effectively enjoy the fruits and the benefits of all of that. So there is a loophole here that is apparent from a reading of the bill. I am surprised that the Minister with his vast army of officials did not pick that up when he talked longingly about greater fairness for all. There is an obvious loophole there that those whose spouses cannot relocate with them for 2 years or 3 years depending on the nature of the out-of-town employment must continue to maintain a home and they do not get the benefit of that additional income as well as the tax-free status for the additional accommodation. I simply point that point out.The next point I want to raise is in relation to the payments for work-related meals. The conditions for these to be exempt from income tax are that the employment duties of the employee require them to work away from the employer’s workplace and then there are some other aspects of the provision as described for food and drink. It includes “food and drink that the employee consumes at a conference or training course:”. Well there are many organisations of a region-wide nature or nationwide nature that organise training conferences in-house on their own premises and those training conferences are attended by some people who work in that office. I know that having worked for a national union. We would run training courses at our premises—it might be Auckland it might be Wellington it might be Christchurch—and at those training courses we would provide a meal a lunchtime meal and if they had to stay overnight a meal in the evening. But those training courses would be attended by people in Auckland Wellington or Christchurch respectively as well as those who are outside of those cities or regions.This part of the bill would require the union to provide some tax administration to those who are domiciled in the city in which the training course is being held but to provide a tax-exempt meal to those who are coming from out of town to the same training course. I think that that will cause confusion and I think that the Inland Revenue Department is going to have to develop some sort of policy of turning a blind eye. Unfortunately the last person of public office to be wilfully blind to an important piece of law was John Banks and look where that ended up. Look where that got him. Many employers will be looking around thinking “Gee well we don’t want to be accused of wilful blindness. We too will be found guilty. We may not have our convictions entered at the time but we will be found guilty of having transgressed our revenue laws.” That will be causing alarm amongst the halls of employers big and small.The question was put that the amendments set out on Supplementary Order Paper 455 in the name of the Hon Todd McClay and the following amendment in his name to Part 2 be agreed to:in clause 74(11) replace “Subsections (1)” with “Subsections (1A)”.Amendments agreed to.Part 2 as amended agreed to.Part 3 Amendments to other enactmentsDr DAVID CLARK (Labour—Dunedin North):Part 3 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill includes the changes that relate to the United States Foreign Account Tax Compliance Act measures. These changes that we are agreeing to here today facilitate the collection of data from New Zealand citizens at their own expense in order to pass on a portion of that information to the United States Government via the Inland Revenue Department. What we are being asked to do here today in this Parliament is to enable banks to collect information on every single person who is in New Zealand at their expense in order to weed out what information is deemed to be interesting enough to pass on to the Inland Revenue Department which will then pass that on to the Inland Revenue Service in the United States.We had many impassioned people come and speak to us at the Finance and Expenditure Committee about the potential privacy breaches that this meant. People would be caught up in this who were otherwise law-abiding citizens but who would now face potential prosecution from the United States—for example people who may have been born in the United States but never lived there as a conscious being. They left in early childhood and then found themselves in New Zealand and they are now deemed to be a New Zealand citizen from whom information might be collected for the United States Government.It will also perhaps affect people who have worked in the US briefly and who have then for one reason or another not completed a little bit of tax paperwork down through the years and may have incurred astronomical penalties as a result. Those kinds of people who are otherwise law-abiding citizens and who are now New Zealand citizens may face prosecution from the United States as a result of the agreement we are putting forward today. That collects information from every New Zealand citizen—every single New Zealand citizen—in order to pass on that information to the United States.Of course the banks need to comply and we on this side of the Chamber accept that the 30 percent wholesale surcharge that the US is threatening would be quite an unreasonable imposition on our banks if they were non-compliant. We feel that the Government could have moved much earlier to push for a more reciprocal agreement an agreement that sought to make sure that all information on New Zealand citizens avoiding tax in the US was passed back to the New Zealand Government and that the US tax database obviously much broader than ours was something that it would be willing to share fully with us to our advantage as a country.But what we have found throughout this process is that the Government has taken a very casual attitude. When I questioned the Minister of Revenue at the select committee about the legislation we were passing and why the principles of reciprocity could not be built into the legislation if that was what the Government believed ought to happen there was some evasive conversation. When we asked about whether the Minister had actually seen the intergovernmental agreement that was due to be implemented in 1 month’s time from then the Minister said he had every confidence that it was a good agreement but that he had not seen it. Goodness me—we wonder why the Minister is there collecting his ministerial salary if it is not to look out for New Zealand’s interests to look at these international agreements. He looks to the sky. He is not interested. He says: “That’s not my job. I’m here to collect this salary to lean back in my chair and to not make speeches in Parliament.” That seems to be the Minister’s attitude as he watches this bit of legislation go through.But in terms of looking out for the interests of New Zealand looking out for New Zealand companies which are facing an unlevel playing field we know there is a great deal of tax avoidance overseas and New Zealand companies tend to be good corporate citizens that pay their taxes here. We know there is an unlevel playing field out there. The Minister does not seem to want to tackle tax avoidance on any scale be it by the large corporates or be it by ordinary citizens other than at the bidding of the US Government. That seems to be the only time he leaps to his feet clicks his heels and says: “Yes yes I am available for service.” But when it comes to speaking in the Committee to laying out a vision for the tax system he is strangely quiet. When it comes to pointing out that reciprocity might be put into the agreement or even looking at the material in the legislation we are passing he is too busy for that—only to say yes to the US only to pass the legislation as promptly as he can.We on this side of the Chamber think that this process could have been handled a lot better. We think that the officials when they first came before the committee had not had impressed upon them by the Government the importance of negotiating this of making sure that tax agreements were beneficial to New Zealand and that really forceful negotiations were carried out. This we know because the tax officials whom we dealt with in the committee have been all I think without exception very very good but they are dictated to by the priorities of the Government of the day. And when the Government says “This is low priority. There’ll be a standard agreement. We’ll just sign up to it.” that message is passed on to the officials. They seem reluctant to engage with it as well they might because they are in a department that is under pressure a department with falling compliance levels. Voluntary compliance for business tax is falling. It is a department where phone calls go unanswered and a department that has billions of dollars’ worth of uncollected tax—$7 billion at last count. This is a department that is struggling because of the outdated technology that it uses to administer the tax system.But it needs leadership from the Minister. It needs a Minister who is committed to ensuring that everybody pays their fair share and that the tax system is not tilted towards the large end of town towards multinationals having a tax advantage that New Zealand companies cannot have also. The statistics tell us that that is the picture. In the last 4 years there have been fewer small businesses created in New Zealand than have been destroyed and that is a worrying trend. We see small businesses in New Zealand not flourishing as they should. We hear talk of a rock star economy of a big upturn but it seems that the big corporates and the wealthiest individuals are securing a larger share and indeed those who will be working with the US the banks are being looked after here. We need secure financial institutions but we do not need all of that at the expense of ordinary New Zealanders getting a similar deal of ordinary New Zealanders and ordinary New Zealand firms having the same level playing field so that there is fair competition out there and so that people can work hard and get ahead.We on this side of the Chamber want to see a fair tax system. We want to see reciprocity in the kinds of agreements that we are passing the enabling legislation for today. We would really like to have had the agreement in the legislation right the way through. If it had been negotiated in a timely fashion we might have debated it more fully in Parliament. It is only just now that we have access to it. It is very very late in the piece and shows a tardy Government that is really not up with the play and that is really quite happy to pass into law bits of legislation and conditions placed on New Zealanders collecting information at New Zealanders’ expense without even seeing the paperwork. It is not a pretty picture. I guess it is a Government that has lost touch with what matters to ordinary New Zealanders. Ordinary New Zealanders people like me and others represented in this House want to see a Government that is in touch that is looking out for their interests and that is looking to make sure that the playing field is level that things are fair and that everyone can have the opportunity to get ahead not just a privileged few.So when we come to pass this piece of legislation it is important that we reflect upon the way it could have been better. As I have stated in my speeches about the other parts it was rushed legislation. It was put through with a very short consultation deadline and then we have had the Minister’s amendments coming through. I am pretty certain there will be more and we will see more. This is not a piece of legislation that has had the full scrutiny of Parliament that it might have had if there had been a more diligent Minister who was willing to roll up his sleeves and do his job in the manner that is expected.Hon TODD McCLAY (Minister of Revenue):I want to thank the last speaker Mr David Clark for his fulsome support of Part 3 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. I know that this is one of the most important parts of the legislation for him. All the way through he has been extremely supportive—understanding of course man of the world that he is when it comes to international negotiation some of the stages. But there are a couple of points I just want to help with and clarify here because in his enthusiasm I am not sure that he meant to say some of the things that he did.The first was that he said that the Government has lost touch with ordinary New Zealanders like him. Well I have got to say that I do not think he is an ordinary New Zealander—special maybe but ordinary I am not sure. What I would say is that in as far as this legislation is concerned what this does is allow banks to collect and provide information to the Inland Revenue Department to pass on to meet its obligations to US authorities. Mr Clark is correct: where people do not do that they face a significant tax of up to 30 percent on their business in the US. All financial institutions in the world except for those where an exception is given are covered by this legislation—every single country of the world. There will be some countries that do not meet that obligation and their citizens who are involved with those financial institutions will be affected by a significant tax. It is interesting to see that Australia and the UK and France have already entered into an agreement with the US similar to that that the New Zealand Government has entered into to make it easier for the financial institutions to provide them with some certainty and to provide some controls around this.Mr Clark said information will be collected on every single person in New Zealand. That is factually not correct. These financial institutions already have information on all of the people who bank with them. They will be under a duty to provide information on clearly defined US citizens and to provide that to the Inland Revenue Department to pass on. There will be no information provided to the department or passed on to the US authorities on New Zealand citizens only on those who are US taxpayers under US law. This creates no new tax obligation. The US taxes its citizens based on their citizenship not their place of residence and not their place of domicile. So anybody who is a tax resident in America a citizen the US legislation has an interest in at all times. So we are not creating new tax obligations; we are merely providing information on behalf of financial institutions to US authorities.Very importantly this is reciprocal. It is reciprocal. The US authorities will provide information to the Inland Revenue Department on New Zealand taxpayers so that we can make sure that everybody who has a duty to pay tax in New Zealand is doing so fairly. The intergovernmental agreement was signed last week here in this Parliament and will enter into force before this legislation is adopted and itself enters into force. That is the right balance and the right way that this should be done. The reason it may have taken a little bit longer than Mr Clark might have wanted is that we were looking specifically at a number of institutions in New Zealand that might not need to be included in the breadth of this US law. There are exceptions that have been agreed for some New Zealand institutions to do with the Crown for superannuation schemes and for anybody who has an account who may be a US taxpayer but who has less than NZ$50000 in it—for them information will not need to be provided.It is important that we do this. If financial institutions in New Zealand did not meet their obligations they would be significantly affected. The Government is merely providing certainty and assisting them. It will reduce red tape compliance and costs upon the financial institutions and therefore others who may be involved with them or bank with them. It is not going to change the obligation of any US taxpayer based in New Zealand to the US tax authorities; it will merely provide information to them and it is reciprocal to us.So this is a very important part of the legislation. I think the Government has been responsible as many other Governments around the world have been. Almost every OECD country is in a current situation of either having agreed or negotiating the same arrangements as New Zealand. The very good news for New Zealand financial institutions is that we have agreed through negotiation a number of exemptions with US authorities and this will give greater certainty and make sure that there is not unnecessary cost to these financial institutions and therefore New Zealand taxpayers.The question was put that the amendments set out on Supplementary Order Paper 455 in the name of the Hon Todd McClay to Part 3 be agreed to.Amendments agreed to.Part 3 as amended agreed to.Schedule agreed to.Clause 1 agreed to.Clause 2 CommencementThe question was put that the amendments set out on Supplementary Order Paper 455 in the name of the Hon Todd McClay and the following amendment in his name to clause 2 be agreed to:in clause 2(10) replace “74(1)” with “74(1A)”Amendments agreed to.Clause 2 as amended agreed to.Bill to be reported with amendment presently.Vulnerable Children BillIn CommitteeDebate resumed from 14 May.Clauses 1 and 2 (continued)POTO WILLIAMS (Labour—Christchurch East):I am happy to take a call on what is a really significant bill the Vulnerable Children Bill. Just to recap I guess I do want to take us back to the beginning before we launch into the final clauses of this bill and back to the start of this work which started with the Green Paper for Vulnerable Children which then became the White Paper for Vulnerable Children. Significant numbers of members of the community actually spoke to that—something like between 8000 and 10000 submissions were made on this particular piece of work. So it is an important bill that we are debating and I want to just kind of make sure that we do not lose sight of how significant this bill could be in the lives of vulnerable children.I want to speak to the last part of this particular bill where we discuss such issues as transitioning young people from care and we look at the ages that this particular bill should be addressing. We have spoken during various parts of this bill about the significance of moving the age for the definition of “young person” from 17 to 18 years. It does actually demonstrate that there is an anomaly within this legislation. It does not occur in other legislation. The definition should definitely move from 17 to 18 years because that will bring it in line with the United Nations Convention on the Rights of the Child.It makes sense in practical terms too because Child Youth and Family and other agencies working with these young people currently need to make special provisions for their care. I just want to refer to my notes here. It also will allow for better help for young people moving from care to independence so that financial assistance can be available where it is considered necessary to enable the achievement of independence rather than in exceptional circumstances and so that assistance can be given when it is requested.Also it clarifies that assistance would be available for those aged between 15 and 19 years and for those who have been in residential care as well and that every young person exiting this care should have a support plan in place because we are talking about young people with some significant issues for whom being in care has been their life. They have not really experienced living independent lives or being able to access the resources in the community themselves. They are young people for whom the State has been their carer.I would like to think that we could be thinking about recommending that these young people continue in some form of support until they are at least aged 20. These young people have special and significant needs and they are transitioning from the care of the State into looking after themselves caring for themselves with the State or other support agencies having very little to do with their ongoing care.We have an expectation that they will be able to manage themselves well; that they will be able to cope on their own. Children who have had relatively stable upbringings find it a difficulty to cope. I do not know whether any of you have teenagers but I certainly have and I know that teenagers whom I have been involved with do not do so well when they are required to look after themselves. So when talking about young people with marginal upbringings who have not always had the best start in life in my view they need to have good stable and sometimes comprehensive support to ensure what we want for them which is good stable and solid lives and the ability to reach their potential.So where we may have let these young people down in the past we now have the opportunity to do something quite different and significant to ensure that they receive their potential. Our duty of care to them is not diminished because they are in care; it should be enhanced.SUE MORONEY (Labour):It is a pleasure to rise and speak on the title and commencement clauses of the Vulnerable Children Bill. Of course the title of the Vulnerable Children Bill probably—I think as we have described throughout this debate—makes it sound like a much more effective and better bill than it in fact is. Although it is worthy of support it certainly does not protect some of the most vulnerable children in our society. I think in the last couple of days—in fact yesterday—that became quite apparent because the Glenn Inquiry was actually telling a story about children being abused in their own homes by people whom they are in loving relationships with and about the harm that that was causing on our society.So although this bill is interesting and useful and will protect some children I think it is important that we note that this applies to and regulates I guess the children’s workforce a little better and protects children in that situation. But sadly what we know in this country—and it is a terrible tragedy in this country; a very very dark and grim thing that happens in our country—is that most of the children who are abused are abused by people whom they are supposed to be in trusting relationships with and also by people who are volunteers in organisations that families ought to be able to trust. So in fact what this bill is dealing with is actually the minority of situations—people in the paid workforce on the front line dealing with children and their involvement with children. Abuse does happen. It should not happen. We want to protect children from that happening but let us not fool ourselves. This is the minority of situations where children are harmed.I was saddened to see the Minister for Social Development on her feet in question time today saying that she would not work with other political parties to actually address the very serious issues that confront this country. I call on the Government: if it really does want to address the issues concerning vulnerable children then it ought to get its own Minister to agree to work in a cross-party approach on this. That is exactly what Labour did when it was in Government. Was it not interesting that the only party that would not participate in a cross-party approach on domestic violence and child abuse was the National Party? That is right. It was Judith Collins at the time actually who declined—refused—to be involved in a cross-party approach on family violence.Hon Judith Collins: Well that’s not true. That’s not true. Why are you making that up?SUE MORONEY: She seems very proud of it but I think she should be ashamed about that actually—she should be absolutely ashamed. The National Party should be ashamed of its Minister’s performance today giving the excuse that she would not work with other parties on this because it was apparently too close to an election. Well what was the excuse in 2006? And what was the excuse in 2007? Now in the year 2014 the National Party is trying to find yet another excuse to not deal with this problem appropriately.Here it is with this bill called the Vulnerable Children Bill—and I take issue with the title of it because it is an attempt to deal with such a minority of offending in this situation and really it should have a title that actually fits the very narrow part of this problem that the Government is attempting to deal with. If it was really attempting to deal with the issues of vulnerable children it would not be in denial over child poverty—it would not be in denial over child poverty—and it would not be in denial over taking a cross-party approach to dealing with domestic violence and violence against children.I think yesterday the Government’s failure to address violence towards women and children became absolutely apparent to every New Zealander—absolutely apparent to every New Zealander—and calling this bill the Vulnerable Children Bill is not going to address the fundamental failure that this Government has had in actually protecting women and children from violence. That has become absolutely clear now. It has become absolutely clear. It is about time that the Government actually realised that it needs to start working with other parties—not only just working with other political parties but it needs to actually start listening to what the social services working in this area are trying to tell it.Earlier today I went and spoke at a panel on election issues for social service providers out in Lower Hutt. Once again the National Party failed to front. I say “Once again” because at the last three political panels I have been on around social services on issues to do with trying to look after some of the most vulnerable children in our society no one from the National Party has fronted. I think there is a theme here. I would not mind betting that there has actually been a deliberate strategy and perhaps a decision at their caucus that they just do not front up to some of these discussions and debates because they are so ashamed. They are so ashamed at their lack of ability to address these issues. The Minister in the chair the Minister of Pacific Island Affairs grins but I cannot think of another reason why on three occasions the National Party has failed to have any candidate—any candidate at all—Hon Peseta Sam Lotu-Iiga: Rubbish!SUE MORONEY: Well it is true. The Minister says “Rubbish!” but it happened on the last three occasions. Tonight it was out at Lower Hutt. I think Christopher Bishop is National’s candidate there. He said he was going to turn up then at the last minute said that he unfortunately could not turn up. But that has been happening time after time. I think the last time that there was a TV debate on the issue of inequality Ministers also refused to front on that as well.We are getting a theme here with a bill in front of this Parliament where the Government is using the title of it the Vulnerable Children Bill to try to convince New Zealanders that it is doing something. Yes OK it is doing something but actually this bill—let us make no mistake about it—attempts to address only a minority of offending in this case. That means that the majority of children who are suffering child abuse—whether that be sexual violence physical violence or emotional violence—in this country will not have their issues addressed by this bill at all. They will not have their issues addressed by this bill at all and they face a Government that will not work with other parties or other organisations to get to the bottom of these issues.I am not going to continue any further with this bill because I think the points have been well made. It is sadly an inadequate bill for what it claims to do in its title. It is an opportunity that has been missed by the National Party and still we have increasing levels of violence against women and children in our country.KELVIN DAVIS (Labour):Tēnā koe Mr Chair. As a former principal and teacher I have a number of stories that I could tell about vulnerable children in our community up north. I would say that the vulnerability extends across all parts of the country. It is not related just to the north. Every community across the country sadly will be experiencing a number of things that have happened up in Kaitāia recently. I just want to touch on some of them and this is relevant to the Vulnerable Children Bill because these children in their vulnerability were let down by not only the adults in their lives but the services that are around.It is just interesting to note too that one of the outcomes of the Glenn Inquiry is that it too says that the services that are available such as Child Youth and Family Work and Income New Zealand and even the police have let down children who are the most vulnerable in our communities. The Pamapuria School case of James Parker is a case in point. The children who initially complained about the problems they were having or the abuse that they had suffered from James Parker were not believed. In fact there was a very shallow sort of investigation that went around the school there.Mike Sabin: No that’s not right. That’s not how it went.KELVIN DAVIS: No no there was a shallow investigation from the school.Mike Sabin: That’s not how it went Kelvin.KELVIN DAVIS: No from the school. The school did not—Mike Sabin: Well be specific then.KELVIN DAVIS: Well I am. The school did not do a very good investigation. In fact the principal in my opinion let down those children. When he was given a warning by the police that strange things were occurring he should have gone to the teacher and said to him: “These are the accusations against you.” He should have put his concerns in writing to that teacher. He should have then had regular meetings to follow up what was going on to make sure that the conditions that he imposed on that teacher were being followed and none of that happened.Those children were let down because when a problem was raised by the police with the principal he did not follow through with processes there. Those children who had made that initial complaint I am told were then made to go and stand in front of the class and apologise to the teacher for making the complaints. Then those young boys had to sit in that class for the next couple of years knowing that the person they had complained about was there in front of them. He carried on teaching and in fact the abuse continued. That is an example where the children who were the most vulnerable were let down by the system.There are a number of other stories relating to my time as a principal. I remember when some children brought some marijuana to school. I contacted the police and the police did a raid on this particular home. I was told by the youth aid officer that in the lounge of this home there were 14 places where marijuana was available. Most people might have a bowl of peanuts or whatever next to the armchair where you watch TV but in this house there was marijuana. It was so easy for this child to access marijuana and bring it to school and it was not until we reacted as a school that this was brought to the attention of the police and they raided the home. It just goes to show that vulnerability is not only about the services; it is actually about the environments that these children live in.Another example is when a girl came to me as a principal and she said she did not want to go home. I said “Oh why is that?”. She said “Oh because I get beaten up.” So I rang Child Youth and Family and I could not get through to them. This was after 3 o’clock and I said “OK we can’t get through to them. I know where the office is. Jump in the car and we’ll go down and you can tell the CYFs people your story.” When we got down there I was hauled over the coals by the Child Youth and Family workers. They said “No you can’t do that. You haven’t followed process Mr Davis. The process is you have to contact us and we come and interview the child in the school.” I thought to myself “Well that’s just nonsense really.”Here was a principal concerned about the well-being of a child who has expressed her concern about going home because she did not want to get a hiding and did not want to get beaten up. Apparently it was occurring regularly. So I took the girl to the agency because I could not contact them and instead I got told off for not following the process. I think “Stuff the process.” When a child is vulnerable and needs help the principal should put the rules aside and just do what is right for the child. In my view at that time what was right for the child was to get her in front of the professionals.What that meant was that there was a lack of cooperation amongst the agencies that are working with children. In that case we were not aware of what the process was for Child Youth and Family. It should not have in my opinion hauled me over the coals for not following process there. Its first concern should have been about making sure that that child was safe.As I have just come back as a member of this House I have not had a full overview of the Vulnerable Children Bill but I think it is really important just to raise some of these instances so that people are aware of actually how vulnerable our children are out there. The few anecdotes that I have given this evening are just scratching the surface of the vulnerability of the children of New Zealand.I think that we really need to take stock of the Glenn Inquiry. It has raised some brilliant points. Those points are actually backed up by my own experiences talking to people who have been victims of abuse. In particular it is difficult to access help—that is one of the points that the Glenn Inquiry made. It is even more difficult for people who have been abused to be believed. I have spoken to a woman in Kaitāia who has been struggling for 2 years to be heard about the abuse she suffered.I have received a letter since I have been back in Parliament from a man in prison who talks about how he was brutalised by his father over a number of years. As a result of that abuse he has done things that have landed him in prison but basically he was not believed and he was not listened to when he tried to tell agencies when he tried to tell police and when he tried to tell a number of people over the years about what was happening to him. He is dealing with those consequences.Just to round up I think there is a lot of work that can be done to support people and support our vulnerable children: agencies cooperating listening to people and believing people when they talk about the impacts and the abuse that they have suffered. I think that we should not ignore it. I agree with Sue Moroney. It was disappointing to hear that the Government is not interested in doing any cross-party work on this. I hope that attitude of the Government changes.JAMI-LEE ROSS (Junior Whip—National):I move That the question be now put.POTO WILLIAMS (Labour—Christchurch East):I want to get back to the heart of the Vulnerable Children Bill which is vulnerability. I recall when work was first commenced that there was a lot of discussion in the community about the definition of vulnerability and what it actually meant. Some of the paperwork that came out from the Minister for Social Development and from the Ministry of Social Development at the time talked about every child thriving and surviving. It talked about a broad-based approach to supporting our children through the most difficult times in their lives.As community groups and social sector providers we struggled with the idea of what vulnerability was. I can recall questions going back to Child Youth and Family to ask what the definition of vulnerability was. In those very first pieces of work there was no definition of vulnerability and you can understand why because you can be vulnerable based on your life circumstances or you can be vulnerable based on simply how old you are. You can be vulnerable at age 5 and then at age 6 be no longer vulnerable depending on whether you are able to go to school or the income of your family. There are many many different definitions of vulnerability. One of the difficult things about this bill is that there is no definition of what a vulnerable child actually is. We are left to make the assumption that vulnerability is about children who we are presuming are from low-income families from families where alcohol and drugs perhaps are issues but there is no clear definition of vulnerability and that is where this bill comes unstuck from the very beginning.I want to go back to Paul Nixon who is the chief social worker and to what he says in lots of his public addresses about vulnerability and what he claims is the unholy trinity of vulnerability for children. He defines that as being when your parents are mentally unwell when there is problematic substance abuse and when there is family violence. That is the definition that Child Youth and Family use for vulnerability and one would think that that would be the automatic threshold at which children enter the Child Youth and Family system. Well I can tell you categorically that it is not. That is where I have a real difficulty because having sat on a community panel supporting Child Youth and Family social workers who were dealing with children who had some difficulties in their lives those were all flags for us as community people in terms of Child Youth and Family intervening.Despite the fact that Child Youth and Family is a relatively large organisation we are talking about huge numbers of children who experience difficulties when their parents have got mental illness problematic substance abuse and family violence. We know about the overwhelming statistics of family violence. They have been highlighted to us this week by the People’s Report from the Glenn Inquiry. Yet family violence is not a mechanism that would trigger an investigation into these children from Child Youth and Family. We might be talking about the Vulnerable Children Bill but that is definitely a misnomer because it does not pick up our most vulnerable children. In fact it seems to carve out a section of those children and define them as vulnerable and to leave out in the cold all these other children who are equally vulnerable.Part of this bill looks at how to keep kids safe through professionals being screened as being safe to work with children. We have heard many of the folk who have spoken before on this bill say that there is an inherent flaw in this in that it is not just people who are paid to work with children who should be screened. There is a whole group of people with whom issues have occurred and where children have been abused in their care and those people are not paid professionals. Here we are talking about sports clubs coaches and people who are engaged in recreational activities with children. So where we may be looking at keeping children safe in a professional sense—CLAUDETTE HAUITI (National):I move That the question be now put.A party votewas called for on the questionThat the question be now put.Ayes62New Zealand National 59; Māori Party 2; United Future 1.Noes56New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1.Motion agreed to.A party votewas called for on the questionThat clause 1 be agreed to.Ayes103New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 2; United Future 1.Noes15Green Party 14; Mana 1.Clause 1 agreed to.The question was put that the amendment set out on Supplementary Order Paper 435 in the name of the Hon Paula Bennett to clause 2 be agreed to.Amendment agreed to.A party votewas called for on the questionThat clause 2 as amended be agreed to.Ayes103New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Māori Party 2; United Future 1.Noes15Green Party 14; Mana 1.Clause 2 as amended agreed to.The Committee divided the bill into the Vulnerable Children Bill the Children Young Persons and Their Families (Vulnerable Children) Amendment Bill and the KiwiSaver (Vulnerable Children) Amendment Billpursuant to Supplementary Order Paper 434.Bill to be reported with amendment presently.Companies and Limited Partnerships Amendment BillIn CommitteePart 1 Amendments to Companies Act 1993The CHAIRPERSON (Lindsay Tisch): We move to the debate on Part 1. This is clauses 3 to 43 and schedules 1 and 2.Hon DAVID PARKER (Deputy Leader—Labour):I want to discuss with the Minister in the chair the Minister of Commerce the provision of clause 4 of the bill which inserts new section 138A into the Companies Act. It is a varied form of the offences for serious breaches of directors’ duties for which we have a Supplementary Order Paper.Before doing so can I explain why in my view these clauses are very important. We have limited partnerships and companies so as to limit the liability of investors essentially to the amounts that they invest. Otherwise were it not for those limitations and we had either partnerships or other forms of joint venture the participants in those ventures would put the whole of their legal entity’s wealth at risk in respect of what can be a relatively small investment. Accordingly without these limited liability vehicles like companies and limited partnerships capitalism does not work well because people are not willing to invest because they take too much risk in respect of a relatively small venture in respect of their other assets. Therefore they do not put them at risk money does not go round in the economy and therefore the economy does not prosper as well. That is essentially why we have limited liability companies—that and the fact that that sort of outcome can be unfair to the people involved in that they can suffer an unfair consequence in respect of their personal liability for an unincorporated venture.When people give over money through a corporate venture or as an investor in a share or in a limited partnership or when they lend money or provide services to one of those entities they put their money at risk and if the directors of the company or those who are in charge of a limited partnership act improperly they can cause a loss to either creditors or the investors. So again there has to be a line drawn as to what their liability should be and when liability should arise if those directors of these entities breach their duties in a way that causes a loss to other people.Again these lines are quite hard to draw. If we get too tough with these lines we actually do not get good people willing to act as directors and that has been one of my criticisms of recent securities law. We have actually gone too far in respect of directors’ duties and in respect of prospectus risk when they raise money from the public. The effect of this has been that the best directors who have already succeeded and whom you want to be bringing their efforts to bear for the good of the economy and to minimise risk for the people who would be investing in these new vehicles are not willing to do it because of prospectus risk. Therefore risk has actually increased because those good directors are not there and that is a worse outcome than having a lower standard of care in respect of prospectus risk for better directors because those better directors would do a better job.My concern about this provision is that it is not in respect of civil liability; it is creating criminal liability for directors in some instances. I have some difficulty with the fact that the Commerce Committee was in the position that it actually had to report back to the House saying that it thought that these provisions went too far but did not really know what the answer was. That presumably was because submissions were received by the select committee that said that the line was not being drawn in the right place but either the Government or the officials—who are you know one and the same—were not in a position to advise what the proper position was.So the select committee reported back to the House saying that it thought that “some existing conduct by directors that is not currently subject to criminal sanctions is sufficiently blameworthy to warrant criminal punishment.” but it also considered that “the new provisions in the bill would allow in certain circumstances certain conduct that is already subject to criminal sanctions to be prosecuted more directly. However we are [also] aware that the bill will be perceived by directors and their advisers to criminalise legitimate business risk-taking behaviour.”—i.e. it said it was going too far. It was going to criminalise some behaviour that should not have been criminalised and the effect of this—and the select committee said it explicitly—would be that it would have discouraged the entrepreneurial behaviour that we actually need in our country in order to prosper.So the select committee flicked the bill back to the House and said: “Although we recommend no changes other than minor drafting provisions we … support further consideration of the drafting of these new offences to ensure that the provisions are expressed in a way that provides clear guidance to directors and does not have a chilling effect on legitimate business risk-taking”. So the bill gets back to this House with the problem that was at the centre of the first substantive provision of this bill actually still not having been fixed.Then we have a Supplementary Order Paper that we are debating today that fundamentally changes the wording of the Act in a way that has not been considered at the select committee. It does this by changing the wording of one of the two arms of criminal liability and deleting the second. It completely ditches the second which was that “Every director of a company who acts or omits to act in breach of the duty in section 135 (reckless trading) commits an offence if [they] know that that conduct will result in serious loss to the company’s creditors.” That has gone. That has been ditched completely and I am not sure whether that is right or not. I suspect it is right actually but I am surprised that if that was so obviously right it was not ditched at the select committee and that the bill went to the select committee with it in in the first place. I am further surprised that if it is being ditched now the Government and the officials could not give that advice to the select committee when the bill was there recently.In respect of the first arm of these prosecutions the Government has changed it from “every director of the company who acts or omits to act in breach of section 131 (of directors to act in good faith and in best interests of the company) commits a [serious] offence if he or she knows that that conduct is seriously detrimental to the interests of the company.” It has softened that substantially so that it now reads: “A director of the company commits an offence if the director exercises powers or performs duties as a director of the company … in bad faith towards the company and believing that the conduct is not in the best interests of the company; and (b) knowing that the conduct will cause serious loss to the company.”Again I can see why the first test was too loose. I really think that was a case of how long is a piece of string. The phrase “seriously detrimental to the interests of the company” is pretty loose language. But I am questioning why it is that you have proven bad faith—they did not intend good things; they intended to act badly believing that it was not in the best interests of the company—and it seems pretty serious there. So this is deliberately bad-faith conduct and then it says that you still have to prove in addition to that that they knew that the conduct would cause serious loss to the company.I am not convinced having toughened up new section 138(1)(a) that you actually need new section 138(1)(b). In that situation where someone has acted in bad faith you have had to prove that they believed that their conduct was not in the best interests of the company and then you have still got to prove that it is serious loss. Why should you have to prove serious loss? I would have thought in that case if it was not serious loss the penalty is not going to be very high. The conduct has still been highly improper if you knew that you were acting in bad faith and you did it deliberately believing that it was not in the interests of the company. I would have thought the criminal law should have a look at that. If it was not very serious loss no prosecution is going to be brought. We have got prosecutorial guidelines and people exercise their discretion but if there is a prosecution why do you have to prove serious loss?So my question for the Minister is: do we at this stage have confidence to know that we have got it right? I have not had much confidence in this process until now given the history as I understand it from the documents. I was not on the select committee and I do know a bit about this stuff but I have not had the benefit of the submissions. I am surprised that at the Committee stage we are actually effectively fundamentally changing these clauses as they went to the select committee and as they came back from the select committee. I would ask the Minister to address why that was necessary and secondly to address why it is once you have proved bad faith and knowledge that the conduct was not in the best interests of the company that you have to prove serious loss rather than just letting that go to the criminal justice system. If it is not a serious loss then obviously the penalty is not going to be very high.Dr David Clark: I am happy for the Minister to take a call first if he wishes to address those issues but otherwise I will take a call Mr Chairperson.The CHAIRPERSON (Lindsay Tisch): I call Dr David Clark.Dr DAVID CLARK (Labour—Dunedin North):I do look forward to hearing those questions answered and the Minister of Commerce was halfway to his feet. I was quite happy for the Minister to speak first because it would be very interesting to hear why those judgments had been made why that serious rewrite in Supplementary Order Paper 465 has been deemed appropriate at this late stage. I too was not on the Commerce Committee so I am not completely privy to what happened there. Perhaps the select committee chair will enlighten us in due course as to the process that was followed because it certainly is strange.For the benefit of viewers at home who are following this debate keenly I will hold up the original bill which is about this thick and the Supplementary Order Paper which is slightly thicker. There is actually more in the changes than there is in the original bill if you look at it in those simple terms. It is a weighty tome and there has been a substantial rewrite of the bill at this stage. It may be that some of those points are correct. It may be that the changes introduced in Supplementary Order Paper 465 are indeed appropriate as Mr Parker has reflected on from his own experience and in terms of the nature of limited liability companies—the desire to make sure that the risk-benefit ratio is correct. But changing those tests in such a significant fashion surely warrants an explanation from the Minister. I was pleased the Minister was halfway to his feet so I expect we will get an explanation shortly.The Companies and Limited Partnerships Amendment Bill as a whole addresses some important issues and I think it is vital that we cover those off. It is a call for transparency and finding out for the Registrar of Companies who indeed is not complying with the Companies Act. It gives new powers to the registrar and these include the power to flag companies on the register that are under investigation. This has got to be a good thing. It also lays out the consequences and that too is a good thing. The removal of companies from the register if they provide inaccurate information or persistently fail to comply with the Act is something that should be allowed for and it is indeed in this bill. The bill also aims as we had it first off to make similar changes to the Limited Partnerships Act so that those misusing New Zealand companies cannot avoid the new regime by registering as a limited partnership instead. That is something we try to do in this Parliament all the time—anticipate the unintended consequences of legal changes and to head them off at the pass.The bill aims to better align the Companies Act with the Takeovers Code to ensure that shareholders understand the effect that changes in company control will have on the value of their shares and that this is another transparency measure. We all know that markets are about information sharing. That is the fundamental useful function of markets—they share information so that people can make investment decisions and so that capital is efficiently used. We all know that markets if they are properly regulated can work in the interests of people or they can serve their own ends often not in the interests of people if they are improperly regulated. This provision is aimed at aligning the Companies Act with the Takeovers Code. There are also further consequences outlined in the bill such as criminal offences for directors who commit a serious breach in their duty to act in good faith. As we have seen the tests around those are weighed up anew.This bill is one that Labour will support but we are very keen to hear from the Minister as to why such dramatic changes have been made to this bill. It is some time since we last debated it. New Zealand enjoys an international reputation as a trusted place to do business. It is important that we have the legislation correct. It is important that the reputation that we have as an easy place to do business is maintained. It is important that New Zealand is not exposed to bad media about using shell companies and other vehicles for avoiding tax. Let us not forget though that this does not seem to have been that much of a priority for the Government since indeed this bill has languished at the bottom of the Order Paper for some time both at first reading and at second reading. It is only at this late stage that we are getting these changes.The year before last New Zealand along with Russia was struck off a prestigious European Union banking and corporate white list over the country’s weak ministry—Hon CRAIG FOSS (Minister of Commerce):Just very briefly Supplementary Order Paper 465 is actually a tracked version of the entire Companies and Limited Partnerships Amendment Bill and its changes. So measuring it by weight or number of pages is not all that scientific. Also to put Mr Parker’s mind at ease the criminalisation in respect of section 135 has been removed as a stand-alone offence and is now included as a new offence under section 380 of the Companies Act.The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable Minister. The time has come for me to report progress.Progress to be reported presently.House resumed.The Chairperson reported the debate on the performance and current operations of Crown entities public organisations and State enterprises; the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill with amendment; the Vulnerable Children Bill with amendment and that the Committee had divided it into three bills; and progress on the Companies and Limited Partnerships Amendment Bill.Report adopted.The House adjourned at 9.57 p.m.