Volume 606 Week 15 - Tuesday 18 February 2003 
Volume 606 Week 15 - Tuesday 18 February 2003 
[Volume:606;Page:3473] 
Tuesday 18 February 2003 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Speaker’s Statements 
Reply to Written Questions 
Mr SPEAKER 
: Honourable members on 12 February 2003 the Hon Nick Smith raised a point of order regarding the release by the office of the Minister of Education of a reply to a written question before the reply was given to the member. I have received an explanation from the Minister and it is apparent that this was done inadvertently by the Minister’s office and an apology was tendered to the member for this. I confirm that a copy of a reply should not be released until it has been sent to the member. I am satisfied that this was not done deliberately in this case and that no further action should follow given the apology from the Minister’s office. I thank the member for drawing this to my attention. 
Motions 
Mr Bright Williams 
Hon KEN SHIRLEY (Deputy Leader—ACT NZ) 
: 
 I move  
That this House records its sadness at the passing of Mr Bright Williams the last survivor of 100444 New Zealanders who left this country to serve in the First World War and acknowledges the sacrifices that they made 
. 
Motion agreed to. 
Questions to Ministers 
Iraq—Government Policy 
1. KEITH LOCKE (Green) 
 to the  
Minister of Foreign Affairs and Trade 
: In light of the weekend protests by thousands of New Zealanders against the “war talk” of President George W Bush and Prime Minister Tony Blair will New Zealand’s United Nations ambassador tell the United Nations tomorrow that New Zealand believes there is no case for war and that the United Nations should not endorse one; if not why not? 
Hon PHIL GOFF (Minister of Foreign Affairs and Trade) 
: 
 New Zealand’s ambassador to the United Nations will tomorrow reiterate to the open session of the Security Council New Zealand’s position as already outlined to this House last week by the Prime Minister and by me. That position is clear and unequivocal as are the reasons for it. 
Keith Locke 
: Will the Government be expressing support for the French and German proposals which as an alternative to war advance such measures as an increase in the number of UN weapons inspectors backed up by a United Nations peacekeeping force? 
Hon PHIL GOFF 
: The so-called Franco-German proposal has been circulated as a non-paper. There is some debate between the two countries as to what should be emphasised in it. What I can tell the member is that our position is that useful work is being done by the inspectors at this time. The process should be allowed to continue. We should exhaust all possible alternatives for achieving Iraq’s disarmament before any resort to war is even considered. 
David Benson-Pope 
: What concerns does the Government have with regard to the consequences of military force being applied in Iraq? 
Hon PHIL GOFF 
: The United Nations of course needs to have the use of force as an ultimate sanction to achieve compliance with its decisions but the reasons that that should only ever be an ultimate sanction should be obvious to everybody in this House. The use of military force involves the loss of lives—possibly tens of thousands of innocent people will be killed—huge destruction to infrastructure and consequent human misery. The use of force can also destabilise the wider region and work against rather than for the objectives of the campaign against terrorism. 
Dr Wayne Mapp 
: Will New Zealand’s presentation to the Security Council tomorrow include support for a second Security Council resolution declaring Iraq in material breach of earlier resolutions and giving Saddam Hussein a final chance to fully disarm particularly given the Prime Minister’s statement last week that Secretary of State Colin Powell had presented a case strongly suggesting that Iraq is concealing its weapons of mass destruction? 
Hon PHIL GOFF 
: It would be premature to express support for any resolution that to the best of my knowledge has as yet not been drafted. There are a number of alternatives that may be considered by the Security Council. New Zealand’s position is to continue to apply maximum pressure to Iraq but to support the use of force only after every other option has been exhausted. We have not yet reached that point. 
Hon Ken Shirley 
: Is the Minister prepared to review his Government’s stance and join the coalition of the willing now that our traditional allies Australia the United Kingdom and the United States have been joined by Italy Spain Belgium Portugal and other countries? 
Hon PHIL GOFF 
: If the implication of the member’s question is that by joining a coalition of the willing we would act outside of a mandate from the United Nations the answer is no. 
Hon Peter Dunne 
: Does the New Zealand Government support the view advanced by President Chirac that no further United Nations Security Council resolution is required and that France would not support one? 
Hon PHIL GOFF 
: It would be our view if force were to be considered that a second resolution explicitly authorising that would be required. 
Keith Locke 
: Does the Minister agree with the widely expressed view that the Bush administration aims to use a war to gain greater control over Iraq’s oil reserves which are the second largest in the world? 
Hon PHIL GOFF 
: No. I think that there are many reasons that the United Nations Security Council unanimously decided to pass Resolution 1441. The predominant reason is that we need to see disarmament by Iraq. That is why pressure needs to be brought onto it; to put into place actions that it has resisted taking over the last 12 years. 
Iraq—Defence Force Deployment 
2.  
Hon BILL ENGLISH (Leader of the Opposition) 
 to the  
Prime Minister 
: In light of her reported comments that “the chances of a war with Iraq had risen to well above 70 percent” has her Government received any reports assessing the risks to New Zealand Defence Forces deployed to the Gulf? 
Hon Dr MICHAEL CULLEN (Acting Prime Minister) 
: 
 Yes. 
Hon Bill English 
: In the light of her comments over the weekend that it is appropriate to release information about troops other than the SAS can the New Zealand public expect more information about this deployment regarding the activities of New Zealand military personnel and the risks faced by them since they are stationed near the Iraqi war zone? 
Hon Dr MICHAEL CULLEN 
: Yes. There are two major groups involved. There are the 13 New Zealand Defence Force personnel who are deployed in Iraq as part of the UN inspection teams. There are 35 New Zealand Defence Force personnel further afield in the Sinai desert who may be affected and the direct deployment to the Gulf area—not in the Gulf itself but in the Arabian Sea and up to the Strait of Hormuz—of the frigate. The threat to that of course has always been present given the nature of its present deployment but the assumption is that that threat risk will have to be raised from medium to high in the event of hostilities breaking out in Iraq. 
Helen Duncan 
: What has been done to address the security of other New Zealanders in the Middle East region? 
Hon Dr MICHAEL CULLEN 
: Approximately 2000 New Zealanders are registered with our embassies and consulates in the wider region. They have been advised to consider how they might depart urgently if needed. Additional Ministry of Foreign Affairs and Trade and Defence Force liaison staff are in the region to assist with any increased consular activity. 
Keith Locke 
: In the event of a war would not our frigate in the area in performing tasks such as the Minister has explained—by escorting coalition vessels through the Strait of Hormuz into the Persian Gulf—be complicit in that war and should we not withdraw our frigate now as an anti-war statement? 
Hon Dr MICHAEL CULLEN 
: No the frigate is there as part of Operation Enduring Freedom which is— 
Hon Dr Nick Smith 
: Who believes that! 
Hon Dr MICHAEL CULLEN 
: Well the Americans do for a start. The frigate is there as part of Operation Enduring Freedom—the anti-terrorist activity. I think the Americans are quite clear that we are part of that operation not of the operation in Iraq that they are proposing. There is no reason to withdraw the frigate. Much as I admire our armed forces the notion that our rather small frigate is responsible for escorting two or three major aircraft carrier battle groups into the Persian Gulf stretches the imagination somewhat. 
Hon Peter Dunne 
: In view of current reports that groups like al-Qaeda are considering using human torpedoes to pose a fresh threat to international shipping how confident can the Minister be that the presence of a New Zealand vessel in the Gulf is not placed at greater risk as a consequence of those new terrorist moves? 
Hon Dr MICHAEL CULLEN 
: As I said there is already a risk to  
Te Kaha 
. That was clearly taken into account when it was deployed to Operation Enduring Freedom and it seems probable that that risk will need to be upgraded if hostilities do break out. 
Hon Bill English 
: Given that New Zealand has personnel actually in Iraq and that the Government has recently deployed hundreds of navy and air force personnel to the region will the Government give this Parliament the opportunity to express its strong support for our military personnel who have been deployed into a potentially dangerous zone? 
Hon Dr MICHAEL CULLEN 
: We have had that opportunity over the last week during debates and certainly that was expressed by the Government parties. I did not hear from the Opposition parties support for the actions taken by New Zealand so far. 
Workplace Education—Progress 
3.  
JILL PETTIS (NZ Labour—Whanganui) 
 to the  
Associate Minister of Education (Tertiary Education) 
: What progress has the Government made in extending opportunities for learning in the workplace? 
Hon STEVE MAHAREY (Associate Minister of Education (Tertiary Education)) 
: 
 The Government has continued to support and invest in growth in industry training and Modern Apprenticeships in particular. There were 106997 trainees registered with industry training organisations during 2002. That is a 12 percent increase on the same time last year. There were 47 percent more trainees registered as at 31 December 2002 than there were when we became the Government in December 1999. Those figures include 4344 Modern Apprenticeships—a 14 percent increase over the 3-month period from 30 September and a 112 percent increase on the previous year.  
Jill Pettis 
: Does the Government have a vision for the future development of workplace learning? 
Hon STEVE MAHAREY 
: Yes we do. The vision is set out clearly in New Zealand’s first-ever tertiary education strategy which states that by 2007 the benefits of learning in the workplace will be extended to employees in as many industries as is possible. That will be done through the tripartite skills initiative between the Government the Council of Trade Unions and Business New Zealand. There will be a quarter of a million people in training during 2007. By June 2006 there will be 7500 young people in Modern Apprenticeships and that will help to ensure that all young people who leave school in the year 2007 will go on to education training and work. By contrast according to the National Party’s spokesperson Simon Power National has no industry training policy at all. 
Mr SPEAKER 
: The member was all in order until the last sentence. 
Simon Power 
: Where is the equity when some employers such as those involved in the trades can be levied for the cost of training their staff by a vote of only 36 percent of their industry while other employers such as lawyers accountants and doctors still have their employees trained at no cost to them? 
Hon STEVE MAHAREY 
: The basis of industry training is that it is a partnership between the Government the employer and the learner and therefore we share the costs. I say to the member whom I noticed in a newsletter for an industry training organisation states we have no policy that if he had been visiting those organisations they would have told him they wanted this form of levy.  
National Certificate of Educational Achievement—Examination Fees 
4.  
Hon BRIAN DONNELLY (NZ First) 
 to the  
Minister of Education 
: Has he received any reports on the recent study by Child Poverty Action Group “The irony of NCEA: How Compulsory Exam Fees Prevent the Achievement of Students from Poor Families”? 
Hon TREVOR MALLARD (Minister of Education) 
: 
 Not yet. 
Hon Brian Donnelly 
: Is it not true that this research report demonstrates that the level of fees for the NCEA in 2002 meant many children from poorer families could not enter the qualification; if so what are the implications for this year now that the fees have almost doubled? 
Hon TREVOR MALLARD 
: As far as the implications for this year are concerned that will depend on the remission policy that is set in the Budget process. As far as last year is concerned I am advised that not one principal raised the matter with the ministry the New Zealand Qualifications Authority or my office. That is something I am very disappointed about. If this report is accurate and no principal raised the matter then that is very serious. 
Bernie Ogilvy 
: Can the Minister confirm that the real reason that the fees for the NCEA have increased so markedly is the inadequate funding of the New Zealand Qualifications Authority which reported last year that its current expenditure on the NCEA is “not sustainable in the long term” forcing it to spend all its reserves in this coming financial year? 
Hon TREVOR MALLARD 
: There is no doubt that the New Zealand Qualifications Authority was carrying reserves much higher than was necessary and there was a requirement from the Government that those reserves be used in the first instance rather than immediate fee increases to students of the sort of level needed to recover the costs of the NCEA. 
Hon Dr Nick Smith 
: Can the Minister explain why Labour members in the 1990s cried howls of outrage at a 15 percent increase in the School Certificate and bursary fees over 9 years whereas after a 100 percent increase over 2 years not a single Labour member has expressed concern about a single New Zealand family? 
Hon TREVOR MALLARD 
: I can recall no such howls of outrage. The only howls that I hear are those of National Party members as they read the polls. 
Deborah Coddington 
: Is not the ultimate irony of the NCEA the fact that it will severely disadvantage poor students from low-decile schools because the internal assessment failure rate is half that of the external exam rate so their employment prospects will depend on which grammar zone their parents can afford to live in? 
Hon TREVOR MALLARD 
: I think the real irony of going down that track is that the gap between the internal and external assessment grades of decile 10 and decile 1 schools is wider at decile 10 than at decile 1. 
Metiria Turei 
: Can the Minister detail for the House how the imposition of any NCEA assessment fee will meet the Government’s own policy goal of reducing the dropout rate of students who “have the potential to gain secondary school qualifications but bail out before they can reach the later years of secondary schooling”? 
Hon TREVOR MALLARD 
: During the time of this Government there has been a considerable closing of the gap between poorer and richer areas as far as retention rates in the senior school are concerned. But I must point out that that is against a declining trend of retention because of the very very strong economy. 
Mark Peck 
: Is there any financial assistance to students to pay NCEA fees? 
Hon TREVOR MALLARD 
: Yes application for full remission was available for School Certificate and is available for the NCEA. It is always available for university bursaries. Requests for remission have declined since 2000 and the uptake remains underutilised. There was a $212000 or 37 percent under-spend last year. That may result from reduced unemployment rates or students’ parents not being aware of the remissions policy. That will be corrected this year.  
Hon Brian Donnelly 
: Noting the Minister’s statement that parents must pay for a high-quality qualification which presumably the NCEA is why are parents being made to pay $150—an increase of $80 from last year—for Sixth Form Certificate or is the transitional Sixth Form Certificate that much better than its predecessor? 
Hon TREVOR MALLARD 
: It is certainly no better. 
Hon Brian Donnelly 
: Given the rapid escalation of assessment costs in the past 2 years what is the Minister doing to ease the burden on middle to low income families who do not qualify for financial assistance and have several children taking qualifications in the same year? 
Hon TREVOR MALLARD 
: That is the area that is being reviewed as part of the Budget decision-making process.  
Drinking—Teenagers 
5.  
PAUL ADAMS (United Future) 
 to the  
Minister of Justice 
: Is he satisfied that enough is being done to curb the kind of teenage drinking that appeared to be a significant factor in the tragic events at Whangarei over the weekend? 
Hon PHIL GOFF (Minister of Justice) 
: 
 Final conclusions as to what led to the tragic death of a teenage girl and the injury of many others in Whangarei over the weekend must of course await the outcome of police inquiries and the judicial process that will follow that. Drug and alcohol use may have been a significant factor in what occurred but speculation at this point in advance of having any informed reports is not particularly productive.  
Paul Adams 
: Is the Minister concerned at the prevalence of pocket-money alcohol which is sold in 1.125 litre bottles for about $10 and which is 23 percent alcohol and therefore just avoids being taxed at the rate of spirits; if so will he commit to changing the excise duty on those drinks to make them less attractive to price-sensitive young people? 
Hon PHIL GOFF 
: There is no doubt at all that the lower excise rates on alcohol with the lower content just below the benchmark rate does make that alcohol cheaper more affordable and to a greater extent used by young people who do not have a lot of money. I am sure the Minister of Finance will embrace the suggestion of the United Future party with open arms that we should increase the excise duty. In fact my colleague the Associate Minister of Health foreshadowed the need to examine that before Christmas. 
Russell Fairbrother 
: What is being done to address concerns about alcohol and drug abuse which causes harm to teenagers and others? 
Hon PHIL GOFF 
: A wide range of projects to address alcohol and drug abuse by teenagers is being undertaken at the present time. Those include cracking down on the supply of alcohol to under-age drinkers through the police’s controlled purchase operations increasing the power and resources of the police to clamp down on methamphetamines and educative programmes to reduce demand. Those programmes are being overseen by a ministerial action group which is designed to ensure that there is cooperation and coordination between a range of ministries and agencies with responsibilities in this area. 
Richard Worth 
: Is he concerned that the Alcohol Advisory Council’s survey released last year showed that 67 percent of the parents of minors aged between 14 and 17 knew their children were drinking and that 45 percent supplied their children with alcohol; if so what Government initiatives are targeted to curb those figures? 
Hon PHIL GOFF 
: I am concerned not simply that parents are providing alcohol—I think alcohol in moderate amounts provided by a parent to a child is perfectly acceptable—but that some parents have no idea of what is advisable or sensible with reports of young children who went on to commit serious criminal offences having been provided literally with litres of spirits by their parents or guardians. To deal with that problem we have endorsed supported and promoted the “Think Before You Supply” campaign. Indeed just before Christmas I sent out a letter to every safer community council in the country drawing attention to what the Alcohol Advisory Council had available and what it could support those councils with in order to get the message home that if one provides one’s teenagers with large amounts of alcohol one is part of the problem. 
Peter Brown 
: Noting those answers would the Minister consider reviewing the 18 years of age drinking age and perhaps adopting the bill of my colleague Ron Mark that addresses that issue; if not why not? 
Hon PHIL GOFF 
: As the member who has been in the House for a number of terms knows well any decision on issues such as the legal age for the supply of alcohol is a decision for Parliament as a whole on the so-called conscience vote not a decision for the Government. I have however taken the initiative of on a 6-monthly basis monitoring any impact that the lowering of the drinking age to 18 may have had and any negative social consequences of it. To date—and the figures are still relatively fresh and one needs to see the trend—those figures point to movement in both directions: a worsening in some areas but not necessarily because of the lowering of the age and an improvement in some areas such as alcohol-related fatalities caused by drink-driving. 
Nandor Tanczos 
: Does the Minister find it strange to be questioned about teenage drinking by a member of a party that is led by a man who has consistently voted and spoken against age and other controls on alcohol and tobacco who refuses to allow this House to consider age controls on cannabis yet who claims to be family-friendly and sensible?  
Hon PHIL GOFF 
: Rather than commenting on an individual perhaps I can just send the general message that too often we are ready to blame kids for what they do when they draw their social role models from adults. Every member of this House needs to think about that. 
Paul Adams 
: In the light of the findings of the Alcohol Advisory Council of New Zealand’s survey last year which showed 83 percent of 14 to 17-year-olds sourced their alcohol from parents and friends when will programmes like Taranaki’s under-18s drink campaign “Think Before You Buy Under 18s Drink” be introduced to other communities? 
Hon PHIL GOFF 
: I actually addressed that question several supplementary questions back. We have endorsed the “Think Before You Buy Under 18s Drink” campaign and promoted it across the country. We have offered to provide resources to any area or any council that wants to undertake that campaign. I would urge the safer community councils to participate in what has proved to be quite effective in making parents think about the consequences of their actions with regard to supplying large amounts of liquor to under-age drinkers. 
Sovereign Yachts—Jobs Machine 
6.  
Hon BILL ENGLISH (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she still stand by her reported comments that the Sovereign Yachts project is like a dream come true and that the country needs more similar quality investment in leading edge ideas following today’s reports that the firm is laying off workers; if so why? 
Hon Dr MICHAEL CULLEN (Acting Prime Minister) 
: 
 It is in the nature of an innovative entrepreneurial economy that risks are taken. The willingness to take risks is to be encouraged such as for example becoming the leader of the National Party. However by definition the taking of risks will not always lead to complete success—members should see the latest polls. 
Hon Bill English 
: When the Prime Minister said that the Sovereign Yachts project was like a dream come true and that it was a high-quality investment in leading-edge ideas did she have any idea that it would produce one boat and endless controversy about the owner’s property development dreams? 
Hon Dr MICHAEL CULLEN 
: Certainly the expectation was that more than one boat was going to be produced. 
Lynne Pillay 
: Does she still want to see New Zealanders investing in leading-edge technology? 
Hon Dr MICHAEL CULLEN 
: Absolutely. This is crucial to a growing economy. We will continue to work with those who have fresh and new ideas. Despite the problems faced by Sovereign Yachts we still believe that it is more important to build new yachts than to spend too long a spell in the sun on one. 
Dail Jones 
: What assurance can she give the people of Waitakere City and North Shore City that she will not follow this “dream come true” including Sovereign Yachts and Bob Harvey the Mayor of Waitakere City with another of Bob Harvey’s dreams of having a commercial airport at the nearby Whenuapai Air Base a dream that he is professing to give effect to even without resource consent under the Resource Management Act ? 
Hon Dr MICHAEL CULLEN 
: I think that the member can rest assured that the Prime Minister will not be following Mayor Bob Harvey’s suggestion about Whenuapai airport. 
Hon Richard Prebble 
: Was the Prime Minister aware of Mr Bill Lloyd’s dubious business history when she made her glowing remarks on 4 February 2001: “This project gives substance to our vision of New Zealand becoming innovators to the world turning great ideas into great ventures.”; if not does she consider Minister Jim Anderton to have misled her and the taxpayer? 
Hon Dr MICHAEL CULLEN 
: As far as I know she was less aware of it than that member was of Donna Awatere Huata’s somewhat dodgy budget rules.  
Sue Bradford 
: In the light of the Sovereign Yachts fiasco will the Government move away from its “think big” approach to regional economic development and instead begin to put a priority on providing funding and other infrastructure support to grass-roots community-based enterprises providing jobs goods and services at a local level? 
Hon Dr MICHAEL CULLEN 
: The Government’s support of business ranges from very small enterprises to moderately large ones. I would not regard Sovereign Yachts as a “think big” enterprise. I welcome the sign of Green support for providing necessary infrastructure such as roading to enable economic development for small businesses. 
Hon Bill English 
: What does the Prime Minister have to say to the workers of west Auckland who took a job in Sovereign Yachts on the basis of the endorsement of the Prime Minister and the Minister for Economic Development and who are now turning up to work and getting the sack without even a redundancy payment? 
Hon Dr MICHAEL CULLEN 
: Clearly any loss of jobs is to be regretted but the jobs created at Sovereign Yachts were certainly more real than the 410000 phantom ones that the member’s party once promoted.  
Early-childhood Education—Immersion 
7.  
TIM BARNETT (NZ Labour—Christchurch Central) 
 to the  
Minister of Education 
: What reports has he received on the development of immersion early childhood education? 
Hon TREVOR MALLARD (Minister of Education) 
: 
 In July 1999 there were over 1000 centres 642 of which operated programmes for between 81 percent and 100 percent of the time in a particular language including Maori and the Pacific languages. I have also received a report on Te Waka Huruhurumanu ki Otautahi an early-childhood centre in Christchurch. It is licensed to take 37 children and it shares some facilities with the Christchurch Polytechnic Institute of Technology Early Learning Centre which is licensed for 47 children. I am further advised that there are Pakeha children in the Maori language centre and Maori children in the general centre based on parental choice. That arrangement based on parental choice of language is described by Nick Smith as apartheid. 
Tim Barnett 
: Does he support parents having choices in the primary language of instruction in early-childhood centres? 
Hon TREVOR MALLARD 
: I most certainly do as far as is practical. Clearly in some areas where there is not the demand for particular languages one way or other it is not practical and therefore it cannot be guaranteed. But as in Christchurch and as in Hamilton where my own children went to a bilingual language school I think it is particularly important that parents have that choice—a choice Nick Smith wants to deny them. 
Hon Dr Nick Smith 
: What sort of signal is sent to children each day when they come through the entrance of the new Christchurch Polytechnic Institute of Technology Early Learning Centre and Maori children are segregated to the left and other children to the right—that is what the signs say—and for those children— 
Hon Ken Shirley 
: What does the sign say? 
Hon Dr Nick Smith 
: The sign says “Tamariki to the left children to the right”—and for those children to be fenced off from playing with each other to have separate sleeping and eating areas; does the Minister agree with his ministry that that new segregated design is the model of the future?  
Hon TREVOR MALLARD 
: For the member’s information “tamariki” is the Maori word for children; and for kids going to Maori learning immersion centres I would expect that to be the sign used. This Government has encouraged in Christchurch—and in Mangere where Phillip Field has taken a lead—multiple-language centres using some common facilities such as staff facilities. What also happens in that centre and will also happen in the Mangere centre is that staff members when they are pushed to have licensed people or when people are sick are able to cover for each other in a way that could not happen if they had to go down the road. It is logical. 
Hon Dr Nick Smith 
: I raise a point of order Mr Speaker. Standing Order 372(2) states: “The reply to any question must be concise and confined to the subject-matter of the question asked”. The question asked first what signal it sends to children; and secondly that the ministry has said this is the model of the future and is that the case? The Minister made no attempt to answer either of those quite relevant questions. 
Hon TREVOR MALLARD 
: I am happy to have another go. 
Mr SPEAKER 
: The Minister might be happy to have another go but I have to bear in mind the wishes of all the other members of the House who might want to ask and answer the questions concerned. The Minister’s answer was too long. However he addressed the question. But it was too long and I shall make sure that there will not be any long ones for the rest of this question. 
Hon Brian Donnelly 
: Is homeland language immersion in early-childhood education to be made available together with appropriate materials and properly trained teachers for every one of the 160-plus language groups in New Zealand; if not which groups will get this opportunity and which ones will not? 
Hon TREVOR MALLARD 
: I do not have the information as to the quality of the material but my understanding is that as at 1999 when I took over we had language groups—and I do not know the degree of immersion—in Afrikaans Albanian Cook Island Maori French Hindi Japanese Korean Malaysian Maori Niuean Northern Chinese Persian Russian Samoan Tokelauan and Tongan. 
Hon Dr Nick Smith 
: I seek leave of the House to ask a further supplementary question. 
Mr SPEAKER 
: Leave is sought to ask a further supplementary question. Is there any objection? There is. 
Sovereign Yachts—Jobs Machine 
8.  
RODNEY HIDE (ACT NZ) 
 to the  
Minister for Economic Development 
: Does he stand by the statement on his behalf to the House on 28 March 2002 that his “triumph for the jobs machine” Sovereign Yachts project at Hobsonville “is a real success story which is only beginning to unfold”; if so how exactly has the Sovereign yachts project been a “triumph for the jobs machine” and a “success story which is only beginning to unfold”? 
Hon JIM ANDERTON (Minister for Economic Development) 
: 
 The triumph was that this investment occurred at all. Under a National Government supported by ACT there were no jobs and there was no economic return from this land. I am proud that this Government helped to facilitate jobs in Hobsonville and in many other parts of New Zealand. We will continue to do that. We are creating more jobs than ever in recent history and destroying very few. This Government accepts the reality that sometimes there will be both failures and successes but that will not stop us from trying to create—and succeeding in creating—more employment for all New Zealanders. 
Rodney Hide 
: In the light of the Minister’s answer does he also stand by his press statement dated 4 February 2001 under the headline “Jobs machine delivers” which promised that Sovereign Yachts would deliver up to 350 new jobs within 2 years; and just how many new jobs has Sovereign Yachts provided after those 2 years? 
Hon JIM ANDERTON 
: My most recent advice on Sovereign Yachts was that it has provided something like 60 to 70 direct jobs and contract jobs. Let me remind the member that it is not this Government’s job to create employment in just one place. This Government has overseen the creation of 123000 jobs since we took office. Unemployment is now at a 15-year low. No amount of talk from the ACT party can take away from the fact that in Auckland where Sovereign Yachts is located employment has increased by 32400 jobs and unemployment has dropped from 5 percent to 4 percent. 
Hon Matt Robson 
: What benefits have New Zealanders gained from the Government’s economic development policies? 
Hon JIM ANDERTON 
: Specifically in the marine industry—which we have been talking about in relation to Sovereign Yachts—export earnings grew last year by 38 percent. When this Government came into office there were 40 apprentices in this industry; there are now close to 400. No amount of whingeing from Opposition parties can destroy the way in which this Government is going about rebuilding the economy. 
John Key 
: When the Minister talked about the triumphs for the “jobs machine” was he referring to the employment he thought would be created by Sovereign Yachts or was he thinking about the hundreds of carpenters who will now be employed building literally thousands of State houses on prime waterfront real estate at the Hobsonville airbase? 
Hon JIM ANDERTON 
: Before this Government came into office the land at Hobsonville had been an idle open paddock for 40 years. It has now been prepared for both economic and social development. If New Zealanders are better off with jobs in a marine cluster which contains state-of-the-art first-class and First World technology and if we are building houses to house New Zealanders as well then I think we have a double benefit from both. 
David Cunliffe 
: To what extent has the Hobsonville development been a success? 
Hon JIM ANDERTON 
: Hobsonville airbase land is now available and/or being prepared for economic and social development purposes including marine construction and housing. The land has gone from unused paddock to being available or prepared for productive development in less than 3 years. I would describe that as a success and so would most reasonable New Zealanders. 
Dail Jones 
: Has the Minister ever spoken to the Minister of Defence about the use of that land at Hobsonville which has been a site used for the flying in of Andovers when they were available on grass helicopter use training of SAS general military services and the like including weapons training and is the Minister seriously saying he believes that that was just farmland; is that the Labour Party’s view of how that land has been used in the last 40 years? 
Hon JIM ANDERTON 
: All Ministers in this Government including the Minister of Defence talk to each other often. The fact that the Air Force of New Zealand is consolidating its position around Ohakea and that both Hobsonville and Whenuapai are being made available for social and economic development purposes shows that this Government is prepared to take firm and decisive action when it believes that land or resources can be put to better use for the people of New Zealand than they were previously. That is exactly what this Government is doing.  
Growth and Innovation Strategy—Examples 
9.  
Hon MATT ROBSON (Deputy Leader—Progressive) 
 to the  
Minister for Industry and Regional Development 
: Has he seen any practical examples of the Government’s growth and innovation strategy at work; if so can he provide details of these? 
Hon JIM ANDERTON (Minister for Industry and Regional Development) 
: 
 Yes I have. Yesterday I visited the human interface technology laboratory in Christchurch. This is an exciting joint-venture between the University of Canterbury the University of Washington in Seattle the Canterbury Development Corporation and the Government to develop innovative ways of working with people and computers using new technology in the virtual reality field. Industry New Zealand the Government’s economic development agency has assisted both the establishment and development of this high-tech laboratory. At the launch I was able to announce a $500000 grant from the Government to assist high-technology job opportunities for both Canterbury and New Zealand. 
Hon Matt Robson 
: What has made this development possible? 
Hon David Carter 
: Subsidy! 
Mr SPEAKER 
: I do not mind the odd interjection. In fact they sometimes add to question time but I do not think that shouting out is entirely appropriate. It is just rudeness. I want to hear the Minister’s answer. 
Hon JIM ANDERTON 
: National Party members may well laugh but if they listen to the answer they will not laugh any more. Dr Mark Billinghurst a young talented New Zealander and a key member of the human interface technology laboratory in the University of Washington—the only human interface technology laboratory in the world—saw an opportunity of a constructive partnership between two universities one in New Zealand and one in the United States as well as local and central government partnerships to return to his native country to offer back his knowledge and experience. He could have gone literally anywhere in the world and he would have been welcomed with open arms because he is such a talented young New Zealander. However he saw that New Zealand is now actively encouraging innovation and he has even persuaded the head of the human interface technology laboratory in the University of Washington Professor Tom Furness to gain New Zealand residency. This is a triumph for the development of high technology in New Zealand. 
John Carter 
: Given the reports in the  
New Zealand Herald 
 today and indeed the debate in Parliament that Sovereign Yachts once the boast of the Government’s “job machine” has now advised that all the workers are likely to lose their jobs what did the Minister mean when he said at a Government-organised innovation conference in Christchurch last year that Sovereign Yachts was amongst firms celebrated as an example for others to emulate? 
Hon JIM ANDERTON 
: Any time that New Zealanders have been overseas and bring back to this country expertise or investment capital and put that at the use of other New Zealanders in this country that is good news. If the member wants to be derisive about developments such as the human interface technology laboratory in Christchurch which is part of his question that I am now answering then he or any member of his party should go down to the laboratory and see what kind of reception they get. 
John Carter 
: I raise a point of order Mr Speaker. This is where we get into difficulties in question time. I asked a very specific question about what the Minister meant with regard to a statement that Sovereign Yachts was amongst firms celebrated as examples for others to emulate. He never bothered to answer that question. It was a very short concise question. 
Mr SPEAKER 
: The original question was wide-ranging. The member honed in on one particular thing. The Minister addressed it in part; he did not specifically refer to that but he addressed the question. 
David Cunliffe 
: What benefits will New Zealand get from the human interface technology laboratory?  
Hon JIM ANDERTON 
: Mark Billinghurst has already developed virtual reality techniques of significant use in medical engineering building construction telecommunications and computer graphics which will offer a wide range of commercial and job opportunities both in Canterbury and throughout New Zealand. New Zealand will benefit from having high-quality highly paid jobs strong international links a greater research capability retaining intellectual property and spin-off companies. In the United States the Washington human interface technology laboratory has created 400 jobs stimulated more than US$30 million in research grants gifts and contracts and has issued 12 patents and formed 18 spin-off companies. 
Rodney Hide 
: Does the Minister consider the Sovereign Yachts project at Hobsonville a practical example of his economic strategy at work given that 4 hectares of land valued by the defence force at $10 million was sold by the Government for half a million dollars and does he when he looks at this project now and given Mr Lloyd’s dubious and erratic business background accept that with the Sovereign Yachts project he and his Government picked a loser and not a winner? 
Hon JIM ANDERTON 
: Any time 40 to 60 jobs are created anywhere in New Zealand is good news. If the member is asking for hindsight—what in hindsight does he think about being the first MP to take a ride on Bill Lloyd’s yacht in the Auckland harbour when he started off? 
Rodney Hide 
: We had already got off. Get stuffed! 
Mr SPEAKER 
: Order! I call Dr Brash. [ 
Interruption 
] Order! 
Rodney Hide 
: You ask him! 
Mr SPEAKER 
: The member will stand and withdraw and apologise. I have twice called order but he continued to interject. 
Rodney Hide 
: I apologise. I raise a point of order Mr Speaker. 
Mr SPEAKER 
: It had better not relate to my ruling. 
Rodney Hide 
: Not at all. I seek your guidance. When a Minister stands up in the House and says something that is not true what is the appropriate remedy? 
Mr SPEAKER 
: The member knows that that is not a valid point of order. 
Hon Richard Prebble 
: I raise a point of order Mr Speaker. We do have a problem. Now we are told that the answer given by the Minister is not correct. We have a series of Government MPs baiting a member on this side of the House he responds and you then bring down your whole authority on an ACT member of Parliament when in fact the whole matter was incited by the Minister making false statements and then being helped by another Minister. 
Mr SPEAKER 
: If that were an accurate reflection of what had happened then of course the member would be correct but it was not. Mr Hide interjected three times. I moved on the third interjection.  
Economy—OECD Ranking 
10.  
Dr DON BRASH (NZ National) 
 to the  
Minister of Finance 
: Will the Government consider changes to its economic policy following a survey published today which shows most New Zealanders lack confidence that it has a credible strategy to return New Zealand to the top half of the OECD; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 No. The Government does have a credible strategy and I note that the member has quoted the survey question incorrectly. 
Dr Don Brash 
: Ignoring the Minister’s comment which I think is incorrect I ask this question: does it concern the Minister that even among Labour supporters almost 40 percent lack confidence that New Zealand is on course to achieve the Prime Minister’s ambition to rejoin the top half of the OECD; and will he concede that this Government’s ideologically driven policies are an impediment to the economic growth needed to achieve this objective? 
Hon Dr MICHAEL CULLEN 
: No because we are doing better than the rest of the OECD. I would be much more concerned if 42 percent of Labour supporters did not support their leader like the 40 percent of National Party supporters who do not support their leader.  
Rodney Hide 
: I raise a point of order Mr Speaker. The Minister of Finance said that the question was incorrect but it has been to the Clerk and you have approved it. There has clearly been authority for this question. I think that the Minister is making a reflection on you because that was a primary question set down for answer and of course it has to be correct. 
Mr SPEAKER 
: No he is entitled to make that comment. That does not change by way of a point of order. 
Clayton Cosgrove 
: How does this poll line up with other polls about confidence in the Government’s strategic direction? 
Hon Dr MICHAEL CULLEN 
: The NBR poll of 7 February showed that 61 percent of respondents think that the country is on the right track and that only 26 percent think it is on the wrong track. Yesterday’s TV3 poll showed that 56 percent of voters favour Labour. The only poll indicating a demand for a change of direction was the TV3 poll where 42 percent of the miserable 21 percent of people supporting National wanted a change of leader. 
Peter Brown 
: Noting those answers and noting the reports that a Professor Florida is to come here to address the knowledge wave conference very shortly can I take it that the only detailed plan to advance this country up the OECD ratings is to turn us into a nation of homosexual immigrants? 
Hon Dr MICHAEL CULLEN 
: Speaking as an avowedly heterosexual immigrant no. 
Gordon Copeland 
: Does Government economic policy include plans to grow per capita productivity private savings and exports and to reduce the tax burden either on all companies or at least on start-up companies? 
Hon Dr MICHAEL CULLEN 
: The Government’s plans certainly include the growth and innovation framework which is particularly directed at areas of potential comparative advantage particularly in the context of the international environment. It is far from certain that certain changes in the tax system are those that are most likely to advance economic growth in that respect. I notice that over the last 20 or 30 years countries with higher productivity growth than New Zealand seem to include a large number of countries with higher tax burdens than New Zealand’s. 
Jeanette Fitzsimons 
: Is being in the top half of the OECD based on measuring quality-of-life indicators such as access to open space affordable housing education and health care and clear air and water or will it just catch us up with the air pollution of Tokyo the congestion of London and the lack of public health-care in America all of whom are well above us in the gross domestic product tables? 
Hon Dr MICHAEL CULLEN 
: Underlying the member’s question is one important point: if we measure quality-of-life indicators as well as quantity-of-life indicators we see that New Zealand already ranks in the top half of the OECD. Those surveys have been produced quite recently. However in the long term I think it is fair to say that a country that is poor finds it very hard to have a decent health system a decent education system a decent public transport system and many other things. 
Dr Don Brash 
: Is the Minister not at least concerned that only some 5 percent of chief executive officers surveyed by the  
New Zealand Herald 
 late last year thought that the Government had a credible strategy to increase our long-term growth rate? 
Hon Dr MICHAEL CULLEN 
: I refer to the original question asked which was whether I am confident that New Zealand’s leaders have a growth strategy. Clearly that question really did not cover the Government. It covered Opposition parties and it also covered business leaders. I would say sometimes to some of those who respond to chief executive officers that those who are without sin cast the first stone in terms of success. 
Rodney Hide 
: I seek the leave of the House to table the Hon Jim Anderton’s statement of 4 February 2001 headed “Jobs machine delivers.” 
Document by leave laid on the Table of the House. 
Insolvency—Legislation 
11.  
DARREN HUGHES (NZ Labour—Otaki) 
 to the  
Minister of Commerce 
: What recent decisions has the Government made in relation to insolvency law? 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 The Government has made decisions on the four Tier Two papers that were consulted on last year. They include introducing a business rehabilitation regime similar to the Australian voluntary administration framework; restrictions around phoenix company arrangements; a streamlined no-asset procedure for low-income debtors with few or no assets; and the development of a legislative framework to allow for a single insolvency proceeding for cross-border insolvencies. 
Darren Hughes 
: What specific measures are proposed in respect of the phoenix company arrangements where an insolvent company transfers its assets to another company? 
Hon LIANNE DALZIEL 
: The keys issues in the discussion document centred on assets that were not sold for fair value reducing the availability of funds to satisfy creditors of the company in liquidation. It is proposed to make criminal penalties available to the court when directors are shown to have acted in bad faith to defeat the legitimate interests of creditors. There will also be a restriction on the re-use by a former director of a company name when that company is in insolvent liquidation. This is a way of preventing a new company from trading off the goodwill of that previously liquidated company when the principles are the same. 
Hon Tony Ryall 
: Can the Minister advise whether the Government’s desire to harmonise with Australia will see New Zealand adopt the Australian standard where directors will be personally liable for unpaid taxes of such companies; and what is the Government going to do to compensate unsecured creditors who may lose a claim on the assets of a company because of the cost of an unsuccessful rehabilitation? 
Hon LIANNE DALZIEL 
: The business rehabilitation regime is to be modelled on the Australian voluntary administration framework and there are very strong protections around the area of creditors during the period when the rehabilitation is attempted. I should say to the member that if he looks at the detail of what has occurred in Australia he will see that we have seen I think about 20 percent of companies in Australia using the voluntary administration process. That is now 64 percent of total company insolvencies.  
Dail Jones 
: When does the Minister envisage introducing such legislation how long does the Minister envisage it will take to pass through the House and will it include provisions that will prevent people from building one set of houses—as we have seen in the leaky homes situation—for one-purpose development only? 
Mr SPEAKER 
: Two of those three questions can be commented on. 
Hon LIANNE DALZIEL 
: The first question concerned the introduction of legislation. I anticipate having legislation in the House this year. There are both the Tier One and Tier Two paper decisions to be built into a legislative amendment and a decision still has to be taken as to whether to have a single insolvency Act rather than amend the existing laws. Secondly I would anticipate good cooperation on all sides of the House to see the matter proceed as quickly as possible. 
Stephen Franks 
: What evidence has the Minister that following Australian law will not simply fatten the purses of the undertaker professionals who take fees for longer while dog companies are on life support and while the unsecured creditors watch good money being thrown after bad? 
Hon LIANNE DALZIEL 
: I do not wish to disappoint the member but very many successful business rehabilitations have been conducted under the voluntary administration framework. That saves a company from falling over and that is preferable to a liquidation situation. 
Capital and Coast District Health Board—Cardiac Surgery 
12.  
Dr LYNDA SCOTT (NZ National—Kaikoura) 
 to the  
Minister of Health 
: When was she informed that Capital and Coast District Health Board underspent $1.7 million on cardiac surgery in the 2001/02 year and how many of the eight patients who have died in the last three years could have been saved by having their surgery in a private hospital? 
Hon ANNETTE KING (Minister of Health) 
: 
 I was informed 2 months ago. Of the eight patients who died while waiting for cardiothoracic surgery in the past 3 years seven died when Capital and Coast Health was subcontracting cardiac operations to the private hospitals including Wakefield Mercy and Ascot. It is always tragic when somebody dies but we do know that the figure of eight who died in the last 3 years is considerably lower than the 26 who died in the 3 years before we became the Government. 
Dr Lynda Scott 
: If that is the case why did the Minister criticise Capital and Coast Health and has the Ministry of Health set guidelines stating that a 1 percent death rate for those waiting for heart surgery is acceptable; if not where is the evidence—which John Coughlan general manager of Wellington Hospital seems to think exists—that states that eight deaths are an acceptable level? 
Hon ANNETTE KING 
: I did not criticise Capital and Coast Health. I pointed out to them that this Government is not opposed to the use of private facilities when there is lack of capacity in the public sector. The level of 1 percent deaths in terms of cardiac surgery is not something that has been set by the Government. It happens to be the international standard. I would have thought that the member would know that. 
Steve Chadwick 
: Has there been an increase in the number of cardiac procedures provided by Capital and Coast District Health Board since 1996? 
Hon ANNETTE KING 
: Yes. Cardiac procedures have more than doubled from 1996 to 2002 with an increase of 404 procedures in 1996 and 996 in 2002. 
Pita Paraone 
: Can the Minister ensure that the recent letter that Capital and Coast District Health Board mailed to 160 patients on the cardiac surgery waiting list assuring them that by August nobody will wait longer than 6 months for surgery will be sufficient to avoid further deaths among those awaiting cardiac surgery given that this is in effect 12 months from now? 
Hon ANNETTE KING 
: Capital and Coast Health has advised me that it is very confident it will be able to provide cardiac surgery for all those people it has written to within the 6 months. 
Heather Roy 
: Why when in an oral question in this House on 13 February last year ACT’s Ken Shirley predicted that heart patients would die on the waiting list did she still permit the cancellation of the heart surgery contract with Wakefield Hospital and is she now criticising the board for not using private hospitals to avoid all responsibility herself? 
Hon ANNETTE KING 
: No I am not. I raised the issue of it being able to use private capacity because of the misinformation that constantly comes from ACT saying that this Government is philosophically opposed to it. 
Sue Kedgley 
: Following the Minister’s intervention to try to resolve the issue of the long cardiac surgery waiting lists at Capital and Coast District Health Board will she take a similarly proactive stance with the six district health boards that are still refusing to sign a pharmacy agreement and make good on her promise last December that any district health board that refuses to sign the pharmacy agreement will have its pharmaceutical budget managed by the Ministry of Health; if so when will this happen: if not why not? 
Hon ANNETTE KING 
: I am quite happy with the progress that has been made by the six district health boards in relation to their negotiations on the pharmacy contract. 
Judy Turner 
: Is the Minister aware of any other district health boards that have deviated from their nominated budgets resulting in underspending and a reduction of services and treatment in their regions? 
Hon ANNETTE KING 
: Boards have the ability to under-deliver on some things and over-deliver on others. For example although Capital and Coast Health spent $1.7 million less on cardiac operations it over-provided by $2 million in the following areas: general surgery orthopaedic surgery haematology paediatrics and cardiology—which the member will know includes angioplasty which is an alternative form of treatment for patients with cardiac disease.  
Dr Lynda Scott 
: Will she conduct a full inquiry into who was responsible for making the decision that $1.7 million would not be spent on 70 to 100 lifesaving operations for patients; why 58 patients have been waiting more than 6 months for surgery in Wellington 83 in Christchurch and 40 in Auckland; and why the annual plan of the Capital and Coast states as an achievement the fact that it has brought all surgery in-house? 
Hon ANNETTE KING 
: No I will not carry out an inquiry on that matter. I have read the member’s press release. She wants an inquiry because they were not done in private hospitals. Of the eight people who died five died in 2000-01 when surgery was being carried out in Wakefield Mercy and Ascot hospitals. Two people died when it was being carried out in Wakefield Hospital. One person has died since it was brought in-house. That compares much more favourably than the 26 people who died in the 3 years before we became the Government. 
Stephen Franks 
: Did the ministry concur with the decision of Capital and Coast Health not to renew the cardiac surgery contract with Wakefield Hospital when the Minister and her ministry knew that Capital and Coast Health’s waiting list had grown from 87 to 225 over 15 months under her rule; that the number of people on the waiting list who were there for longer than 6 months had grown from 16 to 52; and that her own Health Strategy 2000 bound district health boards to ensure that no one waited more than 6 months; and was the political credit from sticking it to private enterprise worth the eight deaths that should be on her hands? 
Hon ANNETTE KING 
: No. There are not eight deaths on my hands. In the 15 months that Capital and Coast Health has not had a contract with the private sector one person has died which compares with the seven who died when it did have a contract with the private sector. That makes a mockery of using such figures for emotional blackmail in this House. Twenty-six people died in the 3 years before we became the Government. Did we ever hear that from ACT or National? No we did not.  
Debate on Prime Minister’s Statement 
Debate resumed from 13 February. 
JILL PETTIS (NZ Labour—Whanganui) 
: 
 Some fantastic things are happening in terms of learning in the workplace environment. For example 47 percent more trainees have been involved in workplace training since we became the Government. I can tell members that 4344 people in Modern Apprenticeships are now in workplace training. That is a 112 percent increase on the previous year. This training is of a very high quality and it is responding to the skill needs of industry and employees. This situation contrasts dramatically with the almost total absence of workplace training when National was in Government.  
Workplace training enables young people to stay in their home cities in many instances. It is meeting the huge gaps in skill shortages that came about because National failed to invest in the future. National failed to invest in ensuring that we had appropriate skills in place to meet the needs of the market and the needs of the workplace. I sometimes wonder where members opposite were in the last 9 years when we had massive unemployment in the provinces and when young people were leaving their home towns and cities in droves. I ask members to compare that situation with the very buoyant employment market we have now. I am proud of this Government’s achievements.  
JOHN CARTER (NZ National—Northland) 
: 
 I should tell the House that it looks as though we are going to lose the third race in the America’s Cup unfortunately. I wanted to bring that tone to my 10-minute contribution because as much as we are going to be saddened by that loss I must say that the Prime Minister’s statement was about as depressing.  
There are two reasons that a Government does well. The first is that it has a vision for the country and has the ability to capture the hearts and minds of the people. The Prime Minister said in her own words that the statement would be boring. It sure was! What was worse was that the statement she delivered was not only boring but had no vision that would tend to encourage people to continue supporting the Labour Government.  
Secondly a Government does well when it has a stable and growing economy. [ 
Interruption 
] Yes that is true and the Government has accepted all the plaudits for the economy being stable. But that situation is no credit to this Government. Indeed I think that Mr Cullen the Minister of Finance would be one of those who expect a higher surplus than he budgeted for. I think there is an expectation across the country that that will happen. But the fact is that beyond that the situation does not look quite so rosy.  
If we look at what is happening around the world and if we look at commodity prices certainly in rural Northland we are seeing that farmers are starting to close their chequebooks. As that happens—as the prices for dairy products drop and as beef prices start slowing down—we will find that the economy will be on the decline. Although the tax take and the Government’s income are likely to be up over this next 12 months beyond that I have to say the situation will be far more difficult. It will be interesting to see how the Prime Minister the Deputy Prime Minister and the Government manage in those circumstances. I suspect that they will have great difficulty.  
One of the things that interests me is the fact that when this Government started it made a lot of commitments to things like closing the gaps. Also it was going to address the issue of compliance costs. I have not noticed any closing of the gaps—certainly not in Northland and not to my knowledge across the country. There has certainly been no reduction in compliance costs. Indeed the very reverse has occurred. Next I refer to the job machine which we have just had a question about during question time. What has happened to the job machine that was promised with so much fanfare? Where are all the new jobs that we expected to see in Northland?  
There is also the matter of treaty claims. We anticipated that there would be great movement on that issue but unfortunately that has not been the case. Now we see things that cause us concern; things that the Government is not delivering on. The thing that finally gets a Government is the issue of broken promises. Then not only will people see that the Government has no vision and is grappling with an economy that is not as stable and buoyant as it has been as a consequence of our primary sector but people will increasingly notice the issue of broken promises. Where is the delivery on the promise regarding asset tests? The Government said it would do away with asset tests. Where is the delivery on the promise that there would be no increased taxes? What about the rise in petrol taxes? What about the rise in accident compensation premiums? What about the student fees increases that have recently hit us? Are they not increases in taxes?  
I want to talk about one specific promise that affects us very very significantly in Northland. I want to talk about the promise in relation to Kaitaia Hospital. I want to bring to members’ attention a statement about Kaitaia Hospital that was made by the current Minister of Health when she was the Opposition spokesperson on health in 1998. She said that one of the things she was worried about was that beyond doubt lives would be threatened if there was a reduction in services to the Kaitaia Hospital. The far north region is a huge area. Rural people need emergency medical treatment and they will find themselves hours away from their closest hospital. As a member of the Government then I had to stand on that side of the House while the then Leader of the Opposition the then Opposition spokesperson on health—and other Labour members who are now part of the current Labour administration—made all sorts of promises to retain the Kaitaia Hospital for the people of the far north. Sadly they are not delivering on that promise. At least I can look in the mirror and say that one of the commitments I made to the people in the far north when I was in Government was that the services in their hospital would not change and they did not. Those services did not change while National was in Government. Unfortunately I cannot say the same for this administration. So many statements were made and so many promises were given but unfortunately they were not delivered on.  
One of the things that the Minister of Health promised was an independent review. I want to talk about that a little today. She gave a commitment to the people of the far north prior to the last election that there would be an independent review and there has been. I must say that the review is a compliment to those who delivered it. It is very comprehensive and very structured and if it were to be followed it would actually solve a lot of the problems in the far north. The review stated: “However before Kaitaia Hospital moves from a 24/7 model”—this is with regard to surgery—“to the 8am to 6pm surgical roster several major building blocks need to be put in place at least: SMO Recruitment including Kaitaia/Whangarei rotation; A and M Clinic development; Retrieval System improvement and protocols; Increased outpatient clinic services.” Those are amongst a number of building blocks that according to the report need to be put in place with regard to Kaitaia Hospital.  
The Minister of Health made a commitment to the people of the far north that the Government would follow the report and would make sure that if there were changes in services they would be delivered that the building blocks would be put in place first and that then the current services such as the surgical services would be removed. Sadly that is not happening. Given the decision that the 24-hour services are to be removed at the end of this month and given that other services are to be taken away before the things that the report recommended be put in place have actually been put in place the Minister has said in response to the report—this was her statement just last week—that she is committed to improving emergency transfer retrieval systems. Of course we are all committed. The people of the far north do not want just a commitment; they want delivery. The Minister says she is committed to increasing outpatient clinics at Kaitaia. That is good but we need delivery of the service. We need the promise that the Minister made with regard to Kaitaia Hospital fulfilled. The Minister of Health says that she is committed to co-locating general practitioner services at the Kaitaia Hospital. I am pleased that she is committed but I want the Prime Minister and the Minister of Health to actually deliver on their promises. The Minister said that she wants to see a business case developed for onsite accident and medical services. That is doublespeak political gobbledygook. I could develop a business case in half an hour. I want the Minister to actually deliver on the service. She says she is committed to a realignment of surgical services for Kaitaia. Well that is fine. The commitment is fine. I too have a commitment to the Kaitaia Hospital. I am not in a position at the moment to deliver because I am in Opposition but the Minister of Health is.  
One of the things that will finally bring this Government down—apart from a failing economy which we will see in the next 2 to 3 years and apart from the fact that some things mentioned in its vision have not been delivered on—is the issue of broken promises. I know that the people in the far north who supported Labour because the Minister of Health made a commitment to them prior to the last election will certainly be disappointed. They know that this Minister of Health this Prime Minister and this Labour Government are not standing by the commitment they gave with regard to Kaitaia Hospital. I say this to the members on that side of the House: one of the expectations of the Labour voters in the far north was that Labour would stand by its commitment. The far north is one of the most deprived areas of New Zealand. It has a significant Maori population as the Minister of Maori Affairs knows. The people of the far north thought they would get delivery on the promises made to them but they will be disappointed. 
Hon DAMIEN O'CONNOR (Minister of State) 
: 
 It is an honour to be the last speaker in the debate today after some very interesting debate. However I have to say also that sometimes one is ashamed to be in this House. When I heard ACT and the National Party trying to make cheap political gain at the expense of people who unfortunately have lost their lives I felt ashamed to be here and I apologise to the families of those people who have lost their lives.  
I shall just round up on the Prime Minister’s statement which was very clear. We laid out three key principles that this country is looking for. In relation to stable government I acknowledge the support and help from Progressive from United Future and from the Greens at times in enabling us to run a stable Government in this country. We have shown strong leadership not only through the Prime Minister and Cabinet but through the fact that we are prepared to make the hard decisions and shift the direction of this country that the National Government had set it on for some 9 years to put it back on a track of social conscience of public health and of innovation and growth in our economy. The third thing that we are going to endorse and focus on is smart active policies not the flat Earth brain-dead approach of the National and ACT parties which think that the market will deliver this country into the future.  
Every successful nation around this world has had smart active policies and that is what we have set about putting in place for the last 3 years and we will do so not just for the three terms of Government that the Leader of the Opposition Mr Bill English talked about but for four five and six terms of Government and we will be really humming then.  
We now have an unemployment rate of 4.9 percent. That is the best unemployment rate that this country has seen since 1988 and it is because we have smart active policies. We are prepared to make the calls when necessary. The unfortunate thing about that low level of unemployment is that we have exposed once again some skill shortages throughout this country. That is because the National-ACT Government and New Zealand First throughout that period did not acknowledge— 
Hon Ken Shirley 
: I raise a point of order Mr Speaker. We have had previous rulings on that. The member referred to the National-ACT Government. That is factually wrong. There has never been a National - ACT Government. 
Mr SPEAKER 
: No that is a point of debate. 
Hon DAMIEN O'CONNOR 
: I acknowledge that. There never will be an ACT Government. The National Government supported by ACT thought that the market was going to deliver the skills in industry. Well it failed and now we are having to put back in place one of the things most appreciated by the electorate and that is a Modern Apprenticeships scheme. We have been proactive and by the end of this year we will have put 6000 people into skills training.  
In health we are going to invest the best part of $3 billion of extra money in health services up and down this country. We will not answer every single health ailment and challenge that this country can throw up but we will be a long way further ahead than we would have been under the National Government supported by ACT. For years and years—in fact probably for centuries—we have heard that prevention is better than cure. It is such a simple saying. We all understand the value in it but no one had ever done it in health until we came along.  
Hon Ken Shirley 
: Oh for goodness’sake. 
Hon DAMIEN O'CONNOR 
: One of the first things we did was put in place a primary health - care strategy. I say to the Hon Ken Shirley that he had the opportunity in cooperation with the National Party to put in place a primary health-care strategy. Did he do it? No he did not. Did the National Government do it? No it did not. Did we do it? Yes we did. We have put in place a primary health-care strategy that says that the first point of contact for any New Zealander is with a primary health-care provider and that is often the best way of preventing far more complex and expensive health outcomes down the track. Prevention is better than cure. We should get in with the general practitioners and the nurses. We should get out there and try to encourage and support those people. That is what we did in rural primary services.  
John Carter 
: What about Kaitaia? 
Hon DAMIEN O'CONNOR 
: We are spending $400 million on primary health-care and in rural primary health-care we are spending $32 million to help Mr Carter get general practitioners and nurses in the far north. Yes we are doing that. We are giving them better rosters. We are paying money to them and acknowledging the extra pressures they have been put under. Did Mr Carter do that? No he did not.  
Not only in health but also in education of course we have made a huge commitment to shift from a philosophy of competition delivering education to every New Zealander. What a bizarre theory. For many years we have understood that cooperation between schools between officials and between parents has enabled most New Zealanders to make good gains in education. However the competitive model brought in by the previous Government saw division. It saw some schools getting better resources while some schools were starved of resources and we were heading backwards. The National Certificate of Educational Achievement (NCEA) is a somewhat controversial concept but we are going to implement it. Most thinking principals and thinking teachers—which most of them are thankfully—understand the value of the NCEA. It will be in place with support measures from the Ministry of Education. Schools and teachers will not be cast out on their own to look after themselves as happened under the previous Government. We will do central purchasing. We will have property management. We will do all of those things to take some of the pressure off teachers.  
Of course we have to pay for all of that. So where do we get the money from? Well the rural sector is in the healthiest state that we have seen for many many decades. The National Party is the so-called champion of the farmers but it failed and farmers delivered the National Government a clear message: “We don’t want you. We’ll support Labour.” If we have a look at the votes farmers voted for us and we have delivered. We have seen growth in the agriculture horticulture forestry and fishing sectors. All those primary sectors are booming and are grateful for the attention that this Government has paid to them.  
Mr Hide from the ACT party has claimed that the West Coast is down and out. I can tell the House that we are doing very well. This debate has exposed a couple of things in this country: first that we have a strong visionary Government; second that the National Party is a dinosaur—it is down and out. I imagine that attending a National Party caucus must be a bit like going back to an old school reunion—people hang around thinking they have something in common they talk about it for a couple of days then they realise that that was in the past and they have to move on with their lives. That is exactly what Gerry Brownlee and Don Brash are doing. What are Nick Smith and Maurice Williamson doing? Maurice Williamson is getting on with his life. The heart and soul of the National Party is long gone along with the spirit that one thinks might be recaptured when one goes back to an old school reunion. It just cannot happen and one has to move on.  
I also have to comment on the ACT party. It is trying to be the party of Opposition. It is the party of principle—so we hear. It is the party that was outraged by one of its members going to a fashion show in Sydney. Among other things of course she went to a fashion show in Sydney. The leader of ACT said: “I would never have given her leave. Absolutely not.” However he was quite prepared to give leave to Mr Rodney Hide to attend a conference of fraudsters and con artists in Fiji. What did the leader of ACT say then? He did not say a thing.  
ACT is the so-called party of principle but if we have a look at ACT Richard Prebble no longer has any credibility. Let us have a look at rail. Richard Prebble said that he had to save rail from the inadequacies of the workers. Do members know what we are facing now? We are having to salvage rail from the excesses of the bosses. Richard Prebble has not saved anything. This Government is strong and we will lead this country for a long time into the future. 
Mr SPEAKER 
: The time allocated to the debate has expired. Members may wish to refer to page 2 of the Order Paper. The first question is that the amendment to the amendment to the amendment—that is the Hon Roger Sowry’s amendment—be agreed to. 
Amendment agreed to. 
Mr SPEAKER 
: The question now is that the amendment to the amendment—that is Jeanette Fitzsimon’s amendment—as amended by Roger Sowry’s amendment be agreed to. 
A party vote was called for on the question  
That  
all the words after the words “this House has no confidence” be omitted and the following words substituted: “in the Labour-led minority Government because of its determination to allow the release of genetically engineered organisms exposing our health our environment and our economy to significant risks; because despite there being some positive elements in the Government’s programme its economic policies fail to address poverty and inequality; because it has failed to demonstrate any significant leadership in its programme of action on sustainable development fails to invest in our young people with a tax funded tertiary education system continues to perpetuate treaty grievances in areas such as Ngawha; and continues to erode New Zealand’s sovereignty by using New Zealand forces to support US-led operations in the Gulf by trading away New Zealand’s rights through secret GATS negotiations and by supporting corporate globalisation policies which endanger our unique identity and that this House opposes the sale of shares in Air New Zealand by the Government to Qantas.” 
Ayes 9 
Green Party 9. 
Noes 110 
Labour 52; New Zealand National 27; New Zealand First 13; ACT New Zealand 8; United Future 8; Progressive 2. 
Amendment to the amendment as amended not agreed to. 
A party vote was called for on the question That all the words after the words “this House has no confidence” be omitted and the following words substituted: “in the Labour minority Government because of: (a) failure to support New Zealand’s exporters and hence exports are declining; (b) its failure to provide proper training and education for New Zealanders resulting in excess immigration to New Zealand; (c) its failure to resolve issues surrounding the so-called principles of the Treaty of Waitangi; (d) its failure to recognize social ills in New Zealand resulting in increased youth suicide lack of skills for youth in New Zealand and a decline in self-respect for youth; (e) the breakdown of law and order and the failure to support our police force with adequate resources;” (f) the decline in conditions for the poor in New Zealand highlighted by the increase in fees for the NCEA and decline in housing and health standards and; (g) its lack of support for agriculture in New Zealand 
.” 
Ayes 40 
New Zealand National 27; New Zealand First 13. 
Noes 79 
Labour 52; ACT New Zealand 8; Green Party 9; United Future 8; Progressive 2 
Amendment not agreed to. 
A party vote was called for on the question  
That  
this House expresses no confidence in the Labour - United Future minority Government because it has done what it came to do and now lacks vision and purpose because it has outlined a legislative programme which undermines New Zealand’s ability to grow an economy that supports business and high-quality health and education and because the Prime Minister refuses to explain her Government’s policies on the Treaty of Waitangi and the future role it will play in our nation 
. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 71 
Labour 52; Green Party 9; United Future 8; Progressive 2. 
Motion not agreed to. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I raise a point of order Mr Speaker. Since the vote has been taken I notice that the ACT party voted eight with Mrs Awatere Huata in the House. I take it that the ACT whip can assure us that the ACT’s eight votes included Mrs Awatere Huata because if it did not she cannot be in the House and not be voting. 
Hon KEN SHIRLEY (Deputy Leader—ACT NZ) 
: 
 The Standing Orders are very clear on this matter and there have been numerous previous rulings. It is the prerogative of the party whip to call the vote. It has been called. That is the end of the matter. 
Mr SPEAKER 
: Yes the Speaker is not concerned to know the reason a party has not voted its full strength. 
Hon JOHN TAMIHERE (Minister of Youth Affairs) 
: 
 I raise a point of order Mr Speaker. One point of clarification on the point of order raised by the Leader of the House: I did not hear the Clerk call “Were there any other votes?”. 
Mr SPEAKER 
: Yes he did. I heard it. 
Local Government Law Reform Bill (No 2) 
Referral to Local Government and Environment Committee referral to the Local Government and Environment Committee 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That Government Order of the Day No. 1 be discharged and that the Local Government Law Reform Bill (No 2) be referred to the Local Government and Environment Committee for further consideration.  
I raise a point of order Mr Speaker. I had intended to move that the bill be referred back to the Government Administration Committee subject to other parties supporting leave for parties not on that committee to be represented. ACT indicated that it would refuse that leave. I am therefore moving this bill to the Local Government and Environment Committee which has all other parties on it. 
Hon KEN SHIRLEY (Deputy Leader—ACT NZ) 
: 
 As a matter of clarification; my understanding of our Standing Orders is that when we have a referral motion of that nature the consideration of the select committee the bill is referred to is confined specifically and tightly to the matter contained within that bill—that it is confined exclusively to that matter and cannot be expanded to include other matters. Is the House quite clear that that is the situation? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Certainly the select committee is confined in that respect subject to two considerations: firstly I will be seeking leave after this motion is passed if it is passed to expand the scope; and secondly of course it is perfectly open for the Government at some point to move a motion in the House instructing the select committee. 
Mr SPEAKER 
: The member is correct. 
Motion agreed to. 
Instruction to Local Government and Environment Committee 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I seek leave that the Local Government and Environment Committee in its consideration of the Local Government Law Reform Bill (No 2) have power to consider and if it thinks fit adopt any amendments relating to the control and care of dogs. 
Mr SPEAKER 
: Leave is sought for that purpose. Is there any disagreement? There is not. 
JOHN CARTER (Senior Whip—NZ National) 
: 
 I have listened carefully to the explanation given by the Minister with regard to this bill being referred to the Local Government and Environment Committee. I understand that he did not seek leave for it to go to the Government Administration Committee because one of the parties would not support the leave. I think it would be useful if the bill were referred to the Government Administration Committee rather than the Local Government and Environment Committee. Given that we have just passed a motion I nevertheless seek the leave that the Local Government Law Reform Bill (No 2) be referred to the Government Administration Committee. I seek the leave of the House for that to happen. 
Mr SPEAKER 
: I presume that means with the proviso that every party be represented on the committee as explained by the Hon Dr Michael Cullen. 
JOHN CARTER 
: Yes. 
Mr SPEAKER 
: I have to seek the leave of the House to revoke the previous motion which was passed unanimously. Is there leave to put the question again? Does anyone object? There is objection. The original motion stands referred. 
Appropriation (2001/02 Financial Review) Bill 
First Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Appropriation (2001/02 Financial Review) Bill be now read a first time. 
Bill read a first time. 
Health (Screening Programmes) Amendment Bill 
First Reading 
Debate resumed from 15 October 2002. 
Dr LYNDA SCOTT (NZ National—Kaikoura) 
: 
 It is with pleasure that I rise again to continue my speech on the Health (Screening Programmes) Amendment Bill. I was last in this House debating the first reading of this bill on 15 October 2002 so it has taken a very long time for this bill even to make it through a first reading stage to be sent to the Health Committee. I think that shows how slowly things are moving in this Parliament. The issue and views that will be expressed about this bill will be a cry from some members of the public for openness versus the need for a professional low-key review of screening programmes.  
The reason reviews and audits are needed is to ensure that screening programmes are working appropriately. This bill is to assist the operation and evaluation of the National Cervical-screening Programme but it can be extended to other programmes in the future. The basis of this bill goes to the heart of two matters: the need for informed consent and the need to pick up faults and deficiencies of an individual or systemic nature in any programme. Informed consent gained major prominence with what became known as the “unfortunate experiment” and the Cartwright inquiry into cervical cancer treatment. The 1995 regulations relating to cervical screening forbid the disclosure of any protected information and this is at the heart of the informed consent issue. When a woman goes to have a cervical smear she signs up to a register. Certainly when I signed up to the register I thought it meant that my information could be looked at. However there seemed to be uncertainty about the ability of an auditor to access the information and audit the national screening programme. So although individuals may have thought that they were consenting for an auditing of the screening programme when some of the powers that be looked at the situation more closely they felt that was not the case and a great deal of debate around the law occurred.  
The results of not auditing were clearly shown by the under-reporting of cervical smears in the Gisborne region and those centred on the practice of one doctor. Dr McGoogan who did the external investigation into the Gisborne cervical smear situation outlined the essential components of a screening programme that were lacking and those included: no compulsory equality assurance for laboratories; poorly designed management structure with split responsibilities; and no central computerised registration. There was a failure to gather reliable relevant statistical information to monitor and evaluate all parts of the programme’s performance routinely and to have the appropriate legal powers. That is why we are here in the House today debating the Health (Screening Programmes) Amendment Bill. We are talking about changing and correcting those problems so that the legislation that currently regulates the programme and which is prohibiting valuable information from being collected will be changed. That information is required for monitoring and evaluation and it needs to be able to be disclosed to an independent evaluation team. 
The bill once passed will give the ability to monitor and evaluate any screening programme effectively. This means that evaluators can look at patient notes and check for those patients who may have gone on to develop invasive cancer. We have a very high death rate from cancer in this country. I encourage anyone in New Zealand who is listening to accept screening programmes and get themselves screened under cervical screening and breast-screening programmes because it does reduce the cancer death rate. But we do need to be able to audit how well those screening programmes are able to improve the situation. There are false positives and false negatives in a screening programme. That means that sometimes a positive is not actually a positive or sometimes something is missed and although the result looks like a negative it is actually a positive. It is not an absolutely exact science. That is why some doctors are worried. In this name-shame-and-blame culture that we are trying to change but that still exists in New Zealand to some extent they are worrying that they individually may be held accountable for systems errors.  
The ministry has a desire for open audit and that means that it has needed to negotiate carefully with the medical profession over the issues. I am sure we will hear from both groups when the bill goes to a select committee. National supports the bill in its first reading. 
STEVE CHADWICK (NZ Labour—Rotorua) 
: 
 I am pleased to be speaking in the interrupted debate on the first reading of the Health (Screening Programmes) Amendment Bill. It has certainly been interrupted—from May 2002. So it is quite difficult picking up on these bills again. This bill is a direct result of the Gisborne inquiry that occurred in April 2001. The inquiry very clearly concluded that by far the most important stage required to make the National Cervical-screening Programme fully effective is the removal of legal barriers that are preventing the comprehensive evaluation of the programme from proceeding. The removal of those legal barriers was definitely what we looked at and moved very quickly on by way of this bill.  
The National Cervical-screening Programme began in 1990 as a direct result of an area health board approach to population health-based planning. It was a very extensive programme which I was very aware of in the Bay of Plenty. It was all about setting up a programme register that recorded laboratory tests and smears from colposcopy findings and held all recordings from laboratories hospitals and cancer registers. The point of this bill which very clearly arose from the Gisborne inquiry is that we really need to make sure that women are informed about what happens to their cervical-screening results their actual smears their cell samples and any subsequent follow-up and treatment. It did set up the cancer register for cervical-screening. The point is that all women are automatically enrolled on the screening programme—that is all their results. We do want women to have the right to opt off any screening register. If they opt off then all that is left behind is minimal contact details so that we can follow up those women.  
The purpose of a screening register is that one day it can be extended to cover other health issues. This matter was certainly raised during the Parry inquiry that I was on but at this time the Government has no plans to extend the cancer cervical-screening register to other conditions. However at that stage in the Parry inquiry Phillida Bunkle consistently supported the establishment of a general and comprehensive national cancer register.  
The screening programme was very innovative when it was first established. It was part of a Labour-led initiative following on from population-based programmes that were set up by area health boards. It looked at health promotion smear taking the purpose of taking biopsies and the management—that was the important thing—of abnormal smears. We need to be reminded that 220 to 240 women suffer from cancer of the cervix each year. The major issue for us is that of informed consent with the practitioner and that is addressed in the bill. When a woman decides that she needs a smear taken by her general practitioner her midwife or a practice nurse—in fact there are 5500 smear-takers—it is very important that the smear-taker informs the woman about what will happen with the results of her smear and that she will be part of a large population-based programme. Those programmes will only ever be effective if we have really high levels of enrolment and coverage over a wide area. 
Then we need to ensure that we have really high-quality screening and very very good follow-up services. The ultimate aim is to have regular evaluation of the programme to make sure that it is happening as we envisaged it would. Forty-six recommendations came out of the Gisborne inquiry. Annette King had also enlisted the services of Dr Euphemia McGoogan to review the evaluation of how well those recommendations were being implemented. At the same time a Ministry of Health audit was looking at the histories of about 350 women with invasive cervical cancer from January 2000 to September 2001.  
When we look at the statistics of this disease it is very important to note that cancer of the cervix is one of the most preventable forms of all cancers and 90 percent of cases of common cervical cancer are preventable if detected at an early stage and then treated appropriately. In the 10 years from 1987 until 1997 cervical cancer rates dropped by 39 percent but the number of deaths dropped by 44 percent. The programme itself has gone through substantial improvements over the last 3 years as a result of various inquiries and also the Ministry of Health’s approach to continuous quality improvement but several more steps need to be undertaken.  
In conclusion I urge that we cannot continue to watch the numbers of women who develop cancer of the cervix each year and do nothing more about it. The whole rationale for the Gisborne inquiry the Parry inquiry and the Ministry of Health inquiry has to have been to improve the programmes that we currently have in place. Further steps are needed to back up the programme and we are undertaking those with the support of the ministry. This bill will be another step along the way to ensuring that we can treat the disease early that women are well informed about what happens with their health record and that practitioners in the field researchers and evaluators can access records and make sure that treatment is the very best that New Zealand can offer those women. We need to make really sure that all women understand that they are automatically enrolled in the cervical screening programme that they do have the right to opt off with minimal contact being left on the register and that under the provisions of this bill external researchers and evaluators will have access to the records to make sure that the programme which should be comprehensive is being undertaken. Therefore I support the referral of this bill to the Health Committee. 
BARBARA STEWART (NZ First) 
: 
 I am pleased to speak to the Health (Screening Programmes) Amendment Bill. New Zealand First will support the referral of the bill to the select committee. It is a very worthy bill and it is long overdue. It is of particular interest to the members of New Zealand First as we like many other New Zealanders have experienced and know of women and their families who have suffered and are suffering from this tragic cancer. We will be very interested to hear from the various submitters on this bill and to work through the submissions. As we heard from the previous speakers cervical cancer is one of the more common cancers suffered by women and all the research indicates that if the disease is detected early enough many cases are curable. 
The devastating effects of the disease upon women and their families are tragic. New Zealand First believes that the operation of the National Cervical-screening Programme and other programmes to which this bill may be later extended is absolutely essential for the health monitoring of all—at this stage female—New Zealanders. We are pleased to note in the bill that the system will be set up so that it can be extended. New Zealand First would like to see those screening programmes extended at some later date to include for example prostate cancer hepatitis B asthma diabetes and osteoporosis. We believe that it is in the best interests of all New Zealanders that the screening programmes are extended to include those diseases and perhaps even more at some later date. 
This legislation with its monitoring and auditing of practices and results should assist in the elimination of the chronic under-reporting that we saw in the Gisborne region and of the misdiagnoses that came to light in the Northland area. At this time tragically those publicised incidents cannot be considered to be isolated cases. That is totally wrong for our health system. We cannot afford to have misdiagnosis and under-reporting slipping through cracks in the system as has happened in the past. We need to learn from the mistakes of the past and not repeat them. This bill with its evaluation and auditing provisions should address that aspect.  
Early detection of problems is the best way to detect precancerous conditions that can often be treated before cancer develops. It is to be hoped there are sufficient numbers of fully trained staff available in New Zealand to provide that service and if not that a systematic strategy has been developed to address the shortfall. I know that the Minister has commented before on addressing that in the House but the bottom line is that we the people of New Zealand do not want to have to be dependent on Australia or to have to travel to Australia to take advantage of any screening programme. A high-quality screening assessment and treatment programme to reduce the incidence and mortality rate of cervical cancer is essential in New Zealand.  
The creation of a register to enhance screening programmes will be beneficial to New Zealand women. However the Ministry of Health must put safeguards on its use as records of that nature are confidential and the system used must be fully explained to the public and the women of New Zealand. Already I have read news items on that very point. We in New Zealand First believe that clinical records only should be noted in a register such as that and that no other general personal or medical information that relates to the individual should be included in the register. It will be absolutely critical to ensure that the confidentiality of the register is maintained and that safeguards are put on its use. The bill will evaluate the procedures and results against predetermined standards and will then enforce those standards which is a giant leap forward from what is presently in place.  
The number of people participating in the programme is also an indication of the effectiveness of any programme—in this case the percentage of women in the target age group who have participated in the screening process on an annual basis. If increased participation rates in the programme can be achieved a reduction in the death rates in the long term will then be possible because it is then and only then that this programme will be considered to be successful. That means that promotion of programmes outlining the benefits of screening must be systematically planned on a national basis. Living with a serious disease is not easy. Cancer patients their families and those who care for them face many problems and many many challenges. The bottom line is that early detection followed by timely effective treatment is essential for a reduction in the mortality rate to occur. Everybody in New Zealand deserves access to the best and most accurate testing methods available so that they can make the most appropriate health-care decisions. With promotional education programmes and regular screening hopefully many cases of cervical cancer should be detected in the very early stages.  
It is important for the well-being of the health of New Zealand that this bill proceeds. In reality the problem affects every New Zealander. Providing people with certainty about their health care and ensuring timely access to quality services is absolutely essential. New Zealand First supports the referral of this bill to the select committee. 
JUDY TURNER (United Future) 
: 
 United Future believes that the National Cervical-screening Programme and legislation relating to it are incredibly important and contribute to the well-being of women between the ages of 20 and 70. United Future members recognise the need to ensure that the programmes are serviced at the highest most accurate and efficient manner in order to help both research and the women who undertake the screening process.  
United Future acknowledges the aim of this amendment bill as being to assist in increasing the quality of the operation and evaluation of the National Cervical-screening Programme in New Zealand. We see the legislation as doing that because it will appoint a nationally organised screening programme that will enable information to be accessed by operators and evaluators and its provisions will be able to be extended to other screening programmes which is a very far-sighted inclusion in the bill.  
United Future supports the basic principle of the bill which will address previous instances where the screening programme has failed due in part to a lack of routine evaluation as in the case of Dr Bottrill and the subsequent findings of the Cull report. We acknowledge that much personal tragedy instigated the inquiry that has resulted in this bill. We note that the bill asks for an increase in research data for the well-being of all women in New Zealand now and in the future. We also note the request that research data be more readily accessible within the research and evaluation team and that as a consequence in some instances women will have their cervical data used without prior approval. We have been assured that that will not be the norm but we will demand that privacy for women is paramount to this legislation and that data is accessed without prior consent only when there is no alternative. We would like to discuss further the processes involved with the reasonable attempts to seek consent from women for their results. We will be seeking to have this assurance detailed in the legislation. However we support the move to utilise all data available for the greater good of research and agree that the time and resources spent seeking consent may be better utilised. 
We would like to discuss further the privacy issue and the consent of information being released for research in the select committee. We understand the reasoning for the director-general having some discretion to release and work with data without the consent of every woman but we believe that this is a contentious issue and will seek further clarification and detail to ensure that all the rights are reserved. In supporting the national screening programme amendments we will be making every attempt to make sure that women are given every opportunity to have an absolute understanding of their rights and/or of the processes of the bill at the initial appointment made with the doctor. United Future will be looking closely at the way in which the implementation of the register is designed particularly at the way in which the manager will enforce and consent on information that is to be accessed by and shared amongst evaluators. United Future would like to understand further the selection of evaluators and the training that will be involved to ensure that the standards are nationally upheld. We understand that incomplete screening history impedes on the comprehensive evaluation of screening programmes. However we consider that the right to opt off is an imperative right for women. We believe that the screening programme needs to continue to advocate the benefits of having longitudinal results but we appreciate women’s rights to choose. We would like to look further into how data may be collected for those women who want to opt off. We believe that there is an opportunity to collect information about women who opt off as a qualitative longitudinal study that may show regional ethnic and age brackets that may be used as an evaluation to the success of the screening programme. 
We are also interested in the protection of Maori women by the kaitiaki group. We would like more information on how Maori protect and treat screening data appropriately. Is this aggregate data or data on an individual level? In what situations are they reliant to provide data for cervical-screening data analysis process? What if Maori women who identify themselves as Maori in health screening forms want to be included in the national screening programmes? Do they have the choice or are all Maori women automatically under the auspices and the control of the kaitiaki group? We would like to discuss further how research is often used to marginalise Maori women as quoted by the Ministry of Maori health manager Teresa Wall in the  
Daily News 
 on 4 April 2002. For the comprehensive development of health research and for the increased well-being of all women in New Zealand now and in the future United Future strongly supports the bill going to the select committee. 
HEATHER ROY (ACT NZ) 
: 
 The Government tells us that the aim of the bill is to assist the operation and evaluation of the national cervical-screening programme. The bill also addresses the extension of these provisions to other screening programmes. The aim of screening programmes is of course to detect abnormalities early so that they can be referred for treatment early. It is informative therefore to look at the number of cases of cervical cancer diagnosed over time and also at the mortality rate. International comparisons are also useful. In 1995 New Zealand had the second highest rate of death due to cervical cancer of the OECD countries—a rate of 4.2 deaths per 100000 of population. From 1989 to 1998 the mortality rate for cervical cancer decreased within New Zealand by 27.5 percent. There may be many reasons for that—among them perhaps the introduction of the Cancer Registry Act of 1993 under the then National Government. The World Health Organization has the following to say about cervical screening: “Screening with adequate follow-up therapy can achieve major reductions in both incidence and mortality rates.” ACT New Zealand will therefore support this bill at its first reading but we have grave reservations about many of its provisions. I will go on to point those out.  
Much concern has been expressed recently about the quality of health screening programmes in New Zealand—cervical screening in particular. This bill addresses the political concerns but not the issues behind the failure of the current screening programme. The current programme was set up because of a need to be seen doing something about cervical cancer but international guidelines were ignored experts within New Zealand were not consulted and most important there was no adequate system of quality control. Those failings were brought to attention with the report from the Gisborne cervical-screening inquiry and the recent inquiry. The current bill is a response to the Gisborne inquiry but it risks creating another political response to a medical problem. Once again the desire to be seen to be doing something overtakes more practical considerations.  
The first point to make is that there is a moral hazard in having one organisation both provide and evaluate a service. Under the provisions of this bill the Ministry of Health could be charged with producing a New Zealand cervical cancer register running the register itself and being responsible for evaluating the process. There would appear to me to be a conflict of interest. It would be better to have a contract with an independent organisation to provide a screening programme and a separate contract with a separate organisation to audit the programme.  
I appreciate that the Government might find it unpalatable to deal with a profit-making organisation even if it were to provide an excellent service. We in ACT do not have that philosophical handicap and believe firmly that such a contract should go to those able to provide the best quality service for the best price. However there are organisations that this Government could well do business with—for example university departments with the relevant expertise. My point is that the Ministry of Health does have a conflict of interest. Human nature being what it is people have a high opinion of their own work. For a national screening programme to be successful that matter must be addressed.  
There is little doubt that the present screening programme has been inadequate. Quality control was of major concern in the Gisborne inquiry. One could well ask where was the quality control? Why was Dr Bottrill’s under-reporting not picked up earlier? He was after all participating in the national cervical-screening programme. Was the current screening programme working effectively anywhere in the country? I know from my own experience as a participant in the programme that it has been woefully inadequate. I recently received my recall notice—2 years late.  
Although this Government has released a series of statements describing action on the recommendations of the Gisborne inquiry it has ignored the criticisms made of the Ministry of Health by that inquiry. Many of those criticisms were very sharp. Let me quote: “During the first session of the committee’s public hearings it was advised that Professor David Skegg from the University of Otago was attempting to carry out a cancer audit of all the cases of cervical cancer from the Gisborne region. At that time Professor Skegg thought that was the best way to determine whether there had been an unacceptable level of under-reporting in the region. A cancer audit would also have revealed any errors in the reporting of other laboratories. However the cancer audit could not proceed as Professor Skegg was unable to gain access to the information he needed to carry out the audit.”  
The ministerial inquiry into the under-reporting of cervical-smear abnormalities in the Gisborne region concluded that an audit of cases of cervical cancer was the best way of measuring the effectiveness of a cervical-screening programme. In fact I would go so far as to say that there is no point in having a screening programme if the results cannot be evaluated. That would mean having all the cost with none of the benefit.  
However within the community there are widely ranging opinions about the process of audit—in particular with the issue of consent. In the 25 January 2002 edition of the New Zealand Medical Association journal Associate Professor Charlotte Paul of the University of Otago Medical School made the following comments: “It is disturbing to see now that the Government has ignored both the letter and the spirit of the advice of the Gisborne ministerial inquiry. Indeed it has made a decision which flies in the face of that advice—that ready access to medical files for audit must be permitted. The Cabinet decision released on 3 October 2001 now requires that consent must be sought from women with cervical cancer to assess their medical files for audit and the consent of their next of kin must be sought if they have died.” She goes on to say: “Cervical screening will now become the most difficult service to audit.”  
However the Federation of Women’s Health Councils has criticised the new bill for leaving the way open for auditors and evaluators to access hospital records without women’s consent. The bill addresses enrolment on the national register by having an opt-off policy as opposed to the current opt-on policy. That emphasis has wide-ranging implications for women’s rights. The legislation must ensure that each individual has the necessary information to allow her to participate in the programme or if she so wishes not participate.  
I hasten to add that there is reason to be cautiously optimistic about cancer of the cervix. The rate of new cancers has fallen during the last 10 years for which full figures are available. The rate has fallen by about one-third which is extremely encouraging and suggests that the current process of screening intervention may be producing results. The question we have to ask is will that process be aided or retarded by a national register run by the ministry? It is quite possible to leave individual doctors to take action on their own account and it would be better to do that than to have a poorly run national screening programme. A badly run programme would generate conflict and create uncertainty as to where responsibilities lie.  
ACT New Zealand supports the passage of this bill to the select committee stage but we will be pushing for independent audit and scientifically based evaluation. We remain unconvinced that the Ministry of Health is the appropriate organisation to run this programme. We also want to see a complete resolution of the issues regarding privacy. To embark without a clear understanding on privacy issues risks the creation of a programme that generates cost but cannot progress because nobody is allowed to talk to anyone else.  
DARREN HUGHES (NZ Labour—Otaki) 
: 
 I am pleased to speak in support of the bill which as members have said comes as a direct result of the Gisborne inquiry. The Gisborne inquiry was called for by the former Minister of Health the Rt Hon Wyatt Creech when he was deputy leader of the National Party. Following the change of Government the inquiry reported back to the Hon Annette King focusing on what happened in Gisborne through the 1990s up to the point where Dr Bottrill retired from practice. The inquiry came up with 46 recommendations for the Minister of Health to consider and this Minister has worked through many of those recommendations trying to get as many through as possible. The bill we are debating today contains a number of those recommendations. The bill is needed to enable improved evaluation of the screening programme and it is clear from the outcome of the inquiry that that needed to happen.  
I will pick up on Mrs Roy’s comment that the Government is rushing to make it look as though it is doing something and has not consulted enough people. I note in the explanatory note of the bill that a public discussion document was released and that there were 101 submissions on it from key stakeholders and members of the public. Consultation was undertaken with various Government departments and agencies and selected professional and women’s groups—that last part is very important as well. Those stakeholders were part of the process that has led to this bill taking place. It will go to the Health Committee so if the ACT party does not believe that there are enough privacy safeguards in the bill I hope it will come up with very concrete detailed suggestions for the select committee process so that we can make sure we progress the bill and deliver on the spirit and recommendations of the Gisborne inquiry.  
I am proud that Annette King is taking a very sensible approach to getting this inquiry through. I support the bill. 
SUE KEDGLEY (Green) 
: 
 The Green Party will support this bill going to the Health Committee. We too consider that although it is a technical bill it is an important bill. It addresses some of the extremely serious flaws in the operation of the cervical-screening programme which the Gisborne inquiry identified. It also seeks to remove the legal barriers that prevent the comprehensive evaluation of the screening programme from proceeding—which after all was one of the major focuses of the Gisborne inquiry.  
We strongly support the move to restore confidence and to strengthen the national cervical-screening programme. We support the objectives of the screening programme and its focus on continuous quality improvement. We very much support the fact that the bill obliges health practitioners to provide information to women about the risks and benefits of participating in the programme and that it gives women the option of opting off the screening register.  
We support the provisions that allow for the comprehensive and full evaluation and monitoring of the programme because without proper timely monitoring and evaluation we cannot have confidence in the national register. As the previous speaker suggested there is obviously no point in having a national register if we are not sure that we can be totally confident in it. In that regard we are extremely concerned that the evaluation of the national screening programme has still not been completed. It is worth reminding ourselves that until the evaluation of the programme has been completed there is no way of knowing whether the programme is safe for all women or whether there is or has been systematic under-reporting of abnormalities in laboratories in other parts of New Zealand.  
The delay in evaluating the programme which has been commented on by the independent auditor and others calls into question the value and purpose of the entire national cervical-screening programme. What is the purpose of women having regular smears if they cannot have confidence in the screening programme and if they have no idea at the end of the day whether their smears have been accurately read?  
One of the themes of the Gisborne inquiry was the failure of the Minister of Health over a period of 10 years to monitor and evaluate the national screening programme. The truth is that had it been properly monitored the problems at the Gisborne laboratory undoubtedly would have been identified earlier. Some researchers have estimated that proper monitoring would have saved at least 10 deaths a year. The Green Party gives extremely high priority to finally completing the audit and to making changes that are needed to allow for the comprehensive evaluation of the national screening programme.  
Having said that this bill does raise complex issues of privacy and consent as previous speakers have said. A key issue raised in the inquiry and subsequent to it was whether outside researchers can get access to information from the screening register that could identify individual women. The uncertainty about that question has prevented researchers from assessing how many women are getting cervical cancer despite the fact that they have been screened.  
The question of how much health information evaluators should have access to as of right is a complex issue. On the one hand it is essential that health information evaluators have access to the information they need to properly evaluate the programme but on the other hand women do have a right to total privacy. Indeed the New Zealand Bill of Rights Act states that people have a right not to be experimented on and the concept of experiments could arguably be extended to include accessing records because researchers could conduct experiments on clinical test results.  
We consider that the privacy issues are extremely important. Like New Zealand First we want to see clinical records only on the register. We do not want to see any other general information. We have concerns about giving automatic access to hospital records relating to diagnosis and treatment which is presently provided for in the bill and to primary-care providers where that access does not have the explicit consent of the women concerned. Those are contentious and important issues. We will be listening closely to submissions on those issues. We have concerns too that the provisions of the bill can be automatically extended to any other screening programme simply by the very secret procedure of an Order in Council. It is absolutely crucial that we get this bill right and that we resolve those issues well. 
We also have concerns that the director-general has discretion to release data without the consent of women in some instances. We look forward to debating all of these issues in the select committee. We do have an open mind and will be listening carefully to the arguments as other speakers have indicated they will as well. We also have concerns about the Ministry of Health both running the programme and being the monitor and the evaluator.  
While focusing on screening programmes we must not lose sight of the wider issue that we are addressing here which is the escalating rates of cancer in New Zealand. Despite the successes in reducing cervical cancer that have been referred to here the stark fact is that we are not winning the war against cancer. Many cancers are still escalating at epidemic proportions. In fact our statistics on cancer are nothing short of shocking. Deaths from cancer are increasing relative to deaths from heart disease and strokes. New Zealand cancer rates have been increasing considerably faster than those of Canada Australia the UK and the USA etc. New Zealand women have the sixth-highest death rate from cancer out of 173 countries.  
We will not bring down these horrifying statistics simply by focusing on detection and screening important though these programmes are. The only way we will see these figures come down is when we start to focus on reducing the underlying causes of cancer through cancer prevention. The World Trade Organization acknowledges that 80 percent of cancers are environmentally related so why are we not putting the same amount of energy and focus into reducing the environmental causes of cancer as we are into cancer detection and prevention? I would like to quote Professor Samuel Epstein who has written many books and who is an expert on the whole politics of cancer as he puts it. He said that the cancer establishment has been fixated on diagnosis and treatment and is indifferent or ignorant of questions of prevention. They have grossly misled the public into believing we are winning the war against cancer when nothing could be further from the truth. Cancer rates are escalating to epidemic proportions and our ability to treat and cure cancer has not materially improved for decades for the majority of cancers. It is equally unarguable that our total environment our air food water and the workplace has been permeated with a wide range of industrial chemicals over the last four to five decades.  
The good news is that the Government has finally brought out a draft cancer-control strategy. Further good news is that for one of the first times it actually touches on the issue of cancer prevention which was after all one of the major recommendations of the Gisborne inquiry. However despite this draft and despite all the talk and all the money that we spend on cancer detection and treatment very little is being done in the area of cancer prevention except in one or two areas like reducing our exposure to the carcinogen of tobacco smoke.  
We know that 80 percent of cancers are environmentally related so what are we doing? Why are we not focusing on the fact that a raft of cancer-causing substances are being used in workplaces? Where is the strategy to reduce and eliminate workplace chemicals and carcinogens? Where is the acknowledgment even that pesticides are a major cause of cancer and where is the strategy to reduce our exposure to them or to dioxin—another known cause of cancer? This Government does not even have as an objective the elimination of the sources of dioxin in New Zealand. We know that at least 60 occupations have been identified overseas as posing an increased risk of cancer. Why are we in New Zealand not focusing on those high-risk occupations and protecting workers from cancer-causing substances in those occupations? 
Dr PAUL HUTCHISON (NZ National—Port Waikato) 
: 
 National supports this bill into the House. It is considerably concerning that the bill was last debated in October 2002. That suggests the Government is not being assiduous with many of the details that are important in relation to the issues of the day. Along with that is the fact that the 6-monthly audit report that was expected at least as long ago as that has not occurred. That is also a great worry.  
There is no doubt that cervical cancer is a very significant cause of mortality in New Zealand for women and that a well-run screening programme can save lives. It is estimated that something like one in 97 women in New Zealand can expect to develop cancer before the age of 75. An expert analysis has indeed shown that without an adequate screening programme there would be 340 new cases and 116 extra deaths a year. Since the screening programme began in New Zealand cervical cancer deaths have fallen significantly. From 1987 to 1996 the incidence—that is the number of new cases reported per year—has dropped by 22 percent and the death rate by 43 percent. However cervical cancer morbidity and mortality trend rates can be very misleading. In fact cancer rates were trending downwards in all developing countries prior to screening programmes having been initiated in the 1960s. That phenomenon has been confounded by the cohort of post-war babies who have sustained a higher rate of cervical cancer for a variety of reasons.  
This bill has laudatory objectives to achieve. They are the delivery of high-quality cervical screening and treatment services the provision of information to women and the facilitation of continuous quality improvement in the national cervical screening programme. However there are warnings and lessons to be learnt. Because New Zealand has gone through substantial scandal and horror relating to cervical cancer it is absolutely vital that the legislation surrounding cervical cancer screening is indeed made as good as possible. I was heartened when I spoke to Professor David Skegg some months ago to learn that he believes the major features of this bill are appropriate. However probably one of the most important factors relating to the success of the scheme is its practical management by the ministry and by the Minister. While National supports and welcomes this bill going to the select committee it is absolutely essential that it is well scrutinised. It is vital that submissions are carefully heard and if necessary changes are made to the bill particularly in the area of patients’ rights and informed consent.  
Sadly New Zealand history reveals that our own Ministry of Health has not run an ideal cervical cancer screening system from the very beginning in 1990. A leading question is whether it would be better to have an audit unit separated from the ministry. I think the speaker from ACT has asked that question also. Wherever the unit is I say it must be under careful transparent and continuous monitoring.  
Because of the controversy surrounding cervical cancer and its early detection it is important to go over some of the more recent landmarks that have occurred in New Zealand’s history. I quote from a relevant article in the  
New Zealand 
Herald 
 that appeared on 7 November 2001. It stated that in 1998 “Judge Silvia Cartwright reports on the ‘unfortunate experiment’ in cervical cancer treatment at National Women’s Hospital … She recommends a national screening programme with a centralised register. The register would keep cytology … and histology … lab results together to ensure a reliable database.” However in 1989 Health Minister Helen Clark set up the programme in 14 locations. Instead of following then Judge Silvia Cartwright’s recommendations those locations were based on the then new area health boards. To quote the  
New Zealand Herald 
 “Because of the political haste to begin screening cytology and histology results were not combined until 1996” some 7 years later.  
Between 1990 and 1994 it came to light that women who saw Gisborne pathologist Michael Bottrill for cervical smears—like many others seen by Dr Bottrill between 1990 and 1996—were told their smears were normal. It was not until 1999 that the tests showed Dr Bottrill might have missed 129 out of 150 slides with high-grade abnormalities for cervical cancer. Former Minister of Health Wyatt Creech announced a ministerial inquiry. That inquiry took place in Gisborne between September 2000 and March 2001 and a separate report recommended the creation of one super-agency with a central database to deal with medical complaints.  
The  
New Zealand Herald  
report went on to state that in April 2001 the “273-page Gisborne cervical cancer report blames both Dr Bottrill and the national cervical screening programme. It finds Dr Bottrill under-reported smear tests but that the Ministry of Health had failed to design an effective programme for a decade which allowed Dr Bottrill’s mistakes to go unchecked. The report says health officials need access to women’s medical records without their consent to check if other labs have under-reported smears. But it surprises experts by not recommending a separate cancer control agency.” It also stated that on 3 October 2001 “Health Minister Annette King says the Government will implement the inquiry’s key recommendations. Researchers will have access to women’s records. Women will be able to opt out at any time if they do not want their details revealed.”  
It is highly relevant that the Gisborne report stated that ultimately it was the flaws in the national cervical screening programme that permitted Dr Bottrill to practise as he did. For every reason this cervical screening programme bill must be developed through the select committee process in the most optimal possible way. There are some fundamental questions to be asked of the ministry and the Minister. Already there has been a delay in the 6-monthly report from the Minister of Health. Only nine of the 46 recommendations in the report of November 2001 concerning the screening programme have been completed. I call upon the Minister to explain why the second 6-monthly summary report has not been completed. I understand that Dr McGoogan was due to make her report but that has just not happened. Clearly there have been problems within the ministry and within the unit responsible for dealing with completing the recommendations of the Gisborne cervical cancer inquiry.  
It is extremely important that the Minister of Health ensures that all information is available to the select committee so that the bill will be adequately scrutinised and optimally evolved. It is also important that the Minister and the ministry manage the screening programme far better than they have in the past and far more expeditiously than they have demonstrated over the last 6 months. National welcomes this bill being referred to the select committee. 
JILL PETTIS (NZ Labour—Whanganui) 
: 
 I am pleased to speak to this very important bill. I know we say that all bills are important—of course they are otherwise they would never ever get to the House. But this bill is important because the issue it addresses has had a very long emotional history in many respects. I am pleased that we are at this stage in the bill’s progress and I certainly look forward to it progressing through the House as quickly as possible.  
Some of us may ask why this bill is needed but I think most people in New Zealand will know the reason for that themselves. The issue of cervical cancer screening has had a huge public airing. I remember when the announcement was made about the decision at the Gisborne inquiry. I received a speeding ticket that day because I was so preoccupied with listening to the decision that we had been involved in for so many months that my mind wandered and I was not aware that I was doing about 10 kilometres an hour faster than I should have been. That announcement is one that will always remain in my mind for a variety of reasons but particularly because it was a step toward the closure of that issue which then gave rise to moving on.  
In New Zealand a high number of women develop cancer of the cervix unfortunately sometimes because of a lack of attention to our own health needs. This is one of the most preventable forms of all cancers but I think humanity still maintains that 10-foot high and bulletproof attitude and often we do not take as much care of our own health as we should. I am as guilty of that as anybody else. About 90 percent of the cases of the most common form of cervical cancer are preventable if detected at an early stage and treated appropriately.  
The national cervical screening programme was established in 1990-91 to organise cervical screening with the aim primarily of reducing the number of women who develop cervical cancer. It is pleasing to note that in the 10 years from 1987 to 1997 cervical cancer rates dropped by 39 percent and over the same period the death rate for cervical cancer dropped by 44 percent. We have heard the comment earlier today in question time about the figure of 1 percent being acceptable internationally. Of course we all want zero percent in everything if at all possible. While that is an extremely long-term and perhaps naive goal this programme certainly is already having a huge positive benefit—and long may that continue. I am convinced that women are far more aware now of that good old adage “prevention is better than cure” with regard to cervical screening. That has been brought about to a considerable degree by this programme and the very proactive and well-thought-through publicity that surrounds it.  
We acknowledge willingly that further steps are necessary in order to ensure the more successful operation of the programme and I am confident that that evolutionary process will occur with good positive gains being made. I think in the end that while this bill has had a considerable amount of time spent on it it has not been progressed as quickly as we would have liked. We have had the great New Zealand shut-down over January and I am pleased that this is one of the very first bills in front of the House this year. I am sure we are unanimous in wanting its rapid progress through the House. 
JUDITH COLLINS (NZ National—Clevedon) 
: 
 It is with pleasure that I rise to support this bill’s referral to the Health Committee. This bill which concerns cervical cancer is one of the rare occasions when it seems that all parties in the House can be unanimous in supporting it to the Select committee. I have been listening with great interest to all the speeches on this bill this afternoon and I have been particularly heartened by the contributions of Dr Lynda Scott and Dr Paul Hutchison. We are privileged in the National Party to have two such fine parliamentarians who are also very fine and informed doctors and who can help this House to understand more of the issues in relation to this bill.  
Like my colleagues I have concerns over the control and auditing of the process by the Ministry of Health and I say that for various reasons. One is that the cervical cancer screening programme that currently exists—the national cervical-screening programme—has obviously worked for a lot of women and that is a good thing. But what has been shown is that inadequate auditing and excessive amounts of concern about privacy as opposed to health have led to situations where—as in the case of Dr Bottrill’s particular negligence—so many women have needlessly lost not only their fertility but their lives and have gone through the most appalling process. There is no point in having cervical screening if it is not accurate. Inaccurate screening is worse than having no screening at all. Members will have heard of the woman named “Jane” whose case is very well known and who has gone to extraordinary lengths in an attempt to get some justice and personal responsibility from Dr Bottrill. I know Jane and her family. It is awful to see a young woman like her—with a family with young children to look after—having to go through that sort of process. It is awful to see the sort of pain that she and her family have gone through. That said it is wonderful to see the sort of bravery she has shown.  
One of the concerns that some medical professionals have in relation to this bill is what they see as an opportunity for individual practitioners to be identified. Their concern is that there will be too much emphasis on individual health professionals rather than on a system. In other words there will be too much looking for “Dr Bottrills” rather than for systemic failure. Personally I do not agree with that. I agree that if there is one thing we need in our health system it is for health professionals to take individual and personal responsibility for their actions. There is one thing that we certainly need in this country and that is for people to do that generally and stop blaming the system.  
Parliament is certainly trying to look at that issue in this bill by bringing in an auditing process but I have grave doubts about how that process will work when it is audited by the very people who are running the programme. I echo the concerns of both Dr Hutchison and the ACT spokesperson when I say that there is concern as to who is watching the watchers and that is something that we on the Health Committee will be looking at. We will be looking at what that process is going to be and who will be watching the watchers. With a screening programme for something like cervical cancer women are being told that their records are being looked at so that they can be checked. Women should be able to have a cervical screening smear and know that the results they are given are correct. They should not be told—as Jane was three times with three different smears—that they are fine when they are not fine. Jane is just one of the 129 people who were so affected.  
We have a national cancer register and that is obviously a very good thing. It helps us to have better access to information. It lets us know how we should handle health funding and where the money should be spent. There are other areas though and here I echo concerns from I think New Zealand First. If we have cancer registers then we should be looking at other sorts of registers as well particularly in relation to epidemic-type diseases like HIV/AIDS. Unfortunately diseases like cervical cancer are diseases that we cannot just sweep under the carpet and hope that they will go away. Like cervical cancer we are talking about diseases that are in many cases silent killers. There is no outward manifestation of disease and therefore people will often will not know about it unless they are properly informed and unless a register—should we have one—is properly audited.  
I agree with the speakers who have said it is absolutely correct that there be a right to opt off such a register. It is very important for women to know that their records are their records and that should they wish to be on the register their records will be accessed for a proper reason—that is for the auditing of the results in order to make sure that their results are right. They also need to know that no matter what it is their bodies; that what happens to them is their decision and that they have to have that right. I applaud that provision and hope it survives the select committee process.  
Unfortunately early death from cervical cancer almost always leaves children without a mother and grandchildren without a grandmother. Cervical cancer is a disease that invariably hits women in their forties or fifties if it is going to hit them at all. That is one of the tragedies; it takes people far too young. It often takes people in the prime of their professional and family lives. Just when they should be there for their children they are not there. Therefore I am very concerned to make sure that this bill is strengthened in the select committee and I am pleased that we are able to support it. 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
: 
 I rise to support the first reading of the Health (Screening Programmes) Amendment Bill with particular feeling as 10 years ago I was one of the hundreds of women whose lives have been saved by the cancer screening programme. It is a difficult realisation for people to come to—particularly for those who have been careful with their health and have been undergoing regular checks—when a doctor reports to them that they have cancer. It is a shocking time and most of us would do anything we could to avoid it. However having read the report of the Cartwright inquiry back in 1988 and parts of Dr Euphemia McGoogan’s report recently on the problems in the Gisborne region I think that this bill is necessary. It is timely and it is an important step ahead in improving the cervical screening programme for New Zealand women. 
People here have talked about the right to privacy and I am reminded of a woman who was in the same ward as I was at Greenlane Hospital 10 years ago who when I asked her what was wrong with her said she was “dying of embarrassment”. This was a woman who had children and who was looking forward to the birth of her first granddaughter. Because she was too embarrassed to go to the doctor and too embarrassed to follow up the physical signs she was displaying the cancer in her cervix had spread to her bowel her liver and her breasts. I believe we have a duty to that woman and to the many other New Zealand women who have died early from a disease that is not always preventable but is to a large extent curable or treatable – although the treatment is dramatic painful and as other members have talked about it takes a lot of life choices away. I say to all those women that yes their right to privacy is important. This legislation proposes the right to opt out of the national cervical cancer register but I urge women not to just as I urge them to have regular screens so that they like I can look back 10 years later and say to the public health system in New Zealand: “Thank you for the excellent service that I and thousands like me have received.”  
This bill sets up a new standard for screening for the oversight and audit of screening and for the management of that vital information. It carries out the Government’s undertaking to implement the 46 recommendations that Dr Euphemia McGoogan proposed. I believe that we can congratulate ourselves on the great progress that has been made in this area but as with all areas there is always more to do. I look forward to this bill being thoroughly examined at the select committee and coming back speedily to the House. 
Bill read a first time and referred to the Health Committee. referred to the Health Committee 
Consumer Credit Bill 
First Reading 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
: 
 I move  
That the Consumer Credit Bill be now read a first time. 
 At the appropriate time at the end of this debate I intend to move that the bill be referred to the Commerce Committee. This bill represents a long overdue and thorough reform of the legal framework for regulating consumer credit transactions. The bill replaces the Hire Purchase Act and the Credit Contracts Act. It is beyond doubt that those Acts have become outmoded and fail to meet the needs of consumers or the finance industry today. The Hire Purchase Act is now over 30 years old while the Credit Contracts Act was based on a report by the Contracts and Commercial Law Reform Committee which was prepared in the mid-1970s. The consumer credit market has undergone fundamental changes since that time primarily because of financial deregulation and computerisation in the 1980s. Many of the key concepts under the Acts are more relevant to the 1960s and 1970s. For instance the report of the Contracts and Commercial Law Reform Committee did not even mention credit cards but credit cards are now the main form of personal lending to consumers. It referred to fixed rates of interest as predominant and did not foresee the array of credit products now available to consumers. The Consumer Credit Bill takes account of the fundamental changes that have occurred over the last three decades.  
I would now like to outline and explain the key features of this bill. The purposes of the bill are to protect the interests of consumers in respect of credit and consumer-lease contracts to enable consumers to become informed at the time of entering a contract and throughout its duration and to provide transparent rules for charging interest and fees and calculating balances. The bill also aims to prevent oppressive conduct by creditors and lessors. It retains the reopening provision in the Credit Contracts Act for that purpose. As a safeguard for businesses the reopening provisions will continue to apply to borrowing for business purposes. In all other respects the bill is consumer-specific thus avoiding the awkwardness of mixing consumer and business borrowing in the same legislation. In this way neither protection measures for consumers nor flexibility for business borrowers will be compromised. Businesses can get access to appropriate advice before entering into credit deals but they will avoid having lenders’ compliance costs passed on to them for protections they do not need.  
The bill maintains the requirement on creditors to disclose information about the credit contract to consumer borrowers. The items required to be disclosed have been updated. Notably lenders are no longer required to calculate and disclose the finance rate. The finance rate provision was not as successful in practice as was initially hoped and made the Credit Contracts Act unnecessarily complex while adding a layer of compliance costs. The bill also allows disclosure to be made electronically including via the Internet but puts in place safeguards for consumers. For instance consumers must consent to receiving electronic notices.  
The bill adopts Australian provisions that prevent creditors from using various unfair methods of charging interest and calculating balances. For instance interest cannot be charged in advance. Creditors will also have to cease using unfair methods to calculate early settlements. The bill also ensures that creditors cannot charge fees that are in the nature of interest as a means of avoiding the restrictions on interest charging.  
The bill simplifies the law concerning early repayment of a credit contract by a debtor. The borrower has the right to make early repayment but the creditor may also impose a reasonable charge if he or she will suffer a loss as a result of the early payment. This aspect of the bill is intended to align it with principles of contractual damages and the doctrine of penalties which provides that if one party breaches a contract the other party is not entitled to unreasonable excess damages. The definition of credit contract does not include leases although certain forms of lease that are functionally equivalent to credit sales are deemed to be credit contracts. Therefore the bill establishes a separate regime for long-term leases. There are several reasons for that. Firstly providing for the distinctive characteristic of leases increases consumer choice. Secondly it ensures that leases are not preferred as a means of evading regulation. Thirdly long-term leases often involve considerable financial commitment for consumers and are highly complex transactions justifying protection for consumers.  
An important aspect of the bill is that it is to be enforced by the Commerce Commission. At present credit law is under-enforced as demonstrated by the extent of breaches and unethical practices reported at the lower end of the market. Low-income high-risk borrowers—in many cases Pacific people—have been particularly harmed. Enforcement action by the Commerce Commission will give further protection against unethical behaviour by giving extra impetus to the reforms. Many creditors and lenders will welcome tough action against the minority of lenders who let the side down.  
Consumers are not simply beneficiaries of a thriving and sustainable economy. They play a vital role in it but we need to ensure that they have the information they need to make informed choices so that they are able to confidently play an active role in the growth and development of the economy. The Government’s most important task in the next 3 years is to improve the conditions for growth. We want to pursue our economic and social goals in a way that is consistent with the values of fairness security and opportunity. This bill is overdue and benefits both consumers and the finance industry. I commend this bill to the House. 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 While National is supporting the Consumer Credit Bill going to the select committee we have reservations with regard to some areas of the bill in particular increased compliance costs. It is interesting to note that National instigated a review of the credit contracts law in 1999 and since then there has been some concern expressed about the necessity of a new bill as opposed to amending existing legislation. The need for greater disclosure and enforcement provisions has been recognised by many not least by the creditors themselves. This bill provides for greater disclosure and puts in place enforcement provisions that incidentally include reference in clause 86 to the Privy Council which has not yet fallen to the intractable onslaught of Margaret Wilson. However give it time as she appears determined to establish her Supreme Court and do away with the Privy Council.In the interim it is gratifying to see that it is still with us and it is in clause 86.  
A consumer credit contract is defined in clause 9—that is when a debtor enters into a credit contract primarily for personal domestic or household purposes. I was interested to note that the words “domestic” and “household” have practically the same meaning in the  
Concise Oxford Dictionary 
 so I was left wondering why it was felt necessary to use both words in the context of this bill. Regardless of that given that the consumer credit contract is personal or domestic the business credit contracts are now excluded from the provisions of this bill. While this is welcomed by some businesses it will be interesting to see whether small businesses feel there is some measure of protection necessary for them.  
Clause 11 however provides a presumption whereby if a party to any proceeding for a credit contract claims it is a consumer credit contract then that remains the case until the contrary is established or unless a declaration has been made to the contrary as for clause 12.  
Clause 13 outlines those contracts that do not fall within the consumer contracts provision and subclause (2) deals with disclosure requirements. As stated earlier greater disclosure has been wanted for some time. Disclosure will not however protect consumers who have language or literacy barriers and are unable to understand fully the contract being entered into. This includes those persons who may be drawn into a consumer credit contract as a guarantor as well as the immediate debtor.  
The finance rate disclosure has now been excluded from the disclosure provisions and it is interesting to note that one of the submitters to the review stated that the finance rate was of benefit to borrowers. I note that the finance rate has now been excluded from the disclosure provisions. Many agencies such as citizen advice bureaus and community law centres along with reputable businesses have identified language and literacy as a real problem for some people entering into consumer credit contracts. It was identified that more information needed to be available to broaden the education of people likely to enter into consumer credit contracts whether as debtors or guarantors. However the funding would need to be put aside for that education process to take place because that material could be provided to citizen advice bureaus and the like but they could not afford to produce it themselves. Although greater disclosure is welcomed to address some consumer issues personal responsibility cannot be regulated for and any language or literacy barriers will need to be dealt with in a different context.  
With disclosure come compliance costs and as we all know compliance costs are a significant issue for many businesses and particularly under the current Government. In this bill there is an increased compliance cost. That increased cost comes from not just the additional disclosure provisions but also from the additional staff training necessary to meet the requirements of the bill. Any such training is usually ongoing particularly where there is a relatively high staff turnover rate.  
Compliance costs will also come about from the programmes that lenders undertake for monitoring their compliance with the law. Dealing with complaints by consumers or the third party enforcement agency as a result of the legislation does incur a compliance cost. Given the emphasis on disclosure and enforcement within the bill claims by consumers may increase as a result and thereby compliance costs. Any claims that consumers bring to creditors and lenders will need to be addressed by the creditor or lending agency involved and thereby ensure a compliance cost with that. Because they will have to do some significant work around that.  
It has been asserted in the preface to the bill that compliance costs will be no greater and may be less. I find that an extraordinary assumption. “No less” but if one looks at the preface which identifies the compliance costs report it clearly shows that the emphasis is on increased costs—particularly given the growing indebtedness which some consumers seem oblivious to. To suggest that compliance costs may reduce when a creditor or lessor essentially has to do the following—have a compliance programme whereby employees and agents have to follow procedures and where they do have to implement automated procedures and ensure there are methods in place for systematically identifying deficiencies in the effectiveness of the programme and promptly remedy any deficiency discovered defies belief. How could anyone possibly suggest there is any hint of a reduction in compliance costs after what I have just said? Certainly once one has been made aware of the provisions of the bill one has to be aware of the provisions of the increased compliance costs. 
A matter that was raised by the Accident Compensation Corporation which I have not found referenced in the bill anywhere has been the absence of any reference to the Privacy Act and how that Act might impact on those who extend credit and collect overdue credit and how that in turn will also impact on compliance costs in adhering to privacy principles. I have no doubt that in going through the select committee process these matters of concern will be raised. National has a very strong view about the compliance cost issue because of the pressure that this puts on to business. While we do support this bill going to the select committee we do have those reservations and they are significantly around the increased compliance cost—the effect it may have on the exclusion of small businesses the exclusion of the finance rate the absence of any reference to the Privacy Act the fact there is a regulation that is trying to redress concerns around consumers and how consumers actually enter into credit contracts and their awareness or otherwise of that consumer contract.  
It is to be hoped that disclosure provisions and enforcement provisions within this bill will address those concerns because one cannot regulate for personal responsibility or for people needing to take personal responsibility for their own innumeracy and literacy skills and their language capabilities when they enter into these sorts of credit contracts. So National is happy to support the bill going to the select committee. 
PAUL ADAMS (United Future) 
: 
 United Future is pleased to support this bill going to the select committee. It has often been said that if the incoming is not greater than the outgoing the shortfall will be the downfall. How true that is for many people. In New Zealand now consumer borrowing is just part of life. I have worked for many years in an industry that has been involved in this. The most confusing aspect for people who borrow has been the finance rate. I am very pleased to see that removed from this legislation because in principle it made sense but in reality it was very confusing for people to understand. There were institutions such as banks that did not have to declare the finance rate so it was very confusing for people who were borrowing money. The disclosures will be very beneficial because often when people come under financial pressure—I believe that one of the most difficult pressures families can come under is when their backs are to the wall and the creditors are knocking on their doors and they realise that the only way they can release themselves from the pressure is to borrow some money—they will often go to desperate means and they will look at the amount they are paying per week or per month without fully understanding the cost of that money.  
Let me give an example. A person may be able to borrow money from a finance company over a 3-year period. The monthly repayments for that in round figures might be $300 per month. But they may then go to a bank and borrow the same amount of money but they will extend their home loan to do that. The repayments on a monthly basis would possibly be one-third of the amount from the finance company yet the cost of that borrowing may be $3000—these figures are not accurate I am just giving an example in round figures—but in reality if they borrowed that money over their home for a 20-year or 25-year period they might be paying $30000 or $35000 in the interest repayments. Of course that money has to be repaid at some point. So the freeing up and the disclosures on all of the finance contracts need to be commended. I think it is very very good. I have discovered that money is very easy to borrow but it is incredibly difficult to repay. I do not know whether other members agree with me on that but it just seems to be a fact of life.  
The bill also aims to provide greater transparency and protection for creditors in targeting the marginal lenders that unfortunately are in our midsts. I think it is very good that there will be provisions for couples such as those just mentioned who have language difficulties or other difficulties and do not fully understand the contract that they have entered into. If it is explained to them and if any unethical processes have been followed they will have the ability to have that contract rescinded. That is very good.  
I think it is great that all the information will be provided to the borrowers at the beginning of the contract and it will be clearly laid out. On the other side of that coin is that we need to accept that New Zealanders should learn to pick up responsibility for contracts that they are entering into provided all the information is there. This bill does endeavour to make sure that when they are looking at this contract compared with that contract they have all the relevant information available to them. Unfortunately this does not happen under our present legislation which as we have heard is over 30 years old. I think this will be very good.  
There are concerns about the compliance costs both to the creditor and to the Government. Providers of domestic credit will face higher short-term costs because of alterations to software and such things. As they work together and bring in a standardisation of it hopefully the compliance costs will not be so great. The mainstream finance organisations will be able to handle that very easily but of course the smaller finance companies may have more difficulties.  
It is interesting to note that credit card debt alone is now a major form of borrowing for New Zealanders. In the figures I have here the debt is at $3.6 billion in November before Christmas. More significantly $7 of every $10 run up on cards is incurring interest because the debt is rolled over month by month. To me that is a scary figure. People are looking solely at what they can afford to pay weekly monthly or whatever the case may be and they are failing to see the true costs of that debt. Hopefully this legislation will bring greater transparency in these transactions.  
Consumers are now much more comfortable with debt. But if they are to be comfortable with debt—and I hope they become uncomfortable with debt for the betterment of our nation—they must have the complete information and know what they are involved with.  
In terms of the costs to the Government enforcement is estimated to cost the Government an additional $0.6 million per annum. Presumably there will be an education campaign and creditors and debtors will need to be funded. I believe that the select committee should look into this and I believe that the select committee process will be excellent. No doubt many issues will come up before the select committee. United Future supports this going to the select committee.  
DAIL JONES (NZ First) 
: 
 Speaking on behalf of New Zealand First I say that I was not too excited by this legislation until I heard the speech from Mr Adams from United Future. He suggested that the present credit contracts legislation does not seem to affect banks. That is absolutely wrong. Anyone who has been a lawyer as I have and dealt with hundreds if not thousands of credit contracts with loans from banks knows that every loan offer to a client has the finance rate on it. For that member to say that the finance rate is not applicable to banks destroys the credibility of Mr Adams’ comments on this legislation.  
I am interested in the fact that this legislation has removed the finance rate. When I look back to 1981 when I was in this House and we introduced the finance rate there was a reason for it. I am disappointed that the Labour Party has forgotten the reason for that finance rate. The late Arthur Faulkner who was here in those days as the Labour member for Mount Roskill rejoiced in this legislation. As a former creditor manager for the Farmers Trading Co. Ltd and a former RAF pilot in World War II Arthur Faulkner had a great social responsibility. I am disappointed that this Labour Party has lost that concept of social responsibility in its removal of the finance rate.  
The finance rate prevents front-end loading in contracts. A contract for $1000 can have an interest rate of 10 percent so 1 years’ interest might appear to be $100 but of course it is not. If that bill is paid over 12 months on a reducing basis it is not 10 percent interest it is closer to 17 percent. In addition there are extra payments of a $100 booking fee or $100 for insurance. The original legislation was really set to deal with car dealers—and I understand that Mr Adams was a car dealer so he ought to know. If on a contract of $1000 the interest is shown as 10 percent and $100 is charged for interest add to that a $100 booking fee and $100 for insurance and the borrower is forced to pay $300 on the $1000—the interest rate is not 10 percent. The finance rate takes into account the $100 interest the $100 insurance and the $100 booking fee. The borrower needs to know what the actual payout is that he or she needs to make. The actual interest rate or finance rate—or the true interest rate—takes it up to about 30 percent. 
For that reason it is important to retain a finance rate especially for people living in south Auckland or west Auckland or especially for solo parent beneficiaries who may not understand these things. When we talk about interest-free periods members of the public might think that it is only 10 percent. They might believe that because those people have big businesses they must know what they are doing and so they just go along with it.  
I can see the Consumers Institute of New Zealand and Mr Russell getting involved in a submission on this legislation very promptly so that somewhere in the contract it is made clear to the person borrowing the money from some car dealer that he or she is not paying an interest rate of 10 or 12.5 percent. The lender wants to know what it will cost him or her. That is what the finance rate did in the Credit Contracts Act which I was a very proud to be a supporter of when I was in the Government when we introduced it in 1981. That is one of the evils remedied by the Credit Contracts Act. This credit contract legislation introduced by Labour will leave it wide open for unscrupulous people to rip off the poor in our society.  
The Minister gaily read the speech that the department gave her to read but Miss Judith Tizard has no idea of what the bill involves. 
Darren Hughes 
: The Hon Judith Tizard. 
DAIL JONES 
: I am terribly sorry; she is the Hon Judith Tizard. I am sure that if the Hon Bob Tizard had still been in the House he would have ranted and raved and ripped into the Government member who introduced this bill. I can almost see the Hon Bob Tizard getting stuck into the Government on this type of legislation which does not protect the person in the street. In so far as the person in the street is concerned I am sure that every car dealer in New Zealand will be delighted with this legislation because it does not protect car buyers.  
The second area is the question of prepayment. If members read clause 46 on prepayment they will see that people have to be very very careful with this because it allows a lender to add in charges on repaying a loan if it is repaid earlier. Let us say that someone has borrowed $1000 and at about the 11th month of the repayments that person decides to repay it early. If the loan were allowed to go through for the full 12 months there would be no prepayment charges. But if it is repaid in the 11th month then there are prepayment charges. Nowadays banks will charge people $150 to $200 to repay a loan just ordinarily. They would then add that on to an early repayment charge This bill has not been thought through and the Minister obviously does not understand it. She has merely read what the department has provided. This is very dangerous legislation.  
The existing legislation under the Hire Purchase Act looks at the rule of 78. It is a rough rule but it has worked for more than 30 years. I am sure that Mr Adams is familiar with the rule of 78 as are most of us who have been involved in this area. The rule of 78 sets out the procedure and it seems to be fair. It has lasted 31 years and I have never known anyone really to complain about the rule of 78. It gives everybody a fair go. But now this bill seems to be setting up a system whereby if one repays early one has to work out what it is costing the lender.  
We know what happens today when someone repays a mortgage earlier. Say a person has taken out a mortgage for 3 years at a fixed rate of 7.5 percent and repays it in a 2-year period. The bank would charge that person $2000 or $3000 because of early repayment. This bill is saying that that early repayment charge would now apply to a car loan if it were repaid early. Surely the Government is not saying that because a finance company lent the money at 7.5 percent and the interest rate has then gone down and the finance company would lose money because it has to lend it out at a lower rate the borrower for the car has to pay the difference because that is the principle of contractual damages loss that the banks apply today. This bill has not been well thought-through.  
Let us look at the loose requirements such as creditors’ loss arising from full repayment. It has not been thought through. The rule of 78 has been rough and ready but on the whole a fair approach. What we are going to say to someone who has bought a car—and it does not matter whether it is a $4000 car or a $40000 car—is that his or her ability to repay is based on one’s income. It hurts one equally whether one is earning $15000 a year or $50000 a year. So if people go to the finance company and say they have had their holiday pay their bonus or whatever and they want to repay their loan earlier they get stung for charges and for any loss there might be on the reduction in interest.  
All I can say is that New Zealand First will support this bill going to a select committee. As I understand it this bill is meant to be only for improving disclosure but it has gone into so many other areas now that it will create problems. I strongly suggest that Mr David Russell of the Consumers Institute and all those others who have an interest in this area have a close look at it because it seems to be very much in favour of the banks and the lending institutions. Even the definition of “oppressive” in clause 92 is in favour of the banks and the lending institutions and does not take into account the requirements of the working person and the ordinary family person as much as it should do. I will be interested to see how the bill comes back from the select committee.  
HELEN DUNCAN (NZ Labour) 
: 
 I am pleased to have the opportunity to speak in favour of this bill. I have glanced through some headlines from the past year and they say things such as: “Interest free deals with strings confuse customers”; “Credit law rip offs”; and “Loan sharks find easy prey”. I am sure all of us are aware of the number of stories that appear all the time in the news media about unscrupulous people ripping off consumers.  
In respect of concerns about the fact that the finance rate is not in the disclosure I point out that this bill provides not just for initial disclosure but also for continuing disclosure throughout the term of the contract and that the date amount and a description of each fee or charge debited to the debtor’s account during the statement period must be made right through the term of the contract. I think that those people who take the trouble to read the bill and consider the clauses very carefully will realise that there is a lot of protection here for the consumers of New Zealand that will make life much better for them. I commend the bill to the House. 
DEBORAH CODDINGTON (ACT NZ) 
: 
 I rise on behalf of the ACT party to oppose this bill which we see as another knee-jerk ossification of an Act that there is no need to rewrite. There were some problems with the old Act where this bill purports to improve the situation. But as part of this Government’s cringing sycophancy to Australian regulations— 
Hon Judith Tizard 
: Ha ha! 
DEBORAH CODDINGTON 
: The Minister might laugh but as she goes through the bill she will see that it has been drafted and modelled exactly on the old Act and that there is very little in the bill that is new at all. The Government has allowed the former Acting Minister of Consumer Affairs to issue strident press releases about what this bill will do but in reality the bill just pays lip service to consumers. Once more under this Government small business will be the loser under this bill.  
The bill is supposed to address a power imbalance and that is ideologically very telling. If we look at what this Government means by a power imbalance we see it usually means that nanny State does not have enough power to push people around. The bill aims to provide the so-called vulnerable with more clout. Well who are the vulnerable here? Who are we talking about? The bill actually excludes those who borrow for business purposes. So under this bill business borrowers will be left to fend for themselves. If we look at the power imbalance can we see who has the power here? I would say that it is the consumers. The finance companies are practically begging customers to come to them; they are throwing money and incentives at people. It is a highly competitive market and this bill will just make it more regulated—and I will talk more about the heavy cost of that regulation further on in my speech.  
New Zealand is heavily indebted. Recent figures that came out over the Christmas period show that the country is far too indebted but the way to fix that is not to make credit harder to get and tighter; it is to reduce taxes overall especially for those people whom this Government would call vulnerable. If those people were allowed to keep more of their own money they would immediately be protected because they would not need to go into debt to purchase the household goods and personal items that this bill covers.  
Some 80 percent of New Zealand businesses are said to employ fewer than five people. I do not believe that the concerns and needs of those businesses are any different from those of the average consumer. Small businesses are operated by mums and dads around the country—self-employed people. Why are those people as consumers vulnerable when they borrow to buy a personal computer for their children or for themselves to use at home—probably they have to use a computer at home in order to comply with all the regulations and tax laws that this Government continues to insist on passing—but not as vulnerable when they are borrowing to buy a similar computer for their office? Nothing in this legislation indicates those people will be protected in their business activities.  
What of the small-business person’s spouse who probably does need protection? The courts have recognised in the past that those spouses need protection because they are often pushed into the position of having to incur a personal liability for a business debt. Often those people are completely innocent of the workings of that business but because of the high taxes and high compliance costs they are being forced more and more to incur a personal liability. They are not offered any protection by this bill at all. I am not concerned about large businesses with regard to this bill. They have the ability to employ lawyers who can ferret out unfair terms and they can wield commercial leverage. It is the small business in reality that is in no stronger position than the average consumer.  
I will read out parts of the Hon Lianne Dalziel’s press release about this bill in September last year. She said that lenders of last resort or loan sharks regularly breach the law yet few people take credit cases to court or to the disputes tribunal because the law is seen as too complex the process too costly or because they feel intimidated. Lianne Dalziel has supplied no evidence for the claim that lenders of last resort or loan sharks regularly breach the law. We hear about a few such cases as the member highlighted earlier in this debate. The fact that the cases are reported in the newspapers indicates to me that they are very few and far between. The last part of the member’s press release stated: “It will not apply to commercial credit and it will reduce red tape and compliance costs compared with the status quo.” That is absolutely not true. This legislation will increase red tape and compliance costs.  
By making it tougher on lenders this Government believes it is helping consumers. But in fact tightening the regulations will as I said increase compliance costs. In a survey by Business New Zealand those costs are already estimated to have gone up on average by more than $30000 a year since this Government came into power. That is at least enough to pay one person who could have been employed. That is shrinking our economic growth. If the Government makes it harder to lend money and harder to collect a loan then in such a competitive market the costs of that will inevitably be reflected in the cost to anyone who manages to get credit. If credit is too tough then the sensible cautious prudent people who are hurt will just give up and go away. The need for credit will not change. This bill will do absolutely nothing to change the need for people to borrow money; there will always be a need for people to borrow money.  
This Government assisted by United Future which seems to want to protect people from themselves is in effect telling some people that they are too stupid to borrow money that they are getting caught up with three terms when that should be two terms and that they cannot be responsible for their actions. So the Government is to make it too tough for those people to get credit by legitimate means and is to excuse them when they do not read the fine print. How can the Government say on the one hand that the legislation will reduce compliance costs and on the other hand that there will be ongoing disclosure regulations? That just does not stack up.  
The poor will still borrow money for things they cannot afford. That is their right. People have a right to make mistakes and they have a right to be wrong. The Government does not have a right to push people around and to tell them what they can and cannot do if they are not hurting anyone else. The onus should be on lenders to make sure that they have adequate security when they lend money and obviously if they do not do that the responsibility is then on them when they lose the money. The people who will be shut out from legitimate credit markets by this bill will end up going to the informal markets. I predict that we will see a growth in the lender of last resort industry—in the so-called loan shark industry. If the people who borrow from loan sharks renege on a loan then repayment will not be enforced by the multiple hoops that this legislation will put lenders through. Instead repayment will be enforced by sending the gangs or the heavies around to seize the borrower’s car or to biff a rock through a window. We will see more people in desperate situations going to even crueller loan sharks if that is the term we want to use in order to borrow from Peter to pay back Paul.  
The Minister has put forward a bill that will make no difference at all to the middle class except to push up costs. The rich in general are lenders not borrowers. They can afford to pay lawyers to make sure that they do not make mistakes. This bill will put up the price of legitimate credit put it out of the reach of the poor expand the business of the loan sharks and add to the compliance costs of and burdens on small business. 
JILL PETTIS (NZ Labour—Whanganui) 
: 
 I am always frustrated—I was going to say fascinated—after hearing an ACT speaker. I wonder where the world is that they talk about. I wonder where those people are whom they talk about. I do not come across such people very often—and I am an electorate MP unlike the previous speaker so I do see people. But people do not tell me stories like those that that member has just portrayed.  
The aim of this bill is to repeal the Credit Contracts Act and the Hire Purchase Act and to replace them with a new legislative framework governing credit contracts and consumer leases. At this very moment I am working on cases for two women. The women are totally unrelated but a similar incident is causing them great concern in their lives. Both of them are widows in their eighties and both are feeling extremely vulnerable. Their concern has been brought about by a plumbing situation. Those women have not got rash with their cash in the late years of their lives but have found themselves in an extremely unfortunate and expensive situation through absolutely no fault of their own. So I say we do need to have protections in place for consumers. This is a good bill in that it provides that protection.  
The previous speaker said that people have a right to make mistakes. However I wonder why we bother legislating for so many things if we think that people have the right to make mistakes. We seem to spend a disproportionate amount of our time in this House in trying to assist people not to make mistakes or in mopping up after mistakes have been made so I wonder what the member meant by that statement.  
One of the issues that does concern me and I am pleased to see this bill being progressed through the House for this very reason is the proliferation of quick money places throughout New Zealand. We now frequently see advertisements in our metropolitan and certainly the provincial newspapers as well that state that if people wanting money go and ask for it they will get it to paraphrase the advertisements. That issue concerns me a great deal. It is as Mr Adams said far easier to borrow money than it is to pay it back. I believe we need to be cognisant of and concerned about people who do find themselves in difficulties through the misguided borrowing of money.  
I am pleased to support this bill. Let us get it progressed through the House as quickly as possible so that there is more protection for consumers. 
SUE BRADFORD (Green) 
:  
The Green Party welcomes the introduction of this bill to the House. A review of the law covering consumers and credit is well overdue given that there has been no real change in the legislation for over 20 years and that there have been huge changes in our society and our economy during that time. Debt has become a critical issue for ordinary working people and beneficiaries during that period. The levels of indebtedness continue to rise to new heights and most groups working with low-income people acknowledge that crippling debt is in many cases an overwhelming factor in people’s inability to make ends meet on a day-to-day or week-to-week basis.  
Of course the laws around credit are not in themselves the underlying source of the problem. The rise in and entrenchment of structural unemployment in the 1980s and 1990s the pressing down of the comparative value of benefit levels from 1990 to 1991 onwards and low minimum wages have meant that hundreds of thousands of people have been forced into debt as they struggle to provide the bare minima of life for themselves and their families. The fact that people have had to resort to borrowing on an unprecedented scale in recent years has meant that things like extremely high interest rates and deceptively easy access to credit have led people into ever-worsening cycles of poverty and despair in ways that impact on all sorts of aspects of some families’ lives. The recently released Child Poverty Action Group report on the effects of housing transience on school attendance in south Auckland is just one example that highlights the way in which the spiral of debt compounds other problems as families move house constantly in an effort to escape debt.  
For anyone who takes a wander through the streets in places like parts of Manukau City or Otahuhu it is easy to see that alongside the proliferation of pokie parlours and Cash Converters stores there is also an ever-burgeoning number of businesses offering in a variety of languages to lend passers-by cash right now. Moneylending at what I will call the bottom end of the market appears to be a booming part of the economy in those places just like the pokies and I am sure that they are not without links. At the same time I would be the first to agree that lots of the borrowing is not for gambling but for things that most of us see as the necessities of life such as paying the rent or mortgage buying a car to get to work in or simply putting food on the table this week. The fatal contradiction for people borrowing at the bottom end of the market is that all too often the interest rates and other charges are much higher than those paid by better-off people who borrow from mainstream lenders for the very reason that this is fringe lending.  
I will just to give one horrific example of that. A Consumers Institute investigation of loan sharks last year found a case where a woman in Otara had borrowed $600 from a small lender. She had to pay a brokerage fee of $100 a documentation fee of $498 interest at 28.5 percent $30 to make a phone call and $50 to receive a fax. Within 6 months she had paid back the $600 but she still owed $1398. There are other iniquitous practices as well. For example there are places where lenders hang on to borrowers’ automatic teller machine cards and pin numbers so that they can get into borrowers’ accounts at will or there is the Tongan moneylender in Otahuhu who runs a name-and-shame page in the  
Taimi’o Tonga 
 newspaper with photos of the people who are behind with their repayments and a written description in the press of what the loan was for.  
From even just a couple of examples like that it is easy to see why in the years since the introduction of the Credit Contracts Act there has been considerable criticism of that Act. The Act is often seen as too complex and difficult for ordinary people to understand especially with the need to cross-reference it to other legislation. There are problems in ever getting the law enforced because there is no Government agency empowered to enforce the Act. There is perceived unfairness to consumers in some areas such as the exclusion of certain charges from the finance rate and businesses often complain of high compliance costs. The new bill in front of us today is the Government’s attempt to address the issues and is long overdue. The Green Party welcomes its introduction and will be supporting the bill going to the select committee where much of the fine detail can be worked out.  
However we do even at this early stage have several reservations about whether the bill goes far enough in certain areas. Firstly and probably most significantly the Green Party believes there should be a named and fixed limit on interest rate charges. Many low-income people in south Auckland and elsewhere are defaulting on loans that have exceptionally high finance rates. I have been reliably told that rates of 30 to 35 percent are not uncommon and some are even as high as 42 percent. Those loans are being made by moneylenders who are very well aware that it would be just about impossible for a borrower to meet the repayments. When a debtor defaults for example on a car repayment the vehicle is repossessed and the debtor spends years trying to continue to make payments on a car he or she no longer owns or he or she skips out on the debt with all the negative long-term legal and financial consequences that that incurs. Meanwhile the vehicle is resold to someone else on similar terms and the whole vicious cycle is repeated.  
While clause 92 of the new bill does talk about oppressive contracts we do not think that that is enough. There should be a mechanism by which maximum finance rates for consumer credit are regulated. We are also concerned that the definition of an oppressive contract is not sufficient to cover all the types of iniquitous practice to which some borrowers are subjected. I hope that will be tightened up carefully during the select committee process.  
A second reservation that the Green Party has about this bill is in the area of small business. As my colleague in ACT has just said small-business people need protection and disclosure when they borrow just as much as anyone else does and many of them are in the same low-income low-capital bracket as the vulnerable borrowers I have talked about already. The Green Party believes that small-business people should have the same rights and safeguards as personal borrowers and I cannot quite understand why the Labour Government has seen fit to leave that out of this welcome legislation. In its April 2000 discussion document on the review of consumer credit law the Ministry of Consumer Affairs did evidently consider ways and possibilities of allowing small business to fall under the new legislation—for example through defining limits based on the financial size of a business and the number of its employees. However sadly in the time since that review took place the ministry and the Minister seem to have found small business too difficult to deal with in the context of the bill. That is a great pity and I hope the select committee will with the help of submitters and officials find a way to make sure that small business will have access to the benefits of this legislation.  
Despite those reservations and others such as problems around the access to the disputes tribunal I am pleased that this badly needed update is finally before the House. I look forward to hearing what the wider community will have to say about it during the select committee process. 
DARREN HUGHES (NZ Labour—Otaki) 
: 
 I am very pleased to support the Consumer Credit Bill’s first reading in Parliament. This is a modernisation of the law in this area that the Minister of Consumers Affairs the Hon. Judith Tizard has brought to Parliament to replace two very old pieces of legislation—the Hire Purchase Act of 1971 and the Credit Contracts Act of 1981 which I think is pretty old too. I am very pleased that that old credit legislation is being updated by Parliament. This bill will go to the Commerce Committee of which I am a member and through the submission process I look forward to picking up on the points that Sue Bradford has raised. 
PANSY WONG (NZ National) 
: 
 Judging by the statement made by the previous young member I would say that if the number of years it has been in force is a good reason to change the legislation the speech by the New Zealand First member Dail Jones now makes a lot more sense to me. I certainly think that the age of a piece of legislation is not a very good reason to change it. The Minister and all the members of the Labour Party still fail to convey to the public what they mean by this legislation replacing the Credit Contracts Act and the Hire Purchase Act with a modern framework. People who are still listening to the debate would ask what that means and what this new legislative framework is so let us explore that.  
The bill that we are examining sets out to achieve the following objectives: to promote an efficient credit market to provide for effective information disclosure to allow pricing flexibility to provide adequate incentives for compliance and to discourage oppressive conduct. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
PANSY WONG 
: Ni hao Mr Speaker. What a multicultural Parliament! It is sad that we are going to debate this bill. I challenge the next Labour speaker to stop reading from his or her prepared speech and once and for all explain to the public what Labour means by this bill. It is to provide a contemporary framework and replace the Credit Contracts Act and the Hire Purchase Act but I am still seeking the answer as to what the significant difference is between the Consumer Credit Bill and the Credit Contracts Act.  
Essentially the objectives of the Consumer Credit Bill are to encourage full disclosure to make sure that borrowers are well informed and to ensure that there is a competitive market for efficiency of operation. Let me read the objectives stated in the Credit Contracts Act which this current bill is supposed to replace. Those objectives are to—“(a) Prevent oppressive contracts and conduct; (b) Ensure that all the terms of a contract are disclosed to debtors before they become irrevocably committed to them; (c) Ensure that the cost of credit is disclosed on a uniform basis in order to prevent deception and encourage competition; and (d) Prevent misleading credit advertisements;” Therefore I fail to see what significant differences there are between the Credit Contracts Act and the Consumer Credit Bill. This particular bill falls into a “tidy mind” bureaucratic process that always underestimates the cost of enacting a piece of legislation. Every time Parliament introduces new legislation it introduces uncertainty into the lives of people. So many case laws have to be established for the public lenders and borrowers to understand or second-guess the meaning of a particular word in the legislation. Therefore I challenge the next Labour speaker to explain to us whether the benefit of introducing this so-called new bill significantly outweighs the cost of uncertainty.  
Let us examine it. Apparently one of the major differences in this bill is to exclude business transactions. That was capably pointed out by the ACT member—and even agreed to by the Green member who asked why a person would be treated differently if he or she needed a personal computer to run a business. If the money is borrowed on a personal basis it is covered by the Consumer Credit Bill but if that person chooses to say that he or she operates a small business suddenly the bill does not cover that. That is very strange. What happened to the Labour Government which always claims to be the champion of small business? Suddenly it is saying that it does not want to protect small business from the compliance-cost burden. The ACT party is seeking an amendment to include small businesses in the bill and the Green Party will support it. The challenge now lies with United Future which always campaigns on the grounds that it is for average hard-working small-business people.  
David Benson-Pope 
: Get a member of a major party! 
PANSY WONG 
: National thinks this is a bureaucratic piece of legislation. If David Benson-Pope ever has anything worthy to say I ask him to take a call. 
Dr the Hon Lockwood Smith 
: Failed schoolteacher! 
PANSY WONG 
: I do not want to insult schoolteachers—I respect schoolteachers except that one.  
The bill seeks to limit the manner in which interest can be charged but it continues to show a lack of understanding of borrowers. People who want to borrow money usually really need the money. Therefore all they are concerned about is whether they can afford the total cost. If borrowers appreciate the full cost of borrowing it is up to them to decide whether they can afford it. Full disclosure in itself is sufficient. We do not need this heavy-handed legislative measure to do that.  
I am still looking for a significant advantage in the Consumer Credit Bill that is not apparent in the Credit Contracts Act that it is supposed to replace. Maybe it is to do with the enforcement regime or the penalty regime. The Commerce Commission is the enforcement agent for the Consumer Credit Bill but members should look at the statutory damages—only $3000 or 5 percent of the credit limit. I hardly think that would deter anybody from flouting the intention of this legislation. The only provision I was looking forward to was one from the Minister of Commerce the Hon Lianne Dalziel who promised last year that she would toughen up this legislation to sort out the problem of so-called loan sharks. The only provision I can see that remotely relates to that issue is a requirement to restrict the daily interest that can be charged. But the problem with loan sharks is the lack of enforcement. Most victims of loan sharks are not going to report the crime. This legislation stipulates an enforcement agency to look at whether the interest regime has been infringed. If it has the police might take action. The only way the loan shark situation can be dealt with effectively is to increase the resources and commitment of enforcement officers. The police rather than the Commerce Commission should be the ones to take proactive action but they are usually more involved in organised crime.  
Last year the honourable Minister promised a lot but I do not see any more effective mechanisms in this bill for dealing with the very unsatisfactory loan shark situation. She needs to have a conversation with the Minister of Police but given that Minister’s performance in the leaky-building saga I doubt that he would see any problems or react to anything. After reading the bill page by page I fail to understand what enlightened contemporary wonderful framework has been put into place to replace the Credit Contracts Act and the Hire Purchase Act. As the magazine C 
onsumer 
 advocates we want to ensure that the public has a say in whether there is any point in passing this legislation. National will support this bill to the select committee but we will examine it and make sure that public submissions are listened to. In particular we believe that the compliance costs will be horrendous. 
DAVID BENSON-POPE (NZ Labour—Dunedin South) 
: 
 I am pleased to rise in support of this legislation and commend to the House its passage to the select committee. 
LINDSAY TISCH (NZ National—Piako) 
: 
 I wish to take a short call to cover the points that came up earlier in the debate and were mentioned by Dail Jones and by my colleague Pansy Wong. The explanatory note in this bill brings to my attention some major concerns as to why we should want to repeal the Credit Contracts Act and the Hire Purchase Act. There are two points I want to bring to the House’s attention which I am sure will be canvassed in detail in the select committee. The first point is on page 2 of the explanatory note. It states: “The Bill clarifies that the debtor has a right to pay out the contract at any time ( 
full prepayment 
) while allowing the creditor to recover a charge that does not exceed a reasonable estimate of the loss suffered by the creditor on full prepayment.” What is the incentive for somebody to repay a loan if there is a penalty for doing so? 
I bring the attention of the House the heading “What you may have to pay if you cancel” in schedule 1. One of the most important things for individuals and even for businesses to do is to reduce debt loading. Eighty-five percent of small businesses in New Zealand employ fewer than 5 people. One of the major factors in the work I have done over the last 15 years as a management consultant is refinancing and restructuring. We have looked at debt reduction how we can grow a business and make things a lot easier. One of the incentives is to reduce and actually clear that debt. Here we have a provision that states that if people are going to do that and cancel their contracts then they will be penalised for it. What incentive is there for an individual to clean the slate and get rid of his or her short-term debt if he or she is to be penalised for doing so?  
The second major point I want to bring to members’ attention is in the explanatory note. It describes the provisions in clauses 24 to 28 which are about the debtor’s right to cancel a consumer credit contract as the “cooling-off” provisions. It states: “These ‘cooling-off’ provisions are substantially similar to the equivalent provisions in the 1981 Act. However while the equivalent provisions in the 1981 Act applied to modification disclosure these provisions do not apply to variation disclosure.” A lot of the work done over the years in restructuring has been to look at variations that extend the term. One can often get people into a viable business situation by looking at variations. It might be the variation of a mortgage on a property. For example the term of a mortgage can be extended its terms and conditions can be exchanged and different interest-free loans can be considered. If someone other than the mortgagee wants to lend the money then priority might have to be conceded to allow that person to come in. That is part of what happens in the real world. Variations of the terms and conditions of mortgages and credit contracts are very important yet this bill will stymie that. When the bill gets to the select committee those are questions that people will ask. Although we are supporting the bill to the select committee we have major concerns about the compliance costs that will be associated with it.  
The third area I want to bring to members’ attention is the operation of leases. The bill actually talks about consumer leases. I have been a strong advocate of leasing. In fact over the years I have never owned a car; I have always leased one. In that respect I have been able to go into a dealer—in my case a Ford dealer—and drive out with a nice car. I have been able to operate that vehicle for a period of say 2 or 3 years or until 60000 kilometres have been clocked up. I have been able to enter into two types of leases—a full operating lease in which the Ford dealer or the Ford credit company whoever is providing the finance— 
Hon Dover Samuels 
: I hope it’s got a warrant of fitness. 
LINDSAY TISCH 
: Of course the car has a warrant of fitness! I always drive with a warrant of fitness as the member would know.  
With a full-operating lease the costs of registration warrant of fitness insurance and repairs and maintenance on a new vehicle would be covered. Or I could opt for a lease whereby I meet those commitments or outgoings and after a period of a couple of years maybe change the vehicle. From a taxation point of view there are major advantages for a business in leasing because there is no capital outlay. Instead of buying a vehicle for one’s business and maybe paying $30000 to $40000 one can free up that capital by leasing. In the work I have done over a number of years in my previous occupation I found that leasing was an option. If capital is an area of concern a limiting factor in the way one operates then that capital can be freed up. We have looked at that area not only in respect of business but also in respect of individuals. Leasing can be done with computers fax machines and cellphones. In fact the first cellphone I ever operated back in 1993 was one of those big bricks. Do members remember those? To buy one of those at that time cost nearly $1000. 
Darren Hughes 
: You haven’t still got it? 
LINDSAY TISCH 
: I do not have it now.  
In less than 12 months the cost of cellphones fell to below $300. Now there are companies that give them away. The point I am making is that by having flexibility in financing an operation people were able to get a short-term lease on a phone and pay in this case $85 per month. They are not committed to it and after a short period of time they are able to replace it. As technology expands rapidly there is huge move to lease the sorts of things I have mentioned—Eftpos machines in businesses for example. Why pay $3000 when one can be leased for about $65 a month? My point is that leasing is a very important part of an operation whether for business or for individuals.  
The fourth major point I want to bring to the attention of the House follows up on the point about the finance rate made by Dail Jones just before the dinner break. He made a comparison saying that if he borrowed $1000 but at the same time had to pay the interest rate the establishment fee a booking fee and insurance then those things could add a major cost to the loan. If I am going to borrow money or if any person I am dealing with in a restructuring situation is going to borrow money then we really want to know what the true cost of borrowing is. It is no good just talking about the interest rate. Dail Jones mentioned an interest rate of 10 percent. In fact the true interest rate—or the true finance cost of borrowing the money—could be in excess of 30 to 40 percent. That is the area that this bill does not address and it is one of the reasons we are supporting it to the select committee. We have major issues with the compliance costs and how the measure will work in the long term. We believe that many questions will be asked in the select committee about how it will work.  
Pansy Wong asked earlier why we would want to bring in this legislation. What was wrong with the Acts we had that were mentioned earlier—the Credit Contracts Act of 1981 and the Hire Purchase Act of 1971? We are looking at a comparison here. I do not believe that there is a change significant enough to repeal those pieces of legislation and replace them with this legislation. This is being done at the Government’s whim and hard questions have to be asked about how this bill will work and what the benefit will be to the borrower. At the end of the day the borrowers are the most important people. They are the customers and we have to look after them. I am really concerned about the compliance cost and the finance rate. They are not mentioned and they are issues that I am sure will come to light.  
A party vote was called for on the question  
That the Consumer Credit Bill be now read a first time. 
Ayes 109 
Labour 52; New Zealand National 27; New Zealand First 13 Green Party 9; United Future 8. 
Noes 6 
Bill read a first time. 
ACT New Zealand 6. 
Hon MARIAN HOBBS (Minister for the Environment) 
 on behalf of the 
 Minister of Consumer Affairs 
: I move  
That Consumer Credit Bill be referred to the Commerce Committee. 
 referred to the Commerce Committee 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 109 
Labour 52; New Zealand National 27; New Zealand First 13; Green Party 9; United Future 8. 
Noes 6 
Motion agreed to. 
ACT New Zealand 6. 
Telecommunications (Interception Capability) Bill 
First Reading 
Hon RICK BARKER (Associate Minister of Justice) 
: 
 I move  
That the Telecommunications (Interception Capability) Bill be now read a first time. 
 It is my intention to move that the bill be referred to the Law and Order Committee. This bill is necessary to ensure that law enforcement and national security capability are not seriously eroded by changes in technology. This bill places a legislative obligation on telecommunications network operators to be technically able to intercept telecommunications going over that network when authorised by a warrant or other lawful authority. This bill also creates a legislative “duty to assist” on all telecommunications network operators and service providers. That means they must provide reasonable assistance to the police the Government Communications Security Bureau and the Security Intelligence Service in intercepting telecommunications within their technical capability and on a cost-recovery basis. This bill does not change or extend in any way the existing powers of the police the Government Communications Security Bureau or the Security Intelligence Service to intercept telecommunications. If the relevant agency has lawful authority to intercept a telecommunication technological barriers should not prevent them from doing so.  
This bill is complementary to the Crimes Amendment Bill (No 6) which is currently awaiting its second reading before this House. Currently authority for interception can be obtained only in respect of oral communications. The Crimes Amendment Bill (No 6) extends that authority to cover other forms of communication such as text messages emails and faxes. This bill is complementary as it will require network operators to ensure that their systems are capable of intercepting those forms of telecommunications.  
This legislation is not unique. The United States the Netherlands Germany the United Kingdom and Australia all have comparable legislation. The network operator has interception capability if the agency with lawful authority is able to do the following: identify and intercept telecommunications as authorised obtain relevant information about calls intercept unobtrusively while protecting the privacy of other communications obtain information in a usable format and undertake any of the four activities above in an efficient and effective manner.  
There may be a concern that the privacy of individuals who are not the intended targets of the authorised interception will be breached. To address those concerns a number of privacy protections have been placed in the bill. First any interception will only be able to be made in accordance with a lawful authorisation and with the technical assistance of an authorised individual officer or employee of the company. Second the interception capability requirements specifically refer to privacy. They include the ability to exclude telecommunications not authorised to be intercepted. Third the bill includes an express duty on those carrying out interceptions to minimise the likelihood of intercepting telecommunications that are not authorised to be intercepted. Fourth the network operator will not be required to decrypt any telecommunication encrypted by a customer unless that network operator provided the encryption facility. I can report that extensive work has been undertaken with the Privacy Commissioner in the development of this legislation.  
The Government will pay for the provision of interception capability for existing fixed and mobile voice networks to be implemented within 18 months from the date of the legislation being enacted. Network operators will meet the cost of upgrading their networks to provide for the interception of Internet and email services with a 5-year implementation period from the date the legislation is enacted. New companies and new services introduced by existing companies will need to be interception-capable within 18 months of the legislation passing. This phased implementation process is in order to provide the industry with the opportunity to implement the necessary technical change in a way that is cost-efficient recognising that some equipment will need replacing in that time anyway. It is easier and cheaper to install interception capability at the time of design and implementation of new networks rather than upgrading existing networks.  
Enforcement of this legislation will be done by way of a compliance order from the High Court. A civil enforcement regime will be established by the bill with contravention of the compliance order potentially resulting in a fine of up to $500000 and a daily penalty of $50000.  
One of the stated purposes of the legislation is to ensure that the requirement to provide interception capability does not create barriers for the introduction of new or innovative telecommunications technology. To ensure that the Minister of Communications will be able to grant exemptions from the requirements. Such an exemption may be granted in a special circumstance and will be subject to such conditions as the Minister thinks fit after consultation with other specified Ministers. Such an exemption might be obtained for example to enable industry participants to trial new technology for specified periods. I commend this bill to the House. 
Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) 
: 
 There are times when Ministers come into this House to introduce a bill when I wish they at least sounded like they believed in it. Having listened to the Hon Rick Barker I am not sure whether he even understood what he was reading. It is not his bill but the bill of the Hon Lianne Dalziel so I guess we cannot expect Rick Barker to know much about it. However he should at least pretend that he knows something about it instead of just sounding as bored as he did when he read that introductory speech.  
This is important. I know David Benson-Pope might not think it is important but it is. It is important because in the gathering of intelligence information in this country at present we have some significant loopholes that have to be fixed if we want to have an effective intelligence system. Following 11 September the Bali bombings and the growth of terrorism threats around the world I think most New Zealanders realise that this is an important issue even though Labour’s senior whip David Benson-Pope does not.  
We have a problem in that at present some digital phone and Internet technologies do not permit the monitoring of communications and information where necessary via interception technology. Those are major loopholes. A lot of organisations and people in this country now use digital phones. If there is a serious threat to our security that cannot be monitored this country has a serious problem. If members listened carefully to what Rick Barker was saying they might have discerned from his gabble that what the bill actually does is require telecommunications businesses to be able to intercept communications where authorised by one of New Zealand’s authorised surveillance agencies. Those telecommunications businesses must be able to intercept communications that have been lawfully authorised for interception. That is the fundamental principle of the bill and currently we cannot do that. Of course there is nothing wrong with that—it is a vitally important principle.  
There are two further measures in the bill that I think are also important and which I agree with the Government about. The first is this: where a surveillance agency is obtaining assistance for the interception of telecommunications from a telecommunications provider the surveillance agency must not create barriers to the introduction of new or innovative telecommunications technologies. That is a sensible thing to have in this legislation. 
There is a third element that I also think is sensible—that is where the surveillance agencies require the monitoring of certain telecommunications they cannot spell out to the telecommunications providers the technologies the design features or the specifications they are to use in carrying out that monitoring or surveillance. That is also important. It means that we minimise the risks of these new monitoring provisions from if one likes acting against innovation in communications in this country. This proposed legislation puts a lawful requirement on telecommunication providers to be able to monitor telecommunications when authorised by an appropriate authorisation agency—namely Police the Security Intelligence Service or the Government Communications Security Bureau. The onus then goes on the telecommunications provider to do it in a way that does not in any way hamper innovation in telecommunications. The Government has got the balance of that about right.  
The National Party will support the first reading of this bill. We think it is important legislation. As I said a moment ago most New Zealanders think it is important following the tragedy of 11 September with the World Trade Center and the horrific Bali bombings. We know of course that not all Government members support this legislation. We know that some Cabinet Ministers probably do not support it. 
Darren Hughes 
: Name one! 
Dr the Hon LOCKWOOD SMITH 
: I can name two or three Ministers who do not support this legislation. Jim Anderton is ranked third in this coalition Government. Jim Anderton the third most senior Minister in this Government believes that the Security Intelligence Service “are paranoid spooks hammering down the doors of protesters.” He believes that the Security Intelligence Service is useless. Did Jim Anderton say that way back in the 1960s when he might have been a long-haired protester? No he did not! The third-ranking Cabinet Minister in this Labour-led Government said that in 1998—just over 4 years ago when he was a senior member in the Opposition. He said: “I can’t personally see why we have the Security Intelligence Service at all.”  
We know that not all Ministers in this Government support this legislation. We know all about the Associate Minister for Biosecurity Marian Hobbs’ view of security matters. She was the one who sneaked around the Waihopai base protesting—not way back in the 1960s when she might have been a long-haired protester—but as recently as 1997. She said that spending money on the Waihopai base was a waste of money and that the Government Communications Security Bureau which runs it was unaccountable to Parliament and taxpayers. We have another Government Minister who does not support this legislation. 
Hon Marian Hobbs 
: I do support the legislation. 
Dr the Hon LOCKWOOD SMITH 
: She has changed her mind. We now know that Marian Hobbs has changed her mind from someone who used to protest in 1997 which is not that long ago. Just a bit over 5 years ago she reckoned that the Government Communications Security Bureau was useless. She has changed her mind.  
We know what those who support this Labour-led Government the Greens think of this legislation. Rod Donald believes that the money we spend on that kind of monitoring of intelligence information—$20 million he reckons—should be given to taxi-drivers. That is what he said just a couple of years ago. He reckoned that they would do a better job.  
All I can say is that when it comes to serious legislation that is important for New Zealand’s security it is just as well that we have a responsible Opposition like the National Party that is prepared to support it. Most New Zealanders know that it is important to protect New Zealand’s security interests in a way that does not constrain the freedoms of New Zealanders going about their lawful interests but protects them from the ever-growing threat of terrorism. We know that some members of this Government are not supportive of this important legislation. It is just as well that we have a responsible Opposition to make sure that the Government can pass it. 
Hon PETER DUNNE (Leader—United Future) 
: 
 I want to assure the member who has just resumed his seat that I do not believe that the Security Intelligence Service should be turned into taxi-drivers. I have never been a protester longhaired or otherwise at Waihopai. Although I do confess that in 1977 which is a wee bit outside his time frame to going to a public meeting at the Wellington Town Hall as part of opposition to changes that a then National Government was proposing to the Security Intelligence Service legislation. That may damn what I am about to say but I wanted to put it on record in case scurrilous accusations were made subsequently. I know that it has rocked the House and I apologise for the shock. 
Ian Ewen-Street 
: I went to a peace demonstration. 
Hon PETER DUNNE 
: Mr Ian Ewen-Street has admitted that he went to a peace demonstration—it gets worse! Did I inhale?  
This legislation has two important elements to it and I want to deal with both of them. The first is rightly as both the member who preceded me and the Minister in his introductory speech indicated the need to ensure that our surveillance capabilities are able to keep pace with technological change particularly given international terrorism and the international climate we face at the moment and the certainty that whatever else may happen things will become worse before they get a great deal better.  
There can be no real objection to this legislation on the grounds of its stated intent of ensuring that the interception capability is there regardless of improvements in technology. I do not think that any responsible person can object to that. It is a truism to some extent but it is also an important element of ensuring that our law enforcement agencies our surveillance agencies and others have the capability to actually do the job we require of them.  
But having said that there is an important other side to this legislation and it is the conundrum we face every time we deal with issues that relate to law enforcement and private individual rights. The explanatory note states: “The Bill does not change or extend in any way the existing powers of the New Zealand Police the New Zealand Security Intelligence Service and the Government Communications Security Bureau (the surveillance agencies) to intercept telecommunications.”  
On the face of it that is a very reassuring statement. When the Minister spoke he paid great attention to the fact that there are various protections contained in the bill in clauses 5 6 7 and beyond and particularly in clause 8 in respect of the restrictions that are placed on agencies in terms of the changes that are proposed here and any conflict with individual human rights. On the face of it my colleagues in United Future and I are satisfied that the balance has been struck properly. For that reason we will support the bill going to a select committee. But I want to make the point very clear that our support is conditional at this stage not because we disagree with the fundamental principle that is being sought to be addressed here—I think that is unarguable—but because we want to be absolutely clear that the stated intent of the bill and the explanatory note of not conferring any greater powers on the surveillance agencies than currently exist is in fact carried through into law.  
I am not suggesting any deliberate intent on the part of the drafters of this bill to surreptitiously extend the powers of those agencies but I am conscious that in legislation of this type so often these things happen either by omission or by accident. It is important both in terms of the public interest and also the ultimate integrity of this legislation that those matters be very carefully addressed at the select committee.  
Let me give the House a parallel; it does not relate to security issues but it does relate to the sort of difficulty we can get into when we start to set up complex procedures to regulate a particular provision. Last year this House dealt with legislation regarding the Kyoto Protocol and a whole range of issues about how the Government’s commitments under that Protocol might be enforced. When it came to the select committee we discovered a number of things—even opponents of the bill would have agreed—that went far beyond what the stated intent was. We have given more power to the enforcement agencies established under that legislation than the police have or even the courts in some circumstances. The select committee was able to amend that to say: well that is clearly not what was intended but it is not an acceptable position. It is the sort of parallel we might find here.  
I accept the word of the Minister and the bill that the changes simply bring into line current telecommunications regulatory provisions and technology changes with what our expectations are. It is important that telecommunications providers the Privacy Commission and others with an interest in this area have the opportunity to run the rule over the legislation to make sure firstly that that is actually true and secondly that there are not unintended consequences as a result of the quite clearly specified procedures set out here.  
It is absolutely clear to me that this type of legislation and the companion piece that the Minister referred to in his address—which is still somewhere in the parliamentary process—are critical. We do need to have them. We cannot stay still for ever. But we have also to make sure that as we make those changes they both meet the objectives we set for them and do not compromise however accidentally a whole range of other things at the same time. It is easy in the current environment to say: “Look the risk of Bali or associated activities or threats is such that we cannot afford to be overly protective of individual rights that the greater good outweighs a lot of those concerns.” I do not think that is necessarily so. I have no truck with terrorism. I am as strongly resolved as any member of this House to ensure that terrorism is stamped out and that we do what we can in this country to create an environment that makes that unpalatable unattractive and unable to proceed. But I am also determined that in the process we do not restrict unduly the rights of our citizens to go about their normal lives and normal activities in the way that they might deem appropriate.  
Yes there is a balance to be struck and it is important that we get that right. All I am saying is that when this bill goes to a select committee we need to be able to look at it in such a way that when it comes back to the House we can say this bill has achieved that objective of ensuring that our national security capability is not seriously eroded by changes in technology and that no additional powers have been extended by this legislation beyond those already in place for our surveillance agencies.  
The ultimate test will be this: we live in a time when international pressures and other issues make this sort of thing highly topical but if we were to come into a more benign era we would still want the types of provisions that are contained in this legislation to have integrity and credibility. My point is that they will do so if people feel that their rights are not unduly compromised that our national security capability is not weakened and that we are able to proceed in pace with technological change.  
United Future members give conditional support to the bill we look forward to the select committee examining these questions in careful detail and we hope that the bill that emerges is one that can gain widespread support in the House and can quickly find its way on to the statute book. 
DAIL JONES (NZ First) 
:  
Speaking on behalf of New Zealand First I think the preceding members have covered the situation under this bill extremely well. I take the point raised by the Hon Peter Dunne that New Zealand First is also opposed to the state of terrorism and the dreadful activities that have taken place overseas. We do not want them taking place here.  
I mention in passing as reference to the 1977 legislation when I was a member of the Government in those days we had the situation of Ananda Marga at that time and we had what were perceived to be problems with Dr Sutch and information being passed over to the Soviet Embassy at the time of the cold war. Today’s situation is really much worse than that and it is a real threat. Peter Dunne made the point that we must not effectively throw out the baby with the bath water. No member has as yet touched on clauses 21 to 27.  
In clause 27(4) especially we are changing the onus of proof under which one can act under this legislation. Usually when we are involved in a criminal type of proceeding the onus of proof to establish a prosecution is “beyond reasonable doubt”. We do not have the fairly strict “beyond reasonable doubt” requirement in this legislation we have a loosely worded phrase that some members may not fully understand. Clause 27(4) states: “The standard of proof in any proceedings under this section is the standard of proof that applies in civil proceedings.” That really does not tell us anything because then we have to ask what is the standard of proof in civil proceedings. The bill could have been better drafted and I am disappointed that no Minister of Justice or justice spokesperson from the Government has taken the call in this matter.  
Clearly what that means is that the standard of proof is on the balance of probabilities which is a much lesser test than “beyond reasonable doubt”. Under that much lesser test we can get a pecuniary penalty of $500000 against a person. That is not tough enough insofar as the penalty itself is concerned. Why is there no jail sentence in this legislation? We are looking purely at a company. Surely we should be in a situation in this legislation that we could be a bit tougher and imprison someone who does not comply with this legislation. If we are dealing with a big company it can pay the $500000 out of profits or whatever or borrow the money but nobody goes to jail. Why cannot we be tougher still? I will be interested to see when this bill comes back from the select committee whether the select committee takes up the point that if people commit an offence under this legislation in the sense that if they do not comply with the compliance order the High Court has the option to ascertain who the person or persons were who did not comply with the requirements and send them to jail. At this level up to $500000 is not terribly much for the types of people involved and of course the types of offences involved.  
Hon Dover Samuels 
: After that $500000 a day. 
DAIL JONES 
: Yes and impose a further penalty of $50000 for each day after while the contravention continues. But if we are dealing with people who have billions of dollars a $500000 fine is neither here nor there. Trying to lock them up would be more important.  
I am concerned that this Government has again failed to put up a justice spokesperson the Minister of Justice or the Attorney-General. I believe that this House has been sold short in these justice areas since I have been here. The Labour Government has no concern from the point of view of the protection of the individual insofar as his or her legal rights and suchlike are concerned.  
If the Labour Party had any concern for justice and legal rights the Attorney-General would have stood up in this House and explained the situation. I will be very interested to see the penal provisions in this bill when it comes back from the select committee Those provisions touch on the matter Peter Dunne talked about which is that if we bring in this legislation we are taking away people’s rights and we should have a clearer indication from the Government as to what it is that is being removed from our rights. 
DARREN HUGHES (NZ Labour—Otaki) 
: 
 I am pleased to support the Telecommunications (Interception Capability) Bill whose first reading debate was commenced tonight by the Associate Minister of Justice the Hon Rick Barker. Obviously the bill has a technical capability. It covers areas where there is a duty to assist and I am sure that when it goes to the Law and Order Committee it will be reported back in a way that complements the Crimes Amendment Bill (No 6). 
DEBORAH CODDINGTON (ACT NZ) 
: 
 I rise to represent the ACT party. We support the Telecommunications (Interception Capability) Bill as we would proudly support any legislation to protect national security and uphold and promote law enforcement. That is why we support this bill; and that is contained in the first sentence in the preamble to the bill. But why is this Government so schizophrenic when it comes to the issues of national security and law enforcement? That is what is confusing to me.  
If the Government can introduce a bill like this and if we can talk about protecting national security let us look at the defence of this nation. What is the point of having this legislation which I have already said that ACT supports when thanks to this Government we already have a severely marginalised defence force? For instance as we speak  
Te Kaha  
is sailing off towards a potential war zone with 160 men on board and the equivalent of a popgun up front. If we live in such a benign environment as the Prime Minister asserts why do we need this legislation at all? I am sure that my colleague Keith Locke will point out some inconsistencies there and I will leave him to do that. [ 
Interruption 
]  
Yes I am coming back to the spirit of the bill and the spirit of the bill is as it states ensuring that law enforcement and national security are protected. Let us turn that statement round for a minute. If we need this bill which we do then do we live in a benign environment? Of course we do not live in a benign environment and of course we need this bill. We need to protect national security. We all agree on the need for that. In order to protect our national security we also need to support our allies—the United States Australia and Britain—and their courage in their stand against Saddam Hussein. But instead there is an inconsistency as our Prime Minister has aligned us with Continental Europe.  
As the leader of the ACT party the Hon Richard Prebble said in this House on Tuesday 11 February when has Continental Europe ever given a continental about us? Would Germany come to help us? Just look at the German Foreign Minister. I do not know whether— 
Jill Pettis 
: He’s a lovely man. 
DEBORAH CODDINGTON 
: The member says he is a lovely man. Does the member know who Joschka Fischer is? Joschka Fischer is an anti-Semite who changed his view on abolishing the State of Israel only after Entebbe. Despite the terrorist actions at the Munich Olympics in the 1970s when the Israeli competitors were killed off one by one by Arab terrorists that German Foreign Minister was still on the record as continuing to push for the destruction of the State of Israel. 
Jill Pettis 
: I don’t agree with that. 
DEBORAH CODDINGTON 
: That member does not support that. The member was obviously confused and thought I was talking about somebody else. Joschka Fischer that Foreign Minister of a country that our Prime Minister wishes to align us with was also closely aligned with another terrorist organisation in Germany called the Baader-Meinhof gang. I am sure that that member knows about the Baader-Meinhof gang and what it got up to. As one prominent American commentator asked last week in a column: “Who are you Mr Fischer? What do you support?”. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I ask the member to be seated. I remind honourable colleagues of Speaker’s ruling 51/5(3) which states that: “a running commentary of interjection is out of order;”. As my predecessor always used to say interjections should be rare reasonable and relevant and if at all possible witty. 
DEBORAH CODDINGTON 
: Thank you Mr Assistant Speaker. I come back to what I was talking about: the promotion of law enforcement and national security. As those members might remember I did say at the beginning of my speech that I was supporting this bill on behalf of ACT. I come back to the issue of a benign environment. Do we have one? I do not think so but the Prime Minister guided by focus groups and polling has decided that we will not help the United States.  
Prime Minister Blair might well fall on his stand as was said today but at least he stood up for a principle he believed in. As Condoleeza Rice said people all around have the right to protest. That same luxury is not afforded to the people of Iraq. I believe that if we were really serious about protecting national security we would oppose the Prime Minister’s reinforcement of her resolve not to support the United States which is the world’s only superpower prepared to stand up to rogue States. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The debate is much narrower than the area the member is covering now. I ask the member to come back to the bill. 
DEBORAH CODDINGTON 
: Thank you Mr Assistant Speaker. I will focus then on the Telecommunications (Interception Capability) Bill. I am pleased to see that there are provisions in the bill to curb the rights of the State in terms of authorising who will have the ability to intercept communications. I am also pleased to see from the bill that the Government supports compensation for the loss of property rights in terms of the introduction of it and the process that allows organisations and companies to comply with the bill. I am puzzled—and I presume it will be sorted out at the select committee—as to why there is a differential between the provision of interception capability for existing fixed and mobile voice networks to be implemented and why that is not given to the cost of upgrading networks to provide for the interception of Internet and email services. Perhaps one of the members on that side could take a call and explain that discrepancy and why the taking of property is compensated in one instance but not in another.  
I am also pleased that the Government has seen fit to protect the privacy of people who should not be affected by this bill in terms of introducing measures that do not increase the powers of the police and do not increase the powers of the Security Intelligence Service. As I said if this Government wants to have support from the ACT party more often then all it needs to do is introduce more legislation that upholds law and order promotes zero tolerance for crime and protects national security. 
KEITH LOCKE (Green) 
: 
 The Greens will be opposing this bill. This debate has been interesting and I appreciate the caution of some of the speakers like Peter Dunne about the civil liberties implications of this bill. It is a companion bill to a provision in the Crimes Amendment Bill (No 6) that gives the Security Intelligence Service and the Government Communications Security Bureau the power to intercept emails. This bill implements a provision in the Crimes Amendment Bill (No 6) by requiring telecommunications network operators to have all their systems intercept capable. I was on the Law and Order Committee for the consideration of the Crimes Amendment Bill (No 6) and I say virtually all the submissions were against giving the security agencies these powers. 
The Government at that time and again today has made no case as to why we need to give law enforcement agencies these powers at this time and nor has it said how many extra criminals they may catch through these new powers. It has been obvious to the Greens through this whole debate and the debate on the Crimes Amendment Bill (No 6) that this proposal is not being driven by any objectively based demand argued by any politician by the police or by any intelligence agency representative. What came out I think in Rick Barker’s introduction is that it is being driven by what the agencies in other countries are telling us they are doing and what they would like us to do.  
No one is denying that we may catch a few more criminals through these powers but there is a huge downside for us. That big downside has two aspects. One is in terms of our privacy and the other concerns how these powers could be misused by agencies of the Government. It is particularly dangerous for the intelligence agencies to have these powers because those agencies have so little accountability to the public or to Parliament. One person who submitted to the Law and Order Committee to oppose the granting of these additional powers was anti-free trade activist Aziz Choudry who had to go to court to win a case and get compensation for the Security Intelligence Service having unjustly raided his place.  
What is particularly dangerous about the interception of electronic messages is that it can be done on a vast scale because of the sophistication of computer systems. Telephone intercepts were always constrained by the time and human power required to operate them. Because of the ease of intercepting electronic messages it would be tempting for the intelligence agencies to abuse their powers and to intercept the communications of people like Aziz Choudry—that is political dissenters. Once these interception systems are put in place as this bill provides for they will evolve to become even more draconian. We have seen signs of that in Europe recently. David Blunkett the British Home Secretary wanted Internet service providers to be required to keep subscribers’ email records for long periods so that the law enforcement agencies could check back on whom they had had email correspondence with. Three weeks ago a combination of the British communications industry the official privacy watchdog and members of Parliament defeated David Blunkett on that measure but the idea of keeping people’s back emails is still very much alive on the European continent.  
There are also problems with using email intercepts in evidence in that emails can be much more easily doctored in an untraceable way—and we heard evidence of that at the select committee—certainly when compared with paper documents or voice intercepts. One Internet service provider manager Robert Hunt of Plain Communications told a Christchurch meeting in March 2001 that he was worried that email electronic evidence can be juxtaposed to make a case. He explained: “I have had the experience of having a search warrant served on me to require my company to hand over material that was stored on our mail server namely the residual contents of a user’s mailbox. I then saw that material put forward in a curious array of bits to try and construct a case of guilt against a man the jury later found innocent. It took technical evidence before the court that unsupportable assumptions were being made technically before the jury could presumably see the falsity in the aura of guilt created by placing parts of emails in unfortunate juxtaposition. We worry about the way in which decisions are going to end up being made by security establishments when they pick out suspicious elements in material from the correspondence or the surfing activity of someone deemed to be ‘subversive’.”  
The problem with intelligence agencies is twofold: they have their own agendas and they operate in secret so that we do not always know exactly what their agenda is and how they are twisting evidence from intercepts to make their case. We have seen George Bush’s mates using supposed intercept information to undermine the inspectors in Iraq and to try to establish a link between Saddam Hussein and al-Qaeda. Now we have on our statute book the Terrorism Suppression Act whereby someone can be designated a terrorist on the basis of classified information perhaps from electronic intercepts that that accused person is not allowed to see at any subsequent stage in any court appeals. Even if the classified intercept information was accurate it could be there through no fault of the person concerned. To quote Robert Hunt again: “Today you may easily end up with a virus or Trojan in your mailer or other software that will initiate connections to the Internet email multiple parties or push your browser to a porn site.”  
Even if the information the intelligence services possess about the person they are targeting is correct do we really want a situation where people in general become scared about the websites they are visiting or about whom they email in case the intelligence services are watching? If the police are really worried about someone they already have the power to search that person’s home and to look at his or her computer. Is that not enough? The irony of the whole thing is that any real criminal with half a brain will not be caught by law enforcement interception systems. Such a person can very easily use cyber cafés open proxy servers get free unlimited email accounts like MSN Hotmail and get away scot-free. People like that will never be intercepted by any surveillance system.  
Another likely extension to the electronic surveillance system once it is entrenched through this bill in Internet service providers is to move beyond targeting particular individuals to a keyword trawling system. The Government Communications Security Bureau already uses that system through its Waihopai satellite communications interception station which is part of the Echelon network run by the US National Security Agency. It is also what the FBI in America’s Carnivore email interception system does in that country. Those systems are hugely intrusive into the lives of us all because any of us can accidentally use a keyword or key name that is being trawled for and get caught up in the net without even knowing it. Sometimes we do find out. This is what happened to a Wellington woman who made a submission to the Law and Order Committee. She had emailed a friend in the United States indicating that she could not watch the American presidential elections on television because she was going to a funeral. Because the email had the words “president” “election” and “funeral” in it it was intercepted by the Carnivore system and her friend was visited by the FBI and told about that email.  
We live in a world where there are too many moves—and the American Government is egging us on—to go down the road towards a surveillance society and I say we should not go further down that road without a good reason and without good controls. It is a problem with any bureaucracy—we have found this in the past—that some police have been charged with wrongly using the information that has been obtained and that will happen more if there is email interception. The Security Intelligence Service has been shown to have acted illegitimately on occasion and in this case the Internet service providers will also be in the system too and will perhaps use the information wrongly even though under the bill the information is supposed to be confidential.  
It is good that there is a warrant system in the bill but as we found out in the Law and Order Committee there are problems with the warrant system. There is no proper audit system for the warrants there is no system for telling people subsequently that they have had their emails intercepted and there is no proper system particularly for the Security Intelligence Service to destroy the evidence that has been collected on people when it is no longer required. There should be an amendment to the privacy principle of the Privacy Act so that the Security Intelligence Service is not exempt under that Act and is required to remove information once it is no longer necessary. 
There are a lot of problems in controlling the agencies that undertake electronic interceptions. Why not rely on traditional policing which is the most valid and the least restrictive system in terms of our civil liberties? 
JILL PETTIS (NZ Labour—Whanganui) 
:  
Nobody doubts the good intentions of the member who has just resumed his seat but I just wonder what Mr Locke is really describing. He worries me. My own personal belief—and God willing it will never happen—is that if this nation of ours was under serious threat I would want the most sophisticated form of technology available to protect our own interests. This bill is about maintaining law enforcement and our national security capabilities in an environment of rapid changes in technology. Now I am no techno-whiz but technology changes almost by the hour and our country needs to be as up with technology as possible. We are doing that in a highly targeted way eroding neither privacy nor basic individual rights and it is totally in tune with the Government’s aims for an innovative society. I am pleased to support this bill because it continues to protect people rather than to destroy any rights they might have at present. 
Dr WAYNE MAPP (NZ National—North Shore) 
: 
 As my colleague Dr the Hon Lockwood Smith has said National supports this bill but we want to make it very clear why we are doing so. The reality is we are living in an age of international terrorism. The threat is real is substantial and has affected New Zealanders directly. There are New Zealand families around today who have within the last 12 months lost family members to terrorism. That is the real issue that we are debating. When one hears the member for the Green Party one realises he dresses the issue up out of some kind of naivety and the Government gives a certain level of credit to that. But that is not true. Fundamentally Mr Locke does not accept that we have to struggle against the real threat of international terrorism and that the enemies of democracy and freedom out there would challenge our nation’s cherished freedoms. We are right in this House—and I believe the vast majority of the House recognises this—to provide the appropriate powers to protect our society.  
I want to go briefly through some of those powers but interestingly the previous Government speaker really identified the core of them. They are about keeping up with modern technology. The very core of this bill provides additional powers to network operators. Let us be clear that we are talking about TelstraClear and Telecom the sorts of companies that operate network systems. This bill gives the powers to require that there are interception capabilities in those network systems. No longer can one just put a wiretap on a person’s phone or computer. Technology simply does not work in that way. It may have in the past—and it did—but it does not now. A network is centrally driven so in order to have an interception capability particularly in terms of computer communications and emails that has to be provided for at the network level. That is what this bill does. It recognises the basic changes that have occurred in technology and gives those powers.  
I want to refer to a point that was raised by the leader of the United Future party and indeed others. A number of people have said today in this Parliament and I think they were quite well intentioned that they support the bill because it does not extend the powers of the Security Intelligence Service the police or the Government Communications Security Bureau. On the face of it that seems a reasonable proposition. But that is partly because it is not well understood that across a range of legislation—and Parliament has had to deal with quite a lot over the last 24 months—there are significant huge gaps. The ACT party also does not recognise that. The reality is that terrorist activity could occur in our country yet our authorities would not have the interception capability to deal with it. I am not talking about this bill; this bill does not fix that problem. I am talking about a situation whereby a New Zealand citizen or resident communicates with a foreign terrorist entity an embassy or something of that nature in a way that would be harmful to New Zealand’s interests. Our law does not allow for the interception of those kinds of communications. I regard that as quite a serious deficiency. The law allows interceptions between a terrorist entity in New Zealand and a terrorist entity overseas or a foreign intelligence service or between the operators and overseas entities or between two foreigners operating in New Zealand.  
That is not the only risk we face. We need only to look at what happened in the United States to see that a whole lot of foreign nationals—some of them actually had United States residency—operated surreptitiously and secretly using telephones faxes and emails and hatched a diabolical plan to crash two aircraft into the World Trade Center. The United States has the powers to make the appropriate interceptions but in New Zealand we do not. If we look at the Order Paper we see an interrupted debate on the second reading of the Government Communications Security Bureau Bill is item No. 21. One of the things we need to do is to see whether amendments are required to that bill. We are not drawing together the range of legislation in this area consolidating it and sending it to one select committee that could do something of an overview and ensure that our law does not have gaps. This is surely a time when that kind of overview is essential. I know that the Government has been working on producing a series of Acts but I do not believe it has connected the various parts of that legislation in order to provide the range of protections and security that is necessary to protect our essential freedoms. That is a particular gap that I have identified.  
My colleague raised a question about the views and attitudes of various members of the Government. Marian Hobbs might have found it amusing to reject that issue on the basis that she has changed her point of view. But as Dr the Hon Lockwood Smith pointed out it is not as though we are talking about the 1970s. We are talking about a senior Government Minister who while an Opposition member in 1997 participated in a protest against Waihopai simply disbelieving that the Government Communications Security Bureau had any role. What has changed her view? One would like to give her credit and say that maybe the responsibilities of Government have brought her to adopt a common-sense approach. Maybe the Government whip has said to Marian Hobbs that while she is in Government she must obey the Cabinet line. But this House deserves to have any Minister who has held such views in the past state directly to this Parliament why he or she has changed his or her views. Those members should take a call. That Minister was here and was able to take a call to say clearly and specifically to the New Zealand public why she has changed her view and what has brought about that conversion. She owes that to us. As I say it is one thing to talk about the views that one held one or two decades ago but it is quite another thing when people have held those views as members of Parliament. I think it is important that we receive a full explanation from those Ministers.  
I conclude on this point: right at this moment the world is on the cusp of dealing with international terrorism. There is a great challenge out there and it is Iraq. Iraq does have weapons of mass destruction and in particular biological weapons. It is specially prohibited from having such weapons. Biological weapons can only be used in terrorism. We have only to look at the use of anthrax in the United States to see the enormous scale of threat that is imposed by them. That is why we the Opposition members have been asking the Government day after day why it will not support a second resolution in the United Nations declaring Iraq to be in material breach and giving it one final chance to comply—not grudgingly but in a full and complete sense to disarm—or else it must face serious consequences.  
This type of legislation which is part of the struggle against international terrorism and threats to peace brings those questions to the fore. So far we in the Opposition are not satisfied that the Government appreciates the grave seriousness that the biological terrorism of Iraq poses to free people throughout the globe. The Government is charged to answer those questions. 
Hon Rick Barker 
: Oh this bill isn’t about Iraq. 
Dr WAYNE MAPP 
: Interjections from the junior Minister on that issue are simply not constructive. These are serious matters and the Government is required to answer to them. 
LINDSAY TISCH (NZ National—Piako) 
: 
 I want to look very closely at what the bill is about. I have always tempered the view that the primary role of a Government is the protection of its citizens whether it be at home on the street or at work where we rely on the police or whether it be on the national scene where we rely on our defence forces. This bill is about giving an extra tool to our national security to allow us to intercept messages and communications between countries between individuals and between an individual and a country. It is like an insurance policy. 
Clause 7 in my view is the main part of the bill; it is what the bill is about. It identifies that network operators must ensure that public telecommunications networks and telecommunications services have interception capability. That is in essence what the bill is about. The Government is bringing forward legislation that requires that telecommunication operators companies like Telecom Clear Communications and Telstra have interception capability. Clause 7(1) goes on to state: “ … every public telecommunications network that the operator owns controls or operates and every telecommunications service that the operator provides in New Zealand has an interception capability.” That is fine. We support that. 
However there is a provision that does concern me—and we are supporting this bill going to the Law and Order Committee. The explanatory note states: “ … the interception capability requirements specifically refer to privacy—they include the ability to exclude telecommunications that are not authorised to be intercepted.” This will be a very grey area. What is paramount? Is it security? What is the price of security? What is the price if there are interceptions that were not authorised? I guess that is covered in clause 8 “When duty to have interception capability is complied with” or further on in clause 11 “Minister may grant exemptions”. The questions I ask are why we would want to have exemptions and what the price of our national security is. When the bill goes to the select committee those will be the questions we put forward because we want to know exactly what is required there—what actually is that provision. 
We also note that in clause 15 in Part 3 there is a lead-in time. Because of changes to technology there is provision to have a quite substantial lead-in time. Clause 15(1)(a) states: “in the case of a public switched telephone network or a telecommunications service on 1 October 2004;”. Clause 15(1)(b) states: “in the case of a public data network on 1 April 2008.” So there is a huge lead-in time for this. We know that technology changes and that companies will have to spend a lot of money to be able to adapt to the requirements of this bill. We support that. 
We need to be vigilant we need to be ready and we need to play our part in the world security scene. This bill provides for that. That is the reason we will be supporting it going to the select committee. Although we may be geographically isolated we are not immune to what is happening. We saw that with the terrorism in Bali. We need to be prepared. This bill is a step along that way. It is a tool a provision that we can support and we look forward to further debate at the select committee. 
GEORGINA BEYER (NZ Labour—Wairarapa) 
: 
 It is a pleasure to speak on the Telecommunications (Interception Capability) Bill. It is worth reiterating some of the key objectives of this bill. We have to maintain law enforcement and national security capabilities in an environment of rapid changes in technology. Thus we need to require telecommunications companies to provide interception capability for e-communications. We are doing this in a highly targeted way eroding neither privacy nor basic individual rights and in a way that is in tune with the Government’s aim of an innovative society. I commend this bill going through to the select committee. 
Bill read a first time and referred to the Law and Order Committee. referred to the Law and Order Committee 
Income Tax Bill 
First Reading 
Hon RICK BARKER (Minister of Customs) 
 on behalf of the 
 Minister of Revenue 
: I move  
That the Income Tax Bill be now read a first time. 
 Later I will be recommending to the House that the bill be referred to the Finance and Expenditure Committee for consideration. 
At more than 2000 pages in length this bill must be one of the largest if not the largest bill ever introduced into this House. It has been a long time in the making. It represents the third stage of a progressive rewrite of the Income Tax Act that began in the early nineties. The first stage was the reorganisation of the Act to make its structure logical and coherent. This was completed in 1994. The next stage was the rewrite of the Act’s core provisions enacted in 1996. The core provisions are the gateway provisions that give readers an overview of the scheme and purpose of the Act and a summary of its key features. They also summarise the main steps that taxpayers must follow to meet their tax obligations. The third stage of the rewrite of the Income Tax Act culminates in the bill before the House today. The bill‘s main purpose is to rewrite Parts C D and E of the Act. They contain the fundamental rules for calculating net income so they are the most frequently used parts of the Act. 
The remaining parts of the Act will be rewritten in future stages but for the present the bill re-enacts them for the benefit of users to minimise confusion over the numbering of sections. That re-enacting of legislation accounts for a good part of the sheer size of the bill before us today. 
The aim of rewriting the Income Tax Act is to produce tax law that is clear written in plain language and structurally consistent. This will make it easier for readers to locate all the material they need and to understand what they read ultimately saving time and costs. New Zealand is not alone in seeing the need to rewrite its income tax legislation; similar work has begun in the United Kingdom and Australia. 
Today’s Income Tax Act is based on legislation dating back to 1891. The original Act the Land and Income Assessment Act was just 24 pages long. To a certain extent the dramatic lengthening of the Act over the years especially over the last two decades reflects the changing nature of business and taxation. Over time a great many provisions in a variety of drafting styles were added to what had become a creaking structure by the 1990s. By then it was fairly widely acknowledged in tax circles that the Income Tax Act lacked cohesion was hard to read and needed help from both a structural and a presentational perspective. 
The first major recommendations for rewriting the Act came from the Consultative Committee on the Taxation of Income from Capital usually known as the Valabh committee in 1990. They were supported by recommendations from other groups in 1993 and 1994. Much of the structural work was done in the first two stages of the project which were completed by 1996. 
Work over the last few years—the subject of this bill—has concentrated on refining the structure and progressively redrafting Parts A to E using plain-language drafting techniques. The plain-language law-drafting movement is an international one within English-speaking countries. It seeks to present ideas clearly and directly and to avoid archaic terms repetition and verbosity. It also seeks to use everyday words as much as possible. Therefore this bill avoids the use of legalese such as “beforementioned” “hereinbefore” “hereinafter” and “hitherto”. Likewise a phrase such as “by virtue of the fact that” simply becomes “because” and the phrase “until such time as” simply becomes “until”. 
Another feature of plain-language drafting is the use of short sentences in preference to long sentences. This is to ensure that the core structure of a sentence is not obscured by multiple or complex modifiers. A graphic example of sentence length and complexity is found in section DJ 2 of the current Act which consists of a single 14-line sentence. I suspect that by the time most readers have got to the end of the sentence they have forgotten how it began. Sensibly the rewritten legislation breaks it up into three easily understood subsections. 
The draft legislation in this bill is the work of a small project team of law drafters from the public and private sectors and tax policy analysts. They have consulted interested parties throughout the exercise sought views and tested drafts of rewritten law on a number of people and organisations. Most recently the project team sent draft legislation to 15 private sector tax specialists and a plain-language specialist for their checking comments and views. That was followed by the publication in 2001 of an “exposure draft” of the rewritten legislation for wider comment. Submissions on that publication were considered in the preparation of the draft legislation contained in this bill. 
An advisory panel has been overseeing the rewrite of the Income Tax Act since 1995 providing valuable assistance. Chaired by Mr Colin Blair the advisory panel is made up of representatives from the Institute of Chartered Accountants the New Zealand Law Society the policy advice division of the Inland Revenue Department and Treasury. One of the roles of the advisory panel is to ensure that there is a procedure in place to identify any policy issues that might arise in the course of the rewrite. The other is to act as a steering committee for the rewrite. Both roles have been filled admirably. I take this opportunity to thank the advisory panel for its work and to thank the many people who have had a hand in the development of this bill—the private and public sector experts the professional organisations the people who wrote submissions on the “exposure draft” and the rewrite project team itself which undertook the massive exercise. 
Care has been taken in the development of the bill to ensure that the provisions of the rewritten legislation have the same outcomes as those in the current Income Tax Act. A few minor policy clarifications have been made but they were subject to consultation before they were included. If in the first few years of the new Act’s operation it is found to produce a different result from that intended under the present Act the Government will seek a remedial amendment to correct the position from the date of effect of the new legislation. 
The changes introduced in this bill are described in some detail in a separate commentary which has been distributed to members of the House. I recommend it to members. I commend the Income Tax Bill to the House on behalf of the good Minister of Revenue the Hon Dr Michael Cullen. 
Dr DON BRASH (NZ National) 
: 
 I am not quite sure who we should thank for this astonishing document which is 2011 pages long. Mr Barker referred to the first reading of this bill; I am not sure whether all of us will read it one or two let alone three times; indeed I am not sure whether even those of us who are here have read it a first time yet. But let me say that the National Party welcomes this bill. We have to be in favour of anything that will simplify what has been a very complex piece of legislation. I guess that my major regret about it is that the simplification is 2011 pages long. That is a major nightmare for people in income tax practice. 
Some reports suggest that for businesses employing a relatively small number of employees tax represents some 80 percent of the regulatory burden that they face. Between lost management time spent completing their tax returns and the fees they pay for external advice income tax GST fringe benefit tax and the other kinds of taxes that businesses are subjected to are a very major impost on the business sector in New Zealand. This Government has been increasing taxes over the last 3 and a bit years. It increased the top personal income tax rate from 33 percent to 39 percent because basically it is driven by ideology and envy. It increased the cigarette excise tax by 23 percent in 2001 and more recently it has increased the petrol tax as well. So taxes have been increased. 
In addition compliance costs in the tax system have gone up in part at least because of the uncoupling of company tax from the top personal tax rate. A previous Labour Government in 1988 had I would have to concede the good sense to unify those two rates—the company tax rate and the top personal tax rate—and for the next 12 years we had a common company and top personal tax rate. That was a useful contribution to reducing the compliance costs involved in the tax system. As soon as those two rates were split we had a whole raft of other consequential changes in fringe benefit tax and so on all of which add significantly to the compliance costs facing the private sector. I think that is a matter of great regret. 
I am bound to say that this Labour Government is very different indeed from the Labour Government of 1984-90 in this respect. I had the opportunity when that Government was in office of working with then Ministers of Finance to improve the tax system at that time. The commitment of that Government was such that tax experts from the private sector lawyers and accountants were willing to work with the Government to try to eliminate the rorts to eliminate the loopholes and to eliminate the scope for tax avoidance and evasion. That was a Government committed to reducing tax rates simplifying the tax system and reducing compliance costs. 
Let me illustrate by one example. In 1985 the then Government decided to introduce a goods and services tax. I had the privilege of chairing the committee that designed that tax. The simple instruction I received from the Minister of Finance was to design a value-added tax that minimised the compliance costs facing the business sector. The Government had heard as we all had of the horrendous compliance costs that British companies faced with the multiplicity of value-added tax rates in that country. It killed off many small companies and middle-sized companies. The compliance costs were horrendous. So that Government had the good sense to say: “Let’s have a tax system that minimises compliance costs.” and that was the instruction I had in designing the GST. I think it is fair to say that that Government had the courage to put in place a goods and services tax that is still the envy of other countries throughout the world. Sadly this Government is not like that Government. It has been increasing tax rates significantly complicating the tax system and increasing the compliance costs in it. 
Let me briefly also remind the House of the two occasions on which the Minister of Finance has indicated that he is inclined to reduce the company tax rate. On 22 September 1999 he was reported in the  
Evening Post 
 as saying that Labour “would look at lowering business tax if elected”. That of course was before the election in 1999. At that point he was only the Opposition spokesperson on finance. Then a year or so later in April 2000 he told the Asia Society in Hong Kong that: “… the Government wanted to reduce the 33 percent company tax rate when it could afford to.” That was in the  
Press  
of 13 April 2000. Well nearly 3 years have gone by since the second of those two statements and what has happened? There is no sign at all of any reduction in the company tax and indeed the Minister more recently has specifically ruled out the possibility of a cut in the company tax. 
This Government talks about wanting more growth. It talks about reaching the average living standards of other OECD countries. It was a significant point in the Speech from the Throne last year. It was reiterated by the Prime Minister in her speech last week. I do not doubt that Government members will keep on saying it. But how sincere is the Government in that objective when it has a tax system that is moving the country in the opposite direction? 
I mentioned the increased compliance costs and the movement of the top personal tax rate from 33c to 39c. Of course the other impact of that tax is on growth. All the studies done on taxation show that the higher the marginal tax rate the higher the deadweight costs of the tax system. All the studies that have been done show that. They vary depending on how different techniques are used to measure the deadweight costs but all of them suggest that the deadweight costs are significant and that they are higher if the marginal tax rate is higher. This Government did not worry about that. It simply decided to increase the marginal tax rate from 33c to 39c. That means that people earning more than NZ$60000—less than US$30000—are now paying almost half the additional income they earn above that modest figure in tax. So instead of cutting those taxes the Government has increased those taxes and has made increasing the growth rate in this country that much more difficult. 
We welcome this bill. It is long overdue. But it is a huge disappointment to those who hoped we might see some significant structural changes in the tax system. 
Let me say one more thing. This Government decided a year or two back that it should look carefully at the total tax system and it appointed the McLeod committee to look at the tax system. 
Rodney Hide 
: It was a good report. 
Dr DON BRASH 
: It paid a significant amount of money for that. Mr Hide is right; it is a good report. So far none of the significant recommendations in that report have been followed by this Government. It paid money for it. It got the best experts it could find to do the report and then it has consistently ignored it. That is a huge disappointment to all of those who care about the growth and prosperity of this country. 
GORDON COPELAND (United Future) 
: 
 I rise to advise that United Future will vote in support of the first reading of this bill and its referral to the Finance and Expenditure Committee. 
As Rick Barker has said this is probably the longest bill ever introduced to the Parliament of New Zealand. Some say that that is an indication of the behemoth that has been released by generations of rapacious tax-gathering Governments intent on intruding into every conceivable aspect of human activity whether moral or immoral public or private. Others claim that the complexity and length of the Income Tax Act have arisen from the ingenuity of human beings especially those from the legal or accounting professions with their ability to invent an endless array of tax-dodging devices to avoid paying taxes properly and legally due. The latter explanation casts not the tax gatherer but the tax payer as the villain and the ever-strapped Government is left with little option but to continue to pass ever more laws to close off the new loopholes that constantly appear. 
That there is truth in both points of view is evidenced by the fact that those who make their living through tax poaching often make strenuous efforts to recruit into their ranks the very best of the gamekeepers; more rarely that ultimate gamekeeping organisation that we call the Inland Revenue Department sometimes manages to lure across a well-qualified poacher. 
I think however that if we look at the bigger picture we will discover that the reason our Income Tax Act is so long is that New Zealand has traditionally adopted a highly prescriptive legal approach to tax gathering. We like to ensure that every “i” is dotted and every “t” is crossed. By comparison the United Kingdom with 60 million citizens gets by with a much shorter Act that endeavours to set out clear tax principles leaving scope for specific interpretations to emerge either through the courts or believe it or not through negotiation. I had first-hand experience of this when I worked for BP in London during the 1970s. I witnessed the company’s head taxman suitably qualified with a degree in systematic theology go off at regular intervals to negotiate the company’s tax bill with a fisc! 
Perhaps in hindsight we would have been better to adopt the British approach. However I am afraid that the genie is out of the bottle and we are stuck with this more-than-2000-page bill. I agree with Don Brash that for small businesses it is truly a disaster. They will have neither the time nor the expertise even to read this bill. So they will for all time—most of them—be locked into having to depend on employing professional advisers to get their tax bills right. That is not a satisfactory situation. 
I am not sure how to address it. Don Brash seemed to suggest that an adjustment in the company tax rate would make it simpler. I do not think it would. The only thing that I could suggest to simplify this matter for business would be perhaps to give start-up companies a complete tax holiday for a few years. That might be a more effective way of getting them off the ground as they would not immediately have to employ professionals in order to be able to pay their first or second tax bill. That really is a great impediment to business growth in this country. 
Rodney Hide 
: Is that the policy of the United Party? 
GORDON COPELAND 
: It is indeed. Take it as our policy. 
Rodney Hide 
: A tax holiday for 2 years! 
GORDON COPELAND 
: Perhaps more for small start-up businesses. It is a suggestion that I think this House should seriously consider. 
Given that reality there is much to be said for at least ensuring that the Income Tax Bill is written in plain and therefore understandable English. I certainly hope this will prove to be the case. However we need to recognise that for an entire generation of accounting and legal tax advisers this new bill plain English and all will represent a huge challenge which I am sure they could do without. The Inland Revenue Department too will have its fair share of challenges although in its case it has the advantage of having Robin Oliver the general manager of policy who told the Finance and Expenditure Committee recently that he has actually read through the entire bill. I was delighted to hear Don Brash say that he has not yet read the entire bill which implies that he intends to—[ 
Interruption 
]—and I would like to challenge Clayton Cosgrove and Rodney Hide also to read the entire Income Tax Bill. I am not sure I will rise to it myself.  
The courts too will face many challenges as they seek to come to grips with the new approach adopted and ensure they are consistent with the Government’s undertaking that although the wording may be different it is not intended that the Act should in and of itself change the underlying tax law. 
Also the members of the House may spare a thought—but I guess they will not—for the members of the Finance and Expenditure Committee who now have ahead of them the massive task of reading through the many submissions which will likely equal or exceed in volume the length of the bill itself. Given all those circumstances I personally find it important to discover a rationale for the task that lies ahead. The best I can say is that if it will deliver to New Zealand a clear Income Tax Act capable of serving our nation’s future for many years to come then the effort will have been worthwhile. On that assumption United Future supports the bill. 
CRAIG McNAIR (NZ First) 
: 
 Before I start my speech I will say that when I heard Gordon Copeland talk about giving people a tax holiday I have not previously seen Rodney Hide as excited as he was at that. I have never seen somebody’s eyes light up as much as his did. That was very amusing and it reminded me of my days as a kid when I was given a lollipop or something. [ 
Interruption 
] Well I guess that is a compliment these days; I should not take offence at that should I?  
But I do take pleasure in speaking very briefly to this bill on behalf of the New Zealand First Party and my New Zealand First colleagues. I am also very glad to represent that party on the Finance and Expenditure Committee with my leader the Rt Hon Winston Peters.  
I noticed that the Minister of Finance the Hon Dr Michael Cullen was quoted as saying this about the bill: “The purpose of rewriting the Income Tax Act is to make it clear plainly written and structurally consistent.” As one of the New Zealand First members on the Finance and Expenditure Committee I look forward to working cooperatively with the other parties to make sure that we can do something about making that legislation truly clear plainly written and structurally consistent.  
The Hon Dr Michael Cullen also said: “The rewriting has been done in a plain-language style that seeks to present ideas clearly and directly.” A description like that makes me think that this legislation will be a best seller at Whitcoulls or something like that—that it will be a big hit at the bookshops. However on looking at this bill one sees that it is hardly what one would call light reading. It is hardly what I would read to my nephew or niece at bedtime or anything like that. 
R Doug Woolerton 
: You’d have to be a nerd to read that. 
CRAIG McNAIR 
: I guess that makes the Finance and Expenditure Committee— 
R Doug Woolerton 
: Or both. 
CRAIG McNAIR 
: All 2011 pages— 
Rodney Hide 
: What else do you do when you go to bed? 
CRAIG McNAIR 
: The  
Sunday Star-Times  
would think I would be reading that at bedtime but anyway Doug Woolerton our president knows better than that. I was listening—[ 
Interruption 
] Not like that Mr Hide.  
I was thinking about what the National spokesperson on finance Dr Don Brash said when he talked about simplifying the system by reducing the income tax rates. That did not gain Rodney Hide’s attention like the idea of tax holidays did. I am still truly amazed at how happy Rodney Hide was when he heard that. I heard Don Brash talk about lowering the company tax rate and the income tax rate but I propose to the House that we think a little more creatively than that. I know that I will sound like a broken record to members like Dr the Hon Lockwood Smith Rodney Hide and other members of the Finance and Expenditure Committee such as the chairperson Clayton Cosgrove. However I ask that committee the House and the Government to think outside the square and to think creatively. Instead of just saying that tax cuts will solve everything—cutting the income tax rate and the company tax rate—we should think creatively and look outside the square by looking at tax incentives for exporters. Let us think of something like that. Let us have an open mind about this bill I tell Dr the Hon Lockwood Smith and make our economy work. Those members should not think in a close-minded way just about tax cuts. I tell this House and the Government to think more creatively on that aspect of taxation.  
I close tonight by saying that the New Zealand First Party does support this bill going to a select committee. 
R Doug Woolerton 
: Do we? 
CRAIG McNAIR 
: We sure do Mr President. My leader the Rt Hon Winston Peters and I look forward to working on the Finance and Expenditure Committee to make sure that this legislation is beneficial to all New Zealanders. 
JILL PETTIS (NZ Labour—Whanganui) 
: 
 The purpose of rewriting the income tax legislation is as Mr McNair has just finished saying to make it clear by having it plainly written and structurally consistent. We do need to have legislation written in a more simple and easily understood form. 
R Doug Woolerton 
: What does this mean on page 2104? 
JILL PETTIS 
: I have better things to read before I go to sleep than the tax bill. I am presently reading  
Stupid White Men 
. I recommend it to the member. The rewrite of the current legislation will make it easier for readers to locate all the material they need and to understand what they read ultimately saving time and cost which is good for business good for the consumer and good for New Zealand. I support the bill. 
RODNEY HIDE (ACT NZ) 
: 
 I enjoyed Jill Pettis’ contribution. In the time that I have been in the House that is the best contribution I have heard from her in 6 years. It was positive analytical—for Jill Pettis—and insightful which is more than I can say for every other contribution she has made.  
This legislation says it all: it is a simplified version of the income tax legislation. I tell people who are listening on the radio that when I wandered over to pick up the bill I picked up something—I ask Mr McNair how thick this bill would be. 
Craig McNair 
: Pretty thick. 
RODNEY HIDE 
: It is pretty thick like some Government members. It is probably an inch and a half thick in old Christian units. I thought that this bill was enormous but when I carried it back to my desk and started to peruse it I discovered I had only half of it. I had to get the second half which is another inch and a half thick. This is the simplified version of the income tax legislation! I want members of the House to consider that this legislation is what a dairy owner taxi driver or plumber has to comply with. This is the requirement that we put on small and medium business in New Zealand. As we know that is not the half of it. One has to have the Goods and Services Tax Act and all the other tax Acts—and this legislation is what this Government calls the simple version of our income tax legislation. [ 
Interruption 
] It is very interesting to hear from Clayton Cosgrove. I have been down in his electorate and they say he is a very interesting MP. They say that what he lacks in intelligence he makes up for with his own stupidity. That summarises Clayton Cosgrove’s contribution to these debates.  
I have a question for members of the Government: since they have come to office have they made the income tax legislation simpler or more complicated? Chris Carter says that is a hard one. I ask him what the answer on balance is. Mr Carter has a lot to say interjecting away by saying that members think they have been having a glass of wine or whatever. But I ask him this: since this Government came into office in 1999 does he believe that the income tax code has become simpler or more difficult? Chris Carter is sitting there silently. He knows nothing about income tax; he does not speak to business. Trevor Mallard has a lot to say. He is a senior Minister so I ask him whether the income tax code has become more complicated or simpler since this Government came into office. We can assume from their silence that those members do not know the answer to that.  
Every person whom I know in business has told me that it has become more complicated. Every accounting professional and every law professional who has come before the Finance and Expenditure Committee has said that the income tax legislation has become more complicated—and the senior Ministers and senior members in this Government do not even know that. Chris Carter and Trevor Mallard like to pretend that they are in touch with business and yet they cannot figure out whether in the last 4 years the income tax code has become more complicated or simpler.  
Let me remind members of the submissions and reports from professionals and from business people up and down this country when the top rate of tax was increased to 39 cents in the dollar in terms of what that meant to the tax code. I know Dr Lockwood Smith knows exactly what that meant because we sat there in the select committee and heard those submissions. Did Trevor Mallard Helen Clark or Michael Cullen care about what those submissions stated? No Craig McNair is quite right; those members could not care less about business. Business to them as Michael Cullen says is just another interest group with its hand out. That is how Michael Cullen views farmers dairy owners plumbers taxi drivers and the other working people who are saying that they are being killed by that stuff. Michael Cullen says that business is just another interest group like the Post Primary Teachers Association with its hand out.  
Let me come to the United Future party. I thought I had studied its policies but tonight I was very interested to hear a new one from no less than its deputy leader who says the United Future party’s tax policy— 
Paul Adams 
: Who are you looking at? 
RODNEY HIDE 
: What is Mr Copeland? He is the whip. Who is the deputy leader of United Future? [ 
Interruption 
] He is not in Parliament. United Future has a deputy leader who is too shy to be elected and too shy to turn up in this House. But United Future’s whip who is the next in charge says that the party’s policy is to have a 2-year tax holiday for start-up businesses. Mr Craig McNair thought that I was happy and excited at the prospect of that but I was stunned. I was shocked. When did it occur I ask Mr Adams that that became United Future’s policy? 
Paul Adams 
: It’s exciting. 
RODNEY HIDE 
: When did that become a policy of the United Future party? When was it announced and when did the caucus decide on it?  
Mr Adams has said that policy was decided on and announced tonight. We have here the United Future members saying that they would provide a 2-year tax holiday for every start-up business in New Zealand. For 2 years those businesses could just forget about the tax rules and paying tax because there would be no tax for 2 years. Here is my question: what efforts have the United Future members made to present that new exciting and innovative policy to the Government that they so happily support? Have the United Future members discussed that policy with the finance and revenue Minister Dr Michael Cullen? I ask those members whether the answer is yes or no. 
Paul Adams 
: I haven’t. 
RODNEY HIDE 
: They have not spoken to the Government about that yet. Is there a plan to take that new bold and innovative policy that was dreamt up tonight to the Government of the day? Will it be taken to the Government tonight? [ 
Interruption 
] I quite like this United Future party. It is having bold and innovative ideas tonight. We have learnt three things. We have learnt first that United Future’s deputy leader is not a member of Parliament. I had not heard of him before. Second we have learnt that tonight United Future has invented a new and exciting tax policy: a tax holiday for 2 years and third as Mr Adams has just announced we have learnt that I am United Future’s spokesperson on tax matters. I admire his judgment insight and intelligence. After hearing Mr Copeland’s suggestion I think the United Future party does need a new spokesperson on tax matters. I say to that party— 
Judy Turner 
: What’s your policy? 
RODNEY HIDE 
: I am pleased the member asked that. Our tax policy is that there should be a flat tax of 20 cents in the dollar across the board. [ 
Interruption 
] We are being told by the United Future party to talk to the Government. Our party probably has as much success in talking to the Government as the United Future party does but the difference between us is that we do not vote for the Government. That is the difference between United Future and ACT. The United Future party members now consider themselves to be so useless that they can float ideas without any thought that anyone in the Government might listen to them because each and every day in this House their votes are taken for granted. So those members have come down to the House and recommended as supporters of the Government a new policy which is to have an income tax and a GST holiday for 2 years for every new business. 
CLAYTON COSGROVE (NZ Labour—Waimakariri) 
: 
 I rise to support the Income Tax Bill and in doing so I want to acknowledge the constructive speeches I have heard especially from Mr McNair Dr Brash and Gordon Copeland. Each expressed in his own terms his view and philosophy with regard to tax whilst supporting the bill at least to the select committee stage. That is in contrast to the whining buffoonery we have just heard from the previous speaker Mr Hide who—and I give him some credit for it—has waged a campaign on tax reform has championed some taxpayers of dubious origin and has always talked of the need for simplicity in respect of tax systems. Tonight he offered us nothing but buffoonery. I know Mr Hide has a reputation for lecturing on tax from Fiji to Albania and I am told by Mr Carter and others—[ 
Interruption 
] on Waiheke Island recently—but I say to him in all seriousness that this bill will be a complex one before the select committee. We should consider the contributions of others as we go through the bill and work in a constructive way.  
The essence of a good tax system in my view is that it must have the confidence of the public of taxpayers and of the taxpaying community as a whole. To engender that confidence tax law must be transparent and it must be simple. Although it is very weighty I think this bill goes some way to meeting those objectives. Tax legislation as we heard from Mr Barker who introduced the bill goes back to 1891 and an advisory committee has been giving advice on it since 1995. I endorse the bill and finish by counselling Mr Hide to get away from the politics of buffoonery and take the example of Dr Brash and I suspect Dr Lockwood Smith and others— 
Hon Trevor Mallard 
: Or Deborah Coddington. 
CLAYTON COSGROVE 
: Or Deborah Coddington—who will be the future leader of ACT—and deal with this highly technical bill which I think will provide simplicity and transparency in a constructive way. All I will say in respect of Mr Hide’s comments about my electorate of Waimakariri is that I have always welcomed Mr Hide—who was born I think in Rangiora—back to my electorate because every time he arrives my majority goes up. I commend the bill to the House. 
Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) 
: 
 Members of the public who are listening to this debate may be interested to know that the member who has just resumed his seat is the chairperson of the Finance and Expenditure Committee—the committee that will be examining this legislation. I would have expected a little better from him. He said the public needed to have confidence in our tax legislation. I agree with that. He said there needed to be simplicity and transparency in it. He cannot even have attempted to read the 2000 pages of this legislation if he thinks this is simple legislation—and if he thinks it is transparent then he does not know what the word means. “Transparent” means something that can be seen through. There is no way in the world that one can see through 2000 pages of complex legislation.  
The chair of the Finance and Expenditure Committee was wrong when he said that the current tax Act goes back to 1891. It does not. I acknowledge that that was when the first taxation Act was written but the structure of the current tax Act was established in 1916 and it had 143 pages. The simplified version in front of this Parliament today is over 2000 pages. We politicians should ask ourselves why. It is important because the 2000 pages of law in this bill take off middle-income New Zealanders a third or thereabouts of their hard-earned income. This complex bill determines how we take that income off them.  
Let us go back a few years in the history of this Parliament to a well-known Government under a well-known Prime Minister—in fact a Labour Prime Minister—Michael Joseph Savage. He is probably best known historically in New Zealand for the establishment of the welfare State. After his Labour Government had established the welfare State to look after those in need in this country the Government tax take represented about 16 percent of gross domestic product (GDP). The equivalent amount that we politicians take off the people of New Zealand today—and I think we all have a bit to answer for here—is 35 percent of everything they produce. Total Government expenditure including local government is up at exactly 40 percent of everything spent in this country; but to compare apples with apples central government’s tax take after Michael Joseph Savage developed the welfare State was 16 percent of GDP. Today the equivalent figure is 35 percent of GDP which is more than twice as big a hunk of the economy. That has a lot to do with why since 1916 the Income Tax Act has gone from 143 pages up to more than 2000 pages because the more tax one tries to take off people the more complex the rules have to be.  
I could not endorse more wholeheartedly the contribution by National’s spokesperson on finance Dr Don Brash—the previous Governor of the Reserve Bank—when he said that there was a desperate need not to talk about making our income tax more transparent and simple. That is really just rhetoric. If we want to achieve that we have to simplify the tax structures—the tax system—very significantly. It should not be beyond our wits because part of the complexity of our current tax system is that its whole nature was developed before the calculator was created. It was developed back in the days when abacuses were used for doing arithmetic. 
Hon Trevor Mallard 
: What word? Abaci. 
Dr the Hon LOCKWOOD SMITH 
: The Minister of Education corrects me—abaci. I will take his word for it. Let me just use the singular and say “before the abacus was even developed”. 
Let me just share with the House some of the stupidities of the current Income Tax Act. The Minister of Education pays 15c in the dollar tax on the first $9500 of income he earns. Why? And he pays 39c in the dollar tax on the last $15000 of income he earns. Where on earth is the rationale in that? The tax law is so much more complex because of it. If this Government is serious about simplifying income tax it needs to engage its brain a helluva lot more than it has done so far. All it has done so far is to pick up the reform work started by the last National Government when in 1994 it rewrote the Income Tax Act—simply I guess to try to get the thing into some kind of shape. It was not a major reform in 1994. Then in 1996 the last National Government rewrote the core provisions with the Taxation (Core Provisions) Act. In 1997 the last National Government issued a discussion document on that major rewrite of the Income Tax Act. In 1998 the last National Government put out an issues paper on how it might be done. All of this then was essentially the work of the last National-led Government but it is not enough. It was way back in 1997 and 1998 that we did this work.  
It is fair to say that this Labour Government has tried to do some slippery things. For example it is not just satisfied with rewriting the legislation sensibly; instead it has tried to do devious little things like changing the meaning of “dividend”. It tried to include in the definition of “dividend” the services that a company might provide to any shareholders. Not done! Fortunately some people who were watching what the Government was up to pointed out that it is unacceptable to slip that kind of deviousness through the system.  
It has taken the Government too long to do this part; what is needed is a major rethink of how we structure the taxation system in this country. A lot of members of this House will not realise how stupid it has got. Let me share this fact with the Parliament: there are employers in this country who are employing 270000—that is over a quarter of a million—working taxpaying families. Under the 2000 pages of tax law employers take PAYE off them and pay that to the Inland Revenue Department. The amount of PAYE paid by those 270000 families is just under a billion dollars which is promptly taken off them by this tax law. The Inland Revenue Department then turns round and pays every cent of it back to those same families. It may not pay back exactly the same amount but every cent of that amount—which is just under a billion dollars—that employers take off employees under the income tax law we are debating for the first time tonight is paid to the Inland Revenue Department. The Inland Revenue Department then turns round and pays exactly the same amount back to those people. Whatever way one looks at it that is damned stupid. Surely even Trevor Mallard would have to ask where on earth is the logic in that? How does Clayton Cosgrove the chairperson of the Finance and Expenditure Committee explain the logic of this complex law? He probably does not know because he does not employ anyone. I do and I have done it. Every month I deduct PAYE from the wages of farm workers on the average income with three kids and the Inland Revenue Department pays the exact same amount back to them! That is what I mean about an intelligent approach to improving our tax laws in this country.  
Dr Don Brash mentioned that we should be bringing the top personal tax rate and the corporate tax rate back together. The whole system should be flattened. We would not need all this complexity—trying to define income which the bill does under Part C; trying to define deductabilities under Part D and then under part E the timings of when deductabilities can take place—if we simplified the entire tax structure; that is flattened it and got rid of the complexities in the system. It should not be beyond our wit. The tax system grew like topsy from the early days and no Government—I do not just blame Labour for that—has really applied intelligence to asking why for example we tax the Minister of Education 15c in the dollar on his first $9500 and 39c in the dollar on his last $9500. It makes no sense. We will support this bill to a select committee but it is only a start on what should happen in terms of tax reform in this country. 
Bill read a first time and referred to the Finance and Expenditure Committee. referred to the Finance and Expenditure Committee 
The House adjourned at 9.50 p.m.