Volume 634 Week 29 - Tuesday 24 October 2006 
Volume 634 Week 29 - Tuesday 24 October 2006 
[Volume:634;Page:5987] 
Tuesday 24 October 2006 
Madam Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Motions 
Hungarian Revolution—50th Anniversary 
KEITH LOCKE (Green) 
: 
 I move  
That this House  
(1)commends the Hungarian people as they mark the 50th anniversary of the October 1956 Revolution which set the stage for the democratic changes which occurred in 1989 in Hungary and other Eastern European countries;  
(2)expresses its condolences to the people of Hungary for those who lost their lives fighting for the cause of Hungarian freedom and independence in 1956 as well as those individuals executed by the Soviet and Hungarian authorities in the 5 years following the Revolution including Prime Minister Imre Nagy;  
(3)welcomes the achievement of democracy in Hungary in 1989 and the progress its people have made since then;  
(4)reaffirms the friendship and cooperative relations between the Governments of Hungary and New Zealand and between the Hungarian and New Zealand people;  
(5)notes that over 1000 Hungarian refugees came to New Zealand after the Revolution was crushed by Soviet forces;  
(6)recognises the significant contribution of the Hungarian community to the progress of New Zealand over the last 50 years; and  
(7)asks the Speaker to convey this motion to the Speaker of the Hungarian Parliament 
. 
Motion agreed to. 
Points of Order 
Behaviour in Chamber—Bob Clarkson 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I raise a point of order Madam Speaker. We note you have taken we think the unusual step of writing to Mr Clarkson to tell him that he has been out of order in holding up signs and other stuff in the House and in suggesting that he might wear a crash helmet in the House today. We would hope that you have written to Mr Mallard the Deputy Prime Minister the Prime Minister the Labour whips and everybody else here who have been waving signs around this House quite liberally in the last couple of weeks. We ask you to indicate to the House whether that is an action you have taken. Further we offer the view that had Mr Mallard not gone out of his way last week to be in the near vicinity of Mr Clarkson clearly Mr Clarkson would not feel the need to wear a helmet today. 
Madam SPEAKER 
: I thank the member for his comment. Obviously the latter matter he raised is a matter of privilege that has been raised with me and is under consideration at the moment. The other matter was outside the Standing Orders. Members on all sides of the House from time to time raise visual signs to assist their questions or answers. Mr Clarkson’s position was in a totally different category from that. 
Visitors—Hungarian Honorary Consul and Members of Hungarian Community 
KEITH LOCKE (Green) 
: 
 I raise a point of order Madam Speaker. I have one point in relation to my motion earlier. I think it might be appropriate on the occasion of this very important anniversary to recognise the presence with us today of the Hungarian Honorary Consul in New Zealand Klara Szentirmay and other members of the Hungarian community. 
Madam SPEAKER 
: If members wish to acknowledge their presence please do so. 
[ 
Applause 
] 
Questions to Ministers 
Election Advertising—Commencement Date of Legislation 
1. Dr DON BRASH (Leader of the Opposition) 
 to the  
Minister of Finance 
: When will the Appropriation (Parliamentary Expenditure Validation) Bill passed by the House last week come into force? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I am advised that it will very likely come into force tomorrow. 
Dr Don Brash 
: How will the public know whether political parties are honouring their commitments to pay back the amounts that were validated last week given that the legislation makes no provision for that information to be published; or is it the case that the Government intends the public should never know whether those promises are actually being kept? 
Hon Dr MICHAEL CULLEN 
: I do not know whether the member has kept his promise in that respect. I know he has not paid back the GST on their broadcasting because he stated so publicly; and as to the other matters—[ 
Interruption 
] Oh pay back the GST and the fine as well eh? Why not pay the fine back as well? 
Shane Jones 
: What are the ramifications of the bill for Parliamentary Service expenditure on items other than advertising? 
Hon Dr MICHAEL CULLEN 
: I am sure Dr Brash will be glad to know that once the bill does come into force it will clarify the situation around the leaders’ fund expenditure on staff employed to assist in election campaigns. 
Dr Don Brash 
: Can the Minister confirm that he was advised by Treasury that the validating legislation is to be passed as part of the normal Budget legislative cycle; if so why did he completely ignore that advice and ram validating legislation through the House under urgency? 
Hon Dr MICHAEL CULLEN 
: The member should not get Bryan Sinclair to write his questions. Treasury advised me of a range of options. We took one of those options. 
Dr Don Brash 
: Why was the Minister so concerned to pass validating legislation under urgency even though Treasury made no such specific recommendation when he shows so little concern about the fact that New Zealand First which props up his Government has refused to make any commitment to pay back any of the $160000 it owes? 
Hon Dr MICHAEL CULLEN 
: I am not responsible for New Zealand First’s decision or indeed that of any political party in that respect. 
Rt Hon Winston Peters 
: Has the Minister received any reports into Television New Zealand a State-owned enterprise not taking action against the National Party for failing to meet its GST bill and is that part of the validation legislation as well? 
Hon Dr MICHAEL CULLEN 
: I have not received any advice on that matter. Clearly it is a matter for Television New Zealand. No doubt if shareholding Ministers even asked about that question they would be accused of vindictive behaviour by the National Party. 
Dr Don Brash 
: Does he accept that members of the public are entitled to know which parties are honouring their commitments to pay back the money they took; if so why does his legislation make absolutely no provision for accountability and transparency in his mad dash to legalise the unlawful behaviour by him and his colleagues? 
Hon Dr MICHAEL CULLEN 
: Apart from the fact that that gentleman has on occasion sought leave to pass validating legislation for his own overexpenditure that does not provide for the payment of the fine and the entering of the conviction that might otherwise occur I remind him that there are parliamentary procedures and other statutory procedures under which he might try to seek the information. 
Hon Member 
: Answer the question! 
Hon Dr MICHAEL CULLEN 
: I just did. 
Rodney Hide 
: Just to make matters quite clear I seek the leave of Parliament to table the receipt from the Parliamentary Service that I received and the entire ACT caucus received showing that we have paid our money back despite what is being claimed publicly by National. 
Document by leave laid on the Table of the House. 
Social Inclusion—Minister’s Statement 
2.  
SUE BRADFORD (Green) 
 to the  
Minister for Social Development and Employment 
: Does he stand by his statement that “The Labour-led Government stands for social inclusion. We stand for policies that are supportive not punitive … We believe in everyone having a ‘fair go’—that’s the New Zealand way.”? 
Hon DAVID BENSON-POPE (Minister for Social Development and Employment) 
: 
 Yes. 
Sue Bradford 
: Is the Minister confident that a “fair go” was given to a woman with two children under 3 living in a Housing New Zealand house with holes under the floor whose power had been disconnected because she could not pay the bills and who was told that she was ineligible for a grant for firewood because her children were not yet sick? 
Hon DAVID BENSON-POPE 
: I have not had that case drawn to my attention. If the member would like to pass me the details I would be delighted to have it investigated. 
Georgina Beyer 
: What steps has the Government taken to make New Zealand a more socially inclusive country? 
Hon DAVID BENSON-POPE 
: The Government has taken many steps to make New Zealand a more socially inclusive country including the Working for Families tax relief; increases in family support for those on benefits; increases in minimum wage rates; the roll-out of the primary health organisations; 20 hours of free early childhood education for 3 and 4-year-olds; Modern Apprenticeships; improved case management support for sole parents receiving benefits; the introduction of course of income-related rents; lower medical fees; the reduction in unemployment; the abolition of interest on student loans; and among other things increases in New Zealand superannuation. 
Tariana Turia 
: What explanation can the Minister give to the 230000 New Zealanders who are being excluded from the Working for Families in-work payment and who remain in poverty as identified by the Child Poverty Action Group and other leading social commentators? 
Hon DAVID BENSON-POPE 
: As the member will be aware those figures pre-date the introduction of the Working for Families package. She will also be aware that beneficiary families have already received an increase in assistance from that package on an average of $32 per week in the first year. They will get a further increase of $10 per week per child in April 2007. 
Sue Bradford 
: Is the Government giving a “fair go” to those people in Tai Rawhiti who go off the unemployment benefit to do weather dependent field and pack-house work and then if it rains and they cannot work have to go through a stand-down period before their benefits resume; if so does he agree that such punitive treatment disincentivises those trying to get work in the first place and also flies in the face of Government reassurances that people doing seasonal work will not be subject to stand-downs? 
Hon DAVID BENSON-POPE 
: In respect of one of the elements of that question the Hon David Cunliffe and I will be making some announcements in the next couple of days. I tell the member that clearly individual cases that she is concerned about I will be happy to investigate if she passes me that information but that the policies of this Government make no apology for incentivising work. 
Tariana Turia 
: How can social inclusion be maintained for 1675 New Zealand workers and their families who stand to lose their jobs while the Government the major shareholder in Air New Zealand is outsourcing its work to China and Fiji to get cheap labour? 
Hon DAVID BENSON-POPE 
: I have no responsibility for Air New Zealand. 
Sue Bradford 
: Does the Minister agree that due to the loss of discretion to grant the special benefit many people around New Zealand are suffering extreme hardship and that food banks in some parts of the country are almost empty; when will this Government do something to address the impact of the abolition of the special benefit other than just talking about Working for Families a programme that fails to assist those New Zealanders in the worst poverty? 
Hon DAVID BENSON-POPE 
: No I do not agree. I tell the member that when I last had the beneficiary advocates in my office I invited them to come to me with any particular concerns they had about the change from the special benefit to temporary additional support and they are yet to do so. 
Sue Bradford 
: Does the Minister think that cases like the ones I talked about earlier reveal fundamentally inadequate provisions of welfare by this Government at least in some parts of the country or that they are demonstrations of systemic failure within his ministry to deliver the proper entitlements to those in need; whichever it is what action will he take to make sure that the one in five kids growing up in poverty in this country get the fair go he claims he is committed to? 
Hon DAVID BENSON-POPE 
: No no and if the member gives me details I will be happy to investigate particular cases as I have twice said. 
Taxation—Thresholds 
3.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Does he stand by his statement that personal income tax thresholds “will be considered in the light of final decisions around the business taxation review in the context of next year’s Budget for implementation on 1 April 2008.”; if so does this mean that any changes his Government intends making to personal taxes would take effect from 1 April 2008? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes; yes if such decisions are made. 
John Key 
: Does the Minister consider that when the Minister of Revenue last week said in his newsletter that business tax changes will go ahead from April 2008 and will be accompanied by personal tax adjustments that was an accurate statement just as Mr Peters’ statement a few seconds ago “They’re on their way.” was accurate? 
Hon Dr MICHAEL CULLEN 
: I am sure that represents the very deep intentions of the Minister of Revenue and of course we are from the Government we are here to help. 
Hon Mark Gosche 
: Are fiscal constraints the only matters considered when assessing the appropriateness of changes to the personal tax regime? 
Hon Dr MICHAEL CULLEN 
: No. There are two other important factors. One is trade-offs in other areas of Government spending particularly over the long term as well as in the short term. But there is also the macroeconomic environment; with the current account deficit approaching 10 percent of GDP the Government has to be careful how much fiscal stimulus it puts into the economy and Dr Brash clearly agrees. 
John Key 
: If as a result of the business tax review the Minister ends up cutting the company rate to 30 percent leaving a 9c differential between the top rate and the company rate widening out from 6c does he consider that to be an issue; in which case will he be doing anything about the top personal rate? 
Hon Dr MICHAEL CULLEN 
: The member will have to wait and see but I would not raise the mortgage yet. 
Rt Hon Winston Peters 
: Has the Minister received any reports as to whether Mr Key the National Party’s finance spokesman is right when he says that the surplus is $11.5 billion— 
Hon Tau Henare 
: Stick to foreign affairs! 
Rt Hon Winston Peters 
: Tau is growing through his head again. 
Madam SPEAKER 
: Please continue. 
Rt Hon Winston Peters 
: I would love to Madam Speaker. Second what reports has he seen on the kind of financial mind that argues that the surplus for taxation is $11.5 billion when in fact every other informed commentator knows that it is $3 billion? 
Hon Dr MICHAEL CULLEN 
: Indeed the operating surplus in the full level was $11.5 billion. Of that—[ 
Interruption 
] I will wait. I have plenty of time. I have years to answer this. Of that $1.8 billion was merely an accounting change but Mr Key had spent it the following morning and $3 billion was the transfers to the superannuation fund and the earnings on the superannuation fund—all of which were set aside for a specific purpose. A large amount of the rest represented the profits on the other Government investment funds. That is why Mr Key in the morning promised tax cuts of $11.5 billion and in the afternoon of the same day promised tax cuts of $2.5 billion. 
Hon Mark Gosche 
: What are the implications for monetary policy of running a loose fiscal policy? 
Hon Dr MICHAEL CULLEN 
: In just the last few days we have seen the implications of running poor fiscal policy with Italy seeing a credit-rating downgrade by both Standard and Poor’s and Fitch Ratings. It is important that fiscal policy supports monetary policy. I am sure that Dr Brash could organise a seminar for Mr Key on these matters. 
John Key 
: Can we now assume—given that the leaders of the two main support parties of the Government are now saying there will be tax cuts in 2008 and his own Prime Minister is running around the country telling any group that will listen there will be tax cuts in 2008—that the issue has long since passed being one of affordability and now is a question of political expediency and that is why people are having to wait until 2008 in the very same way that Mike Williams the Labour Party President argued on  
Agenda 
 on Saturday morning that the validating legislation went through under urgency only as a matter of political expediency? 
Hon Dr MICHAEL CULLEN 
: We will run it through again for the member. If the member really believes that with a current account deficit of nearly 10 percent of GDP the Government right now should be putting in an extra $2.5 billion of spending power with no corresponding cut in Government spending it shows how stupid a background in money manipulation of financial market speculation is in running a small economy. 
John Key 
: Has the Government been considering raising the trust rate to 36 percent a rate that Mr Dunne as Minister of Revenue has been indicating may be the case in which case can he tell us when it is likely that the trust rate will be increased? 
Hon Dr MICHAEL CULLEN 
: There is no active consideration of that. The Inland Revenue Department did suggest it I think in its briefing papers or something similar to that. 
John Key 
: In the Minister’s forthcoming speech to the Labour Party conference this weekend will he be explaining why after 7 years of healthy and particularly lately bumper surpluses after 7 years of fiscal drag and after 7 years of seeing tax increase as a proportion of national income he has finally come to the realisation that tax cuts might make sense; can he also understand why the workers in his audience listening to his speech on Saturday or Sunday—whenever he delivers it—who look across the Tasman will feel a 7-year itch when they see an Australian Labor Party that is arguing for tax cuts and has been doing so for quite some time? 
Hon Dr MICHAEL CULLEN 
: When it comes to 7-year itches the Labour Party members know a working-class scab when they see one. 
Student Loans—Borrowing Trends 
4.  
MOANA MACKEY (Labour) 
 to the  
Minister for Tertiary Education 
: What reports if any has he received on trends in student loan borrowing over the past year? 
Hon Dr MICHAEL CULLEN (Minister for Tertiary Education) 
: 
 The annual report shows that student loan borrowing has tended to reduce over the past 4 years. The average time to repay a student loan has dropped from around 10 years 4 years ago to around 9 years today and that trend has continued over the last year. 
Moana Mackey 
: What reports has he seen on the effects of policy changes on student loan borrowing? 
Hon Dr MICHAEL CULLEN 
: I have seen a number of reports suggesting that borrowing will skyrocket and blow out following the introduction of interest-free loans. They were from Mr Key and from Mr English. In fact the predictions of the outstanding loan balance for 2009-10—in some 3 years’ time—that were made this June were only 1 percent higher than those made in June last year before the announcement of the interest-free student loan policy. The increase in cost is about 10 percent of the estimates made by National Party supporters before the last election. 
Hon Bill English 
: Can the Minister explain the forecast on page 41 of the annual report that shows that borrowings will go up—in the officials’ forecast—by at least 16 percent? 
Hon Dr MICHAEL CULLEN 
: There has been some increase in borrowings and that is related in part to student numbers. If the member cares to look at it he will find that the increase is a tiny fraction of that forecast by himself and National Party supporters outside the House before the last election with figures of up to $1 billion being used at that time. 
Ingram Report—Immigration Minister’s Statement 
5.  
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
 to the  
Minister of Immigration 
: Is it appropriate for any ministerial special directions to be issued in response to immigration submissions by Taito Phillip Field since he told the House on 19 October 2006 that Mr Field’s failure to advise the Associate Minister of Immigration of all relevant information was an error of judgment? 
Hon DAVID CUNLIFFE (Minister of Immigration) 
: 
 Decisions are made on the basis of the best available information at the time. The Minister of Immigration and his Associate Minister rely upon evidence provided by the Department of Labour; information put forward by individuals advocates immigration advisers and members of Parliament; and verification processes. 
Dr the Hon Lockwood Smith 
: When he told the House last Thursday that Taito Phillip Field’s failure to advise the Associate Minister of Immigration of all relevant information was Mr Field’s only error of judgment does that mean he is now claiming that it was not an error of judgment for Mr Field to make a deal with Mr Sunan Siriwan for him to work on Mr Field’s house in Samoa without pay in return for a work permit for New Zealand; if it was not an error of judgment how would he describe it? 
Hon DAVID CUNLIFFE 
: Last Thursday I answered questions in response to a previous statement to the House on 24 August and it is in the context of that reply that my reply was given. 
Dr the Hon Lockwood Smith 
: When he told the House last Thursday that Mr Field’s failure to advise the Associate Minister of Immigration of all relevant information was Mr Field’s only error of judgment does that mean he is now claiming that it was not an error of judgment for Mr Field to employ Mr Siriwan’s partner Ms Phanngarm as Mr Field’s wife’s personal housekeeper in Samoa where she worked without pay “like slave” in exchange for a New Zealand work permit; if so how would he now describe that behaviour? 
Hon DAVID CUNLIFFE 
: I made no comment on the matter to which the member now refers. My earlier answer referred to the Ingram inquiry’s report findings. 
Dr the Hon Lockwood Smith 
: When he told the House last Thursday that Taito Phillip Field’s failure to advise the Associate Minister of Immigration of all relevant information was Mr Field’s only error of judgment does that mean he is now claiming that it was not an error of judgment for Mr Field to tell Mr Siriwan not to submit his application for the 2-year work permit that the Associate Minister of Immigration had authorised because Taito Phillip Field “got a problem in New Zealand”; if so how would he now describe that action? 
Hon DAVID CUNLIFFE 
: As I told the House last Thursday that matter is the subject of a conflict of evidence and the allegation has been referred to the New Zealand Police. 
Dr the Hon Lockwood Smith 
: When he told the House last Thursday that Taito Phillip Field’s failure to advise the Associate Minister of Immigration of all relevant information was Mr Field’s only error of judgment does that mean he is now claiming that it was not an error of judgment for Mr Field’s family to tell people that Mr Siriwan had moved back to Bangkok when they knew he was still in Samoa and were throwing mail addressed to Mr Siriwan in the rubbish; if that was not an error of judgment how would he describe those actions? 
Hon DAVID CUNLIFFE 
: The Minister of Immigration and his Associate Minister have the right to expect full information to be provided by any member of Parliament making representations on behalf of any constituent. 
Dr the Hon Lockwood Smith 
: When he told the House last Thursday that Taito Phillip Field’s failure to advise the Associate Minister of Immigration of all relevant information was Mr Field’s only error of judgment does that mean he is now claiming that paying Mr Siriwan over $500 in cash then seeking to influence what Mr Siriwan might tell the police was not an error of judgment; if so how would he describe it? 
Hon DAVID CUNLIFFE 
: I repeat again I think for the fifth time that the matter to which the member refers is the subject of a conflict of evidence and that that evidence and the allegation have been transferred to the New Zealand Police. Proof by repeated assertion is no more than innuendo. 
Schools—New Zealand Teachers Council 
6.  
Hon BILL ENGLISH (National—Clutha-Southland) 
 to the  
Minister of Education 
: Which schools employed those teachers whose cases were published in the  
Herald on Sunday 
 article on 22 October 2006 drawn from New Zealand Teachers Council decisions? 
Hon STEVE MAHAREY (Minister of Education) 
: 
 Full information about the 13 cases reported in the  
Herald on Sunday 
 is available on the Teachers Council website along with a summary of council decisions. The Privacy Act 1993 prevents me from making available details that would identify the particular individuals concerned. However I met with the Teachers Council this morning and I have been assured that the council closely monitors the terms of any conditions attached to an individual allowed to remain registered as a teacher. It is not legally possible for the Minister to overturn decisions made by the council; nor is it possible for the Minister to direct actions of the council in relation to a particular individual. However for these particular cases the chairperson of the Teachers Council has undertaken to review the files and reassure me that in all cases conditions put in place have been followed to the letter. In addition I have invited the chairperson of the council to provide me with any recommendations on any further improvements that can be made to current arrangements as soon as possible. 
Hon Bill English 
: Does the Minister believe that parents should know whether their child is in the care of a teacher who abused his 15-year-old niece for 2 years or a teacher who played strip poker with female students and let them drink alcohol on a ski trip or a teacher who imported Ecstasy? 
Hon STEVE MAHAREY 
: As the member knows I am deeply concerned by these reports and I met with the Teachers Council this morning. I hope that parents will understand that the Teachers Council itself is at pains to point out that as a professional body there is no way that it would return anyone to the classroom who should not be there; it monitors closely any decisions that it makes; and as a professional body its members are the people to oversee this practice. As a Minister I am not able to interfere with those decisions and they cannot of course be changed by the council once made. But parents should take reassurance from the fact that the chairperson of the council has today yet again reiterated the robustness of the current arrangements. 
Hon Marian Hobbs 
: What is the history of the process for teacher registration? 
Hon STEVE MAHAREY 
: Under the National Government in the 1990s the registration of teachers was voluntary until 1997. Although registration became mandatory in 1997 there was no professional body for teachers and no requirement for police vetting of teachers before they were employed in schools. When Labour took office in 1999 we immediately began to work on establishing professional standards for all teachers. Changes to the Education Act in 2001 required police vetting for all personnel in schools and early childhood centres. The Act also established the Teachers Council which is the professional body of teachers. The body includes professional teachers principals leading educational professionals and of course parents. It includes two independent disciplinary bodies: a complaints committee and a disciplinary tribunal with powers either to deregister teachers or impose conditions on their ongoing registration. In 2004 new rules came into effect enabling the council to consider complaints of serious misconduct at any time rather than waiting until the expiry of the current registration. I believe that the arrangements now in place can give us confidence in the professionalism of the Teachers Council. 
Hon Brian Donnelly 
: Will the Minister assure the House that the report he claims he is to receive from the Teachers Council into its decisions and monitoring surrounding these cases will be made publicly available in order to allow the public to decide whether it can have confidence in the teaching profession’s watchdog; if not why not? 
Hon STEVE MAHAREY 
: The report I received was of course the verbal report of the Teachers Council and its chief executive. As I have said I have invited them to consider whether any further improvements can be made to what as I have outlined are now quite robust arrangements. If they do that I am more than happy to make them available. 
Hon Bill English 
: Does the Minister take his role as an advocate for parents seriously and if so does he believe that it is acceptable to parents that their children may be in the care—without them knowing—of a teacher who has been found to have abused his 15-year-old niece another teacher who played strip poker with female students on a ski trip another one who imported Ecstasy another one who was caught beating his wife and was convicted for it and others with violent and drink-driving convictions? 
Hon STEVE MAHAREY 
: Yes to the first question and of course not to the second. That is why the Labour Government in 1999 changed the impossibly loose approach that was taken by Mr English’s Government in the 1990s when basically anybody could have been in the classroom at any time. I have said today that the improvements over the last 7 years have left us in a position where the Teachers Council is able to give us reassurance that it is a professional body overseeing a proper and robust process. I have also said that I have invited that council to report to me as quickly as it possibly can on any further improvements I can take because of course— I say to Mr English—it is offensive to suggest anything else. I take it absolutely as my role to ensure that young people are in a safe environment when they learn as do the Teachers Council the Post Primary Teachers Association the New Zealand Educational Institute and Secondary Tertiary Alignment Resource. 
Hon Bill English 
: Why does the Minister not follow the suggestion made by Mr Brian Donnelly and make public a report from the Teachers Council on these cases so that those of us who have children in classrooms with these teachers can make a judgment on the professional standards rather than leaving it to the Minister and his union mates to decide in the Beehive? 
Hon STEVE MAHAREY 
: I welcome the member’s concern. I understand that he is a parent and has children in class at the present time and therefore like all parents he will want to be reassured in this matter. As I said to Mr Donnelly in answer to his question when the Teachers Council prepares its report with recommendations of where we might or might not go further in this matter I am more than happy to make that available. But right now I say to that member that unlike the time when he was in Government we have moved hugely in the last 6 years to ensure that we have a proper environment where registered teachers are properly registered. He might like to contemplate why he did not do that himself for the children of the 1990s. 
Hon Bill English 
: Does the Minister believe that the behaviour that has been now outlined publicly and set out in detail on the Teachers Council website reflects the professional standards of the vast majority of teachers; and if he does not believe it reflects those professional standards what does he intend to do about raising the standard of Teachers Council decisions? 
Hon STEVE MAHAREY 
: Of course this does not reflect on the 80000 teachers who are currently in our workforce from early childhood centres through to secondary schools. As to what we are doing about raising performance as I said the member might like to contemplate the vacant space that existed in the 1990s under his Government and compare it with what we are doing today which is lifting the professional standards by the invention of a Teachers Council that is writing professional standards and overseeing the development of a professional body. This is unlike himself when he left children in the classroom in the 1990s without these protections. 
Hon Trevor Mallard 
: Can I ask the Minister whether at the same time as the protections were removed for children in the early 1990s they were put in place for animals; vets were registered while teachers were deregistered? 
Hon STEVE MAHAREY 
: Further to the inquiry about the history of this matter it was one of the major points made by many people in the 1990s that the National Government protected animals but did not protect children. The Labour Government protects children. 
Hon Bill English 
: Is the Minister going to continue to protect teachers who have abused students in their care who have imported drugs and who have drink-driving convictions or is he going to expose these people to the principals who employ them and the parents whose children are in their classrooms; which is it? 
Hon STEVE MAHAREY 
: Once again a good question from someone who is a parent as well as a politician in the House. As he knows under the Privacy Act I personally cannot reveal the individual circumstances behind each of the cases that are on the website. However as I explained to the member earlier— 
Hon Tau Henare 
: Come on out with it—which one of your mates are you protecting? 
Hon STEVE MAHAREY 
: —if the member at the back would just like to listen—one of the things that the Teachers Council does is to attach conditions to each of these decisions which require the reporting back of principals about those conditions. My understanding is that that is exactly what goes on. 
Madam SPEAKER 
: If I could just remind members when they are asking and answering questions that they keep them succinct and also that they avoid making any unnecessary comment in them. 
Small Business—Small to Medium Sized Enterprises 
7.  
H V ROSS ROBERTSON (Labour—Manukau East) 
 to the  
Minister for Small Business 
: What is the Government doing to help small to medium sized enterprises in New Zealand? 
Hon LIANNE DALZIEL (Minister for Small Business) 
: 
 Today I am releasing the Government’s response to the second report of the Small Business Advisory Group. The response shows that the advisory group and the Government share a vision on how to improve the business environment for small to medium sized businesses. The Quality Regulation Review which I announced in May this year will also produce results around several of the recommendations including improving the quality of regulatory impact statements. The Government is also committed to a 2-year trial of the business cost calculator which will identify explicitly the administrative costs of proposed regulation and any alternatives. 
H V Ross Robertson 
: What other aspects of the Small Business Advisory Group report has the Government responded to favourably? 
Hon LIANNE DALZIEL 
: Ten of the 12 recommendations have received a positive response from the Government although with both exceptions the Government is looking at whether there are other ways of reducing compliance costs such as the addition of an online holiday calculator to the Department of Labour website. The Accident Compensation Corporation and the Inland Revenue Department have already announced changes in the way they deal with minor misdemeanours and unintentional mistakes. Improved processes for hazardous substances and new organisms controls came into operation in July this year. 
Dr Pita Sharples 
: Tena koe Madam Speaker tena tatou katoa. Has the Minister had reports on the potential for the creation and support of businesses in the East Coast area—that is the area from Kaiti in the south to Potaka in the north; if not why not? 
Hon LIANNE DALZIEL 
: Unfortunately that was not included as one of the recommendations from the Small Business Advisory Group although I will say to the member that one of the issues it did raise was the question of champions within individual Government departments. Te Puni Kokiri and the Ministry of Pacific Island Affairs were two departments where the group was concerned that there was proper information being given on the development and promotion of small business. 
Laboratory Tests—Charges 
8.  
Hon TONY RYALL (National—Bay of Plenty) 
 to the  
Minister of Health 
: What reports has he received if any on possible impacts on patients of planned charging for laboratory tests originating from private specialists in the Wellington region and does the Government support this charging? 
Hon PETE HODGSON (Minister of Health) 
: 
 I have seen reports that the Wellington region district health boards feel that making this change is correcting a historical anomaly that was diverting resources from patients who rely solely on the public health system. From the Government’s perspective I have told district health board chief executives that we must have national consistency on this policy to ensure fairness from region to region. 
Hon Tony Ryall 
: So is the Minister saying that it is the Government’s intention that charging patients for tests ordered by private specialists will be implemented by all district health boards; if so when does he expect this to be implemented by? 
Hon PETE HODGSON 
: Needless to say the Wellington changes will occur first and there will be some learning by doing no doubt. District health board chief executives are next due to discuss this issue at their November meeting. 
Hon Tony Ryall 
: I raise a point of order Madam Speaker. My question was quite clear. I asked whether it was the Minister’s intention that all district health boards will charge and I think it is important that he answers that specific question. 
Madam SPEAKER 
: As the member knows there is no requirement for a yes or no answer. However the Minister did address the question; I listened very carefully to it. 
Maryan Street 
: What is the likely annual savings resulting from various laboratory changes made in the Wellington region? 
Hon PETE HODGSON 
: The total annual savings is in the order of $6 million to $7 million per annum part of which is due to the planned changes to laboratory tests originating in the private sector. All of that money is now available to be reinvested back into the health of local people within the Wellington region. 
Barbara Stewart 
: Does the Minister share the concerns of the New Zealand Medical Association chairman Ross Boswell that the imposition of charges could result in people choosing to get their tests done by their already overburdened general practitioners possibly resulting in compromised care; if not why not? 
Hon PETE HODGSON 
: I have met with Dr Boswell on a number of occasions on this matter and other matters and yes he raised a valid point of view. It is almost certainly overstated when one considers for example that CAT scans X-rays and ultrasounds are already funded privately. All of those things cost a good deal less on average than do laboratory services. 
Hon Tony Ryall 
: What would the Minister say to an uninsured woman who has a lump in her breast for which she is prepared to pay say $500 to see a specialist in order to find out whether she has cancer when that woman will now face paying over $250 extra for laboratory tests in order to find out whether she has cancer? 
Hon PETE HODGSON 
: I just point out to the member that the average cost of laboratory tests is well less than that—usually well under $50 for a range of tests but some tests cost more than $200. But I would point out to the woman that if she persists with the private sector and needs a mastectomy the cost to her will be probably $13000. That gives members some perspective. 
Dr Jackie Blue 
: What would the Minister say to a man with suspected prostate cancer—a cancer that is mostly treated in private hospitals and that is predicted to steadily increase in the next 5 years—when he is told that he will be facing additional costs well over $500; and how does the Minister think that that might affect public urology waiting lists? 
Hon PETE HODGSON 
: The cost of prostatic cancer testing is a mere fraction of that which the member would have this House believe. 
Dr Jackie Blue 
: What will the Minister say to a person who needs a cardiac bypass and is considering going private thereby reducing the burden on the public sector waiting list but is informed that he or she will have to pay thousands of dollars extra; and does the Minister think that this might be a tipping point for that person to decide to go public instead? 
Hon PETE HODGSON 
: I would point out that various tests that people face whether they are receiving cardiac surgery in the private sector or any other surgery—including those that I listed for the member from New Zealand First—are already paid for privately and already cost a great deal more. This change—which was examined carefully by Bill English when he was Minister of Health and he was not in the job long enough to go through with it; and it was examined on 1 July by Wyatt Creech when he was Minister of Health and he was not in the job long enough to go ahead with it either—simply removes a historic anomaly. 
Hon Tony Ryall 
: If it is a historic anomaly that private patients pay for some tests and because the public pays for diagnostic tests they should pay for that as well is the Minister also saying it is an anomaly that private patients should receive subsidy for their pharmaceuticals as well? 
Hon PETE HODGSON 
: Strictly speaking one could argue that but of course the Government has no intention of making treatment—[ 
Interruption 
] The National Party might because it has exorbitant tax cuts on its mind; it will have to do something in order to save the money. This Government invests in health and it draws a distinction quite clearly between testing and treatment. 
Hon Tony Ryall 
: No. 
Hon PETE HODGSON 
: Yes it does. 
Injury Prevention Programme—Tai Chi 
9.  
MARTIN GALLAGHER (Labour—Hamilton West) 
 to the  
Minister for ACC 
: Has she received any reports on the effectiveness of ACC’s falls-prevention programmes for older people involving tai chi? 
Hon RUTH DYSON (Minister for ACC) 
: 
 Yes I have seen an evaluation of the tai chi programmes offered by the Accident Compensation Corporation (ACC). The evaluation was done by the Auckland University of Technology and shows significant improvements in the strength and balance of participants. An evaluation of Christchurch classes shows a 63 percent reduction in falls with 97 percent of participants having improved confidence as a result of the reduced fear of falling. 
Charles Chauvel 
: Has she received any other reports concerning proposals that would jeopardise successful injury prevention programmes? 
Hon RUTH DYSON 
: Yes I have. I have seen reports proposing that the ACC scheme be replaced with a competitive market-based scheme. It is well accepted among injury prevention experts that successful injury prevention depends on collaboration and coordination. National’s proposal to privatise the scheme would do exactly the opposite and undo the successes this Government has achieved. 
Court System—Justice for All 
10.  
KATE WILKINSON (National) 
 to the  
Minister for Courts 
: Is he confident that our court system is delivering justice for all; if not why not? 
Hon CHRIS CARTER (Acting Minister for Courts) 
: 
 Yes. 
Kate Wilkinson 
: How can he stand by his comments that court security is a high priority when figures show that serious security incidents in the Family Court doubled in 2004-05; and what is he doing to resolve this issue? 
Hon CHRIS CARTER 
: The Government takes court security very seriously. In the latter half of 2005 the number of security officers for example was increased from 18 to a total of 53. 
Kate Wilkinson 
: Has the Minister seen the transcript of his answers given in evidence at the examination of the Department for Courts estimate which includes the answer: “Every Budget we have put on extra security officers—38 this year. It is a high priority for us.” then the question: “Thirty-eight this year?” then the answer: “Eighteen is it? Sorry I got the wrong figure.”; and the question: So there’s no increased security officers from Budget 2005?” then the answer: “2006. nothing.”; and how much of a high priority is “nothing”? 
Hon CHRIS CARTER 
: To be quite honest I heard so many figures bandied around that it was hard to know which one the member was sticking to. I can report that according to the information I have been given today the number of security officers has increased from 18 to 53. 
Jill Pettis 
: How is the Pay or Stay initiative helping to deliver justice? 
Hon CHRIS CARTER 
: The initiative to collect fines at airports has already been very effective. Six people have been intercepted at airports and more than $37000 netted since the campaign began less than a month ago. All six people intercepted owed reparation to victims. 
Judy Turner 
: Is the 2-year trial of the parenting hearing programme intended to aid in breaking down the perception of anti-male bias within the Family Court; if so what aspects of the programme does he expect to address directly the strained relationships between many fathers and court officials? 
Hon CHRIS CARTER 
: The Government recognises that relationships between fathers and their children are important. As for the details that the member has raised I will be happy to get back to her with that later when I have more information. 
Kate Wilkinson 
: How can he stand by his comments that court security is a high priority when recent changes at the Family Court mean that security will not automatically be provided due to prioritisation in other courts when local lawyers are warning that they “have noticed an increase in the number of abusive and emotional outbursts in court and that often there are no police or security officers in courtrooms” and when two justices of the peace have moved to suppress their own names over fears for their safety—or is this another example of this Government getting its priorities wrong? 
Hon CHRIS CARTER 
: I have already raised the issue of the increase in the number of security guards. I can add that $156 million in baseline funding has gone into the courts since this Government came to power. And there has been a number of structural changes. For example now single entrances are designed with scanning machines and security officers; that was not the case under National. 
Kate Wilkinson 
: What more will it take to highlight the need for better courtroom security—another judge being punched and knocked over by an angry butcher another judge being slashed with a machete another judge being pelted with wads of wet toilet paper and clothing or another judge being spat at—before this Government sheds its rhetoric and really demonstrates that court security is a high priority or are those just incidences of the ebbs and flows that the Minister for Courts was referring to in the House on 29 August? 
Hon CHRIS CARTER 
: Madam Speaker I am sure I do not need to remind you or this House that courtroom security has been an issue in New Zealand for as long as the courts have existed. Attacks on judges are not a new thing. But what this Government has done is pour $156 million into baseline funding to try to fix up the courts.  
Defence Force Units—Operational Level of Establishment 
11.  
RON MARK (NZ First) 
 to the  
Minister of Defence 
: What level of establishment must Defence Force units fall below to be deemed operationally ineffective and how many units are currently below that level of establishment? 
Hon ANNETTE KING (Minister of State Services) 
 on behalf of the  
Minister of Defence 
: I am advised that all deployed units are staffed at 100 percent fit for purpose and equipped appropriately. I am also advised that effectiveness is not measured solely by establishment numbers. However the Defence Capability and Resourcing Review presented in February 2005 shows that there are a number of areas where operational and organisational capabilities are below what is required by Government policy. In answer to a written question in 2005 a summary table of the then current average strength was provided. I have asked for an update for 2006 to be provided but it was not available in time to answer this question today. I am sure the member is also aware that these issues are being directly addressed through the Government’s $4.6 billion Defence Sustainability Initiative. 
Ron Mark 
: How many of the units in New Zealand are currently operating under 80 percent of establishment and can the Minister tell us the names of those units? 
Hon ANNETTE KING 
: No I am unable to tell the member that today although I did seek that information before I could answer this question. As soon as I receive it I will make it available to the member. 
Ron Mark 
: Can the Minister undertake to also report to the House and clarify the difference between the established strengths of the units the authorised strengths—that is the strengths that the Government has funded those units to—and the actual strengths as we need to clearly understand the difference between those strength levels? 
Hon ANNETTE KING 
: On behalf of the Minister of Defence no I am not able to provide the answer to the member. I am told however that in terms of establishment it is not the only measure of effectiveness and that we need also to look at readiness combat viability deployability and sustainability. But in terms of the substantial question I could not provide the information at this time. 
Heather Roy 
: Does the Minister accept that full funding availability is a key element for defence units to maintain directed level of capability personnel numbers; if so when does his Government intend to reimburse the Royal New Zealand Air Force the conservatively estimated $12 million it has cost it to date to run the air combat force disposal unit to maintain the decommissioned Skyhawk and Aermacchi fleets for a sale that looks likely never to happen? 
Hon ANNETTE KING 
: This Government will stand by its commitment to the defence forces of New Zealand. 
Rodney Hide 
:When? 
Hon ANNETTE KING 
: In fact the first urgent injection of capital happened in 2000 with $1 billion being put in for capital equipment. Since then we have seen a commitment of $3.3 billion in terms of the long-term development plan and a further $4.6 billion for the defence sustainability initiative which includes provision for personnel infrastructure and organisation. So this Government has shown its commitment to defence in a way that no Government in the past has. 
Heather Roy 
: I raise a point of order Madam Speaker. The Minister failed to address any part of my question. The first part asked whether full funding availability was a key element for defence units to maintain directed level of capability status and the second part asked when the Government if the Minister agreed with that statement would refund the Air Force the $12 million which is a conservative estimate. She failed to address any part of that specific question. 
Madam SPEAKER 
: The Minister gave a long answer that addressed the question generally. Would she like to specifically address the Air Force? 
Hon ANNETTE KING 
: I already outlined in my answer the money going into the defence forces of New Zealand including into the Air Force. I said that I stand by our commitment to the defence forces of over $7 billion going forward over 10 years which includes money for the Air Force. 
Heather Roy 
: I raise a point of order Madam Speaker. With respect the Minister still has not specifically addressed the question which was when this Government will refund the $12 million taken from the Air Force to maintain the Skyhawk and Aermacchi fleets for a sale that is never going to happen. 
Madam SPEAKER 
: I think the Minister did address the question in terms of funding available. 
Gambling—Problem-gambling Service Providers 
12.  
SANDRA GOUDIE (National—Coromandel) 
 to the  
Associate Minister of Health 
: Is he satisfied with the Ministry of Health’s contracting and monitoring of problem-gambling service providers; if not why not? 
Hon DAMIEN O'CONNOR (Associate Minister of Health) 
: 
 Yes I am satisfied with the strategic progress being made but there is always room for improvement. 
Sandra Goudie 
: Does the Minister stand by his statement that if these people are not able to meet the targets then “we will be requiring money back from them”; if so when does he expect this money will be repaid? 
Hon DAMIEN O'CONNOR 
: The Ministry is in active discussion and negotiation with the twelve at-risk providers and I hope to have a report by the end of next week on that. I cannot prejudge what might be required from those providers or from the ministry to rectify the situation. 
Sandra Goudie 
: How long does the Minister think it is acceptable for teething problems to continue—teething problems such as the Te Rapuora health services paying $86124 for counselling six clients—and is he aware that contrary to his earlier claims most of those providers have had contracts since July 2004? 
Hon DAMIEN O'CONNOR 
: I am informed that five of the 12 are brand-new providers. The other seven have had contracts with the ministry before. However they have been funded for a range of services broken down into different categories and they range from brief and early intervention peer support community assessment and intervention and community follow-up. These are all necessary services to try to get to the estimated 40000 people in this country who have problem-gambling addictions. 
Sandra Goudie 
: Why does the ministry continue to pay problem-gambling service providers hundreds of thousands of dollars when the Minister’s officials have seen quarterly reports that show providers were falling well short of contracted levels and would not a competent Minister expect his department to withhold money for non-performance? 
Hon DAMIEN O'CONNOR 
: I am asking for a review of the contracts themselves to make sure that they have realistic targets that can be achieved and that they have negotiated sensible contracts with providers who often struggle to get people with the capability and the skills to do this very difficult job. 
Sandra Goudie 
: Which are the 12 problem-gambling providers that are currently under review and when does the Minister expect that review to be completed? 
Hon DAMIEN O'CONNOR 
: As I said there are 12 of them. They are included in the list that I have provided the member and I am hoping for a report back on them by the end of next week. 
Rt Hon Winston Peters 
: Has the Minister received any reports suggesting that it is a bit rich for the National Party to raise this issue now given its support back in 1989 when the far right of the Labour Party brought in casinos and recent gambling outlets all of which they were warned against; now we have 40000 problem gamblers and the National Party has finally woken up and is concerned? 
Hon DAMIEN O'CONNOR 
: I am very aware of the problem. I am also aware of the irony of the situation and understand that the member on the other side of the House is rather enthusiastically supporting a gaming industry that for the most part delivers entertainment but for 40000 New Zealanders delivers a very sad outcome. 
Rt Hon Winston Peters 
: I seek leave to table the voting record of New Zealand First on this matter which has been to consistently—[ 
Interruption 
] 
Madam SPEAKER 
: This is a point of order. The members who shouted out will please leave the Chamber. 
Rt Hon Winston Peters 
: It was Mr Carter and Mr Hide. 
Madam SPEAKER 
: Would they please leave the Chamber until the end of the day. 
Hon David Carter withdrew from the Chamber. 
Rodney Hide withdrew from the Chamber. 
Rt Hon Winston Peters 
: I seek leave to table the voting record of New Zealand First which shows we opposed these issues when they were raised. 
Madam SPEAKER 
: Is there any objection? 
Gerry Brownlee 
: I raise a point of order Madam Speaker. The member has sought leave to table the voting record of New Zealand First. That is fascinating: on what? 
Madam SPEAKER 
: That is not a point of order. The member clearly identified what it was on. He clearly identified before he was rudely interrupted by members who are no longer with us that he was referring to the voting on the introduction of casinos. Is there any objection to that? There is objection. 
Hon Maurice Williamson 
: I seek leave to table the voting record of Winston Peters during 1989 on the legislation regarding casinos. 
Document not tabled. 
Urgent Debates Declined 
Dioxin Release Ivon Watkins-Dow—Report 
Madam SPEAKER 
: I have received a letter from Sue Kedgley seeking to debate under Standing Order 380 recent developments in the ongoing health impacts of dioxin released from the Ivon Watkins-Dow plant at Paritutu in New Plymouth. The recent developments involve the Leonard report commissioned by TV3. This does not involve ministerial responsibility. The Ministry of Health has said it will look into claims that significant mistakes were made in the study of dioxin contamination in New Plymouth. The ministry’s comments relate to events that are likely to occur. There is therefore no particular case of recent occurrence involving administrative or ministerial responsibility of the Government that would give grounds for a debate on this matter today. The application is declined. 
Injury Prevention Rehabilitation and Compensation Amendment Bill 
First Reading 
Hon RUTH DYSON (Minister for ACC) 
: 
 I move  
That the Injury Prevention Rehabilitation and Compensation Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be considered by the Transport and Industrial Relations Committee that the committee present its final report on or before 18 December 2006 and that the committee have the authority to meet at any time while the House is sitting excepting during questions during any evening in a day in which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 192 and 195(1)(b) and (c). 
The Injury Prevention Rehabilitation and Compensation Act 2001 provides a fair and sustainable scheme for minimising both the overall incidence and the impact of injury in the community. A key goal of the Act is to ensure that the Accident Compensation Corporation (ACC) scheme is funded in a fair and sustainable manner. The bill continues to progress this goal through merging the accident compensation self-employed work account and the employers’ account into a single work account so that levies are more stable and provide a better reflection of risk. Currently levy payers and their injury claims are allocated to either the self-employed work account or the employer’s account on the basis of their business structure which is derived from tax information. 
The self-employed work account was established as an ACC-run default account to support the creation of the private insurance market for employer and self-employed workplace injury cover in 1999. When workplace injury cover was returned to the Government-run accident compensation scheme the self-employed work account was retained as a separate account on the basis that the self-employed had a higher rate of serious injury than employees. Further consideration indicates that a higher average rate of serious injury for the self-employed is mainly due to the clustering of self-employed people in high-risk industries and occupations such as forestry fisheries and farming. Business structure—in this case self-employment—is not considered a significant risk factor. 
The ASSISTANT SPEAKER (Ann Hartley) 
: I am sorry to interrupt the member but I have given members leeway. They know they are not to stand and have meetings while a member is speaking. Please leave the Chamber immediately and quietly. 
Hon RUTH DYSON 
: The self-employed work account has also had a high degree of volatility due to its small earning space combined with a high turnover of levy payers from year to year. Small businesses particularly have cited levy instability as creating problems for their business cost planning. The merger will ensure that accident compensation levies paid by businesses are fairer as they will be based on the injury risk associated with the activity undertaken rather than on the basis of the business structure. It will ensure that the levies are more stable for both the self-employed and employers. It will also improve the focus of reducing the risk of injury by encouraging industries to better coordinate health and safety across their workplaces regardless of business structure. 
The existing funds and claims currently allocated to the employers’ account and self-employed work account will be transferred to the new work account. The work account will continue to fund the entitlements that are provided for under the Act at present. Programmes allowing for levy adjustments based on safety management practices and the ability of the self-employed and shareholder employees to purchase an agreed amount of weekly compensation cover will also be retained under the work account. Employers private domestic workers and self-employed people will pay levies into the work account to fund the cost currently provided for under that account. 
To ensure that the transition to a single work account is as fair and smooth as possible the bill provides for a transition period of 3 years for the self-employed and employer levy rates in each industry or risk class to equalise. During this period levy rights would be only able to increase or decrease by up to 25 percent in relation to the previous year’s levy rates. After the transition period is complete employers and self-employed people in the same industry or risk class would pay the same levy rate. 
The bill also renames the medical misadventure account the treatment injury account. The Injury Prevention Rehabilitation and Compensation Amendment Act (No 2) 2005 replaced the “medical error” and “medical mishap” definitions with a “treatment injury” definition and removed the necessity to find fault in order to obtain cover for treatment injuries. Those new provisions were implemented on 1 June 2005. At the time of the amendment the name of the account to which such claims are allocated—the medical misadventure account—was retained for purposes of continuity. As health professionals and health-professional organisations are now familiar with the new systems terms and cover provisions that have been implemented it is appropriate that the medical misadventure account be renamed the treatment injury account. 
Our Government is committed to providing strong public services. Creating a fair and simple accident compensation scheme that reduces the incidence and impact of personal injury is our goal. This bill builds on the framework provided by the existing legislation by ensuring that the accident compensation scheme is funded in a fair and sustainable manner. I commend the bill to the House. 
Debate interrupted. 
Amended Answers to Oral Questions 
Question No. 10 to Minister 
Hon CHRIS CARTER (Acting Minister for Courts) 
: 
 I seek leave from the House to correct some information I gave in answering question No. 10 today. 
The ASSISTANT SPEAKER (Ann Hartley) 
: Leave is sought for that. Is there any objection? There is not. 
Hon CHRIS CARTER 
: In replying to a supplementary question today on question No. 10 I mentioned the increase in security guard numbers in courts around New Zealand and said they had gone up from 18 to 53 in total. I should have said that the number had gone up from 35 to 53 an increase of 18. 
Injury Prevention Rehabilitation and Compensation Amendment Bill 
First Reading 
Debate resumed. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you for the opportunity to speak on the Injury Prevention Rehabilitation and Compensation Amendment Bill. The National Party is opposing this bill as it will make accident compensation less efficient it will place a greater burden on the taxpayer and it has been brought in in a deceptive and somewhat devious way. This bill represents Minister Dyson’s and the socialist Labour Government’s absolute ideological bent to stick with the Accident Compensation Corporation (ACC) monopoly at all costs even though it will make accident compensation less efficient even though it sends signals against not for workplace safety even though it undermines the very successful accredited employers’ ACC Partnership Programme and even though it makes it less likely that the accident compensation scheme will be fully funded by 2014 which is required in the legislation. 
I look at the explanatory note of the bill with wonder because it states: “This Bill continues the Government’s commitment to a fair and sustainable ACC scheme by merging the Employers’ Account and the Self-Employed Work Account”. All one has to do is to look at the transitional provisions and one will see that the Minister’s claim to fairness goes right out the door. It states that to achieve the merger by 1 April “the Bill provides for the usual consultation process on the 2007-08 regulations to be bypassed as there is insufficient time to consult”. Ruth Dyson has the temerity to tell this House that she has a commitment to fairness yet with this bill she legislates to bypass due process and consultation. That is classic arrogant behaviour of the Labour Government which now after 7 years actually goes to the lengths of legislating to signal that it is not listening. In fact it legislates to say it is not prepared to listen. That is how far the Labour Government goes. 
The other aspect Labour claims is that the scheme is sustainable. What does Mr Phil O’Reilly of Business New Zealand say about the merger? He says that not only will merging the two accounts mean that employers are subsidising accident compensation for the self-employed but also that without experience rating which rewards a good safety record and penalises a poor one there are not strong incentives for companies to constantly improve their safety management. 
Let us just look at the ACC annual report and its claims under Labour. We see that steadily over the last 7 years accident claims have been going up—year after year despite this Labour Government claiming its monopoly model is so good. Severe and moderate injuries have also been going up despite this Labour Government saying that it is putting more money into prevention. I do not know what the Minister is wittering away about there but the fact is that if one looks in the annual report one sees that claims are continuing to go up despite what this Government suggested would happen. In 1999 when accident compensation was put out to competition and choice claims went down. For the first time in many years the whole organisation became much much more efficient. Case management became incredibly efficient with early rehabilitation and people getting back to work much faster. The facts are there. It is a great worry that the Minister denies the facts. 
But let me look at the other things the Minister says in the explanatory note of the bill. It states: “When workplace injury cover was returned to the ACC the SEWA was retained as a separate Account from the Employers’ Account on the premise that self-employed people have a higher rate of serious injuries than employees.” That is absolutely correct. The explanatory note then states: “Further evidence now indicates that the higher average injury rate for self-employed people is mainly due to the clustering of self-employed people in particular high injury risk industries and occupations (such as forestry fisheries and farming).” That is absolute rubbish. I would like Minister Dyson and her union mates to produce the evidence to substantiate those claims. 
For instance I will look at the rate of entitlement claims per million dollars of payroll. The self-employed rate is 1.06 per million; the employers’ account is half that at 0.525 per million. The average claims cost for self-employed people is $14200; from the employers’ account it is $13704. But what is really important is the fact that the claims per million dollars of payroll for the employers’ account are less than half those of the self-employed work account. Minister Dyson has absolutely no ability to substantiate what she has put in the general policy statement of the explanatory note. 
The Government then has the gall to state in the explanatory note: “The merger will ensure that ACC levies paid by businesses are fairer as they will be based on injury risk associated with activity undertaken rather than business structure.” We agree with that. That is exactly what Business New Zealand has been saying for years and years. Risk rating actually works. But no the Labour Government does not want to believe in simple common sense. 
There is some mischief in this bill that Minister Dyson has not come clean about. Firstly last year the Labour Government very quietly introduced an amendment to section 192(6) of the Act. It allows transfers of claims liability from the employers’ account to the residual account. One of the commentators believes that the transfer of claims liability from the employers’ account to the residual account under this scheme is the most significant change to the accident compensation scheme in the last 6 years. The impact of that on future levies has not been openly discussed or debated nor have the potential ramifications been communicated to the stakeholders liable for funding that growing system. That is yet another example of the Minister failing to listen to those who are intimately involved with the scheme. 
Hon Ruth Dyson 
: Rubbish! 
Dr PAUL HUTCHISON 
: She says “Rubbish!”. 
But what has also happened is that this is undermining the very successful accredited employers ACC Partnership Programme. That is a particularly sad thing because under that programme there has been some very very successful management in the private sector. For instance one of the third-party administrators highlights how its focus on early return to work strategies has meant it has significantly outperformed ACC over many years. Its present average entitlement claim cost is $3900 for the employers against ACC’s average cost of $13700. Its average entitlement claim loss days is 4 compared with ACC’s estimate of 35 days. That is how inefficient the ACC is. Minister Dyson hates the fact that under the ACC Partnership Programme businesses are very effective and efficient in managing the scheme and she want to curb it. That is of serious import. 
By making these artificial changes to the employers’ levy the Government is undermining the highly efficient Accredited Employers Programme. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 It is interesting to follow that member over there who obviously had to read from either his research unit notes or the notes of whoever writes the National Party speeches on accident compensation. It is probably the exact same people who supported National’s election campaign with the expectation that they would be sitting back up there in that gallery as they were when National privatised accident compensation in 1998. 
Darren Hughes 
: They were morticians. 
Hon MARK GOSCHE 
: They were like a couple of morticians from HIH and they were morticians all right—they oversaw the death of a major amount of money in Australia that the poor old taxpayers workers and businesses of Australia had to fork out because of the failed privatisation model that the previous National Government tried to impose upon New Zealand and that this Government quite rightfully chucked out. This type of small legislation that we have signalled clearly to people just makes sense. That is something one could never accuse the National Party spokesperson on accident compensation of. As the third-party people who have designed National’s policy say it is a pity Dr Hutchison despite the best work of designing the National Party’s policy for them prior to the election is not bright enough to know what accident compensation is about. 
Hon Ruth Dyson 
: That is what they are saying about him. 
Hon MARK GOSCHE 
: That is what they say about him—the people who are funding the National Party’s election campaigns in the expectation that they will get privatised accident compensation back— 
Hon Ruth Dyson 
: Have we got it in writing? 
Hon MARK GOSCHE 
: Oh yes we have it in writing that he is a major disappointment to the industry that backs the National Party. But the industry will keep on forking the money over to the National Party because it knows there are huge profits if it gets National back in again to privatise accident compensation as it did last time. It was a disaster. One has only to look across the Tasman and check the levy rates. Of course the research unit of the National Party did not bother to do that. It tried to find some figures in the annual report but poor old Dr Hutchison did not bother to check their work to find out that the figures he was quoting were wrong because he was not talking about the accident rates in terms of the percentage against the size of the workforce—which by the way under this Government continues to grow and grow every year. As we get unemployment down to the lowest in the world obviously we get a growth in the workforce and if there is a growth in accident rates the correct figure to look at is the percentage against that workforce growth. 
Poor old Dr Hutchison did not get his research unit to point that out to him in the annual report. However when he comes to the select committee that will deal with this bill—a very good hard-working and sensible select committee—we will give him a bit of education. There are actually some good National Party members on that committee who actually do some work from time to time and they will help to educate him. 
Hon Ruth Dyson 
: Who? 
Hon MARK GOSCHE 
: Like Bob Clarkson one of the great intellects of the National Party. He is on that committee with us. He will teach Dr Hutchison about this because Bob knows all about hard work. He does not like the work he does here; he much prefers to go home and get on the digger every weekend—he said that that is real work instead of coming down here and having to mix with the people over there. They have no intellectual grunt when it comes to understanding things like this. 
Anne Tolley 
: I raise a point of order Madam Speaker. I have waited now for some 5 minutes for the speaker to actually address the bill. I ask you to bring him back to the bill before the House. 
Darren Hughes 
: First of all it is impossible for Mark Gosche to have been doing that for 5 minutes because he did not start his speech until 3 minutes ago but secondly a fair amount of time is allowed for rebuttal on a first reading speech and I do not think he has done anything outside some of the outrageous claims made by the previous speaker; he is within his rights to spend part of his 10-minute call answering that. 
The ASSISTANT SPEAKER (Ann Hartley) 
: The member was addressing the bill generally and as he said the previous speaker raised a lot of general issues within the bill that the speaker was addressing. 
Hon MARK GOSCHE 
: Thank you Madam Assistant Speaker. I was just about to ask National members whether their next speaker could explain why a plumber who is operating as a self-employed plumber should pay a different rate of accident compensation from somebody operating as say a sole trader who has set up a company doing exactly the same work with the same risk. National members say they are opposed to the measure. Why do they not go out there and tell small businesses why they are opposed to it? They should tell them why one plumber doing exactly the same job as another plumber but whose business structure is X should pay a different rate from a plumber whose business structure is Y. That is why that National Party is no longer seen as the party for business. It is because it has lost it. National members oppose simple sensible measures such as this just for the sake of it. 
It is just not good enough. One does not oppose things just for the sake of it. They should explain to two plumbers one of whom is operating under a company structure and one of whom is self-employed both with the same risk why their levies should be so different. We are waiting for National’s intellectual grunt to answer that one. We will be waiting for a long time because National members come to the House only to oppose and to dish up policy that somebody else has made up for them—like the privatisation of accident compensation that Dr Wayne Mapp will talk about next. He will talk about the fact that he wants to put up the levies for all New Zealand workers in businesses by privatising by getting the vultures from HIH who were in the gallery like a couple of morticians overseeing the death of accident compensation but I am pleased to say that accident compensation is back as a State-provided wonderful system with low levies and HIH is dead. 
Dr WAYNE MAPP (National—North Shore) 
: 
 Well we can certainly tell when Labour members think that not very many people are listening—they get up and talk about their hatred for business; they talk about their hatred for competition; and they talk about their arrogance in just passing legislation and steamrollering it through irrespective of the economic reality of the situation and irrespective of whether submissions are being made on the best way forward. This Government is putting legislation into the House before it has even heard submissions from the industry on the whole issue. 
That is typical of this Government. It is just like last week when we had validation legislation dealt with in 24 hours without listening to the public. Well I have news for the Minister. The public have given their verdict and they hate this current Government. They want to see the end of it. They see this Government as an arrogant hateful Government interested only in its continuation in power. The voters will get to make that judgment in 2 years’ time and they will not forget. 
This kind of legislation is exactly what we now expect from this Government. It hates competition. Mr Gosche was proud to say that Labour hated the competition of 1998 and 1999. That was the era where for many businesses the premium cost fell by as much as 80 percent. Why was that? It is a simple thing that Government members cannot get their heads around. It is the whole element of risk and reward the rate of accidents and the level of premiums and the incentives to get people back to work so that the cost of premiums can be reduced. 
Government members do not understand it; they hate it. Whenever they think the public is not looking they talk in hateful ways about competition and effectiveness. They seem to think that when National members talk about the value of competition and about the value of getting private sector competition into the provision of accident compensation we have somehow lost it. The proof of 1998 and 1999 is completely lost on this Government. We are proud to say in this House that we will reintroduce competition. The one thing this Government has never really understood is what that competition was about. We still had 7-day 24-hour cover based on 80 percent of earnings. That never changed. The only thing that changed was the range of options that businesses could choose from to provide that cover. There was a competitive-based premium approach based on the level of accidents. The only way the Government got through its bill back in 1999-2000 was to get some sort of synthetic approach from the accredited employers partnership. 
This bill today sabotages that scheme. That is what this Minister is doing to that scheme. The one bright spot in its socialist nationalisation of the scheme in 1999 was the accredited employers partnership. The reason it worked is that there was at least some connection between risk and cost of premiums and self-management. That is why it was successful: there was that connection. Of course the socialists hate that connection. They want a flat uniform charge whenever possible. So there is a complete disconnection between the risk of accidents and the levels of premiums They want that to be broken. 
I have heard Labour members talk many many times on all of these kinds of social insurance schemes. They want a total universal approach. They want a flat-fee approach. They want no connection between the level of accidents and the level of premiums for particular businesses. So they will always find devices and mechanisms that break that link and that is because in their hearts—and I include the members sitting in the Chamber today Mr Maharey the Hon Ruth Dyson the Hon Judith Tizard and even dare I say it Darren Hughes—they are all socialists. They believe in socialisation and whenever they think they can get away with it that is what they will do. 
I have news for those members—the 1950s have come and gone. The 1990s have come and gone. We are looking towards a 21st century where New Zealanders expect to pay in relation to a connection between risk and what they get. People know that in the modern world and this Government has lost this truth. 
I want to produce some evidence for the Government. A submission was made to this Government by an organisation called Wellnz which is a private provider associated with the accredited employers scheme. This is what it had to say. It manages 4000 claims per year within the accredited employers scheme. It is in its interests and in the interests of the accredited employers to reduce its costs because that is how it reduces its premiums. How does it reduce costs? Basically it is by rehabilitation. There is a real incentive for people to get better because when people get better they go back to work and fall out of the accident compensation system as they have gone back to independence. Wellnz focuses on that and this is what it achieved—I am quoting from its submission. It has an entitlement claim cost measured over 4000 claims of $3900. The Accident Compensation Corporation (ACC) average is $13700. Another way of looking at that is to say that the ACC is four times less efficient than Wellnz at managing claims. Why is that? It is because the ACC is a bureaucracy and bureaucracies and State socialists simply do not make the connection between the costs they incur not for themselves but for businesses. They think it is all just a cost-plus mentality. 
 That is the flaw in the ACC model as represented by Labour. As soon as there is any element of competition any element of incentive when there is a connection between the level of the premium and getting people back to work there is a real incentive on the provider to go through the rehabilitation process and get people back to work. 
The other interesting statistic is that the average entitlement claim lost days is only 4 days under Wellnz; under ACC it is 35 days. That is nine times more simply because of the dead hand of bureaucracy over employers. 
This bill summarises Labour’s philosophy: it hates competition it hates efficiency it has an arrogant approach to employers and employees and believes in dependency; that is its hallmark and it will be judged on it. On this side of the House National believes in competition in rehabilitation in people getting get back to work and making a contribution. It believes in independence as opposed to dependency. That is what New Zealanders are looking for and in 2 years’ time they will judge this Government as a failure. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I listened to Wayne Mapp with some interest because normally he comes out with some commonsense-type statements around bills of the nature of the Injury Prevention Rehabilitation and Compensation Amendment Bill but I could not hear terribly many words about this bill. I say that with some sincerity because this bill is an attempt to have the level of the premium in line with the level of risk; that is what it is all about. 
I think the honourable member should talk to some self-employed people. The Hon Mark Gosche asked why a self-employed plumber should be treated differently from a plumber who works under a company structure. I thought Wayne Mapp might answer that. 
Dr Wayne Mapp 
: It all depends on the risk. 
PETER BROWN 
: It does not all depend on the risk. That plumber could change his structure overnight and pay a different premium. I have spoken to a number of self-employed people. They will tell members that the levies are all over the place they go up and down far too frequently and the level of compensation is most unclear and most unfair. 
I was very interested in what the Hon Mark Gosche had to say. He recognised that there was growth in the accident rate as Dr Hutchison had outlined earlier but he implied—I will not go so far as to say he stated—that it was far less than the growth in employment. If employment numbers go up it is only logical that to some degree accident rates will go up. 
New Zealand First will support this bill going to a select committee. We do not confuse the current regime with the previous regime under the privatised workplace insurance scheme that National brought in. We actually supported it and would have liked it to have a longer trial because in the 6 months it was in existence—and that was all it was in existence for—it seemed to be working pretty well. We would have liked it to have at least a 2-year trial and a thorough evaluation at the end of it. But that is not what we have. We have the Accident Compensation Corporation scheme now. It has been modified it has been amended and it has been improved. In fairness to the Government we have to recognise that the scheme has been improved on what it was when it came in in 2001 or 2000. Was it 2000? 
Dr Wayne Mapp 
: 2000. 
PETER BROWN 
: It was 2000. The Government has improved it gradually bit by bit. New Zealand First considers that this bill makes another improvement so we will support it. It is no good harping back on the privatised scheme. When National members get their shot at the Government benches they will have the opportunity to do what they want but now we have the obligation to make this legislation as fair and as reasonable as possible for the people it affects—not for us but for the people it affects. This legislation is a move in the right direction. 
New Zealand First will support this bill going to a select committee but we have one reservation. We do not think it is wise or fair to change the name medical misadventure account to treatment injury account. We will be interested in the public’s view on that. It might be just a small change but a claim for medical misadventure puts shivers down the spines of doctors—and there are two doctors over there. “Treatment injury account” sounds nice and woolly-woolly and fuzzy-fuzzy and we are not terribly happy about that. We are keen to hear what the public has to say on it. 
Nevertheless New Zealand First will take an objective view. We are keen to see the bill go to a select committee and we will work through it diligently and conscientiously to ensure that we get the best legislation not for ourselves but for the public of New Zealand particularly the self-employed. Thank you. 
KEITH LOCKE (Green) 
: 
 The Green Party will be supporting the Injury Prevention Rehabilitation and Compensation Amendment Bill. I would like to make a few comments on behalf of my colleague Sue Bradford who is our spokesperson on this area. The Green Party welcomes the introduction of the bill. The new bill is short and unusually simple for anything related to accident compensation. It corrects two glaring anomalies in the current legislative framework. We are pleased to support the bill going to a select committee and through all its stages. 
The most significant provisions are contained in clauses 4 to 11 which have the effect of combining the employers’ account and the self-employed work account into one account to be called the work account. This is an undoubtedly sensible move. The existence of these two systems side by side has created anomalies in that people carrying out what are essentially the same business activities have their accident compensation levies based not just on the injury risk of those activities but on the structure of their business. For example there is no good reason why a self-employed builder pays an accident compensation levy different from that paid by a company established by another builder that employs him or her as its sole employee—the injury risks are the same. That type of discrepancy is the sort of inequity that was inherent in the National Government’s misguided workplace injury insurance privatisation experiment of the late 1990s. 
It is unfortunate that we have had to wait 6 years to see this particular inconsistency rectified. I can certainly understand the Government’s wish to address the anomaly promptly now to ensure it does not carry forward into the 2007-08 tax year. However I question why it has taken so long to introduce this simple bill. The delay has meant that a transitional provision is now required in clause 15 to bypass the consultation process required by section 331 of the Injury Prevention Rehabilitation and Compensation Act in setting the work account levies for 2007 and 2008. Appropriate decision-making involves consultation with stakeholders and section 331 reflects recognition by Parliament of this principle. Under clause 15 no consultation with employers and self-employed people will be required in setting the 2007-08 work account levies. That is a direct and unfortunate consequence of the belated introduction of this bill. That said the Green Party does not wish to see the anomaly continue into a further tax year so despite our reservations regarding the transitional provision dispensing with consultation over levy setting we support the commencement date of 1 April 2007 proposed for this bill. 
The second major feature of this bill is clause 12. This clause renames the medical misadventure account the treatment injury account. Medical misadventure cover was replaced by treatment injury cover under a previous amendment effective from 1 July last year. Because Sue Bradford did not sit on the select committee dealing with that bill at the time the Greens are somewhat unsure as to why the account was not renamed then. We imagine it was a drafting error. However better late than never and the Green Party supports this issue being rectified especially now that health-care providers are familiar with the new system. 
One of the aspects of the new bill we are most pleased about is the fact that many of New Zealand’s around 250000 self-employed people should have their accident compensation costs cut as a result of the merger of the employers’ account and the self-employed account. When Sue Bradford was involved in the two initial accident compensation reforms bills back in 2000 the Green Party had a strong position of seeking to make sure that the interests of the self-employed including farmers were represented in that legislation. In July this year self-employed people were subject to a 10 percent increase in their levies taking them to $3.54 for the first $100 of earnings. This happened at the same time that the employers levy remained at $1.21 for each $100 of payroll. In an agricultural society for example livestock farm employees pay about $2.56 for each $100 of employee income while self-employed livestock farmers pay between $3.93 and $4.66 per $100. The gap between what the self-employed pay and what employers pay has continued to widen assisted by the fact that the pool of self-employed people is decreasing which means their levies keep rising exponentially. This is why merging the accounts will be a big help in equalising and lowering costs for the self-employed. They will also have the option of taking out CoverPlus Extra if they want the additional protection that that provides. 
I acknowledge that levies will go up for some—for example those working with chemical products in aged care or in ambulance services—but I am relieved by reassurances that the number of self-employed people affected is not large and that the Accident Compensation Corporation will smooth and cap any increases at 25 percent a year. 
The Green Party is pleased that we are removing what has become today an anachronistic separation between the employers’ account and the self-employed account and that what appears to be a drafting error—the misnaming of the medical misadventure account—will be corrected. Many changes of a far more substantive nature could and should be made to the administration of the accident compensation system in this country but meanwhile the Green Party supports the small steps forward in this bill. 
TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena koe Madam Assistant Speaker tena tatou katoa. I was pleased to see in the explanatory note of the Injury Prevention Rehabilitation and Compensation Amendment Bill that the Government states that it has a commitment to a fair and sustainable accident compensation system and I commend the Minister for ACC Ruth Dyson for her willingness to consider strategies that work in the accident compensation system to respond to the priorities for tangata whenua. Tena koe Ruth. 
There are two key issues we want to raise about this bill. It is a bill to discuss the merging together of two accounts—if you like balancing the books. It is also a bill that provides an opportunity to discuss access which it must be said the bill does not address well. A fair and sustainable accident compensation system must address the inequities that have been identified for so many Maori who do not access accident compensation or whose claims are denied. A fair and sustainable accident compensation system must address the lack of cultural fit. 
The other night I was reading the classic health resource  
Mauri Ora: The Dynamics of Maori Health 
. In it Professor Mason Durie stated his theory on cultural fit and I quote: “The degree of comfort individuals feel with seeking health services impacts on their use of services and in turn health outcomes. … The delivery of care in a culturally appropriate manner is an important element in determining both the willingness of people to access services and the success of any treatment or care then delivered.” 
The Maori Party comes to the Injury Prevention Rehabilitation and Compensation Amendment Bill thus thinking about these challenges. What degree of comfort do Maori have with the accident compensation system? What health outcomes do they achieve? How effective is the delivery of culturally appropriate care? And the results are not good news. Despite the fact that tangata whenua have a higher injury rate across the board they are significantly less likely to make an accident compensation claim and they are more likely to be declined cover. In other words application and take-up rate of accident compensation by Maori is significantly lower than it is by non-Maori. Although Maori made up 14 percent of the working age population in the 2005-06 year Maori were 11.3 percent of new claimants and 9.8 percent of ongoing claimants while being overrepresented in injury statistics across all age groups and in employment and in sport. What is interesting is that there is an even higher proportion of Maori claimants being declined accident compensation support. 
This data however is probably still an understatement of the real situation for Maori. It is by anyone’s account a depressing story. Indeed when we look at Maori in the peak fitness age—the 24 to 34-year-old age group—we find that injury is the leading cause of death accounting for 52 percent of deaths of Maori at this age. It is obvious from statistics about workplaces for Maori that they are overrepresented in high-risk industries. Maori aged 25 to 64 particularly men are more likely to be injured at work than non-Maori and this reflects the types of occupations in which Maori men are overrepresented such as manual and trade occupations. But there is also the bizarre fact that Maori are under-represented in accident compensation claims and entitlements. For the 2005 calendar year the claim rate per 1000 New Zealand Europeans was 361 per 1000 compared with 289 Maori. It is not a trick question but what explanation can there possibly be to respond to the fact that all the reports state that Maori have greater need but then Accident Compensation Corporation (ACC) reports less access to treatment? 
Dr Peter Jansen’s recent research on Maori consumer use and experience of accident compensation services reveals that Maori are currently not receiving entitlements to care rehabilitation and compensation at a level comparable to the proportion of Maori in the population. His research identifies four key barriers to care. The first is the cost of care. The cost of a general practitioner visit often discourages Maori from seeking assistance. Other perceived costs including prescriptions and travel expenses are also barriers. Many also express concern at the loss of their job believing that the 80 percent of previous income that accident compensation covers will not be adequate to cover their household expenses. Eighty percent of an already low income just will not pay the bills. 
The second barrier is communication including difficulty navigating the system or perhaps a lack of awareness of accident compensation entitlements. Out of the 651 participants in the survey only 56 percent said that the general practitioner had given them everything they needed to know about accident compensation entitlements. 
The third barrier is structural. Structural barriers may be created by consumers living some distance from the general practitioner or by their not being able to make appointments on time. The fourth barrier is cultural fit. Dr Jansen’s research reported consumer experiences where they felt there was no respect for Maori they could not trust the general practitioner or they perceived a level of racism. Other comments reported the discomfort that consumers felt at not being able to have their whanau with them. 
I have taken some time to share these results with the House today because I believe that the real and significant disparities between Maori and non-Maori’s accessing of accident compensation must be addressed if we are to ever achieve a fair and sustainable system. Auckland general practitioner Dr David Jansen confirms that disparities exist between Maori and non-Maori even when poverty is taken out of the equation. Fewer diagnostic tests are ordered for Maori Maori make fewer accident compensation claims and they die at an average of up to 10 years earlier than non-Maori. 
The Maori Party is disappointed that this bill—far from addressing these inequalities—may actually by an accident of its design exacerbate even further the inequities experienced by Maori. For in merging the employers’ account and the self-employed work account into a single work account the concern is that there will be disproportionate impacts on the self-employed an increasing number of whom are Maori as levies will almost certainly increase. 
There will be levy rate increases for self-employed people in high-risk industries like fishing farming and forestry. Of course those are three areas—fishing farming and forestry—where tangata whenua will be particularly effective. This is where our antennae really shot up. This bill will create another increased cost that the Maori fisheries industry will need to absorb in addition to the increased wages of the workers on foreign fishing vessels—an issue we have been rigorously opposing over the last month. 
We are also aware that costs will be increased for new businesses and those who are newly self-employed as the ACC requires the next year’s levy in advance. In a practical sense that means that 2 years’ worth of payments have to paid upfront. The possible consequences of these high levies might be that self-employed small businesses are faced with difficult choices like cutting back on health and safety equipment thus setting them up for future accidents. Given the high propensity for Maori to be involved in both high-risk and low-paid occupations the risk of compromises being made on occupational health and safety is just far too great. 
To return again to the concept of accident compensation as a fair and sustainable system I point out that an issue that sticks out is the redistribution of $96 million of levy reserves from the employers’ account to the self-employed work account. Although there is a $400 million surplus in the employers’ account the self-employed work account is in deficit. Employers have thus questioned the justice in transferring the surplus for use by groups that have not contributed to it. Employers are saying it is not right that their levies have been used to prop up the self-employed without due and informed consultation with all parties. One has to ask why the Government could not come to the party and prop up the self-employed work account. 
There needs to be more consultation and dialogue on the issue. The bill is rather evasive suggesting that the usual consultation process on the 2007-08 regulations should be bypassed so that there will be insufficient time to consult. The Maori Party simply ask that the questions that have arisen even in our brief analysis warrant making time available—time to consider why providers are seeming to give lesser and lower quality to indigenous people time to consider how Maori can identify when it is appropriate to seek treatment for injury time to consider how Maori with injury differ in expectations from other consumers and time to consider the degree of comfort the cultural fit and the health outcomes in order to ensure that future generations of Maori have an opportunity to live their full lives to their potential. 
We will support the Injury Prevention Rehabilitation and Compensation Amendment Bill through to the select committee in order to provide the time and opportunity for these questions to be heard. Tena koutou katoa. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 I rise on behalf of United Future to speak to the first reading of the Injury Prevention Rehabilitation and Compensation Amendment Bill. United Future will be supporting the bill going through to the select committee. However we are not averse to some of the provisions that were originally in the Accident Insurance Act of 1998 which National Party members hark back to; we suspect that the opportunity to engage with the private sector was never given enough time to bed down and that some opportunities in that area have been lost to us. But we recognise that this amendment bill is about addressing current problems with the current system. It is an opportunity to bring in some much-needed fairness and that is what we have focused our support on. We do not think that hand-wringing and looking back will make any measurable difference to particularly self-employed people who are currently faced with a lack of certainty over their accident compensation levies. 
I want to deal firstly with a comment made by the New Zealand First speaker regarding the renaming of the medical misadventure account to the treatment injury account. We all agreed that under the old system which was changed in a previous amendment bill—and I am pretty sure New Zealand First supported the change—when medical misadventure happened a considerable amount of time had to be taken to prove it had happened before the person who had suffered medical misadventure could get the compensation and help that he or she needed and was looking for. A person would have to prove that medical misadventure had happened. There was a complete shift in thinking around that issue to an approach that acknowledged that a treatment injury had happened and that left the issue of blame to the professional bodies that dealt with that and got on with the job of making sure the person in need of support and compensation received them in a timely way—hence the change of name from the medical misadventure account to the treatment injury account. The need to change the name of the account as the Green member suggested was overlooked during the passage of the previous amendment bill and we are tidying that up right now. 
It is really good that we are making work-related injuries more clearly defined and that the levies are set according to the risk posed by the activity that is intended to be undertaken rather than according to what has proved apparently to be the flawed approach of thinking that self-employed workers were particularly high-risk people just by virtue of being self-employed. Evidence has now been amassed to suggest that that is not true. Although it is true that there seems to be some clustering of self-employed people around particular high-risk industries and occupations such as forestry fisheries and farming being self-employed in itself does not pose a higher risk. The Hon Mark Gosche rightly asked whether a self-employed plumber should have to pay more in accident compensation levies than a plumber who works for a company pays. Obviously the risks in those situations are identical and it therefore seems that that inconsistency does not make sense. 
However a Maori Party member raised a question that I also noticed as I was scrolling through the commentary on the bill. I hope this question can be answered in the select committee process. It seems that those who currently contribute to the employers’ account will now be propping up those who currently contribute to the self-employed account. I think that that situation is of concern and has a potential downside for one half of the equation. We need to look very seriously at that situation to make sure that what we set up is truly equitable and truly fairer—certainly that is the intention of the bill and we support that. 
I also think that questions raised by the National Party beg an answer and I am hopeful that the select committee process will explore those questions. I note that National members have talked about their concern that this legislation will somehow undermine prevention provisions that are currently in place. They are also concerned that its provisions will be less efficient than the current system and they picked up on some concerns that there will be less clarity in respect of funding than the bill purports to provide. 
United Future has one other concern—and it is probably our No. 1 concern—that we really want to hear some advice back from the select committee on and I imagine there will be some submissions around this issue. Our concern is about the transitional provisions that are intended so that the provision can take effect from 1 April 2007. The bill provides for the usual consultation process on the 2007-08 regulations to be bypassed because of insufficient time to consult on the regulations. We have a huge warning signal sounding that we would be bypassing a process that has always been robust and able to highlight any difficulties that may be unwittingly proposed. So we would like to hear some feedback on that particular issue. We think that measure is slightly alarming if not very alarming and I imagine that people who make submissions to the select committee will pick up on that issue and make some recommendations. I hope the select committee can find a way to weed-whack its way through that little problem and come up with an alternative approach so that we can move ahead with the very noble intention of improving the current provision of accident compensation as it exists right now—not what we might want the scheme to look like and what our policy may prefer it to look like—so that it is completely fair for all those who participate in the business community and are currently very disturbed at the lack of fairness that they experience on a day-to-day basis. 
United Future is happy to support the first reading of the bill. 
HEATHER ROY (Deputy Leader—ACT) 
: 
 I rise to speak to the first reading of the Injury Prevention Rehabilitation and Compensation Amendment Bill on behalf of ACT New Zealand. We will be opposing this bill and I will go on to explain why. The bill as the explanatory note states covers two issues. The first is quite large and concerns the merging of the employers’ account and the self-employed work account. ACT vigorously opposes that merger. The second issue concerns the renaming of the medical misadventure account as the treatment injury account. I will address that issue first as it is much smaller and much more technical in nature but there is quite a principle at stake. 
In 2005 another accident compensation amendment bill was introduced in this House and I listened to the submissions in the Health Committee. That amendment bill removed the necessity to find fault to obtain cover for treatment injuries amongst other things and removed “error”and “rare and severe” as definitions of medical mishap. 
At that time ACT vigorously opposed the amendment bill pointing out many of the injustices that arise when fault does not have to be found. We will oppose that part of the current amendment bill as vigorously as we opposed the previous legislation given that we did not agree with the principle in the first place. 
With that out of the way we can address the primary reason for bringing this bill to the House—that is to merge the employers’ account and the self-employed work account. Other members have talked about the fact that the National Party’s speeches have harked back to the 1999 amendments and I suppose the privatisation of the account which allowed for competition and choice. It is not a harking back; it is in fact a relooking at very sensible changes made to accident compensation which improved the operating of accident compensation completely. Despite those changes being in place for only 9 months there was a decrease in the number of injuries and a decrease in the levies that employers the self-employed and others paid. 
It saw competition and choice introduced into the running of the accident compensation scheme and that was a very good thing. The sooner we move back to that system the better despite the fact that it was tried for only a very short time. It should have been trialled for much longer; the advantages would have been much more visible had that been the case and it was a very backward step for this nation indeed that those provisions were removed. 
There are some very good things about the Accident Compensation Corporation (ACC). I recently asked a written question of the Minister about what percentage of accident compensation surgery was done in private hospitals. The answer came back that the updated figure was 83 percent. ACC has managed to get that absolutely right—that is the contracting-out of surgery to the private hospitals that are able to do that most efficiently and very important as taxpayers are footing the bill very cost-effectively. 
Unfortunately the health system generally has not learnt its lesson in that respect. Again that is a very backward step for the taxpayers of this country. However in this instance the policy in this bill today will not be of benefit to taxpayers or to employers and the self-employed. Despite the speaker from New Zealand First seeming to miss this point completely accident compensation is an insurance-based scheme and as such is based on risk. Unfortunately we have a monopoly insurer and I have addressed that point already saying we should go back to having competition and choice which would see significant improvement in the system. Certainly that is what the ACT party wants to happen. But one size does not fit all and the proposal to merge the two accounts is a one-size-fits-all solution to a problem that involves insuring those in the workplace where it should be based on risk. 
We hear much about improving workplace safety. This bill unfortunately will not do that. It will not see the incentivisation of safety and that has been pointed out by groups like Business New Zealand. The first point to be made is that the employers’ account is significantly overfunded compared with the self-employed account. We need to look at these two accounts very carefully just to see the state of them at the moment. 
If we look at some forward forecasting the employers’ account is forecast to be overfunded to the tune of about $341 million as at 30 June 2007—an overfunding of around 27.2 percent. In contrast the self-employed account which is a much smaller account given the nature of the employment type is forecast to be in a deficit position to the tune of $33.5 million as at 30 June 2007. That represents an underfunding of around 11 percent. So the two accounts are in significantly different positions. 
That is important because as a result we will see a significant cross-subsidisation by the employers’ account of the self-employed account. Some people probably think that that has absolutely no significance at all but it has. It means that employers will be paying a lot more than the self-employed. So they will be subsidising that group when in fact the risk is significantly different. 
I turn to my second point. The United Future member highlighted a point but I think came to the wrong conclusion. She used the example of a plumber as many others have. The plumber example I suppose is a good one but again the wrong conclusion has been reached by just about everybody who has used it. Why should a self-employed plumber be paying a levy different from somebody who is employed as a plumber and the employer is paying the levy on that person’s behalf? 
The problem is that not all workplaces are equal and what needs to happen is that workplaces need to be assessed. They are at the moment; they are audited for workplace safety management practices. That leads to an experience-rating so those workplaces that have a good safety record pay less than those that do not have a good safety record. The plumber example is a good example of how this should not work. In fact the workplaces that are safe should be rewarded for providing a safe workplace—presumably they take better safety precautions realising fewer injuries in their final outcome. That is what should be in place. So groups should receive the benefit for a good safety record and those that do not provide one should be penalised. 
ACT will oppose this bill for a number of reasons. The differences between the employers’ account at the moment and the self-employed work account resulting in cross-subsidisation is a concept we find unacceptable. The levy rates should be based on experience. The two accounts are not funded to the same tune at the moment so that is a real difficulty for the future. The other thing we object to is that this planned legislation does not show a commitment to fairness and sustainability when it will—and the transition provisions in the bill highlight this—bypass the usual levy consultation process for the 2007-08 year. This too is totally unacceptable particularly from a Government that claims that consultation is important and that everybody should have his or her say. So for those reasons ACT will oppose this bill. 
Dr JONATHAN COLEMAN (National—Northcote) 
: 
 It is a pleasure to speak in opposition to the Injury Prevention Rehabilitation and Compensation Amendment Bill. I must say that I think the arguments against it have been very well canvassed by my colleagues Dr Paul Hutchison and Dr Wayne Mapp and also by Heather Roy. 
I think that fundamentally we have a situation that encapsulates some of the philosophical differences between Labour and parties that are of a centre-right persuasion. On the one hand the Labour Party wants to put forward this legislation that will make accident compensation less efficient. Labour will undermine workplace safety and it will try to impose a one-size-fits-all solution on everyone in the workplace. We know from experience that that will not work. On the other hand National and ACT are advocating for more competition in accident compensation. We believe that the changes in 1999 although they were in place for only a very brief period made some real differences in accident compensation and in the workplace. The premiums were lower there were incentives for people to look at workplace safety and the system was working more efficiently than previously. The reality when looking at insurance is that if we do not have incentives people will not ensure that workplaces are safe. Everyone will be paying one high premium to a monopoly provider—the situation that we have now—and there will be no incentive for competition in the sector and for enhanced safety in the workplace. 
One of the really concerning things about this legislation is the way it is being rushed through. There is a normally accepted period of 3 months for consultation on changes to accident compensation levies yet twice in the space of a couple of weeks legislation is being rushed through without the normally accepted consultation period. It is legislation that will not be in the best interests of the country. 
I think there is quite a parallel between this bill and the revalidation legislation that was before the House last week. A tired deceitful Government was pushing through legislation to make the illegal legal. I can say that if any of the Labour members have been out in their electorates—those who have them—over the weekend they will know that the revalidation legislation is going down very poorly out there. It will be the nail in the coffin for a lot of the Labour members who sit in the Chamber today. It is striking a very negative chord in the heart of New Zealand society. People are not happy about it. They are seeing this Government as an arrogant tired Government that is trying to absolutely run over the will of the people. I also believe that a lot of the members of the Labour caucus are not very happy about what we have seen in the past week in this House. It has been disgraceful. It has been unprecedented in the history of the New Zealand Parliament and the people of New Zealand will not stand for it. 
It is not very surprising that New Zealand First is supporting the Government on the bill that is before us today. Last week New Zealand First was very happy to support totally undemocratic legislation that made the illegal legal. It was an unprecedented move and that party will be out of this Parliament in 2008. It will disappear. 
R Doug Woolerton 
: We’ll be here. 
Dr JONATHAN COLEMAN 
: Mr Woolerton will not be here reading his newspaper and snoring away on the cross benches. He will be gone as well as some of the Labour members. 
I come back to the bill. The Government’s proposal to merge the two accounts will result in the socialisation of costs and the benefits of accident compensation. It reflects a move away from the clear incentives that are provided by an insurance-based approach. We in the National Party are clearly very opposed to that. In 2008 when we are back in Government we will reintroduce the privatisation of accident compensation and reintroduce competition to the sector because we know that when that was the case in 1999 both premiums and accident rates fell. Labour wants to take a flat approach; Labour wants it to be cost-plus. It does not see the connection between risk and premium. Labour does not recognise that if someone works in a high-risk occupation that person should pay a higher premium than someone who does not. 
It was interesting that when the Minister spoke—she took the first call—she talked about self-employed people. I think it really illustrates how little the Labour Party really understands about self-employment. She says in the explanatory note of the bill that self-employed people are clustered “in particular high injury risk industries and occupations (such as forestry fisheries and farming).” That might have been the case 40 years ago but I can tell members that time has moved on. That sort of thinking takes no account of the fact that many self-employed people now work in fields such as catering the professions and information technology. In fact thousands of people in this country are employed in information technology. Why should people who are employed in low-risk professions like information technology or catering pay the same premium as people who are foresters or fishers? That just does not make sense. 
This bill also shows us that Labour is fundamentally anti-business. It does not want to see any differentiation between people who are putting themselves out there running a business and taking all the risks. It wants to see them pay exactly the same premium as people who are not putting themselves at risk. There will be cross-subsidisation and no strong incentives. This law will not reflect the degree of risk that individuals are taking. 
It is sad that under Labour New Zealanders do not have a choice of insurer when it comes to cover for personal injury. Labour and its union mates want to have a monopoly model in this sector and they want that to continue. They have socialised insurance rather than following basic insurance principles. We have to ask ourselves why after 7 long years in Government Labour is so eager to rush this legislation through in the space of just a few short months—there is a 3-month period before it comes into effect—without giving the New Zealand public the right to be heard on the matter. The unpalatable fact and the unpalatable answer are that this legislation is all about preparing accident compensation for life under a National Government. It will set up an environment whereby it will be a lot more difficult for private insurers to enter the market in 2008 and to make it work. 
Is not this bill all about the Accident Compensation Corporation (ACC) positioning itself for the potential competitive environment once the electorate has finally rejected this tired worn-out Government this deceitful Government this Government that frankly people have had enough of? How exactly will ACC be preparing itself for that change in 2008? Basically ACC will move as many claims as possible to the residual account which it can control now and it believes well into the future. The corporation and the Government do not believe in and will not accept the residual account ever being put out to competition. They will greatly reduce the number of claims under the employers’ account management framework and that will take claims away from the management of employers who are presently within the ACC Partnership Programme. Finally they will reduce the rating structure by a number of means. They will move claims to the residual account discount the rate now and then progressively increase it over the following years and they will remove the rate stability level. They will transfer the liability to the residual account but not the collected premium and there is something deeply wrong with that. All of that will result in fewer claims and a lower rate in the employers’ account and thereby a reduced premium pool. The upshot of it all is that it will be a lot more difficult for private insurers to enter the new market and to make it work when National becomes the Government in 2008. 
So there we have it. A clear philosophical difference between the two major parties surrounds this bill. Members of the Labour Party do not believe in competition. They want everyone to be the same. They believe in a cost-plus mentality and they do not want competition in insurance. The National Party and ACT want to see competition in accident compensation and we will make sure that come 2008 with the change of Government that is exactly what happens. 
A party vote was called for on the question  
That the Injury Prevention Rehabilitation and Compensation Amendment Bill be now read a first time. 
Ayes 71 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 50 
New Zealand National 48; ACT New Zealand 2. 
Bill read a first time. 
Hon STEVE MAHAREY (Minister of Education) 
: 
 I move  
That the Injury Prevention Rehabilitation and Compensation Amendment Bill be referred to the Transport and Industrial Relations Committee for consideration that the committee report the bill on or before 18 December 2006 and that the committee have authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 192 and 195(1)(b) and (c). 
referred to Transport and Industrial Relations Committee 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 71 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Motion agreed to. 
Reserve Bank of New Zealand Amendment Bill 
In Committee 
Part 1 Reserve Bank of New Zealand Act 1989 
JOHN KEY (National—Helensville) 
: 
 Madam Chair—Mr Chair; sorry. Clearly you have not had a sex change. I am terribly sorry. Trust me when I tell you that I was deeply engrossed in a conversation of national interest. 
Darren Hughes 
: Which “National” is that? 
JOHN KEY 
: Well actually “national” as in the wider country. I would be very happy to explain my logic to the member if he wants. 
I rise on behalf of the National Party to address Part 1 of the Reserve Bank of New Zealand Amendment Bill which the National Party is supporting. I remind members that really the essence of the bill is relatively simple. In essence under this bill which is the result of deliberations by the Trans-Tasman Council on Banking Supervision—members of which include the Reserve Bank of New Zealand and the equivalent body in Australia the Australian Prudential Regulatory Authority—both countries will have observance of each other’s jurisdiction and give consideration to the financial stability and financial management of banks on either side of the Tasman. 
To come back to the case in point members will know that if they look closely at the banking scene in New Zealand they will see that around 85 percent of banks are owned by Australian institutions. There is clearly a huge degree of integration of the Australian and the New Zealand banking systems. In fact if one looks at the assets comprising financial institutions in New Zealand one sees that around 75 percent of those assets come from Australian-owned banks in New Zealand. So the level of integration is extremely high. Of course it makes tremendous sense to ensure that there is a huge degree of cooperation between the regulatory bodies on both sides of the Tasman. 
Part 1 talks to a degree about the definition of financial institutions and in fact about what financial institutions are. Members will also be aware that what comes under the purview of the Reserve Bank of New Zealand in terms of financial institutions is actually quite different from what comes under the purview of the Australian Prudential Regulatory Authority. In New Zealand the Reserve Bank has regulatory oversight of only the major banks; finance companies for instance fall outside its purview. In Australia that is not the case. Under the Australian Prudential Regulatory Authority—as in the United Kingdom under the Financial Services Authority—there is a much wider review process that includes major commercial banks as we would understand them finance companies as we would understand them and insurance companies. That is also the case in the United Kingdom but it is not the case in New Zealand. 
This issue raises an interesting point. What we have seen over the last 4 or 5 years is an explosion of the assets contained within finance companies in New Zealand. I think those companies now control something in the order of $12 billion to $14 billion worth of assets. Those assets are controlled by institutions that are not reviewed by the Reserve Bank of New Zealand. They fall outside of this bill. I think it is interesting that we have seen in recent times the collapse of at least three of those finance companies. I suspect that we have not seen the last of collapses of finance companies in New Zealand. I suspect that over time there will be as there already has been a greater call from some parts of the community for greater forms of financial regulation of finance companies in New Zealand. That is a debate the National Party is happy to engage in at a later stage. 
Secondly let me make the point that it makes enormous sense for New Zealand to work closely with Australia. I could choose any of the Australian-owned banks but for the purposes of this explanation let me choose Westpac in New Zealand. Clearly if Westpac operates successfully here in New Zealand then part of that success will come from the strength of its parent company. Clearly it makes sense for the Australian Prudential Regulatory Authority to work very closely with the Reserve Bank of New Zealand because it is extremely difficult for the Reserve Bank of New Zealand to go about its normal review process of Westpac in New Zealand unless it has full and frank knowledge and information. I was involved in global investment banks particularly Merrill Lynch whose main regulator was the Federal Reserve System even though we operated on the ground in numerous countries. Let us take for example the UK. 
The CHAIRPERSON (H V Ross Robertson) 
: The question is that Part 1 be agreed to. 
R Doug Woolerton 
: Mr Chairman— 
The CHAIRPERSON (H V Ross Robertson) 
: Sorry? The member was calling? 
R Doug Woolerton 
: Carry on. 
Part 1 agreed to. 
Part 2 Racing Act 2003 
JOHN KEY (National—Helensville) 
: 
 One thing that excites me about my Part 2 speech is that I know that Mr Woolerton will also make a Part 2 speech seeing as he missed getting the call in the Part 1 debate. I urge him to wrap both parts into one speech because it is very similar stuff. 
I rise to address Part 2 of the Reserve Bank of New Zealand Amendment Bill. This is the part that amends the Racing Act 2003. Members will be aware that the Reserve Bank of New Zealand Amendment Bill is an omnibus bill that makes alterations to both the Reserve Bank of New Zealand Act and the Racing Act. If people look at in particular clause 12 “Racing clubs may conduct equalisator betting” they will see that it states: “Section 51(3) is amended by omitting ‘section 60(2) and (3)’ and substituting ‘rules made under section 52 stating the denomination to which dividends are to be rounded and paid out”. I think members know that that means dividends will be rounded down because of the withdrawal of 5c coins to the nearest multiple of 10c. 
My colleague Mr Tisch who is very very widely regarded in racing circles led the charge for the racing industry at the last election. We saw horses parading before the election with “Fair Tax” tattooed on their hindquarters which was all about getting some fairness and equity for the racing industry in New Zealand. When National announced its racing policy I do not know how Lindsay coped actually with the sheer volume of cards of emails of phone calls of messages of goodwill and thanks to the National Party. For once people saw the Labour Party’s true colours—that it is a party that does not believe in racing. I know that Mr Hughes wanders along to on-course betting at Otaki at whatever races they have down there—they probably do not have any— 
Darren Hughes 
: Yes we do! We’ve got three racing clubs. 
JOHN KEY 
: Actually they do. I know the Otaki Racing Club is quite active. I know Mr Hughes goes there and tries even now to cajole the members of the club into thinking that Labour believes in racing but the real truth is that the party that led this fair tax policy which has brought out much greater support for the racing industry was the National Party. In fact even though my colleague—or my friend I can almost say—from New Zealand First Mr Woolerton will get on his feet and try to claim some credit on behalf of New Zealand First because the policy was part of its coalition agreement with Labour the truth as Mr Woolerton knows is that New Zealand First got it as part of its coalition arrangement only because National had it. National introduced it and National brought it up. [ 
Interruption 
] Those members from Labour are chipping away here but they are filled with grief remorse and guilt that they had not done for the racing industry what National in 5 minutes worked out was necessary. 
Racing is a very important industry indeed. It has a huge impact on New Zealand. It is not just the betting side which brings a lot of joy and enjoyment; racing also does a lot for “Brand New Zealand” as I think New Zealanders recognise. I was interested this morning as other New Zealanders would have been to read in both the  
New Zealand Herald  
and the  
Dominion Post  
about Phar Lap being poisoned by arsenic. As I flew into Wellington Airport in the 140-kilometre-an-hour gales in my Boeing 737 I did whatever I could to deter my thought process from wondering what sort of obituary about me would appear in the paper this afternoon. Even though the horse died in 1936—or whenever it was—I asked myself what sort of individual would try to poison Phar Lap with arsenic as I came into Wellington Airport sideways in a Boeing 737 with the pilot looking away from the runway with deep concern. 
Let me just return to the Racing Act 2003 having allowed New Zealanders to understand who should be claiming the credit for the changes to the racing industry and the fair tax—[ 
Interruption 
] That was the National Party I say to Mr Gosche. I expect him to get on his feet and thank the National Party for doing that. But let me just make it clear that in terms of dividends being rounded down by the Racing Board we on the select committee had an assurance from the board that that will not affect the amount of dividends paid out. That will not change. I know that the chairman of the Finance and Expenditure Committee Mr Jones— 
R DOUG WOOLERTON (NZ First) 
:  
In speaking to Part 2 of the Reserve Bank of New Zealand Amendment Bill I must say that Sir Patrick Hogan—beavering around in his stables as he does shovelling manure and all that sort of thing as a good Waikato man—would be amazed to hear that speech from John Key. He would be amazed to know that Lindsay Tisch was racing around at the last election trying to promote taxation changes to the racing industry. Because he would know being a sensible very astute businessman that he had hosted many many functions on behalf of the National Party and I have been to a few of them at his stud. He was on and on forever about the taxation of the racing industry and National never listened. It never listened and it took the Rt Hon Winston Peters and New Zealand First in cooperation with the Labour Party to deliver the changes that Patrick Hogan had been looking for all of these years. 
He must be—and I am talking to Part 2 of the bill—a very disillusioned man to know that his hospitality his generosity and his famed ability to bring people on board has been treated in such a way for so many years. It took a relatively new party to deliver that which he had been promised but what was never delivered in all of those years. 
It is true that this bill looks after the taking out of circulation of the 5c and 10c coins. It is true that it gives the Racing Board the ability to take care of its own business in the future—it will not have to come back to the House any more for this sort of legislation. It is true that dividends will be rounded down rather than up but the board has assured us—as the chairman and now Mr Key has said—that it will take account of that in its expenditure and it will make sure that it makes relevant savings and that the punters do not actually lose out of that. 
But I will say a couple of things more and I say in light of previous discussions in this Chamber around gambling casinos and those sorts of things that New Zealand First understands that this is an industry that has approximately 30000 to 35000 people employed nationwide that does have a gambling component but that exports—and “exports” is the critical word. It is no good for National members to sit there saying that this Government or New Zealand First does not believe in exporters because National when it has the opportunity does not put one incentive in place does not put one tax right down in place and does not believe in enhanced depreciation otherwise it would have done it for the racing industry as we have. It does not believe in any of those things. It would sooner support gambling and casinos that suck money out of this country—mainly from the poor—into the rich coffers mainly of American and Australian owners. 
We in New Zealand First think that that is wrong because horse racing in this country which we are talking about in Part 2 of the bill puts money into New Zealanders’ pockets and it makes sure that it stays there. It does not go offshore to the same degree that casino money does. So we have no hesitation in showing preference for this industry over and above others. We think it is absolutely right that a Government should—yes I will use the words—pick winners in this way. We do not pick the winners as in personalities but it is certainly the job of a Government to pick winners when it comes to exports when it comes to imports. This is an industry that fulfils all of the criteria and deserves the help that New Zealand First has ensured it has and we look forward to supporting it in the future. 
SHANE JONES (Labour) 
: 
 Kia ora Mr Chairman. I stand to elaborate on one or three things that were said last week in relation to this Reserve Bank of New Zealand Amendment Bill and to correct the predictable and tired rhetoric from our colleague on the other side of the Chamber Mr Key on this very important bill. 
I am referring of course to Part 2. I know that he who rides a Shetland pony in the Waikato is soon to speak to this issue. However I think of particular importance to this portion of the bill is the reassurance that the Finance and Expenditure Committee was given—[ 
Interruption 
] OK I hear all the nags whinnying from the other side of the Chamber. It is not my fault that a number of them are preparing for a dress presentation—a dress circle foray—or something like that. They are debating amongst themselves what sort of double or trifecta they will back. Of course we have had one Mr English—an English horse—who got on the track too early. He had not actually had the experience of sitting in Opposition. It has taken him 5 years to try to find his stride. He has thrown everything on to the track—[ 
Interruption 
] 
The CHAIRPERSON (H V Ross Robertson) 
: Order! 
SHANE JONES 
: Yes Mr Chairman I think a couple of scratchings on the other side of the Chamber would be in order. It would make those members disappear from the track for a time while we on this side who are much more lucid and coherent contributors make our points. 
However moving right along I point out something those members said that was very very silly and actually unwise. They said earlier today that our friends from New Zealand First did not have any role in or did not contribute towards the great reforms and improvements relating to the racing industry. Of course as we on our side of the Chamber have intimated we are only too prepared to look after the interests of those who know what stable Government is about and who know how to look after their friends. 
I come back to the bill. We had a number of— 
Hon Member 
: Pay it back! 
SHANE JONES 
: On the question of paying it back I look forward to the next discussion we have about tax—in particular GST—before I hear any more comments about paying it back. What if every businessperson every horse owner or every stable owner in Te Tai Tokerau Matamata or anywhere else in Aotearoa could actually wander off gaily unimpeded tell their creditors to haera ra and not fulfil their tax obligations! What we will actually see is the old grey gelding Dr Brash bring back a bill to try to make his arrears go away. No no no! Those members can think again if they think the New Zealand public will not hear about that. The public will hear about it a great deal. It is as if National thinks it is watching a winner. But it will not be a winner; it will be like a horse on the way to the knackers’ yard. [ 
Interruption 
] The member should not worry. We will serve that up with great lashings. In fact it will be like the molasses served up in the Waikato. It will be like a bit of that old dry hay that our man Mr Tisch gives to his horses few of which have yet to yield much of a win. 
However let me go back to the very important content of this bill. Representatives from the industry came to the Finance and Expenditure Committee and reassured us that those who are regular participants in the fun and the betting frenzy at the various racetracks will not be disadvantaged. As I said earlier the people on our select committee are a relatively competent bunch. Competence sort of ebbs and flows depending on the issue but I can reassure the Committee that it is generally at the high-tide mark where the chair is concerned. We were reassured that the participants in the industry—the regular contributors—would not be disadvantaged. I agree with Mr Key that in the event that that does not come to pass it would be a very very dark day for the people who represented the industry at the select committee because we were approached and were reassured that that was the case. 
I will continue on. John Key said earlier today that there is no site in Otaki for people to expend energy in the pursuit of racing gains. Well if there is ever a reason why our man Mr Key needs to broaden his current level of interest and address his very shallow level of experience in what is happening up and down the country and to come out of the money rooms then it is to find out that Otaki is a very illustrious site in terms of the racing industry—of racing pedigree—and that the site belongs to Ngati Raukawa. Kia ora tatou. 
LINDSAY TISCH (National—Piako) 
: 
 This is important legislation and I can assure the previous speaker Shane Jones that my Shetland pony is running quite well. In fact it ran third last week. 
Hon Parekura Horomia 
: What’s its name? 
LINDSAY TISCH 
: It is called Mum’s a Honey. How is that for a name? The Minister should write that down. When it races this week it will run better than third; it will run first. 
But I have a bet for this Committee and it is a trifecta. Do members opposite want inside information? In terms of this trifecta I bet that at the next election Labour will be out. That is a sure bet. Members should put their money on the fact that Labour will be gone. That is a sure bet and I know they will make money out of it. 
Racing is important in the Waikato. If we look at the Mercedes awards just recently— 
Hon Mark Gosche 
: What’s this got to do with 10c? 
LINDSAY TISCH 
: This has a lot to do with 10c. Others have talked about it but if we look at the New Zealand Thoroughbred 
Racehorse Owners Federation magazine  
Racehorse Owner 
—and this is where the 10c is so important—we will see that it was a proud night for those from the Waikato particularly the Piako electorate which includes Cambridge and Matamata. Members should listen to this. The Mercedes Owner of the Year award went to Ann Brown from Cambridge. The leading jockey was Mark Walker from Matamata. The best contribution to racing went to Waikato Stud owned and operated by Garry and Mary Chittick and Mark and Lisa Chittick. Of course last year Garry Chittick of Waikato Stud won a Mercedes Breeder of the Year award. So there is a lot of support there and I am proud to be able to stand up and support racing and what it means not only to this region but to the country as a whole. 
R Doug Woolerton 
: When you had a chance you didn’t do a thing. 
LINDSAY TISCH 
: The member says we did not do a thing. It was National’s policy that New Zealand First ran with at the election. It was plain to us when we sat on platform after platform before the election that the Minister for Racing at the time had absolutely no interest in racing whatsoever. At Te Rapa Damien O’Connor had absolutely no interest in racing. It was only because we put pressure on that we are able to show the importance of racing and what it brings in the way of jobs—and to the brand as John Key said—and what it means to New Zealand as a whole. 
What does this bill actually do? If we are to be competitive then we need to have some commonality with Australia. It is very very easy to bet on Australian horses. If we are not going to be competitive and have the flexibility that is so important in racing then we will lose our market offshore. It is very easy to bet offshore and this bill will bring us some commonality in terms of what will happen with the 5c situation we currently have and our move to rounding off to 10c. The proposed amendments to the Racing Act will allow the Racing Board to round down dividends within the rules. Of course from 1 November we are doing away with 5c coins. They will no longer be available. 
But what does it actually mean in terms of the payouts and who will win and who will lose? The bet type will change its current deduction of 15.5 percent down to 14.5 percent. Deductions on a place type will go from 15.5 percent down to 14.25 percent. Overall if we look at the turnover in 2005-06 we will see that it was $1.364 billion. The dividends paid to the punters the customers under the current system amount to $1.106 billion. Under the proposed rounding-down scheme they will amount to $1.1105 billion. There is a $4.4 million advantage to the punters. 
So National does support this legislation because the customer the punter will not miss out. There were some thoughts earlier on that those people may be disadvantaged by this move but that will not be the case. We have to have a rate determined by the Racing Board. We need commonality with Australia. That is what is so important. That is the flexibility to meet the market. National has much pleasure in supporting not only the whole of the Reserve Bank of New Zealand Amendment Bill but particularly from where I am speaking Part 2. 
Part 2 agreed to. 
Clause 1 agreed to.  
Clause 2 agreed to.  
The Committee divided the bill into the Reserve Bank of New Zealand Amendment Bill and the Racing Amendment Bill  
divided into Reserve Bank of New Zealand Amendment Bill Racing Amendment Bill  
pursuant to Supplementary Order Paper65. 
Bill to be reported without amendment presently. 
Communications Legislation Bill 
In Committee 
Debate resumed from 10 October. 
Part 2 Amendments to Radiocommunications Act 1989 
PANSY WONG (National) 
: 
 We are very pleased to resume the debate on this legislation. There are three issues that we would like to bring to the attention of the Committee. First is the issue with regard to the position advised by the officials that stereos in second-hand Japanese cars that may not receive radio signals would not be considered an inappropriate device that would interfere with the allocation of radio frequency. National agrees with that position. In my hand I am holding a copy of the Ministry of Economic Development’s information leaflet on the FM reception problem and the Commerce Committee is quite comfortable for that education approach to be taken. 
I would like to seek comments or commitments from the Minister in the chair Pete Hodgson on the next two issues that I bring to the attention of the Committee because National members on the select committee were assured of some conditions before we agreed to continue to support this part. The first issue is the introduction of the possibility that in future the allocation of radio frequency will be conducted by means other than a competitive process. Some submitters showed a lot of nervousness about what the Labour Government could do in terms of interference and the introduction of a lack of transparency into the process. For example one submitter suggested that these provisions allow the Government to allocate radio frequency by means other than a competitive process which means that the Government can choose whom they negotiate with. Some commercial operators indeed feel very nervous. They reckon that under the existing legislation there is provision for Government to do that anyway. The submitter reckoned that this new provision was introduced to allow the Crown to require further payment to be made when radio licences are allocated by those other means because under Part 13 of the existing Radiocommunications Act the Crown could allocate those radio frequencies anyway. So is it an issue of introducing further levy payments by stealth? I think the Minister in the chair should take a call to assure those submitters that the introduction of this new provision to allow radio frequency to be allocated by arrangement or agreement is not an underhand way of charging further fees to those organisations who may be the successful recipient of frequencies. 
The other prospect of introducing this flexible mechanism raised a concern by others about the Government allocating those very sought-after radio frequencies in a very non-transparent manner. We heard the Minister not too long ago announce two additional frequencies for commercial use and two for community use in the various regions. Putting the community frequencies aside if the allocation of commercial frequencies is to be awarded without a transparent competitive process some people are concerned about what the criteria are and who is likely to receive those frequencies. They are a very marketable product. In fact people in the market to acquire radio frequencies could find that they attract very high prices. I believe that the Minister in the chair should take a call to assure the public that the introduction of new frequencies does not have a hidden agenda for interference by Government. 
The second issue I would like to raise before my other colleagues take a call—and once again I urge the Minister to rise and give the public an assurance—is the issue raised by the Radio Frequency Users Association of New Zealand. This association is a non-profit organisation consisting of members such as local government authorities and transport communications courier forestry farming taxi and consultancy organisations. These members use a number of different radio bands mainly for non-profit purposes. They are very anxious that in the first instance they were not consulted on this legislation and they were very very unclear as to what the impact would be on them. They are seeking an assurance that they will have security of tenure. During the select committee process I recommended with the support of all the members that the chair ensure that officials carry out further consultation with this group. But at the time we came to deliberate the issue had not really been resolved. That association wrote to us again and said it was nervous and had not been reassured of the tenure of those frequencies for non-profit users. 
The association also suspects that the driving reason for officials not supporting its amendment to secure its tenure is that the officials are already planning further conversions of some of the spectrum to other uses. I tell the Minister that National has agreed to support the bill only on the assurance of the officials that the Government is in the process of reviewing in this financial year the security of tenure for all radio licences. The officials said that this would address the concerns raised by that association. The officials have said that the proposition to offer great certainties of tenure to holders of the radio licences is a good argument because that might facilitate the increased investment in radio infrastructure. However they claim that at this stage policy work on this issue needs to be undertaken with full consultation. 
I tell the Minister that I think this is a very very serious issue. The Radio Frequency Users Association is responsible for a lot of the transmitted emergency community news. The fact that it was not consulted in the first instance has led to the select committee requesting the officials to go back to the association and hold a consultation. I understand that at this stage it has not been fully resolved. I would like to see the Minister in the chair take a call to reassure the public and the Radio Frequency Users Association that the policy work is genuinely under way and there is no hidden agenda to assign the frequencies currently operated by it for other usage. 
It is incumbent on the Government to give that assurance to ensure the continued support of National on this issue. We have accepted the words of the officials at this stage but it would be helpful if the Minister could take a call to assure us that in the meantime before the policy work and the consultation is undertaken there is no hidden agenda or plan to convert the spectrum that at the moment is operated by the Radio Frequency Users Association for other purposes. Otherwise National will continue the Committee stage. I am sure that my good colleagues will support me. I can see that Chris Tremain is ready to charge on furthering that questioning. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to Part 2 of the Communications Legislation Bill. Members of the public who are listening will be aware that it has probably been a couple of weeks since we have spoken in the Committee stage of this bill. As a quick reminder of where we have got to I point out that the Communications Legislation Bill is an omnibus bill that attends to both the Telecommunications Act 2001 and the Radiocommunications Act 1989. Listeners may recall if they were listening to the debate on this earth-shattering legislation that in Part 1 we dealt with the Telecommunications Act. Right now we are looking at the Radiocommunications Act 1989 and some amendments to that Act. 
As Minister Cunliffe said in the first reading the bill is aimed at maintaining a commercial environment of certainty and confidence for both telecommunications services and use of the radio frequency spectrum. So from that point of view the National Party certainly supports that and is behind the bill in that regard. 
Both parts of the bill are narrow in scope. That is demonstrated in Part 1 by there being only one substantive clause which amends the Telecommunications Act. The wider bill is not related to the decisions of the broader telecommunications legislation that is currently before the Finance and Expenditure Committee so members of the public should not be confused by that. That bill is proceeding. At the Finance and Expenditure Committee we are dealing with the local loop unbundling and we should be reporting to the House on that particular bill in I believe early December. 
In terms of Part 2 there are two key things on which we need to focus. One matter that my colleague Pansy Wong discussed earlier is the issue of inappropriate receivers. If we look at the purpose of the bill set out in Part 2 we see that it deals first with inappropriate receivers. Clause 6 states: “The purpose of this Part is to … (a) provide that radio engineers and others considering questions of interference and technical compatibility should not have regard to the reception of radio waves by inappropriate receivers:”. To many people that might sound like a heck of a lot of gobbledygook so I will attempt to explain exactly what we are talking about here because it is somewhat confusing. In fact it all comes down to property rights and whether people who own parts of spectrum are receiving their property rights. CanWest took a court case back in 2004 in Christchurch. The case was between two radio stations More FM at 92.1FM and Niu FM at 104.1FM. CanWest the owner of More FM took legal action against Niu FM for infringement of its property rights because it believed that there was significant interference being emitted on its signal and it was being confused with the Niu FM signal. As a result of that the two signals were combining in the same radio frequency and therefore More FM believed that it was losing a property right. 
Part 2 of this legislation aims to overcome that. It states that irrespective of that particular situation it will not change the actual law. It comes down to the actual receivers in cars. The situation that has arisen with Japanese cars is that in Japan the frequency on which FM stations are received is between about 76 and 90 megahertz whereas in New Zealand we receive it on the frequency between 87 and 108 megahertz. Since Japan uses a different spectrum band for radio broadcasting—as I have said 76 to 90 megahertz—the radios that turn up in New Zealand in imported cars are incapable of reception above 90 megahertz. So for instance we were talking 92.1FM which was above that level so it became a problem. It also includes the majority of New Zealand stations which are in the higher band spectrum. If we think about our own FM stations—in Hawke’s Bay for instance we have 92FM— 
Craig Foss 
: Hauraki. 
CHRIS TREMAIN 
:—and Radio Hauraki which Mr Foss listens to—they tend to be at the higher end of the spectrum. When Japanese cars come over here with their bands at between 76 and 90 megahertz in order to pick up 92FM in Hawke’s Bay people need to do one of two things. Firstly they can put in a new radio. 
CRAIG FOSS (National—Tukituki) 
: 
 I rise on behalf of the National Party to speak on the Communications Legislation Bill. Previous National speakers have alluded to the fact that yes we are supporting this bill. First though I have to declare an interest having lived in Japan for a couple of years. Frustratingly and sadly I brought home a few Japanese radios and what at the time I thought were flash stereos and I cannot pick up anything after 90 megahertz. I cannot even pick up Radio Kahungunu The Rock Radio Hauraki and so on. So I learnt a lesson there. 
In doing a bit of research for the Committee stage today I was looking at the Minister’s first reading speech. I have here a couple of interesting quotes from the Minister when he introduced the bill. Minister Cunliffe talked about Part 2 which we are dealing with now. He said that the changes in Part 2 were “largely of a technical nature but they are critical for the efficient functioning of the regulatory environment for services that require use of the radio frequency spectrum.” Then—and this is most important—he spoke of the underlying spectrum licences that are created for periods of up to 20 years which gives certainty of investment for services using the radio spectrum. Those comments on their own are fine. It is nice rhetoric but as with so much of the current administration they are nice ideas but there is hopeless hopeless execution. 
As I said I would like to speak on Part 2 and in particular on clause 6. Clause 6 deals with radio licensing spectrum management etc. I would like to touch on the WiMAX spectrum of which our Ministry of Economic Development has been undertaking auctions over the last couple of years. It is the 2.5 to 3.5 gigahertz part of the spectrum. For the uninitiated out there they come in pairs. 
Members will remember that the Minister said we need certainty of investment and that these spectrum licences were for 20 years. I would just like to quote from a couple of written questions that I asked the Minister and his replies. They are quite illuminating. This is a reply I received on 10 March when I asked the Minister whether he was satisfied with the distribution of the 3.5 gigahertz WiMAX spectrum and if so why. The Minister said that yes he was satisfied that the spectrum in question had been allocated appropriately. I thought that was interesting and I will tell members why in a minute. Another question I asked was whether he was satisfied with the process of the allocation of the 3.5 gigahertz WiMAX spectrum; if so why. The Minister said that yes he was satisfied that the allocation process to date had been fair and equitable and that it met the policy intentions of the Government. Again that reply was received on 10 March 2006. Finally I asked the Minister what the original time frame was for the allocation of the 3.5 gigahertz WiMAX spectrum and whether any adjustments had been made to that timetable; if so why. The Minister answered—and I ask members to bear with me—“The process for allocation of area spectrum licences in the two remaining Crown-retained management rights”—they are the ones that are up for auction—“was originally planned to be completed in late 2005. It is now expected that this will be completed in April or May 2006.” 
 Well I say to the Minister that we are in October 2006 now so that was 6 or 7 months ago. The WiMax auction—the allocation—is still going. The result has been an absolute shambles. There has been delay upon delay upon delay. There have been cancelled auctions. There have been suspended auctions. There have been further investigations of auctions. Winning bids—as part of the spectrum as part of this efficiency and certainty that the Minister speaks of—have not been able to prove and they do not have the resource to come up and pay for their winning spectrum or auction. I wonder whether the Minister is even aware of that because in the telecommunications industry in the sectors on the blog sites etc. it is pretty easy to find out that stuff. Again I think the execution of what is a good idea is absolutely hopeless. Not only can the winning bids not even afford to pay a deposit now but they have no resource whatsoever to pay the balance. I believe that the minimum was 17c per head per region. Some of the winning bids have no background whatsoever in telecommunications. They have no network in the telecommunications industry. How on earth will New Zealand move its infrastructure forward when after virtually 2 years when this auction was first started we really have no one off the ground? We have nothing but a few headlines. 
Hon PETE HODGSON (Minister of Health) 
: 
 I rise to make a contribution to the debate on behalf of my colleague the Minister of Communications not that I am myself a person with great expertise in this matter I might say. Following on from a contribution from Pansy Wong and perhaps National Party colleagues prior to her—I was not listening to the debate earlier—and certainly subsequent to her it seems that the National Party is unaware of some recent developments. If I can give the tenor of those to the House it might help progress the debate. 
My colleague the Minister of Communications met with David Thompson chairman of the Radio Frequency Users Association last Monday and sent him a letter last Wednesday. If I put into the public record a couple of paragraphs from that letter it may help. I will give the essence of it: “I have already agreed that the issue of security of tenure for radio licences should be addressed urgently commencing with the release of a discussion paper.” He then goes on to point out that the discussion paper is due to come out later this year with decisions in June of 2007. The letter continues importantly: “In the interim period prior to the outcome of the discussion paper process being known you may be assured that there are no plans to announce any further changes to the spectrum allocations in relation to land mobile bands (as set out in Public Information Brochure 21). I will seek to confirm this through a statement of general policy of Government under section 112 of the Radiocommunications Act 1989.” 
I think that might answer the questions of Pansy Wong and other colleagues about whether the Government has a secret agenda. This letter has gone to David Thomson and I am happy that the essence of the letter is in the House. 
PANSY WONG (National) 
:  
I raise a point of order Mr Chairperson. The Minister is reading from a letter that is quite important to our deliberation so I seek leave for the Minister to table it. 
The CHAIRPERSON (H V Ross Robertson) 
: You cannot seek leave for the Minister to do that. It is up to the Minister whether he wishes to do so. It is an official State document and you can request it but you cannot seek leave for the Minister to do that. 
Hon BRIAN DONNELLY (NZ First) 
: 
 This is probably a very appropriate time for New Zealand First to come into the debate given that contribution by the Minister in the chair Pete Hodgson because it was New Zealand First that facilitated those meetings with the Minister. I can confirm that what the Minister was saying was absolutely correct because I have a copy of the letter in front of me. It states that New Zealand First expressed its concern in the second reading with regard to this particular issue regarding the Radio Frequency Users Association of New Zealand and the radio mobile spectrum. We said at that time that we would be putting up a Supplementary Order Paper. 
I can say that as a result of the meetings that have been held with David Thompson the Minister representatives of the Radio Frequency Users Association of New Zealand and members of the Ministry of Economic Development matters have been resolved. David Thompson has been in communication with me and said that the association is more than happy now that the issues its members raised at the Commerce Committee—which they considered had not been addressed appropriately through the select committee process—have now been addressed as a result of the work by New Zealand First. I asked the association what the problem was. I found it was that New Zealand First did not have a member on that select committee to pick up the genuine issues that were raised there so somebody outside the select committee needed to pick up those issues and genuinely run with them. I guess the situation was like this. The association had gone through the normal processes put up its submission to the select committee and been ignored. Its members had been shunned and there is some reference to that in the report back. But they came to New Zealand First and asked whether we could help them to fix that. We said yes we could and we have done that. So what the Minister said is correct. 
The issues that revolve around this particular matter are not unimportant issues. The part of the spectrum that we are talking about is the part that was captured by the Radiocommunications Act 1989. All the other users of that spectrum got their incumbency tenure except for the users of the land radio mobile part of the spectrum. Since 1989 even though it is in the sixth schedule of that Act nothing has been done about that matter. Whereas the owners of the other parts of the spectrum have been able to get investment in there because there is security and they are secure in their future use of it this legislation was creating a high level of insecurity. And not only was that the case but the legislation was also creating what could have been seen to be an environment in which there was no value in providing any long-term investment and the actual users themselves felt under threat. 
I will quote from the Minister’s letter because I am sure he will not mind that in order to give members some understanding of just how important this part of the spectrum is. He wrote: “It is acknowledged that the land mobile service provides essential services to both Government and private industry as highlighted during the recent severe snow storms in southern Canterbury where for a lengthy period such services provided the only reliable form of communications.” It was that part of the spectrum that was under threat. National and ACT would probably say it should be sold to the highest bidder. New Zealand First has a much more responsible view of the whole thing; it believes that such things as social responsibilities have to be balanced against economic imperatives. New Zealand First therefore although we did not even have a member on the select committee that looked at this legislation said that no something had to be done about the issue. We facilitated the meetings we achieved the necessary outcomes and as we say we have once again fixed it. Thank you Mr Chairman. 
PANSY WONG (National) 
: 
 I raise a point of order Mr Chairperson. Standing Order 368 “Quoting documents” states: “Whenever a Minister quotes from a document relating to public affairs a member may on a point of order require the Minister to lay the document on the Table. The Minister must then lay the document on the Table unless it is of a confidential nature.” 
The CHAIRPERSON (H V Ross Robertson) 
: Is the member requesting— 
PANSY WONG 
: I am seeking leave for that— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No the member cannot seek leave but she can request that it be done. 
PANSY WONG 
: I can request it? OK. 
Hon PETE HODGSON (Minister of Health) 
: 
 I am very happy to put the document on the Table. It is already on the Table and Pansy Wong has already seen it. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you. 
CHRIS AUCHINVOLE (National) 
: 
 I rise to speak to Part 2 of the Communications Legislation Bill. I will speak about the position advised by officials of imported Japanese cars that would interfere with radio frequency in addition to other aspects of the bill. 
The introduction of the possibility of allocated radio frequencies resulted in a number of submissions. Mr Donnelly is quite correct that the Radio Frequency Users Association of New Zealand referred in its submission to the land mobile radio band and I will be speaking to that point. It is not something that was ignored by the National Party members on the Commerce Committee. Some submitters though were concerned about the process to be used on the allocation of radio frequencies. I know that earlier speakers have already discussed this issue but I intend to canvass it again because I am not entirely sure that those who made submissions would be comfortable with what we have heard so far from the Minister. 
Why we have a Government controlling allocation other than by competitive tender is the question. We have already been asked whether this is simply a means by which the Crown can hike the costs whether it is a tax by stealth or whether it is an underhand way of charging further fees. The Minister has given us a peep of a letter which is now tabled and which he says is now in general circulation—well he did not quite say that but he said it was available—and I look forward to seeing that letter so that as a member of the select committee I can have some sense that all is being done as it should be. 
That did raise a concern about the allocation being conducted in a less than transparent manner. It is unfortunate that we are now receiving ministerial letters after select committee hearings. 
Craig Foss 
: Same old same old. 
CHRIS AUCHINVOLE 
: Same old same old. If the allocation is to be made on a basis other than competitive tender what will the criteria be? TelstraClear in its submission to the bill raised the same nervousness that has been commented on by those organisations referred to by my colleague Pansy Wong when it said that an allocation of radio licences by any means is a matter of concern to it. This is in section 116(1)(e) which is to be substituted by clause 30 of the bill. TelstraClear stated in its submission about the allocation of radio licences by any means: “TelstraClear opposes clauses 30 and 32 of the bill which provide that radio licences may be allocated by any means not just by competitive tender or auction. They would like to make it clear that they are talking about the allocation of spectrum for commercial purposes not areas like scientific research. The proposed amendment creates uncertainty over the allocation method and opens up the prospect of arbitrary and non-transparent allocation of radio licences.” This is exactly the nub of the question that is now being discussed. “Providing allocation by any means will result in a party seeking to obtain a radio licence not knowing what requirements must be met in order to obtain a radio licence. Allocation by competitive tender or auction promotes economic efficiency as these methods ensure that parties that place the greatest value on licences obtain them. Providing for allocation by any means opens up the possibility of allocation on a political basis favouring some parties at the expense of others.”—and we all know about that—“This would be particularly problematic for those parts of the spectrum that are used by the service providers for telecommunications. TelstraClear accepts that its part of the radio spectrum may only have a limited number of users or have characteristics that mean that a non-financial method of allocation is appropriate. However the Act should be clear about when these considerations should apply. TelstraClear submits that such considerations would not apply when there is competition for the spectrum when the spectrum has been determined to have a commercial purpose. In these circumstances spectrum should only be allocated by competitive tender or auction.” 
I could absorb the time of the Committee by speaking of other protestations and concerns expressed by submitters but basically the bill is small and technical. It was interesting to listen to the officials—and we did listen I say to Mr Donnelly—and to submitters. They went to great lengths to try to explain their very complex submissions and to make them more easily understandable and we certainly had a good understanding of the submissions. 
National of course supports the bill’s laudable aspects but we continue to have some concerns. One of them relates to Japanese imports which have a 76 to 90 megahertz frequency. They are incapable of reception above that so the majority of FM stations in New Zealand are excluded. This imposes some difficulties in terms of civil defence—and that was indicated by Mr Donnelly. In speaking to this issue the officials mentioned that they sought to provide a reassurance that broadcasts in civil defence emergencies would be available on National Radio AM. Being a West Coast resident I was able to advise them that we on the West Coast do not receive National Radio AM. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 I move  
That the question be now put 
. 
PANSY WONG (National) 
: 
 Thank you for giving me the call Mr Chairperson because now that the Minister of Health has tabled the Hon David Cunliffe’s response to the Radio Frequency Users Association I would like to make further comments. 
First of all I am just wondering why we did not bring the Reserve Bank Amendment Bill into this debate because Part 2 of that bill talked about horse racing and I think we are now talking a lot about horse-trading in debating Part 2 of the Communications Legislation Bill. I was looking forward to Barbara Stewart of New Zealand First taking a call on her Supplementary Order Paper that seeks clarification of security of tenure for the Radio Frequency Users Association. I now understand that that Supplementary Order Paper has been withdrawn. 
Why I was particularly interested was that Mr Shane Jones a Labour member on the Commerce Committee went to great lengths at the select committee—and my very hard-working colleague can back me up on this—to try to resolve the longstanding uneasiness of the association. He actually went to discuss the matter with the Minister of Communications Mr Cunliffe. We had to seek leave to delay the deliberations until Mr Shane Jones could come back to the select committee members and assure us that a secure path could be resolved. Well after three attempts and a delay of about 3 weeks in our deliberation on the issue he came back empty-handed and we were left no clearer as to why. Well I have bad news for Mr Shane Jones the rising star of the Labour Party: his action unfortunately did not secure much and did not count for much with his Minister. I think he needs to learn to trade horses a little better. Maybe he should take a lesson from National’s senior whip Lindsay Tisch who is better at horse-trading and knowing how to secure a guarantee. 
It was interesting to find that the letter went further. The Minister stated in the letter that he understood that the association was seeking “a 5-year window after the announcement of changes to the use of a land mobile band during which time mobile licensees could not be compelled to relinquish radio licences … Further you want to be assured that licensees will have access to alternative spectrum that the frequencies provided for replacement licences are suitable and that there is consideration of compensation for the related conversion costs.” I congratulate the association on very successful horse-trading through New Zealand First. But it does raise an issue. I think in future members on the Commerce Committee will certainly make sure that we do not easily accept any advice in good faith from the officials without every assurance that we will not be ambushed. We are actually happy with the outcome but we are also disappointed that that clear assurance from the Minister could not have been communicated to us in the first place through the Labour member Shane Jones. 
It is interesting: one never knows what one can discover in the Committee stage—last-minute horse-trading could prove to be quite fruitful for the Radio Frequency Users Association. I want to refute what New Zealand First’s Brian Donnelly was saying about the Commerce Committee members. We were of one mind in seeking the assurance and we fought very strongly on behalf of the Radio Frequency Users Association. 
Part 2 agreed to. 
Clauses 1 and 2 
PANSY WONG (National) 
: 
 I am very pleased to take a call on the title and commencement clauses of the Communications Legislation Bill. Now that National members know there is an official letter as a result of horse-trading we can assure the Commerce Committee members that the very valid point raised by the Radio Frequency Users Association has been resolved. National members are pleased to continue to support this bill. 
We are doing so well that I wonder whether Minister Maharey would like to take a call to give us further reassurance that the Government’s move to introduce a new provision in Part 2 to assign radio frequencies to entities through means other than a competitive process would not result in horse-trading in a very non-transparent way to bidders. It has been a very revealing Committee of the whole House process because we have seen how the parliamentary transparency process can be slightly sabotaged by horse-trading between Ministers and the parties that prop up this Government. Although National members support the result we do not endorse the process. The public should be even more alarmed after last week when the Government in indecent haste passed the parliamentary expenditure validation legislation. Now we learn that horse-trading happened behind the scenes even after the select committee process— 
Hon Members 
: Pay the GST! 
PANSY WONG 
: I seek leave to table the member’s bill in the name of Dr Don Brash that would allow the National Party to pay the GST. 
The CHAIRPERSON (H V Ross Robertson) 
: The member is perfectly entitled to do so because interjections from the other side of the Chamber led to it. Leave has been sought to table the bill. Is there any objection to that course of action? There is. 
PANSY WONG 
: That is telling is it not? The Labour member sitting on the other side of the Chamber did nothing to contribute to the legislation that is before us. That lazy Labour member did not even take the trouble to read this legislation but continued to interject to challenge National to pay the GST bill then refused leave for me to table Dr Brash’s bill so that we could do that. Well I have bad news for Labour members: the public has a long memory. I am very happy to come back to this legislation if Labour members take the trouble to get up on their lazy legs take a call and contribute intelligently to the debate about the legislation that is before the Committee. 
The National Party supports this legislation even though we are totally unhappy with the incompetence of the Labour Government. Part 1 amends the Telecommunications Act 2001 which was set up to finish the business within 5 years. But we are here to extend that period for a further 2 years because of the inability of the incompetent Labour Government to finish the task of examining the 13 designated services which the Hon Paul Swain said would take the Commerce Commission only 5 years to do. We have agreed that we will support this legislation. The last thing we want to do is create uncertainty in the telecommunications sector which has been through enough because of this inefficient incompetent Labour Government. For that reason we reluctantly agree to support the passage of this bill. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to the title of the Communications Legislation Bill and to thank the chairperson of the Commerce Committee Katherine Rich. It is interesting to look at the membership list of the committee and to see that young Charles Chauvel joined the committee on 3 August 2006. We are looking forward to Mr Chauvel taking a call and enlightening us with his knowledge of the Communications Legislation Bill. 
In speaking to the title I say that National supports the bill which deals with matters that are both urgent and necessary in the telecommunications sector. The bill is aimed at avoiding unintended consequences in both the telecommunications and the radio communications industries. 
There are a couple of key things about the bill that I will summarise. Firstly the bill prevents the unplanned expiry of regulations on a narrow range of communications services. We can see that Part 1 addresses that issue on the likes of local telephone number portability services cellular telephone number portability national roaming—which I will touch on a little later on—and co-location on cellular mobile transmission sites. The second thing the bill does is give legal certainty to allowing the full use of the radio spectrum despite some listeners choosing to use inappropriate radio receivers such as band expanders which I spoke on in an earlier speech. 
The Communications Legislation Bill is an omnibus bill; it amends two Acts—the Telecommunications Act 2001 and the Radiocommunications Act 1989. As the Hon David Cunliffe—“Lord Cunliffe”—said in his first reading speech the bill maintains a commercial environment of certainty and confidence for both telecommunications services and the use of the radio frequency spectrum. 
Speaking to the title I will deal with Part 1 in terms of the Telecommunications Act 2001. Members will recall that Part 1 was debated 2 weeks ago. Under the Telecommunications Act we see the issue of the expiry of a number of licences. The bill aims to extend by 2 years—to December 2008—the regulation of 10 services originally regulated under the 2001 Act and those are the services I referred to earlier that include the likes of local telephone number portability cellular telephone number portability and national roaming etc. As I said the regulation of those services is due to expire in December 2006 unless that regulation is extended by an Order in Council on the recommendation of the Minister following an investigation by the Commerce Commission. At the moment the Finance and Expenditure Committee is dealing with the likes of the local loop unbundling issue under the Telecommunications Act. It is very important that those regulated services are clarified and in good order. The necessary investigations by the Commerce Commission are under way right now but the final decision on those investigations will not be acted on until late December 2006. 
So the situation has arisen where we could extend the regulated period by a number of years under an Order in Council but there is a time frame that would not be able to be reached. As a result under this bill we have created legislation to allow it to happen earlier. That will allow certainty to telecommunication service providers and customers which they need in this industry. The industry requires big investment dollars and it is very important that investors from overseas know there is security of services going forward. The bill therefore extends the regulation of 10 services through to 2008. We have certainty of tenure in that regard—at least for 2 years. 
I would be interested to hear the Minister in the chair the Hon Steve Maharey clarify whether there will be an Order in Council to extend regulation beyond post-2008 and explain the Government’s plans. He could say whether the matter will be left in the hands of the new Government of the day which is likely to be a National Government. 
Part 2 deals largely with amendments to the Radiocommunications Act and they are mostly technical in nature. Once again they are critical for the efficient functioning of the regulatory environment for services that require use of the radio spectrum. Listeners will have heard much about the firming up of the regulatory environment in regard to the radio spectrum. We have talked in particular about the certification of licences and the ensuring of property rights around those licences. The present legislation provides for proposed new licences to be assessed against existing licences to ensure that the new use is technically compatible. The Act requires a certificate to be provided by a suitably qualified and approved radio engineer attesting to technical compatibility prior to registration on the public register. 
What does all that mean? Put simply it means that if we accommodate poor-quality receivers we can limit the spectrum available for new licences and lower the economic utilisation of the radio frequency spectrum as a whole. That was the point I made in referring to the issue that arose with two Christchurch radio stations where CanWest took Niu FM to court arguing that Niu FM had overtaken some of its frequency and it was unable to get its full listenership on board because listeners who had imported new Japanese radios were flicking between the two stations albeit not through CanWest’s fault. CanWest went to court to get a decision about whose fault it was. I quote from the decision by Justice Chisholm in which he stated that he would not uphold CanWest’s claim since it was “reasonable to assume that the certifying engineer at RSM might not have known about the problem.” 
This legislation sorts that out. It says that receivers that do not receive properly will not be taken into account. The legislation will clearly initiate licences going forward and provide security of property rights to radio spectrum owners. 
That summarises the two key parts of the bill relating to the Radiocommunications Act and the Telecommunications Act. The legislation deals with matters that are both urgent and necessary in the sector. It will avoid unintended consequences and ensure some security of tenure in the next couple of years. I say in summary that first it will prevent the unplanned expiry of regulation on a narrow range of communication services—and I have talked about co-location in that regard—and second it will give legal certainty to allow the full use of the radio spectrum despite some listeners choosing to use inappropriate radio receivers such as band expanders. 
Hon BRIAN DONNELLY (NZ First) 
: 
 I want to make a fairly brief contribution. First I would like to respond to some of the things Pansy Wong said. I have to say to her that in fact her party can pay back the GST any time it wants. All it has to do is take out the cheque book put in the correct figures get the signatures and amounts on the paper put “TVNZ” on the top of the cheque and send it off—and the bill would be paid. 
New Zealand First had a bit of a conundrum with this legislation because we supported Part 1 but had some difficulties with Part 2 which we have pointed out. In respect of Part 2 we alerted Parliament to the fact that we had concerns and we alerted Parliament to what those concerns were during the second reading debate. We said we would put forward a Supplementary Order Paper on the second part and we made it very clear to the Government that if the Supplementary Order Paper did not proceed we would not be able to continue to support the second part of this split bill. 
As it was we were able to take our concerns to the Minister of Communications David Cunliffe and I believe there is a lesson here for some of the Opposition members in learning how MMP actually operates. The Minister instead of saying: “No no no—that’s all been sorted out by the select committee. No there are no issues here—I don’t want to hear you.” actually sat down and listened. When he listened he found there were genuine concerns. As a result he was able to facilitate meetings with the groups concerned and once again he was open-minded enough to say that there were some genuine issues involved and that he would do what he could to respond to them. He did respond to them in such a way that it placated the concerns of the particular users group that had brought the concerns to New Zealand First and we were able to proceed with this legislation with everybody feeling somewhat more secure about its outcomes than they did before. 
That is MMP in operation. No one party has a mortgage on all the wisdom in this Parliament but unless certain parties that have been in power in the past learn that lesson they will in continue in the positions where they are for a long long time. I know about coalition and I tell members here and now that when it comes to education Wyatt Creech and I could teach many people here how MMP can operate and operate constructively. 
The problem that was pointed out by the Radio Frequency Users Association actually emanated from the Radiocommunications Act 1989 under which there were certain obligations for the Government to meet. The Government did meet those obligations when it came to cellular broadcasting television and cellular services but it completely failed to meet them when it came to the land mobile radio spectrum. The question therefore has to be asked: who was in Government for 9 of those years since that time? In fact the party that did not meet the obligations under that Act is the party now sitting on the Opposition benches. That needs to be recognised. 
After all that time—from 1989 when the Act came in and there has been a problem ever since—what party was able to reconcile the issues and fix the problems? The answer is that New Zealand First was able to take up the cudgels of that vitally important group and the services it operates—vitally important particularly in emergencies—and New Zealand First was able to say that something had to be done. We would use the power of our vote in this Parliament to be able at least to get some leverage with the Minister. Fortunately we had a Minister who was prepared to listen and we were able to move the thing forward in a constructive fashion. New Zealand First is very proud of what it has been able to achieve in terms of this legislation and we will be very pleased to vote for it. 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
Motion agreed to. 
Clause 1 agreed to. 
Clause 2 agreed to. 
The Committee divided the bill into the Telecommunications Amendment Bill (No 2) and the Radiocommunications Amendment Bill (No 2)  
divided into Telecommunications Amendment Bill Radiocommunications Amendment Bill 
 pursuant to Supplementary Order Paper60. 
Bill to be reported without amendment presently. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Insolvency Law Reform Bill 
In Committee 
Debate resumed from 12 October. 
Part 3 Dealing with bankrupt and bankrupt’s property 
PANSY WONG (National) 
: 
 Part 3 concentrates on the very detailed technical procedures of the duties and responsibilities of the assignee and how the assignee will supervise where an organisation has gone into liquidation. Part 3 also lays out whom the preferential creditors are. I will concentrate on two aspects of those provisions. I know that the Minister in the chair Lianne Dalziel is well known for her willingness to answer queries and address issues and I look forward to that. A lot of the people who raised the issue who are actually unsecured creditors rightly will be quite cynical about legislation that has so many detailed provisions about what an assignee can do etc. Will the end result be beneficial? Is there anything left for the unsecured creditor after a bankruptcy? 
I will share with members a very high-profile case which is one of the many bankruptcies that happen in a year. This high-profile bankruptcy happened in Wellington to a restaurant called Kopi. What happened is quite interesting. The proprietors owed the Inland Revenue Department $1.2 million in unpaid PAYE and income tax and also related penalties and interest. The  
Dominion Post 
 article on this high-profile bankruptcy included an interview with an unsecured creditor a Richard Young of Molesworth Fruit Supply. He wrote off $28000 that was owed by the restaurant proprietor and he reckoned that his chances of winning first division Lotto are higher than getting his money back. I am sure that Richard Young’s statement would be echoed quite frequently by unsecured creditors. 
I think maybe the Minister might like to take a call to say that we have gone through all the deliberation stages and whether there was anything that she felt has been seen as a significant improvement to the legislation whereby the assignee would be better able to look after the interests of unsecured creditors. They are not the only ones who mentioned that winning first division Lotto would be easier than getting any residual money from a bankruptcy. 
The other issue I want to return to is the $1.2 million owed by the couple to the Inland Revenue Department in unpaid PAYE income tax and penalties. The bankruptcy record shows that the liquidators were appointed on 20 February 2005 but apparently the proprietors stopped paying PAYE deductions from their employees’ pay packets in 1998. They had stopped payment for 3 years. Then in the tax years ended March 2002 and 2003 they paid only a fraction of their personal income tax and one of them paid nothing at all in 2002. We all know that failing to pay PAYE is an offence as is the persistent non-payment of personal tax. I wonder why the Inland Revenue Department had not instigated any action against this couple for the non-payment of taxes for 3 years from 1998. 
Part 3 continues to protect the Inland Revenue Department’s secured preferential creditor status and I think the Minister might like to take a call and say why an entity such as the Inland Revenue Department is so lax in terms of compliance action. We are being asked today in this Committee of the whole House to approve this part that includes a provision to continue to protect the Inland Revenue Department’s position as a secured creditor. I emphasise that this is not a single example. A powerful department like the Inland Revenue Department has all the tools at its disposal. If it had taken action to liquidate the company earlier it might be that the unsecured creditors and other creditors would have benefited from it. 
That is not an isolated case. Let me share another case with the public. I am sure that my very good hard-working colleague from the West Coast Chris Auchinvole would join me in citing this case. This is a company on the West Coast that went into liquidation. During the hearing in the High Court at Greymouth the very very good mining town Justice Christiansen described the Inland Revenue Department as lurking in the background like a shark waiting to consume failing companies. Why did he say that? He said that because this was an attempt by the department to liquidate a possum skin company called Gray Fur Trading. 
Justice Christiansen said that the company owed almost $200000 in overdue income tax and GST. That is fair enough. But the court was told that almost half of that amount $100000 was added on in penalties. The initial debt was closer to $90000 but it had ballooned since 2003 and the department did not take any action or correspond with that company until October 2004. A powerful Government department did not take action that could have benefited unsecured creditors and then on the initial debt of $90000 it charged $110000 more to liquidate the company. In the event nobody benefited. We on this side of the Chamber need to be convinced why the department’s preferential creditor status needs to continue to be protected. 
Then of course recently the department released a discussion document and said it was going to waive some penalty tax. If a company can prove that it has taken reasonable steps to address or reassess its tax position the department might be a bit lenient in terms of the penalty test. I do not think it is good enough. I think the fact that National members on the Commerce Committee put up a very strong case for questioning the department’s continued protected preferential creditor status has somehow led the department now to issue a discussion document about being a bit lenient on certain penalties incurred by those companies. 
Those two very high-profile examples are not untypical. In fact they are quite representative of the position because liquidators the people involved in the insolvency petitions have come before our committee and said that lots of times they have felt for the unsecured creditor. They said that the position of companies was aggravated largely because for example the department failed to take early action or alternatively the department’s preferential creditor position has made sure that it does not take very quick action to recover some of those payments which do not even belong to the department or to the company because the company is simply a collecting agent. 
CHRISTOPHER FINLAYSON (National) 
: 
 Part 3 is made up of 10 subparts but really does not contain a great deal that is new to the Insolvency Act 1967 which this bill is designed to replace. If one looks at the various clauses of all 10 subparts one finds that most of those clauses simply re-establish the position that was quite clear under the Insolvency Act. So there is not a great deal that I really want to say about this part and I will just make a couple of brief comments about some of the newer provisions. The first concerns clauses 117 to 121 which provide for various provisions relating to disclaimers of onerous property. I will just pause on those for a couple of minutes and explain what onerous property is about. When an official assignee takes over the affairs of a bankrupt he or she may make a decision to disclaim onerous property. In other words the assignee may decide not to take certain steps in relation to an unprofitable contract or in relation to the property of a bankrupt that is unsaleable if to take on those obligations would create a burden on the official assignee that would be regarded as onerous. 
Those provisions are brought across from certain provisions of the Companies Act 1993 particularly sections 269 and 270 about the power to disclaim onerous property. There are a couple of minor changes to clause 117(4). In particular the definition of onerous property can include: “a litigation right that in the opinion of the Assignee has no reasonable prospect of success or cannot reasonably be funded from the assets of the bankrupt’s estate;”. All that means is that if the bankrupt was party to litigation in which he or she was seeking damages or a declaration or whatever the official assignee could decide that the proceeding did not have a reasonable prospect of success so there was no real point in taking it over. 
That is really the only thing I want to say about the first subpart of Part 3. I think the provisions are brought together reasonably well although for the reasons that my colleagues have advanced because of major flaws that we see in other parts we will not be supporting the bill. 
Subpart 2 sets out the duties of the bankrupt and as I say largely re-enacts what is already in the Insolvency Act 1967. Subpart 3 outlines importantly those provisions that deal with control over the bankrupt during a bankruptcy. There are very real limitations on what the bankrupt can do once he or she becomes bankrupt and those provisions include if necessary prohibiting the bankrupt from entering or continuing on in business and seizing the bankrupt’s property—indeed the bankrupt must vacate land or buildings if required to do so. 
Subpart 4 deals with the provision for the bankrupt during bankruptcy. Obviously the fact that a person is bankrupt does not necessarily mean he or she shall be reduced to being a beggar; the bankrupt may retain certain assets within reason. That is all dealt with perfectly rationally in that subpart. 
Subpart 5—again nothing new here—deals with the powers of the assignee and the court to examine the bankrupt and others. Clause 182 brings across a provision relating to the privilege against self-incrimination that states: “A person is not excused from answering a question because the question may incriminate or tend to incriminate that person.” Subpart 6 is a very important subpart that deals with the status of a bankrupt’s contracts. It re-enacts those provisions reasonably clearly explaining what exactly can happen to contracts that may have been entered into by the bankrupt. 
Subpart 7 “Irregular transactions before adjudication” contains one or two new provisions and the only area I want to pay any attention to is clauses 202 and 203 which deal with insolvent gifts. If a bankrupt gifts something to another person that gift may be cancelled on the assignee’s initiative if the bankrupt made the gift within the 5 years immediately before adjudication and the bankrupt was unable to pay his or her debts immediately after making the gifts. Those are important provisions designed to get around the prospect of gifting in order to avoid the consequences of bankruptcy. 
That is really all I wanted to say. Perhaps I should just briefly say that subpart 8 sets out the very great powers of the assignee once he or she assumes responsibility for the property of a bankrupt. Subpart 9 simply deals with creditors’ claims. I think there is virtually nothing new there; some provisions are brought across from equivalent sections in the Companies Act 1993. Finally perhaps I should refer to subpart 10 of Part 3 which deals with the powers of the court. 
 So really there is nothing very important in this part that has not been brought across either from the Insolvency Act 1967 or the Companies Act 1993. It is all fairly routine stuff. As I said earlier we have major issues of principle with Part 5 and Part 8—which seeks to deal with the new concept of voluntary administration—for reasons that will be developed when we deal with those parts. That is why we are opposing the bill. 
The question was put that the amendments set out on Supplementary Order Paper 62 in the name of the Hon Lianne Dalziel to Part 3 be agreed to. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 3 as amended be agreed to. 
Ayes 71 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Part 3 as amended agreed to. 
Part 4 agreed to.  
Part 5 Compositions proposals summary instalment orders and no asset procedure 
PANSY WONG (National) 
: 
 Part 5 is quite a substantial part so we will take quite a few calls. I will start off by raising the concerns of the National Party which does not support Part 5. 
One of the major issues of concern to us is the introduction of a provision called the no-asset procedure. We were told by the officials that the reason for introducing the no-asset register is to allow a person who has no previous bankruptcy experience and no assets etc. to simply enter into the register for a period of 12 months and at the end of that period to be discharged of his or her debts. The debt can range up to $40000. They claimed that that was proposed for two reasons. First nothing positive is achieved by placing people who have no income or assets into bankruptcy and it does not help the creditors to get their money back. Secondly it will reduce administration costs. 
We certainly have a problem with the concept that if a person who has incurred a debt agrees to enter into the no-asset register the creditor will end up with nothing. The indebted person has no obligation to try to repay his or her debt. I can just see that a lot of students will be eligible. In fact my very hard-working intelligent colleague Chris Tremain as soon as he heard about this provision said that it could become known as the student loan write-off provision. When one thinks about it one realises that tertiary students are very well qualified under this provision. First of all they are encouraged to incur debt because there is no interest on it. Then they are encouraged to enter into the no-asset register because if they enter themselves in the register after 12 months their debts will be written off. Presumably if it is good enough for the Government to write off debts owed to businesses it will be good enough for the Government to apply the same principle to itself. 
But the concern about that concept is that it undermines once again personal responsibility. I believe that a person who incurs a debt incurs an obligation to pay that debt. The fact that the Government endorses the concept that a person can incur debt of up to $40000 enter on to a register for 12 months say “That’s it; it’s a clean slate.” and start from the beginning is certainly not a good thing. We were told that some retailers endorse that but I am not sure that all retailers would like that measure. Some retailers—maybe those of a smaller size—may find it more difficult to do business once they get a credit assessment of certain individuals decide to extend credit to them then find themselves at the stage where those individuals may not have to repay their debt. We certainly find that the Government should not send the message to individuals that it is OK to incur debts because they could at the end of the process have no obligation to repay them. There are a lot of small businesses in New Zealand; we all know that small to medium-sized businesses make up 92 percent of businesses in New Zealand. In fact for a lot of them their annual profit may only come to about $30000 to $40000 and to write off a significant debt is certainly not of comfort to our small businesses. 
We are flabbergasted that the no-asset procedure is being introduced. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I will respond to a couple of points that Pansy Wong has made. She has referred to students. Because students will not be adjudged bankrupt because of non-payment of their student debts it has been decided student debt should not be provable or dischargeable within the no-asset procedure. Therefore it is not an issue as the member has indicated. I think the member should refer to the fact that summary instalment orders are now being made far more accessible in terms of the cap being raised from $12000 to $40000 total unsecured debt and I think a lot more individuals will take the summary instalment order option rather than go to the no-asset procedure. 
I am interested that the National Party opposes an alternative to bankruptcy for individuals with minimal debt and few assets who have no means to repay the debt. This measure acknowledges that individuals cannot avoid bankruptcy and that the punitive deterrent element is disproportionate and totally irrelevant to these individuals. It gives debtors a fresh start it provides safeguards against abuse of the procedure and it minimises the cost to the State. I think this is a win-win. 
The other point the member has made that I think does not stand up to any scrutiny is that this will encourage those who offer credit to people who cannot afford to pay back the amount of credit they have been offered. It will make them think twice. They will have to think very carefully about extending a person’s credit card limit without a request even having come from the individual. Pansy Wong does not have constituents so she does not understand this. But I have constituents who come into my office and show me letters from their banks stating that their credit card limit has been extended without an application having come from the individual. I do not think it is right and proper that we have people offering credit left right and centre without any realistic prospect that people will be able to pay it. I think this will make creditors a lot more careful about offering credit to people who cannot afford to pay. 
KATHERINE RICH (National) 
: 
 The points made by the Minister Lianne Dalziel are very interesting but they are quite wrong. I will start by taking issue with her phrase that a “fresh start” is being offered people who become bankrupt. That is nothing more than a euphemism because quite often a number of Kiwis rack up debts through recklessly taking out loans even though they have no ability to repay them. This Government is saying it is OK to write off 40 grand of debt. 
The second point—and I think it shows a difference between National and Labour—is that the Minister is indicating a total disregard for business. Ninety-five percent of New Zealand businesses are small businesses many of them are mum and dad operations and some of them in good faith sell products to people who on the surface look like they can pay for them and have a good credit history. These are the operators and business people who will be in the gun for selling products to people who cannot repay them—up to $40000. I do not think that is fair. I think allowing someone to recklessly rack up debts then be let off the hook to the tune of $40000 shows a total disregard for what it is like to be in business to carry risk and to lie awake at night worrying about whether the bills can be paid. That is a serious sum if one is a plumber or runs the local dairy or runs the local furniture shop. 
The final point where I think the Minister has it quite wrong is the little barbed comment she made about Pansy Wong doing no constituency work. That member looks after most of the Asian community from Kaitaia to Bluff and deals with a wide range of issues—from immigration to welfare to business—and it is kind of smug and insulting to say she does not do that kind of work. 
This bill was probably at least worth putting on the agenda because personal bankruptcy laws have not been looked at since the early 1960s. We saw that some work done in the 1960s culminated in the Insolvency Act of 1967 but there has not really been a good look at it since that time. The number of bankruptcies we see in this country has changed dramatically. In the 1980s there were about 800 personal bankruptcies and we have seen that increase dramatically to about 3000 per year—that was the 2005 figure but it is probably more now. The type of bankruptcy we are seeing has also changed. It used to be bankruptcy as a result of a small business falling over; today many bankruptcies are the result of people racking up too much debt on the credit card. 
The no-asset procedure aims to deal with people who have no money no assets and no prospect of paying a debt off. It might seem a cute tidy way of dealing with those people but members on this side of the Chamber are worried about the messages it sends to other New Zealanders—that it is OK for people not to be responsible for the debts they incur that it is OK for people to take out goods on hire purchase with no prospect of paying for them that it is OK for people not to deal with issues of personal responsibility because the Government will let them off for up to $40000. 
 That is a serious amount of money for most New Zealanders. I feel for some of the creditors who have sold products to these people because there is no prospect of their getting back any of the money. The Minister Lianne Dalziel might say: “Oh well it will make those businesses think twice.” but I think that indicates a total lack of interest in the day-to-day workings of small businesses and a lack of realisation of what it is like to have a customer standing opposite who wants to buy a lounge suite and who looks like he or she stacks up but who when things turn to custard cannot pay his or her bill. Most small-business operators have children. They want to put bread and butter on the family table just like anybody else. This Government is giving up on these debtors. It is forgiving debts of up to $40000. It is basically setting up a training programme for people to move on to the big game of proper bankruptcy after they have had their first warning by entering this 12-month no-asset procedure. 
Luckily the Commerce Committee did tighten up a few things. The committee members felt that there were no penalties for people who give misinformation or do not keep their part of the bargain. At least that change was made even though we were concerned about some other aspects. But I think ultimately Part 5 is really about what message we are sending to Kiwis. We are saying it is OK for them to incur debts of up to $40000. They will be forgiven that they will be told it is OK and they can have another go. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to Part 5 of the Insolvency Law Reform Bill and to the different means within this bill that can be put forward to deal with people—companies in a range of different corporate and individual structures—who get themselves into the position of being unable to pay their bills. I must say that over the course of the last 15 years I have had some personal experience with a number of individuals and companies that have unfortunately got themselves into that position. They have got into a situation where they have owed my own business money and we have been faced with having to deal with their bankruptcy and trying to recover money from either an individual or a company we have put our trust in and have done business with over a period of many years—in some cases for decades. In one instance in one of our travel businesses we had dealt with the person concerned for decades. 
It is a very difficult situation when one of the businesses in a relationship like that goes into bankruptcy. I can assure members that not all companies deal with bankruptcy in a draconian way and look to bedevil the poor guy who has got himself into that situation. In fact many companies look for alternative ways to help those people because bankruptcy as we know is not just about the financial impact of that situation on people but also about the mental and psychological impact on them on their family on their friends and on their whanau. I think one does need to take that into account. There are those who go bankrupt and break the law in doing that—they actually go out of their way to put themselves into a difficult position. But I am talking about guys who have been in business for a long time and who through no fault of their own get themselves into a difficult situation. 
One example we were involved with concerned a building company that put up the AMP building in Napier. Because the head contractor for that building project had gone bankrupt Linnell Building and Joinery in Hastings unfortunately got itself into a position where its head contractor did not pay the bills. It was such a major contract that that company then got itself into a situation where it turned bankrupt. Really Linnell Building and Joinery had done nothing wrong but it found itself in a difficult situation with many companies in Hastings including my own at that point—I think we had just sold a property for that individual and he could not pay the commission. In that case we sat down and used the proposals situation referred to in Part 5 of this bill to help the company out. I am pleased to say that the firm is now back on its feet again and is one of the best building companies in Hastings not only in residential joinery but also in a whole range of building products. That firm does homes and commercial properties and it is back on its feet again. I think it was helped by the proposals situation and by everyone getting on board on that. The company also does a lot of work in my own constituency of Napier which is good to see. 
Part 5 deals with four different types of procedure that can be undertaken in a bankruptcy situation. I will make a few comments about each. The first is composition. In that situation creditors put forward a resolution to help the individual person or company out. That in many cases works well. Often creditors accept a lesser amount than is due to them. That can help people to get out of difficulty as was the case with my friends in Hawke’s Bay in their particular situation. The very few changes made to Part 5 in the Commerce Committee were small ones. The second procedure is proposals. That is the situation where instead of the creditors putting forward a solution the bankrupt company is able to put forward its own proposal for getting itself out of that situation. Another situation with which I was involved in the Napier electorate concerned a business called Linden Estate Winery and Vineyard a company that got itself into a difficult situation and overcommitted itself by taking on a number of vineyard leases. 
KATE WILKINSON (National) 
: 
 In rising to speak to Part 5 of the Insolvency Law Reform Bill I point out that it is in four subparts—as we know. 
The first three subparts are mostly relatively straightforward machinery-type provisions with which I do not have any issue. Subpart 1 as Mr Tremain stated deals with composition during bankruptcy the passing of resolutions the fact that compositions must be approved by the court the procedure for court approval the deed of composition etc. Subpart 2 deals with the proposals. It includes a definition of “debt” and the allowance for an insolvent to make a proposal whether that be by way of a compromise a time payment assignment or other. Again that proposal must be filed in and approved by the court. The subpart continues with the various duties of the insolvent and the trustee. Subpart 3 deals with the summary instalment orders and includes the time payment who can apply for an order the supervising of such an order the role of the supervisor and rules for summary instalment orders. National does not take too much issue with most of those provisions. 
The provision that causes us the most angst as National members have already mentioned is subpart 4 relating to the no-asset procedure. It sounds good in practice. An individual can choose to enter into the scheme for 12 months in return for a write-off of up to $40000—unfortunately at the expense of creditors. Although this may have some practical advantages it sends a very clear message that individual responsibility is not important. Basically it says that people can do what they like and take no responsibility because never mind someone else will pay for their mistakes. 
We all know that insolvency laws should always provide a balance. They do by their very nature allow for mistakes but they should also require responsibility to be taken for those mistakes so that debtors can learn from them get over them then start again; it should not be that the mistakes can just be swept under the carpet and 12 months later the debtor can start again. But it seems that under subpart 4 of Part 5 there are no such words as “mistake” and “responsibility”. It is a bit like pretending that failure does not exist when we all know that it does. 
 Insolvency laws should balance the responsibility for failure and the opportunity to start again. But they should also never forget the creditors who are not always the Inland Revenue Department and who are not always the Government. It could be the creditors who stand to lose. This measure punishes the small-business owners—the self-employed—who are owed this money. It makes it too easy for the debtor to give up rather than try to trade through those difficulties. The debtor can give up and in 12 months’ time just start again and the poor small-business owner the self-employed creditor has no recourse whatsoever. 
The criteria for the no-asset procedure as set out in clause 359 are not particularly complicated. The assignee must be satisfied on reasonable grounds that the debtor has no realisable assets; the debtor has not previously been admitted to the no-asset procedure so this is one strike and you are out; the debtor has not previously been adjudicated bankrupt; the total debts are between $1000 and $40000; and under a prescribed means test the debtor does not have the means of repaying any amount towards those debts. 
Throughout the no-asset procedure the debtor must not obtain any further credit—which seems to make sense—including hire purchase whether it is jointly or by himself or herself. But it does not seem actually to describe what the debtor can do in that 12-month period. Does the debtor just sit on his seat and do nothing? Can the debtor actually continue with employment? Can the debtor if jointly in business with say his or her spouse continue that business with the assignee’s consent? This part of the bill does seem to be a wee bit silent as to what the debtor can actually do during that 12-month no-asset period. 
CHRIS AUCHINVOLE (National) 
: 
 I rise to speak to Part 5 of the Insolvency Law Reform Bill. National members are opposed to the bill which in some ways I think is unfortunate because we feel it could have been quite good in so many aspects. But as in so many aspects of the term of office of the current Government it has failed to come up with the momentum necessary to carry through the better parts of the bill. In Part 5 there is again the feature of the Government not being able to carry through the original intention of this borrowed legislation. I say “borrowed” because in its original form it came from Australia. In its original form it concentrated heavily on improving the situation of bankruptcies on helping debtors to recover their situation and in all aspects was quite a solid piece of legislation. But it has been chopped and changed to suit I would suggest the social agenda of this particular Government. 
The problem of major proportions that we have here is the no-asset procedure. Why on earth is the Government even entertaining such a move? There seems to be some suggestion that this is State-assisted debt avoidance. Subclause (2) of clause 367 states: “The debtor must notify the Assignee as soon as practicable of any change in the debtor’s circumstances that would allow the debtor to repay an amount towards the debts referred to in section 366(1).” I cannot find in any parts or subparts of the bill the compulsion that goes with this requirement. 
I do not think it is quite right for the Minister who was previously in the chair the Hon Lianne Dalziel to blame outright the creditor for the person being in debt as she did earlier. Sure I share the Government’s concern that there is an easy extension of credit to people which for the poorly organised could entice them towards debt. But by the same token here it is providing an opportunity for people to walk away from the responsibility they willingly undertook. I also think it is a bit rich that on the one hand the Government extends credit to students through the student loan scheme but then denies them entry on to the register. They cannot get off without paying the Government back—oh no! 
Pansy Wong 
: Double standards. 
CHRIS AUCHINVOLE 
: But small businesses will have the debtors strolling off from the debt through this particular clause. As my colleague and mentor in many ways Pansy Wong says there are double standards operating here. In other words the Government is not prepared to extend the same level of protection to retailers that it extends to itself but by gosh it will put them at risk in a way that it is not prepared to put itself at risk. 
Pansy Wong 
: It does not care about retailers. 
CHRIS AUCHINVOLE 
: It does not care about retailers. Small business in New Zealand though is New Zealand’s major business and there are plenty of statistics to emphasise that. To allow a shrug of the shoulders towards personal debt is an odd thing for any Government to do but particularly this one. We understand—and I am not an economist and I do not pretend to be one—that the present level of household debt is higher than ever before in this country’s economic history. 
Pansy Wong 
: Why? 
CHRIS AUCHINVOLE 
: I do not know. Why is it? Does this legislation help? 
Pansy Wong 
: No personal responsibility. 
CHRIS AUCHINVOLE 
: Looking at the lack of personal responsibility is a good start when addressing why. 
Ron Mark 
: Credit cards and hire purchase. 
CHRIS AUCHINVOLE 
: Credit cards and hire purchase—access to easily available credit. A constituent came to see me the other day in my little blue office in Greymouth. He explained just how easy it is to get credit nowadays. He said that all people have to do is keep refusing to take it from the companies that keep offering it and they offer them more and they offer to make it easier. He did not have a problem with that. What he did have a problem with was a weak-willed relative who took advantage of those opportunities then sought exactly as we are saying here to walk away from the responsibilities. That is the danger that is faced here. I notice that Mr Mark of New Zealand First is agreeing with that and I am delighted to think we have reached one point of agreement in our mutual interest. 
We understand that the level of household debt is higher than ever before. Is the Government blind to the reality of this? It has been quick enough to crow repeatedly about how the Government’s debts—and I have heard Dr Cullen give a speech on this particular subject—have been cleared and reduced almost as if the taxpayer had not actually contributed to that being possible. 
DAVID BENNETT (National—Hamilton East) 
: 
 As we have been talking about Part 5 of the Insolvency Law Reform Bill the National Party does have some major concerns about the no-asset procedure. I think it is important that as a country we look at the time of year we are entering. The next couple of months is a very important time for New Zealanders and their families as we come into Christmas. Just on Monday we had Labour Day and there were a number of sales in Hamilton for example. Major discounts were offered on appliances and other household goods. Consumers were lining up to buy such goods and they will line up over the next couple of months because they have families they have to buy Christmas presents for. They will increase their household debt to huge levels over the next couple of months. What will happen at the end of that time? People will have to make some payback in the early New Year. That is when the hampers come to fruition. That is when people pay for their families to go away on holidays. 
And what are we doing as a Parliament in this country? We are setting up an institution that encourages greater debt that tells people not to worry about it and that after Christmas they can write it off. Why would we be putting that message out? Well I guess it is the lesson we learnt last week is it not? If it is good enough for this Government to take that attitude it certainly signals that it is good enough for New Zealanders to have the same attitude. 
Let us look at some of the reasoning behind the legislation. When it was first put together by the Minister of Commerce it was disclosed: “The Bill proposes a NAP be introduced as an alternative to personal bankruptcy which is less punitive to individuals and may prove to have less social stigma attached to it. This would apply to first time debtors who have no assets and could not repay the debt. The proposal to introduce a NAP is the most significant change that the bill proposes in the area of personal bankruptcy.” Well certainly that is what the Minister was intending to bring about through this legislation. It has also been said in a press release from the Minister: “The No Asset Procedure is a one-off opportunity for an individual with no assets to be subject to the procedure for 12 months as opposed to 3 years as in cases of personal bankruptcy.” 
 Well those may be fine ideological things to put forward in a bill but they deny the reality that there is another side to any credit engagement and that is the institution that sells the product. In New Zealand that is generally a small business. This country is based on small businesses. Hundreds and hundreds of thousands of us rely on small businesses for jobs for income and for the support that is the integral part of the New Zealand economy and community. We as a country rely on small business yet at the same time we are about to give small business a decent whack. In this Chamber of representatives $40000 may not seem much but to a small business $40000 is the difference between a profit or a loss for a year. It is the difference between that small business retaining its staff. It is the difference between that small business still having a shop on the corner so that we can go down and get our newspaper on a Sunday morning. It is the difference between a small business actually paying the taxes that build up to pay the salaries of Government. 
Those small businesses cannot be kicked in the guts forever and a day. At some point in time they will either go out of business or go to Australia. They will do that; they will walk with their feet as we have seen in the last year. We cannot do that to a country built on small business. 
Chris Auchinvole 
: But they will. 
DAVID BENNETT 
: Members opposite certainly will and at the same time they are sending the wrong signals to all New Zealanders about the need for debt. We have a country whose economy has been strangled over the last 7 years. It is an economy that is now going into low-growth mode. On the world scale we need to be growing at 9 or 10 percent to keep up with our Asian neighbours. But what will we grow at? Probably at a rate of 1 to 2 percent. That is simply not enough to pay for the debt levels New Zealanders are incurring. New Zealanders borrow to the hilt. That is fine they can borrow to the hilt but they have to pay the mortgage and they are not going to pay the mortgage if New Zealand does not have growth. We live in a country governed by a Government that does not understand that that is willing to strangle growth and at the same time is willing to forgive debts to the extent of $40000. It does not have any concept of reality or safeness for small business. 
RUSSELL FAIRBROTHER (Labour) 
: 
 There is nothing worse for a small business than to have the expectation of a debt being repaid that will not be repaid. It leads to borrowing from the bank in order to cover assets that will never be realised—namely unpaid debts. The no-asset procedure is an enlightened piece of legislation in the debt recovery regime. In fact it is a natural extension from the present provisions of the Insolvency Act because bankruptcy is not an automatic consequence of filing to put someone in bankruptcy. The judge always retains the discretion to make a bankruptcy order because the underlying thesis of granting that discretion is a protection to the commercial community from a continually bad debtor. 
The no-asset procedure has high qualifying standards. Clause 359 has five prerequisites two of which are important in rebuttal of the matters raised by previous speakers. First clause 359(1)(a) states: “the debtor has no realisable assets;”. Of course an income that will enable payment of the debt over a 12-month period is a realisable asset so any person with such an income would not qualify for a no-asset procedure. Under clause 359(1)(e) a debtor must meet a prescribed means test to prove that he or she “does not have the means of repaying any amount towards those debts.” So a person who applies for a no-asset procedure will not be granted that status if there is any ability within the 12-month period to repay the debt. But more important we find in clause 360(c) that a debtor who has incurred debt knowing that he or she does not have the means to repay it will not be allowed into a no-asset procedure. So a debtor who is careless and reckless is precluded from entering the no-asset procedure. That provision underscores the basic tenet of the present bankruptcy laws that that is a discretion designed to protect the commercial community. 
If a person is not a threat to the commercial community but is in a circumstance where he or she having acted in good faith comes to a stage where he or she cannot pay his or her debts then all creditors are entitled to know that in order to clear what would otherwise be an asset from their books and get on with planning their businesses accordingly. So a debtor who is in the unfortunate position of being in good faith but of having no realisable assets which would include a good income over the next 12 months can apply for a no-asset procedure because it cancels out the share of unmeritorious assets in a creditor’s book based on the assumption that maybe that debtor will one day pay. Of course if the circumstances of the debtor do change in a 12-month period then clause 367 applies because in the event of such a change the official assignee must be notified of that and of course the next step would be for the person to go either straight into bankruptcy or into the insolvency provisions. 
The no-asset procedure will not be used in a widespread way. It is a simple cut-off sanitising process for a person who cannot repay debts that have been incurred in good faith. It is an asset to the business community because it gives everybody a standard for assessing which debts will be repaid and which people are worth lingering with in the hope that they will repay debt. But of course a creditor also has a say in this procedure. Under clause 362 a creditor has time to object to a debtor being placed into a no-asset provision situation. The final underscoring of the good-faith provisions that underlie the no-asset procedure is that a debtor may be placed into a no-asset procedure on only one occasion. One mistake is OK in the commercial world but two are a bad habit and people cannot be placed in a no-asset procedure again. 
So instead of the misrepresentation we have heard from the speakers on the Opposition side of the debate I can tell the Committee that the no-asset procedure is a logical extension of the discretion the court has under the present insolvency laws. It is a low-expense provision that enables creditors to truly appraise what are good debts and what are bad debts because it has the measuring stick of the official assignee who has to apply stringent test criteria before admitting someone to a no-asset procedure. There is the out of the creditor having a chance to object and there is the opportunity should the debtor’s position improve for the debtor to move from a no-asset procedure to an insolvency or even bankruptcy basis or to repay his or her bills. 
NATHAN GUY (National) 
: 
 I thought I would even the slate with our colleagues on the other side because what a lot of diatribe we have just heard from Russell Fairbrother the former member for Napier. I think the people out there who may have been listening to that speech would be completely confused so I will take the few moments I have to even the slate and talk about why we are so uptight about supporting Part 5. 
The no-asset procedure seems complete stupidity to me when I read it. This procedure will allow people 12 months in which they can write off their debt and be discharged from it. Up to $40000 can be written off. We heard from the hard-working member for Hamilton East Mr Bennett about the importance of small business and how it is often those people who are waiting for the cheque to come on the 20th of the month and hoping that it will come. They know full well that if the cheque is late it may mean bad news for them. Let us think about the creditors out there—the small-business people who are the heart of our economy. Somewhere between 90 and 95 percent of the small businesses in New Zealand actually drive the economy. 
We need to be mindful of the signal we are sending to the rest of society when someone can come in with a clean slate and write off $40000 of debt. When we think about the culture of savings in this country we are pretty poor. There is hire purchase the credit card debt that people rack up traffic offences and parking fines that are not paid and now in Part 5 we are signalling to those people that they can write off $40000 and live happily ever after. 
 So there is a lot of stupidity around Part 5. It is fair enough that we give debtors a second chance so they can start again but I think it is too easy to allow those people to just chuck everything in and not to take into account the real importance of those creditors that I have spoken about. The creditors—the last cab off the rank when a company goes into insolvency—are left high and dry under this proposal. 
I think it is important that we have a look at the no-asset procedure in clause 359(1). It states: “(a) the debtor has no realisable assets; and (b) the debtor has not previously been admitted to the no asset procedure; and (c) the debtor has not previously been adjudicated bankrupt; and (d) the debtor has total debts that are not less than $1000 and not more than $40000;”. Clause 359(2) refers to section 156 and states: “In this section realisable assets does not include the assets that a bankrupt is allowed to retain under section 156.” I refer to that because it is pretty important and I would appreciate the Minister in the chair Pete Hodgson taking a call. Clause 156(1) states: “The bankrupt may choose and retain as the bankrupt’s own property certain assets up to a maximum value.” I would appreciate the Minister taking a call on that. I ask him to let us all in the Committee this evening know what is a certain asset up to the maximum value. I look forward to him taking a call on that. 
Clause 156(3) states: “The assets and their maximum value are—(a) the bankrupt’s necessary tools of trade—”. I think it is important to realise that for those people their tools of trade are extremely important. The examples given in clause 156(3)(b) are: “necessary household furniture and effects including clothing for the bankrupt and his or her relatives and dependants—the maximum value is fixed in the Assignee’s discretion:”. It is interesting to see that a motor vehicle is valued at $5000. When the Minister takes a call about my previous question I would really appreciate it if he could tell us how he has come to the value of a motor vehicle at $5000. For a lot of small businesses $5000 is a very small amount for a vehicle. 
CHRISTOPHER FINLAYSON (National) 
: 
 I want to take a very brief call on Part 5. I certainly do not intend to speak about subparts 1 to 3 which as Mr Tremain said largely re-enact equivalent provisions in the 1967 Insolvency Act. But I do raise a couple of questions about the no-asset procedure in subpart 4 and I would be most grateful if the Minister in the chair the Hon Pete Hodgson could condescend to answer them. They are not so much on the morality of the no-asset procedure but on the necessity for it. 
Let me explain it this way from the point of view of the debtor. The debtor finds himself or herself in trouble and prima facie would appear to qualify for entry into the no-asset procedure. Clause 358 states: “(1) A debtor who meets the criteria set out in section 359 may apply to the Assignee for entry …” and the assignee as other speakers have said may admit that debtor to the no-asset procedure if the assignee is satisfied on reasonable grounds as to the criteria set out in clause 359(1). So it is very much at the discretion of the assignee. 
The Minister Lianne Dalziel said when she was in the chair that this procedure is an alternative to bankruptcy. But I wonder whether that is right—for the reasons that Mr Fairbrother explained when he gave his speech—because under clause 11 adjudication by the court is discretionary and the court may refuse to adjudicate in the circumstances set out in clause 37 which largely re-enacts section 26(2) of the Insolvency Act. The four criteria in clause 37 are: “… if—(a) the applicant creditor has not established the requirements set out in section 13; or (b) the debtor is able to pay his or her debts; or (c) it is just and equitable that the Court does not make an order of adjudication; or (d) for any other reason an order of adjudication should not be made.” 
There are numerous examples where the court has declined to exercise its discretion under the existing section 26(2). One of the principles that is set out is that a lack of assets is no bar. A lack of assets is a factor that the court should take into account in the exercise of its discretion but it is not a bar to the making of an order that is otherwise appropriate. As the commentaries have said a lack of assets is not to be found lightly. At the time of the hearing of the petition—or of what will become an application under the new legislation—the court would generally not have sufficient material before it to decide the question and the public examination of the debtor may have the effect of bringing assets to light. 
The point I am making—from the debtor’s point of view—is that rather than bother to go into the no-asset procedure set out in Part 5 he or she may decide simply to oppose the application for bankruptcy on the grounds that to bankrupt that person would be largely a pointless exercise. So there is the discretionary element in the clause that re-enacts section 26(2) of the Insolvency Act. If that is the case then I fail to see why the no-asset procedure provision is really necessary. It seems to me that there are sufficient tools under Part 5 to enable compositions with creditors or summary instalment orders or compositions during bankruptcy. If one adds to that the ability to oppose an application for bankruptcy which as I have said is a discretionary remedy for the court then one wonders where the no-asset procedure really takes us. 
So for those reasons quite apart from the business morality reasons that my friends on this side of the Committee have mentioned I really doubt the usefulness of this provision. I think that the way I have approached it either by opposing the application for bankruptcy on the grounds set out in the clause that now replaces section 26(2) of the Insolvency Act or by relying on the other tools set out in Part 5 would tend to render the no-asset procedure superfluous. 
The question was put that the amendments set out on Supplementary Order Paper 62 in the name of the Hon Lianne Dalziel to Part 5 be agreed to. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 5 as amended be agreed to. 
Ayes 71 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Part 5 as amended agreed to. 
Part 6 agreed to.  
Part 7 Offences and miscellaneous provisions 
The question was put that the amendments set out on Supplementary Order Paper 62 in the name of the Hon Lianne Dalziel to Part 7 be agreed to. 
Amendments agreed to. 
Part 7 as amended agreed to. 
Part 8 Companies Act 1993 
The CHAIRPERSON (Ann Hartley) 
: The debate on Part 8 includes debate on schedules 3 and 4. 
PANSY WONG (National) 
: 
 The substantial issue in Part 8 is the introduction of a very positive move known as voluntary administration. The voluntary administration scheme was introduced in Australia in the early 1990s. Since then many different jurisdictions such as Britain have introduced similar business recovery procedure schemes. The voluntary administration scheme’s advantage is that it allows an insolvent company the court and secured creditors to put a company into voluntary administration and to appoint an administrator. While the company is in voluntary administration the creditors agree not to enforce repayment which allows time for the company to work itself back into a solvent state. 
All the submitters who came before the Commerce Committee felt very positive about that step because currently in New Zealand we do not have a voluntary administration procedure. This means that the director of a company that is not doing well can only either request the bank to appoint a receiver which usually means that the receiver sells the business and in many cases the bank calls on the director’s personal guarantee—there is no prospect of maintaining shareholders’ value and the creditors lose a customer—or a liquidator can be appointed where usually once again trade creditors lose a consumer and the shareholders’ value is not maintained or there is out-of-court restructuring. This is difficult because out-of-court restructuring requires all the creditors to agree on a position and if even one creditor is opposed then the whole thing will not fly. The last option is rarely used and is termed a creditors’ compromise because of the fact that there is no provision that while creditors agree to compromise all of them would agree not to call back their loan. 
So the advantage of the voluntary administration scheme is that it allows all these people to work together in order to make sure a company that might be in a difficult situation temporarily can work itself out of it. The reason it is successful in Australia is that where creditors agree to go into this voluntary administration they all have to agree to be treated equally. Nobody has a preferential status. That is where things went very wrong in New Zealand. 
The Inland Revenue Department will retain its preferential creditor status which it has under the current legislation. One hundred percent of the submitters who came before the select committee said that it would not work for several reasons. The first was that they reckoned that a lot of companies got so far into an insolvent state because the Inland Revenue Department did not call on them to pay for example PAYE GST or the liable-parents’ payment. That money does not belong to the company or to the Inland Revenue Department; it is actually trust money that the company collects and is supposed to pass on to the department. In one of the cases that I have just shared with the public one company failed to pay PAYE for 3 years and it took the department 3 years to take action. In the meantime the company was using trust money basically for its cash flow. The other reason submitters say the scheme will not work is that if the department enjoys preferential creditor status why would it agree to voluntary administration where it would not enjoy that status? Officials from the Inland Revenue Department made a submission to the Commerce Committee and told us that under this preferential creditor status that the department enjoys it collects only about $5 million a year. So if this Labour Government is serious about making it work it should remove the department’s preferential creditor status. 
KATHERINE RICH (National) 
: 
 I rise to speak to Part 8 and I would like to touch on an amendment that I have put on the Table. It arose out of the select committee process but was ignored at that stage. Although I totally agree with the role of business rehabilitation and the aim of voluntary administration one of the concerns raised by one of the leading accountancy firms was that one of the definitions we have of who can and cannot be a liquidator is far too wide. As a result I have spoken with representatives from PricewaterhouseCoopers and they continue to hold the view that one of the provisions new section 280(1)(cb) which is to be inserted by clause 471(1) is written so widely that some of the major accountancy firms could actually be blocked from doing some of the larger and more complex liquidations in this country. 
We are a small country we have only 4 million people and our major firms will have established often continuing business relationships with a number of clients. I totally understand the aim of defining who can be appointed to be a liquidator because we do not want some cowboy or someone who has a super-friendly relationship with the company directors and who can as a result of good relationships push things through for the benefit of the failed company but we do need to be able to ensure that our major accountancy firms are able to conduct their work. 
New paragraph (cb) of section 280(1) states: “(cb) a person who has or whose firm has within 2 years immediately before the commencement of the liquidation had a continuing business relationship (other than through the provision of banking or financial services) with the company its majority shareholder any of its directors”—and this is the main bit—“or any of its secured creditors unless within 20 working days before the appointment of a liquidator the board of the company resolves that the company will on the appointment of the liquidator …”. The concern is that our major accountancy firms may or may not have a continuing business relationship with some of the other creditors involved in the liquidation but they do have an ongoing business relationship with the main banks. For example the liquidation arm of PricewaterhouseCoopers may be involved in a liquidation but that firm may be providing to one of the major banks ongoing business services advice or some kind of service that means the firm has a continuing relationship with the bank which is of course one of the secured creditors. 
We have only a certain number of major firms in this country that can do the kinds of liquidations that are more complex and take more time—not the small mum and dad liquidations—and we have only a handful of banks. So if we look at all the major firms the chances are that they will have an ongoing business relationship with a bank that is likely to be one of the secured creditors in many of these situations. The last thing we want to do is limit the pool of skilled and experienced professionals who are able to undertake the medium to large complex liquidations in this country. 
This clause may have the unintended consequence of locking out those firms that have the expertise to deal with the big liquidations—the Feltex liquidation and the other liquidations that we have seen in this country. We are not so concerned about the small mum and dad operations which can be dealt with at arm’s length. It is the more complex ones where we rely on the skills and expertise of our top firms that are at issue. 
As we know there are only a handful of banks in this country and they will have continuing business relationships with the top firms—PricewaterhouseCoopers Deloitte Anderson Lloyd Caudwell—and I am sure that the Minister in the chair Pete Hodgson knows their names. This is a serious concern that was put forward by those firms during the select committee process and I am unsure as to why this matter was ignored during that process. 
CHRIS TREMAIN (National—Napier) 
: 
 Thank you Mr Chairperson for the opportunity to speak on Part 8 and to talk specifically about voluntary administration which is at the heart of this legislation. Voluntary administration provides a company that is experiencing difficulty with a new means to trade out of that position. Indeed it is a means of encouraging that company to move on. In that regard I echo the thoughts of both Pansy Wong and Katherine Rich. National supports the intent of voluntary administration and acknowledges that it has worked in other countries. But—and I say a big “but” in this regard—it has worked only under certain conditions. 
The key condition which is where National finds itself voting against Part 8 is the priority status of the Inland Revenue Department. In all other countries where voluntary administration has been implemented the priority status of the Inland Revenue Department has been reduced to that of ordinary unsecured creditors. In fact this information was clearly disclosed to us at the submission process in no uncertain terms. A piece from the Chapman Tripp council newsletter states: “The recent submissions to the Commerce Select Committee on the Insolvency Law Reform Bill almost uniformly sought amendment of Inland Revenue’s preferred creditor status on insolvency.” So the submissions almost uniformly sought amendment of the Inland Revenue Department’s priority status. That point goes to the very heart of National’s position which is to vote against Part 8. 
Let me explain exactly why that is. Another Act the Tax Administration Act gives the Inland Revenue Department a clear sense of its responsibility to the New Zealand taxpayer. In particular I refer to section 6A(3) of that Act which makes it clear that it is the statutory duty of the Commissioner of Inland Revenue to “collect over time the highest net revenue that is practicable within the law…”. It is the responsibility of the Commissioner of Inland Revenue to implement that policy. So we have a situation whereby in one Act it is the responsibility of the Inland Revenue Department to collect under all circumstances the highest amount possible yet in another breath this legislation tries to implement voluntary administration where the Inland Revenue Department needs to be a partner in that situation. In our opinion that creates a very difficult situation indeed. 
Voluntary administration lies at the very heart of the Insolvency Law Reform Bill. In fact voluntary administration has been introduced under the bill in accordance with New Zealand’s obligations under the Memorandum of Understanding on Coordination of Business Law of 2000. I would be interested if the Minister took a call later on and gave us a little bit more information on that memorandum. 
In a nutshell National believes that voluntary administration has significant merit but as I have said only under the right circumstances. National believes that the retention of the Inland Revenue Department’s priority above unsecured creditors coupled with the responsibility to collect over time the highest net revenue that is practicable within the law will ensure that the Inland Revenue Department votes in favour of liquidation and recovery for itself as opposed to supporting voluntary administration. Therein lies the problem. We believe that without the Inland Revenue Department’s support voluntary administration is doomed from the start and that is why we do not support the bill. 
The minority view from National reads as follows: “All the submitters on this provision were unanimous in their view that unless the Government addresses the issue of the priority status for IRD the voluntary administration scheme will be severely compromised.” That view echoes the Chapman Tripp newsletter that I mentioned before. The minority view goes on to state: “We do not believe that Parliament should pass another piece of redundant legislation when there is a groundswell of opinion from practitioners who believe that it will not work without the removal of Inland Revenue’s priority status.” 
Let me just cover a little information on voluntary administration. It was introduced under the 2000 Memorandum of Understanding on Coordination of Business Law. [ 
Interruption 
] I am pleased to hear that the Minister will take a call on that later on and speak with a little bit more depth on that particular memorandum. It aims to replace the seldom-used compromise scheme already available to companies that are in financial stress. A lack of incentives to get a majority of creditors to consent to compromise has been the reason for the lack of use of that part of the older legislation. Voluntary administration was introduced into Australia in the early 1990s and it has had a degree of success there. But I must say as I have said earlier that that success came with the priority status of the Australian office of taxation being reduced. 
Voluntary administration allows an insolvent company the court or secured creditors to put a company into voluntary administration and to appoint a voluntary administrator. While the company is under voluntary administration there is a stay on creditor enforcement which is the means with which a company can trade itself out of a difficult situation. It stops that ongoing situation of creditors ringing day after day to hound people into paying their bills. That is indeed a difficult situation to get into. In the voluntary administration situation the administrator manages the company calls meetings of creditors and develops a restructuring plan on which creditors are able to vote. A majority of creditors determines whether the company is to be restructured or put into liquidation. Like I said this system has proven very popular in Australia. 
The opportunities directors in New Zealand have without voluntary administration are pretty unappealing at this point in time. They are to request that the bank appoint a liquidator to appoint a liquidator and to attempt an out-of-court restructuring. I spoke to some of these issues in the debate on Part 5 tonight when my learned colleagues spoke about compositions proposals no-asset procedures and summary instalment orders which we covered off in some depth earlier on. In the main there is no prospect of retaining any level of shareholder value. If one looks at the balance sheet of a company that is bankrupt one sees that in most cases there are a heck of a lot more creditors than assets. When one goes out to try to sell one has to move the stock to move the debtors. If people are able to get 25 percent of their stock value they are lucky. Debtors use this situation as a means to evade paying their bills under the guise that there was a problem with the service in the first place. 
In contrast voluntary administration provides directors shareholders and creditors with a process that protects a company from enforcing remedies during a reasonably short period. It provides breathing space. During that period the administrator develops a restructuring plan that potentially allows the business to maintain enterprise value and to deliver a better outcome for creditors employees directors and shareholders. I have to say that employees have to come into this whole thing in a big way because they are often the unsung heroes in this situation. Having worked for a company for years and years they can find themselves at the end of the line in terms of getting paid. 
On the face of it voluntary administration seems to have merit but as I have previously mentioned the Inland Revenue Department becomes a critical factor in its success or failure. In any voluntary administration the Inland Revenue Department is likely to be a significant creditor. If we look at some of the situations that Pansy Wong alluded to earlier we find an example where the Inland Revenue Department was the main creditor. In this situation which was written about by Keri Welham the Inland Revenue Department was a creditor to the tune of $1.2 million but to other creditors the total was $160000. If people think the Inland Revenue Department will not take preferential status fairly seriously in that example they have to be joking. As I say the department is likely to be the main creditor. 
A person could continue to run a business for some time without paying GST PAYE and fringe benefit tax but could not run a business for very long without power telephone and other core operational products. If the Inland Revenue Department’s priority status is retained as it has been in this bill then it will be compelled to evaluate its recovery from entering into the voluntary administration scheme versus entering into liquidation. As I said earlier the Taxation Administration Act makes it clear that the Commissioner of Inland Revenue has a statutory duty to collect over time the highest net revenue that is practicable within the law. We must remember that if a company is put into liquidation the Inland Revenue Department has priority status. 
NICKY WAGNER (National) 
: 
 It was Charles Dickens in  
David Copperfield 
 who stated: “Annual income twenty pounds annual expenditure nineteen nineteen six result happiness. Annual income twenty pounds annual expenditure twenty pounds ought and six result misery.” That is absolutely true of the 3000-plus people or companies who file for bankruptcy in New Zealand every year. It does not matter what has driven them to bankruptcy—although the public tends to have more sympathy for those who have poor health or unemployment than those who have got there through extravagance or gambling—it all ends in misery. 
This legislation covers both company and personal insolvency. I will consider Part 8 from the point of view of small business and the voluntary administration regime. New Zealand is a country of small businesses; over 300000 New Zealanders are sole traders or owner-operators. We rely on those businesses for much of the economic health of this country but by its very nature small business is risky. It is risky because resources are limited. It is risky because profits are small. It is risky because the business environment is very volatile for small companies. Small businesses are particularly vulnerable because it takes only a small hiccup to go from being profitable to making a loss; and going from a loss to bankruptcy can be frighteningly quick. 
One of the biggest vulnerabilities of small businesses is their tendency to trade with other small companies. A case of insolvency in one business can trigger a domino effect and a series of small businesses can be unwittingly drawn into a financial disaster. Sole traders and small owner-operators are often undercapitalised. To finance business growth they often borrow against personal assets—more often than not the family home. They also perhaps unwisely offer personal guarantees to secure business lending. It is a risk that big business and corporates would never countenance but one that small-business owners are forced to accept and take for granted. Mostly of course there is no problem but occasionally things turn sour and that is where this legislation comes into play. 
To help small businesses survive difficult times National supports a voluntary administration regime for companies with financial problems similar to a scheme being used very successfully in Australia. It makes sense to allow administrators to assess the viability of a company and if possible allow it to have a voluntary plan to trade its way out of trouble while managing its debts. This seems a sensible and mature approach to company difficulties and any way to avoid a bankruptcy and all its destructive side effects should be considered very seriously. 
As noted by Chris Tremain the system is working well in Australia but we have already heard that the major difference between Australia’s legislation and the bill we are debating tonight is that Australia’s tax department waits in line along with other creditors involved in liquidation. The Labour Government is not prepared to accept this as a reasonable option and I understand all its arguments but it seems to me that a voluntary administration will come into being only if there is a good chance of that company trading out of its problems. If it is good enough for creditors to be prepared to take the risk then it should be good enough for the Inland Revenue Department to take that risk too particularly in light of the difficulties that small businesses face and the domino effect within companies that trade with each other. 
It is a reality that from time to time businesses falter and stumble into failure. Small businesses are especially vulnerable. It would be good if the House could introduce legislation that would support innovation and responsible risk-taking and entrepreneurialism by giving a viable company a second chance and with time the opportunity to make good. 
CHRIS AUCHINVOLE (National) 
: 
 The Government is showing again its double-handedness as it comes to light in Part 8. There was a glimmer of this as we were discussing Part 5 in relation to the no-asset register. Then we spoke of the Government seeming to have a double standard in that it will not extend the opportunity of joining a no-asset register to those with a student loan but any old debtor to a small business who qualifies can join up. The Government seems to be in the business of forgiving the debts of those who owe to commerce but not to the Government. 
Part 8 is a case of “here we go again”. The Government will not relinquish the Inland Revenue Department’s pre-emptive or priority status for the Inland Revenue Department. That will severely compromise in our view the effectiveness of the voluntary administration scheme. Let us remember it is a voluntary administration scheme. I felt compelled during one of the Commerce Committee meetings to say that the difficulty that the Government seems to have with “voluntary” is that everything is voluntary until such time as one does not want to do it then it becomes compulsory. If we are going to have voluntary then the “voluntary” bit has to go right through to the very end otherwise it becomes a bitter end. 
No one could have doubted the sincerity of the submitters who came before the Commerce Committee. These people for the most part insolvency practitioners are people with a tough job. They are constantly being exposed to the stress of others and I would guess in every case having to deal with something that is in every way a mess. For about a decade I worked in a little office in Albert Street in Auckland. It was in the same building as I think two or three insolvency practitioners. I used to see their clients going up in the lift and I used to see their clients going down in the lift. The difference in the journeys was that they clearly looked relieved—and in many ways saddened but none the less relieved—that their immediate responsibility had been handed over to the insolvency practitioners. 
From my memory of it at the select committee every insolvency practitioner who appeared before it insisted beseeched asked the committee to ensure that the reduction in the Inland Revenue Department’s priority in insolvency matters be adopted as part of the bill as it is in Australia. I wonder whether that is the memory of other members of the committee. I can see them nodding in agreement. It was. They did not do this on the basis of not liking the Inland Revenue Department. These are real people and they are in the commercial financial world. It is that by having the priority—and most creditors are not aware very often that there is a problem—when the problem begins the department can be aware of it and it is not seen as being overly energetic in taking a company into insolvency. I am not suggesting that is a good thing or a bad thing but the reality is the department is the creditor that takes people into insolvency eventually and this allows poorly organised businesses to use moneys that should be paid to the department to extend their commercial credit extension beyond redemption and recovery. That is one of the key practical bits. 
 The purpose of voluntary administration is at the heart of the bill. We hear of the early failure of new businesses in New Zealand. It is an oft-repeated statistic. New business has a very high rate of failure. But the reality is that while the individual business might fail the activity that it started with often continues. 
This has been a fascinating bill to be part of in the discussion process because I personally believe in it. In my own commercial experience I have engaged in this sort of thing without it being part of the legislation. The creditors got together and worked with a debtor to see whether we could put something together because we knew that if we did not we were not going to get much out of it. The voluntary system of administration is a good one in my mind. It works but it works only if there is an incentive for all. The object is to save companies but by being weak-kneed I think the Government has lost the opportunity. 
KATE WILKINSON (National) 
: 
 I hate to interrupt my learned colleague because I am sure the quality of his speech was a lot better than the quality of mine will be but none the less I rise to speak to Part 8 which deals with voluntary administration. This should have been very good legislation and Part 8 should have been a very good part of it. But unfortunately it is flawed because the Inland Revenue Department is retaining and clinging to its priority status. This means we do not have a level playing field which is unfair and means that this legislation is flawed. 
I am somewhat surprised that despite all the submissions to the contrary this Government has still insisted on retaining the spurious Inland Revenue Department priority. A Government that values the opinion of Chapman Tripp so very very highly in other matters has disregarded its opinion in regard to Part 8 and in relation to the Inland Revenue Department’s priority. Way back as early as April 2006 it said in its  
Counsel 
 brochure which we all received a copy of: “We consider the likely effectiveness of this procedure given the policy decision to retain Inland Revenue’s priority in liquidation. We conclude that by retaining this priority there is a significant statutory incentive for Inland Revenue to vote against voluntary administration and in favour of liquidation in order to make a better recovery. It is our concern that if the first wave of voluntary administrations are undone by Inland Revenue voting against restructuring and rehabilitation plans then the new voluntary administration regime may well lose the confidence of the market.” 
I have a fear that that will indeed happen. In its  
Counsel 
 magazine Chapman Tripp went on to say: “In any voluntary administration Inland Revenue will be a significant creditor. If the Inland Revenue priority is retained Inland Revenue will be compelled to evaluate its recovery out of voluntary administration against its recovery out of a liquidation. If a company is in liquidation the Inland Revenue priority debt ranks ahead of all other unsecured creditors. In voluntary administration unsecured creditors will expect to be treated equally with Inland Revenue in accordance with the pari passu principle (which provides that all creditors in a class are treated equally).” By retaining Inland Revenue priority there is a statutory incentive for Inland Revenue to vote against a voluntary administration and in favour of liquidation to make a better recovery. It may even be that Inland Revenue decides that notwithstanding the general merits of a voluntary administration restructuring plan … it has a statutory duty to vote in favour of liquidation and priority recovery because”—as Mr Tremain has already pointed out—“the Commissioner’s statutory duty is ‘to collect over time the highest net revenue that is practicable within the law’ (section 6A Tax Administration Act 1994). If Inland Revenue is compelled to vote against voluntary administration restructuring plans then the prospects of New Zealand’s voluntary administration regime achieving the success of its Australian counterpart are slim. The opportunities that voluntary administration provides to maintain value for all stakeholders may be lost to the commercial community.” 
The fatal flaw in this bill and in this part of the bill is the clinging to the Inland Revenue Department’s priority status. If the department becomes the preferred creditor it will receive the proceeds of liquidation before other unsecured creditors. Why would it vote for a voluntary administration that would then put it pari passu with other creditors when it can easily outvote the other creditors and easily have its preferred status? 
Can I repeat some of our minority view in the commentary on the bill. Yes we agree that the centrepiece of the bill is the voluntary administration scheme which replaces the seldom used compromise scheme. I can vouch as a practitioner of 29 years standing that the compromise was seldom used. 
DAVID BENNETT (National—Hamilton East) 
: 
 As we have heard in a number of great speeches from the National side the voluntary administration regime has not exactly been a real problem. It is just part of the implications of it that we find quite difficult to contest. I think Nicky Wagner summed it up very well when she said it was good enough for creditors but not good enough for the Inland Revenue Department. That makes us think: “Well why is there a different rule for the IRD?”. The reason must be that this Government feels that the Government is in a higher position than the ordinary New Zealander. The Government sees that it has a greater role than New Zealanders do on the street. It has always been a historical fact that Governments can tax and they can willingly impose taxes and people have to pay them. We cannot get out of paying our taxes and Governments have the ability to implicate people and make them pay a tax. 
It does the same with local government. It pushes services on to local government which then in turn has to rate ordinary New Zealanders to pay for those services. We do not have a choice in our taxation system. We have to pay the taxes that are imposed upon us. That is something that has occurred throughout history and it is why we have Governments. It is how Governments are funded. But then why does the Government also want to have priority on the other side of the ledger? It is not good enough for the Government just to have the ability to tax; it is also good enough for the Government to have the ability to take money on the other side through the Inland Revenue Department and preferential claims when a business may go under. Why cannot the Government sit there like any other business or creditor when it has the ability to tax over and above an ordinary creditor? 
This is something I think this Government needs to look at very closely in its legislation. I look at the reasons why this was put forward in the office of the Minister of Commerce. It said it was “to ensure that the current business rehabilitation regime will enhance business confidence.” Well it will not enhance business confidence if we are giving a priority to the Government over ordinary creditors. 
Another big thing this legislation was supposed to do was to ensure that overseas investors were not deterred from investing in New Zealand. Well they will certainly be deterred if they know that the Government has a higher priority than their creditor ranking would have. It also said that it is “to ensure that New Zealand adopts an international best practice for business rehabilitation.” Certainly there are aspects of the voluntary administration regime that we do favour. But that regime needs to be one that is consistent with overseas practice and this is not. 
The press release from the Minister says that “the voluntary procedure will bring New Zealand into line with other OECD countries.” It would be great if we could do that with a few other things like employment law and have a probationary period. But it said that it “has been adopted from the Australian voluntary administration regime which has had the advantage of benefiting business rehabilitation involving trans-Tasman organisations.” That is all very good rhetoric but will it be followed up? The reality is that this legislation is different from Australia’s. How can the Minister say in her press release that we are doing what Australia and the other OECD countries want and do when we are doing the opposite? 
For example Australia abolished the priority status of the Australian tax office in the early 1990s while the UK followed suit in 2002. This is not consistent with the Minister’s press releases. The Minister says we will be following OECD best practice in doing what we are doing. The reality is we are not following OECD best practice; we are just feathering the caps of a Government that wants to have the ability not only to tax but also to have priority status when a business goes under. Why would the Government want to do that when it has an $11.5 billion surplus? How much money do Government members actually need to be sitting on to make them happy? How many big buildings in Wellington do they need? How many statues to their Government do they need to erect to be happy? They need to keep on going because they need to build up their war chests for an election campaign to buy off New Zealanders. 
That is the reality of why they want to have preferential status. They are not looking after New Zealand business people; they just want to build up the money so they can go out there and bribe at the next election. Or maybe they want the money to pay off a few debts they have carried over from this election by way of a few payments to certain organisations that will in turn repay them through financial assistance. It is all part of this Government knowing what is best for ordinary New Zealanders. It believes that it knows what to do. 
CHRISTOPHER FINLAYSON (National) 
: 
 I will briefly address the Committee on Part 8 and say as has been said by some of my colleagues on this side of the Chamber that this part really is the centre point of the insolvency law reform package that we have been dealing with tonight. It is the most significant reform in this bill. The policy decision of the Government that underpins it is that the voluntary administration regime should be aligned as closely as possible with the Australian provisions unless there is a very very good reason to depart from them. As I understand it this policy decision was made in accordance with New Zealand’s obligations under the 2000 Australia - New Zealand Memorandum of Understanding on Coordination of Business Law. 
The real issue for determination tonight—and I would be grateful if one of the Government members said something about it—is that although we are purporting to introduce basically the Australian procedure we have left one major element out. That element concerns the priority of the Inland Revenue Departmentm which will have the effect of messing up the entire procedure. 
The objects of voluntary administration that are set out in new section 239A of Part 15A which will be inserted into the Companies Act by clause 454 are laudable. They propose that voluntary administration will maximise “the chances of the company or as much as possible of its business continuing in existence;” and if that is not possible then voluntary administration will manage matters in such a way as to ensure that there is “a better return for the company’s creditors and shareholders…”. The procedures are all reasonably straightforward and I have no real objection to them culminating in what Subpart 8 refers to as the “watershed meeting” which is the crunch meeting when the company’s creditors must determine what will be the future of the company. 
As my colleagues have said when one is dealing with a voluntary administration one finds that nine times out of 10 the Inland Revenue Department will be a major creditor if not the most important creditor. I am sure that the Inland Revenue Department armed with its priority for revenue debt will be compelled to evaluate its recovery out of the voluntary administration regime as opposed to its recovery out of a liquidation. I refer members to Subpart 10 of Part 3 which deals with the distribution of assets and in particular to clause 272 on priority of payments. The Inland Revenue Department is compelled to evaluate its recovery because as we well know if a company is in liquidation the department debt will rank ahead of all other secured creditors. In a voluntary administration the department debt will rank equally in accordance with all unsecured creditors. So the Inland Revenue Department will have to decide whether it is content with that state of affairs or whether it is better to place the company in liquidation. 
I refer very briefly to what the distinguished law firm Chapman Tripp said about this issue. We all know that the Government pays a lot of attention to Chapman Tripp as it did last week. Chapman Tripp said: “If the first wave of voluntary administrations are undone by the Inland Revenue voting against restructuring and rehabilitation plans then voluntary administration will lose the confidence of the market. Australian businesses involved in New Zealand voluntary administrations will be incredulous that our procedure departs so markedly from theirs. However what is most disappointing and ironic is that the most significant risk to the government ambition of introducing and implementing a successful rehabilitation procedure will be the government itself.” I particularly refer to the fact that Chapman Tripp says that Australian businesses “will be incredulous that our procedure departs so markedly from theirs.” 
So the only question I have for the Minister—or for any Government member who is prepared to take a call—is why the Government when introducing this mechanism that is adopted from the Corporations (Investigation and Management) Act 2000 and the Australian Corporations Act 2001 has chosen to treat the Inland Revenue Department in the way it has. It will undermine the effectiveness of the new regime. 
NATHAN GUY (National) 
: 
 Following on from Mr Finlayson it is good to take a call on Part 8. I think everyone would fundamentally agree that something such as this Insolvency Law Reform Bill needs to happen as there have not been any substantial changes to the insolvency legislation since 1967. But the reality is that Part 8 is the fundamental part in this whole bill that will turn things upside down. 
 Those people who were fortunate enough to sit on the Commerce Committee know that most of the submitters—I think close to 100 percent of those who submitted—had concerns about the priority status of the Inland Revenue Department. What I cannot understand is why the Government has not addressed that in Part 8. That is the biggest concern to me with this part. All creditors should be treated equally. That is fundamentally I would have thought a common-sense principle but no under this part the Inland Revenue Department gets its dibs on its loot no matter what. The Inland Revenue Department can vote to put someone into liquidation and it seems to me that that is fundamentally flawed and unfair. It seems to me that it is very like bully-boy tactics. 
We heard earlier from Mr Bennett about high taxation being used to build up a big war chest for the next election about how this Government is very much about big tax and about how there will be a big lolly scramble in 2008. But in essence we do not want to see in Part 8 the Inland Revenue Department being the first cab off the rank and having the ability to force people into liquidation. 
I refer to the National Party’s minority view in the select committee report because I think it is really important. Following on from the point I made earlier all the submitters on this provision—I am talking about voluntary administration—were unanimous in their view that unless the Government addresses the issue of the priority status of the Inland Revenue Department the voluntary administration scheme will be severely compromised. That should send alarm bells around this Chamber. The minority view states: “The select committee did not pursue in-depth ways to ensure that the centre-piece of the bill will be effective to the satisfaction of New Zealand National members.”—in other words we were unheard; the committee did not listen. “We do not believe that Parliament should pass another piece of redundant legislation when there is a groundswell of opinion from practitioners who believe that it will not work without the removal of Inland Revenue’s priority status.” In other words the committee has not listened to National’s minority view. 
I think it is important to look across the Tasman to our Australian counterpart. It has abolished the priority status. When we look across to the UK we see that it has ditched priority status. We do not seem to be following the OECD’s best practice. We seem to be out on a limb with Part 8. Fundamentally parts of this bill are necessary but Part 8 is of great concern to me and should be to many of us in the Chamber. That is why National cannot support Part 8. 
CHRIS TREMAIN (National—Napier) 
: 
 I wish to round out my arguments earlier on this evening on Part 8 of the Insolvency Law Reform Bill. I spoke at length about voluntary administration and how it does appear to have merit—in fact we have seen that it does have merit overseas. I spoke in depth again about the level of priority status and I think it would be inept of me not to discuss the full consideration that the Commerce Committee had—particularly given that Maryan Street who was at those meetings is here in the Chamber with us tonight. In terms of the points that Shane Jones made regarding why priority status was left where it was I will cover those off in some detail. 
As I have said on the face of it the idea of voluntary administration appears to have merit but as I have previously mentioned the Inland Revenue Department becomes a critical factor in its success or failure. In any voluntary administration the Inland Revenue Department is likely to be the significant creditor. Why? Well a person can run a small business by putting off paying the PAYE by putting off paying the GST and by putting off paying the fringe benefit tax but a person cannot keep his or her business going by putting off paying the power the telephone and all those items for which if he or she stopped paying the bills it would unfortunately mean he or she would not have a business. So what tends to happen is that the department ends up being a significant creditor in many of the situations we are talking about. 
If the department’s priority is retained as it has been in the bill the department will be compelled to evaluate its recovery from entering voluntary administration versus entering liquidation. As I have said previously section 6A of the Tax Administration Act ensures that the commissioner is required to collect tax over anything else—that is his or her priority. By retaining the department’s priority there is a statutory incentive to vote against voluntary administration in favour of liquidation to ensure the department gets better recovery. If the department is compelled to vote against voluntary administration I cannot see how it will have the success it has been able to achieve overseas. 
How did voluntary administration have success overseas? In Australia the Australian Taxation Office priority was amended but at the same time director responsibility was increased. We did discuss that point in the select committee but we have not rounded it out tonight. Here is how it works. If a company has failed to pay tax that it is required to collect then the Australian Taxation Office can issue the directors with a notice requiring the directors to firstly comply with its remittance obligations; secondly make an agreement with the Australian Taxation Office; thirdly appoint an administrator; or lastly appoint a liquidator. The key point is that if the company does not take one of those steps within a 14-day period each director can be personally liable for the unpaid amount of tax the company is required to collect. 
Shane Jones argued vociferously in defence of the corporate veil. He argued—and I understood his point on this—that if we actually increased the directors’ liability then we would discourage more directors and more entrepreneurs from getting into business. He made the point that if we are to have economic transformation in this country we do not want to increase the barriers to and risks of directorship. Shane Jones did not want to increase director liability so he voted in favour of retaining the department’s priority status. I argued that we did not need to follow the Australian model and that we could have removed the department’s priority status and kept director responsibility unchanged. The select committee seemed unable to cover that—why we could lower the department’s responsibility and not increase director responsibility. One can bet that in this instance the department would be far more vigilant with regard to late PAYE and GST remittances and that as a result companies would not be allowed to get to the point where liquidation was the only option. 
Other alternatives that were not fully debated included firstly reducing the department’s priority to a limited period only—say a specific period of 3 to 6 months prior to liquidation or receivership—and secondly the English approach which eliminated the Crown priority completely in 2002 on the basis that the fiscal cost to Treasury was insignificant. This is a key quote that I think we will end this part of the debate on: “The state could not maintain the priority because the government could not get any sympathy from the private sector over its long delay in collecting back taxes … such rank inefficiency merely confirmed to private creditors that government needed stronger incentives to keep abreast of creditor delinquency…”. That was the point. 
So in summary National believes that for voluntary administration to work effectively the department’s priority needs to be removed or limited. We believe that the retention of the department’s priority will lead to difficulties in implementing the key component of the bill. We believe that we did not explore other alternatives enough. Thank you. 
The question was put that the following amendment in the name of Katherine Rich to clause 471(1) be agreed to: 
to omit from paragraph (cb) of section 280(1) the words “or any of its secured creditors”. 
A party vote was called for on the question  
That the amendment be agreed to 
. 
Ayes 48 
New Zealand National 48. 
Noes 71 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 62 in the name of the Hon Lianne Dalziel to Part 8 be agreed to. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 8 as amended be agreed to. 
Ayes 71 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Part 8 as amended agreed to. 
Part 9 Cross-border insolvency 
The CHAIRPERSON (Hon Clem Simich) 
: The debate on this part includes debate on schedules 5 and 6. 
PANSY WONG (National) 
: 
 Part 9 is about cross-border insolvency and the National Party is in favour of these provisions. Quite interestingly the commencement date for this part is a date to be appointed by the Governor-General by Order in Council. We were told that the reason for the flexibility through the Order in Council process was that we were waiting for Australia to enact similar legislation. 
National sees that in the current environment businesses have become increasingly global. More than that the mobility of businesspeople etc. throughout the world has become such a frequent and accepted pattern that New Zealand should implement the model law of cross-border insolvency adopted by the United Nations Commission on International Trade Law on 30 May 1997. The law was also ratified and approved by the United Nations and we accept that this is a very sensible and forward-looking move. 
We support this part but I wonder whether there will be vigilant implementation of it. Although Parliament may pass legislation at times one wonders whether the application of that law will be as effective as politicians may think. 
I have an example of a recent case in point involving a sad occurrence. Last Monday in the pouring rain in Auckland a group of protestors gathered outside the Auckland Central Police Station. Those people unfortunately are a group of unsecured creditors who utilised a finance entity known as An Ying which has many subsidiaries and owns different companies under similar names. An Ying International Financial Ltd has gone into bankruptcy and a lot of the individuals involved used that organisation for transmitting money from China to New Zealand. Some have used the company for foreign currency exchanges. 
One person in the group told me that he had just transmitted money but was informed that because of the large sum involved the transfer would take about 3 to 5 days. Of course 5 days later he suddenly found out that the entity was no longer operating. A group of creditors applied to put An Ying International Financial Ltd into bankruptcy. The liquidator put out a statement that the repayment of money involved the ability to find out what overseas assets that company or the people responsible for the company might have. One can only live in hope that an international arrangement of this nature can be enforced effectively. 
As I said because nowadays there are so many transnational businesses our people can be quite vulnerable when individuals or businesses move to New Zealand and start businesses here. Do we actually know their reputation? That is the first challenge. The second one is whether we can believe that they are being upfront when they have insolvency problems as to whether they have assets overseas. 
KATHERINE RICH (National) 
: 
 This will be the last call I will take for the evening. I would like to make a few comments about schedule 5 which contains the provisions relating to model law on cross-border insolvency. This was an issue that I had not considered prior to being part of the Commerce Committee and I would like to acknowledge the officials here today. The work they did in communicating some quite technical concepts and principles to a table full of select committee members who initially were not au fait with insolvency law is to be commended. So we were very thankful that they were able to take some very difficult concepts and explain them to us and cross-border insolvency was one of those issues. 
Cross-border insolvency arises when an insolvent entity is placed in a form of insolvency administration in one country but has assets or debts in another country or countries. So a Kiwi firm might have been dealing with an Australian firm as just one example or a firm in the United States. Its bill is not paid and it has to make a decision about where to go to from there. So of course one needs laws in common to be able to have some kind of framework to allow some kind of justice on both sides. 
So it is timely that we look at this area. As members will be aware some of this law has not been considered since the 1960s and other parts have not been considered since the enactment of the Companies Act in 1993. The world has changed a lot since then so it is time for New Zealand to adopt the provisions of the model law on cross-border insolvency adopted by the United Nations Commission on International Trade Law. The area is often also referred to as UNCITRAL which sounds like one of those acronyms that do not really roll off the tongue very well. 
I have a couple of questions I would like to put to the Minister. During the select committee process members were told that banks that were subject to statutory management and were under the Reserve Bank of New Zealand Act 1989 were expressly excluded from the operation of the model law on cross-border insolvency. There may be a very simple reason for this and as I did not have an opportunity during the select committee process to ask about this I would like to put it to the Minister now. 
The second question I ask is why we are embracing this model law only after Australia has done so. The aim of having embracing model law is to ensure that we take part in the international framework so that Kiwi companies are dealing with the United States the UK or wherever and obviously Australia being our closest neighbour. Why are we waiting for Australia to take on board the law before we do? Once again there might be a pretty simple reason for that and I would be interested in hearing an explanation tonight. 
So the aim is to facilitate cross-border insolvencies. It is not easy when firms have to deal with companies that go bust at home. It makes it so much harder when one is dealing with a firm that is offshore. We need to have consistent rules so that Kiwi firms can have greater certainty. Officials argued during the select committee process that by embracing this law the increased certainty would in fact add to New Zealand’s economic growth. I think the jury is still out on that. I am unsure whether that will be the case. But certainly on this side of the Chamber we think it is a good thing that we engage in a framework that will provide greater consistency around the world as long as all the parties are working under the same law. Obviously some Kiwi firms will still continue to deal with some countries that do not. But this looks to be a step forward and we will see whether there are additional benefits from this point. 
Part 9 agreed to. 
Schedule 1 agreed to.  
Schedule 2 
The question was put that the amendments set out on Supplementary Order Paper 62 in the name of the Hon Lianne Dalziel to schedule 2 be agreed to. 
Amendments agreed to. 
Schedule 2 as amended agreed to. 
Schedule 3 
The question was put that the amendments set out on Supplementary Order Paper 62 in the name of the Hon Lianne Dalziel to schedule 3 be agreed to. 
Amendments agreed to. 
Schedule 3 as amended agreed to. 
Schedule 4 
The question was put that the amendment set out on Supplementary Order Paper 62 in the name of the Hon Lianne Dalziel to schedule 4 be agreed to. 
Amendment agreed to. 
Schedule 4 as amended agreed to. 
Schedule 5 agreed to.  
Schedule 6 agreed to.  
Clauses 1 and 2 
LINDSAY TISCH (National—Piako) 
: 
 National as members have heard in the debate on the Committee stage this evening has supported most parts. However we had concerns with Part 3 Part 5 and Part 8; consequently we voted against those parts. If we reflect on National’s minority view which is set out in the commentary on the bill we see that our speakers and our members who were on the select committee have identified that: “The centrepiece of this bill is the ‘voluntary administration’ scheme which will replace the seldom-used ‘compromise’ scheme.” It is interesting to note that all submitters on that provision were unanimous in their view that unless the Government addressed the issue of priority status for the Inland Revenue Department the voluntary administration scheme would be severely compromised. With that in mind our speakers especially Pansy Wong who led the debate in this area were adamant that we had to vote against the voluntary administration provisions. 
Further we do not believe that Parliament should pass another piece of redundant legislation when there is a groundswell of opinion from practitioners who believe that the legislation will not work without the removal of the Inland Revenue Department’s priority status. 
The other point we were very mindful of was the newly introduced no-asset procedure whereby an individual can choose to enter into a scheme for 12 months in return for a write-off of $40000. We ask where the personal responsibility is—the individual responsibility—for the debts that have been incurred. 
Overall with that in mind National says that while we support some parts we will be voting against this bill. 
Clause 1 agreed to. 
Clause 2 agreed to. 
The Committee divided the bill into the Insolvency Bill the Companies Amendment Bill and the Insolvency (Cross-border) Bill  
divided into Insolvency Bill Companies Amendment Bill Insolvency (Cross-border) Bill  
pursuant to Supplementary Order Paper 61. 
Bill to be reported with amendment presently. 
House resumed. 
The Chairperson reported the Reserve Bank of New Zealand Amendment Bill without amendment and that the Committee had divided it into two bills; the Communications Legislation Bill without amendment and that the Committee had divided it into two bills; and the Insolvency Law Reform Bill with amendment and that the Committee had divided it into two bills. 
Report adopted. 
The House adjourned at 9.55 p.m.