Volume 616 Week 51 - Thursday 18 March 2004 
Volume 616 Week 51 - Thursday 18 March 2004 
[Volume:616;Page:11775] 
Thursday 18 March 2004 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Next week in the House priority will be given to the Appropriation (2002/03 Financial Review) Bill debate Government Notice of Motion No. 1 and the second readings of the Business Law Reform Bill and the Resource Management (Waitaki Catchment) Amendment Bill. Wednesday is a members’ day. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I have noticed on the Order Paper and in the other documents that we receive to get some lead on where the Government is going that there is no legislation that will put the seabed and foreshore into Crown ownership. I seek leave for a bill in the name of the honourable member Richard Worth that does exactly that to be placed on the Order Paper for first consideration next week. 
Mr SPEAKER 
: Leave is sought is there any objection? There is. 
Income Tax Bill 
Referral of S.O.P. 195 to Finance and Expenditure Committee 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Following discussion at the Business Committee I wish to seek leave for the procedures to be followed in passing the Income Tax Bill. I seek leave for Supplementary Order Paper 195 relating to the Income Tax Bill to be referred to the Finance and Expenditure Committee for consideration. 
Mr SPEAKER 
: Is there any objection to that course being followed? There is not. 
Business of the House 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I seek leave for the Committee stage of the Income Tax Bill to be set down for 30 March to be up to a maximum of 3 hours and for the House to proceed directly after the Committee stage to a motion from the Minister in charge for the third reading of the bill after which the debate is to be adjourned until 8 April without the bill being reprinted under Standing Order 266(2). I am referring to the bill on the Table. Members will understand why in a bill of this sort which does not introduce any new policy it is desirable to avoid reprinting it between the two stages. 
Mr SPEAKER 
: Is there any objection to that course being followed? There is not. 
Questions to Ministers 
Foreshore and Seabed—Ownership 
1. GERRY BROWNLEE (Deputy Leader—National) 
 to the  
Prime Minister 
: Does she stand by the statement given on her behalf regarding the seabed and foreshore “the language of ownership is clearly divisive in this context. If one wants to be divisive as one’s main purpose then continue to use the concept of “ownership” as the main consideration.”; if not why not? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the 
 Prime Minister 
: Yes. 
Gerry Brownlee 
: Has the Government always known that the National Party would support Crown ownership for the seabed and foreshore and that the number of votes it could achieve from other parties was irrelevant and is not the real issue on the Government’s agenda—[ 
Interruption 
] 
Mr SPEAKER 
: This is the one and only warning today. Please start the question again. 
Gerry Brownlee 
: Has the Government not always known that the National Party would support Crown ownership for the seabed and foreshore and that the number of votes it could achieve from other parties was irrelevant and is not the real issue on the Government’s agenda to take Treaty of Waitangi issues off the political landscape until after the next election by use of this proposed commission? 
Hon Dr MICHAEL CULLEN 
: To the first question yes. To the second question no. The Government does not regard the views of other parties as significant in comparison with those of the National Party. To the third question this is not actually a treaty issue at its heart. 
Hon Peter Dunne 
: In the light of that question and the answer to it has the Prime Minister received any approaches since the Court of Appeal’s ruling last year from anyone in the National Party seeking to discuss this issue with her and how it might be advanced in the bipartisan way that Mr Brownlee seems to be suggesting? 
Hon Dr MICHAEL CULLEN 
: Indeed the honourable member has suggested such an approach and I seem to recollect the National Party rejected it. I should point out that legislating for Crown ownership by itself is a rather pointless exercise because that is already the law. If one simply re-enacts the current law it will have no effect at all on the Court of Appeal decision. 
Jeanette Fitzsimons 
: Is it his intention that the Crown should own all the foreshore and seabed or will the 12500 parcels of land in private ownership identified in the Land Information New Zealand report to its Minister be exempt; if so does this mean that there is a lesser standard of citizenship for Maori? 
Hon Dr MICHAEL CULLEN 
: I think the member is getting confused between those titles that are actually over the foreshore and seabed and those in private hands that abut the foreshore and seabed. I think there is something like 59 titles on the foreshore and seabed. My understanding also is that—[ 
Interruption 
] No abutting the foreshore and seabed not on the foreshore and seabed. My understanding is that approximately a third of those are in Maori hands. 
Hon Richard Prebble 
: Is the Prime Minister aware of the repeated statement by the Deputy Prime Minister that legally there is no difference between the concept of public domain and Crown ownership; if so would not New Zealand First and National be wise to look at the details of what Labour proposes before giving it a rubber stamp? 
Hon Dr MICHAEL CULLEN 
: The Prime Minister is aware of almost everything that the Deputy Prime Minister says. She would recommend that Opposition parties always pay careful attention to the detail of anything the Deputy Prime Minister says. 
Jeanette Fitzsimons 
: I seek leave to table a 12 December 2003 document to the Minster for Land Information. 
Document by leave laid on the Table of the House. 
Dail Jones 
: Will the Prime Minister confirm for the benefit of many New Zealanders who are confused on this issue that when we talk about the foreshore we refer to the land from the high-water mark down to the low-water mark and when we talk about the seabed we are talking about the bit from the low-water mark out to Chile on one side and out to Australia on the other—the East Coast and the West Coast? 
Hon Dr MICHAEL CULLEN 
: On the first yes. On the second no. In New Zealand legal terms we do not claim the seabed out as far as Chile. 
Gerry Brownlee 
: Is it not true that the Government had been considering its U-turn away from public domain back toward Crown ownership well before the meeting the Prime Minister had with New Zealand First this week but about 9 months after the National Party stated that the foreshore and seabed should remain in Crown ownership; and was not the Government’s reconsideration begun after public reaction to Dr Brash’s Orewa speech? 
Hon Dr MICHAEL CULLEN 
: No the Government is not considering a move away from public domain. To understand that remark the member will have to await further the details of the policy. 
Hon Richard Prebble 
: Accepting the Prime Minister’s assurance that it is the details that are important can the Prime Minister confirm that it is still the intention of the Government regardless of whether the term “Crown ownership” or “public domain” is used to create by legislation a new form of title in favour of Maori that the Attorney-General tells us will cover virtually all of the coastline of New Zealand? 
Hon Dr MICHAEL CULLEN 
: As I indicated in the previous answer the concepts of Crown ownership and public domain are not mutually exclusive. The issue is around what the title is expressed as. On the second matter the member will have to await the finalisation of the policy but there is no suggestion that there is going to be an alternative title system around the country that conveys any form of exclusive usage. 
Taxation—OECD Comparisons 
2.  
CLAYTON COSGROVE (Labour—Waimakariri) 
 to the  
Minister of Finance 
: Has he received any reports on tax levels for average income earners compared with other OECD countries? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes an OECD report out yesterday evening shows that the single average production worker in New Zealand pays the third lowest tax or at least the tax wedge is the third lowest of 30 OECD countries and that for the same kind of worker with two children it is the ninth lowest of 30 OECD countries. 
Clayton Cosgrove 
: Is the Government proposing further tax changes and what effect will they have on our OECD tax burden rating? 
Hon Dr MICHAEL CULLEN 
: The Government is certainly considering some major changes that will assist low to modest-income families. The effect of those is that the tax burden on the average production worker with two children will move from being the ninth lowest to the fourth lowest in the OECD. 
John Key 
: Why is the Minister gloating about the survey when new taxes introduced by his Government have cost the average Kiwi household $2600 the results of which show that New Zealand’s average tax rate has increased in the last 12 months at the fastest rate of all countries in the developed part of the OECD according to the same survey he cites? 
Hon Dr MICHAEL CULLEN 
: I am quite interested in the number of developed countries in the OECD that will be immensely offended by that comment that actually had a higher rise than New Zealand. New Zealand has the third lowest tax wedge of the average production worker of any OECD country. Of course the OECD unlike members opposite counts all the various forms of taxation and income not merely one form. 
Rod Donald 
: Is the Minister concerned that New Zealand is in the bottom half of the OECD when it comes to the use of eco-taxes because advanced OECD countries currently collect 8 percent—and rising—of their tax revenue this way compared to only 3 percent in New Zealand and when will he start to update our tax system to make greater use of environmental and resource taxes? 
Hon Dr MICHAEL CULLEN 
: I thank the member for his confirmation that in addition to the fact that we have a low tax wedge on income we also have other forms of taxation that are lower in New Zealand than in other OECD countries. 
Hon Richard Prebble 
: Looking at the OECD report and the Government’s intention to lower taxes to some workers why is the Government not in favour of giving a tax cut to all workers in New Zealand? 
Hon Dr MICHAEL CULLEN 
: That is even more interesting because when we move to somewhat higher paid workers New Zealand moves to an even higher ranking in the OECD; indeed to second lowest. 
John Key 
: Does the Minister intend to cut taxes in the forthcoming Budget or will he use the largest surplus ever accumulated in the history of New Zealand Governments in the last 50 years just to give more money to beneficiaries through the Future Directions programme? 
Hon Dr MICHAEL CULLEN 
: The Government of course is at the present time running a cash-neutral position over the current year—not the massive surplus that members are promising to spend. [ 
Interruption 
] If the member waits for the Budget he will discover that his spending room for massive tax cuts for himself and his mates will be very limited. In fact the bulk of the funding in the package is not going simply to beneficiaries; it is going particularly to low to modest-income families in work who gain more than beneficiaries. 
Mr SPEAKER 
: Before I move to question No. 3 I say to Mr Key that he brought me into the debate three times in three interjections and he is interjecting from a seat he is not entitled to interject from. That is his warning. 
Police Minister—Confidence 
3.  
PETER BROWN (Deputy Leader—NZ First) 
 to the  
Prime Minister 
: Does she have confidence in her Minister of Police; if so why? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the 
 Prime Minister 
: Yes because he is a hard-working and conscientious Minister. 
Peter Brown 
: How can she have such confidence; and is she not concerned at the comments of the Australian defence Minister indicating that he felt totally let down by the serious breach of security with regard to the Australian naval vessel that was in the Wellington port recently? 
Hon Dr MICHAEL CULLEN 
: No. I have seen other indications that the Australians are not blaming the New Zealand Police for what happened in that respect. 
Peter Brown 
: Is the Prime Minister not aware that 99.9 percent of New Zealand exports and imports come and go by ship and that maritime security be it concerning a naval vessel or a merchant naval vessel is very very important to this country and if she is aware of that what is she doing to address it? 
Hon Dr MICHAEL CULLEN 
: In terms of naval security the Government is considering at the moment a major element of expansion in terms of our naval forces. In terms of biosecurity we have put massive amounts of additional spending into that area. As far as I am aware the kind of attack that occurred on the Australian ship which is to be deplored has not occurred in relation to New Zealand cargo ships. 
Marc Alexander 
: How can the Prime Minister maintain her confidence in the Minister of Police when his police force continues to take such a laissez-faire approach to the enforcement of the new prostitution laws having recorded one pathetic offence of using an under-age prostitute despite multiple reports that at least 20 under-age prostitutes are working out of Christchurch’s Cathedral Square right now? 
Hon Dr MICHAEL CULLEN 
: I am sure the police do not take a laissez-faire approach to the issue of under-age prostitution. No doubt as time develops they will become more experienced in dealing with that particular offence. 
Peter Brown 
: Noting those answers to my earlier supplementary questions will the Prime Minister give this House an assurance that such a graffiti attack or something even worse will not occur again on a naval ship or even a merchant ship that may be carrying cargo to the USA which may be a likely target? 
Hon Dr MICHAEL CULLEN 
: I do not think that I can give the member an assurance that there will never be a graffiti attack on a cargo ship. I doubt whether we would want all our police resources to be devoted to that particular exercise when more serious crimes are being committed than graffiti attacks on cargo ships. 
Hikurangi Learning Centre—Attendance 
4.  
DEBORAH CODDINGTON (ACT) 
 to the  
Associate Minister of Education (Tertiary Education) 
: What action did he take and on what dates did he take it following the letter of complaint he received asserting the chief executive of the Hikurangi Learning Centre was carrying out fraudulent acts by changing attendance sheets of students? 
Hon MARIAN HOBBS (Associate Minister of Education (Adult and Community Education)) 
 on behalf of the 
Associate Minister of Education (Tertiary Education) 
: The complainant was sent a letter of acknowledgment on 2 February 2004. On 12 March 2004 the Northland regional office of the Tertiary Education Commission initiated the following actions. It compared the two sets of records referred to in the letter; identified a couple of trainees where there seemed to be a discrepancy; identified differences in information; and followed that up with Work and Income for trainees who have gone back into their system and compared dates. As we speak it is now meeting with the Hikurangi Learning Centre this afternoon about the complaint. 
Deborah Coddington 
: Why has he not referred this matter to the Auditor-General or the police given that the Tertiary Education Commission has already audited the Hikurangi Learning Centre every year and tells us that everything is OK? 
Hon MARIAN HOBBS 
: Neither I nor the commission have involved the police or the Audit Office. The commission is investigating. If there is a need to involve the police it will do so. But such complaints are quite frequent and I would like to draw members’ attention to the fact that there were ghosts on school rolls for many many years when I was in senior administration under previous Governments. 
Dr Ashraf Choudhary 
: What sort of tertiary education provision is the Hikurangi Learning Centre involved in and how large a provider is it? 
Hon MARIAN HOBBS 
: For 2003 and 2004 the Tertiary Education Commission has purchased Training Opportunities and Youth Training programmes from the Hikurangi Learning Centre. There are 18 places available in the former programme and nine places in the latter. The Hikurangi Learning Centre has received around but less than $400000 a year in funding. 
Simon Power 
: Did the Minister report her ghost enrolments at her school to the then Minister of Education? 
Hon MARIAN HOBBS 
: The allusion I was making was to the practice that occurred often in the comparison between 1 March roll returns and actual roll attendances on that day. I did not make them; I always got a very clean record when the Audit Office came in. 
Hon Brian Donnelly 
: Could the Associate Minister explain the apparent inconsistency between the statement made by the chief executive officer of the Eastern Institute of Technology referred to by the Associate Minister of Education (Tertiary Education) yesterday that his institution does not have recruiters signing up people at hamburger bars and the fact that Mr Mark is recorded as being enrolled at the Eastern Institute of Technology—given that two other MPs can verifying the accuracy of Mr Mark’s statement to the House? 
Mr SPEAKER 
: This question was originally about the Hikurangi Learning Centre. The Minister can however comment on the matter if she wishes to do so. 
Hon MARIAN HOBBS 
: I understand that the Tertiary Education Commission is investigating the Eastern Institute of Technology in terms of such category 5.1 enrolments. 
Dr Muriel Newman 
: Does he believe that it is appropriate for tutors to be instructed to fill out attendance rolls in pencil but to sign them in ink so that they can falsely inflate attendance rolls; if he does not think it is appropriate can he just tell the House why he did not act in December last year when he was first informed of this case? 
Hon MARIAN HOBBS 
: There are two questions there. With reference to his being informed in December I understand that the letter was received in the Minister’s office on 24 December—that is Christmas Eve—and the Minister was not in the office on that particular day. In terms of writing in pencil I can only assume and this is a positive way of looking at it that it was the advised practice—all of those of us involved in teaching will remember it and I presume the member herself remembers it—in schools when filling out our form attendance registers to fill them out in pencil first. This practice may have been continued. 
Industry Training—Objectives 
5.  
LYNNE PILLAY (Labour—Waitakere) 
 to the  
Associate Minister of Education (Tertiary Education) 
: What progress is being made against the Government’s target of having 150000 New Zealanders in industry training in 2005? 
Hon PAUL SWAIN (Minister of Corrections) 
 on behalf of the Associate Minister of Education (Tertiary Education): The House will be delighted to learn that this week the Prime Minister announced that the total numbers in industry training during 2003 reached 126870 trainees. That is a 19 percent increase on the number participating during 2002 and a whopping 56 percent increase since 2000. It is a tribute both to the Government’s 70 percent increase in the Industry Training Fund over the last 5 years and to a growing industry contribution both in cash and kind. 
Lynne Pillay 
: Is this growth in industry training numbers sustainable? 
Hon PAUL SWAIN 
: Yes we are confident it is sustainable. The best indication of that kind is the continued broadening in the employer base for industry training. I am sure the House will enthusiastically welcome the news that 29206 firms were on board in 2003—a 19 percent increase on 2002 and a 31 percent increase since 2000. That is because business is increasingly aware that industry training is good for the workplace and good for New Zealand. The Skill New Zealand partnership we have with the Council of Trade Unions and Business New Zealand is out there selling that message. 
Hon Brian Donnelly 
: Will the Minister guarantee that the present strategy will achieve the ultimate target of 250000 industry trainees by 2007 or will he have to revert to singalong courses to achieve that goal? 
Hon PAUL SWAIN 
: The target is certainly on track and the answer to the second part of the question is no. 
Foreshore and Seabed—Crown Ownership 
6.  
Dr WAYNE MAPP (National—North Shore) 
 to the  
Minister of Maori Affairs 
: Does he stand by his statement last night that Crown ownership of the foreshore and seabed was now “More probable than not.”; if so why? 
Hon PAREKURA HOROMIA (Minister of Maori Affairs) 
: 
 Cabinet will advise its decision in due course. Crown ownership is definitely an option. 
Dr Wayne Mapp 
: In that case does he also stand by his statement of 3 weeks ago that Crown ownership of the foreshore and the seabed was “Back on the table.”; if so how long ago was it that the Government finally recognised the wisdom of the National Party position of Crown ownership of the foreshore and seabed? 
Hon PAREKURA HOROMIA 
: There have been long discussions and we have had wide consultation. Cabinet will advise the detail in due course. 
Mahara Okeroa 
: Is there a significant difference between Crown ownership and public domain? 
Hon PAREKURA HOROMIA 
: We are all familiar with Crown ownership. The Government has the right to regulate and the sovereignty of Parliament is assured. 
Hon Richard Prebble 
: I raise a point of order Mr Speaker. I think the patsy questions must have been shuffled because that answer has no resemblance to the question asked. 
Mr SPEAKER 
: Perhaps the member could ask the question again and the Minister could answer. 
Mahara Okeroa 
: Is there a significant difference between Crown ownership and public domain? 
Hon PAREKURA HOROMIA 
: Regardless of Crown ownership and public domain the Government has the right to regulate and the sovereignty of Parliament is assured. That is what gives them their income. 
Mr SPEAKER 
: The Minister was asked a question and the question was: did he accept that the two were similar? I suggest that he might like to answer that question. 
Hon PAREKURA HOROMIA 
: There is similarity. [ 
Interruption 
] 
Mr SPEAKER 
: The Minister has answered the question. 
Hon Roger Sowry 
: I raise a point of order Mr Speaker. The question was asked twice and then you chose to interpret what you thought the question was and guide the Minister into giving an answer. I think that is inappropriate. If the Minister did not hear the question the second time it should be asked again. I for one disagreed with the way you translated the question to the Minister and I do not believe for one moment that that is the job of the Speaker. 
Mr SPEAKER 
: The member might not but I consider it is. I have done it that way and the Minister gave an answer. 
Hon Brian Donnelly 
: Will the Minister confirm that the Court of Appeal ruling that has created the present dilemma was based on the Te Ture Whenua Maori Act of 1993 enacted by the then National Government? 
Hon PAREKURA HOROMIA 
: Yes. 
Metiria Turei 
: Does the Minister agree that Crown ownership of potential Maori foreshore land but not the 12500 parcels of private land is a Government-promoted race-based policy? 
Hon PAREKURA HOROMIA 
: We will refine a process that ensures that all of that is taken into account. 
Mr SPEAKER 
: I call Mr Franks. [ 
Interruption 
] I want to hear Mr Franks. He is at the back of the Chamber and he has a perfect right to be heard. I wonder if the senior Government whip could make sure that her colleagues allow me to hear the question. 
Stephen Franks 
: If there is no real difference between public domain and Crown ownership what did the Government really say to the Rt Hon Winston Peters to persuade him to claim that the change was a justification for inflicting on us all “a treaty commission of pontificating worthies.”? 
Hon Dr Michael Cullen 
: I raise a point of order Mr Speaker. Even supplementary questions have to have some authentication. Both Mr Peters and the Prime Minister stated that there is no connection between the statements on the foreshore and seabed and the statement on the Waitangi Tribunal from Mr Peters. 
Mr SPEAKER 
: Perhaps Mr Franks might like to rephrase his question. 
Gerry Brownlee 
: I seek leave to table a press release put out by the Prime Minister and Mr Peters—I presume it is by the two of them. Sorry it is a  
New Zealand Herald  
story dated 1 p.m. today but I think it will pretty much clarify that Mr Franks’ question is totally in order. 
Mr SPEAKER 
: The member can seek leave to table that. Is there any objection? There is. I will now invite Mr Franks to restate his question. 
Hon Richard Prebble 
: I raise a point of order Mr Speaker. We have just been told very helpfully by Mr Brownlee that he is able to authenticate Mr Franks’ question. In that case he should be allowed to ask it. 
Mr SPEAKER 
: The member will be able to refer to that report in his question. 
Stephen Franks 
: If there is no real difference between public domain and Crown ownership what did the Government really say to persuade the Rt Hon Winston Peters to claim as reported in the  
New Zealand Herald 
 that it was the change to allow Crown ownership that would justify inflicting on the people of this country “a treaty commission of pontificating worthies.”? 
Hon Dr Michael Cullen 
: I raise a point of order Mr Speaker. This is a different point of order. How is the Minister supposed to be responsible for remarks made by the Prime Minister to Mr Peters at a meeting that the Minister was not attending? 
Hon Richard Prebble 
: It’s called “Cabinet solidarity”. They might have forgotten about it but that’s what it is called. 
Mr SPEAKER 
: It might be but the member and I have both been in the same Cabinet. The second part of the question is out of order. The first part of the question can be asked. If the Hon Parekura Horomia would like the first part repeated it will be but the honourable Minister may reply. 
Hon PAREKURA HOROMIA 
: This Government like any responsible Government has undertaken extensive consultation. The Rt Hon Winston Peters has been one part of that. 
Hon Peter Dunne 
: Will the Minister confirm that the concept of Crown ownership is an essential part of ensuring that there is public domain over the foreshore and seabed? 
Hon PAREKURA HOROMIA 
: It is one possible interpretation. 
Dr Wayne Mapp 
: Can the Minister answer whether Maori customary title will coexist with Crown title over all the foreshore and seabed what rights does such a title contain and how will that be different from the original December proposals? 
Mr SPEAKER 
: There were three questions there. The Minister may comment on two of them. 
Hon PAREKURA HOROMIA 
: Can I begin by saying this: customary rights are about ancestral connection. That is not too different from that great day celebrated yesterday—I think in a race-based situation—by the Irish in relation to St Patrick’s Day. Good on them! I just thought I wanted to celebrate that with them and certainly a lot of them partook of Guinness which I think is a traditional handout. So in summing it all up this is about ancestral connection. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. It is a fact that Mr Horomia Mr Hereora and Mr Ririnui were all out celebrating their Irish ancestry last evening but it could not possibly be an answer to the question asked by Dr Mapp. If we were to look at  
Hansard 
 we would find that although the Minister certainly stood up and said some things he did not address the question at all. 
Mr SPEAKER 
: I listened to the Minister’s reply. I thought he was making a comparison. I thought he addressed the question but whether it was satisfactory to the member is another issue. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I have ruled Mr Brownlee. 
Gerry Brownlee 
: Mr Speaker you will see in  
Hansard 
 that the Minister started his answer by saying: “First let me say…” which I would have thought was a reasonable indication to the House that he would give some clarification of some particular gem that might have come after that and have given us a clue as to an answer that related to Dr Mapp’s question. But we got none of that. 
Mr SPEAKER 
: If I ruled out people who said: “First let me say….” and who did not then have a second point I would be ruling out quite frequently. 
Dr Wayne Mapp 
: Has the Minister received any indication from other Maori MPs within the Labour caucus as to whether they support this apparent U-turn whereby the Government will now legislate for Crown title over the foreshore and seabed? 
Hon PAREKURA HOROMIA 
: Unlike that member and his party we talk a lot to each other. There has been no U-turn. 
Stephen Franks 
: I raise a point of order Mr Speaker. In view of the opacity—to say the least—of the responses I ask you to consider whether this may be a suitable occasion for the Speaker to exercise the discretion to allow additional supplementary questions until we can get answers. 
Mr SPEAKER 
: As far as I am concerned the answer to the last question was absolutely specific. 
Dr Wayne Mapp 
: I raise a point of order Mr Speaker. I asked the Minister a specific question about whether there had been any indication from fellow MPs within the Labour caucus as to whether they would support Crown ownership. No answer was given and the question was not even addressed. 
Mr SPEAKER 
: The member did not accept that premise and he is perfectly entitled not to accept it. 
Dr Wayne Mapp 
: I raise a point of order Mr Speaker. I suggest to you that I did not put a premise. I asked a straight question and the Minister did not answer that question or even address it. 
Mr SPEAKER 
: The member talked about an apparent U-turn. The Minister did not accept that there was an apparent U-turn. 
Hon Dr Michael Cullen 
: I seek leave to table the Newztellog from  
Morning Report 
 this morning in which both Helen Clark and Winston Peters stated that the Treaty of Waitangi inquiry and the foreshore and seabed are separate issues. 
Document by leave laid on the Table of the House. 
Dr Wayne Mapp 
: Has the Minister received any indication from other Maori MPs within the Labour caucus that they will vote against the proposition of Crown title over the foreshore and seabed? 
Hon PAREKURA HOROMIA 
: At this stage no and that member will have to wait like everybody else for the finalisation of the policy. 
Question No. 3 to Minister 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I should have raised this earlier at the time of my question but I did not know I had the document to hand. I seek leave to table a press release that indicates the concern of the Australian Defence Minister Robert Hill and Colonel Hall of Australia about policing—. 
Mr SPEAKER 
: Leave is sought to table that press release. Is there any objection? There is. 
Solomon Islands—Regional Assistance Mission 
7.  
LUAMANUVAO WINNIE LABAN (Labour—Mana) 
 to the  
Minister of Foreign Affairs and Trade 
: What level of support has New Zealand provided the Regional Assistance Mission in the Solomon Islands? 
Hon PHIL GOFF (Minister of Foreign Affairs and Trade) 
: 
 New Zealand has strongly supported regional action to restore the rule of law in the Solomon Islands from the time that New Zealand and Australia jointly reported on the situation in the Solomons to the Pacific Islands Forum foreign ministers’ meeting in Sydney in June 2003. We subsequently provided 229 Defence Force personnel four helicopters 35 police officers and ongoing development assistance of at least $14 million per year. This has been a significant component in the success of the mission. 
Luamanuvao Winnie Laban 
: What has been the response to New Zealand’s contribution to the Solomon Islands? 
Hon PHIL GOFF 
: We have had a hugely positive response from the Solomon Islands—whose Prime Minister visited us just 2 weekends ago—from Australia and from New Zealanders as a whole. But there was one exception to this apparently and that was the comments made in the  
Australian 
 this week by Don Brash who badmouthed New Zealand’s efforts and supported the view that New Zealand was not pulling its weight. Challenged by the New Zealand media to repeat and elaborate on those comments Dr Brash refused—apparently not being prepared to say to New Zealanders what he was caught out saying to Australians. 
Mr SPEAKER 
: The last part of the Minister’s answer was out of order. 
Simon Power 
: How does the Minister’s answer to that last question then fit with comments made by the Australian High Commissioner Dr Allan Hawke who said on 15 August 2003: “Our future relationship is anything but certain.”? 
Hon PHIL GOFF 
: The address made by Dr Hawke some time ago had absolutely nothing to do with the Solomon Islands— 
Simon Power 
: You brought up the relationship! 
Hon PHIL GOFF 
: It had absolutely nothing to do with the Solomon Islands and the member knows that. What I can say is that the Australian Minister for Foreign Affairs Alexander Downer has praised New Zealand’s contribution as being essential to the success of the mission in the Solomon Islands—which is quite different to what Dr Brash said. What an irony that the Australian Foreign Minister praises what we do and the leader of the National Opposition condemns it. 
Keith Locke 
: Could the Minister explain a little how our military and civilian contribution to the Solomons is helping the Solomon Islands people to restore their basic social services and to address the underlying problems in that country? 
Hon PHIL GOFF 
: The critical thing that needed to be done in the Solomon Islands was to restore the rule of law. The New Zealand Police backed by the New Zealand military and working with the Australians and many other Pacific Islands Forum countries have been successful in arresting over 940 people laying 1630 charges and confiscating and destroying 3700-plus weapons. The restoration of stability has also led to the lifting of the travel advisory from New Zealand so tourism can get back under way. The assistance being given on the economic front will hopefully put that country back on its feet and give the people of the Solomon Islands a chance to get on with their lives for the first time in many years. 
Maori Youth Contestable Fund—Recidivist Offending 
8.  
Hon TONY RYALL (National—Bay of Plenty) 
 to the  
Associate Minister for Social Development and Employment (CYF) 
: Does the Provider Information for the Maori Youth Contestable Fund dated 14 September 2001 list the first primary outcome expected from Whanau Service Plans as “Reduced re-offending by young Maori who attend the programme;”? 
Hon RUTH DYSON (Associate Minister for Social Development and Employment (CYF)) 
: 
 Yes. 
Hon Tony Ryall 
: Why did she answer emphatically “No.” to my question yesterday giving the clear impression that no such computer was purchased for that young offender? 
Hon RUTH DYSON 
: The computer was purchased to help the girl to learn and to contribute to improving her personal situation not as a “‘carrot’ for not reoffending.” It was not provided at the cost or in the circumstances reported. My response was accurate. 
Georgina Beyer 
: Why does the Department of Child Youth and Family Services provide funding for young offenders to buy such things as computers? 
Hon RUTH DYSON 
: As part of an individual plan the Department of Child Youth and Family Services may provide equipment for young people who have offended in order to support their learning opportunities and thereby to improve their chances of moving into further education or employment. That may occur for young people in residential care in family homes or in this case in the Maori Youth Contestable Fund programme. 
Ron Mark 
: Does the Minister stand by her comments in the  
New Zealand Herald  
that “She didn’t get the computer as a carrot to stop reoffending. The purpose of the fund is to provide rehabilitation services … so they get all sorts of things.”; if she does can she tell the House firstly whether she believes that the editor of  
Police News 
 Mr Steve Plowman who wrote the article is less informed on police issues than she is secondly the numbers of other teenage offenders who have likewise been given computers thirdly how many of those computer recipients have likewise continued to offend and fourthly what sort of other goodies they receive as part of the “all sorts of other things” package? 
Mr SPEAKER 
: There were five questions there. The Minister may comment on two of them. 
Hon RUTH DYSON 
: I do not pretend to be more informed about police matters than the editor of  
Police News 
 nor have I claimed to be. But I can confirm to the member that the computer which cost $1200 was purchased to help the girl learn and to contribute to her personal situation not as a carrot for not reoffending. Therefore my response was accurate. 
Hon Tony Ryall 
: Now that the Minister has admitted that that young offender received a computer why did she give the House the clear impression on two occasions yesterday that the offender did not receive a computer? 
Hon RUTH DYSON 
: I answered the question yesterday accurately as I have just reassured the House again today. 
Hon Tony Ryall 
: Since her excuse was that the computer was not— 
Mr SPEAKER 
: Would the member start his question with an interrogative word? 
Hon Tony Ryall 
: How does the Minister explain her excuse to the  
New Zealand Herald  
that the computer was not offered as an incentive to stop reoffending after her confirmation to the House this afternoon that the primary objective of the fund is to reduce reoffending by young Maori who attend the programme? 
Hon RUTH DYSON 
: I answered for the  
New Zealand Herald  
a competent question from a competent journalist—unlike the question that that member asked yesterday. 
Mr SPEAKER 
: No no. I want the Minister to address the question that the member asked. She can comment on it in her own way but she must address it. 
Hon RUTH DYSON 
: As I have explained to the House I answered the question accurately yesterday. The computer was not bought for the price or in the circumstances outlined in the report—which was directly referred to in that member’s question yesterday. 
Hon Richard Prebble 
: I raise a point of order Mr Speaker. I raise it under Speakers’ rulings 145/1 145/2 and indeed about three other rulings on the matter. The first ruling is one of your own where you state:“The House and public opinion arbitrate on the quality of an answer to a question. It is not the Speaker’s role.” That is so but you have another ruling the next one part of which states: “It is incumbent on Ministers to treat questions in a manner that is consistent with their constitutional responsibilities.” We are in a situation where the Minister did not have to say “Yes” or “No”. She actually said “No” in a way that any person would have interpreted as meaning that a computer had not been supplied. I suggest to you that I am concerned about Speaker’s ruling 145/1 as it is at the moment and I believe that you ought to add to that ruling of yours. Yes it is a matter for the public to arbitrate on whether the Minister was misleading us but I think you should also say that Ministers ought not to deliberately give answers that mislead the House. I am not saying that it was a breach of privilege but we have a situation where the Minister clearly gave an answer that misled the House. In fact if the  
New Zealand Herald  
had itself not asked some questions and if we had not read in the newspaper that when the Minister said “No” she actually meant “Yes” the whole House would have thought that that young lady had not received a computer from the prison service. 
Mr SPEAKER 
: I thank the member for his point of order. I will have a look at the issue as he has asked me to do. 
Floods—Government Assistance 
9.  
JILL PETTIS (Labour—Whanganui) 
 to the  
Minister for Rural Affairs 
: What reports has he received on the response from flood-affected people to the Government’s package? 
Hon JIM SUTTON (Minister for Rural Affairs) 
: 
 The Government’s offer has been well received by farmers and crop growers who told National Radio that it was more than they expected and that it reflected the Government’s recognition of the importance of agriculture to the New Zealand economy. Federated Farmers’ vice-president Charlie Pederson says: “It’s basically a 10 out of 10 for the Government. The package is timely it’s comprehensive and it’s going to target all people affected.” 
Jill Pettis 
: Has the Government placed limits on how much each farmer can receive? 
Hon JIM SUTTON 
: No. The Government is offering 75 percent of essential on-farm infrastructure reinstatement costs and 90 percent of crop re-establishment costs minus a $10000 threshold without any cap. This is about giving people a helping hand to get back in business. The effect of capping individual entitlements would have been that those who had suffered the highest levels of damage would have received a lower percentage of assistance. 
Simon Power 
: Is the Government contribution of a dollar for every community dollar raised which was announced 2 weeks ago to go directly to those community organisations such as the Red Cross or will that money go to regional relief funds? 
Hon JIM SUTTON 
: My understanding and this is not directly within my portfolio is that this will go to the Manawatu-Rangitikei community fund which is a sort of clearing house for many of these fundraising efforts. 
R Doug Woolerton 
: Can the Minister tell us what specific procedures have been established to ensure that individuals receive compensation promptly? 
Hon JIM SUTTON 
: The process for distributing this assistance will be as efficient as we can make it. There will of course be a form that people have to fill out and there will be an examination of the application submitted. That examination will be conducted by local committees of farmers and foresters chaired by the regional recovery facilitators who are already in place. Operational details will still have to be worked out but it will be the intention of the Government and I am sure the local committees to keep the process as simple and speedy as possible. 
Ian Ewen-Street 
: Has the Government allocated money for the reforestation of the headwaters of river catchments in order to contribute to the long-term flood mitigation in the affected areas; if not why not? 
Hon JIM SUTTON 
: The answer to that is no. The objective of this package is to restore farms to production as quickly as possible for the benefit of the regional and national economy. There is no doubt a case to be made that some of the country that has been subject to severe slipping damage in the headwaters of these rivers might be afforested to advantage but that is a matter that we have yet to address. 
Hon Peter Dunne 
: With regard to the dollar for dollar subsidy when will the Government be releasing the list of organisations to which that applies that was promised a few days ago? 
Hon JIM SUTTON 
: I do not know the answer to that question. 
Monte Cassino 60th Anniversary Commemorations—Veterans 
10.  
SIMON POWER (National—Rangitikei) 
 to the  
Minister of Veterans' Affairs 
: How many places have been allocated to veterans within the New Zealand delegation travelling to Italy for the Monte Cassino 60th Anniversary commemorations in May this year? 
Hon GEORGE HAWKINS (Minister of Veterans' Affairs) 
: 
 I am advised that two groups will travel as part of the New Zealand delegation. One group will make its way independently with considerable Government funding. This number already exceeds the number that went to Monte Cassino in 1994. Another group will travel on an RNZAF aircraft. Once all applications for this are received numbers of veterans travelling to Monte Cassino in this way can begin to be finalised. 
Simon Power 
: I raise a point of order Mr Speaker. The question asked specifically “within the New Zealand delegation”. The Minister should be able to give us an indication as to how many are flying on the Air Force plane heading for Italy. 
Mr SPEAKER 
: The Minister I thought said he had not finalised the detail of that. That is a perfectly acceptable addressing of the question. The member can have a supplementary question. 
Simon Power 
: How many non-veterans will be travelling to Monte Cassino in May with the official New Zealand delegation and which organisations or Government departments do they represent? 
Hon GEORGE HAWKINS 
: A number of groups will travel including young people who won an essay competition young cadets from the cadet forces a Maori cultural group a guard of honour group medical and support staff media and others. When all those numbers are finished we will be able to give members some direct answers. 
Dianne Yates 
: What steps is the Government taking to ensure that as many veterans as possible are able to travel to the Monte Cassino commemorations? 
Hon GEORGE HAWKINS 
: I am advised that special funding is being made available to all Monte Cassino veterans wishing to travel independently to the commemorations. Another group will travel on military aircraft. The Government is aware the trip will be emotionally and physically demanding on the veterans who are mainly in their 80s and 90s. Consequently a medical team will form part of the delegation and veterans travelling on the RNZAF aircraft will be required to meet strict medical criteria. 
Bill Gudgeon 
: Is the Minister aware that on 23 June 2003 and 12 August 2003 the Prime Minister received correspondence from the New Zealand First spokesperson on defence Mr Ron Mark that the whole issue of the commemoration concerning veterans involved in the Battle of Cassino be looked into and that this Government take as many veterans as possible? 
Hon GEORGE HAWKINS 
: Yes. I have a copy of that letter. It is the Government’s intention to make sure that as many veterans as possible can attend the commemorations. 
Stephen Franks 
: What could demonstrate more dramatically how the Government sees battle commemorations generally and the value it places on old servicemen and servicewomen than today’s uncertainty contrasted with 10 years ago when I went to Monte Cassino to join 100 veterans—including my father—and I saw an honoured delegation focused around them putting those old soldiers first instead of the Prime Minister’s photographers? 
Hon GEORGE HAWKINS 
: This Government is making sure as many of the veterans who can travel do travel. Those who want to go will go— 
Judith Collins 
: Shame on you! 
Hon GEORGE HAWKINS 
:—instead of the member over on the other side making little snide remarks. 
Simon Power 
: Will the ballot to be drawn on Monday allow all able-bodied and medically cleared veterans to go to Monte Cassino—especially following the  
Holmes 
 poll last night showing 95 percent of callers believed every veteran who is able should go to the commemorations? 
Hon GEORGE HAWKINS 
: The ballot does not take place next Monday. However I will say we are going to take as many people as we can. This Government sees this as the last opportunity for many of those people and we will try to take as many as we can who are medically fit and who will not suffer because of the arduous nature of the trip. We will try to get them there. 
Exporters—Government Assistance 
11.  
GORDON COPELAND (United Future) 
 to the  
Minister of Finance 
: What specific measures if any is the Government proposing to assist the export sector? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 In addition to providing a supportive business environment with measures such as one of the lowest tax wedges in the OECD this year’s Budget will provide a pragmatic World Trade Organization - compliant approach to business assistance with increased support for exporters. Obviously the member will have to await the Budget on 27 May for the details. 
Gordon Copeland 
: Can he inform the House whether the Government would be prepared to resolve the border security dispute with the Trade and Travel Industry Coalition in its favour given the record January trade deficit—the highest since 1986—and the perilous state of our export industries? 
Hon Dr MICHAEL CULLEN 
: On the border security issue only 40 percent of the proposed charge is paid by exporters. The remainder is paid by importers who are the reverse side of the trade balance that the member refers to and by re-exporters. The travel industry itself is probably the most subsidised single sector of the New Zealand economy. 
Gordon Copeland 
: Can the Minister provide details of any Government initiative over the last 12 months that has truly helped the ailing export sector? 
Hon Dr MICHAEL CULLEN 
: Far be it from me to dwell upon the present but the potential re-entry into managing the exchange rate is certainly designed to be of some assistance to the exporting sector. 
Gordon Copeland 
: Has the Minister considered the idea of accelerated depreciation allowances for tax purposes on all plant and machinery used principally to produce exports as one way of alleviating the export crisis? 
Hon Dr MICHAEL CULLEN 
: At present of course we already have accelerated depreciation unlike Australia which does not have accelerated depreciation. The Government has undertaken a lot of work on depreciation itself which is more complicated than just changing the acceleration rate. 
Iraq—Troop Withdrawals 
12.  
KEITH LOCKE (Green) 
 to the  
Prime Minister 
: Will New Zealand follow the lead of the new Spanish Prime Minister Jose Luis Rodriguez Zapatero and commit to withdraw our soldiers from Iraq if the United Nations does not take control by 30 June? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
 on behalf of the 
 Prime Minister 
: No. 
Keith Locke 
: Does the Prime Minister agree with the Spanish Prime Minister that the occupation of Iraq has been “disastrous” and “Mr Blair and Mr Bush must do some reflection and self-criticism. … you can’t organise a war on lies.”? 
Hon Dr MICHAEL CULLEN 
: I think self-criticism is a useful exercise for all politicians and I recommend it to the member. 
Keith Locke 
: Given the Prime Minister’s strong commitment about a UN role during the lead-up to the Iraq war what will she be doing alongside the Spanish Prime Minister to end the US-led occupation of Iraq and put the UN in charge of facilitating a return to democracy in that country? 
Hon Dr MICHAEL CULLEN 
: The Government will support any move by the United Nations that will see a smooth transition to Iraqi control of its own administration. In the meantime our engineers will continue their work repairing hospitals health clinics schools police stations law courts municipal and Government buildings restoring electricity and rebuilding bridges and water pipelines as part of creating a more independent and viable Iraq. 
Keith Locke 
: Besides doing the reconstruction work just referred to why are New Zealand Army engineers helping to repair the rigid radar and combat support boats of the British as disclosed in our journal  
Navy Today 
 when these boats are commonly being used by the British occupation forces for patrol work and only to a lesser extent to help in reconstruction? 
Hon Dr MICHAEL CULLEN 
: If they are being used in patrol work it may well be that that is consistent with the Government’s own commitment to Operation Enduring Freedom. 
Income Tax Bill 
Second Reading 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I move  
That the Income Tax Bill be now read a second time 
. In so doing I note with some relief on behalf of the Clerk that the practice for the Clerk to read the bill at that particular point has long since ceased—as the bill is some 2154 pages long. As members will have noted I have referred Supplementary Order Paper 195 to the Finance and Expenditure Committee for its consideration. The Supplementary Order Paper amends the bill to incorporate the changes made to the 1994 Act by the Taxation (GST Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 and to enhance the consistency of the drafting. The purpose of referring the Supplementary Order Paper is so that the select committee can assure itself that there are no policy changes incorporated within that Supplementary Order Paper. 
The bill represents a third stage in the progressive rewrite of the Income Tax Act which has been going on for some considerable number of years. It introduces rewritten legislation contained in the first five parts of the Act and re-enacts the remainder of the Act leaving about half of the Act to be rewritten in future stages. The three most frequently consulted parts of the Act those setting out the rules for calculating net income are amongst the parts that have been rewritten for this bill. The purpose of the rewrite of this Act which is one of the most consulted Acts in the country is to produce tax law that is clear plainly written and structurally consistent. That will make it easier for users to find all the provisions they need and to understand what they read which ultimately saves time and money. 
Tax is of course a notoriously complex subject so it is all the more important that the law governing it be as clear and easy to use as possible. A plain-language drafting style has been used to rewrite the legislation. It seeks to present ideas clearly concisely and directly and to avoid legalese archaic terms and repetition. Throughout the redrafting process the paramount aim has been to make the rewritten legislation as clear as possible without substantively changing the policy content of the current Act. To this end the rewritten legislation has been the subject of constant consultation and review since drafting began several years ago. This has involved public and private sectors alike professional associations and a wide range of people and organisations. 
Since 1995 an advisory panel consisting of the Institute of Chartered Accountants the Law Society and tax policy officials has been overseeing the rewrite of the Act. It has ensured that procedures have been in place to identify policy issues arising in the course of the rewrite. As a further safeguard the Government has assured the public that it will introduce remedial legislation to correct any problems arising from the new Act’s producing a different outcome from that intended under the present Act. Any amending legislation would apply from the date of effect of the new Act. 
In its examination of the bill the Finance and Expenditure Committee was also concerned to make certain that no unintended policy changes had arisen in the course of rewriting the law. It therefore sought further testing of several key parts of the rewritten legislation and that was undertaken by eight leading tax professionals. This was a major exercise and extended the committee’s consideration of the bill by some 6 months. Perhaps I could say to the member who is collecting what I think he thinks is a copy of the bill that that is only the first volume; there is a second one as well. As a result of that lengthened consideration the committee has recommended that the date of application of the new legislation be deferred by 1 year to the 2005-06 tax year. That will give interested parties including tax practitioners and tax publishers more time to prepare for the changeover to the new Act. 
The committee has also recommended that new transitional provisions be included in the bill. These make it clear that no change in the effect of the law was intended and that the old law should be used as a guide for interpretation should there emerge any ambiguity or absurdity. The new transitional provisions would not apply to those few relatively minor policy changes that we made intentionally and were subjected to public consultation well before the bill was introduced into Parliament. These are the two main changes the committee has recommended. As an extra safeguard it has also recommended that an independent committee be set up to consider any unintended changes for the meaning application and operation of the law as a result of the rewrite and it sees the current advisory panel given its background expertise and composition as the right entity to undertake the task. 
I thank the committee for its thorough consideration of this massive bill. I thank the Institute of Chartered Accountants the Law Society the committee’s tax advisers and the many others who made significant contributions to the proposed legislation throughout its development. I recognise in particular two current members of the House the Hon Peter Dunne and the Hon David Carter who also played a role in this rewrite as previous Ministers of revenue. I finish by thanking all the parties in the House for their cooperation in the orderly management of the passage of this bill. 
JOHN KEY (National—Helensville) 
: 
 National will be supporting the rewrite of the tax bill. However as the Minister pointed out taxation law in New Zealand is growing ever more complex by the day. I say that because since the Labour Government took office in 1999 we have seen in the order of 17 increases in taxation to New Zealanders. Those 17 changes have led to an increased tax burden on average households of $2600. It is no wonder that taxpayers around New Zealand are confused about why a Government that is running a $5.6 billion surplus the largest surplus in 50 years—a surplus generated off hard-working New Zealanders and businesses that day after day toil and graft to make this a greater country—has been unable through the Income Tax Act to deliver just a small portion of that back to hard-working New Zealanders. 
Taxpayers are confused because this bill is so complex. They are confused too about the comments made by the Minister of Finance yesterday when National boldly took the step of wanting to reduce corporate taxation. National boldly took the step to a new frontier where it would once again put New Zealand corporates in a position of equal footing with those in Australia and would seek over time to have a real advantage. The Minister of Finance completely dismissed that wonderful opportunity for New Zealand businesses to regain their strength and position. All he could do was scoff that it would not be terribly good because some of that benefit would go back to foreign companies. I am surprised that the Minister of Finance has taken such a shallow view of that position. 
I shall outline to the House why in the Income Tax Bill the Minister of Finance could have taken an opportunity to put New Zealand on the front foot and why he is so lacking in his knowledge base about this issue. Firstly New Zealand relies on foreign investment. Foreign investment has flowed into our country and has built stronger and stronger businesses. Investors look at the nominal corporate tax rate as one of the very factors on which they base those decisions. They look at that tax rate and currently today they see a tax rate that is 33 cents in the dollar for corporates. They look at the Australian corporate tax rate of 30 cents in the dollar and very often if not on many many occasions they then decide to put that investment in Australia. 
Yesterday I was shocked absolutely stunned when the Minister of Finance was not telling the people of New Zealand that he would not be encouraging more investment from off shore and more opportunities to build greater businesses for New Zealand. Only on Saturday the Minister of Finance told the people of New Zealand: “We’re going into harder times. We’re going into growth rates of less than 2 percent. Tighten your belt.” He knows he took $5.6 billion extra from people last year and he is not going to give any of it back to them in the next Budget. He knows times are going to get harder. He knows that people are struggling with the proposed changes to the labour laws and with the 17 tax increases he has put on them over the last 4 years. He knows that people are struggling with a mountain of compliance costs and he knows they are struggling under a higher dollar but he is not going to do anything for them to help build foreign investment. What a disgrace that was to the hard-working businesses of New Zealand! They are toiling away working hard and looking for the green light from the Minister of Finance. He is just putting up red lights and stop signs in front of them and it is despicable. 
Secondly the Minister showed an amazing display of lack of knowledge when it came to the issue of multinational transfer pricing. Only a few months ago one of the world’s leading experts came to New Zealand and warned our country that we would be subject to a major deterioration in our corporate tax base if we did not recognise that issue. We need look only at the number of major law suits around the world that are taking place—Toyota in Australia and Glaxo in the United States where a huge amount of corporate income is determined solely on the basis of the tax base. We need look only for instance at the position in Ireland where so much revenue is booked because the corporate tax rate is low and at where expenses are booked in the United States where corporate tax rates are higher—absolutely higher. That is the issue of transfer pricing. 
I suggest to members of this House that they would be well served to read the  
Economist 
 magazine. I know they probably do not read those kinds of comics during the weekend but I suggest they pick up the  
Economist 
 magazine and look at the corporate tax take in the United States of America. It is about 1 percent. It is very low and deteriorating. Why is that? Because it has been subject to transfer pricing from multinationals. I suggest that the Latvia curve effect would take place in New Zealand. That is the effect whereby if the corporate tax rate were lowered the tax take of this country would go up. However yesterday when the National Party boldly took the step of telling New Zealand it would reduce corporate tax rates unfortunately the Minister rejected it. 
Finally we know that when companies come to New Zealand they invest because they want to grow. They will pick up the income tax rewrite and they will be shaking their heads in bewilderment at the various clauses. They will be looking to their tax accountants and they will not find clarity in this position. The bill has failed in every extent other than the fact that it is a wonderful doorstop. It has failed to provide that great fillip that is required. 
I do want to congratulate the Minister on just two things if I may as well as the select committee the number of people who submitted to the committee and the advisers. One was an understanding that a later date of implementation should take place—about 12 months longer than was originally intended—and because of the complexity of this bill the unusual nature of it and the extreme work that has to be done to understand it I think that that was a very wise situation indeed. I want to commend the officials for pointing out—and I congratulate the Minister on accepting it—that the situation related to unintended consequences should be taken into consideration so that if a taxpayer is in a position where his or her tax changes not knowingly and where it was an error in the bill and a non-intended consequence the bill will be retrospectively changed to allow that. 
One of the reasons that tax legislation is increasingly complex in our country is due to the divergence between the top rate and the company rate. That was brought about by one Government and one Government alone. One of the very reasons why the Income Tax Bill is such a long and wordy piece of legislation is that when Labour came into office despite running very large surpluses despite the fact that it did not require the revenue and despite the fact that it is now running a $5.6 billion dollar surplus it chose to increase the top personal tax rate and cause a great deal of complexity that is now bound up in this bill. 
Darren Hughes 
: Is the member still whingeing about that? 
JOHN KEY 
: What will happen in the Budget? Mr Hughes would be well advised to take an opportunity to look at what will happen. Mark my prediction: in the 2004 Budget that will be read by the Hon Dr Michael Cullen the Future Directions package will enclose in it a great deal of revenue a great deal of opportunity and a great deal of resource for beneficiaries in this country. It will do very little for hard-working families very little for the Kiwi battler and very little for Kiwi companies. They will have to rely on the 2005 National Government to get some respite. 
DARREN HUGHES (Labour—Otaki) 
: 
 There is nothing quite like following a National Party spokesperson talking about battling New Zealand families. The National Party uses every opportunity in this House to whinge and whine about the top tax rate because it hates paying more tax. Poor old John Key is down to his last three Jaguars because he has had to put up with the personal top tax rate. The only battlers National members care about are themselves. When the “deputy spokesperson on voodoo economics” over there on the Opposition benches criticises the tax legislation introduced by this Government it is a little bit rich. 
I have to confess that I have not read this bill. Members will see it sitting on the Table of the House. It is a huge two-volume document running to 3000 pages. However I do know that it rewrites tax legislation in the biggest way since 1916 into plain English. I know that only a few members of the House have read it—those who serve on the Finance and Expenditure Committee—and I congratulate them on that. They have made some good recommendations to the House. It makes our tax law easier to follow. This is a great Government doing great things for ordinary people and I support the bill. 
CRAIG McNAIR (NZ First) 
: 
 In speaking to the Income Tax Bill I want to say firstly that I picked up volume 1 while the Minister of Finance was speaking and he pointed out that I had only picked up half the bill. As I have stopped going to the gym as often these days this is all I am able to pick up because it is such a big bill. It is something like 2000 pages long. We are talking about a bill that is supposed to simplify the tax law and I would have to question whether a bill of 2000 pages is really simplifying it. Tax law is hugely complex and that is why we have to start the whole process over again and start the rewrite as the Minister said. To expand a little on that the bill represents the third stage in the process of rewriting the income tax legislation. It follows the reordering and renumbering of the Income Tax Act 1976 and its enactment as the Income Tax Act 1994 and the rewrite of the core provisions contained in Parts A and B of the Act. 
In the Finance and Expenditure Committee we felt there were some submissions that would enhance the bill. I want to share with the House some of the submissions that were important to me and that I am very happy to see accepted and taken on board. One of the submissions I want to talk about—and obviously there were a huge number of them—came from PricewaterhouseCoopers. They thought the date of application of the bill should be deferred for 1 year to apply to the 2005-06 tax year or corresponding income year. Taxpayers with early balance dates will have insufficient notice of the new Act and could be disadvantaged compared with taxpayers with standard or late balance dates. Officials did not oppose this submission for deferring the application date. However deferring this date would mean there would be a longer period within which future amendments to the 1994 Act and the rewritten Act would use different styles and language. However officials do not consider this concern outweighs the suggested benefits for readers of the Act of deferring the application date and I am very happy that the submission was passed. 
With regard to enhancing the entire tax system some members—such as the associate finance spokesperson for the National Party John Key—have talked about doing this and their solution is cutting tax rates. I want to encourage the Government to implement a tax abatement scheme and concessions for our exporters to ensure that viable exporting opportunities and innovation are not lost—for example a 20 percent tax rate on new export net income. I heard the National Party spokesperson talking for most of his speech about tax cuts and all one hears is tax cuts tax cuts. Basically the interpretation of that is “tax cuts for the wealthy” and that is pretty much all one hears from that party and that spokesperson. 
John Key 
: Do you think you’re wealthy if you earn under $38000 because that’s what we were talking about yesterday. 
CRAIG McNAIR 
: The point I am trying to get to is the fact that the National Party and that spokesperson do not think outside the square. They do not think outside the box. All one hears from them day in and day out is: “Tax cuts for the rich.” 
As the only true centre party in this Parliament New Zealand First wants to propose something new and different. We want to think outside the square and outside the box and create tax incentives for exporters. I want to talk about this only briefly because I do understand we are talking about the Income Tax Bill but briefly our exports per capita clearly show New Zealand $3000 Ireland $19000 Singapore $34000—and right there that shows that we have to do something about this. This is not just about giving tax cuts to the rich but saying: “Let’s think outside the square and start giving tax incentives to the engine room of this economy.”—our export sector. 
I listened to the National Party spokesperson and he talked about doing something for the Kiwi battlers the Kiwi farmers and so on who are being hurt by this high export dollar. I ask what did the National Party do for exporters back in 1996. 
Government Member 
: Nothing! 
CRAIG McNAIR 
: It did absolutely nothing. I remember that the exchange rate back in 1996-97 was at around US70c and the National Government did absolutely nothing. It took New Zealand First to get into coalition and do something to start to bring the dollar down. This is the only party on this side of the Chamber that means what it says and says what it means. 
John Key 
: What did Winston Peters do when he was Treasurer? 
CRAIG McNAIR 
: We started to bring the dollar down. 
John Key 
: No you didn’t. 
CRAIG McNAIR 
: Yes we did. We set in place a policy targets agreement that would bring the New Zealand dollar down. What did it do? It brought it down. For somebody who has been in the foreign exchange market to not even understand that is absolutely crazy and I cannot understand it. It must be hard for the old National Party Kiwi battlers who—as Darren Hughes said—are down to their last three Jaguars. It must be hard and I feel for them. 
I want to get back to some of the intricate details of the bill and I want to focus on a couple of other submissions that were made to our committee. Some of them were very interesting and very helpful. I want to bring to the Committee’s attention one of the submissions of the Institute of Chartered Accountants of New Zealand on clause CB 1. The institute felt that the clause should be repealed to make it clear that an amount derived from a business does not include a capital amount. This submission codifies case law and makes explicit the treatment of capital gains derived by a business. This addresses the concern expressed in other submissions that this clause in the rewritten Act could be interpreted as including capital gains. That submission was accepted. So I wanted to raise a couple of submissions that were taken on board by the committee which I believe has enhanced the bill. 
With regard to tax law I believe it will always be a never-ending moving ship and will have to be constantly looked at in that respect. I am glad I have been able to be part of a select committee representing the New Zealand First Party along with my leader the Rt Hon Winston Peters in making sure we are able to simplify the tax law in this respect. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I rise on behalf of the ACT party to speak to the Income Tax Bill. As members have said it is going to be the largest bill ever passed by our Parliament. It is not just the 2307 pages in these two volumes but there is already a Supplementary Order Paper that contains another 114 pages. The ACT party will be voting against the bill. The reason we are doing that is that we are opposed to the principles contained in this bill. Having said that we do accept it is desirable that Parliament regularly rewrites tax laws into one law so that tax practitioners and perhaps members of the public will be able to find the tax law. That is principally why we are doing this and it has also been written in such a way as to try to make tax law more understandable. ACT supports that concept and therefore we have not opposed the procedural measures that have been necessary to enable such a bill to go through. 
Members will realise that if any one party had dug its toes in the Government would not have enough time to pass a bill of this nature and we have not procedurally prevented this bill from going through. But now that we are having the second reading and we are talking about the principles of the Income Tax Bill it is important that I set out the reasons why the ACT party does not support the legislation. The first one is that we would not need 2400 pages of tax law unless the Government was doing something quite extraordinary. What is it doing that is extraordinary? The Government is taking 40 percent of everything that is produced in New Zealand. Would the public of New Zealand voluntarily hand over 40 percent? No they would not. That is why the Government needs 2400 pages of draconian measures to take the money—because it is a draconian measure. Would the member mind doing her telephone conversation a little— 
Metiria Turei 
: Ha ha! 
Hon RICHARD PREBBLE 
: That is very funny. I raise a point of order Madam Speaker. We do have telephones in the House but the Green member who I would have thought would be opposed to telephones and would be doing things by tom-tom— 
Hon Brian Donnelly 
: Smoke signals. 
Hon RICHARD PREBBLE 
: —or by smoke signals should have her conversations in a somewhat less obvious fashion. 
Madam DEPUTY SPEAKER 
: Can we just show courtesy to members certainly when they are speaking and not be on the telephone? 
Hon RICHARD PREBBLE 
: I will say to the Green member in the House that we are not just taking 40 percent of gross domestic product (GDP). If we realise that a large number of the population are young and we have those who are on welfare and those who are retired it follows that working New Zealanders must be paying more than half their income to the Government. The ACT party says that is an outrage and it is not something we support so we do not support the tax laws that make that possible. 
Can I then tell the Government why it is wrong that the Government takes 40 percent of GDP? Firstly income tax is if one likes the penalty we all pay in order to work. If one wants to work in this country the penalty is that one has to pay tax. If one wants to invest the penalty is that one must pay tax. [ 
Interruption 
] The member might have incredulity. She might never have invested. If she tries investing the Government will penalise her for doing it. If the member was to try to be more productive she would find that the penalty for that is income tax. It follows that if members want more productivity if they want more wealth in New Zealand if they want more investment—and I understand that all parties say that they do—we should be lowering the amount of tax rather than passing laws of this sort to increase it. So that is another reason we are opposed to this bill. 
But there is a further reason why it is 2400 pages long: this tax bill is not just to collect the amount of money the Government needs. If that is what it was going to do we could probably do it with 1000 pages of law. 
John Carter 
: What? 
Hon RICHARD PREBBLE 
: No we would probably need 1000 pages of law. But successive Governments have used the tax system to redistribute income and that is the objective of all social engineers. This is a piece of social engineering and I say to the House that it is unfair but it will also continue to fail. That is another reason why the ACT party is opposed to it. One reason why we are saying to members that we do not think this sort of tax law is necessary is that we do not support the notion that just because one earns more money the Government has the right to confiscate it. I can think of a very good example of that given by the Leader of the Opposition before he was a member of Parliament. He pointed out that under the present tax law—this law we are passing here—a couple with two children who earn $100000 a year pay a hundred times more tax than a couple earning $25000 a year who qualify for family support. He also pointed out quite rightly that our tax laws are skewed in favour of those on low incomes. Indeed many people on low incomes are net receivers of money from the Inland Revenue Department via family support. 
John Carter 
: From us the people. 
Hon RICHARD PREBBLE 
: From us right. I am obliged to the member. They are net receivers of money from the people and I want to draw to the attention of the House that the vast bulk of income tax is paid by just a third of the electorate and that third of the electorate really pays very heavily. Then when I hear people say—not just the Government but now apparently the National Party—that $60000 a year means one is rich I just wonder what planet they are living on. Why is $60000 important? It is because that is where the top 39c tax bracket cuts in. 
 We are now being told by the two major parties that the top 39c tax bracket should continue. The ACT party does not agree with that. We say we should give a tax cut to every worker and there are a variety of reasons for that. One is that it is a question of fairness but secondly there is a thing called “keeping your pledge”. I have a copy of these cards. I know that the Government is trying to gather them up but this is the credit card promise that has that photograph of Helen Clark—apparently it is Helen Clark—stating that: “My commitment is to you we will deliver.” This was pledge No. 7: “No rise in income tax for the 95 percent of taxpayers earning under $60000 a year.” 
This year members know that 20 percent of all full-time workers are in the top tax bracket. That is unfair. Why should those workers wait as the two major parties compete for the social welfare vote? I say that we ought to give a tax cut to everyone. We could give a tax cut to every worker. We could give $100 per fortnight to every single worker in New Zealand and that would cost $4 billion. The taxpayer surplus is $6.9 billion. I agree that we ought to cut the company rate but cutting it just to the rate of Australia will not cut it. Why should someone come to New Zealand? We have to give a competitive advantage and with a $6.9 billion surplus we could go to a flat tax rate of 24c in the dollar. We would then need a tax code not of 2400 pages but of probably less than 20 pages. If we had a flat rate of tax whereby everybody pays the same amount on every dollar he or she earns the person on $100000 would be paying 4 times more than the person on $25000 but that is a fair system. It would be easy to implement and it would result in a huge increase in production jobs and wealth. All it needs is the two major parties to decide to adopt some sound economics and some fairness and then we could retire a whole lot of tax planners as well. 
GORDON COPELAND (United Future) 
: 
 Before I get into the substance of the bill I would like to pause and thank the member John Key for his ringing endorsement of the United Future policy to cut the corporate tax rate from 33c to 30c in the dollar. I guess that in a way imitation is the ultimate form of flattery. 
In income tax history terms the second reading of this bill is a historic occasion. As others have mentioned this bill tips the scales at a massive 2421 pages undoubtedly an all-time record for any bill coming before this Parliament. The bill represents the culmination of many years of work by officials at the Inland Revenue Department and I would like to begin today by thanking them for their dedication and professionalism over such a sustained period of time. I also thank them for the way in which they cooperated fully with the Finance and Expenditure Committee for it must be said that we worked them virtually right through 2003 between the first reading of the bill and today. The officials responded with energy and good common sense kept their heads down and brought together a bill expressed in common English that is destined to form the tax law of New Zealand for another generation or more. I thank also Therese Turner and David Patterson who were retained by the committee as specialist tax advisers. 
A few people have asked me whether anyone has actually read right through the bill from cover to cover. I have not but I can tell members on good authority that Therese Turner has. Therefore it needs to be acknowledged that those of us on the committee who have not read the entire bill relied enormously on the excellent advice and guidance given to us by Therese and David. Those advisers together with the officials also worked tirelessly with the Institute of Chartered Accountants of New Zealand the New Zealand Law Society and Treasury to give this bill its final shape and content. Since I am a chartered accountant myself—one I believe of only two in the House—I would also like to pay a special tribute to the institute and to the enormous amount of time and energy that it put into this bill. Many institute members were involved and put in extra hours in their own time over and above and in addition to their normal work commitments. All of those who appeared before the committee displayed a dedicated professionalism and a deep interest in both the drafting of this bill and its practical application. 
I am very conscious that the rewrite of the tax legislation will be regarded with a degree of both apprehension and anticipation by tax practitioners in both the accounting and legal professions. Many of the best tax advisers in this country have grown up using the original 1960 law and the 1976 Act and could literally quote great hunks of it almost from memory. The partial rewrite of that Act in 1994 meant tax practitioners had to go back to school and such relearning will be again necessary once this bill has been enacted. 
The Finance and Expenditure Committee was mindful of those realities and for that reason has striven to ensure that the transition from the old to the new will in practice occur as smoothly as possible. With that in mind we have done a number of things. Firstly we have endeavoured in conjunction with our advisers and practitioners to road test seven key areas of the bill. This has been a most useful exercise and has identified a number of drafting changes and in a number of instances involved a complete rewrite where clarification or correction was seen to be necessary. The bill when enacted will have application for the 2005-06 tax year. We note that for some taxpayers that year will start on 2 October this year. Accordingly we have encouraged the officials to continue their work with the Law Society and the Institute of Chartered Accountants in this interim period. We have also squarely faced up to the problems that may result from the unavoidable “going back to school” relearning phase as practitioners swap from the old law to the new. 
Overarching provisions have been included in Part Y—I wonder whether this is the only bill that has ever had a Part Y—to indicate that no change in the effect of the law is intended and that the old law should be used as an interpretive guide in cases where the meaning of a provision in the new law is unclear ambiguous or even gives rise to an absurdity. Such cases will be able to be referred to a panel comprising representatives from the Law Society the Institute of Chartered Accountants Treasury and the Inland Revenue Department and the Government has given a commitment to consider amending the Act retrospectively in circumstances where the panel finds it necessary to amend or reword in order to clarify matters as they arise. 
We have also given reassurance to tax advisers and taxpayers that where there are such accidental or unintended changes between the old law and the new then taxpayers will not be penalised provided they have taken reasonable care and a reasonable tax position under the old law. However we are conscious also that the Government cannot bind its successors. To guard against the possibility that a new Government may decide to retain the rewritten law without retrospective amendment taxpayers will not be subject to penalties or use-of-money charges. Even with those safeguards we recognise that there will be a one-time disruption for both practitioners and taxpayers in preparing tax returns for the 2005-06 tax year. Diligent practitioners will want to double-check against the new legislation and it seems inevitable to me that they will then want to pass some of the extra costs arising on to their tax clients. We have also encouraged the Inland Revenue Department to undertake an educational programme to inform practitioners of those realities and in particular to encourage them not just to rely on their memories or on their current understanding of the law but to actively check the position against the provisions contained in the new legislation. 
I said a moment ago that experienced practitioners can pretty much prepare tax returns on autopilot because of their long experience with the legislation. However that does not in itself guarantee they will get matters right so we encourage all taxpayers and their advisers to familiarise themselves with the new law as quickly as possible. It is my hope for example that come the 2006-07 tax year all the initial kinks will have been ironed out and everybody will be able to return to plain sailing. 
In case individuals should feel that this rewrite provides an opportunity for tax evasion let us be quite clear that Parliament’s intention is that except for the small number of intended policy changes which are set out in schedule 22A it should not change the underlying policy of New Zealand tax law. The committee believes that these provisions will ensure as smooth a transition as is humanly possible from the old law to the new. I have enjoyed working with the committee and team of advisers on this major rewrite and I signify United Future’s support for the bill. 
PANSY WONG (National) 
: 
 The National Party will be supporting the passage of the Income Tax Bill. I want to make it very clear that this rewrite of the Income Tax Act has nothing to do with tax rates. This legislation does not mention what personal or corporate tax rates should be. That is the subject of other annual legislation which Parliament will debate. So I do not agree with the ACT party which gave that as the reason it will be voting against this bill. 
The sole purpose of this bill is to bring together the income tax legislation which has had so many amendments and binding rulings over the years. Many of my parliamentary colleagues have mentioned there are over 2000 pages in this bill. I do not want people to overemphasise the fact that because the bill is written in a simpler style of English a lot of people will supposedly find it easier to interpret; I think that is an oversimplification. We are dealing with legislation and we need to accept that there are technicalities that this legislation will not overcome in terms of the definition. I will demonstrate that later on. 
I want to comment that New Zealand First’s Craig McNair should at least be as honest as Labour’s Darren Hughes. We appreciate from Darren Hughes’ speech that he had not read the bill. I listened with a lot of intensity but I could not really understand what Craig McNair was driving at. I want to acknowledge the hard work of the Finance and Expenditure Committee members. Myself and John Key joined the select committee only this year so two of us participated only at the final stages of the examination of this legislation which comprises over 2000 pages. I would like to acknowledge the effort of the other select committee members and also the former members of that committee our National Party leader Dr Don Brash and Dr the Hon Lockwood Smith and the Hon David Carter. It must have been quite a daunting task. I also think it is to the select committee’s credit—as Gordon Copeland mentioned—that there was an initiative to do “road tests” and also to extend the transitional period of this legislation. It is such a massive piece of legislation that all due care should be taken during the consultation process. 
I also want to join my colleagues in acknowledging the efforts of Inland Revenue Department staff in trying to bring thousands of pages of legislation together. That cannot be an easy task. As one of the two members of the Institute of Chartered Accountants who are in Parliament I want to join Gordon Copeland in acknowledging the efforts and contributions made by the members of that institute. 
I want to re-emphasise a promise that was made by the Hon Michael Cullen during his second reading speech. He promised that in this legislation he will try his best to maintain the tax policy and try to maintain the stand that it does not aim to change any policy. But there are two exceptions. First of all there are some changes made I understand in the interests of clarifying or simplifying the policy intention and there are also changes approved under the generic tax policy process. I want to re-emphasise that because at the final stages of deliberations on this legislation cases have already been raised by people disputing whether the rewrite has led to a change of the underlying tax policy. Some of those issues raised have already been referred to the panel for decisions. 
I know that we can all be optimistic when standing in the safe atmosphere of the debating chamber and making promises that this legislation does not intend to change tax policy so therefore taxpayers should be safe that if queries are raised with the Inland Revenue Department or the Minister they will be satisfactorily resolved. My experience is that those types of issues tend to be a lot more complicated and for any taxpayer trying to take on a department in terms of changes to interpretation whether intentionally or unintentionally it is difficult. I raised that issue during our consideration but I was told that the department has taken upon itself the responsibility to ensure that any taxpayers who believe they have been disadvantaged by the changes to interpretation in the rewrite of the Income Tax Bill will have the opportunity to take their concerns to the tax panel. So I think it is very important to reassure taxpayers and tax practitioners in New Zealand that the rewrite of the Income Tax Bill will still enable them to have a fair hearing if they believe unintentional changes are being brought in during this rewriting process. I am glad that the Minister of Finance the Hon Michael Cullen repeated that assurance. It is one that has to be honoured. 
I mentioned previously—and I promised to share this with the public—that as parliamentarians we should not try to overpromise or oversimplify how user-friendly this rewrite of the income tax legislation will sound to them. Let me give a few examples. In Part A “Purpose and interpretation” clause AA2(2) tries to give us the definition of defined terms: “If a defined term is used in a section and is not included in the list of defined terms following the section the term is nevertheless used in the section as defined.” I have to confess that I am none the less any clearer after reading the definition of the defined terms. I am just trying to warn people that as parliamentarians we should not overpromise how wonderful this piece of rewritten income tax legislation is. If anybody is in doubt they should still seek the advice of experts. 
To demonstrate how complicated the tax system has become I point out that even the definition of income can be varied. Ordinary taxpayers might think that income is simple enough but in subpart BD1 of Part B income is defined as exempt income excluded income and counted income. So to me it is not a matter of standing today in Parliament and telling the public to trust politicians because we have a trustworthy process of rewriting the Income Tax Bill and from now on it is a very simple issue. Legislation by its nature has technicalities and complications. The intention of the Income Tax Bill no doubt is to make sure people are paying their fair share of tax. If one derives income one is supposed to be able to deduct the expenditure incurred in deriving of that income. 
Ultimately I agree with ACT and also with my own party in saying that a lower rate of income tax undoubtedly helps to simplify tax legislation. When people believe that their rate of income tax is reasonable then they will try less to challenge the system or devise means to avoid paying tax. Ultimately individuals anywhere will try to challenge income tax schemes no matter how low the rates are. 
The National Party supports the passage of the Income Tax Bill through its second reading and looks forward to the Committee stage debate. 
JOHN CARTER (National—Northland) 
: 
 I want to start off by telling the House that I have not read the bill. 
Darren Hughes 
: Have or haven’t? 
JOHN CARTER 
: I have not read it for a couple of obvious reasons: for a start off it is in two volumes and it is in English. That is a bit of a negative. Secondly I do not in any way intend to pass myself off as a tax expert. Indeed I think it is probably accepted that I am not known for my knowledge in financial matters. So I just get those two things out in the open to save anyone from trying to poke the finger at me. 
There are a couple of fundamental issues I want to raise with regard to this rewrite. First it is important that we do our best as a Parliament to bring together legislation that has been amended over a number of years for those who are significantly involved. Obviously there are a lot of tax consultants and accountants who use this sort of legislation repeatedly and who from time to time miss little bits that then cause them problems with the Inland Revenue Department. 
I want to make some comments on some fundamental issues relating to legislation of this sort. The first thing I will put on the record is that I often hear people say: “Well I haven’t paid any tax this year.” or “I don’t pay tax.” Anybody who thinks that he or she does not pay tax in one way or another is dreaming because tax is a cost in our society and anything we do where a tax is implied means that tax somehow or other gets wound up in the goods we purchase or use. If people suggest they are the lucky ones and do not make some contribution to the taxation system in this country then they are deluding themselves. The fact is that tax is a built-in cost in our society and we all pay it in some form or another. When we buy goods or purchase services there will be a tax component in it that we contribute to. So the first fundamental point we need to understand is that tax is a cost in our society and quite honestly every Government should be doing its best to ensure it reduces the cost and burden on our society. 
The second thing that interests me with tax law is that people who are tax experts are always looking for ways in which they can gather revenue. I saw it more with local government with which I am more familiar than with central government finances but the same principle applies. There are people who—if they happen to be the treasurers of local government or whoever they may be—are always thinking about what they can do to gather more revenue. They think that by putting a certain rate across or by applying a tax somewhere more revenue will be brought in. That is fine but we need to go back a step and ask why they need the revenue in the first place. That seems to me to be an absolute fundamental with regard to any system of revenue collection. 
Quite honestly I do not think that enough time is spent on asking ourselves the very fundamental question of why we need the revenue in the first place. If our system of delivering services to the people of this country were more efficient—and I am now talking about our bureaucracy in particular—the Government would not need the same level of income to provide them. After all it is the people themselves who pay for and then receive those services. They are the people who not only pay but also are the recipients. We should constantly be looking to see why we need that level of income. Do we need to provide the services that we do provide? 
That leads me to one other observation. I am becoming increasingly concerned about the mindset in our bureaucracy. Once upon a time we had an absolutely dedicated loyal public service in this country. I am afraid to say that today it is not so in my view. Things are happening in our public service that worry me. We have seen signs of corruption coming through in particular cases. Also the public service used to be apolitical but I am afraid we cannot say that today. As a consequence because of those two aspects that never used to be there the public service is not what it was. 
Pita Paraone 
: It started during the wine-box inquiry. 
JOHN CARTER 
: There are a whole number of instances where one could say that the attitude in the public service has changed one of which my colleague has just pointed out. The price of that is extra cost. The price of that is the need for a volume of tax law because more cost is added and we need to see whether we can attract more revenue. 
One of the things we should be looking at with regard to law like this is how we can simplify the way we gather revenue. I will give an extreme example of what I mean because I do not think there is anybody in New Zealand who would not say that legislation like this is hugely complicated. It is an example of extreme simplification because I know there are people who believe that a flat tax system is a way in which we could attract revenue and that it would be a lot more efficient than the system we have now. Instead of having a system of income tax of GST of road tax and of all the systems we have what would happen if we had a system that taxed one good at source? An example would be if all Government revenue were gathered only from diesel and petrol. Believe it or not I had the calculation made to do away with all other systems of income for the Government other than applying a levy on fuel. The problem is that it becomes a bit extreme because the cost of the fuel is quite excessive. It is not so much the fuel itself but the tax applied on it by the Government. 
The last time I did the calculation I figured we would need to be paying about $18 a litre at the pump for petrol in order to gather enough revenue to replace all the other income that everybody else pays. Although obviously that would not work because it would cause a few distortions in the system we have the point of collection would become so much easier: once a month the petrol companies would write out a cheque to the Government for whatever the revenue was and we would not need this complicated law or a whole lot of people making tax calculations for other people. It would simplify the tax system overnight. The advantages to our country in getting rid of all that structure and bureaucracy would be huge. The problem would be in getting such a system implemented and accepted so that people understood that they would not be paying GST or income tax or any other form of tax. However it would cause them some concern the first time they turned up at the petrol station to fill up their car and found that they had a bill of about $250. So although it is probably not practical to implement such a system the point I am making is that we should continue to endeavour to ask ourselves whether we need the income and how we can simplify it. 
I will finish my comments on one other point that I think is important. We have a system where we talk about tax changes and all parties will have a different view. One of the things that disturbs me is that as we go through the debate and the discussion—and in the last 2 days the National Party leader Don Brash has given the National Party’s view on taxation as we go into the next election—we find that unfortunately comments from the Prime Minister tend to distort what she claims will be the impact. The fact is that this country has a huge surplus of $5.5 billion at the moment and that will undoubtedly be used by the Minister of Finance in the next election to try to spread the load and encourage people to continue supporting the Government. 
 I heard the Prime Minister the other day say that if Don Brash’s policy were to be implemented it would have a negative impact on health and mean that we would have to decrease funding in education and other areas. That is absolute garbage. It is rubbish. Quite honestly it is irresponsible for the Prime Minister or anyone else to suggest that we do not have sufficient opportunity to look at our tax levels and at whether we can encourage further investment and involvement in employment through the private sector without the Government having to be so involved. 
I come back to this legislation and I say that it is great that the Government is doing it. We have been supportive of it; nevertheless there are some fundamental things that we should be looking at as we do these rewrites. We should be looking to see whether we can change the principles we work on and have less complication in our tax laws. 
A party vote was called for on the question  
That the Income Tax Bill be now read a second time. 
Ayes 111 
New Zealand Labour 52; New Zealand National 27; New Zealand First 13; Green Party 9; United Future 8; Progressive 2. 
Noes 9 
ACT New Zealand 8; Independent: Awatere Huata. 
Bill read a second time. 
Hazardous Substances and New Organisms (Transitional Provisions and Controls) Amendment Bill 
Third Reading 
Hon MARIAN HOBBS (Minister for the Environment) 
: 
 I move  
That the Hazardous Substances and New Organisms (Transitional Provisions and Controls) Amendment Bill be now read a third time 
. The bill’s primary objectives are to enable the practical application of controls to all hazardous substances and to provide for practical management of the transitional period. In providing for these outcomes this bill reduces cost to Government and to industry reduces barriers to innovation and better protects the environment and the health and safety of people and communities. 
No amendments were made to the bill during the Committee of the whole House but I would like to address some of the concerns raised in the House during its passage. On the numbers of existing hazardous substances let us put this to rest. The chair of the Education and Science Committee expressed concern that the committee may have been incorrectly advised as to the number of the existing hazardous substances. There are I admit a lot of numbers flying around and I want to set the record straight once and for all. We have approximately 8000 hazardous substances that were previously subject to regulatory control under explosives dangerous goods pesticides and toxic substances Acts which the Hazardous Substances and New Organisms Act replaced. 
Then there are the notified toxic substances. In the years 1996 to 2001 when the hazardous substances part of the Hazardous Substances and New Organisms Act commenced the tally of notifications rose from 8000 to a staggering 215000. This happened because the chemical industry recognised that this was the only way to gain the status of an existing substance under the Act and therefore remained legally in use. If we take these 215000 notifications and remove the multiple notifications and the notifications for substances that are not hazardous we arrive at a figure of approximately 70000 notified toxic substances. A more exact figure will not be known until the Environmental Risk Management Authority has further progressed its work with industry on these substances. If we add 8000 substances that were subject to direct regulatory control to the approximately 70000 notified toxic substances we would find that we have approximately 80000 existing hazardous substances. 
Hon Brian Donnelly 
: 78000 actually. 
Hon MARIAN HOBBS 
: “Approximately” was the word. I know these numbers do not add up exactly. As I said the reason is that the 70000 can be confirmed only when the Environmental Risk Management Authority has finalised its work with industry. These numbers match those in the select committee report and I wish to assure the chair that the select committee was correctly advised. 
I refer to select committee time frames. Concern has been expressed at the time frames in which the select committee was asked to report on this bill. I acknowledge that the time frames were tighter than the norm and I thank the committee for its diligent work in grappling with this small but very technical bill. I would like to explain a little of why these time frames came about and I acknowledge that perhaps I should have explained this in December. The current provisions governing transfer are woefully unworkable. It took until August 2003—and this question was raised last night—to successfully make the first transfers under the Act the explosives. This was not due to a lack of effort; it was due to the roadblocks in the legislation. The process was unworkable. However we needed actually to use the provisions in order to learn all their pitfalls—otherwise we would be doing it in theory—to make sure we fixed the problems. So finalising the details of this very technical bill could not be done until after the explosives had been transferred and that was in August 2003. That brings us to the point at which the legislation was introduced in November. 
Perhaps most important this bill must be in force to allow the dangerous goods transfer scheduled for April to happen. Businesses have long planned for these transfers. Delay means uncertainty and forcing people to change their plans resulting in significant and avoidable business compliance costs. We must avoid these costs—and avoid them we will with members’ help which I appreciate. 
This bill will result in a dramatic improvement in the functioning of the hazardous substances and new organisms regime. In addition to the costs associated with delays in the transfer dates delay has other effects. Delay means adverse effects on the authority and wider government in terms of efficiencies. Delay means businesses that wish to proactively take advantage of the flexibility the Act offers cannot free themselves of the old requirements. Delay means that businesses trying to import or manufacture newer safer or more specific substances are forced to use a more onerous process of application and in some cases accept impractical controls. In practice we think that many businesses are simply waiting until the bill is passed. This means the market availability in New Zealand of these generally safer substances is being delayed. 
With so many substances to transfer and so few substances transferred to date the progress in respect of transfer has been slow. Why? Because of the very problems that this bill fixes. The bill contains amendments that remove the need to give effect to transfer through making a regulation. We have given the Environmental Risk Management Authority the ability to design practical and cost-effective controls rather than having to vary the default controls individually upon transfer if they are not suitable for the substance like the approved-handler requirement for petrol which could have been exciting. We have allowed—and this is terribly important—groups of substances to be transferred together. All these things are critical in enabling transfer to occur to deal with the 80000 existing hazardous substances by the deadline of July 2006. Much of the technical work required has been done. What is needed is the changes in this bill that remove the legislative roadblocks that hamper practical effective and efficient risk management. 
The transfers will begin to flow in April with dangerous goods and scheduled toxic substances. July will see the transfer of pesticides. By the end of this year 80 percent of the hazardous substances previously subject to direct regulatory controls will have been transferred to this bill. Over the following 18 months the 70000 notified toxic substances will be transferred in groups. These substances are less hazardous than the explosives the pesticides the vertebrate poisons the dangerous goods and the scheduled toxic substances that properly precede them in transfer. 
Contrary to some concerns that have been raised this bill enhances the protection of the environment and the health and safety of people and communities. It does this because it removes the barriers to transfer bringing existing hazardous substances under hazardous substances and new organisms control sooner. This supports business in a variety of ways as I have described but it also allows New Zealand to reap the environmental and safety benefits of the hazardous substances and new organisms regime. These benefits are considerable. Firstly in contrast to earlier regimes the hazardous substances and new organisms regime includes controls to manage all the hazardous properties of a substance. This means that petrol for instance will have controls to manage not only the fact that it is flammable as it did under dangerous goods but also its toxicity and eco-toxicity. Secondly the notified toxic substances will come under direct regulatory control when transferred. This bill is necessary in order to get the job done safely and in a timely manner. Thirdly completing transfer means that transferred substances can be used as reference substances for rapid assessment of new substances. That enables faster and more cost-effective approvals for safer new-generation substances thereby helping to reduce the overall level of risk from hazardous substances. 
Enactment of the bill is a key milestone in the Government implementing its plan to make the Hazardous Substances and New Organisms Act more workable for hazardous substances—in other words the hazardous substances strategy. This debate marks the completion of a crucial step in making the hazardous substances and new organisms regime workable thereby providing for cost-effective management of hazardous substances. That protects people the community and the environment. The changes in this bill will ensure that the processes of the hazardous substances and new organisms regime work better. 
This is not a divisive case of business versus environment. The very same features of this legislation are good for both business and the environment. This legislation is a snapshot of the future of New Zealand one in which sustainable development is an achievable goal that is enabled by New Zealand’s legislative framework. I commend the bill to the House. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 I am always somewhat wary when a Labour Government Minister says something like: “I’m going to set the record straight once and for all.” Although there was an adjustment from yesterday I say to the Minister that some of the figures were not quite right. 
Hon Marian Hobbs 
: No I object. 
Dr PAUL HUTCHISON 
: I have the ministry’s figures regarding the number of toxic substances which I think the Minister said was 215000. 
Hon Marian Hobbs 
: No “notified”. Please get it right for the record. 
Dr PAUL HUTCHISON 
: We have the strategy for improving the workability of hazardous substances. The Environmental Risk Management Authority currently has about 217000 notified toxic substances on its books but estimates there are only about 70000. I accept the Minister’s point. She is quite right once we account for the duplications and the non-hazardous substances. Just to make sure that we get the record absolutely straight I think the Minister said there were 215000 but in actual fact the record suggests 217000. I suggest to the Minister as I think she herself said at the end of her “getting the record straight once and for all” statement that the real figures will be ascertained only at the end of the day once the Environmental Risk Management Authority has reported exactly what the situation is. So I think it is quite appropriate that I am wary of a Labour Government Minister who says she will put the record straight once and for all. 
Hon Ken Shirley 
: “I’m from the Government. I’m here to help you.” 
Dr PAUL HUTCHISON 
: That is excellent. The other point the Minister made was that the time frames were tighter than normal. Indeed that was a wonderful exercise of licence given the fact that the Act for hazardous substances came into force in July 2001. If one looks at the legislative history of this bill one sees that it was introduced on 6 November 2003 and its first reading was on 18 November 2003. The time frame was somewhat tight—to use the Minister’s terminology—to suggest that report back could occur 3 days after Parliament resumed. As I understand it the process was poor because Brian Donnelly the very good chairman whom the Minister acknowledged yesterday was not consulted until Parliament resumed. Nevertheless National is supporting this bill because its intent is to minimise business costs and to reduce barriers to innovation. Certainly those causes are extremely worthy. 
I am interested in knowing the situation of the strategy that requires several things to be done once the bill becomes an Act. The advice from the ministry was that short-term easy gains can be made by two non-regulatory steps: firstly to make controls on hazardous substances and new organisms easier to understand and secondly to reduce compliance costs for applicants. The ministry recommended that user-friendly guidance be developed to interpret the controls on hazardous substances and new organisms for businesses. I would really like to know from the Minister—and I would suggest that she does comment on this—whether those user-friendly guidelines will be put in place. The officials did not seem to know but went on to say that it was a high priority because the risk that hazardous substances pose to the environment and people increases significantly if people cannot understand and follow those controls. So I tell the Minister that the challenge is to ensure that those user-friendly guidelines are put in place. 
The second requirement was that the Environmental Risk Management Authority take steps to reduce the information provision costs for applicants. In that case the costs of getting information together for an application are much higher than the fees the authority charges to process the application and are a significant cost to industry. Once again it is hugely important that the Minister does ensure that those steps are put into place. She has outlined the fact that by 2006 the transfer and controls should all be in place. I hope that will be the case but what we do want to see from this Labour Government is that those two very important non-regulatory steps are also put into place. They too will add to helping minimise the cost to business and reducing the barriers to innovation which are clearly so hugely important for this legislation to be successful. 
I commented earlier that it is refreshing to see the Labour Government at last bringing in some legislation that will reduce obstacles. Unfortunately the Hazardous Substances and New Organisms Act is complicated. It has all sorts of regulatory controls that have been made worse by the Labour Government over the last 2 years particularly in relation to new organisms. That has been commented on extensively by the Biotechnology Taskforce which has asked for best-practice guidelines predictability and clarity in terms of regulations. It is hugely important that those are monitored. I understand that one of the tasks the Environmental Risk Management Authority will be required to do 2 years after the Act comes into place is review the situation. That is hugely important. In fact there is every chance a National Government will be in by then. Indeed we will wish to look at a review of the whole Hazardous Substances and New Organisms Act so that it can be made much more sensible and appropriate to minimise business costs than it is at present. However it certainly is refreshing that this bill which is so necessary will be in place. 
One of the things I was concerned about was the fact the Minister had said that every day the passage of the bill was delayed would cost businesses throughout New Zealand. She had the gall to say that given the fact that the need for this bill has been around since 2001. The Government had plenty of time to pass this legislation much earlier but then had this extraordinary rush at the beginning of this year. The Government must put in context its wish to ensure that business wishes really are achieved. 
The very last thing I want to say about this legislation concerns the area of transfers relating to transitional matters. Before issuing a notice one thing the authority must do is consider best international practices and standards for safe management. It is hugely important that New Zealand is in the international loop in that respect and that it does everything reasonably practicable to advise all relevant people involved with the process. Again that is where the monitoring requirements are hugely important. The Environmental Risk Management Authority has a great deal to do with the transfers but it is also important that it monitors the practical way the legislation pans out in industry because the legislation covers such a wide variety of dangerous goods. 
National is supporting this bill. Its basic thesis in terms of minimising costs to business and reducing barriers to innovation is worthy of our support. 
DAVID PARKER (Labour—Otago) 
: 
 I too commend this bill to the House and I thank the chairman of the Education and Science Committee Mr Donnelly and other members who were on it for the work that they did on the bill. It will improve the legislation relating to the control of hazardous substances. It is important that legislation like that works as cost effectively as possible so that it maintains New Zealand’s position as a nation with one of the lowest rates of compliance costs in the OECD. I commend this legislation to the House. 
Hon BRIAN DONNELLY (NZ First) 
: 
 So that we do not get to the awkward situation again whereby we come to the third reading of a bill before we are given an adequate understanding of what the figures mean I need to point out to both the Minister and to her officials that under mathematical convention the sum of approximately 70000 and approximately 8000 is approximately 78000 not approximately 80000 as has been said to us all the way through the debate on this bill. Confusion has arisen from the Minister’s approximately 2000 ghost hazardous substances. I hope that the Minister and her officials will take that convention on board in future. 
Enough has been said about the process by which this legislation has been moved forward. Let it just be said that a lesson should have been learnt by the Government that when an action strategy is established it needs to take into consideration the parliamentary calendar. In this particular case it did not. This legislation is simply part of a strategy established last year—the strategy paper was published in June last year—when it had been realised that the legal framework established all the way back in 1996 under the Hazardous Substances and New Organisms Act to deal with hazardous substances simply was not working in the sense of the transfer of substances. More particularly it was not working with regard to the transfer of substances from the various pieces of legislation because of some of the restrictions set out in the legislation itself. The strategy that was put in place in June of last year determined that the Environmental Risk Management Authority would transfer 500 substances by 1 April 2004. However in order to do so it needed this piece of legislation to be passed. Thus the legislation had to be progressed within a certain time constraint but unfortunately that time constraint did not take into consideration the parliamentary calendar. 
However the bigger issue is whether the requirement for all hazardous substance transfers to be completed by June 2006 will be able to be met within that legislated time constraint. Certainly without the changes to the transfer process that this bill envisages meeting the June 2006 deadline would be impossible. Moreover the cost to business if the present regime is maintained is estimated to be in excess of $2 million per annum in terms of compliance costs. This legislation goes a considerable way towards overcoming some of those problems. 
A number of problems are encountered within the current regime. The first problem is that when a transfer is completed under the present situation the very next day individuals and organisations must comply. For example if one has a whole pile of turpentine under one piece of legislation and the new controls state that it has to be labelled in certain ways all the bottles of turpentine throughout New Zealand have to be re-labelled overnight. This legislation will enable exemptions in certain cases to allow for change over time. It also allows for individuals and organisations to be able to move into the new regulatory framework in anticipation of those changes. That is far far more sensible than the here today gone tomorrow type of regime that currently exists. The second problem is the cumbersome system that requires an Order in Council in order to fulfil a transfer. Under the bill a transfer is to be effected by notice of transfer—a far more logical and sensible process than Orders in Council. 
The bill widens the powers of the Environmental Risk Management Authority to vary controls so that appropriate controls can be assigned to all hazardous substances. It provides greater flexibility whilst also ensuring that there is adequate risk management. But instead of creating of hammer to crack a nut it allows the appropriate implements for the particular items to be applied. The bill creates a couple of new forms of authorisation that do not currently exist. The first is called a permission which permits the general or particular use of a substance. A permission is required if the authority makes it a condition of the authority’s approval of a substance. In considering an application under that new form of authorisation the authority must consider any adverse effects involved in the use or uses of the substance to which the application relates and also the conditions if any that it thinks should be imposed as part of the permission. The permission is then given and the individuals or organisations can proceed with the particular use of that hazardous substance. 
The other new authority that the bill creates is a licence that authorises the possession of a hazardous substance. A licence under that new section is required if the authority makes it a condition of the authority’s approval of a substance. So the authority can approve a substance as long as one has a licence to be able to use it or to maintain it. But the authority must grant a licence under that section if it is satisfied that the applicant is a fit and proper person to possess the substance concerned and meets the relevant test certification requirements under section 82 of the principal Act. The bill states that if Bernie Ogilvy is a fit and proper person to have explosives and has been properly trained to have them he can get a licence to have them—albeit one would hope that he would not apply in the first place. The fit and proper person test will be prescribed by regulations made under the Act. But once again that is a sensible approach rather than having everything controlled and prescribed by regulation and by Orders in Council. Therefore the bill certainly allows for an improved regime now. 
There is also a provision—and this is the fall-back and I guess the quid pro quo of it—to contest a decision by the authority in the District Court by appealing against a decision about the terms and conditions of a permission or a licence held by a person or about the declining or revoking of a permission. The legislation also provides greater flexibility for the authority to grant exemptions. 
During the select committee process we did come across one area of concern and that was what was described as “onerous” materials in the select committee report but as “arduous” materials in the departmental briefing. If a company goes into receivership or bankruptcy there is the issue of what happens to any leftover materials or to sites if they have become contaminated when there is no person to assign responsibility to. The bill does not address that concern. We know at this stage that the Government is very much aware of the circumstances that there is a work programme and that it may well mean the Companies Act will have to be amended to accommodate that. However at this stage we have to alert the House that there is one area of concern not covered by this particular bill or by the principal Act. 
There is also a strong body of opinion that this legislation should not be necessary and would not be necessary if the regulations that flowed from the principal Act had been put in place appropriately in the first place. As I say it is a strong body of opinion. New Zealand First has considered that particular issue and has concluded that whilst we agree that the regulations need careful and immediate scrutiny we also require this legislation to go through. So it is not a matter of either/or; it is a matter of both/and. We will be keeping a close eye on the Government to ensure that the important work around the regulations is done. I mentioned compressed gases in my speech in the Committee stage. We think that matter has been covered as a result of the work carried out by the select committee. 
I want to finish up by saying that the very nature of New Zealand First is to look after the health and well-being of our nation. There is no way that we would frustrate necessary legislation to ensure that neither our citizens nor our environment are to be put at risk through hazardous substances. Neither however do we want a regime that paralyses economic activity. We believe that this bill goes in the right direction and therefore New Zealand First will be supporting it. 
Hon KEN SHIRLEY (Deputy Leader—ACT) 
: 
 The ACT party joins with every other party I think in this House in supporting the Hazardous Substances and New Organisms (Transitional Provisions and Controls) Amendment Bill. I would like to comment on the legislative process but before I do I commend the chairman of the Education and Science Committee the Hon Brian Donnelly whom we have just heard from. He clearly has a very good grasp of this legislation and steered it through the committee under considerable duress. I think the House should note the tremendous job he has done under what I would regard as unreasonable pressures that were put on the select committee by this Labour Government. 
I was aghast to learn in this debate that the bill had its first reading on 18 November 2003—last year—and that the chairman of the select committee only learnt of the report-back date at the time of the referral motion. That referral motion set the report-back date to be 3 days after the recommencement of Parliament in 2004. Now that was an outrage. There has been indecent haste. People have been forced to make submissions through the Christmas-January period. That is happening too often under this Government and I may say with this Minister the Hon Marian Hobbs. 
There is a parallel situation with regard to Project Aqua in terms of the Resource Management (Waitaki Catchment) Amendment Bill. The Local Government and Environment Committee is meeting at 7 o’clock tonight to deliberate on that bill. The Government wants to ram the bill through next week and that committee has faced a similar time constraint. I can speak with authority as a member of that select committee and say there has been indecent haste. As a legislator I am not satisfied or convinced that every submitter has had a reasonable hearing. Officials have been put under intolerable pressure all because this Government cannot manage its affairs. 
The point was well made in this debate that the hazardous substances legislation goes back to 1996. This Government has been in power now for—what 4 years? It seems a lot longer but— 
Hon Dr Nick Smith 
: It seems a lifetime. 
Hon KEN SHIRLEY 
: It seems a lifetime of misery but it is about 4 years. All of a sudden late last year the Minister had a rush of blood to the head. She rushed this bill into the House and gave unreasonable instructions to the select committee. Brian Donnelly did his best—I think he did a good job in the circumstances—but it is not fair in terms of the legislative programme for Governments to behave in this way. This Labour Government is behaving like that consistently. Time and time again it is treating select committees with contempt. I say to the Government that in doing so it is treating the people of New Zealand with contempt. It is an arrogance that comes when a Government has been in power too long—far too long. We are seeing more and more of that arrogance and total disregard for due process—and disregard for the select committee process in particular. I say to this Government that it should heed this advice and be warned that the public of New Zealand will not accept that sort of behaviour. 
The legislative process on this bill has been appalling. I think all parties—even the Government—must concede that. But in terms of the content of the bill I think that has been very well explained by the chairman. I do not need to repeat the details. The bill is sensible in that this is a very complex technical area but the bill sets out to streamline some of the processes and to introduce some flexibility in the transitional measures—all aimed at reducing the compliance cost thresholds. The ACT party certainly supports that and therefore we will be voting for this bill. 
BERNIE OGILVY (United Future) 
: 
 United Future supports the third reading of the Hazardous Substances and New Organisms (Transitional Provisions and Controls) Amendment Bill. Firstly I thank the Minister for at least attempting to answer the questions that were posed to her yesterday and last night and I certainly thank her for her explanations in trying to sort out the numbers game. As another member has pointed out even those numbers do not quite add up but at least the difference has shrunk considerably. At least I am grateful that I am informed to that extent. I certainly want to put on record my thanks for the great work the chairperson did in corralling us under these circumstances and listening intently to the submitters who had a wide range of views and keeping us as fellow committee members working steadily through the process. 
As the Minister has pointed out and as everybody should be aware this bill is designed to get hold of the 70000 or so notified toxic substances that remain outside the Hazardous Substances and New Organisms Act of 1996 include them finally get them classified correctly and therefore deal with health problems that possibly would occur if this did not happen as well as environmental issues that could also get out of hand. The bill will also allow for a commercial balance and expansion at the same time. 
The bill provides the mechanism for this to happen and will help to do that. I am very pleased that the bill provides cost savings through various mechanisms. We realise it has to go through in super-quick time and has to be fulfilled by June 2006. That is a pressure in itself. We also realise that the mechanisms explained in the bill are much more user-friendly as opposed to the substantive Act. 
I would like to bring to the attention of the House and the Minister that there are things that are still not complete. We have been told there will be further amendments. One of the areas that I find needs to have certainty about it is the international standards and what other blocs of nations are going to require in the future. So on that note I would like to reaffirm that United Future supports the third reading of this bill and would love to see it enacted so that all the bodies involved can get on with business and achieve their goals. 
SUE KEDGLEY (Green) 
: 
 I would like to speak very briefly on this third reading to reiterate like other parties that we will be grudgingly supporting this bill. We support it grudgingly for a number of reasons. The first is because of the process that has been outlined and the fact that there was virtually no time to consider it. It has not had proper due process. There was not really time for proper consultation. The rushed hasty manner in which the bill went through makes our support very grudging indeed. We hope this will not be a precedent for other bills of equal importance that are to come before this House. 
We also find it odd when we look at the purpose of this bill which deals with hazardous substances—70000 notifiable toxic substances which one would have thought was a major health and safety concern for New Zealanders—that there is no mention of health or safety or concerns about the effects of the 70000 notifiable toxic substances that are not currently controlled in New Zealand. The bill does not even mention health and safety. All it talks about is trying to minimise the cost to business and the Government of regulating these substances. So the entire purpose is simply to make it easy for business. It is not to protect ordinary New Zealanders and not to protect consumers but simply to make it easy for business. I find this quite astonishing in a bill of this importance. 
The other extremely interesting thing is that the bill draws our attention to the fact that there are 70000 notifiable toxic substances in New Zealand that are not currently controlled. Most of us are having some difficulty getting our heads around this. There are so many—70000—that it is hard for us to work out how this could be and what these substances are. So I have been asking some of my colleagues who were on the select committee whether they could try to help us resolve the mystery of these 70000 notifiable toxic substances that are not even controlled in New Zealand. We can only assume that saying they are not controlled means there are no safety controls no controls on how they are disposed of and no controls on how they are used. 
So what are these 70000 notifiable toxic substances? None of my colleagues whom I have been asking who have sat on the committee can help me to resolve this mystery. They do not seem to know what these 70000 notifiable toxic substances are. We are about to pass legislation in this House that relates to 70000 notifiable toxic substances and nobody in the House seems to know what we are dealing with or what this bill is all about. Maybe before we finally pass the bill the Minister can enlighten us as to what on earth we are talking about and voting on. It is quite astonishing not only that there should be so many toxic substances that are not controlled or regulated in New Zealand but that we do not even know what they are. Some have suggested they might be industrial chemicals. That is a bit of a punt. We are wondering whether this means flea powders and fly sprays. That is a punt; we simply do not know. Quite frankly it is quite extraordinary that we are passing a bill when we do not even know what it is about. 
 It is also quite extraordinary that in New Zealand we have so many of these mysterious toxic substances that we do not control. The Government asked the Environmental Risk Management Authority to regulate them and the authority has apparently been so busy doing whatever else it does that it has not got round to it. I think the Hon Nick Smith said that the Environmental Risk Management Authority had managed to regulate something like 100 substances over the last 10 years. It is extraordinary. 
I would like to make one further point. We have a Government that is seemingly unconcerned about 70000 notifiable toxic substances that are not controlled or regulated yet the same Government is trying to introduce what seem to be completely unnecessary bureaucratic and over-the-top draconian regulations for dietary supplements. Could this Government get its priorities right? To my knowledge I do not think that anyone has died from taking dietary supplements. For the most part dietary supplements are based on herbs and so forth that have been used by humans for millennia and are of extraordinarily low risk. Yes we need to make sure that they are safe but we do not need some draconian regulation. So could somebody please explain why the Government is putting this huge effort into developing these draconian regulations for dietary supplements which people take on a voluntary basis—they take them to improve their health—and which as far as we know no one in New Zealand has died from yet it is doing absolutely nothing about 70000 notifiable toxic substances? Could we get our priorities right here? Could we suggest that the Government focus first of all on trying to put some regulation on these 70000 notifiable toxic substances—which we assume are toxic? The substances have known health effects or they would not be considered toxic. Could the Government get its priorities right and focus on getting proper regulation for these toxic substances? 
What about building materials? I was at the hearing on the Building Bill today. We have all these building materials—thousands of them—and none of them are even accredited. They are not even assessed for their health effects. We know that particle boards and all sorts of things are off-gassing—as in the case of formaldehyde—and causing problems for those of us who spend 80 percent of our time in indoor environments in our homes but the Government is not bothered with regulations. It sees no need to worry about the health effects of the building materials that are in our homes no need to worry about 70000 notifiable toxic substances—we are not even sure what they are—and no need for urgency. The Government sees no need to worry about these things that we know are toxic and have significant health effects but at the same time it is trying to rush through some draconian legislation on dietary supplements. I wonder whether the Government could get its priorities right and explain to us why it is doing nothing about significant serious toxic substances and is going over the top with excessive draconian regulations on dietary supplements. I think it would be very helpful if somebody from the Government could think about those priorities think about other things like building materials—which have no regulation—and leave dietary supplements to basic simple New Zealand legislation that will ensure consumers are safe but will not involve draconian and expensive bureaucracy that will decimate the dietary supplement industry in New Zealand. 
The Green Party reluctantly and grudgingly will vote for this bill because it hopes that somehow the bill may galvanise the Environmental Risk Management Authority finally to do something about all these notifiable toxic substances. Green Party members are deeply disappointed that the bill focuses only on minimising the cost to business and completely ignores the health and safety issues involved in all these unregulated toxic substances but we will vote grudgingly for it in the hope that we may finally begin to get some action from the Environmental Risk Management Authority on this serious issue. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 National has indicated its support for this Hazardous Substances and New Organisms (Transitional Provisions and Controls) Amendment Bill. We want to make a number of points in its third reading in terms of trying to come up with a regime that provides for the safe use of hazardous substances but also ensures that the many sectors of our agricultural and industrial economies that depend on chemicals can do so at minimum cost. 
First I want to raise the issue of just how sloppy the process of the Government has been in advancing this bill. Let me set out the background: the new Act was passed back in 1996 yet today only 10 percent of the substances—8 years later—have been transitioned into the new Act. By anybody’s measurement that is an appalling failure. 
Then we look at the process by which this bill has been rushed through the House. The Minister Marian Hobbs has said that there is a real need in the business community for this issue to be resolved but she has been the Minister for 4½ years. To expect Parliament to rush through complex legislation of this sort will result only in botch-ups more amendments and more problems in the administration of this important area of law. 
Last night during the Committee stage when we challenged the Minister and asked: “Minister have you finally got it right? Can we be sure that the provisions contained in this bill will end the amendments to the Hazardous Substances and New Organisms Act?” not a member was surprised when she admitted that there would be another amendment bill before too long. That is not good enough. 
 Then we come to the issue of the transitions themselves. At the current pace about 100 toxic chemicals or substances are taken per year through the system yet we are to believe that we will be able to increase the rate from 100 per year to 35000 per year. That is how many the Environmental Risk Management Authority will need to process over the next 2 years in order to meet its deadline of full implementation by July 2006. 
I would be happy to bet any member of this House the best wine in Nelson—in fact the best wine in New Zealand—that there will not be a hope in heck of meeting the deadline of all chemicals being transferred over into the new regulatory regime by July 2006. It will not happen. There will be another bill. There will be another list of excuses as to why this legislation has still not been implemented. Let us remember that in July 2006 this legislation will be 10 years old. Is it really acceptable that a new environmental law takes 10 years to be implemented—and that time period is only if that deadline is reached? 
I do want to offer some positive alternatives because there is some common sense that we should put into this legislation so that we do not have those sorts of expensive time-consuming delays. The first of those is that we should move to recognise as much as is possible the international regimes for the labelling and regulation of hazardous chemicals. We are a wee country of 4000000 people that has—by the Minister’s own admission—70000 toxic substances. Some of those toxic substances are probably used by only one or two small businesses. The sensible thing for us to do is to gang up with similar nations and provide for a common regulatory regime. That work began back in National’s time and was raised at a number of international conferences and the Globally Harmonized System of Classification and Labelling of Chemicals (GHS) has been set up. We would like to see New Zealand adopting that system so that we do not need to go through the bureaucracy of registering every single chemical. 
In fact we would go one step further. Members will be aware of the debates we have had in the House about the former Australia New Zealand Food Authority in which we said that it makes good sense for New Zealand and Australia to regulate food for both New Zealand and Australia in that sort of way. It is the view of the National Party that we should go down the same road in relation to chemical regulation—we should do it in a united way. 
Sue Kedgley 
: One vote out of 10. 
Hon Dr NICK SMITH 
: I know that Sue Kedgley as a member of the Green Party would rather that we be some isolated North Korea - type island at the bottom of the Pacific. We in the National Party take a very global perspective on these issues. We think it makes good sense to have a greater degree of international cooperation and we would want to move to an Australian - New Zealand—at the very least—regime in which we believe we could provide for better public safety better environmental protection and less cost for business in dealing with those sorts of regulations. 
A further point that National would make is that the thresholds we have set for substances being hazardous are way too low. I remember a wonderful petition that was launched by some people with a good sense of humour in my electorate of Nelson. It was about the fact that dihydrogen monoxide was a very dangerous chemical that should be banned. 
Hon Paul Swain 
: Exactly right! 
Hon Dr NICK SMITH 
: “Exactly right!” says Mr Swain. In fact dihydrogen monoxide is in acid rain and nuclear power plants. It is a very very dangerous substance. At a high temperature thousands of people get burnt with it and there are many people who would seek to ban dihydrogen monoxide despite the fact that it is on the table here as water for us as members to drink. The truth is that water does kill a lot of people. People drown in it and are scalded and burnt by it. The point I am trying to make— 
Hon Harry Duynhoven 
: They also drink it. 
Hon Dr NICK SMITH 
: Yes they do as Mr Duynhoven correctly points out. My point is that every chemical or substance if used incorrectly can result in death or hurt. With this bill we have legislation that sets the thresholds way too low so that we throw an incredibly wide net out for all sorts of very minor substances. For instance under this regime Sellotape is deemed to be a hazardous substance. 
Lindsay Tisch 
: Is that right? 
Hon Dr NICK SMITH 
: The glue in Sellotape is one of the substances that is caught under those regulations so the poor old makers of Sellotape have to go off to the Environmental Risk Management Authority and satisfy it that their product is safe. 
We need to focus on those substances that really are hazardous which need to have a good regulatory regime around them in terms of their handling storage and those sorts of things—rather than the regime in this legislation where we throw the net so wide that we pick up a whole lot of things that with an ounce of common sense pose no real risk to the general public. 
Yes this bill is a step forward. It is far too late coming. The Minister has been negligent in not bringing it to the House earlier. We have no confidence that she will meet her own deadline of all those substances being brought in by July 2006. We think it is inevitable that there will be another hazardous substances amendment bill before we get too far down the track and we believe that there is a common-sense approach around focusing on a narrower range of substances and taking a more international view on regulation of hazardous substances which would mean a far better outcome for the environment for people’s safety and for the economy. 
LINDSAY TISCH (National—Piako) 
: 
 It is always good to follow Dr Smith and Dr Hutchison because they are experts in this field. I want to make a couple of comments as to the process that has gone on because it has concerned National that the genesis of the bill goes back to 2001 yet when we look at the last page of the bill we see that it says its introduction was on 6 November 2003 and the first reading was on 18 November 2003. Then lo and behold submissions were to be called and had to be in by 14 January 2004. Well the chairman of the Education and Science Committee the Hon Brian Donnelly is nodding his head in acknowledgment that that was the case. This is such important legislation but submissions were to be heard in January when everybody was away. Not only that but the report back was to be 3 days after Parliament had resumed. 
Brent Catchpole 
: Disgraceful! 
LINDSAY TISCH 
: Yes disgraceful! On such important legislation one would say the consultative process should be exactly that and we should have a pretty good feel about what people are saying. It is so important that National is going to support it. We are supporting it but we really have to question why we have had such delays. Of course when the Hon Brian Donnelly and the committee asked for an extra 4 weeks and got it we then had the Minister coming and saying: “Oh but it’s going to be costly to business.” Well we had had a bill sitting around since 2001 so we said: “Too bad! We want to get the best out of this legislation. We want to make it work.” 
The intentions of the bill are honourable. When we look at the introduction where it talks about minimising the costs to businesses we see that that is a worthy objective. National has no problem with that. In fact we are the party that is out there saying that the compliance costs and regulatory regimes this Government has put in place need to be curbed back and taken under control. That is one of the positive initiatives where there has been an attempt made to minimise the costs to business. 
As I said the intent of the bill is to minimise the costs to business and to the Government and to reduce barriers to innovation. We are happy with that and prepared to support those objectives because anything that allows for innovation and that allows for the reduction of obstacles to progress are worthy objectives. We will support them. There are too many regulatory controls and this bill rationalises that regulatory approach. 
When I read the legislation and the reports that have been done I see that 80000-odd hazardous substances will come under the control of the new Act and that is significant. Of those 8000 will be transferred and the balance of the remaining 72000—I think Dr Smith said—will come under the new Act by July 2006. 
When we looked at the summary of the strategy that needed to be implemented we saw areas that we want to hold the Government to account on—I want to quote because this does not appear in the bill and will not be in the Act—“We propose that short-term easy gains can be made by two non-regulatory steps: one to make the HASNO controls easier to understand and two to reduce compliance costs for applicants.” Those two non-regulatory steps that are mentioned in the summary of the strategy relate to areas where we will be keeping a very close eye on this Government to make sure they are in fact implemented. 
All in all this is important legislation. We were not happy with the process and way it was handled but we support the bill and will be once again making sure that over the period of time ahead of us that process is expedited and that those two non-regulatory steps I have just mentioned actually come into force. 
Bill read a third time. 
Civil Aviation Amendment Bill 
Third Reading 
Hon HARRY DUYNHOVEN (Associate Minister of Transport) 
: 
 I move  
That the Civil Aviation Amendment Bill be now read a third time 
. I wish to thank members of the House and of the Transport and Industrial Relations Committee for the careful consideration they have given this bill. The bill amends the Civil Aviation Act of 1990 and provides a number of changes that support the objectives of the New Zealand Transport Strategy: assisting economic development assisting safety and personal security and improving access and mobility. It enables New Zealand to implement mutual recognition of aviation-related certification between Australia and New Zealand. It introduces a regime to deal with unruly passengers and it consolidates civil aviation law. 
With regard to mutual recognition on 20 November 2000 the New Zealand and Australian Ministers of Transport signed a memorandum of understanding on open skies. That reaffirmed the commitment of New Zealand and Australia to adopt mutual recognition of aviation-related safety certification. The mutual recognition provisions in the bill make the legislative changes required to implement this Government to Government commitment. Under mutual recognition New Zealand airlines wishing to operate in Australia will benefit from reduced compliance costs as they will be able to operate under their New Zealand certification and will not have to obtain separate Australian certification. Airlines will no longer face the costs associated with dual certification like for example insurance accident compensation and compliance with differing requirements for airline operations. 
The Australian Parliament is considering a similar bill which is expected to be debated later this month. The mutual recognition provisions in this bill will come into force by Order in Council once the Australians have passed their legislation. 
In recent years there have been a number of high-profile incidents of unruly passenger behaviour on board aircraft. Those incidents range from offensive language and behaviour to those raising serious safety concerns such as tampering with smoke detectors. As many of us have experienced I am sure such incidents can be distressing and frightening for both passengers and crew. The present law has not been adequate to ensure firm and effective enforcement action and has not covered unruly behaviour occurring on international flights coming to New Zealand. 
 Under this bill a coherent regime of offences and penalties that has an extraterritorial effect comes into force on 1 June 2004. This enables New Zealand to prosecute passengers committing offences on domestic aircraft and on aircraft of any country flying en route to New Zealand. The new regime brings New Zealand into line with international practice in countries such as Australia the United Kingdom and Canada and the expectations of the International Civil Aviation Organisation will be met. The bill also brings into force an accelerated infringement offence procedure to ensure that as much as possible visitors on a short-term stay in New Zealand do not escape enforcement provisions of the law. 
The bill transfers the liability provisions for passenger delay from the Carriage By Air Act of 1967. This means that if a passenger is delayed the airline is presumed liable for the delay. Liability is capped at 10 times the fare paid for the journey or the total cost of the damage sustained—whichever is the lesser amount. The airline is not liable for damages for delay or for events that are beyond the control of the airline—for example natural disasters weather and safety considerations. Although some airlines expressed concern over these provisions the select committee and this House have accepted the need for passengers to continue to have this right. 
In addition the bill makes a number of minor amendments to civil aviation legislation to further enhance aviation safety and personal security. It provides for the Aviation Security Service to provide security support services to the police when requested. The Aviation Security Service will provide this support only if in doing so it does not compromise its core airport security services. This provision comes into force the day after the date of the royal assent. 
The bill increases the maximum fines for various offences against the Act to ensure that they act as an effective deterrent. This amendment takes account of inflation since 1990 and brings the fines into line with the penalties for similar offences created subsequently. The bill also responds to a need to update consolidate and ensure consistency across different legislation. For example it includes a minor amendment to the definition of dangerous goods to align it more closely with the Chicago Convention on International Civil Aviation. 
In conclusion this bill reinforces the Government’s commitment to improving aviation safety by extending the measures to deal with unruly passenger behaviour. It encourages economic development by removing regulatory barriers to the development of the Australian and New Zealand single aviation market. It provides benefits to passengers the airlines and the public and supports the objectives of the New Zealand Transport Strategy. 
Finally I would like to thank all the officials particularly the Ministry of Transport officials: Glen-Marie Burns Nigel Mouatt and Lisa Nickson; the Civil Aviation Authority officials; all of those who submitted their views to the select committee and the members of the Transport and Industrial Relations Committee who worked so hard to process the bill in a timely and efficient manner. I also thank the members from the other parties of this House who have been most supportive of the provisions of this bill. 
JOHN KEY (National—Helensville) 
: 
 As the Minister quite correctly pointed out to the House before the Civil Aviation Amendment Bill will amend the Civil Aviation Act 1990. I think it is worth noting that this bill is probably even more pertinent and more important than the 1990 legislation was. I say that because we have seen a dramatic change in the number of New Zealanders who are flying and using aircraft as a form of travel. That in large part has come about because of the reduction in cost to the travelling public. We have seen an explosion of low-cost point-to-point airlines and that has made international and domestic travel far more accessible to the average New Zealander. This bill will have far more significance to them and I think a great many New Zealanders will take the opportunity to review this bill which would be a wise choice on their part. 
I will talk about the mutual recognition provisions with Australia which appear in Part 1. I think it is a very positive step that New Zealand carriers will not require Civil Aviation Safety Authority approval in Australia should they be flying domestically. Similarly here in New Zealand we will be recognising the provisions in Australia. Mutual recognition is something that we have been moving to in a number of fields as we look to have closer and closer economic relations with Australia. Only a few months ago the Minister of Finance in New Zealand and the Australian Treasurer Peter Costello were in talks about how we could move New Zealand towards the harmonisation of one common market with Australia which would really be an extension on the great work undertaken by the National Government to put through CER 20 years ago. This is the kind of thing that is an important step. I only wish that the Minister of Finance who no doubt is very supportive of this bill would look to do the same thing on corporate taxation and have mutual recognition and harmonisation with the rate in Australia at 30c in the dollar instead of imposing the current 33c tax rate on New Zealand businesses. [ 
Interruption 
] That is right and there are a number of ways in which we could look to align our provisions with Australia. 
I will touch on the issue of disorderly and unruly passenger behaviour. As we have seen an international increase in the numbers of people travelling so too have we seen an international increase in the number of instances of unruly behaviour. Some of them start with relatively minor and inoffensive comments where someone is a little bit too boisterous on an aircraft. Maybe they have travelled from Auckland to Wellington to watch the Blues undertake one of their brilliant matches against the Hurricanes. 
Hon Paul Swain 
: Not this time. 
JOHN KEY 
: I know that the Wellington-based member over there the member for the Rimutaka electorate will be looking but I say he should have confidence and faith. In the same way that the country has faith in the National Party to come again and be a strong and great Government I have tremendous faith in the Auckland Blues that they will deliver the goods for Auckland down here in the “cake tin”. 
I am talking about the kind of situation where people on an aircraft might have a few too many drinks and become a little unruly. But the serious aspect of this is really the fact that we saw on 9/11 a situation that changed the world when aircraft were literally used as flying bombs in an international terrorism war. We saw the same sort of thing regrettably in Madrid a few days ago. I think the question of unruly passenger behaviour and how to control that situation has seen a number of airlines internationally call for a situation where one cannot for instance gather around the toilet on a plane. So I think we may see amendments to the civil aviation legislation over time to reflect a growing unease from the public in general about people who are travelling on aircraft and operating in a way that is shall we say less than normal or less than consistent. People may be looking to the legislation to bring about change. 
I do want to talk for a moment about the issue of dangerous goods. A number of submitters commented to the Transport and Industrial Relations Committee on which I sat with regard to dangerous goods and the clarification of the definition. I think the bill moves a long way to recognising and defining that situation more clearly as it does I might add in the area of intoxicated passengers. A reasonable discussion took place on that issue. What for example is meant by “intoxicated”? For some people it is more alcohol consumption than others which may reflect in their behaviour. Quite a lot of work has been done in that area. 
I note that in section 65A and the like inserted by clause 24 there is an increase in the fines applicable for unruly behaviour. We in the National Party support heavier fines. We believe that these are very serious times that we live in. I think that aircraft as we saw in the 9/11 incident have a whole new meaning. We felt that that was necessary and important to make sure that the public understood the severity of not treating aircraft in the right manner. At the end of the day some unruly passenger who for whatever reason decides to try to open a door when the plane is in flight presents a tremendous hazard to all the other passengers on board who are clearly honourable respectable and law-abiding citizens. 
I do not want to take much more of the House’s time except to say that we will be supporting the Civil Aviation Amendment Bill wholeheartedly. We are pleased to see its passage through the House. I know that the Hon Harry Duynhoven has worked hard on it. We were a little disappointed that the Australians having come to this mutual recognition and agreement were very very slow at the final hurdle. New Zealanders rightly so have a general hesitancy in the area of aviation after the open skies arrangement with Australia fell over some years ago. So we are pleased to see that the Australians will get over the line on this and we want to make sure rightly so as the Minister said that they sign shall we say equally as the pen is drying on our Act over here. We support the legislation and we look forward to seeing its swift passage through the House 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 I am very pleased to speak in this debate also. As a previous Minister of Transport I have had some involvement in a number of these matters. It is good for New Zealand airlines and good for New Zealand that through this bill we have another step forward in the mutual recognition area. As John Key said there were a few nervous moments at the end but we got there and good work was done by the select committee in making sure that this bill is fit for purpose. 
I am also extremely pleased about the provisions for dealing with unruly passengers and I pass on a word of congratulations to the flight attendants union. Terry Law who at the time was head of that organisation did a wonderful job of lobbying Parliament to make sure that that part of the law was put in place. It has taken some time but we finally got there too and I know that a lot of flight attendants will be very pleased that they have this law to protect them and the travelling public. 
I endorse the speeches made by the previous speakers and I am pleased to see finally this bill get to its third reading stage. 
BRENT CATCHPOLE (NZ First) 
: 
 It is with pleasure I stand to take a call on this bill for New Zealand First. First of all I would like to acknowledge the Minister the Hon Harry Duynhoven who has been a very good Minister to deal with on this bill. He has explained many of the concerns we had during the passage of this bill and I commend him for that. 
A large part of the bill is to do with mutual cooperation between the airlines of Australia and New Zealand. It is also to do with mutual recognition by the two countries of legislation that deals with aviation between the two countries and within both New Zealand and Australia. Both Qantas and Air New Zealand get the benefit of that when flying between and flying within the two countries. 
The bill carries on an aviation tradition that is worldwide—that is it makes the pilot in complete control and command of the aircraft. It also gives the crew the power under the command of the pilot to deal with any unruly passengers. It is the issue of unruly passengers that I particularly note. There has been a growing trend for passengers on aircraft to get out of control. It used to be known as altitude sickness or tropical sickness but it seems to be more and more prevalent. Whether it is the result of too much alcohol or some other aspect of the passengers’ health they do tend to get out of control on occasions. I think giving the crew control under the command of the pilot so that they can deal with those passengers in a firm way is sound practice. The passengers can then be dealt with very very firmly in those circumstances. There is nothing worse than being trapped in an aircraft with a passenger getting out of control and feeling a little helpless. 
But I do say that in no circumstances should any weapon of self-defence be taken on aircraft by passengers. That is the biggest concern I have—that anybody at all would have weapons on an aircraft. If such a person happens to be the one who becomes unruly then we have all sorts of major issues. It was noted in the select committee that air marshals should be trained in New Zealand to deal with unruly passengers. We should have it was suggested 100 air marshals ready to participate. Whether they actually take part is still under discussion but we should at least have them trained and ready to take part if there is any need to have air marshals on board aircraft to deal with unruly passengers and certainly any dangerous situations. 
 Another area that was highlighted during the select committee consideration was the carriage of dangerous goods on board an aircraft. There are different types of dangerous goods. Some passengers carry dangerous goods on board quite oblivious to the dangers of them. They are quite often just normal innocent-looking household products but when mixed they can have a devastating effect and a very explosive effect. So the carriage of those goods is rightly banned. The additional fines that have been put in place to penalise those people should be a wake-up call for people never to do it at all. They should learn what they can take on board an aircraft and definitely never be able to take dangerous goods on board. There is another type of passenger who flouts that restriction—what is commonly known as a dangerous-goods salesman—and carries dangerous goods on board an aircraft. He or she just flouts the airline’s conditions and prescriptions. 
Finally I would like to touch on the airlines’ liability for delays. This bill highlights the necessity to deal with airlines and make them responsible for delays. Carrying on an old tradition many airlines have been known to cancel a flight to consolidate the numbers of passengers on board. It has been a practice in the airline industry for probably as long as the airline industry has been in existence. Another practice airlines use and this is also a long-term tradition is to overbook passengers. Airlines overbook by quite a substantial percentage. They overbook by something like 20 percent of their passenger loading as they anticipate they will get a no-show rate of somewhere between 20 and 25 percent. The danger with that practice is that when all the passengers turn up the airlines have a problem trying to accommodate all of them on an aircraft. Therefore the airlines need to be responsible for any delays encountered by passengers because of overbooking. If there is any deliberate attempt to cause a delay then obviously the airline should be responsible. 
The airlines should not be responsible for delays caused by the weather. We know from the airport here in Wellington that those delays are not necessarily caused by high winds. They are often caused because there is a lack of wind; low cloud or fog rolls in from the sea and does not dissipate from the airfield and therefore the aircraft are unable to take off or land. I suppose we could call those circumstances an act of God but the situation is beyond the airlines’ control. The safety aspect is paramount. It is the pilot’s decision whether to take off or land in those circumstances and the airlines should not be held responsible for any delays. 
I conclude by saying that New Zealand First supports this bill’s third reading. We certainly agree with aspects of it. We hope the Australian bill when it is finalised meshes neatly with the bill we have. It is intended to so let us see whether the final product from the Australian Parliament is as we expect. New Zealand First supports the third reading of this bill. 
DEBORAH CODDINGTON (ACT) 
: 
 I rise on behalf of the ACT party. We support the Civil Aviation Amendment Bill and have supported it all the way through. Like one of my colleagues before me I commend the Hon Harry Duynhoven for the amount of work he put into keeping all members of the Transport and Industrial Relations Committee well informed as to what the bill was proposing and what it would do. The bill repeals the Carriage by Air Act 1967 and it also amends the Civil Aviation Act 1990. 
Three main issues are dealt with in this bill. The first issue that of mutual recognition has taken a while to get here. For several years we have had some of the most open skies in the world but airlines have been unable to take full advantage of that situation because of the duplication of commitments they had to make in both New Zealand and Australia which involved high cost and complexity in obtaining and maintaining separate safety certifications from each country. So that set up a barrier and this bill is now going to break down that barrier. One hopes that the reduction in compliance costs on which I congratulate this Government will be passed on to consumers in terms of cheaper air fares and more accessible travel for all. I will not speak for very long on this bill because we support it. 
The second issue is that of unruly passengers. In earlier debates on this bill I made some suggestions which some people considered were a little over the top. But I do think we should consider that in a world that is not as safe as it used to be the more we disarm those charged with taking care of us the more power we give to our enemies. If we consider some airlines we see that the Israeli airline with armed marshals on its flights has one of the safest records yet it is probably one of the airlines that hundreds of thousands of people in the world want to blow out of the skies. 
Like Mr Gosche I commend the members of the union who came before the select committee and explained to us a lot of the things they have to put up with concerning unruly passengers. Those people are not there just to hand out tea and coffee and demonstrate safety procedures; they have to take care of everybody’s safety on flights. When they do not have the power to deal with people who are behaving in a way that can bring down a whole airline—for instance using a cellphone or not complying with simple instructions during take-off and landing—it makes their job so much harder. When things do go wrong all passengers rely on them and look to them for guidance. Therefore it is good we have increased the fines so that there is more of a deterrent for those who think it is OK to get on an aircraft and behave as badly as they behave in restaurants. As someone who has worked as a waitress for many years I wish there was legislation that could perhaps persuade people to behave in restaurants as well. 
One final thing I would like to talk about and what really concerns me is the issue that although we pass good legislation like this which is empowered with making people safer the Civil Aviation Authority came before the select committee this morning in a public hearing with some interesting answers from its director to questions; we heard from that organisation which is charged with keeping our airlines safe the general consensus that people would rather take the train. That is something that really needs to be looked at. However I am pleased to support this bill. 
MURRAY SMITH (United Future) 
: 
 United Future is pleased to also support the third reading of the Civil Aviation Amendment Bill. Civil aviation is one of the few areas of our lives in New Zealand where there is an importance for international consistency and cooperation by virtue of the fact that a lot of what happens in the civil aviation area happens in the skies between the countries people are travelling to and from. Therefore in the whole area of civil aviation it is important that New Zealand is in step with what is happening worldwide. 
United Future is very pleased that the bill brings New Zealand’s aviation security laws into line with those of Australia Canada and Britain in particular and eliminates certain sovereignty-related complications that in the past have made prosecuting foreigners for offences outside New Zealand territory difficult. I notice that there are really two aspects to the bill in terms of international obligations. One is the general international concerns about security and the other is the trans-Tasman aspect—in particular the increasing cooperation between Australia and New Zealand that this bill evidences. We are very pleased to see the progress that has been made in getting Australian and New Zealand mutual recognition agreements in train and in particular the certification and safety oversights that we will respect from each other’s countries. We look forward to the Australians moving hopefully with speed to pass their legislation so that this legislation can be brought into force. 
The bill does provide a win-win situation for both operators and consumers in so far as the reduction in regulatory barriers to aviation activity will cut operating costs for New Zealand and Australian airlines hopefully leading to air travellers having to pay even less for fares because the costs are reduced as well. That is to be welcomed particularly with the level of communication we have between New Zealand and Australia through air traffic. 
The prosecution of passengers who offend on aircrafts is also an important consideration. Again the civil aviation industry is very unusual in that respect because those offences occur in the air where the police are not readily available and in a situation that is extremely vulnerable and where any breach of the skin of the aircraft can put many lives in peril. The offences also occur where disturbances cannot readily be quelled because a crowd of people are stuck in a confined space for hours. If any disturbances cannot be restrained then that can have an impact on passengers on the flight for several hours before they can be dealt with by policing authorities. Therefore it is important in this bill that the restrictions we would normally leave to the police are extended firstly to the pilot in terms of his ability to give commands that people must obey—it is an offence if they do not—and secondly to aviation security officials. United Future is very happy with the increase in penalties that the Transport and Industrial Relations Committee has suggested and that are now in the bill because of the factors that make civil aviation quite different in terms of its protection needs. 
We also think that the streamlining of procedures with regard to the liability for a delay in a domestic air service is a welcome move. We note the concerns airlines had about that issue. However they need to recognise that in effect the limitation of liability they have been given is quite restricted. In particular with the age of cheap fares they could well be looking at less than $1000 in terms of maximum liability. When several carriers and missed connections are involved that could pale into insignificance in terms of a person’s loss or of damages incurred through loss of connecting flights. Therefore they ought to be quite appreciative that such a restriction is included and they do not have an open-ended liability. 
I certainly endorse the comments made by my colleague Brent Catchpole about the need for airlines to take responsibility for their actions. Some penalty provisions also preclude them from carrying out what would be unethical if not illegal behaviour in terms of over-stacking of flights and that sort of thing. United Future is pleased to support this bill. We are pleased to see it go through. 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 I guess this is one of the many times a member gets to speak in Parliament where it has all been said a number of times before. One feels a little bit like Madonna’s new boyfriend—he knows what is expected; his problem is how to make it interesting. My intention is to try to put a bit of a different spin on this issue and it is to do with the trans-Tasman mutual recognition of aviation which I do not think we have dwelt on enough with this bill. 
Obviously the National Party supports the bill but I just warn members of this Parliament that if they think the Australians will move willingly to this they are dreaming. When the Australians say they will they do not and even when they sign a document saying they have they have not and then they come back and renege on it with only a week to run. They have done it before. They have a track record of it. 
 We even had a single aviation market stitched up by the Prime Ministers. Prime Minister Bolger and Prime Minister Paul Keating ratified it at the prime ministerial meeting in 1994. On 26 October—and I remember the date well—with 1 week to run until 1 November 1994 when the open-skies single aviation market was to come into place Mr Brereton I think his name was—I’m still getting counselling about it so I am trying to keep the name out of my mind—just decided to unilaterally send a fax that said: “Sorry about that. We had agreed to all this but we’re not going to do it any more.” 
It is bizarre that it has taken the years it has to get Australia to agree to at least where we are now. For goodness’ sake a 747 is a 747 wherever it happens to be! I can promise that a Qantas 747 has the same bits and pieces to its engines its galleys and so on as any other 747 with that engine type. If it is a Rolls Royce then it is the same as a Rolls Royce and so on. The fact that our engineers were not certified to work on it when they were over there or that theirs could not work on it over here or vice versa because of what I guess were the old restrictive trade practices more than anything else is bizarre. 
I guess what is important for members of the House to recognise is just how much civil aviation has changed over the last couple of decades. Airlines were actually an extension of the foreign affairs arm of a country. They were the flag-flyers for the foreign affairs agencies of that country. Qantas was the Australian Government’s flag-flyer Air New Zealand was the New Zealand Government’s flag-flyer and BOAC was the overseas arm of the British Government’s foreign affairs agency. They were Government-owned and Government-controlled. The idea that anyone else could come into their domain and provide some sort of competitive market was just an outrage—it was disgraceful. Because of Government ownership we were not going to allow a second airline to come into this country. 
As everyone knows the ownership of most international airlines literally cannot be tracked. There is cross ownership. I understand that KLM Royal Dutch Airlines has bought Swissair and Scandinavian Airlines has a share in a couple of companies that own some shareholding in Aerolineas Argentinas out of Buenos Aires. Most civil aviation companies are simply businesses trying to attract passengers earn revenue and fly. It is time that we recognised the certifications of companies that operate in Australia and want to fly planes into here—both internationally and domestically—and we should recognise the people they recognise and vice versa for us. It dramatically reduces compliance costs. 
I do not know whether members will ever have any idea how much duplication and quadruplication has had to be involved in getting people to certify our planes and processes and so on. It might already have been done the once but their regime does not recognise ours and vice versa. Interestingly what sprang to mind when I heard one of the debates about controls over domestic and international flights was the enormous debate that went on about whether the 1979 Erebus flight was an international or a domestic flight. I still remember that crash with great sadness. I do not think the debate was ever solved. I know Sir Robert Muldoon was keen for it to be a domestic flight which then protected it from the international covenants of the Warsaw convention but because it had flown with a flight number of TE901 it was under Air New Zealand’s international operations. But then it was said that the flight only went from New Zealand and was supposed to come back without landing so it was a domestic flight. 
They then tried to change the name. If members look at the plaque down at the South Pole they will see that the flight number is NZ901 but then it was suddenly realised that if people had been killed on a domestic plane that bordered on the ambit of accident compensation. To this day I do not think that anyone has a final determination as to whether that flight was an international or domestic flight. Members will get the idea that it can all be quite difficult. People flying over the United States from a Canadian flight leaving from Quebec and going to say Vancouver can often fly over parts of the United States but still only land in the country they took off in. The point I am trying to make—and I know getting there makes me sound a bit long-winded—is that the old rules about this being our domain we will do it and no one else can come in here have to go. 
I congratulate the Government and Harry Duynhoven—who I am sure not only has engine oil but aviation fuel in his veins because he simply loves this stuff—on getting this legislation through. I wish him well in making sure that the blowtorch is kept on our Australian cousins on the other side of the pond. I do not think that they have anywhere near the desire we have but I hope I am wrong. I would love them to prove me wrong whip their legislation through post-haste and say: “That bloke Williamson didn’t know what he was talking about. We really believe in this as well.” 
 The other provisions of the bill are all quite common-sense ones. There have been a number of serious issues involving passengers—and on a couple of occasions while I worked at Air New Zealand aircrew themselves—having a few drinks and misbehaving on flights. There was a very famous case which we will not go into here but I was sort of involved in that process. It was a fascinating case and at the time there were a lot of very good jokes about Air New Zealand’s in-flight service. So the unruly people might not be the passengers but a whole lot of people. 
But a regime is needed because the aircraft is not in a country where police have the necessary rules. One has to say that while a 747 is flying along it is a sort of mini-country and the chief of police is the pilot. He or she has to have those powers and cannot afford not to be able to detain people with handcuffs which all those flights have. I have been on a couple of flights where there were some pretty ghastly examples of unruly behaviour. On one the guy was so tanked up that he tried to open the big door on the 747. He got hold of the big silver lever and started swinging on it. He said he had had a gutsful of the way the airline had treated him and wanted to get off. The fact that we were at 35000 feet and that that would be a problem for him once he was off the plane had not crossed his mind. 
I tried to assure the House the last time we spoke on this matter—and it is really quite important for members to know this—that one simply cannot open the door of a plane at 35000 feet because the door does not open outwards but inwards. Members should watch when they see the aircrew opening the aircraft doors. The doors have to be pulled in first rotated on a lever and then they go back out. Because the plane is highly pressurised at 35000 feet and the pressure is outwards Charles Atlas could not get the door back. There are huge volumes of pounds per square inch on that door and one cannot simply pull it back. So one could sit there comfortably and let that guy swing on the lever for as long as he liked safe in the knowledge that the door would not open inwards until the plane had come way way down and the pressure was equalised with the outside atmosphere—which is really on short finals as the aircraft is coming in towards the airport. 
In respect of the carriage of dangerous goods and aviation security I would like to give a plug to a particular Government agency. Around this place I am a person who often bags Government agencies for poor performance but I think Mark Everitt and the Aviation Security Service run one of the most stunning world-class operations and I would trust Mark Everitt and his team to do the right thing at the right time. I am delighted that this bill will give them the powers to do some cooperative work with the police when necessary without compromising their own role. That is simply fantastic. 
Overall the National Party is very very supportive of this bill and we will watch with great interest as the calendar days tick off to see our Australian cousins—our much-loved Australian cousins who along with the South African team hold the top three places in the Super 12—pass their legislation to get the mutual recognition. 
LINDSAY TISCH (National—Piako) 
: 
 I wish to take a brief call to add National’s support for this legislation. So many of us fly around the country and overseas and I was fortunate to sit for 1 day on the select committee in Auckland and learn of the sorts of things that can go on without our knowing. 
This legislation will allow the pilots and crews to take action if they are dealing with unruly passengers. Some passengers do lose control through the alcohol they consume although it is not always through alcohol. It may be through fear of flying or maybe they have been smoking. I think we were told that in the 6-month periodfrom January to June last year there were 241 serious offences where action needed to be taken. This bill will allow that to happen. 
As the Hon Maurice Williamson said we have all travelled around places where we have experienced unruly behaviour that is not only unbefitting to the person but brings discredit on other people. During the second reading I mentioned an occasion when I was flying between London and Hong Kong with a stopover in New Delhi. I would never again want to experience the behaviour that went on at that time. 
A major part of the bill is also the mutual recognition with Australia. It brings together one civil aviation market and if that reduces compliance costs allows flexibility and safer flying for the airline and passengers concerned we welcome that. National has supported this bill through all its stages and we are happy to do so in the third reading. 
Bill read a third time. 
The House adjourned at 5.56 p.m.