Volume 667 Week 55 - Thursday 23 September 2010 
Volume 667 Week 55 - Thursday 23 September 2010 
[Volume:667;Page:14273] 
Thursday 23 September 2010 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon CHRISTOPHER FINLAYSON (Attorney-General) 
 on behalf of the  
Leader of the House 
: The House will lift this afternoon for a 2-week adjournment. When it resumes on 12 October priority will be given to the New Zealand Public Health and Disability Amendment Bill and the Ngati Tuwharetoa Raukawa and Te Arawa River Iwi Waikato River Bill. The Hon Luamanuvao Winnie Laban will deliver her valedictory statement on Tuesday 12 October at 5.30 p.m. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 The Opposition just wonders what the future is for the Identity Information Confirmation Bill which we notice has slipped even further down the Order Paper this week. We are wondering whether that bill will reappear in the next sitting. 
Hon CHRISTOPHER FINLAYSON (Attorney-General) 
: 
 I first congratulate the member on his promotion and tell him that the bill will be dealt with in due course. I can understand the member’s concern that the movements of Chris Carter be better monitored but until then Labour will have to rely on eyewitness reports and grainy amateur video footage or phone Helen to find out where he is. 
Mr SPEAKER 
: The Speaker remains none the wiser. 
Questions to Ministers 
Local Government Minister—Confidence 
1. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Prime Minister 
: Does he stand by his statement in the House yesterday that: “Mr Hide has carried out his affairs in a personal and private capacity to a high ethical standard”? 
Hon BILL ENGLISH (Deputy Prime Minister) 
 on behalf of the  
Prime Minister 
: Yes. 
Hon Annette King 
: Does he think Rodney Hide met the highest ethical standards when on a Television One  
Close Up  
programme he encouraged New Zealanders to break the law relating to the Building Act by saying: “Look as a Minister I can’t recommend someone breaking the law but I believe he should.”? 
Hon BILL ENGLISH 
: I am advised that he was not actually advocating breaking the law—because it was not the law. 
Hon Annette King 
: Does he think a Minister who told an audience that the Prime Minister John Key does not do anything and who suggested it was easy to ram proposals through Cabinet as was reported in the Christchurch  
Press  
demonstrated the highest ethical standards? 
Hon BILL ENGLISH 
: Any Minister will have an opinion about how Cabinet is run or how his or her colleagues perform. Mr Hide is no exception. 
Hon Annette King 
: Does he think that a Minister’s endorsing a dental firm in breach of the  
Cabinet Manual 
 demonstrates the highest ethical standards? 
Hon BILL ENGLISH 
: That is an assertion. The Prime Minister would expect any breach of the  
Cabinet Manual 
 to be brought to his attention. 
Hon Annette King 
: Does he think that a Minister’s charging people to hear him speak on his portfolio demonstrates the highest ethical standards? 
Hon BILL ENGLISH 
: That issue has been discussed and dealt with in the past. I have to say it is a bit rich to be lectured by the Labour members about ethical standards after Labour’s previous term in office was a trail of ethical breaches ministerial incompetence and untrustworthiness. 
Hon Annette King 
: Does he think that a Minister who has been accused of bullying another Minister as was reported in numerous media outlets shows the highest ethical behaviour? [ 
Interruption 
] 
Mr SPEAKER 
: Before I call the Minister I say to members that the level of interjection is getting too high. I was finding it difficult to hear the Hon Annette King. 
Hon BILL ENGLISH 
: If the Prime Minister was to receive an allegation of ministerial bullying he would refer it to the Labour members who are experts in these matters. 
Grant Robertson 
: I raise a point of order Mr Speaker. [ 
Interruption 
] 
Mr SPEAKER 
: A point of order has been called. 
Grant Robertson 
: In a number of the answers that the Hon Bill English has given today he has not actually addressed the question. In that one he immediately turned to talk about Labour rather than answering the question that was asked. 
Mr SPEAKER 
: I think that is a fair point. There was a lot of noise while the member was asking the question and I invite the Hon Annette King to repeat her question. 
Hon Annette King 
: Does he think that a Minister who has been accused of bullying another Minister as was reported in numerous media outlets shows good ethical behaviour? 
Hon BILL ENGLISH 
: As I said if the Prime Minister received an allegation of ministerial bullying one option would be to refer it to the Labour members who are experts in these matters. 
Mr SPEAKER 
: I accept that the question was seeking an opinion and there is no particular answer to an opinion but I do not think that the question justified an attack like that on Labour. I invite the Minister to re-answer that question because he can answer the question without attacking the questioner. 
Hon Dr Nick Smith 
: I raise a point of order Mr Speaker. How can it be proper for a member in a question to accuse a Minister of bullying but not proper for the Minister in response to refer to many complaints of bullying by members of the Opposition? Is it not tit for tat in this House? [ 
Interruption 
] 
Mr SPEAKER 
: This is not a game of tit for tat; it happens to be question time in Parliament. The member who asked the question referred to reports and the member does not need to think back far to when a former Minister was reported as making such a claim. The member has based her question on that. Admittedly it was a supplementary question and therefore could not be validated but I do not believe that the question justified an attack on Labour. The questioner did not attack National; the question just asked whether certain behaviour was considered to be ethical behaviour. I do not believe that it deserved an attack to be made on the questioner’s party. 
Hon John Carter 
: I raise a point of order Mr Speaker. We get to these situations because we are now into political issues. We get to the stage where one party asks another party a political question and then the respondent the Minister in this case responds in a political way. For example an Opposition member has raised the issue of an accusation of bullying by one Minister against another. In the same way the Minister may well have been referring to the fact that the Opposition accused one of its members of being mentally unwell—and that again is a form of bullying. 
Mr SPEAKER 
: I have listened to the member long enough. The question was not out of order. Members may not like the question. I can think of many times when I have asked a question in this House and certain members did not like the question. But that does not mean to say questioners should be treated with contempt. No attempt was made to answer the question. I accept that there is no precise answer but simply to attack the party of the questioner is not good enough. I stress again that the questioner did not attack the Minister’s party. The question did not make any attack on National in respect of anything at all. It just asked whether certain behaviour would be considered to be ethical. I accept that the question is hypothetical. It seeks an opinion and there is no precise answer but to attack the questioner’s party is not acceptable. 
Hon BILL ENGLISH 
: As far as I am aware the Prime Minister has not received any substantiated complaint of that nature. 
Hon Annette King 
: Does he think Mr Hide’s use of taxpayers’ money to take his girlfriend on a round-the-world trip and attend her brother’s wedding after he had campaigned against such behaviour demonstrated the highest ethical standards? 
Hon BILL ENGLISH 
: It is the style of this Government that Ministers deal with the consequences of any decisions they make and that matter has been aired publicly. I can assure the House though that when National members make judgments that get them into trouble we do not accuse them of being mentally ill as is the habit of the Labour Party. 
Chris Hipkins 
: I raise a point of order Mr Speaker. I waited until the end of the question in the hope that the situation would improve. I am sitting just two rows directly behind Annette King and those of us in the back row can barely hear what is going on today. I waited for the duration of question No. 1 as I hoped the situation would improve. We could not hear what John Carter was saying when he spoke to the point of order and we could not hear what the Clerk was saying when she read out the items of business at the beginning of the day. I wonder whether the volume could be turned up a bit. We seem to go from one extreme to the other. Some weeks it is incredibly loud and I cannot hear myself think and on other days such as today I can barely hear what is going on. 
Mr SPEAKER 
: The member’s point is well made. I apologise to the House. I am equally frustrated. I cannot understand why the technicians cannot achieve a standard level of sound in this Chamber. All I can say to give some hope to members—and I think the sound has improved while I have been talking—is that the experts who installed this hugely expensive sound system are coming back during the next adjournment to do further work to try to improve the quality. But as Speaker I still state publicly that I am not happy with the day-to-day variation in the levels that we are subjected to in the House. The member is absolutely right. I find it equally frustrating and I apologise to all members. But I think the sound has improved; it is indeed better now. 
Economy—Reports 
2. 
TODD McCLAY (National—Rotorua) 
 to the  
Minister of Finance 
: What reports has he received on the economy? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Today Statistics New Zealand reported that real GDP grew by 0.2 percent in the June quarter. The economy has now expanded in five successive quarters and has grown by 2 percent over the past year. This follows five quarters of contraction that began at the start of 2008. The numbers today illustrate that the economy is headed in the right direction. Private consumption growth was almost zero which tells us that households have clamped down on their spending. By contrast export volumes have risen by 7 percent and had their strongest quarter on record. Although we want stronger growth this switch towards saving and exporting more is precisely what the economy needs as a prerequisite for sustained higher incomes and sustained new growth which is a reversal of the trend of the previous 5 years. 
Todd McClay 
: What is the outlook for growth from here? 
Hon BILL ENGLISH 
: Most commentators see a continuation of the expansion through the next few years at around 2.5 to 3 percent per year. Of course given world conditions it is likely that progress along this path could be volatile. Also local events will impact on it—for instance the Canterbury earthquake will have some negative impact. Trading partner growth looks to be weaker in the second half of 2010 though it could still end up being positive. I think most people are realising by now though that we have a different kind of recovery from what is usual in New Zealand. In this case exporting is strengthening and people are saving more. In the shorter term that means things are a bit tougher; in the longer term it is the right direction for the economy. 
Hon Sir Roger Douglas 
: Is the Minister aware that since he became the Minister of Finance the gap between Australian and New Zealand incomes has increased by 29 percent; if so how does he plan to achieve the Government’s concrete goal of catching Australia by 2025? 
Hon BILL ENGLISH 
: I do not agree with the member’s figures but we share the common goal of catching Australia. The Government will continue with the plan it is currently following: extensive investment in infrastructure cutting red tape in regulation lifting skills and education across New Zealand reforming the tax system supporting innovation and improving the efficiency of the Public Service which makes up about one-quarter of the economy. 
Hon Sir Roger Douglas 
: I seek leave to table a chart prepared by the Parliamentary Library comparing New Zealand gross average weekly earnings with Australia’s purchasing power parity adjusted. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Todd McClay 
: What is the Government’s next step to ensure that the current expansion is sustainable? 
Hon BILL ENGLISH 
: The next step to help strengthen the economy is next week’s tax changes. These include across-the-board personal tax cuts to the value of about $4 billion offset by increases in GST tobacco excise and the effective tax rate on property investment. This will help boost New Zealand’s long-term growth prospects by tilting the economy towards savings investment and exports and away from borrowing housing speculation and excessive consumption. 
Inflation and Wage Growth—Treasury Forecast to March 2013 
3. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: How much does inflation outstrip nominal wage growth for the next 3 years to March 2013 as forecast on page 63 of the Budget 2010 Economic and Fiscal Update? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 It does not. In 2012 and 2013 as well as in 2014 the forecast the member refers to shows quite the opposite with nominal wages growing faster than inflation. In 2011 inflation is forecast to outstrip pre-tax wage growth but that is simply because the table on page 63 does not take account of the tax switch on 1 October. After-tax wages are what matter to people and the 1 October tax switch will increase people’s after-tax wages. As I said in the House on Tuesday real after-tax wages—that is after tax and after taking into account inflation—will rise by over 1 percent in the last 3 months of the year. 
Hon David Cunliffe 
: Given that his online tax calculator does not take account of his own inflation forecasts and he is now telling the House that his own Budget does not take account of his own tax switch how can he maintain that New Zealanders will be better off when his Budget is delivering higher prices not higher wages; and does this explain the widening wage gap between New Zealand and Australia which is estimated by his esteemed predecessor to have grown by 29 percent? 
Hon BILL ENGLISH 
: No but let me explain to the Minister again. He picked out— 
Hon David Cunliffe 
: Which Minister? 
Hon BILL ENGLISH 
: Let me explain to the member—well as a Minister he spent a lot of time in front of the mirror and that is what he sees when he looks in the mirror. The member sent us to page 63. When I look at the figures on page 63 I see that in the next 4 years nominal wages outstrip inflation in 3 of those years. Nominal wages outstrip inflation in 3 of those years. The 1 year where they do not is 2011 and the reason they do not is that the GST increase pushes inflation higher. But of course those figures do not take account of the income tax cut. When we take account of the income tax cut we see that in all 4 years wage increases outstrip inflation. So using the figures the member himself pointed out he is wrong. 
Hon David Cunliffe 
: Could the Minister describe in plain English whether today’s poor GDP figures which are less than one-quarter of the 0.9 percent growth that the Reserve Bank was expecting are further evidence of a stalling economy that has so far delivered only higher rents higher doctors’ fees and higher electricity and petrol prices for New Zealanders? 
Hon BILL ENGLISH 
: No. The outlook for the economy is that it is rebalancing in just the way it needs to with stronger exports and stronger savings. It is also delivering more increases in real after-tax wages in the next year than the Labour Government delivered in its last 3 or 4 years in office. The fact is New Zealanders are being more careful with their spending—probably a bit more careful than we expected—and that is one of the reasons for the number today. 
Simon Bridges 
: Is 1.2 percent growth in real after-tax wages a significant increase? 
Hon BILL ENGLISH 
: The answer is that I would not get too carried away about it but it is pretty significant growth compared with what has happened in the past. If we use the figures that are used to calculate national superannuation entitlements and have been used for the last 15 years or so we see that under the previous Labour Government from September 2003 to September 2008 real after-tax wages grew by a total of only 0.3 percent. They then did go up a bit when the tax cuts came in and wages will go up after these tax cuts come in. So the member opposite cannot claim that when Labour cut taxes wages went up but when National does it they do not go up. Of course they go up. 
Hon David Cunliffe 
: Can the Minister guarantee that supermarkets and other retailers will not raise prices by more than 2.5 percent on the back of his GST increase from next week and what enforcement powers are at his disposal to ensure that that will not occur? 
Hon BILL ENGLISH 
: If supermarkets could put up their prices any day they liked they would have already done it. I think many supermarkets will be putting their prices up by less than the GST increase. New Zealanders are being very careful in how they spend retailers are having to discount consistently to get their sales up and it is not likely that we will see a burst of excessive pricing. If there is then the member is free to complain to the Commerce Commission about it. 
Hon David Cunliffe 
: Do the retailers he was just talking about that will have to discount include Contact Energy which will increase its prices by 6 percent on 1 October; bus fares in Wellington which for some people are increasing by 100 percent; and even the humble stamp which is increasing by 20 percent? If so what has he done to ensure that none of those prices exceeds the 2.5 percent GST increase? 
Hon BILL ENGLISH 
: The unfortunate thing for the member’s theory is that in fact forecasts of inflation are dropping not rising. If the member was such an expert on controlling prices then why did the CPI under his Government increase by almost 3 percent a year? It is currently increasing by about 1.2 percent a year. Food and vegetable prices have actually dropped by 6.5 percent per year in the last 2 years compared with an increase of 4.9 percent a year under Labour. Petrol and diesel prices have dropped by an average of 4 percent a year compared with an increase of 7.2 percent a year under Labour. That is why forecasts of inflation are now dropping—because a lot of prices are dropping and real after-tax incomes are rising. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. Further to your earlier comments I think there may still be a problem with the speaker system because I was not sure whether he said it was growth or inflation that was dropping. 
Mr SPEAKER 
: I said to the member the other day that he is a senior member in this House and he knows that that is not a point of order. One day he will stretch my patience too far. 
Tax System Changes—Fairness and Equity 
4. 
JONATHAN YOUNG (National—New Plymouth) 
 to the  
Minister of Revenue 
: How will the tax system be fairer and more equitable for all New Zealanders from 1 October? 
Hon PETER DUNNE (Minister of Revenue) 
: 
 In response to the member’s question the tax system will be fairer and more equitable in the following ways. By next Friday the bottom tax rate will have fallen 30 percent in the last 2 years to 10.5c and the threshold up to which it applies will have gone up considerably from $9500 to $14000. All intermediate tax rates will have been reduced and every income tax threshold increased so much so that for nearly three-quarters of taxpayers the top marginal rate will now be just 17.5 percent. When the effect of Working For Families tax credits is added in a family with two children will now pay effectively no tax at all until their earnings exceed $50000. 
Jonathan Young 
: Which groups gained most from the Budget 2010 tax changes? 
Hon PETER DUNNE 
: That is a very interesting question. Two-thirds of the cost of the income tax cuts will go to reducing the bottom two marginal tax rates. The rate for income up to $14000 will go down from 12.5 percent to 10.5 percent and the rate for income up to $48000 will reduce from 21 percent to 17.5 percent. In every single income level the income tax cuts will more than offset the rate of increase in GST. A further important point is that we are also reducing the top personal tax rate to 33 percent and aligning that with the rate payable by trusts. 
Jonathan Young 
: Which groups will bear most of the cost of the Budget 2010 tax changes? 
Hon PETER DUNNE 
: The costs of these cuts do have to be met and the Budget is therefore not a lolly scramble. The groups that will pay more are property owners large foreign companies with interests in New Zealand people who use trusts to reduce their taxable income to gain access to Working for Families tax credits and also smokers. For its own part the Government will be giving another $120 million to the Inland Revenue Department to better prosecute cases and we expect about a fivefold return over the next 4 years. In response to both this question and the previous questions all these measures put together are overall a much fairer tax system for every single New Zealander. 
Stuart Nash 
: How can the tax cuts be fair when they increase the wage gap between someone on the median wage and someone on $120000 by over $75 a week? 
Hon PETER DUNNE 
: I do not think the member was listening to my earlier answer. The biggest point of fairness in this package is the fact that nearly three-quarters of New Zealand taxpayers after 1 October will face a top marginal tax rate of just 17.5c in the dollar. That is a huge improvement on the position just a couple of years ago when that rate was over 30c in the dollar and it certainly boosts our international competitiveness. 
Stuart Nash 
: How can it be equitable when the Minister himself will be better off by almost $140 a week while someone on the median wage in his electorate will be better off by less than $5 a week? 
Hon PETER DUNNE 
: Unlike the member I am not fixated by what I earn. The reality is that with two-thirds of the cost of this package being borne by the bottom two tax-rate changes the vast majority of the impact of the package will be beneficial for people on those lower income tax rates. 
Hon Heather Roy 
: Will the final tax proposal outlined in his  
Making tax easier 
 discussion document prevent workers who have been overtaxed through no fault of their own from receiving a tax refund; if so how is this fair or equitable? 
Hon PETER DUNNE 
: Firstly we are still consulting on that particular proposal but the point at issue there is that by having a better method of collecting tax from people through greater reliance on electronic measures we will actually get the tax rate right first up so there will not be the need for the unders and overs square up at the end of the year. So I can assure the member that no one will lose out under that proposal. 
Accident Compensation—Hearing Loss Victims 
5. 
Hon DAVID PARKER (Labour) 
 to the  
Minister for ACC 
: Does his recent admission that ACC has handled the issue of counselling for sexual abuse victims badly give him cause to question whether ACC has also treated victims of hearing loss badly? 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 No. The issue of sensitive claims was about best clinical practice and with the assistance of the independent clinical reviews supported by the Accident Compensation Corporation (ACC) it has resulted in a good outcome. The issue of hearing loss is about policy and regulation and arises from a Cabinet decision last year that ACC should as per its legislation be responsible only for injury-related hearing loss and not for that caused by other factors such as age. In short age is not an accident. 
Hon David Parker 
: Does the Minister still assert that he had no responsibility nor blame properly attached to him for the mistakes made in relation to the withdrawal of accident compensation counselling for victims of sexual crimes; if so why do we bother with question time where he was repeatedly warned about his folly? 
Hon Dr NICK SMITH 
: Of course I am responsible; I am the Minister for ACC. But my response to the issues that were raised was to seek an independent clinical review. Members opposite have been misleading when they have asserted that decisions made by clinicians in respect of sensitive claims were made by either me or Ministers. 
Hon David Parker 
: Given the Minister’s earlier assertions that he relies on expert advice why has he ignored the evidence from Professor Thorne and Dr Welch of the department of audiology at the University of Auckland who said: “The introduction of a percentage handicap threshold for [noise-induced hearing loss] appears to be a reaction to the cost of claims and is apparently not based on an understanding of the real [noise-induced hearing loss] situation in New Zealand.”? 
Hon Dr NICK SMITH 
: The member is making reference to the accident compensation amendment legislation that introduced the 6 percent threshold. That decision was made finally by Parliament but with my strong support as the Minister. I note that every workers’ compensation scheme in Australia has a threshold— 
Grant Robertson 
: We’re in New Zealand. 
Hon Dr NICK SMITH 
: Well yes we are. But I also say that as a consequence of the multibillion-dollar losses that the previous Government passed on to us in the area of accident compensation we have had to be very careful about ensuring cost-effectiveness of the scheme’s expenditure. 
Michael Woodhouse 
: What discussions has the Minister had with his colleague the Minister of Health to ensure that ACC’s systems properly respond to any changes to ensure that people are able to secure health support for any age-related hearing loss? 
Hon Dr NICK SMITH 
: I have had very close discussions with the Minister of Health and officials from our respective agencies have been working closely together. The current rule is that if any support for hearing loss is provided through the accident compensation scheme then the claimant is ineligible for any support from the Ministry of Health. This has led people in the sector to assume a lack of any support from the Ministry of Health where a person has industrial hearing loss as well as age-related hearing loss. The Government is working through the options and considering the submissions that have been made. We are confident that we can come to an answer between ACC and the Ministry of Health that will be fair and will work for those who require hearing assistance. 
Hon David Parker 
: Has the Minister seen the latest issue of the National Foundation for the Deaf’s magazine which contains a report about people on whom his decisions are impacting—like Les Slattery who is reported to have repaired chainsaws in the 1970s without earmuffs and if it were not for that job he would not need hearing aids but now at age 72 he faces cuts to his accident compensation cover for his work-related hearing loss? 
Hon Dr NICK SMITH 
: Let me make the issue absolutely plain: the scheme will meet its full obligations for hearing loss that has occurred as a consequence of industrial hearing loss. We have made that absolutely plain. As I have said I am working closely with the Minister of Health to ensure that where a person has a mix of both industrial and age-related hearing loss the total package is one that works well for New Zealanders. 
Michael Woodhouse 
: Can the Minister confirm the facts of the audited accounts of ACC which show losses of $7.2 billion in 2007 and 2008; if so has he received any calls for a full and independent inquiry into those losses? 
Hon Dr NICK SMITH 
: Yes. The audited ACC accounts show a loss of $2.4 billion in 2007-08 and $4.8 billion in 2008-09. This total of $7.2 billion exceeds that of the expected losses from all of the 61 failed finance companies. The cost of ACC’s loss to the public purse exceeds by a factor of 10 the cost of the deposit guarantee scheme. I have not received any calls from the Opposition for a full public inquiry into those losses although I note that the inquiry into the failure to disclose the losses in the non-earners account shows that it was a breach of the Public Finance Act. 
Hon David Parker 
: Why would older New Zealanders not see his refusal to provide proper accident compensation cover for work-related hearing loss as just part of National’s campaign to target the elderly for cost-cutting with other examples being cuts to home support to the falls prevention programme and to orthopaedic operations for older workers who have suffered shoulder injuries? 
Hon Dr NICK SMITH 
: This Government is very committed to providing proper support for older New Zealanders—for instance tax changes will come into effect on 1 October and the average superannuitant will be significantly better off with those changes. We need to look only at the biggest-ever increase in elective surgery which my colleague Tony Ryall has delivered or at the very good work that my colleague John Carter is doing as the Minister for Senior Citizens to realise that older New Zealanders are so much better off with the leadership from this Government. 
Welfare Reforms—Legislation in Force from 27 September 
6. 
CHESTER BORROWS (National—Whanganui) 
 to the  
Minister for Social Development and Employment 
: What new legislation introduced by her is coming into force next week? 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 Two new pieces of legislation come into force next week. Both of these deliver on National’s pre-election manifesto promises. The Social Security (New Work Tests Incentives and Obligations) Amendment Act comes into force on Monday and the Fresh Start Children Young Persons and Their Families (Youth Courts Jurisdiction and Orders) Amendment Act comes into force next Friday 1 October. 
Chester Borrows 
: What changes will these two pieces of legislation make? 
Hon PAULA BENNETT 
: The social assistance legislation rebalances expectations and obligations and supports this Government’s belief that those who can work should be actively looking for work. The Fresh Start legislation is aimed at the country’s 1000 most persistent serious young offenders. It means that from Friday 1 October Youth Court judges will have a greater tool box of options including new parenting mentoring and drug and alcohol rehabilitation orders. This allows young offenders to be held to account while providing the greater supports that are so necessary to turn their lives round. 
Su’a William Sio 
: Will the introduction of work-test requirements for recipients of the unemployment benefit and the domestic purposes benefit in Canterbury be delayed due to the effects of the earthquake; if so how long will they be delayed for? 
Hon PAULA BENNETT 
: Yes. Cabinet approved delays to those on Monday. They will be delayed until 1 March next year. 
Chester Borrows 
: How many people will be better off because of these changes? 
Hon PAULA BENNETT 
: The Social Security (New Work Tests Incentives and Obligations) Amendment Act means that all 336000 beneficiaries will benefit from the legislated CPI changes. About 28000 people will benefit from increased abatement levels which will cost $53 million. This means that those on the invalids benefit and the domestic purposes benefit will get more money in their pocket if they are working part-time. 
Jacinda Ardern 
: How much additional funding has been invested in alcohol and drug programmes since she created the new alcohol and drug orders and does she believe that this will be sufficient to cope with the 80 percent of young people appearing before the Youth Court who committed their crime under the influence of drugs or alcohol? 
Hon PAULA BENNETT 
: Between the mentoring parenting and drug and alcohol orders there will 1232 new places. For the drug and alcohol issue by itself there are 32 places in residential drug and alcohol programmes to combat the very serious end of it. About $9.4 million is going into those sorts of programmes. Contracts have been negotiated and are going out to community organisations to date. 
Question No. 5 to Minister 
Hon DAVID PARKER (Labour) 
: 
 I seek leave to table a document prepared by the Accident Compensation Corporation last year that states that neither Victoria nor South Australia has a threshold for hearing aids for work-related hearing loss. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
Electricity—Prices 
7. 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
 to the  
Minister of Energy and Resources 
: Does he stand by his comments regarding electricity prices made a year ago where he said “I’m promising to make every effort to slow the increase”? 
Hon PANSY WONG (Associate Minister of Energy and Resources) 
 on behalf of the  
Minister of Energy and Resources 
: Yes and the efforts made through the Government’s policies are working. During the 9 long years between 1999 and 2008 under the Labour Government average residential electricity prices went up by a massive 72 percent. In the nearly 2 years since National came into office prices have risen by 6 percent and that is including the effect of the emissions trading scheme. It is clear that Labour has no credibility in questioning power price increases. 
Hon Nanaia Mahuta 
: Is the Minister aware that the average unpaid electricity bill has increased by $100 in the last year to $615 and how does that statistic support his statement that electricity is becoming more affordable for New Zealanders? 
Hon PANSY WONG 
: As I said power prices increased over the last 2 years by 6.6 percent and between October 2009 and 2010 the increase was 4.4 percent which is nowhere near the 72 percent increase during those 9 long years of the Labour Government. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. I imagine that you can anticipate the point of order. I waited until after the response to the first supplementary question to raise it. The primary question set down on notice asked the Minister a substantive question and we got a rehearsal of Labour’s record. 
Mr SPEAKER 
: I hear what the member is on about. Ministers must listen to the question. I know that the Minister is very keen to get her point across but the question asked something quite different. If I recollect correctly it was “Is the Minister aware of a certain increase in the average value of unpaid electricity bills; if so”—and it went on to the next bit. At least the Minister might have indicated in answering whether she has even heard of that or is aware of it in any way shape or form. To just repeat a point that the Minister wants to make is certainly not what question time is about. I invite the Hon Nanaia Mahuta to repeat her question to make sure the Minister does hear it. 
Hon Nanaia Mahuta 
: Is the Minister aware that the average unpaid electricity bill increased by $100 in the last year to $615 and how does that statistic support his statement that electricity is becoming more affordable for New Zealanders? 
Hon PANSY WONG 
: I think power prices increased affordability and whether an individual pays the higher prices are not necessarily correlated. Obviously the power companies should be looking at enforcing repayment. The fact that the Government is introducing tax cuts from next month will certainly mean that people are better off with cash in their pockets. I hope they will pay their unpaid bills. 
Chris Auchinvole 
: How will the Government’s tax package leave an average household better off? 
Hon David Parker 
: I raise a point of order Mr Speaker. I do not see how that can come within the terms of the primary question and I do not think it is permissible with respect for the Government to answer a supplementary question so broadly as to bring anything within the ambit of a supplementary patsy question. 
Hon Christopher Finlayson 
: Mr Speaker yesterday there was a very precise question on the Crafar farms and you allowed the supplementary questions to range well beyond the scope of it. I suggest that this is an identical situation. 
Hon Rodney Hide 
: I do not want to address the issue of the substance of the point of order as that is for you Mr Speaker but my point is that a member should not be able to stand up in this House and say that because he or she cannot see something it is outside the Standing Orders. 
Mr SPEAKER 
: The point that the Hon David Parker was making as I understood his point of order was to raise a concern that Ministers may when answering a question introduce such material as to allow another member from their party to then ask a favourable question based on the material included in a previous answer. That is what I understood to be the point being raised by the Hon David Parker. It is an interesting point because I would have to rule that the question was in order because of the way that the Hon Pansy Wong had answered the previous question. Should it become a problem I will watch it and think about it. But I think given that this is the first time this issue has particularly been raised I cannot deprive the member of the right to ask a question based on an answer the Minister has given. But I understand the point that the honourable member was making in his point of order and I think it was perfectly reasonable. However given the situation today I must invite the Minister to answer the question. 
Hon PANSY WONG 
: The Electricity Industry Bill which is to receive its third reading includes measures that will certainly slow down the increases in power prices. First of all it is implementing recommendations made by the ministerial review of the electricity market conducted last year. It includes asset swaps between State-owned enterprises— 
Hon David Parker 
: I raise a point of order Mr Speaker. The Speaker ruled that the question was in order but the Minister has not addressed the question which came from her own member. 
Chris Auchinvole 
: I think there has been an element of confusion arising from the constant points of order. I would be very happy to repeat my question which was a spontaneous question asked in response to the Minister raising an issue in her answer to a previous question. 
Mr SPEAKER 
: Given the circumstances that have arisen it appears to me that the Minister might have been answering a different question. I invite Chris Auchinvole to repeat his question. 
Chris Auchinvole 
: How will the Government’s tax package leave an average household better off? 
Hon PANSY WONG 
: I see. Following the tax cuts to be introduced on 1 October—next month—73 percent of New Zealanders will pay average tax of only 17.5 percent and each household will be $25 per week better off and that has to be good news. 
Hon Nanaia Mahuta 
: Does the Minister agree with the comment of the Veda Advantage Chief Executive Officer Geoff Harper: “with ETS levies GST rises ongoing job losses and the fact that money is generally tight and recovery still feels a long way off I’m afraid we’re going to see a massive spike in the number of people who just won’t be able to pay their bills.”; if not why not? 
Hon PANSY WONG 
: The emissions trading scheme introduced by National is estimated to increase power prices by $3. If the Labour emissions trading scheme had been introduced the increase would have doubled. Next month when the tax cuts are introduced people will have more cash in their hands. The fact that we have introduced the Electricity Industry Bill which will increase competition is further good news for consumers because more competition will lead to a slow-down in increases in power prices. 
Hon Nanaia Mahuta 
: Is the 12 percent electricity price rise that Gisborne households will incur from Genesis Energy from October the “slower rate of increase” that households should expect under the Minister’s watch? 
Hon PANSY WONG 
: History is the better indicator. The fact is that over the last 2 years price increases have been constrained to 6.6 percent. Also the Electricity Industry Bill will enable consumers to switch companies more easily. I think intelligent New Zealanders will use that scheme to check and monitor their power price increases. 
Animal Welfare—Ethical and Moral Dimensions 
8. 
SUE KEDGLEY (Green) 
 to the  
Minister of Agriculture 
: Is animal welfare principally an ethical and moral issue; if not why not? 
Hon NATHAN GUY (Minister of Internal Affairs) 
 on behalf of the  
Minister of Agriculture 
: Animal welfare is not just an ethical and moral issue; it is a complex international policy issue involving ethical moral scientific economic and trade-related considerations. This requires the Government to take a balanced approach when considering animal welfare matters. 
Sue Kedgley 
: Which in his view is more important: trade and economic considerations and the profitability of farmers or moral and ethical issues about how animals are treated? 
Hon NATHAN GUY 
: I believe that I answered that in reply to the primary question. I said the Government needs to take a very balanced approach. 
Sue Kedgley 
: What responsibility does he have as the Minister of Agriculture who is responsible for animal welfare for investigating ethical issues relating to the treatment of farm animals in New Zealand? 
Hon NATHAN GUY 
: The member will be pleased to know—and indeed she commended the Minister in her first reading speech on the Animal Welfare Amendment Bill which the House passed earlier this year—that the Government has invested $8.2 million over 4 years. That is the biggest funding boost for animal welfare activities that we have had and it doubles the number of Ministry of Agriculture and Forestry enforcement agents on the ground. 
Sue Kedgley 
: I raise a point of order Mr Speaker. I asked a very straightforward and specific question. I asked what responsibility he had for investigating ethical issues relating to the treatment of farm animals. Whether the Government has increased the enforcement budget is completely irrelevant to the ethical issues relating to the treatment of farm animals in New Zealand. 
Mr SPEAKER 
: I think the member has further supplementary questions in which to pick apart the Minister’s answers. The Minister as I heard his answer indicated that the Government was investing more money in inspectors to enable these issues to be investigated and dealt with. That would seem to indicate that the Minister is prepared. Ministers are not responsible; they take these actions through their departments. That answer seemed to be reasonable but if the member is not happy with it she has further supplementary questions in which to pick it apart. 
Sue Kedgley 
: I raise a point of order Mr Speaker. I have only a very limited number of supplementary questions. I asked specifically about investigating ethical issues which animal welfare inspectors do not do. They investigate issues of the abuse of animals; they do not investigate ethical issues relating to the treatment of farm animals. 
Mr SPEAKER 
: I believe that that is a perfectly valid reason why we have further supplementary questions. The Minister I believe made an honest attempt to answer that question and it is not for the Speaker to pick it apart; that is the role of the member who asked the question. As I look at the supplementary questions that may be asked I see the member has four more questions. The member has every opportunity to pick the answer apart with four more supplementary questions. 
Sue Kedgley 
: Does he think it is acceptable that it is an offence under the Animal Welfare Act to keep a companion animal such as a dog in a cage but perfectly acceptable to keep a farm animal such as a hen or a pig in a cage for all or most of its life? 
Hon NATHAN GUY 
: The member will be pleased to know that this Government is doing an awful lot more on animal welfare issues than was done in the previous 9 years. As a result of that we have already passed some legislation through this House and the Minister has also announced that a full review of the Animal Welfare Act is planned for 2011. 
Sue Kedgley 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I think that I can predict what the member’s point of order is. On this occasion the member’s question was very specific. I invite her to repeat it so that there will be no misunderstanding because some attempt must be made to answer it. 
Sue Kedgley 
: Does he think it is acceptable that it is an offence under the Animal Welfare Act to keep a companion animal such as a dog in a cage but perfectly acceptable to keep a farm animal such as a hen or a pig in a cage for all or most of its life? 
Hon NATHAN GUY 
: That is something that will be addressed in the wide-ranging review in 2011 that I have indicated will occur. The Minister looks forward to the response to that review and bringing the issue back to Parliament. 
Sue Kedgley 
: Does he disagree with New Zealand’s largest mainstream animal welfare organisation the SPCA that it is unethical to keep sows in cages where they cannot turn round socialise search for food be part of a family build a nest for their young or express any normal patterns of behaviour; if so why? 
Hon NATHAN GUY 
: Yes the Minister has heard of those concerns and I come back to the point again that they will be captured in the 2011 review. The Minister has also received information in the last week from the New Zealand Veterinary Association which wrote: “I would like to acknowledge the continuing support and priority you and the Government are putting on animal welfare and particularly the additional funding of $8 million to support MAF deliver on the animal welfare portfolio.” 
Sue Kedgley 
: Does he believe that the National Animal Ethics Advisory Committee pays enough attention to the ethical considerations that underpin animal welfare such as whether it is acceptable to force animals to suffer throughout their lives so that they can become more efficient producers of meat milk and eggs? 
Hon NATHAN GUY 
: Yes at this point in time the Minister does but that will be covered under the wide-ranging review in 2011. 
Sue Kedgley 
: Given the ethical and moral issues that underpin animal welfare why will the Government not allow a personal or conscience vote on my member’s bill on animal welfare? 
Hon NATHAN GUY 
: National has made a decision on that and we will not be supporting a conscience vote. It is also interesting to note that when the Animal Welfare Amendment Bill recently passed through this Parliament it had majority support in the House but the member for the Greens did not call for a conscience vote then. 
Mr SPEAKER 
: To assist the House I tell members that it is not actually a Minister’s responsibility as to whether a conscience vote is allowed on a matter; it is a matter for the Speaker. 
Student Loans—Performance Element 
9. 
GRANT ROBERTSON (Labour—Wellington Central) 
 to the  
Minister for Tertiary Education 
: Why did the Government make the performance element of the student loan scheme that requires a borrower to pass more than half their course over a 2-year period retrospective to include courses taken in 2009 when it was introduced in Budget 2010? 
Hon STEVEN JOYCE (Minister for Tertiary Education) 
: 
 The Government put the performance element in place to encourage students to use taxpayers’ generous support of their academic study wisely and because we want to avoid the situation where students who are not succeeding academically are stung with thousands of dollars of debt and have no qualification to help them pay back that debt. With regard to commencing with 2009 data we have acknowledged at the outset an element of retrospectivity and we have made it clear that if students are showing strong progress this year or have legitimate reasons for their past performances then StudyLink has the discretion to consider their individual cases for having their student loans extended. 
Grant Robertson 
: I raise a point of order Mr Speaker. That was an interesting statement from the Minister but the question asked why—it was looking for a reason. We got an explanation of what was happening in the process but there was no attempt to explain why it was retrospective. 
Mr SPEAKER 
: If the Minister wishes to add further to his answer I am very happy for that. 
Hon STEVEN JOYCE 
: I went through the reasons why we introduced the performance element and I acknowledged the retrospectivity which links the two together and then I said what the students could do about it. I think it was a very clear and full answer. 
Grant Robertson 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I think the member is being a little pedantic given that he has further supplementary questions. The Minister did not try to be political. I think he made a genuine attempt to answer that question. He said the Government acknowledged why it was retrospective. The reason it has introduced the measure including why it is retrospective is to improve performance. The quality of an answer is something the Speaker cannot judge but it seemed to be a reasonable answer. 
Grant Robertson 
: How does the Minister think it is fair that thousands of students will not be eligible for student loans next year on the basis of having failed courses in 2009 at a time when they had no idea that the Government was going to introduce this requirement? 
Hon STEVEN JOYCE 
: As I have just said to the member if students are showing strong progress in 2010 or have legitimate reasons for their past poor performances then StudyLink has the discretion to consider their individual cases and it can. 
Grant Robertson 
: Is the Minister aware that some tertiary institutions have estimated that more than 20 percent of their students are at risk of not being eligible for student loans next year as a result of making the performance element retrospective; if so will he be compensating institutions for that loss of funding? 
Hon STEVEN JOYCE 
: I am aware via the media that one institution has claimed that and let us think about what that means. It means that that institution is saying that 20 percent of its students are failing more than half their courses not over just 1 year but 2 years. I have a problem with any institution doing that because that says there are big issues with pastoral care and big issues with encouraging their students to achieve academically. I think that institution has much wider issues that it needs to address. 
Grant Robertson 
: Has the Minister made any public statement that has acknowledged the retrospectivity of the performance element of the student loan scheme before today? 
Hon STEVEN JOYCE 
: On the day the decision was released in the Budget there was a press release and a series of questions and answers about it I say to Mr Robertson. It seems to me that you are one of the few people who have not been awake since then because you are now raising it as an issue not in May— 
Grant Robertson 
: I raise a point of order Mr Speaker. My question was reasonably straightforward. It asked whether the Minister had made any public statement on that. 
Hon Bill English 
: He answered it. You didn’t like the answer. 
Grant Robertson 
: He did not I say to Mr English. He answered about the department and not about— 
Mr SPEAKER 
: We will not have interjections. It was my fault; I apologise to the member that that happened. The Hon Bill English should know better than to interject during a point of order. The Minister did answer the question. He disputed it. The question which was a fair question asked whether the Minister had made any public statement about the retrospectivity aspect of this issue. The Minister said he did make that clear I think on the day of the Budget in a press release in answers to questions. It sounded to me like it was attached to that press release. I acknowledge that the Minister then threw in a bit of a political gibe in suggesting that the member had not noticed that—in slightly different language—but I do not think it was a particularly vicious political gibe and at least he answered the question. Had he started his answer that way I would have pulled him up totally but at least he did answer the question. 
Hon Annette King 
: I raise a point of order Mr Speaker. There is just one part of your ruling I think you omitted. In fact the Minister brought you into the debate. He addressed the member as “you” and I remember that a poor old member who asked a question yesterday was made to apologise for including you in an interjection. 
Hon STEVEN JOYCE 
: Mr Speaker I apologise profusely for drawing you into it. I was of course referring to Mr Robertson being asleep at the time. 
Mr SPEAKER 
: The only fair thing for me to do now is to hear Grant Robertson. 
Grant Robertson 
: This is a different matter. I seek leave to table—I would not normally do this but I will in light of the Minister’s answer—the Minister’s press statement on Budget day on this matter which did not contain any questions and answers. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Earthquake Canterbury—Government Assistance for Character and Heritage Buildings 
10. 
AARON GILMORE (National) 
 to the  
Minister for Arts Culture and Heritage 
: What assistance is the Government providing to assist with the repair restoration and strengthening of heritage and character buildings in the Canterbury region? 
Hon CHRISTOPHER FINLAYSON (Minister for Arts Culture and Heritage) 
: 
 Last Friday the Government announced that it would contribute up to $10 million in addition to local funding to assist with the repair restoration and strengthening of heritage and character buildings in the Canterbury region. 
Aaron Gilmore 
: Why is the Government providing assistance with the repair restoration and strengthening of heritage and character buildings in the Canterbury region? 
Hon CHRISTOPHER FINLAYSON 
: Those buildings are an important part of the region’s character and history. The earthquake caused significant damage to many of these buildings. The cost of their repair and restoration will be considerable and it is appropriate that the Government assists with local rebuilding and strengthening efforts in order to preserve that history. The Canterbury community places a high value on its heritage and character buildings. The Government shares that view and it will encourage further donations through its provision of matching funding for regional heritage repairs dollar for dollar up to a maximum of $10 million. 
Hon Steve Chadwick 
: Thank you for that contribution to heritage buildings— 
Mr SPEAKER 
: There should be just a question not a comment. 
Hon Steve Chadwick 
: Is he satisfied that building owners and interested parties will be appropriately consulted on any decision arising from the Order in Council process related to heritage in Christchurch? 
Hon CHRISTOPHER FINLAYSON 
: I thank the member for her thanks; it is gratefully appreciated. Yes. 
Hon Members 
: Mr Speaker. 
Mr SPEAKER 
: Well— 
Hon CHRISTOPHER FINLAYSON 
: I have answered the question succinctly which is I know a novelty. 
Mr SPEAKER 
: I apologise. I hear what is going on. 
Rahui Katene 
: Does the council’s definition of heritage buildings include marae as ancestral marae are by definition the embodiment of a community’s heritage; if so what assistance will be made available for marae repair and strengthening? 
Hon CHRISTOPHER FINLAYSON 
: Officials from the ministry are currently working with the local councils in Canterbury and the Historic Places Trust to establish relevant criteria for applications to access the funds that the Government is going to make available. Those criteria have not yet been finalised. 
Rahui Katene 
: What consultation has there been with mana whenua throughout Otautahi to seek guidance about the repair restoration and strengthening that will be required of their special heritage and character buildings? 
Hon CHRISTOPHER FINLAYSON 
: Decisions on the repair restoration and strengthening of the special heritage and character buildings in Canterbury will be made by members of the Canterbury community not by central government. Although it is not an area of ministerial responsibility I note the close and constructive earthquake recovery engagement between local councils and representatives of Ngai Tahu. 
Auckland Transition Agency—Cost of Recruitment Agency’s Services 
11. 
PHIL TWYFORD (Labour) 
 to the  
Minister of Local Government 
: What is the total cost to date of the services provided to the Auckland Transition Agency by the recruitment firm Momentum? 
Hon RODNEY HIDE (Minister of Local Government) 
: 
 The evaluation panel chaired by Laila Harré the Auckland Transition Agency’s human resources and workforce adviser selected Momentum from three possible agencies due to its quality processes and the fact it offered the lowest price. I am not sure what has been charged but the total cost to the Auckland Transition Agency of Momentum’s consultancy services has been $355500 for the recruitment of 45 mid-tier managers in the structure of the new Auckland Council. 
Phil Twyford 
: Is he concerned that public money is connected to a conflict of interest by Michelle Boag campaigning and fund-raising for John Banks on Momentum letterhead while Momentum is recruiting senior executives for the super-city? 
Hon RODNEY HIDE 
: I have been assured by the Auckland Transition Agency that Momentum has done a good job. Of course I am not responsible as Minister for the behaviour of Michelle Boag or Momentum. 
Phil Twyford 
: Does he believe he is displaying “high ethical standards” by washing his hands of this matter when public money is clearly involved? 
Hon RODNEY HIDE 
: Yes. 
Phil Twyford 
: What confidence does he think Auckland ratepayers have in his ability to manage the transition to the super-city given revelations that have called into question his ability to act in an ethical manner? 
Hon RODNEY HIDE 
: Well the people of Auckland should have very high confidence because as that member has observed the previous Government for 9 years did nothing in Auckland. This Government has done a remarkable job. To give the member just one example of what that means a member over there was saying that the water price would go up by hundreds of dollars; in fact because of the changes we have instituted the water price for a family of four in my own electorate will fall on 1 July next year by 40 percent. 
Phil Twyford 
: I raise a point of order Mr Speaker. My question was about his ability to act in an ethical manner and the confidence of Auckland ratepayers. It was not about water charges in Epsom. 
Hon RODNEY HIDE 
: Speaking to the point of order. 
Mr SPEAKER 
: I do not think I need assistance. In fact the Minister answered the question asked. He gave reasons why Aucklanders would have confidence—so he believed—in him as Minister and given the length of the question he was at liberty to answer whatever part of the question he chose. The Minister chose in his answer to cover the issue of confidence. I believe that the Minister answered that part of the question. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. The Minister has refused to answer part of that question on the grounds that he was not as Minister responsible for the actions of Michelle Boag— 
Mr SPEAKER 
: Order! 
Hon David Cunliffe 
: I have not made the request yet. 
Mr SPEAKER 
: I do not see what the point of order is. Is the member referring to an earlier supplementary question? 
Hon David Cunliffe 
: Yes. 
Mr SPEAKER 
: The Minister indicated that he does not have responsibility for the activities of a business that is under contract it would seem to the Auckland Transition Agency and the Minister is absolutely right—he does not have direct responsibility for that. He can certainly be questioned about it but when it comes to detail the Minister has indicated that he does not have direct responsibility; he has indicated that to the House. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I will hear the member briefly further. 
Hon David Cunliffe 
: Mr Speaker the intent of the point of order was to inquire whether your ruling about the Minister’s responsibility would change if the person in question were to take up a senior line management position in the organisation—for example as the chief of staff of the incoming mayor. 
Mr SPEAKER 
: As Speaker I am not going to rule on hypothetical issues; I can rule only on what is before the House and on matters to do with the order of the House. I have ruled that the Minister is answerable for issues going on in his local government area of responsibility. The Auckland Transition Agency has been set up by statute so the Minister can answer questions about it. But the Minister in his answer says he does not have ministerial responsibility and I think there has to be a reasonable point at which I as Speaker have to accept that. 
Phil Twyford 
: I raise a point of order Mr Speaker. Further to your comment just prior to that my recollection is that the Minister in his answer to my first supplementary question acknowledged that public money had been spent by the Auckland Transition Agency on contracting Momentum to recruit executives for the super-city. I would have thought that that was clearly within the responsibility of the Minister—the spending of public money by his transition agency. 
Mr SPEAKER 
: We will not go back because that question was dealt with. I can only through points of order deal with the issues before the House right now. The question was dealt with; the Minister answered it. The question before the House right now is to do with ethical issues and confidence and the Minister answered that he believed that Aucklanders did have confidence in him as Minister. The member has further supplementary questions available to him should he wish to take them. 
Hon RODNEY HIDE 
: I raise a point of order Mr Speaker. To help you in the House Mr Speaker let me say through you that I am more than happy to help any member of the Opposition frame his or her questions so that they are in order. 
Mr SPEAKER 
: That is not helpful to the good order of the House. On this occasion I will choose to ignore it. 
Public Transport Auckland—Commuter Rail Network 
12. 
Dr CAM CALDER (National) 
 to the  
Minister of Transport 
: What further progress is being made on developing the commuter rail network in Auckland? 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 There is more good news. I am looking forward to tomorrow when I will help to officially open the newly constructed New Lynn transport hub. This $275 million project has separated road and rail by placing the rail tracks in a trench; it has double-tracked the railway line; and it is being serviced by a new station that is part of an integrated transport hub for bus and rail. This will provide easy access to public transport for New Lynn locals and it will significantly improve traffic flow through the area. The wider development is expected to create 4000 new residents and provide 12000 new jobs. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. I acknowledge that the question has been accepted on notice but I question whether the Minister does in fact have responsibility for the matters raised in the question as he has made no significant decisions around the New Lynn transit— 
Mr SPEAKER 
: I do not know what the Hon David Cunliffe is attempting to achieve with silly points of order. The only way to describe that is as a silly point of order. The member may think that it is clever but I do not. I do not think that members of the public who are listening will think that it is clever either. 
Dr Cam Calder 
: How does the development at New Lynn fit into the Government’s wider $1.6 billion investment in Auckland rail? 
Hon STEVEN JOYCE 
: This National-led Government has funded improvements to all transport modes in Auckland—for example the Victoria Park tunnel the north-western cycleway and of course our enormous commitment to rail with the electrification of the lines new electric passenger trains and ongoing work to upgrade the infrastructure. This Government has spent $180 million on improvements to Auckland’s commuter rail with another $1 billion worth of commitments to come and all of it without charging a 10c a litre regional fuel tax which of course the previous Labour Government was planning to do. 
Carol Beaumont 
: When the Minister warned the House yesterday that further work must be done to ensure that the new rail network is financially sustainable did he mean that further fare increases can be expected or that the central business district rail loop is now off the agenda? 
Hon STEVEN JOYCE 
: Firstly the central business district rail loop has not been committed to by anybody in terms of funding—not by either the previous Government or the current one nor by any of the local bodies in Auckland that have talked about it on a regular basis. So it cannot be off the agenda if it has not yet been on it. In regard to the cost of actually running the rail network there are some issues in terms of making sure that we can cover the operating costs of the expanded network for Auckland before we go further. There are three ways in which that can be met: increased subsidies from the Auckland local bodies from the New Zealand Transport Agency and from fares. We do not want to see in Auckland the situation that has occurred over many years in Wellington where insufficient investment in maintenance and renewal has resulted in a very very poor network. That situation was not fixed by the previous Government. 
Electricity Industry Bill 
Third Reading 
Hon JOHN CARTER (Minister of Civil Defence) 
 on behalf of the  
Minister of Energy and Resources 
: I move  
That the Electricity Industry Bill be now read a third time 
. The bill will give the electricity industry a well overdue overhaul. When this Government took office there was widespread dissatisfaction with the performance of the electricity sector. Prices had risen relentlessly in the previous decade especially for residential consumers. At the time consumers had been asked several times to save power because not enough generation had been built to deal with dry years. There was also widespread criticism of the Electricity Commission which was seen as slow to deal with competition issues and to approve overdue upgrades to the transmission system. Last year the Minister set up a ministerial review to get to the bottom of these problems and come up with a workable and practical solution. The review consulted widely and proposed a comprehensive set of measures to get traction on the issues. The Government carefully considered the recommendations of the review and this bill implements the final decisions. 
The overall aims of the bill are as follows. Firstly it aims to increase the level of competition in the industry particularly in retailing and particularly in the South Island. Secondly it aims to put strong incentives on the industry to better manage the security of supply particularly in dry years. Thirdly it aims to streamline the governance and decision-making arrangements for the industry. In terms of improving competition in the sector the ministerial review concluded that the portfolios of the State-owned enterprises were not well balanced in terms of the location of their assets and activities and the types of generation that they owned. This meant that the State-owned enterprises tended to concentrate their activities in either the North Island or the South Island and did not really operate as nationwide competitors. A major objective of the bill is to compel the State-owned enterprises to compete nationwide. This is being done by transferring the Tekapo A and Tekapo B stations from Meridian Energy to Genesis Power and through virtual asset swaps between three State-owned enterprises via long-term hedge contracts. We are already seeing a noticeable uptake in real competition as a result of these changes. 
There are a number of other pro-competitive measures in the bill. These measures include letting lines businesses get back into retailing subject to various provisions designed to ensure continued open access to lines for competing retailers and generators; setting up a liquid hedge market so that generators and retailers especially new entrants and businesses generally can better manage market risk including volatile spot prices; reducing the barriers to retail entry by reducing the complexity of line tariffs; and setting up a fund to encourage consumers to shop around. The Minister is also putting pressure on the industry to speed up consumer switching times. 
The second main component of the bill is about improving the security of supply. To this end the bill contains measures designed to improve the incentives for the industry and its participants to better manage the security of supply and to make public conservation campaigns a last resort not a first resort. The measures include getting rid of the reserve energy scheme put in place in 2003 and ensuring that the Whirinaki power station is operated commercially. The ministerial review concluded that the reserve energy scheme reduced rather than improved the security of supply by transferring responsibility for managing security from industry participants to the Electricity Commission. The bill also requires retailers to compensate consumers when conservation campaigns are put in place and it enables a floor to be put on spot prices during campaigns and other supply emergencies. The aim of these measures is to ensure that the industry rather than the consumer wears the costs of poor supply management. 
The bill also improves governance arrangements in the electricity sector. It does this by replacing the Electricity Commission with a more focused independent and streamlined Electricity Authority. Functions better undertaken elsewhere are transferred such as the promotion of energy efficiency to the Energy Efficiency and Conservation Authority the approval of grid upgrade proposals to the Commerce Commission and the management of supply emergencies to Transpower. The new authority will be required to focus on getting the rules right with the objective of improving competition reliability and efficiency in the industry. It is also required to set up advisory groups including a Security and Reliability Council. 
Finally the bill includes the provisions of the discharged Electricity (Continuance of Supply) Amendment Bill. These provisions will ensure that rural electricity consumers will continue to receive secure electricity supply while allowing lines companies to meet their obligations in more efficient and cost-effective ways. 
Overall the Minister is confident that this bill will deliver a more competitive more responsible and more responsive electricity sector. However we need to repeat a caution: we cannot promise that there will be lower prices. There are a number of upward pressures on electricity costs particularly the need to build new power stations and transmission and distribution lines. We need to invest over a billion dollars each and every year to replace ageing assets and meet steadily growing demand. As has been said before we have long since run out of cheap options for building new power stations and transmission lines. We can give assurances however that this bill will put more competitive pressure on costs and prices in the industry and will improve the incentives for managing the security of supply. 
In conclusion the Minister and I would like to thank the Finance and Expenditure Committee for its work on the bill and to thank all those who made submissions. I commend the Electricity Industry Bill to the House. 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
: 
 I rise to speak to the third reading of the Electricity Industry Bill and to signal that Labour will be opposing its introduction into law. 
Throughout the consideration of this bill Labour members have measured their consideration against the three key pillars that we believe underpin responsible reform in the sector: first does the bill balance the security of supply and transmission? Second does the bill address the affordability and the predictability of electricity pricing? Third does the bill enhance the sustainable production of electricity? This bill does not pass that threshold; instead it promotes competition streamlines governance and progresses structural shifts of assets—all of which we would argue do not constrain the price of electricity and all of which rest the security of supply on thermal generation. We just do not think that that is a responsible way forward. 
We have concerns about both the proposal to disestablish the Electricity Commission and replace it with the Electricity Authority and the narrow focus of the authority which will now not consider issues of fairness and sustainability in the supply of electricity. Although I presented Supplementary Order Paper 163 to include that as a focus for the new authority the suggestion was rejected by Government members with little reason. Our concern is that it will be more difficult to ensure the industry operates in a sustainable manner that aims to limit carbon emissions for any new electricity generation. 
On the issue of fairness we do not believe that fair delivery of power to consumers will be achieved. The authority will not be required to monitor the environmental impacts of electricity generation to ensure greater sustainability in the long term. That further highlights Labour’s concern that the Government refuses to take leadership on achieving the 90 percent renewable electricity generation goal in any serious way. That may well remain an aspirational goal with no coherent targets. 
A key concern raised by Labour members is the ongoing pressure that households feel with regard to their monthly power bill. Baycorp Holdings predicts that it will be increasingly difficult for many households to pay their power bills and household expenses. I propose that the code that guides the authority be amended to include fair consumer pricing and sustainable electricity generation. That would go some way to ensuring that fair consumer pricing would be actively considered by the authority. Instead the Government’s solution is to encourage greater competition and to believe that somehow consumers may see better pricing options. I remain sceptical about that view. 
Labour members also raised issues regarding smart meters and a smart grid. We agreed with the recommendation of the Parliamentary Commissioner for the Environment and proposed that the provision for a smart grid - enabling mechanism be included in the Electricity Industry Participation Code. That was rejected by Government members because they believe that rather than future-proofing our grid for the benefit of consumers and retailers we should take a fast-follower approach while technology is developed. That lack of leadership means that right now we have “dumb meters” being rolled out in some of our regions. That does not make sense when the Minister of Energy and Resources could grab the bull by the horns. 
A substantial debate on asset reconfiguration has been repeatedly ignored by the Minister. Government members do not accept that there is no evidence that efficiency gains through swapping Tekapo A and B will be achieved. The Treasury regulatory impact team who considered the bill noted that the bill was lacking in certain areas. In particular the regulatory impact team presented information that more comprehensive discussion was needed to assess the risk of asset swaps. There was no cost-benefit analysis to assess whether asset swaps would fix the problem that the Government believes it is addressing and there was no assessment of other examples where asset swaps have delivered efficiency gains. The upshot was that it did not make sense to swap assets between State-owned enterprises when there was no evidence of its benefits. 
The Minister of Energy and Resources claims that he has received no concerns from Meridian Energy over the asset reconfiguration. But a letter was sent from the chair of Meridian Energy Wayne Boyd in December last year to Ministers Power and English to suggest that splitting the management of the Waitaki chain between two operators would result in a loss of efficiency in managing the water resource. From an energy perspective Meridian Energy would need to hold its lakes higher in order to counter the security of supply risk that it outlined. Advice went on to highlight that that would result in a much higher likelihood of spillage and loss of efficiency. Ari Sargent chief executive of Powershop slammed the reforms proposed by the Government. He said that there was a high risk they would lead to both higher prices and to less secure power supply. It was evident that those comments contrasted starkly with those of the Minister of Energy and Resources and Mr Sargent’s criticisms were quickly removed from his blog. 
Labour members have consistently raised through the debate in the House our concern about the rising cost of power prices for those who are more vulnerable—those on fixed incomes. Baycorp Holdings chief executive Geoff Harper noted in his press statement that the number of New Zealand households unable or unwilling to pay power bills on time was set to increase over the next 6 months according to its debt recovery agency. Baycorp Holdings said that rising electricity prices fuelled by emissions trading scheme levies and the increase in GST were likely to result in people defaulting on their power bills in order to pay more pressing bills such as mortgages and their grocery bills. 
Our concern remains that the differential between domestic and industry users will not be fixed by this particular bill. We still do not think that the solution offered by the Minister will go anywhere near to addressing these very important issues. The bill increases bureaucracy and there is little evidence to suggest that asset swaps will be efficient and without risk. It lacks leadership to progress the measure that all new energy generation be from renewable resources. It fails to address fairness to consumers and the huge differential between domestic and industrial electricity users. It fails to address price predictability at a time when people need greater assurance. So for those reasons and several more Labour will not be voting to pass it. 
AMY ADAMS (National—Selwyn) 
: 
 I will take a brief call on the third reading of the Electricity Industry Bill. As this bill progressed through the House and the Finance and Expenditure Committee there was good opportunity to traverse the detail within it and I do not want to go over that again. 
I will summarise in very fundamental terms what this bill is driving at which is really three things: it is putting in place more effective and efficient governance in this most important of sectors; it is increasing competition particularly in the retail sector—which is of interest to me being from the South Island—and it is focusing on improving security of supply. 
If anyone is in any doubt about how fundamentally important it is to get our electricity sector working well they have only to look at the chaos that was brought about when electricity was taken away from much of Canterbury after the earthquake and when it was taken away from much of the North Island after the recent storms. We all know how dependent we have become as a nation on an effective electricity supply. 
Equally we know that over the last 10 years the growth in power prices has been unacceptably high. We saw growth of 72 percent under the 9 years of the Labour Government. National has never pretended that we can stop power prices rising but what we absolutely must do is slow the growth in power prices. We are determined to do that and this bill is fundamentally a step in the right direction towards that. I am very pleased to commend this bill to the House. Thank you. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I notice that when Amy Adams stood up she said she did not want to traverse the details of the Electricity Industry Bill and that is because the details of the bill and the details of the evidence that the Finance and Expenditure Committee heard on the bill are that it probably will not work and that it does not address the major issues confronting the electricity sector. There was a huge amount of criticism of the bill. So I am not surprised that National members do not particularly want to talk about the detail of the bill because no robust case has been prepared or presented to justify what they are trying to do here. 
Let us be clear what this bill is all about. Firstly it is about making the State-owned enterprises Meridian Energy and Genesis Energy more attractive for privatisation. The rearrangement of the assets is all about making them more attractive for privatisation. Although the National Government promised New Zealanders before the last election that it would not privatise them in its first term we know that the work is under way to privatise them in the second term should it get one. That is one of the reasons why New Zealanders will reject the National Government at the next election and return a Labour Government. They do not want to see the National Government hocking off the family silverware. 
Hon Maurice Williamson 
: Ha ha! 
CHRIS HIPKINS 
: Maurice Williamson knows all about that because he was involved in privatising the assets last time around. In fact I think he was an Associate Minister of Energy and Resources last time around when it was busy hocking off Contact Energy. That was Maurice Williamson. He cannot wait to get his hands on the other State-owned enterprises. That is what this bill is all about. It is about preparing those State-owned enterprises and getting them ready for privatisation. There is no business case for the asset swaps. Treasury noted that the business case had not been prepared and the Ministry of Economic Development noted that the business case had not been prepared. The Institution of Professional Engineers submitted to the select committee about not only the business case but also the inefficient management of water that could result from the asset swaps. It noted that a case had not been made and that in fact it could have the opposite effect to what the Government claimed—that is that it would result in more competition when it could result in less. 
I want to traverse that for a moment. The Waitaki water scheme is one coherent system. Water flows from one lake into the next into the next. This bill takes the Tekapo A and B lakes which are power stations relatively near the top and gives them to one company. That company will control a large amount of the water supply flowing into the other lakes and the other power stations further down the water system. If it is going to operate in the way that Gerry Brownlee wants it to operate which is in a competitive market model its incentive will be to maximise its own use of the water potentially at the expense of the other power generators further down the hydro system. That is one of the reasons why the Waitaki system operates most efficiently as a monopoly because then the operator of that system can work out how to generate the maximum amount of electricity from the given amount of water that is available. That was the view put forward by a number of technical experts to the select committee and that evidence was ignored by the National members on the committee who used their majority to push this legislation through. 
There is no robust case for saying that separating Tekapo A and B from the rest of the Waitaki system will lead to more efficient use of water or lower power prices or even increased competition. In fact the committee received some strong advice that any modest increases in competition that may result from this asset swap would be more than offset by the potential downsides of it. The Government did not respond to that. It did not engage with the detail as Amy Adams said they were not going to because simply the details were not on the Government’s side. The details have not been on the Government’s side all the way through. The Government has taken its eye off the ball when it comes to electricity. 
The three major issues in the electricity market are sustainability affordability and security. That is what the Government should be focused on. Before the last election we had National MPs and National candidates up and down the country doing their best to give New Zealanders the impression that under a National Government power prices would come down. Not only have they not delivered on that but also suddenly they have changed their tune. They are not talking about lowering power prices any more; they are talking about stabilising the cost increases. What they are actually saying to New Zealanders is that power prices will keep going up and they have given up on any notion that they will lower power prices. That is what they promised New Zealanders before the last election but now they are simply talking about increasing power prices by a slightly lesser amount. 
When National members boast that power prices have gone up less in the last 2 years than they did in the 9 years prior to that they are ignoring the fact that we had a drought for a big part of those years prior to that which significantly increased the cost of power in New Zealand. When the hydro lakes are half empty it means we are more reliant on non-renewable energy which is more expensive. The responsibility for the mess in the electricity industry that led to some of those hydro shortages rests with people like Max Bradford and Maurice Williamson who created the mess in the first place with this idea that if we just had more competition and just carved up the electricity industry into all these different parts and made everyone compete against each other then the power prices would go down. 
It has been 14 years since Max Bradford and Maurice Williamson promised the House that carving up the electricity sector and introducing competition would result in lower power prices. They were proved to be spectacularly wrong. Now Gerry Brownlee is coming here and saying “Gosh if we just introduce a bit more competition and if we just go back to that original idea that Max Bradford and Maurice Williamson put forward in the first place maybe we could lower power prices.” Well it did not work the first time and it will not work this time. 
If we want to talk about really lowering power prices we need to look at the cheapest form of electricity out there. Renewable energy will be cheaper in the longer term than non-renewable energy. As oil and gas supplies continue to diminish as they are a finite resource and there is a limit to the amount of oil and gas that is available the price of them will go up. In New Zealand we have no excuse for being reliant on non-renewable sources of energy when we have such an abundance supply of renewable energy. We are already very fortunate in the sense that most of our electricity already comes from hydro energy. It means we are already well ahead of the rest of the world. We could easily reach the 90 percent renewable electricity target that the Government says it aspires to but is doing nothing to move towards. 
Hon Maurice Williamson 
: How much renewable energy was built under Labour? 
CHRIS HIPKINS 
: There was not enough I tell the member. I would say there could have been more because the previous Labour Government largely kept in place up until about 2003 the regulatory and legislative framework for the electricity industry that was put in place by Max Bradford and Maurice Williamson. Labour changed it and started to focus on renewable electricity but we did not start to see those benefits until the last few years. Electricity is a long-term game. It takes a number of years for an electricity-generating plant to go from the planning stage to actually producing electricity. 
Hon Tau Henare 
: Well you had 9 years. 
CHRIS HIPKINS 
: It was not long enough; that is right. In the next 9-year Labour Government we will have a lot more renewable electricity. Given the spectacular failure of this National Government another 9-year Labour Government is not an unrealistic prospect at the end of this very short term of National Government. 
I come back to electricity. In particular we need more renewable electricity because in the long term renewable electricity will be cheaper. That is where the Government should be placing its focus. It will also potentially if we diversify the renewable sources of electricity we have increase the security of supply. If we do it right it will ease the constraints on our transmission system. One of the big constraints on the system at the moment is that we have the hydro all in the South Island and a lot of the gas and geothermal generation increasingly in the North Island so electricity is flowing one way or the other over quite long distances. If we move to a new approach based on having smaller-scale renewable energy spread throughout the country then we can ease some of the real pressure on the transmission grid thereby reducing the amount of money that will need to be invested in upgrading the transmission grid over the next little while. That has to be a good thing. 
Those are the three things we think the Government should be focused on: sustainability affordability and security. Those things go hand in hand. If we deal with the issues related to sustainability then we will in part deal with the issues related to affordability because unsustainable energy sources will be more expensive in the long term. If we deal with the issues related to sustainability then we will also deal with some of the issues related to security because as I have said we can ease the constraints on transmission and so on. We can get a much better much fairer electricity system if we focus on those three things. This is a bad bill and Labour will be voting against it. 
Dr KENNEDY GRAHAM (Green) 
: 
 The Electricity Industry Bill remains as flawed today as it was when it first appeared before the House. The purpose as stated in the bill is as dense as it is brief. It is “… to provide a framework for the regulation of the electricity industry.” The bill claims to reform various areas of the electricity sector to increase market competition and to ensure security of supply. It seeks to modify governance arrangements by replacing the Electricity Commission with the Electricity Authority which is to be more independent. It will allow lines businesses back into retailing and it will reconfigure some of the assets of the three State-owned enterprises—Meridian Energy Mighty River Power and Genesis—amongst themselves. 
The Finance and Expenditure Committee heard 91 submissions. Many opposed provisions of the bill or cast doubt on their likely efficacy. These warnings were largely ignored by the Government whose mind had been set long before the select committee process. We have argued before that this bill is simply another round of marginal tinkering with the problematic electricity industry. We contended that the underlying challenge was missing. This was the need for a genuine regulatory framework that would make the playing field level for more sustainable renewable energy. We said that the Government was in danger of missing the whole point. The Government ignored that as well. 
This bill is significant beyond its own terms. It is symptomatic of the general approach of the Government to energy in general. The draft energy strategy of the Minister of Energy and Resources confirms the public’s fear that ideological blinkers are preventing this Government from moving purposefully towards a low-carbon economy. The Minister’s petroleum action plan of late 2009 to unlock the potential of our fossil fuel resources was in the same vein. 
The Minister’s thinking which lies behind this electricity bill was on display at the New Zealand Petroleum Conference held in Auckland earlier this week which I attended. In Mr Brownlee’s keynote address he advanced a breathtaking comment. He invited New Zealanders to consider the potential for an accelerated oil and gas discovery programme that can be achieved in an environmentally responsible way. In fact he went further and told us to mend our ways of thinking. He said: “people need to shift their thinking on exactly this issue.” He stated: “The development of New Zealand’s natural resources and the protection of the environment are not mutually exclusive … it is only through a strong economy that New Zealand can afford the expenditure required to look after and improve our environment.” According to this suicidal logic we should mine and burn more oil and gas hastening climate change in order to become rich enough to deal with climate change. 
Recently I questioned the Minister in the House over what phased milestones he had in place to achieve his stated goal of reaching 90 percent electricity generation from renewable resources by 2025. His reply was that his Government did not determine the investment decisions needed to increase the availability of renewably generated activity; rather it sets the regulatory and policy environment in which investments are made such as an amended Resource Management Act and the moderated emissions trading scheme. He observed: “Phased milestones would be possible only if we lived in a command and control - style economy: we do not.” 
Mr Brownlee is correct. We do not live in a command and control economy; we never have although a National Prime Minister came closest three decades back. But we do live in a country that is part of an unsustainable global economy. Its most obvious symptom is dangerous climate change from excessive carbon emissions. Switching to renewable energy sources and developing a low-carbon economy within a short time period is a condition of enduring economic welfare both for New Zealand and for the world. 
It is generally recognised that this switch must be completed within two decades at the latest. New Zealand’s goal of having 90 percent renewable electricity is one part of that transformation. Identification of phased milestones is a legitimate part of obtaining that goal. It does not reflect Kremlin thinking; it reflects an agreed aspiration through consensus to ensure that a final goal is more likely to be obtained with the public and private sectors working together. Most people and most Governments and organisations do that. The Government has a phased milestone signed by the National Cabinet in 1997 in the Kyoto Protocol to achieve the goal signed by the National Government at Rio in 1992. That goal is stabilising the global climate at a level that is not dangerous to the planet’s life-support systems. The UN has phased milestones under the well-known Millennium Development Goals. They are: to halve global poverty to improve educational attainment and to increase maternal health and longevity. 
We all have milestones I say to the Minister. It is not a betrayal of the private sector as the driver of the national economy to lay down midpoint milestones to measure how well we are moving towards a stated target. In fact the Government itself has milestones or at least has access to them. The Electricity Commission’s draft statement of opportunities released in July is intended to provide interested parties with independent information to consider in assessing the potential for grid management efficiencies and in particular investment in upgrades and transmission alternatives. The chairman of the commission stated that the statement “is not a plan for the future development of the grid or of generation … Rather it is a set of scenarios as to how the transmission and generation of electricity may develop given a range of reasonable assumptions.” 
The scenarios show a trend for each year for all energy sources between 2010 and 2014. Each renewable source—geothermal hydro wind tidal solar—is expected to increase. The Government and the public will have this available to assess the effectiveness of the energy strategy over the next decade. 
The policies of the previous Government through the thermal power station moratorium and its emissions trading scheme were broadly on target for the market to deliver a 90 percent renewables goal by 2027. The Green Party’s  
Getting There 
 document of August 2009 showed how we could achieve a goal of having 90 percent renewables by 2025. This Government’s repeal of the moratorium and the weakening of the emissions trading scheme has left that goal in tatters. Without a clear signal through Government leadership the market will not deliver on time. 
The Minister’s energy strategy speaks of fostering the deployment of new renewable sources such as marine and solar. How the Government plans to foster marine energy is left unclear. I say to the Minister that if all he does is state an aspirational goal leave it to the commission to postulate scenarios based on assumptions and leave unclear how he will foster new renewables he will simply not attain the target. Yet attaining the target is an imperative for our children’s generation and the Minister has the ministerial responsibility. 
Here are a few personal thoughts on how to facilitate the attainment of a 90 percent target. Let us assume a population growth of 0.8 percent per annum and electricity generation growth of 2 percent per annum. Under that scenario national electricity generation would rise from 780 petajoules in 2010 to 1050 petajoules in 2025. Based on these assumptions it is possible to picture a scenario where a goal of 90 percent renewables can be achieved by 2025. Hydro might remain static at around 55 to 60 percent with some ageing stations being decommissioned. Geothermal might remain static at 13 percent. Wind power could with a level playing field increase over 15 years from its current 4 percent to say 12 percent. Tidal power possibly the most promising of all might with supportive action of the kind the Government extends to the petroleum industry be introduced and grow from nothing to say 10 percent. 
This is not a command plan; it is a heuristic tool to help policy makers and the public envisage a sustainable future. It also shows the magnitude of the challenge of switching to a low-carbon economy when energy consumption is growing exponentially. The reality will not be precisely like this but unless we all—householders voters farms companies local authorities and Government—have some idea of the phase-in and phase-out trend we need as a nation we shall never get there. The only way to get there is by having a robust carbon price signal for the market economy to react. There the Government is failing us as well. Instead of a whole-of-Government strategy envisaging a switch to low-carbon bases for our power sources the Minister is content to tinker with the imperfect framework of the electricity sector in the name of an outmoded notion of market competition. The Green Party will be opposing this bill. 
DAVID BENNETT (National—Hamilton East) 
: 
 I will take just a short call on the Electricity Industry Bill. The Government supports the bill; contrary to what Opposition members have been saying this bill is in the best interests of the electricity industry. It will promote competition and that is in the best interests of consumers. National is very proud of the way that prices have stabilised under this Government compared with those under the previous Government. Thank you. 
Mr DEPUTY SPEAKER 
: The question is that the motion be agreed to. Those of that opinion will say Aye; to the contrary No. The Ayes have it. I call on Government orders of the day Nos 2 and 3.  
SUE MORONEY (Labour) 
: 
 I raise a point of order Mr Speaker. We called for a party vote on the bill but no party vote was taken. 
Mr DEPUTY SPEAKER 
: I am afraid I did not hear a call for a party vote. The Labour Party supported the bill; only one party voted against it. 
Sue Moroney 
: Oh no. We opposed it. 
Mr DEPUTY SPEAKER 
: I am happy to reconsider the matter. If I was wrong I am certainly happy to reconsider it. 
Hon John Carter 
: Point of order— 
Mr DEPUTY SPEAKER 
: One moment. I am getting some advice. 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 I seek the leave of the House to have a vote on the Electricity Industry Bill. 
Mr DEPUTY SPEAKER 
: Leave is sought for that purpose. Is there any objection? There is no objection. 
A party vote was called for on the question  
That the Electricity Industry Bill be now read a third time. 
Ayes 66 
New Zealand National 58; Maori Party 3; ACT New Zealand 4; United Future 1. 
Noes 49 
New Zealand Labour 40; Green Party 9. 
Bill read a third time. 
Mr DEPUTY SPEAKER 
: I just make the point that when a party is calling for a party vote it needs at that time to exercise its right to call for a party vote. I cannot second-guess and I certainly did not hear that call for a party vote. I apologise to the member but I did not hear her call. Had I been remiss at the time the call for a party vote should have been brought to my attention by way of a point of order. Of course I had moved on to the next order of the day and I am informed that I am not obliged to go back. However leave was sought and I was prepared to accept it. In future can we make it very clear that if a party wishes to exercise its right to have a party vote it does so at the time and not when we have moved to the next course of business. 
Financial Markets (Regulators and KiwiSaver) Bill 
Auditor Regulation and External Reporting Bill 
First Reading 
Debate resumed from 21 September. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The Labour Party will be supporting this legislation to the select committee but it will do so with only the most intense scrutiny being applied at that stage. Many issues are raised by this very complex set of legislation but high in the minds of New Zealanders who are listening to this debate particularly those in the South Island will be the appointment of Mr Simon Botherway as chair of the establishment board of the new Financial Markets Authority which is set up under this legislation. That appointment has been called into question by the apparent failure of Mr Botherway to make a timely declaration of a possible perceived conflict of interest around his recommendation as chairperson of a Securities Commission committee to place Allan and Jean Hubbard into statutory management along with Aorangi Securities. 
It has further been a matter of surprise to the Opposition that the chairperson of the Securities Commission Jane Diplock for whom we have high regard excused that late declaration—and in our view partial declaration—on the grounds that Mr Hubbard’s association with South Canterbury Finance which had earlier put Mr Botherway’s brother into receivership was “ancient history”. Well how ancient was that history? 
Mr Hubbard tipped all his remaining assets in Southbury Group into South Canterbury Finance to ensure that equity holders did not lose their shirts. He tipped all his assets in and I understand that a matter of only a few days later a single anonymous letter of complaint was received by the Securities Commission. On the basis of that single anonymous complaint they took the unprecedented step of placing Mr and Mrs Hubbard and Aorangi Securities into statutory management thereby causing a collapse in the inflow of funds into South Canterbury Finance. 
The Securities Commission said they were not related parties because a legal opinion noted that at the time Mr Hubbard was no longer a director of South Canterbury Finance. Well technically speaking that is true but by a very short margin of time. But in practical terms the impact was the same: funds into South Canterbury Finance dried up; it received a credit-rating downgrade days later and the fate of that company was sealed. 
The Opposition believes that two things must now occur: first given the news earlier in the week that the Ombudsman is investigating Mr Botherway’s so-called declaration of interest we believe that Mr Botherway must immediately stand aside from the chair of the establishment board and should reconsider any availability should he not be completely exonerated from his suitability to chair the Financial Markets Authority. This is the senior regulator in the New Zealand markets. This is the position that must be beyond reproach upon which the reputation for the integrity and transparency of the entire market rests. If New Zealand does not maintain that reputation all New Zealanders will suffer. 
I regret to hear from a major broker of international investment into New Zealand that he will not allow offshore clients to invest in New Zealand registered vehicles; he insists they must invest only through Australian-based Australian Securities and Investments Commission regulated vehicles because he said: “New Zealand is the coldest banana republic in the world.” If that is the reputation of our markets in the ears of foreign investors how important is it that the chair-designate of the establishment board should have his name cleared— 
Jo Goodhew 
: 9 years of Labour’s stewardship. That’s how you left it. 
Hon DAVID CUNLIFFE 
: The soon-to-be former member for Timaru and Rangitata should listen up. I have had more emails from her constituents in the last week than she has had hot dinners. They are all saying the same thing—that they will never vote for her or her party again after the actions that this uncaring improper non-transparent National Government has taken in regard to South Canterbury Finance. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on the Financial Markets (Regulators and KiwiSaver) Bill and the Auditor Regulation and External Reporting Bill. 
It is an interesting day in the House when we have bills before us that seek to reintroduce some degree of regulation to the financial markets. It is paradoxical that at a time when the ACT Party is collapsing internally the ideology that sat behind ACT requires overturning after the catastrophic effect that that ideology has had on the New Zealand economy. These bills in some respects try to address some of the huge problems that were left by the embrace by the right wing of National and of Labour through the 1980s and 1990s of the ideology of laissez-faire and a low level of regulation. It seems to me that we are having to clean up after two decades of disaster as a result of that embracing of the ideology of laissez-faire—of letting the market decide everything and believing that we do not need proper regulators. After maybe two decades of catastrophe as a result of that embracing of the ideology that underpins ACT which underpinned part of the National Government and the Labour Government in the 1980s and 1990s we are having to try to fix it up here today. 
The Financial Markets (Regulators and KiwiSaver) Bill seeks to restore investor confidence and to promote fair efficient and transparent markets. It pulls together functions and roles currently dispersed amongst several agencies and takes a more integrated approach. It is important that KiwiSaver schemes in particular are monitored and risks minimised as so many people rely on these for their long-term financial security. Many are still under the misapprehension that the schemes are Government-guaranteed. 
It is clear that the deregulation of the 1980s and 1990s was a failed experiment. It has done serious harm. Very few people would not have a war story whether personal or of a family member or friend of being caught up in the financial collapses that resulted from the deregulation of the late 1980s and 1990s. Deregulation opened up the way for greed. It was an opportunity for some people to exploit and gain from the less well-informed trusting people—who often were persuaded by celebrity endorsements—and sheer financial stupidity. The Greens will support this bill as it is a useful mechanism to give some comfort to investors and potential investors. 
The bigger picture is that in New Zealand and globally investor confidence and indeed the confidence of those not directly participating in the financial markets have been seriously undermined and that confidence is unlikely to return as people realise that more is broken here than inadequate regulation poor oversight and sharp or often outright corrupt practice. There is a much more profound flaw at the base of our economic system and that is not a problem that is amenable to mending by any single bill as important as it is that we amend some of it. 
Tim Jackson the Economics Commissioner for the UK Sustainable Development Commission has outlined the deeper-seated problem in his report  
Prosperity without Growth 
. The report highlights the inherent structural flaws of the economic system predicated as it is on the assumption of continued and unending economic growth. He says: “The market was not undone by rogue individuals or the turning of a blind eye by incompetent regulators. It was undone by growth itself.” He demonstrates that the dominant economic model was always ecologically unsustainable and has now proven to be economically unsustainable as well. He also on a more positive note makes the point that the economic crisis and its ongoing effects also present us with a unique opportunity to invest in change to put aside the short-term and limited thinking and to look for means and practices whereby we can still survive and flourish but also reduce our material impact on the planet. 
The Greens will be hosting an economic seminar later this year—and we look forward to the participation of members from other parties in the House—where some of the possibilities for positive change can be proposed and debated. A debate starting from first principles on the purpose and form of our economy and the base assumptions underpinning it needs to occur as a matter of urgency if we are not to soon discover that remedial measures like those proposed in this bill while necessary and useful in the interim are far from sufficient. 
I will speak now on the second of the two bills before us tonight the Auditor Regulation and External Reporting Bill. In similar fashion to the Financial Markets (Regulators and KiwiSaver) Bill this bill has a worthwhile purpose and as such we will support it but it also shines some light on an industry that needs to come to terms with the realities of international and increasingly local expectations about the profession’s scope and the potential for it to make a more holistic contribution to a successful and sustainable economy. 
The bill to some extent acknowledges the age-old dilemma of who will guard the guardians. A great deal of trust has been placed in auditors and this bill sets out to strengthen the regulatory regime within the Financial Markets Authority or FMA with the authority charged with overseeing a new licensing system for auditors and being responsible for monitoring the adequacy and effectiveness of the industry’s regulatory systems and processes for overseeing auditors. This response to the financial crisis will also contribute a degree of investor confidence in our financial markets. 
It is interesting to read in the bill’s explanatory note the comment that “self-regulation is no longer within the range of international acceptability.” Yet self-regulation of course has been the ideology of New Zealand Governments since 1984 through to 1999. It is incredible what a failure that ridiculous experiment in self-regulation has been. It has resulted in catastrophe and suffering for tens of thousands of New Zealanders who have lost their savings because the ACT Party ideology became the official ideology of the National and Labour sides of the New Zealand Parliament for so many years. Despite regulation being somewhat antithetical to the National Government’s core philosophical position it is bowing to international pressure to better and more actively regulate in this area and let us hope it does it well. 
It is unfortunate that the Government seems unable or unwilling to go further and to take the opportunity to encourage or even over time oblige the practitioners the chartered accountants to adopt what is emerging as best practice internationally: to bring together not only financial but also environmental and social information into accounting standards and practice. After all what does it matter if we have great accounting standards if they lead us to destroying the planet on which we depend for our very survival? 
The profession has always measured and reported upon the flow of money through a business an organisation or indeed an economy. The New Zealand Institute of Chartered Accountants among others has over time looked at the various mechanisms and models for extending accounting and auditing practices to measure the whole of a business’s activity and the effect of that activity—measuring and reporting the environmental and social costs and benefits of business and so giving a much clearer and more complete picture of its real value and its real influence. A genuinely integrated transparent form of accounting is becoming commonplace in many countries and sustainability reporting has been adopted by some of our largest and most successful companies locally as part of their regular cycle of reporting. Not only does this make a positive contribution to brand value; it gives our exporters a means to protect themselves against claims from other producers closer to the market that we are not able to compete in terms of the sustainability of our products and services. The present Government’s distaste for the word “sustainability” is well documented but in this instance it would do well to acknowledge and accept the inevitable; to be at least a follower of the international trend to whole cost accounting and to facilitate the development of expertise and acceptance of the new models within the profession. This is after all the 21st century not the 19th century. 
These bills are useful in terms of repairing some of the shortcomings of our current approach to finance and economy. The challenge now is for the Government to display some courage and willingness to recognise that some things cannot be fixed and to adapt to new realities and new demands on a finite planet. Substantive and fundamental change in our economy is inevitable. We can choose to lead and work to manage the transition and seek to achieve the most positive outcomes socially environmentally and economically or we can passively wait for change to roll over us. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 I am pleased to stand to talk on the Financial Markets (Regulators and KiwiSaver) Bill and the Auditor Regulation and External Reporting Bill. I say from the outset that although I am naturally suspicious whenever leave is sought for bills to be brought together under one umbrella—so-called cognate bills—in this case I am prepared to grant an exemption. These bills are truly what we might call companion bills. The Auditor Regulation and External Reporting Bill is absolutely linked to the establishment of the Financial Markets Authority an initiative in the Financial Markets (Regulators and KiwiSaver) Bill. The Financial Markets Authority once it is up and running will be the Government regulator of the audit profession so the two bills are virtually one and the same. It is in the philosophical intent that the linkages are most explicit with both bills designed to foster confidence in our finance industry and in doing so to strengthen the base for our markets. 
I have come straight from Otautahi and I have been immersed in the situation of our people there since the earthquake on the morning of Saturday 4 September. The perilous situation of some of our families as they consider their capacity to provide for the basics of life—food shelter a place to sleep and a roof over their heads—has been truly hard to bear. I have seen our elders weep in despair as they wonder how they will manage. I have sat with families who are struggling to cope and it reminded me of just how important it is to ensure our financial viability is secure. On a different scale but essentially driven by the same hopes and fears the financial confidence of our markets is a critical factor in establishing a secure foundation for our economy. The last few years have seen many analysts expressing concerns about the viability of our regulator agencies and in particular whether there are sufficient checks and balances in the system to ensure that providers act with integrity and honesty. 
Such concerns have sparked off an enormous legislative agenda around financial advisers securities capital market development prudential regulation governance of financial service provides and the like. I cannot help but think that if only the Government could put such effort into addressing the situations of abject poverty that so many New Zealand families find themselves in we could make a difference overnight. I am thinking of aspirations to create confidence in our communities such as setting a deadline to eliminate child poverty by 2020 or initiatives to address the basic levers such as raising core benefit levels including superannuation and the veterans pension and increasing the minimum wage to at least $15 an hour—of course not to mention removing GST from healthy food. 
These bills do not do that but they do look after the interests of some people who are cash rich and are able to invest in our financial markets primarily through the creation and establishment of a new Financial Markets Authority. This is being promoted as a super-regulator for our financial markets bringing together functions that have been spread across the Securities Commission the Ministry of Economic Development the Government Actuary and NZX. This Government clearly likes the super-size concept—the super-regulator the super-city—but only to a degree and we have to remember that the “Supersize my pay!” campaign is a message that this Government is yet to deliver on. The “Supersize my pay!” campaign was launched in late 2005. It revolved around three main planks: the minimum wage abolishment of the youth rate and secure hours. One would think they are all perfectly reasonable. However this bill does not deal with that. It aims to promote fair efficient and transparent financial markets. We know that the Government is anxious to fast-track this legislation to establish the authority as soon as possible in order to promote confidence in Aotearoa’s financial markets. However there is always the concern that fast-tracking the authority’s establishment might mean that the work carried out by the authority would be done under uncertainty as the finer details of the shape of the new regulator are still being sorted out and might not be completed by the time the authority is established. 
I want to turn my attention to the proposals in this bill to improve an oversight in KiwiSaver. We have been really pleased to be part of the developments around KiwiSaver that are focused on housing. I come back to the basic needs I talked about earlier as demonstrated in the last couple of weeks in Otautahi. Some members of this House might be familiar with Maslow’s hierarchy of needs. They include safety and security which are so fundamental to survival. One of the developments we are really proud of over the last 18 months since we have been in a confidence and supply arrangement with the Government is the KiwiSaver deposit subsidy and the KiwiSaver first home withdrawal option which helps people with the deposit for a home. In our analysis about 10 percent of current KiwiSaver members are Maori. With this new development the home deposit elements of the scheme can be coupled with a Kainga Whenua a Welcome Home Loan and the Welcome Home First Steps education course providing another pathway for Maori into homeownership. This is a significant advance to help create opportunities for Maori to enjoy homeownership along with other New Zealanders. 
We have had a particular interest in looking into the KiwiSaver changes to ensure that basic thresholds of fairness and justice apply to that scheme along with any others. The changes to the KiwiSaver regulatory regime include making fund managers more accountable to regulators and investors and requiring fund managers to disclose information about returns fees and assets in a consistent and comparable manner. In the current environment there is only limited regulation of fund managers within the KiwiSaver regulatory regime. These bills will move the KiwiSaver scheme closer to the legal structure of unit trusts and bring trustees closer to the licensing regime that will be established by the Securities Trustees and Statutory Supervisors Bill. We support all these measures as we believe they are being done in the spirit of accountability transparency and security. We are pleased to support this bill at its first reading. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to take a call on the Financial Markets (Regulators and KiwiSaver) Bill and the Auditor Regulation and External Reporting Bill this afternoon. I cannot wait until this legislation comes to the Commerce Committee because I sit on it as does Sam Lotu-Iiga the deputy chairperson who I would like acknowledge had a baby girl this morning. He is now the father of a beautiful little girl called Hope Elizabeth. Hopefully he will be back in time for this legislation to come into the select committee as we kick off the deliberations. 
I am particularly interested in this legislation coming to the select committee for the reason that I am a chartered accountant. A lot of the things that this legislation deals with are in relation to improving auditor regulation. I first started off in accountancy as an auditor in Wellington so for me it is really relevant to see where this discussion goes. I know that the Institute of Chartered Accountants or NZICA is a supporter of this change. That is good to see because it put the regulation of auditors who audit public accounts underneath another regulator and takes it out of the family of the institute. 
So I take just a small call this afternoon to say that I look forward to seeing this legislation come into our select committee and to hearing what the submitters have to say. Thank you very much. 
Hon DAVID PARKER (Labour) 
: 
 I will begin by responding to the comment by Rahui Katene that she wished this House could do more to eliminate poverty in families. Rahui Katene sits with the Maori Party and she voted for a Budget this year that increased the gap between the rich and the poor by having income tax cuts of which 35 percent of the value will go to the top 5 percent of income earners. So I say to Ms Katene that she should please not preach to others in this House about those who are less well off and that she should not vote for a Budget that increases the gap between the rich and the poor. 
I agreed with some of the things that Russel Norman said in that we are dealing in this legislation with a reaction to some over-deregulation in different parts of the economy. He mentioned that there had been over-deregulation in a number of spheres. There are some obvious examples like the building industry. We over-deregulated the building industry and we caused billions of dollars of costs to ordinary New Zealanders through leaky homes. Those homes were in large part an outcome of the over-deregulation of the building industry. 
We also had over-deregulation of the electricity industry. I am reminded of the comments we heard from John Carter in respect of the Electricity Industry Bill. He had the temerity to assert that there had been under-investment in transmission because of what the last Government did. [ 
Interruption 
] Well I say to the Hon John Carter that I put on record that he got that exactly wrong. What happened was that Mr Bradford so deregulated electricity transmission that there was a written agreement between Transpower New Zealand which owned the national grid and the energy companies. The agreement said that Transpower could only ever invest in the grid and be paid for it if the people who were paying their bills agreed to the upgrade. That was contained in a written document prepared by Treasury under Max Bradford’s National Government. But what happened was that Contact Energy Meridian Energy and the other companies could never agree on any upgrades so none were done. By the end of the 1990s transmission expenditure had dropped to I think between $20 and $50 million per annum which was woefully inadequate. 
The Labour Government then came in and said that that was nonsense and that we needed to have a regulator that had some oversight of planned investment in transmission infrastructure. The amount in transmission spending following that change increased more than ten-fold to more than $500 million per annum under the Labour Government. That included approval for some massive projects like the upgrade of the Cook Strait cable the transmission upgrade through the Waikato some big upgrades in the northern South Island and some upgrades in Auckland. So I say to Mr Carter that far from that record being proof that a National Government does well and a Labour Government does poorly history shows the opposite. 
In terms of these bills which impose more regulation in respect of the finance sector I agree they are necessary. But I do not think that they absolve the need to have a good look at what has already gone wrong. I am told that 61 finance companies have gone broke in the last 4 years—61 finance companies. The biggest of the recent failures has been South Canterbury Finance. We heard the Hon Bill English a couple of weeks ago in the ministerial statement debate say that most of what had gone wrong in South Canterbury Finance was a consequence of lending prior to the date of the first Crown Retail Deposit Guarantee Scheme. He said that that was the case—and it may be the case—but we will not know until we look into it. I raise that because it seems to me that if there was shonky lending before the time of the grant of the first guarantee we need to know what was known by whom and when. The purpose of the Crown guarantee was not to prop up already insolvent institutions. The purpose of the Crown guarantee was to give investors confidence that already sound institutions would not fail as a consequence of a run on the fund. That is why we did that in favour of banks and also in favour of finance companies. 
If the Hon Bill English is correct in saying that at the time of the original guarantee South Canterbury Finance was effectively already broke then someone has gone wrong. I do not know who that somebody is which is why we need an inquiry. Was it the statutory trustee? There is a statutory trustee for every finance company who has a statutory duty to oversee the terms of the debenture trust deed and to make sure that the finance company is operating in terms of its legal mandate set out in the trust deed. I do not know. There may be some fault by the trustee and if there is the trustee should share the pain that is currently being borne totally by taxpayers who have bailed out the company to the amount of $1.6 billion. I ask Mr Cunliffe whether that is the figure. 
Hon David Cunliffe 
: The figure is $1.75 billion. 
Hon DAVID PARKER 
: That $1.75 billion has gone to depositors in South Canterbury Finance so maybe the trustee should be bearing some scrutiny about whether that trustee has some liability. 
Perhaps it was the auditors. Did the auditors do their job properly in respect of South Canterbury Finance? I am not sure. I find it hard to believe that if the Hon Bill English is right—and I have no reason to doubt his word—then the bad lending had already taken place and the state of South Canterbury Finance was already parlous effectively at the time of the original guarantee. Did the auditors do their job properly? 
Hon David Cunliffe 
: Why did Bill English sign it in? 
Hon DAVID PARKER 
: To be fair I tell Mr Cunliffe I do not think that the Hon Bill English would have signed it in if he had known that. Maybe there was some misrepresentation of the position by the auditors or of what the auditors were responsible for. 
What about the directors? Did the directors of South Canterbury Finance have knowledge about how parlous their loan book was? If they did have that knowledge it ought to have been disclosed to the Crown. It ought to have been disclosed to depositors too but it certainly ought to have been disclosed to the Crown at the time of the guarantee. A $1.75 billion loss is being suffered by taxpayers as a consequence of this bail-out and we need to find out what went wrong. We really need to find out what went wrong. 
One of the other problems in a lot of finance companies is that there have been far too many cosy deals between directors and the family interests of directors including their family trusts and their friends and there have been loans not appropriately secured. We have seen that in Hanover Finance and in a lot of other finance companies where there was related-party lending and where loans were given by companies under the control of directors to entities that were related to those directors. In my opinion this has been one of the greatest failures by regulators because in some of those transactions those directors had prior form from the 1980s cleanout. If regulators cannot keep an eye on the people who had prior form if the trustees cannot and if the auditors cannot why do we have those officials? If they cannot keep an eye on people who had prior form—criminal form sometimes—and who had come back as directors in a later incarnation there is something wrong with our systems. 
I suspect that some of the things that have gone wrong in South Canterbury Finance could include related-party loans—loans to organisations controlled by some of the directors in instances where they did not take appropriate guarantees from family trusts. In that case the benefit of the transaction accrued to some entity related to the director in order to improve the wealth of the number of companies or family trusts those people had an interest in yet the risk was not attached to those assets despite the fact that the directors of those companies knew where the assets were and knew where those guarantees should have been taken from. I am not convinced that there are not tens of millions if not hundreds of millions of dollars in that category—not just in the case of South Canterbury Finance but also in respect of some of those other finance companies. 
This bill is supported by the Labour Opposition but more than anything else we need an inquiry into these finance companies—in particular into South Canterbury Finance—in relation to what has gone wrong there. Why is there no willingness to have an inquiry when $1.75 billion of taxpayer money has been spent? If the inquiry cost $1 million it would be a tiny fraction of the loss. It is not 1 percent not a tenth of 1 percent of the loss; it is even less than that. We must get this in perspective. There has been a $1.75 billion cost to taxpayers; we need to find out what has gone wrong. I am not suggesting mala fide on the part of the Hon Bill English but something rotten has happened here and we need to find out the cause of the smell. 
JONATHAN YOUNG (National—New Plymouth) 
: 
 I am sure the Hon David Parker realises that there is going to be recovery of assets. I will not proceed to talk much further than that other than to say that the Financial Markets (Regulators and KiwiSaver) Bill and the Auditor Regulation and External Reporting Bill are strong and good legislation that will bring great robustness to our regulatory framework. When shocks and quakes come they reveal where weaknesses exist. Prior to the quake everything looks integral but when a shift and upheaval come vulnerabilities are exposed. That is exactly what happened when the global financial crisis hit. It was felt in nearly every sector of our economy and the economies of the world. But the fractures came where inherent weaknesses existed. This Government has undertaken the rebuilding of the regulatory infrastructure of the financial sector and in the case of this legislation now before the House the establishment of a Financial Markets Authority. 
Although a low Government debt compared with those of other advanced economies puts us in a stronger place according to the International Monetary Fund in order to withstand future financial shocks we need a robust regulatory infrastructure in place. I congratulate the Minister of Commerce the Hon Simon Power on his leadership and the hard work he has put into this rebuilding. As much as the Hon Gerry Brownlee is present and hardworking for the people of Canterbury in their quake the Minister of Commerce has put in an enormous effort to ensure that strength confidence and stability surrounds our financial markets sector. He said at the end of April 2010: “Over the past year it has become increasingly clear to me that one of the missing pieces in the regulatory landscape is a single regulator focused on proactively monitoring and enforcing securities law. On too many occasions in finance company collapses we heard of investors’ money falling to the floor through the cracks between regulators. This has damaged investor confidence and if we are to restore that confidence we need to make changes.” 
National is focused on boosting growth and creating jobs. Only a strong economy can provide financial security for families real opportunities for young people safer communities and the high-quality education and health services that all New Zealanders need. This bill will go a long way towards providing the environment and framework for that to occur. Thank you. 
Hon SHANE JONES (Labour) 
: 
 Kia ora ano tatou. One hopes that members of the financial community up and down the country are taking note that legislation is wending its way through Parliament although the legislation really is a belated reaction in terms of the $6 billion - odd that has gone west associated with the failure of multiple finance companies. You see that was New Zealand’s episode of the subprime mortgage crisis. We are told that the derivatives market—opaque and complex; numbering trillions of dollars—actually lay beneath the collapse of much of the financial system in northern Europe and the United States of America. Although much of our financial apparatus was spared such pain we have lived through the loss of $6.5 billion worth of toilers’ and garden-variety Kiwis’ wealth; it has gone up in smoke. 
Those finance organisations actually had a very important role to fulfil. Mezzanine finance provided a level of financial support for investors and entrepreneurs beyond what a bank could prudentially allocate. It makes one wonder had those types of people been in charge of our major trading banks what the result might have been. One shudders to think about that. Other than Kiwibank we are stuck with Aussie-owned banks. Those banks remained stable during the recent financial imbroglio but many of the finance companies have turned to custard. This legislation unfortunately will not bring that money back in any manner or form. Let us not forget the size of the loss and the fact that an entire generation of savers have watched their wealth vanish. 
One of the most extraordinary examples concerned the protagonists behind the failed Hanover Finance investment. It is hard to imagine that the long arm of the law will ever catch up with them but who knows? Events like those show why legislation of this nature and extreme vigilance is needed. The original owners of Hanover Finance passed the spoiled goods over to Allied Farmers and what do we read about in the newspaper now? That company too is teetering on the point of absolute collapse. 
I preface my remarks on the bills with those comments because we did not move with enough pace to bring to justice the people in whom society had posited their trust. We will live to regret that because it is difficult now to get a range of projects up and going. Although capital may be there it is very chary and it is very frightened of falling again into the hands of the characters who have ruined people’s lives. As we have said earlier we support this legislation but we ask whether it will enhance the confidence of savers to bring money back into circulation so that it fulfils this mezzanine purpose. I hesitate to agree that it will other than to say that it is an important building block on a long road to recovery. 
My colleague Lianne Dalziel played a key role in launching the work related to the Capital Market Development Taskforce. I do not fully subscribe to the notion that New Zealand is short of capital. I prefer the approach that says New Zealand has capital but that it is both misallocated and at the moment very shy; it is staying in an area where it is unlikely to be squandered as a consequence of dodgy decision-makers. So this apparatus has to fulfil the purpose of causing a new source of capital to be made available to firms entrepreneurs and investors in our country because it is only through investment that we will create jobs and enhance the number of firms that will produce a greater level of goods and services—hopefully to generate foreign exchange earnings. 
Often a celebrated case is seized upon and the culprits in a given case are jumped upon from a great height. The style of compliance pursued by the Inland Revenue Department tends in my assessment to search out for egregious examples of wrongdoing smash them hard and then hope and trust that the severe punitive measures visited upon the culprits will send a message out to a wider group of people. Well that is really what needs to happen as a consequence of the passage of these bills. There is an enormous contrast. We can watch television and see the hapless individuals who have been fast and loose with the funds of American citizens being marched out of their offices surrounded by heavies—I dare not say “goons” but they are very frightening individuals—wearing FBI-emblazoned jackets. However in Aotearoa New Zealand those wrongdoers often go away for a holiday overseas then come back— 
Hon David Cunliffe 
: Hawaii. 
Hon SHANE JONES 
: Yes. Well the man who is in Hawaii is a particularly unpleasant chap: Hotchin. 
Hon David Cunliffe 
: Oh Hotchin or Key? 
Hon SHANE JONES 
: Ha ha! Well Mr Key has enough explaining to do in terms of his role in relation to Mr Hubbard’s empire. But with the fullness of time no doubt information will continue to trickle to this side of the House in that regard. 
Hon David Cunliffe 
: It’s a torrent at the moment. 
Hon SHANE JONES 
: Yes. Well there we go—the quantity of the information although it may take a while to sieve through contains a number of nuggets; of that we can be sure. 
The point I will make though is that unless the regulators are able to visit significant criminal consequences on culprits then I fear that garden-variety Kiwis with their several hundreds of thousands - odd dollars etc. will be at risk again. 
Too much of the capital that we refer to as mezzanine capital ended up in the hands of people who fed an asset-price spike through commercial property investments residential property investments and land conversions. None of those are inherently wrong but when there is a significant misallocation and when the asset prices become decoupled from the cash-generating capacity of the actual asset then one is on a hiding to nothing in the event that capital prices do not keep rising. At one level it is important that we as savers show some due diligence. At another level it is important that the people whom we trust are aware that if they break that trust and if they act in a fashion that is reckless fast and loose then they personally will bear the consequences: they personally will lose their liberty and they personally will be ruined in terms of their reputations in that sector. The reason that Labour supports these two bills is that we feel that this legislation is an important step in that direction. 
As I finish my speech I will give an indication of how difficult it is to make those people aware of the trust they hold. I felt ill as I read the newspaper the other day and saw that the person representing the ratings agency that had looked at various aspects of the Hubbard empire said the agency may have been a little casual and it may have been insouciant in relation to the level of information that it asked for as if it had no responsibility whatsoever for what has occurred. So despite the loss of $6.5 billion the imbroglio around South Canterbury Finance is an example of how far we have to go. Hopefully this legislation will make a good contribution. 
MELISSA LEE (National) 
: 
 It is a pleasure to rise to make a very short contribution to the Financial Markets (Regulators and KiwiSaver) Bill together with the Auditor Regulation and External Reporting Bill which are obviously being read together. 
I will take a moment to talk about the Financial Markets Authority. This authority will consolidate functions that are currently fragmented across several departments such as the Securities Commission which is the current market conduct regulator; the Government Actuary which is the current market regulator of superannuation and KiwiSaver schemes; certain functions of the Ministry of Economic Development; and also some functions currently undertaken by the Minister of Commerce. The Financial Markets Authority will be the one authority that will look after all of those. 
Obviously the Financial Markets Authority will be focused on promoting fair efficient and transparent financial markets. A key focus will be on a visible proactive surveillance and enforcement role in relation to those markets. Speakers who have spoken before me have talked about the huge financial trouble that New Zealand and the world has had. Investment literacy in New Zealand is very poor and we need to improve the situation. 
I am a member of the Commerce Committee and I look forward to the submissions that will come to it and the work that will be done on this legislation. This is great legislation and I commend it to the House. 
Financial Markets (Regulators and KiwiSaver) Bill read a first time. 
Hon MAURICE WILLIAMSON (Minister for Building and Construction) 
: 
 on behalf of the  
Minister of Commerce 
: I move  
That the Commerce Committee 
 consider the  
Financial Markets (Regulators and KiwiSaver) Bill that the committee report finally to the House on or before 28 February 2011 and that the committee have authority to meet at any time while the House is sitting (except during oral questions) and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 65 
New Zealand National 58; Maori Party 3; ACT New Zealand 3; United Future 1. 
Noes 51 
New Zealand Labour 41; Green Party 9; Progressive 1. 
Motion agreed to. 
Auditor Regulation and External Reporting Bill read a first time.  
Bill referred to the Commerce Committee. 
Taxation (Income-sharing Tax Credit) Bill 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Income-sharing Tax Credit) Bill be now read a first time. 
 At the appropriate time I will move that the bill be referred to the Finance and Expenditure Committee. Income sharing for parents with dependent children has long been a core policy of United Future. The introduction of this bill forms part of our confidence and supply agreement with the National-led Government. 
The income-sharing proposals that this bill introduces have been the subject of two separate rounds of public consultation under two successive Governments. During the term of the previous Labour-led Government a Government discussion paper was released. Again that was part of a confidence and supply agreement commitment and it followed full consideration by Cabinet. The document canvassed people’s views on the idea of income sharing an arrangement that allows couples with children the option to split their income for tax purposes so that each partner is taxed on an equal share of their combined income. Because income tax rates rise according to the amount earned under such a scheme parents could ultimately end up paying less tax if for example one parent works full-time and the other chooses to remain home to care for their children. 
Around 90 percent of the submissions on that first discussion paper were in favour of some form of income sharing on various grounds including that it recognises the contributions of full-time parents in their homes and communities and that it balances the assistance available to parents who are in the workforce. I should acknowledge that at every stage of that process the previous Government was constructive and helpful and appeared to operate on a good-faith basis. All of that makes Labour’s current opposition to this legislation much harder to understand. 
I constantly receive very positive feedback from everyday New Zealand families about income sharing. New Zealanders react to hip-pocket realities. They know that income sharing is good for them and that no amount of political double-speak from politicians who might oppose it will stop them from recognising when something actually benefits them. The reality is simple: up to 310000 New Zealand families and nearly three-quarters of New Zealand children stand to benefit by anything up to $9000 a year and parents will have the choice of spending more time raising their children. The key word here is “choice”. Those who oppose this bill are in effect saying they wish to deny New Zealand families a very helpful choice in the way they might wish to raise their families. 
The second consultation round took place in December last year during the term of the present Government. We sought feedback on how income splitting might be delivered as an annual tax credit similar to Working for Families assistance. Again most submitters supported this approach. The bill introduced today reflects public feedback from both consultation rounds and sets out who would be eligible how the tax credit will be calculated the rules around how to apply for the credit and how it should be paid. I particularly acknowledge the support of both National and the Maori Party during the development of this legislation and in its first reading today. 
In essence under an income-sharing arrangement each partner in a relationship caring for dependent children under 18 years of age would be taxed on an equal share of their combined income. At the end of the tax year they would be able to apply to the Inland Revenue Department for a tax credit based on the difference between the amount of tax they would have paid on an individual basis and what they instead pay based on half their combined income. 
Members may have noticed that I am using the term “income sharing” rather than the term “income splitting” which was used during the consultation process. Adopting the new term “income sharing” is a deliberate choice. First it more accurately reflects the status of couples with children as equal partners in raising their families. Second it provides a more accurate description of the arrangement in law. The bill defines parents as being spouses civil union partners or de facto partners similar to the Working for Families legislation. They would have to be New Zealand tax residents for the whole tax year before they could claim a tax credit and one of the partners would also have to be the principal caregiver for the dependent child or children. Under the provisions in the bill the shared care credit would also be available to parents when they have separated if they have subsequently re-partnered and are sharing responsibility for caring for their child or children for at least one-third of the tax year. 
Although the income-sharing arrangement has the potential to benefit many families it cannot and is not intended to be a suitable arrangement for all couples with children. For some depending on their income the option to claim the credit will be of marginal value; nor will the credit be available for certain parents who do not meet the eligibility criteria such as sole-charge parents. I am aware that some will view this aspect of income sharing as an infringement on human rights; some members have no doubt observed the report from the Attorney-General under section 7 of the New Zealand Bill of Rights Act that accompanies this bill. 
On this matter I need to make the obvious point that no one benefit fits all. That is why we have targeted assistance for groups with particular financial and social needs. Arrangements are already in place for people who are sole-charge parents—for example through the childcare subsidy the minimum family tax credit childcare rebates and the domestic purposes benefit. For many families income sharing recognises the real financial choice that many couples with children often have to make about whether they work full-time and employ others to care for their children or whether one partner stays home to care for the children possibly on a part-time basis. 
The proposals that this bill contains will give parents more choice about their work and caring roles. As such those proposals give greater recognition to the equal role and value of both parents in raising their children. Too often we hear the lament from parents that they would have loved to be able to spend more time at home with their children when they were growing up but simply could not afford to do so. Income sharing extends that option to many more parents and gives them choices that they currently do not have. In my view it is not for this House to continue to deny them those options. 
I hear the argument from those who oppose income sharing as being unfair because they say not everyone will benefit equally. Although differing income levels will mean differing levels of benefit it is exactly the same with any income-related tax change. I cannot see any logic in denying parents the choice of income sharing if it suits their circumstances. After all if they were in a business relationship they would be able to share their incomes for tax purposes in precisely the way that this bill proposes yet I do not hear any suggestion that that is unfair. Raising a family is surely the most basic and important business that every one of us will ever be involved in. Therefore surely it is only right to give parents as many options as possible to enable them to do so to the very best of their abilities. Against that background it is with considerable pride and pleasure that I commend this bill to the House. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take a call on behalf of the Labour Opposition on the first reading of the Taxation (Income-sharing Tax Credit) Bill. I will take this opportunity to recognise and acknowledge the effort that the Minister of Revenue the Hon Peter Dunne who has just resumed his seat has put into this issue over a number of years. The consultation on this issue was first undertaken under the previous Labour-led Government and it has to be acknowledged that this has been a passion of the Minister over a good part of his parliamentary career. 
I think it fitting that the House acknowledge that the intentions of this bill are good. Certainly I would not demur from the Minister’s statement that the raising of children is the most important function that any of us could undertake. I say further that the pressures upon families in our country at the moment are intense. They are intense because New Zealand has found itself caught in the grip of a world recession which it is struggling to emerge out of and many of our families have seen their principal income earner face enormous challenge and wage restraint. Jobs have been lost there are 160000 unemployed and only today we learnt that the latest GDP growth figures were only one-quarter of those forecast by the Reserve Bank. Growth is collapsing. Our economy is in trouble and our families are in trouble so no New Zealander would demur from the idea that it would be a wonderful thing if we could give some relief. That is why we will be making announcements over the next week that will contribute to that goal. It is no surprise that in the consultation undertaken on this bill 90 percent of respondents thought it would be a wonderful idea to receive a $500 million tax windfall. What I want to know is who the 10 percent are who did not want it. 
Amy Adams 
: The childless. 
Hon DAVID CUNLIFFE 
: Perhaps it was the childless but one can hardly be surprised that people were enamoured of the idea of receiving free money. But in all seriousness this I guess is where we part company with the Minister. 
If one is concerned about addressing the issue of child poverty in New Zealand—which is where this is fundamentally headed—then the Labour Party believes there are much much better ways to achieve that goal. Indeed we are working on breakthrough policy in that area in order to bring it to the New Zealand public at the 2011 election. Certainly there are better ways to provide flexibility for families and partnerships as to how they structure childcare. It was Labour that brought in paid parental leave and it may be possible for us to look at making extensions to the current level of paid parental leave. I commend my colleague Sue Moroney for her work in that regard and for her development of a member’s bill in pursuit of that idea. It may also be possible for us to extend the 20 hours’ free early childhood education allowance that the previous Labour-led Government brought to New Zealanders. Both those measures would be done at significantly less fiscal cost than the $500 million price tag of the measure that is contained in this bill. Most important either of those measures or thirdly a restructuring of the tax and benefits structure around the lowest-income New Zealanders including beneficiaries would achieve better health and social well-being outcomes at a lower fiscal cost than this bill proposes. 
I have to take issue with the Minister when he said that any measure that affected the taxation of families would have a similar result which is that the more one earns the more one gains from the tax change. This is capped so that the benefit of the tax splitting—and I do not think it is particularly appropriate that we use the word “sharing” because that is a kind of “touchy-feely” spin-filled word; it is actually income tax splitting—goes up to a threshold of $140000 a year. The effect of that is that the closer one is to the $140000 threshold the more tax remission one gets. But the needs of the children are greater the lesser the income one gets. That is perverse. It is the children of the poorest who are struggling the most yet this tax benefit goes mainly to the children of the middle class. They may be the Minister’s constituency but they are not the area of greatest social need. 
The next problem is one of design. This is a cumulative effect. It comes on top of two previous sets of tax changes that already favour the upper middle class. Firstly we had the reduction by the incoming National Government with indecent haste of the 39c tax rate to 38c. That was a windfall to upper-income earners including—to be fair to the Minister—people earning over $140000 and in Budget 2010 we have seen the reduction of that income tax rate extended all the way to 33c. Although there may be some design advantages in equating it with the trust tax rate it cannot be removed that this again is a windfall to the top income earners. In fact a full third of the tax remission goes to the top 5 percent of income earners. I will say that again: a third of the tax remission goes to the top 5 percent of income earners in the Government’s plan. 
Hon Dr Nick Smith 
: What about the GST? 
Hon DAVID CUNLIFFE 
: The member raises the subject of GST. Well here we go again because I am bound to remind the House and the New Zealand public that if the Government was so convinced that there was a net benefit to ordinary New Zealanders after the tax switch and after inflation then it would have had the moral courage to put the inflation impact in its online tax calculator. But did it? No it did not. What did the Budget documents tell New Zealanders about the net impact of the tax switch and inflation? Well there is one number: 5.9 percent inflation next year—and with that figure it takes until 2014 two elections away for an average or minimum wage earner to break even. Well that will be joyfully received in the hills and dales of Remuera but it will not be so well received in my electorate of New Lynn nor I would say even in the Minister’s electorate of Ohariu. 
Paul Quinn 
: What about in your household at St Marys Bay? 
Hon DAVID CUNLIFFE 
: My very proud electorate of New Lynn I say to Mr Quinn I am very happy to say has returned me to Parliament for three consecutive terms and I am now enjoying a fourth term. So it cannot be random can it I say to Mr Quinn. Something must be happening out there in order for the good people of New Lynn to do that. In fact Mr Joyce is rushing to New Lynn tomorrow as it happens to celebrate the opening of the railway station that Labour paid for. How tremendous it is for him to grace us with his presence to kiss the babies cut the ribbon and open the railway station. All the hard work was done by Michael Cullen along with if I might add this the dutiful efforts of the MP for New Lynn. Merry Christmas New Lynn. There is $300 million worth of first-class infrastructure brought to the area by the previous Labour-led Government and how very nice it is of Steven Joyce to come and celebrate with us in our humble community. We shall roll out the red carpet for him; he can be assured of that. 
I come back to the bill. I acknowledge the Hon Peter Dunne who is one of the longest-serving members of this House. I believe that he is a member who has his heart in the right place. We do not demur from the intent of this bill and we do not demur from the idea that every Kiwi child needs to be given a helping hand and a fair start. But if we had $500 million to spend in pursuit of that aim we would not spend it on the provisions in this legislation. Nor would we do that following the two consecutive tax changes in two consecutive Budgets that have already delivered a windfall to the upper end of taxpayers and unfortunately that is what this bill does up to the point of $140000 a year. The returns increase up to that point and then flatten off. Labour will be bringing forward to the public of New Zealand policies that are better designed more far-reaching and have more impact on the position of the children of the poor. Labour will bring to the electorate a new opportunity for every Kiwi child to get ahead for every Kiwi family to have the pressure reduced and for those who have had it the toughest the relief will be most tangible. Thank you. 
AMY ADAMS (National—Selwyn) 
: 
 I am very pleased to have the chance to take a call on the Taxation (Income-sharing Tax Credit) Bill. Let me say at the outset that the concept that the bill puts before the House is one that I have both a great deal of interest in and a number of significant concerns about. Equally it is fair to say it is an issue that generates a lot of public debate and interest. When the Minister’s press release about the upcoming introduction of the bill came out I was involved in a function all day and had missed the announcement. The thing that brought it to my attention was the steady stream of people who came up to me throughout the rest of the day and the next morning wanting to talk to me about it and express their views which were pretty passionately held on both sides of the debate. Clearly it is an issue that will generate a lot of interest. 
I certainly can see a lot of merit in having a select committee look at the bill and then put the issues out there and debate them. As the House knows it is part of National’s supply and confidence agreement with United Future that National will work with United Future in respect of this bill and certainly support it going to the select committee. I am very pleased to do that because I think it is an important issue. The matters that it traverses and touches upon are fundamental as Minister Dunne said in his opening remarks. There can be nothing more important in our society than the raising of children and the supporting of families in doing that. 
I will run through the two halves of the debate as I see them and the issues that impact on me. Certainly on the positive side it appeals to me that we would be able to encourage families to set up their childcare arrangements in a way that best suits them. I have often been a believer that there is no one-size-fits-all arrangement when it comes to how parents should raise their children and how parents should work. If one parent wishes to stay home full-time to raise the children and it was simply financial matters that were not allowing that to occur then obviously it would be wonderful to be able to give parents that opportunity. I know that having two parents going out to work for 20 hours a week each rather than having one parent working for 40 hours would certainly be financially more valuable to the family. But that has a cost too in consistency and in time spent together. There is nothing more difficult than raising children particularly in the very early stages of parenting. Frankly I know when I went back to work as a young parent it was pretty much for a rest. Working as a lawyer was considerably easier than being at home with a young child. But if this is the best thing we can do for our families and our children then every member of this House would want to support families in doing that as far as they can do so. 
There are some really strong drivers within me that want to support the concepts in the bill. But on the flip side I do have concerns and they have been predominantly picked up by the Attorney-General in his report under section 7 of the New Zealand Bill of Rights Act about the position that the bill leaves sole parents in. The Attorney-General’s report talks about the bill being discriminatory against sole parents. The negative comments that I have heard from people in my community are largely around that issue. Does the bill unfairly place sole parents at a disadvantage to married parents? Will parents be encouraged to stay together in a marriage they might not have stayed in but for that ability? Who knows? These are issues that we need to look at. The fact that the Attorney-General was so concerned that he issued a section 7 report is not something we can take lightly. 
The other factor that we need to be very mindful of and the previous speaker David Cunliffe touched on it is that we are all very aware of the difficult and strained financial times we are in and a proposal such as this does have a significant fiscal impact. In a perfect world we would never have to worry about these things but the fact is that we do. We have to be very mindful as a Government to consider the fiscal costs of the proposal. 
As I said in my introductory comments I have a lot of interest in the proposal I see merit in it but equally I have a number of significant concerns. For my part as a member of the Finance and Expenditure Committee which the House is so moved to send the bill to should it pass its first reading I will be incredibly interested to go through the process of public submission and debate on the proposals and I will do so very much with an open mind. For that reason I am very pleased to support the bill at its first reading. 
STUART NASH (Labour) 
: 
 I stand in opposition to Minister Dunne’s Taxation (Income-sharing Tax Credit) Bill at its first reading. There are two things I would like to say about this bill. First this proposal does not increase equity; rather it further increases the gap between those who earn the most and those who struggle to make ends meet. Second I will outline a couple of points made by experts—not in Parliament but in the real world—who have spoken on this bill. 
In reading this bill and listening to the Minister’s answers to oral questions in the House today it is hard to believe that this Minister of Revenue was also the Minister of Revenue under the previous Labour Government. His apparent lack of empathy with those who are really battling is baffling. Mr Dunne himself is about to get a tax cut of around $140 a week but a person on the median wage in the electorate he purports to represent will get about $5 a week. That is simply not fair or equitable. This bill is not fair either. Mr Cunliffe earlier alluded to the Minister’s passion about this issue and said it was commendable. Well I would not use the word “commendable”; I would use “misguided”. If the Minister concentrated his passion on securing real benefits for all Kiwis then I would commend him. But that is not the case with this legislation. It does not benefit all Kiwis at all. It is not about families; it is about high-income families who do have choices. 
The Minister speaks a lot about choice. However choice implies a level of economic freedom; necessity does not. As the Inland Revenue Department noted in its report on income splitting: “It might be perceived as unfair that the benefit from income splitting increases as primary earner income increases providing more benefit to couples with higher incomes.” So the real question is whether income splitting helps those who really need it—those who were torn between returning to the workforce full-time working part-time or staying at home to look after children. The answer to the question is no. We should remember that Mr Dunne’s proposal is applicable only to families with dependent children. It does not help those who really need assistance. Working for Families is in place to help struggling families and Mr Dunne suggests that we have both. The median household income is about $60000 and the median wage for those in paid employment is around $41000. Therefore many households have both parents working full time and they would not benefit from income splitting. Those families who genuinely do have choice around whether one parent works or both parents work tend to be those who earn the most. It just makes sense. 
For the benefit of members opposite who have no understanding whatsoever I will outline three scenarios. They assume a two-parent household with at least one dependent child and one partner who works. The first household with a salary of $40000 will get $8.65 a week under Mr Key’s tax cut and about $23 a week with income splitting. They will be about $32 a week better off. The second household with a salary of $100000 will get about $38 a week with the tax cut and $163 a week with income splitting. They will be $202 a week better off. However those who earn $140000 a year will get $66 a week with the tax cut and $180 a week with income splitting. They will be $240 a week better off. A household that earns $40000 a year—about 70 percent of Kiwis earn $40000 or less—will be $32 a week better off but a household on $140000 will be $240 a week better off. How does that promote equity? In fact the regulatory impact statement which accompanies the bill spells it out. It states: “The most significant gains would go to higher single income households with the lowest gains going to low-income families.” Nothing has changed on the other side of the House; it is simply not fair. 
A couple where one partner earns $140000 a year and the other earns nothing will get $9000 more a year. This bill is not about families; this is about high-income families. Mr Dunne said that not everyone would take this up. What? Of course they will take it up. Those people will say that they pay enough tax and will grab that $9000. It is the people who earn $140000 who will benefit not the people who earn low incomes. The Inland Revenue Department costed this proposal at around $500 million a year. We should remember that the Government cut the budget to the early childhood education sector by $250 million over 4 years. That will really cost struggling parents. I would have thought that pumping more money into high-quality early childhood education would be the type of policy that provided choice for struggling parents. Mr Dunne set up the Families Commission yet he sits with a Government that cut funding to the early childhood education sector. That has set that sector back 10 years. That is the real travesty that Mr Dunne and United Future should be fighting. That is what he should be standing up for if he value parents and children. Mr Dunne says that anyone who opposes this bill does not value families and is engaged in the politics of envy. That is the sort of rhetoric we hear when there is no logical argument to back up a claim. There is no logical argument to back up this bill. 
That brings me to my second point which is to relay the comments of a couple of experts who have spoken about this bill. First of all let us be honest and Amy Adams outlined it: the reason we are debating this bill is that it is a supply and confidence agreement between Mr Dunne and the National Government. When I questioned Mr Dunne about this at the Finance and Expenditure Committee he said it was in the supply and confidence agreement. That was all he said. When I questioned the Minister of Finance Bill English at the select committee about the possibility of income splitting he ruled it out. He said it was not well targeted it was inequitable and it probably would not go ahead. He also said that there were better targeted approaches to this. And there is a targeted approach; it is called Working for Families which was put in by the previous Labour Government and helps 300000 families in this country. That is targeted assistance; this bill is not. 
We are going through the motions. The National Government will vote for this bill to go through to the select committee we will sit there and we will hear submissions in the knowledge that the bill will be voted down in the second reading. Bill English has pretty much said as much. The Attorney-General Chris Finlayson has said as much. He said the bill was discriminatory and we all know that whatever Chris Finlayson says must be right as the guy walks on water—he has told us as much himself. The  
New Zealand Herald 
’s economic reporter called this bill unfair unaffordable and unlikely to happen. Mary Holm said that it was bad prioritisation of spending and would do nothing to help low and middle income New Zealanders. There are very very few people outside a little square box on that side of the House who actually think this is a good idea. It will definitely not help those who really need it. 
In conclusion I say that this proposal is not equitable. It will not help those families who are really struggling at the moment so make ends meet. It will do nothing to alleviate child poverty. It does not provide choice because choice implies a level of economic freedom. At the moment there are many families where both parents work out of economic necessity and earn $40000 or below. This bill will not help them and that is why I oppose this bill. Thank you very much. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise on behalf of the Green Party to speak on the Taxation (Income-sharing Tax Credit) Bill—or the tax-splitting bill as it is probably more accurately described. The Greens will not be supporting the bill; we do not think it is a good bill. 
The reason fundamentally is that if one were to spend $470 million a year with the objective of supporting parents one would not spend the money in this way. Spending $470 million nearly half a billion dollars a year on a scheme in which 70 percent of the value of the credits goes to couples with a joint income of $70000 or more is not a well-targeted scheme. To look at it the other way it is a well-targeted scheme; it is just that it is well targeted towards those who are at the upper end of income earners. Those who are towards the lower end will get very little benefit from this scheme. Even if we look at a family where both parents work and earn a modest income of $35000 we can see they will not get anything from this scheme. 
This scheme is overwhelmingly targeted at two-parent families where one partner is on a pretty good income and they are the ones who will benefit the most from it. That is just the nature of the scheme. Of course one could argue that it is a good idea to spend half a billion dollars a year to support families where one person earns a lot of money and the other one does not. But I argue that in the kind of society in which we live which is highly unequal and has very widespread poverty spending half a billion dollars a year on that particular group is not a very wise way to spend money. Part of that reasoning relies on the Green Party’s view that inequality is a problem. For those who do not think that inequality is a problem and are happy to increase inequality through a measure such as this then it is not an issue. But if one thinks that inequality is a problem—New Zealand is one of the most unequal countries within the OECD—then this scheme will only exacerbate the inequality that we already have. 
It is also just straight discrimination against sole parents. Sole parents of course will not benefit from this bill. Sole parents will contribute towards the half a billion dollars a year in foregone taxes that it will cost the Government but they themselves will not benefit at all from this bill. It discriminates in a straight and unadulterated way against sole parents. The Green Party thinks sole parents should not be discriminated against. We think sole parents have a pretty tough job and they deserve support. For us it does not seem right that we should spend half a billion dollars of taxpayers’ money on a benefit that is not accessible to sole parents. 
One may argue—perhaps those from the moral majority or from a conservative point of view argue this—that sole parents have something wrong with them that they should be punished because they are sole parents and that that is why we need a bill that punishes them and gives money to people who are in relationships. But the Green Party does not take that view. We think sole parents have a tough job and we should support sole parents rather than— 
Simon Bridges 
: Don’t be silly! No it doesn’t. Helping families to parent doesn’t mean you’re hurting solo parents. 
Dr RUSSEL NORMAN 
: I hear the National member interjecting. National is voting tonight for a bill that discriminates against sole parents. I say to every sole parent in New Zealand that tonight National is voting for a bill that discriminates against sole parents and gives half a billion dollars a year to people on the basis that they are in relationships. It says that if people are sole parents they will not get a cent of that money. National will vote for a bill tonight that discriminates against sole parents to the tune of half a billion dollars a year and that says to those people who are sole parents: “Tough luck we are not going to support you.” The Green Party will not support that. We think that sole parents have a tough enough job; they do not need the taxation system to discriminate against them further. 
We think that if the Government wants to support parents and we totally understand that the drive of the member behind this bill is to support parents then there are better ways to do that. Labour introduced Working for Families which discriminates against the very poor because it does not include those who are on benefits. Why does the Government not extend Working for Families to those who are on benefits so that some of the poorest parents in our country who are out of work through no fault of their own but because there is this thing called the recession could get some support? The Working for Families package which the Green Party supported because it does help to reduce inequality does not help those at the very bottom. So if the Government has half a billion dollars to spend every year on supporting families then why does it not direct that money to families who are in the bottom income range rather than to those who are in the middle to upper income range as this bill does? If the Government has half a billion dollars a year to spend on supporting families why is it giving it to those at the top? Why does it not give it to those who are in the bottom deciles? It seems to me that extending Working for Families to those groups would be a better way to spend half a billion dollars a year. 
There is also the option of extending paid parental leave. The advantage of paid parental leave is that it provides support for parents with newborns and young children so that they can be paid during the first part of their child’s life. If the Government has half a billion dollars a year to spend then why does it not spend it on that? It seems to me that is a much more targeted way to spend half a billion dollars a year. It is not an insubstantial amount and it does surprise me that National which tells us that we are short of money is happy to vote for a bill that will cost $470 million a year when 78 percent—three-quarters—of the value of the credits will go to couples with a joint income of $70000 or more a year. That is the problem. 
National is proposing to vote for a bill that costs half a billion dollars and overwhelmingly the benefits will go to those at the upper end despite the fact that we live in a society that is grossly unequal and has more inequality than pretty much any other country in the OECD—or the developed Western countries. Tonight National is voting for a bill that will add to the inequality by directing taxes towards those at the top. Why do we not vote for a bill that will direct some support to those at the bottom so that we reduce inequality in our country rather than increase it? 
I think others have acknowledged that the member in charge of this bill Peter Dunne is promoting it with good intent and I acknowledge that. Also I know a lot of people think this bill is a great idea when they first hear about it and of course many people in this House would be beneficiaries of this bill were it to pass. Although the Minister in charge of the bill has good intentions and although the bill on first appearances seems to have some benefits the fact remains that it is an extremely problematic bill. It will not help those who need help the most. For that reason the Green Party will not be voting for it tonight. 
DAVID BENNETT (National—Hamilton East) 
: 
 I will take just a short call on the Taxation (Income-sharing Tax Credit) Bill and to follow on from the last speaker Russel Norman I think it is a bit rich for the Green Party to come into this House and try to put fear into New Zealanders and say certain people will miss out with this scheme. 
Taxation law is targeted. It is targeted in the Working for Families package at people who have children. If people do not have children then they miss out. This bill is targeted at those families who have children. It is a tax break for them. That is the nature of it and it is being considered as part of the coalition agreement. The Green Party says it is the party that looks after the vulnerable and the weak. It is very sad to see that the Green Party’s whole argument against this bill is based on trying to make out that the vulnerable and the weak as the Greens perceive them do not benefit from legislation and therefore the Greens will not support the legislation. That is a sad indictment on the Green Party’s politics. 
I think we should congratulate the Minister of Revenue Peter Dunne on this bill. He has been an advocate for this measure for many years. When members meet people in the street they hear them talk about this quite often. People understand the concept and they are very keen on it in many ways. It is in the best interest of this Parliament to have the debate and to see the bill referred to the Finance and Expenditure Committee so people will have a chance to have their say. We congratulate the Minister on bringing it forward. 
Hon SHANE JONES (Labour) 
: 
 Kia ora. I stand with my colleagues to oppose the Taxation (Income-sharing Tax Credit) Bill. I note that it will be referred to a select committee and every interested New Zealander will have an opportunity to come and make submissions. I want them all to know that this bill will not emerge from a chrysalis like a butterfly that will fly away and deliver goods; it will die at the feet of the Government. It will certainly not be supported by us. If people want to go through the ritual of making a submission and demonstrating that they believe it is important to entrench inequity through our tax system even more than do the changes that the current Minister of Revenue has presided over then they should make their submissions. But the submissions will be an exercise in learning about how select committees can be manipulated by the executive and turned into squawk-boxes that serve only to reward minority parties for their support to keep going a broad policy that worsens inequity and rewards a very narrow range of New Zealanders. 
There is an element of piety about this bill as befits its architect. There is a sense that a narrow range of New Zealanders because they live in a style that one might associate with the 1950s ought to be rewarded while those who are in genuine need ought to be ignored. It is possible that this bill fits a broader picture and the broader picture is that tax concessions and tax give-aways are the best way to reward the class of citizenry that supports a particular political party. That is essentially the economic development policy of the Government through its tax give-away. 
We absolutely oppose this bill. It carries on the multibillion-dollar tax give-away entered into earlier this year. That in itself is premised on an assumption that if a narrow range of New Zealanders get a significant tax slice and a reduction in their tax rates it will catalyse the economy and somehow unleash a level of dynamism and more firms will emerge and more jobs will be created. Of course it will have the opposite effect. This bill proposes to take money away from the most vulnerable and direct it towards a very narrow range of New Zealanders— 
Simon Bridges 
: No it doesn’t. The vulnerable don’t pay tax. 
Hon SHANE JONES 
: That young man should learn that it is better to confess ignorance than to provide it every day. As the Maori say “Pai ke atu me whaki i te kuare kaua e whangaia to kuare ki tetahi atu.” 
[ 
“It is better to disclose being ignorant; do not cast your ignorance upon someone else.” 
]  
But such a suntanned mascot would not understand what I have just said. 
Labour will not be supporting this bill. We hope that the public realise that we will never treat tax policy in such a narrow iniquitous fashion. 
I am called on to elevate the importance of the contributions made by a genuine lawyer in this House—not one who pretends he lives in the Bay of Plenty but who lives in Auckland and not one who models himself on Perry Mason but unfortunately lacks a sense of being well adjusted. I will talk about a real lawyer in this House: Mr Chris Finlayson. He has pointed out that this bill represents an egregious example of discrimination. That man understands the law and has a style of delivery as befits someone who craves attention from the legal fraternity. 
We thoroughly agree that this bill ought not to be supported because not only is it very discriminatory but it is ill-judged. It is ill-judged for a host of reasons. It does not treat families in their broadest context. It does nothing to create jobs and growth. Where will the jobs come from under the current mix of policies that we are forced to endure week after week? Each year there is a tsunami of young men and women leaving school—quite apart from those who have been dislocated from the job market. Where will the jobs come from? They will not come from a tax break that is predominantly for the wealthy. They will certainly not come as a consequence of a tax break for the self-satisfied. That will not happen. 
In fact New Zealanders were hoping to receive as part of broader tax reform a lever that would enable jobs to grow and firms to generate more foreign exchange earnings by investment and innovation. This bill does nothing. This bill takes $5 billion and rewards a narrow category of New Zealanders. It deepens inequity and it rewards vested interests which is why we cannot possibly agree with it. 
The notion of income splitting is only one way of lessening the problem of people not having enough to pay their way. A far better way would have been to not proceed with the tax cuts that will benefit only a very narrow range of people and similarly to not proceed with the imposition of a GST reform that will worsen the cost of living statistics. I tell members that once the by-election in Mana starts and that side of the House—although I have a great deal of respect for its candidate unlike other members of that small sub-caucus group of the broader caucus. She will find—[ 
Interruption 
] I have to acknowledge Mr Paul Quinn because in the gallery today are some kaumatua from my rohe from Taemaro from the Waikohatu block. I know that Mr Paul Quinn has been endeavouring to assist that very proper respected lawyer Mr Chris Finlayson unlike the younger member who has yet to visit the kohanga reo. 
Once the Mana by-election rolls out we will see that the GST reforms such as they are have worsened the prospects for the average family to pay its way and to meet its regular bills on food on buying school clothes and on buying sports gear. We do not have to explain why we have it. The responsibility is on that side of the House to explain why this punitive measure has been visited upon the most vulnerable in New Zealand society at a time when they can hardly afford to meet all their daily expenses as a consequence of the global meltdown. 
Mana is where we will see how these ill-conceived ideas impact on people in a political way. That will be a dress rehearsal for the big game next year. I do not refer obviously to the golden oldie game; I refer to the election which will be fought and won by those who oppose such acts of false piety as we see in this bill and the ill-conceived ideas that are designed to reward a narrow class and forget about the bulk of people who have significant issues that they cannot address. Their cost of living problems have spun out of control as a consequence of that Minister of Revenue who fortunately will not be here after the next election. Kia ora tatou katoa. 
PAUL QUINN (National) 
: 
 Kia ora Mr Deputy Speaker. I have sat here throughout this debate on the Taxation (Income-sharing Tax Credit) Bill and I have to say that the contribution from the Opposition benches has been extraordinary in the rhetoric—the absolute rhetoric—it has delivered. We have just heard a speech from Mr Jones and he spent the first part of it giving us a lecture about parliamentary process. We have just heard a sophomore give the kaumatua of this House a lecture on parliamentary process. For goodness’ sake! Who are these people? I suggest to Shane that he sticks with being a sophomore which he is and that he just waits— 
Hon Shane Jones 
: I raise a point of order Mr Speaker. Although my name comes from a well-known cowboy movie I would prefer to be referred to as the Hon Shane Jones. 
Mr DEPUTY SPEAKER 
: Yes; the member knows he must use the member’s full name not an abbreviation or one name. 
PAUL QUINN 
: Can I seek your guidance? 
Mr DEPUTY SPEAKER 
: I have dealt with the matter. Continue with your speech. 
PAUL QUINN 
: Am I allowed to call him Mr Shane Jones? 
Mr DEPUTY SPEAKER 
: You are trifling with the Chair. I call the member to continue. 
PAUL QUINN 
: Oh well I will call that sophomore the Hon Shane Jones. It is clear that— 
Hon Shane Jones 
: I raise a point of order Mr Speaker. I do not mind being regarded as a sophomore but I am of Maori-Croatian descent not of Moorish descent! 
Mr DEPUTY SPEAKER 
: It is one all. I invite the member to continue. 
PAUL QUINN 
: I say to that gentleman who has obviously been rattled that he should take guidance from the kaumatua of this House who needs no lecture on parliamentary process. 
We heard a contribution from the Greens who seem to think that life is all about mediocrity and that the only way to get ahead is to have people achieve mediocrity. That is extraordinary because the simple reality of life is that in terms of getting people to aspire upwards we have a basket of programmes and this is just one of them. 
National will support the first reading of this bill so that it can be properly explored and examined. That is a very proper process. We hear time and time again from members on the Opposition benches about stuff needing to go through the proper process and saying that we should send it to select committees. Yet here we are doing exactly that and they still criticise us. I suggest to Opposition members that we are following proper process. This is an excellent bill. It is another building block in helping families and people within the community—in this particular case middle-income people—to try to get ahead through income sharing. 
This Government also has programmes for those whom some people refer to as the most vulnerable. The Opposition needs to understand that families earning $50000 or less do not pay tax under this Government. We are concerned about those families and that is the sort of support we are giving. With those few words it gives me great pleasure to say that I look forward to exercising my vote and supporting this bill at its first reading. Thank you. 
RAYMOND HUO (Labour) 
: 
 I thank the Hon Peter Dunne for confirming that this Taxation (Income-sharing Tax Credit) Bill is a direct result of the confidence and supply agreement between United Future and the National-ACT Government. It explains a lot. Thanks also go to Ms Amy Adams and my good friend Mr Paul Quinn for their contributions because the concerned parties will read between the lines of their  
Hansard 
 copy very carefully. 
Labour opposes the bill on the basis that it is badly targeted. It favours wealthy parents over families that really need extra support. The Hon Peter Dunne said in his speech a moment ago that the key word is “choice”. If that is the case if we consider this year’s Budget we realise that the choice has gone from a genuine tax switch to a tax swindle. On 1 October 2010 GST will rise by 2.5 percent. New Zealand taxpayers who are in the top 1 percent of income earners will benefit from 50 percent of a $40.3 billion tax package. A third of that package will go to the top 5 percent and people in the middle and at the bottom of the income range will go backwards after inflation. That is National’s choice. 
The Hon Peter Dunne also mentioned the Working for Families scheme. The  
Taranaki Daily News 
 published a very good opinion article on 6 September 2010 and I will read it out: “Since individual tax rates rise according to a person’s total income a single income family currently pays more tax than a family with two people earning the same combined income. The proposed income-sharing rules would mean families with the same family income would pay the same amount of tax regardless of whether one or both partners had derived the income. The eligibility requirements for the new tax credit largely mirror the current Working for Families requirements. Around 60 per cent of families that would qualify for the new income-sharing credit would also be recipients of Working for Families tax credits. Seventy-eight per cent of the benefits of the proposed tax credit are likely to go to families with combined incomes of more than $70000. The greatest benefit would go to families with one high income earner.” 
The Hon Peter Dunne said the key word is “choice”. I say that the key word here is not “choice” but “top-up”. The article went on to ask why families who already receive Government assistance require a further top-up under a different scheme. Working for Families already provides assistance to tens of thousands of families with children. Further many families who receive assistance through Working for Families already pay little or no income tax. Providing further assistance through an income-sharing scheme will only add to the distortions in the current tax system. The recommendations made by the Tax Working Group—many of which were adopted in this year’s Budget—aim to remove these distortions. An income-sharing tax credit would add complexity to the system and introduce another level of distortion. The key word here for the National-ACT Government is “confusion”. 
The other area where the National-ACT Government is confused is where it seems to be happy to provide further tax relief to working families with children at the expense of single people families with no dependent children sole parents and families with partners not in work. The fact that the same level of benefit would apply to a family with one child as to a family with five children seems to be very confusing. It is not surprising that Treasury the Ministry of Social Development the Department of Labour and the Ministry of Women’s Affairs—together with Labour—are all expressing serious concerns about the policy. The Inland Revenue Department confirms that the credit would not be available to all families and in particular it would not assist sole parents. The most significant gains would go to higher single-income households with the lowest gains going to low-income families. 
Treasury advised against introducing the credit because it costs too much is unfair and is poorly targeted. The Ministry of Social Development commented that income splitting provides additional income for a limited population with the most significant gains being for higher-income households and the lowest gains for low-income families. 
The Department of Labour highlighted the policy’s potential to reduce the incentives for secondary earners in particular to participate in the labour force and to invest in their own training and development. The Ministry of Women’s Affairs pointed out that by increasing effective marginal tax rates for secondary earners—who are mostly women—the proposal would encourage partners to have specialised roles thus discouraging women’s participation in the workforce and increasing their share of unpaid work. The ministry continued: “The credit appears inconsistent with the Government’s policy on labour force participation.” The ministry also considered the proposal to be unfair to sole parent families. So the key word here is “inconsistency”. 
Finally in the New Zealand Bill of Rights Act report the Attorney-General concluded that the bill limits the right to be free from discrimination and that that limitation could not be justified under that Act. The key word here is “discrimination”. Thank you very much. 
SIMON BRIDGES (National—Tauranga) 
: 
 I can sum up my views on the Taxation (Income-sharing Tax Credit) Bill very briefly: I really really like the idea of Kiwi families being eligible to share their income for tax purposes. I like it because it is pro-choice and it is pro-families. 
However in relation to this bill I suppose I reserve my judgment on its practicalities particularly in the tough times we are in when this policy will be an expensive one for the taxpayers’ coffers. Therefore I think we really do have a high threshold to cross; the bill must be very high-quality law before in the end analysis it would be signed up to by National. 
I will say again why I like the idea with an example. I went very recently to a decile 10 school in my electorate. It is a fantastic little school and as I said it has the highest rating that can be achieved so the students if you like have very wealthy parents. But when I went into the first-year class of new entrants I was astounded to learn from the teacher that over the last 5 or so years she had noticed a real change whereby children were coming in who did not know the alphabet who did not even know numbers and who did not know any nursery rhymes. The growth in those children was astounding. We talked a bit about that and effectively we came to the view that it was because mums and dads both work. They are busy and when they get home they are tired and the like. 
This idea of sharing incomes for tax purposes is pro-choice and pro-families. It allows families to do something to have more options and it could—and I will not be naive about it—be a nudge in the direction of ensuring that children get a much better start. 
I know that Labour says that income sharing does nothing to address child poverty and child poverty is a very important issue. No one disputes how important child poverty is. No one disputes what an issue we have with child poverty in this country but that is not a reason in principle to not do something for other families who may not be scraping the bottom of the barrel but who nevertheless deserve and could do with some additional choices. The idea of income sharing provides for that. 
As I said I very much like this idea. I am looking forward to seeing how things go through the select committee process. There are serious practical issues and there is the cost of this policy but in principle it is a very good idea. 
A party vote was called for on the question  
That the Taxation (Income-sharing Tax Credit) Bill be now read a first time. 
Ayes 62 
New Zealand National 58; Maori Party 3; United Future 1. 
Noes 54 
New Zealand Labour 41; Green Party 9; ACT New Zealand 3; Progressive 1. 
Bill read a first time. 
The result corrected after originally being announced as Ayes 64 Noes 54. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Income-sharing Tax Credit) Bill be referred to the Finance and Expenditure Committee. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 59 
New Zealand National 58; United Future 1. 
Noes 54 
New Zealand Labour 41; Green Party 9; ACT New Zealand 3; Progressive 1. 
Motion agreed to. 
The House adjourned at 6 p.m.