Volume 610 Week 33 - Thursday 14 August 2003 
Volume 610 Week 33 - Thursday 14 August 2003 
[Volume:610;Page:7981] 
Thursday 14 August 2003 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Voting 
Correction 
Mr SPEAKER 
: Last night leave was given for the New Zealand First Party to alter its vote on the question that the order of the day for the consideration in Committee of the Smoke-free Environments Amendment Bill be discharged and the bill be referred to the Health Committee. The New Zealand First vote was initially recorded as a split party vote and Dail Jones sought to have the vote cast as a single party vote for the Ayes. This was not clear at the time and the corrected result was not correctly announced. The corrected result is Ayes 56 Noes 61 and the motion is not agreed to. 
Business of the House 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Next week is an adjournment week. When the House resumes on Tuesday 26 August the main items of business are likely to be the remaining stages of the Gambling Bill the Health Practitioners Competence Assurance Bill and the Consumer Credit Bill. 
GERRY BROWNLEE (NZ National—Ilam) 
: 
 I thank the Leader of the House for giving us an indication of what might be on the Order Paper when we resume. Would he be able to give us some indication of when we might expect to see some legislation relating to the Crown’s interest in the seabed and foreshore? 
Hon Dr MICHAEL CULLEN 
: I suppose I can say in the fullness of tide in this case rather than in the fullness of time. 
Questions to Ministers 
School Leavers—Teenagers' Options 
1. PETER BROWN (Deputy Leader—NZ First) 
 to the  
Minister for Social Development and Employment 
: What options are presently available for teenagers deciding to leave school without having obtained work? 
Mr SPEAKER 
: Before I call the Minister can I say he did advise me that his answer was a little longer than usual. 
Hon STEVE MAHAREY (Minister for Social Development and Employment) 
: 
 We have a very wide range of options. We have a youth employment education and training partnership with the Mayors Task Force for Jobs and a range of specific initiatives including Gateway Modern Apprenticeships industry training the Training Opportunities Programme and specialist youth employment services worth $5.4 million over 4 years in the last Budget alone. In question No. 4 today I will mention something else. Finally people under 18 years of age who are not supported by their families can receive the independent youth benefit while they complete school and find work. 
Peter Brown 
: Noting that answer is he aware—and if so is he at all concerned—that according to the coordinator of Wellington’s Downtown Community Ministry street people project many unemployed teenagers are turning to prostitution rather than going on the dole? 
Hon STEVE MAHAREY 
: I have heard that. If there are individual cases the member would like to bring to my attention I ask him to please do that because he will know that under the new Prostitution Reform Act under-18-year-olds are specifically prohibited from working in the sex industry. 
Georgina Beyer 
: What have been the results of initiatives to engage young people in education training or employment? 
Hon STEVE MAHAREY 
: The latest household labour force survey reports that the fall in unemployment was driven largely by the 15 to 24-year-old age group. This is backed up by information showing a lift in tertiary education participation decline in the number of young people receiving an independent youth benefit and since 1999 a 39 percent drop in the number of people on the unemployment benefit in the 18 to 24-year-old age group. 
Katherine Rich 
: Can he confirm that last week’s re-announcement of $1.5 million over 3 years to help young people move from school to work was something Work and Income was already doing and is approximately one-quarter of what Work and Income spends in 1 day? 
Hon STEVE MAHAREY 
: I think the money the member is referring to is the $1.5 million that goes to the Mayors Task Force for Jobs and is focused on youth. It is new money. 
Nandor Tanczos 
: What options are available for teenagers forced to leave school because they have been expelled for experimental use of cannabis outside school grounds outside school time and outside their wearing school uniform? 
Mr SPEAKER 
: I am not warning anyone. I said no interjections during questions. That applies to everyone. 
Hon STEVE MAHAREY 
: If the member has a particular case he would like to bring up he should do so. I think the main place to which such people would go would be youth training programmes outside the school that provide them with a skill base to get a job. 
Peter Brown 
: Noting those answers has the Minister’s department noticed any reduction at all in the number of those claiming unemployment benefits since prostitution was made legal? 
Hon STEVE MAHAREY 
: It is too soon to tell. 
Peter Brown 
: Will the Minister tell the House what monitoring processes he has in place to determine whether young people are turning to prostitution instead of claiming the dole? 
Hon STEVE MAHAREY 
: Through particularly the Ministry of Youth Affairs and the Ministry of Social Development we have a range of programmes to track the well-being of young people and those would be the best places we could go for information. But I say to the member that the bill was passed only a little while ago so doing anything that might require research would be pretty hard given that length of time. 
Violent Offenders—Public Safety 
2.  
MARC ALEXANDER (United Future) 
 to the  
Minister of Corrections 
: Is he satisfied that his department is doing enough to keep violent offenders secure and away from the public? 
Hon PAUL SWAIN (Minister of Corrections) 
: 
 Yes but we can always do better. 
Marc Alexander 
: Can the Minister confirm that it is common practice for prisoners to be transported on commercial passenger planes unrestrained and accompanied by one plain-clothes police officer yet under the Privacy Act an airline cannot let other passengers know on request whether there will be any prisoners on the flight? 
Hon PAUL SWAIN 
: I cannot confirm that but if the member is keen to take the matter up with me then I am happy to provide him with an answer. 
Martin Gallagher 
: What has the Government done to keep the public safe from violent offenders? 
Hon PAUL SWAIN 
: Under the Sentencing Act violent offenders are now being locked up for longer and— 
Gerry Brownlee 
: Rubbish! 
Hon PAUL SWAIN 
: That is true. Under the Sentencing Act violent offenders are being locked up for longer and under the Parole Act the Parole Board must give priority to public safety before deciding to release an inmate. This is good work from this Government. 
Brian Connell 
: In the light of the Minister’s answers to Mr Alexander’s question has the Minister considered using experienced and highly regarded prison officers like Doug Smith and Tony Bird former members of the “Goon Squad” to escort prisoners around the country as those guys would do anything for a chance to dress up and have a free beer; if not why not? 
Hon PAUL SWAIN 
: No because it is not appropriate. 
Ron Mark 
: Does the Minister consider that one of his greatest successes in terms of keeping the public safe from offenders—from known violent offenders and rapists—was the inability of his department to know where Mr Mike Carroll was when he was on the loose in Christchurch and when supposedly the Minister’s staff had Mr Carroll fully secure and fully under observation at all times as the Minister assured us? 
Hon PAUL SWAIN 
: I have had many successes in my life but I would not count that as one of them. 
Marc Alexander 
: Can the Minister assure the public that the safety of their air travel is not being compromised by prisoners being on board the same plane as them given that in May last year a transferring prisoner overpowered his police escort threatened to “f--- up the flight” and had to be subdued by cabin crew and a passenger? 
Hon PAUL SWAIN 
: I can give an assurance about that. Obviously prisoners need to be escorted around the country and need to go by plane. Of course any concern about public safety needs to be investigated and I am happy to provide further information for that member if he so wishes. 
Stephen Franks 
: If the Minister finds after investigation that handcuffs are not used because of concern about the feelings and self-esteem of prisoners will he undertake to reverse that policy and ensure that handcuffs are worn to ensure safety; if not why not? 
Hon PAUL SWAIN 
: I am happy to have a look at it. The reality of course is that the police or escorting officers will determine the level of security that is required. I am assured that obviously the safety of the public is the priority. But as I said I will investigate the matter and get back to the member in due course. 
Brian Connell 
: Would the Minister like to withdraw the comments he made in a recent speech where he congratulated the Department of Corrections on “achieving the results you do” in the light of the 32 prison escapes since June of last year and the outcome of the Law and Order Committee investigation of the infamous “Goon Squad”; if not does this mean he is congratulating the department on those inadequacies? 
Hon PAUL SWAIN 
: Certainly not. Actually the latest figures show that breakout escapes per 1000 inmates were less than one in the last year for which we have counted them. Under National it was around seven. So I think the department is doing pretty well. 
Katherine Rich 
: Why is there a policy not to handcuff prisoners on aircraft given that a prisoner was handcuffed during childbirth? 
Hon PAUL SWAIN 
: The inmate was not handcuffed during childbirth. 
Katherine Rich 
: She was in labour. 
Hon PAUL SWAIN 
: She was not handcuffed during childbirth. I have had considerable correspondence with that member on this issue. The facts have been pointed out to her. The inmate was not handcuffed during childbirth. 
Marc Alexander 
: Can the Minister deny that prisoners transferred on domestic flights often have convictions for violent crime and in some cases have a record of escaping from custody? 
Hon PAUL SWAIN 
: No I cannot confirm or deny that. But the issue of the security of the public when prisoners are travelling on public transport such as that must be a priority and I will investigate it further. 
Marc Alexander 
: Why are thousands of dollars spent on transferring convicts to other prisons when the victims of crime have to fund their own transport to court hearings and Parole Board meetings which are often some distance from where they reside and what does this say about this Government’s view on the balance between victims’ and offenders’ rights? 
Hon PAUL SWAIN 
: On the issue of victims of course we can all do better. But I hope the member will concede that this Government has done a lot for victims’ rights by enshrining them in legislation which is the first time it has been done. As far as transporting prisoners around the country is concerned sometimes that is a requirement for muster arrangements which are determined by the Department of Corrections. 
Mr SPEAKER 
: Before I call the next question I want to point out to Ministers that the reason I go through the process of calling 
them is to enable time for their microphones to be turned on so that the hundreds of thousands of people listening are able to hear. 
Question No. 1 to Minister 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I seek leave to table a newspaper article so that the Minister who replied to question No. 1 will know what I was referring to. 
Mr SPEAKER 
: Leave is sought to table that. Is there any objection? There is. 
New Zealand Superannuation Fund—Investment Strategy 
3.  
Dr DON BRASH (NZ National) 
 to the  
Minister of Finance 
: In light of today’s announcement of the New Zealand Superannuation Fund’s investment strategy does he believe that Treasury’s original assumption of an overall long-term annual return of 9.4 percent on the fund is realistic; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes. 
Dr Don Brash 
: Given that Treasury itself has acknowledged that there is no realistic way of judging the long-term outlook that the expected rate of return has recently been revised down from that first proposed and that the similarly structured Government Superannuation Fund has lost considerable sums on its investments over the last 2 years why does the Government not simply retire some of its $35 billion of Crown debt as any prudent homeowner with a mortgage would do? 
Hon Dr MICHAEL CULLEN 
: The statement on the Government Superannuation Fund is incorrect. The original question related to the Superannuation Fund’s investment strategy. The estimates by the guardians are extremely close to the original Treasury estimates despite the fact there is a somewhat different mix of investments within the portfolio. 
Peter Brown 
: What is the Minister’s attitude to investing some of this money in New Zealand’s infrastructure such as roading and transport areas? 
Hon Dr MICHAEL CULLEN 
: That is a matter for the guardians; they determine the asset allocation policy. This will never be a fund that is at the whim of any Minister of Finance to use as a slush fund for things like silly “think big” projects. 
Rod Donald 
: Can the Minister confirm that the guardians have established an ethical investment strategy that includes investing in anything that is legal which could include such enterprises as armaments manufacturers cigarette companies alcohol companies casinos and even brothels; if that is the case is he happy with such an investment strategy? 
Hon Dr MICHAEL CULLEN 
: I think the member’s summary of the approach taken by the board to ethical investment is in fact not a fair one. In any case at the end of the day it is up to the board of guardians to interpret their statutory responsibilities and to carry them out. I repeat that one of the main purposes of the way the fund is structured is to stop Ministers of Finance determining how the fund should be invested. 
Gordon Copeland 
: Does the Minister believe that the investment of a mere one-fifth of the New Zealand Superannuation Fund in New Zealand could be viewed as a vote of no confidence in the future of the New Zealand economy and therefore become a self-fulfilling prophecy by denying local companies access to capital; if not why not? 
Hon Dr MICHAEL CULLEN 
: The guardians are determined to invest 7.5 percent in New Zealand equities. The New Zealand equity market is 0.2 percent of the world total so they are weighting New Zealand at 40 times its world average. 
Dr Don Brash 
: If the Minister is so confident that the fund will over the long term generate a much higher rate of return than the cost of the Government’s debt why does he not borrow another $100 billion or so invest it in overseas sharemarkets and use the income generated to cut everybody’s tax burden? 
Hon Dr MICHAEL CULLEN 
: I think we have at last flushed out the member’s economic policy; it is to borrow for tax cuts which is what I have said the National Party’s policy always has been. 
Gordon Copeland 
: Does the Minister have concerns that having almost four-fifths of the fund allocated off shore carries an additional level of risk given that New Zealand is the highest-indebted country in the OECD with resultant large annual outflows in interest and dividends; if not why not? 
Hon Dr MICHAEL CULLEN 
: No. Strictly speaking in terms of when the fund comes to be realised I think it is fair to say that appreciation of the New Zealand dollar is more of a worry than depreciation of it. 
Tertiary Education—Low Income Earners 
4.  
MARK PECK (NZ Labour—Invercargill) 
 on behalf of  
DAVE HEREORA (NZ Labour) 
 to the  
Associate Minister of Education (Tertiary Education) 
: What is the Government doing to improve the participation of low-income people in tertiary education and to retain these students in New Zealand once they have graduated? 
Hon STEVE MAHAREY (Associate Minister of Education (Tertiary Education)) 
: 
 The Minister of Health and I have today announced that around 500 low-income students will be eligible next year for a new bonded scholarship scheme. Step-up scholarships are being piloted in 2004 for students studying for degrees in the subjects of human and animal health. Students who receive a scholarship will pay a flat fee of $2000 per year regardless of the tuition fee for the course they have chosen. The scholarship pays for the remainder. The Government has committed just under $16 million to this initiative. 
Mark Peck 
: What will this mean for students who receive the scholarship? 
Hon STEVE MAHAREY 
: The individual value of the scholarship will depend on the course being undertaken. The scholarships are awarded for the full duration of the degree programme—subject to satisfactory academic progress. I give some examples: students studying medicine can expect to save around $43000; nursing students can expect to save around $5500; veterinary students about $20000; midwifery students around $5500; and dentistry students $36000. 
Craig McNair 
: What does the Minister think of an education system that motivates businessman Scott Gilmour to establish a trust to support 36 pupils at Wesley Primary School through their education and eventually to pay their fees to attend a tertiary education course and an education system that has slipped so far that in this case education is not a right for our children but a charitable service provided by the wealthy to the less fortunate? 
Hon STEVE MAHAREY 
: We have an outstanding education system in this country but I certainly welcome the philanthropy demonstrated in that question. 
Nandor Tanczos 
: Will this scholarship be available for people wishing to study complementary medicines accepted by orthodox health professionals as effective treatments such as acupuncture and osteopathy; if not why not? 
Hon STEVE MAHAREY 
: It will not for the purposes of this pilot. 
Hon Annette King 
: Has the Minister seen any response to today’s announcement; if so what is that response? 
Hon STEVE MAHAREY 
: The Nurses Organisation has welcomed the scholarships as “a step towards addressing the causes of our nursing shortage”. The New Zealand Medical Association has said: “This will do much to reduce the stress from the burden of debt for some medical students.” Massey University has welcomed this as “a strategic move to provide generous scholarships for bright students studying human and animal health”. Overall we are seen as a listening and responsive Government. 
Foreshore and Seabed—Government Decision 
5.  
GERRY BROWNLEE (NZ National—Ilam) 
 to the  
Prime Minister 
: When the Hon Dr Michael Cullen said on her behalf “those on the extremes” would be disappointed with the Government’s decision on the seabed and foreshore did this include New Zealanders who believe the Crown should have exclusive title over the foreshore and the seabed to be “on the extremes”; if so why? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the 
 Prime Minister 
: Those who will be disappointed include those who want to assert private exclusive ownership of the seabed and foreshore as well as those who seek to play the race card and are hell-bent on this issue being about winners and losers. 
Gerry Brownlee 
: In the light of that answer is it not extreme for the Prime Minister of New Zealand to be unable to answer whether she believes that the Crown should have exclusive title to the foreshore and seabed when most Kiwis are quite clear that that is what the case should be? 
Hon Dr MICHAEL CULLEN 
: The Prime Minister is never extreme. She is a hard-working and conscientious Prime Minister. 
Rodney Hide 
: When the Hon Dr Michael Cullen said that “those on the extremes” would be disappointed was he including in that the views of the Hon Tariana Turia or does this Government think that her views are not extreme? 
Hon Dr MICHAEL CULLEN 
: The Hon Tariana Turia and the rest of the Labour Party’s Maori caucus committee have made a very strong input into the announcements to be made next week. Indeed I can say very clearly that they have clearly asserted right throughout the importance to Maori of customary rights being respected. 
Dr Muriel Newman 
: Is it extreme to promise that the Crown should legislate for equal access to the beaches and seabed without distinction or privilege on the basis of race or ethnic inheritance; if so does she consider that the Hon Margaret Wilson who said that to the House on Tuesday 24 June is an extremist? 
Hon Dr MICHAEL CULLEN 
: The Hon Margaret Wilson is certainly not an extremist. 
Gerry Brownlee 
: Does the Prime Minister’s statement that “no one is going to get any new exclusive ownership to the foreshore and seabed” mean that she will ensure that the Crown has exclusive title to the foreshore and seabed; if not why not? 
Hon Dr MICHAEL CULLEN 
: It means that no one will have new exclusive title to the seabed and foreshore. 
Gerry Brownlee 
: Does that mean that the Prime Minister is now saying that the Crown has exclusive title to the seabed and foreshore and will continue to have it? 
Hon Dr MICHAEL CULLEN 
: The member will have to wait until Monday. 
BIZ Portal Website—Response 
6.  
DAVID PARKER (NZ Labour—Otago) 
 to the  
Minister for Small Business 
: What has been the response to the launch of the BIZ portal website earlier this month? 
Hon JOHN TAMIHERE (Minister for Small Business) 
: 
 The BIZ portal website went live on 8 July. The feedback has been extraordinarily positive across the country. I have been advised that the BIZ portal site has been awarded the  
Net Guide 
 site of the month award in the most recent edition due out this week. 
David Parker 
: How has the business sector reacted to the launch of the BIZ portal? 
Hon JOHN TAMIHERE 
: The establishment of a one-stop business portal was a key recommendation of the Ministerial Panel on Business Compliance Costs ably put together and led by the Hon Paul Swain. The business people on the panel have provided very positive feedback including the chair of the panel Alan Dunn managing director of McDonald’s Restaurants of New Zealand. McDonald’s Restaurants of New Zealand employs over 6000 Kiwis and is the country’s largest first-time employer. It includes a collection of more than 140 restaurants— 
Gerry Brownlee 
: What about the others? 
Hon JOHN TAMIHERE 
: It is Gerry Brownlee’s favourite eatery. The majority of McDonald’s restaurants are operated by 49 small-business owners nationwide. Unlike the Opposition we do not think that sitting around tables while sipping champagne and eating caviar is the right way to meet with businesses. 
Iraq—Defence Force Unit 
7.  
SIMON POWER (NZ National—Rangitikei) 
 to the  
Minister of Defence 
: Can he assure the House and the New Zealand public that the New Zealand Defence Force unit deployed to Iraq will have sufficient support and defensive capability to defend itself in the event of hostile action; if so why? 
Hon STEVE MAHAREY (Minister for Social Development and Employment) 
 on behalf of the 
 Minister of Defence 
: Our defence personnel are well trained and they will be appropriately equipped and armed for self-defence. However I note that the situation in Basrah has worsened recently. The Ministry of Defence is monitoring that to ensure that the New Zealand defence forces can undertake the tasks for which they are deployed. 
Simon Power 
: Can the Minister assure the House that in the 2 months between the decision to deploy in principle and the actual decision to deploy engineers announced recently adequate work was carried out to ensure the safety of New Zealand Defence Force personnel serving in Iraq; if so why? 
Hon STEVE MAHAREY 
: Yes. I need to stress that this is a team of engineers and they are there on that deployment alone. If they are not safe then of course they will leave. 
Tim Barnett 
: Will our planned deployment to Iraq proceed regardless of any changes in the security situation in southern Iraq? 
Hon STEVE MAHAREY 
: No it will not. We understand of course that this a team of engineers who are being sent to Iraq. The prevailing conditions are such that they are able to be there but should those conditions affect their ability to do their work as engineers as the Minister of Defence said on Monday “there is no point in them being there”. 
Ron Mark 
: Why is the Minister deploying 61 young New Zealanders into Basrah or Shaibah an area where British soldiers are now suffering increasing casualties without 50-calibre machine guns; is it because as I suspect the Army has not been able to train enough of them to be competent with the weapon or is it because as we read in the paper the Government thinks tactics such as not looking like a Brit or an American or running away when one gets caught up in a firefight are the best forms of defence? 
Hon STEVE MAHAREY 
: No to the last plethora of questions but going back to the earlier question can I say that the Minister of Defence has already said that if the situation is such that the troops are not safe there is no point in their being there. 
Sue Kedgley 
: Can he assure the House and the New Zealand public that the New Zealand Defence Force unit deployed to Iraq has sufficient support and protective capability to protect itself from the risks posed by depleted uranium and other contaminants; if so how? 
Hon STEVE MAHAREY 
: My understanding is yes to all those questions. We can be sure that the best possible protection is available to those troops. 
Simon Power 
: Can the Minister confirm as reported that the approach of the New Zealand Defence Force and personnel in Iraq will be to try not to look American to drive around in hired civilian vehicles with large kiwis painted on them and to try to get away as quickly as possible if fired upon; if so does he not think that a stronger force with real defensive capability would have been more appropriate in such a hostile environment? 
Hon Steve Maharey 
: Yes to the first three questions. It sounds quite sensible to run away if fired at. Can I say that these troops are there under Resolution 1483 to help with the reconstruction of Iraq. If they are safe there they will do their job and if they are not they will leave. 
Simon Power 
: I raise a point of order Mr Speaker. At the beginning of the Minister’s answer I lost the gist of what he was saying. I asked whether he could confirm those reported comments and given the way the Minister responded and the way members on the Opposition side of the House interjected I wonder whether he could repeat the first part of his answer. 
Mr SPEAKER 
: Just briefly. 
Hon STEVE MAHAREY 
: I did think that the member had his tongue in his cheek when he asked the first three questions and I simply replied that I personally thought it sounded like common sense to have a kiwi on the side. It sounds like good advertising to me. 
Tariffs—Review 
8.  
ROD DONALD (Co-Leader—Green) 
 to the  
Minister of Commerce 
: How is the tariff review she is due to present to Cabinet this month taking into account the comments of the Acting Minister of Commerce Hon Trevor Mallard on 11 May 2000 that “it is senseless for New Zealand to attempt to lead the world into a tariff-free playing field without ensuring that other countries reciprocate”? 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 The terms of reference for the review incorporated four matters that the review was to have regard to. Those included encouraging reciprocity by New Zealand’s trading partners with regard to the lowering of tariffs. This issue is being taken into account. I should though point out to the member given the way his question was framed that I am not expecting to report to Cabinet by the end of this month. 
Rod Donald 
: Will the Minister now extend the current tariff freeze for a further 5 years in the light of the United States Government’s statements yesterday that it has dropped its push for zero tariffs; if not why not? 
Hon LIANNE DALZIEL 
: No. I am due to report to Cabinet so Cabinet can make a decision on the future of the tariff environment in New Zealand. 
Mark Peck 
: Why did the Government freeze tariffs in 2000 and why is it important that a decision be taken this year rather than waiting until 2005? 
Hon LIANNE DALZIEL 
: The Government recognised the need for a period of stability which is why we froze tariffs for 5 years until 2005. However it is now important that we make decisions so that businesses can plan for the post-2005 tariff environment. 
Rod Donald 
: As part of the review has the Minister visited and talked with clothing workers in places like Lower Hutt and Levin about the effect that even the threat of tariff cuts is having on their job security; and why will she not rule out any move to zero tariffs right now to give those businesses the security they need to keep those jobs safe? 
Hon LIANNE DALZIEL 
: As I said to the member the question of encouraging reciprocity was only one of four matters. The other three related to promoting the development of prosperous and internationally competitive industries encouraging regional development and reducing economic disparity and abiding by New Zealand’s international commitments and actively participating in multilateral and bilateral trade negotiations. I am not prepared to make any statement in respect of our commitment to go to zero. 
Sue Bradford 
: Is cutting tariffs and forcing clothing workers out of jobs this Government’s real Jobs Jolt and is she concerned that those redundant workers will then be forced to relocate in order to get the unemployment benefit if they are unlucky enough to live somewhere that the Ministry of Social Development deems to be a no-go area for employment? 
Hon LIANNE DALZIEL 
: I think it is very important that the member takes into account all the matters that I have just raised. I have met with the unions that represent the textiles footwear and clothing sector. The point has been made more than once that we already have one of the lowest tariff regimes in the world and that the final shift ultimately to zero which will happen at some point in the future will not make a significant difference. There have already been closures associated with the rush that was implemented by the previous Government. That is not the indication that sits with the final phase-out of tariffs. 
Rod Donald 
: Is the Minister asking for a new analysis to be carried out after the Infometrics report commissioned as part of the tariff review was found to be flawed because it simply assumed that the trade balance would be unaffected by cuts in tariffs when we all know that in the real world reductions in tariffs result in an increase in imports? 
Hon LIANNE DALZIEL 
: My reading of that report indicated there was not a suggestion that there would be a reduction in the numbers of people employed in the textiles clothing and footwear sector but that it suggested there would be a reduction in the increase in employment in that sector. 
Violent Offenders—Strategic Business Plan 
9.  
BRIAN CONNELL (NZ National—Rakaia) 
 to the  
Minister of Corrections 
: Does he believe that his department can provide “safe secure and humane management of offenders” as outlined in its recent strategic business plan? 
Hon PAUL SWAIN (Minister of Corrections) 
: 
 Yes. 
Brian Connell 
: Is the Minister aware that Judge Colgan—in an Employment Court case involving a former emergency response unit member better known as the “goon squad” in the Department of Corrections—said with regard to phase four of the operation build-up carried out on the night of 19 December 2000 that it was arguably unlawful; if so what has the Minister done about that and is that what he means in the department’s recruitment catchphrase “Have you considered a career in crime?” 
Hon PAUL SWAIN 
: In answer to the last part of the question no. But I am sure that the member is aware that there were two reports. The first report into various allegations concentrated more on procedural issues like exhibit handling expenses management and the like. In the end when the second report came out when all the other allegations had come to the fore the department made an assessment of them and decided that many of them were without foundation. It is important to note that the officers were subjected to various disciplinary procedures including final warnings. 
Dr Ashraf Choudhary 
: How does New Zealand compare with other jurisdictions in the safe secure and humane management of offenders? 
Hon PAUL SWAIN 
: New Zealand compares very favourably with like jurisdictions on all the key indicators including low rates of assaults escapes suicides and costs per inmate. I am also advised that those statistics have continued to improve in recent years. 
Ron Mark 
: Will the Minister lend his total support to a select committee inquiry into the operations of the emergency response unit in Christchurch Prison and in doing that also enable the select committee if it chooses to do so to interview inmates and prison officers so that the real truth about what happened in Canterbury’s prisons may be known to the public? 
Hon PAUL SWAIN 
: I would hope that before the select committee even considered such things it would investigate very thoroughly the two very comprehensive reports that have been done on this matter. As the member will know there were two. Many of the allegations that have been brought to light in public through the media have not been substantiated. 
Brian Connell 
: Do the Minister’s comments made in a speech earlier this month where he congratulated the Department of Corrections on “achieving the results you do” include Paul Monk Paul Rushton Tony Bird Doug Smith and Mike Kelly who were all involved in or linked to the infamous goon squad which achieved results that included dressing up in military uniforms conducting top very very secret meetings in Dunedin running up $480 bar tabs and indecent exposure in a public place; and is that a viable path to promotion within the department? 
Mr SPEAKER 
: There are three questions there; two may be commented on. 
Hon PAUL SWAIN 
: I most certainly stand by the comments I made earlier last month. I tell that member that corrections officers in New Zealand do an extraordinarily good job in very difficult circumstances. I would expect members on the Opposition side of the House to provide them with some support in the House instead of bagging people like them who do a difficult job all the time. 
Television New Zealand—Kaihautu Position 
10.  
DEBORAH CODDINGTON (ACT NZ) 
 to the  
Minister of Broadcasting 
: What is the salary band of Television New Zealand’s new position of kaihautu and have there been any employment grievances from other persons who believed that they had been offered the position of kaihautu? 
Hon STEVE MAHAREY (Minister of Broadcasting) 
: 
 These are operational matters for which I have no legal responsibility. However in accordance with section 211 of the Companies Act each annual report of Television New Zealand Ltdwill state such information if it is relevant. 
Deborah Coddington 
: Can the Minister deny media rumours that the new kaihautu Hone Edwards is paid more than $180000 per year and is he concerned that under the charter the kaihautu—already dubbed cultural safety officer—is paid more than investigative journalists whose job it is to report the facts; if not why not? 
Hon STEVE MAHAREY 
: No I cannot confirm those media rumours as the member puts it and I remind her that they are operational matters for which I have no legal responsibility. However the information of course is made publicly available by Television New Zealand at the appropriate time. 
H V Ross Robertson 
: Does the Minister have any responsibility at all for the recruitment of staff at Television New Zealand? 
Hon STEVE MAHAREY 
: No. Such personnel matters are the responsibility of the management of the company. Section 128 of the Companies Act provides that the business and affairs of a company must be managed by or under the direction or supervision of the board of the company and not by its shareholders—something I imagine everybody in the House already knows. 
Katherine Rich 
: Can the Minister see the contradiction in appointing a kaihautu at a rumoured remuneration of more than $180000 when at the same time Television New Zealand is cutting costs reducing the news budget by 10 percent making staff redundant and cancelling high-quality current affairs and drama programmes? 
Hon STEVE MAHAREY 
: I try to avoid listening to unfounded rumours and no. 
Heather Roy 
: Can the Minister deny that two tangata whenua have been paid out by Television New Zealand because of a cultural misunderstanding by which they believed that Ian Fraser had offered them the job of kaihautu; if not does he as Minister have any concerns about just how Television New Zealand is spending taxpayers’ dollars? 
Hon STEVE MAHAREY 
: I have no knowledge of those unfounded rumours. 
Marc Alexander 
: Can the Minister say whether any of the $12 million allocated by the Government for the fulfilment of chartered programming was used to pay for the appointment of the kaihautu; if so what programmes were cut in order to make such a politically correct appointment? 
Hon STEVE MAHAREY 
: No that money was not used to hire this new member of staff. 
Katherine Rich 
: Can the Minister assure the House that the agreement worked out between Television New Zealand and any of the unsuccessful applicants did not involve any payment financial settlement commitment undertaking or promise from Television New Zealand to engage or commission them to undertake any forms of consultancy or the Brian Edwards - option of producing their own programme; if not why not? 
Hon STEVE MAHAREY 
: I am aware through media reports of only one person who has complained about the process—and that person is not a Television New Zealand staff member. That is the only complaint I am aware of. 
Rodney Hide 
: Does the Minister believe that the appointment of a cultural safety officer at Television New Zealand is going a bit far if it is simply to protect the Minister of Maori Affairs and is that not just another reason for New Zealanders to switch to TV3 where the staff are all paid to get and to report the news rather than to censor it? 
Hon STEVE MAHAREY 
: I know of no cultural safety officer employed by Television New Zealand. 
Stephen Franks 
: In the light of the Minister’s apparent lack of interest in the kaihautu appointment if people flock to private broadcasters for news they feel is uncensored by any cultural safety officer will he promise that the Government will not force private broadcasters to appoint their own such officers; if not how else will he ensure that people stay watching State broadcasting’s PC news? 
Hon STEVE MAHAREY 
: I hope they watch Television New Zealand because it is interesting. That is why I hope they will go and do that. No one has forced anybody to do anything; this was a choice made by Television New Zealand itself. Of course I am interested in those kinds of appointments and consistent with that I point out that no one is going to force TV3 to do anything either. 
Deborah Coddington 
: What obligations does Television New Zealand have under the Treaty of Waitangi? 
Hon STEVE MAHAREY 
: As an organisation that is relatively autonomous under its own legislation Television New Zealand has to make choices about how it will deal with the Treaty of Waitangi just as all other organisations of that kind do. 
Immigration—Crime 
11.  
RON MARK (NZ First) 
 to the  
Minister of Police 
: Is he considering any initiatives to assist in combating immigrant crime; if so what? 
Hon GEORGE HAWKINS (Minister of Police) 
: 
 Police are proactive in developing initiatives to counter crime among New Zealand’s changing and diverse population. 
Ron Mark 
: How can the Minister continue to ignore the fact that further resourcing to combat immigrant crime is required when on one hand the Auckland police have reached the point of requesting a force of volunteer reserves to back them up in their struggle to fight crime among Auckland’s immigrant communities and on the other hand the Chinese Government is now expressing its grave concerns at the high level of Chinese crime in New Zealand? 
Hon GEORGE HAWKINS 
: Because the police are taking a number of actions. The Commissioner of Police is visiting Bangkok this week where he will discuss this matter with others including fellow commissioners. Several initiatives are also under way at a national level. The Auckland Asian crime unit recently outlined trends in the development of Asian crime at a conference of District Court judges and an Asian-organised crime investigation course is being held at the Royal New Zealand Police College this very month. There are so many initiatives and trends in which police are working with local communities and of course they are trying to recruit more people from across the spectrum so that problems can be dealt with. 
Mahara Okeroa 
: What success has the police had in clearing crime in recent years? 
Hon GEORGE HAWKINS 
: The office of the commissioner announced today that the resolution rate for crime in the 2002-03 year is 43.7 percent—the best in over 20 years. We can compare that with the rates for 1991-92 under National when the resolution rate hit a low of 29.8 percent. I am happy and I think people should be congratulating the police. 
Brian Connell 
: Is it not a fact that one cannot do enough to combat immigrant crime or any other serious crime for that matter because the police simply do not have enough police officers as acknowledged by Commissioner Robinson in a memo to the Minister of Police dated 14 November 2002? 
Hon GEORGE HAWKINS 
: The police now have the highest number of police officers—both trained sworn officers and non-sworn officers. Of course we note that when that member’s party was in power it tried to cut police numbers by 540. It failed. This Government has put the money in and I think we should be saying “Well done” to the New Zealand Police. 
Ron Mark 
: Why has this Government been so content to ignore the fact that the continual mass influx of people from a completely different culture causes problems for the police by way of language and cultural barriers and brings with it criminogenic traits of those particular cultures as evidenced by the fact that in 1 year the total recorded apprehensions of persons of Asian ethnicity for kidnapping offences have increased by over 700 percent? 
Hon GEORGE HAWKINS 
: This Government is giving the police the resources so they can do their job without a racial bent and I am disturbed that some people seem to think that following a racial bent is the way to police New Zealand. It is not. 
Ron Mark 
: I raise a point of order Mr Speaker. Once again I seek your protection. I take absolute offence to the insinuations by that Minister that continuing to ask questions on immigrant crime is different to asking questions about Maori crime. That Minister should be brought back to answering questions without a racist slur. He should deal with the issue. 
Mr SPEAKER 
: The member should please contain himself. I rule in the member’s favour. The member took offence. The Minister will withdraw and apologise. 
Hon GEORGE HAWKINS 
: I withdraw and apologise. 
Hon Dr Michael Cullen 
: I raise a point of order Mr Speaker. What language is it permissible to use in this House of people who describe other people as having “crimino-genetic” traits determined by their racial background? 
Ron Mark 
: That member deliberately misinterpreted the word that I took from the Department of Corrections handbook which continually refers to “criminogenic” not “genetic” traits. The word is in the Minister of Corrections’ own handbook. The member should refer to it. 
Mr SPEAKER 
: That is a matter of— 
Ron Mark 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: The member should be seated. I am on my feet. That is a matter of taste and that is how I rule in that direction. 
Methamphetamine—Border Control 
12.  
MOANA MACKEY (NZ Labour) 
 to the  
Minister of Customs 
: What impact is the increasing abuse of pure methamphetamine commonly known as “P” having at the New Zealand border? 
Hon RICK BARKER (Minister of Customs) 
: 
 The New Zealand Customs Service has reported a dramatic increase in seizures of crystal methamphetamine and massive increases in quantities of precursor substances suspected to be used for the manufacture of methamphetamine. In 7 months of this year over 530000 tablets or the powdered equivalent of ephedrine and pseudoephedrine have been seized by the Customs Service at the border. This compares with just 250000 for the whole of 2002. 
Moana Mackey 
: Is the New Zealand Customs Service working in conjunction with the police on this problem? 
Hon RICK BARKER 
: Most certainly. The New Zealand Customs Service regularly reports to the police on its interceptions of precursor substances and both agencies follow up on its inquiries in a joint capacity. This process is consistent with the principles outlined in the Government’s Methamphetamine Action Plan. It is absolutely necessary as the effective police campaign is drying up local supplies of precursors. So together Customs and the police are making a sizeable dent in both the local and imported supplies of the precursor substances. 
Question No. 11 to Minister 
RON MARK (NZ First) 
: 
 I seek leave of the House to table an answer to a written question that shows that Asiatic apprehensions for kidnapping in 1 year have risen over 700 percent. 
Mr SPEAKER 
: Leave is sought to table that. Is there any objection? There is. 
Urgent Debates Declined 
New Zealand Superannuation Fund 
Mr SPEAKER 
: I have received a letter from Gordon Copeland seeking to debate under Standing Order 376 the investment formula to be used by the New Zealand Superannuation Fund. Disclosure of the formula is a particular case of recent occurrence and as the fund is owned by the Crown I accept that it does involve ministerial responsibility. I do not however consider that a decision of this nature which will inevitably be implemented over time requires the immediate attention of the House. I therefore decline the application. 
Crown Minerals Amendment Bill 
Third Reading 
Hon HARRY DUYNHOVEN (Associate Minister of Energy) 
: 
 I move  
That the Crown Minerals Amendment Bill be now read a third time 
. This bill makes a number of amendments to the Crown Minerals Act—the Act through which the Government manages all in-ground petroleum gold and silver and approximately half of the coal and other mineral resources in New Zealand. The Government’s fundamental policy objective for managing— 
Peter Brown 
: I raise a point of order— 
Mr SPEAKER 
: I know what the member is going to say. I know that meetings are about to occur but there will be no more conversations inside the House. I ask members to please have them in the lobby. 
Hon HARRY DUYNHOVEN 
: The Government’s fundamental policy objective for managing those resources is to allow continuing investment in prospecting exploration and mining which is in accordance with good exploration and mining practice. That objective must be achieved while ensuring that there is an efficient allocation of prospecting exploration and mining permits that the Crown obtains a fair financial return from the extraction of its minerals and that there is due regard for the principles of the Treaty of Waitangi. Exploration for and development of those minerals delivers resources vital for the economy regional employment export earnings and energy security. 
The Crown Minerals Amendment Bill makes a number of amendments to the principal Act that will improve the rules under which those valuable resources are managed. The bill also addresses issues that have arisen because of recent court decisions concerning the transition from the previous regime under the Mining Act of 1971 and the Coal Mines Act of 1979 to the Crown Minerals Act regime. The bill removes the right of licensees to extend or renew their mining licences under the now-repealed Mining Act and Coal Mines Act as of 5 p.m. on 19 September 2002 in order to give effect to the original policy intention concerning the duration of mining licences. It is this aspect of the bill that has dominated the debate in this House. I would like to take the opportunity to dispel a few myths in that regard. 
Prior to 1991 licences to mine minerals or coal were granted under the Mining Act or the Coal Mines Act. Those Acts provided a right in priority for holders to apply for new mining licences if they applied for them before their current mining licences expired. The policy intention when the previous National Government put the Crown Minerals Act in place was that existing mining licences under the repealed Mining Act and Coal Mines Act would have a limited life and would not be able to be renewed. That was widely understood within the industry and was the basis upon which officials and the industry proceeded from 1991 onwards. In the year 2000 the High Court held in  
Glenharrow Holdings Ltd  
v  
Attorney-General 
 that the right of mining licence holders to apply for a new mining licence had not been extinguished by the Crown Minerals Act. The court also held that it is still possible to extend the term of a mining licence as a variation of the conditions of the licence. However in subsequent proceedings in April 2003 three Court of Appeal judges confirmed unanimously what the Crown had consistently maintained which is that since the old legislation was repealed in 1991 the Minister of Energy neither has had the power to grant a new licence nor was able to consider an application to vary the term of a licence. I feel that it is especially important to point this out for the benefit of the member for Whangarei who in his second reading speech appeared to be unaware that the Court of Appeal has in fact already ruled on this particular matter. 
The Government believes that the Act must be amended to ensure that the rights to renew or extend mining licences are expressly removed. These changes will mean that repealed legislation is not perpetuated and that landowners or occupiers have a say about mining on their land as was always intended by the Crown Minerals Act. The bill does not extinguish property rights. All current mining licences will continue in force until they expire. At that time if licence holders want to continue to mine they can apply for a mining permit under the Crown Minerals Act. Glenharrow Holdings Ltd has been granted conditional leave to appeal to the Privy Council. Special provisions have been included in the bill to ensure that the court’s final judgment in the ongoing Glenharrow proceedings is protected and that the decisions in this litigation are applied to any applications received prior to 5 p.m. on 19 September 2002 including applications by Glenharrow Holdings Ltd. I feel it is really important to stress this—those have been protected. 
Another key amendment which has been overlooked during the debate is clause 5. Amongst other things clause 5 clarifies the requirements when the holder of an exploration permit wants to extend its duration. An exploration permit can be granted initially for a term of up to 5 years with a right to extend the duration for up to a further 5 years subject to certain requirements including the requirement to relinquish at least half of the original permit area. This “use it or lose it” requirement has been part of the regime in New Zealand for over 20 years and is common overseas. It is well understood. It has become apparent that the way the Act is currently written exploration permit holders may be able to avoid the relinquishment requirement in a way that was not intended. The amendments will ensure that exploration permit holders who have not made a discovery and want to continue basic exploration beyond the first 5 years must relinquish at least 50 percent of the permit area on renewal. These amendments strengthen a policy that fairly balances the interests of the Crown and the interests of permit holders. It provides an incentive for permit holders to explore efficiently and it allows the Government to make acreage available to new explorers to ensure that exploration continues to flourish. 
The bill also contains a number of technical amendments some of which I would like to clarify for the benefit of members. During the debate in this House there seemed to be a lot of confusion about clause 9 and a misunderstanding that it somehow relates to the provisions to remove the right to renew and vary mining licences under Part 2 of the bill. There is no such link. Clause 9 amends the principal Act to allow the Minister’s unit development powers to apply to both licences and permits. Where a mineral or petroleum deposit extends across the boundary between adjacent permits and/or licences and the parties fail to cooperate the Act gives the Minister the power to require what is known as a unit development in order to ensure that minerals and petroleum along the boundary are not wasted. The way that the principal Act is currently written the Minister can impose a unit development only in relation to two or more adjacent permits. It does not enable the Minister to require a permit and an existing privilege or two or more permits or existing privileges to be developed as a unit. Clause 9 will amend the Act so that the unit development powers apply to both existing privileges and permits. The term “existing privilege” is defined in section 106 of the principal Act and includes licences that were granted under the former Mining Act the Coal Mines Act and the Petroleum Act. 
I would also like to address two issues raised by the member for Coromandel during the Committee of the whole House—and I might observe that she was one of the few people who seemed to understand much of this bill. Ms Goudie raised concerns about clause 5 and in particular the proposed amendments to section 36(1)(b) which she claimed would allow the Minister to unilaterally decrease the minerals to which a permit relates. These concerns are unfounded. The Act makes it clear that the minerals to which a permit relates can be decreased only with the prior written consent or on the written application of the permit holder. Ms Goudie also asked why I have not taken this opportunity to clarify that coal-seam gas is petroleum and not coal for the purposes of the Crown Minerals Act. As I pointed out this matter was deemed to be outside the scope of the bill. However Ms Goudie will be pleased to know that I will be pursuing alternative means to clarify this anomaly and look forward to National Party support when the amendments come before the House. 
In conclusion I would like to reiterate that the Crown Minerals Amendment Bill will improve the management and allocation of rights to Crown-owned minerals and ensure that the original policy intentions concerning the transition from the previous regime to the regime under the Crown Minerals Act of 1991 are implemented. 
Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) 
: 
 The Minister Mr Duynhoven has just asserted to this Parliament that this bill does not extinguish any property rights. I do not know how he can make that claim when the court process involved in ascertaining whether licences under the old mining Acts—the Mining Act of 1971 and Coal Mines Act of 1979—can be varied or renewed is incomplete. The Minister has just told this Parliament that no property rights are extinguished because in the Court of Appeal in April this year three judges ruled against Acting Chief Justice Heron’s original decision in 2000. The Court of Appeal argued in that judgment that there was no right under the Crown Minerals Act of 1991 for licences issued under those earlier Acts to be varied or renewed. 
Mark Peck 
: Why didn’t that member fix it when he was Minister? 
Dr the Hon LOCKWOOD SMITH 
: Mr Mark Peck is interjecting from the other side of the House. He should look at recent history. How often have judgments of the New Zealand Court of Appeal been overturned by the Privy Council? 
Mark Peck 
: Why didn’t that member fix it when he had the chance? 
Dr the Hon LOCKWOOD SMITH 
: The member cannot answer. In fact on commercial law issues the Privy Council has found the New Zealand Court of Appeal to be wrong in over half the cases brought before it. So for the Minister to suggest to this Parliament that 
the Court of Appeal in disagreeing with Acting Chief Justice Heron in the original High Court case puts this matter at an end is clearly not the case. 
 The matter may well be taken to the Privy Council and may be overturned by the Privy Council as has been the recent experience. I am told that in 70 percent of cases on commercial law issues 
where the New Zealand Court of Appeal has ruled one way and where those cases have been taken to the Privy Council the ruling of the New Zealand Court of Appeal has been overturned. So for the Minister to come to this House and say there is not an issue of property rights in this legislation is clearly mistaken. I am not allowed to say it is “false” so let me just say it is mistaken. If the Privy Council were to agree with Acting Chief Justice Heron that the transitional provisions back in the 1991 Act did provide for variations to the terms of mining licences that existed or renewal of mining licences then property rights are at issue. 
Mark Peck 
: No they’re not. 
Dr the Hon LOCKWOOD SMITH 
: They are at issue. Mark Peck is rabbiting on and not even from his own seat. But I do not mind that; let us not stop him. Mr Peck should look at the effect of this legislation. It is so unfair. Anyone who got an 
application in who filed a case prior to when Mr Duynhoven made his statement to expunge property rights—at 5 p.m. on 19 September 2002—may be protected by this legislation. But up until that point officials had been telling the industry there was no right to vary the term; there was no opportunity for renewal. So a lot of licence holders did not seek to vary the term of their licence. They did not apply for renewal. Their property rights are extinguished by this legislation. Mark Peck knows it and Harry Duynhoven knows it. 
That is why National objects to this legislation. It is just so unfair. Those who believed the official advice now face the possibility that their existing property rights will be extinguished. Those who ignored the official advice and took action ensured their property rights may be preserved. [ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Running commentaries are out of order under Speaker’s ruling 51/5. Everyone will have a chance to make a speech. 
Dr the Hon LOCKWOOD SMITH 
: Apart from the principle of the extinction of property rights the fact that this legislation will make null and void the opportunity to vary the term of or renew an existing mining licence becomes even more important given the advice the Commerce Committee heard on the mining permit system. What I am told because I was not there is that officials examining this legislation could not tell the select committee when the Department of Conservation had ever granted access for a mining permit to Crown minerals on Department of Conservation land. That is a hugely important issue. 
If in fact the department is preventing access to Crown minerals under the Crown Minerals Act then the issue of the possibility of renewal of rights that existed under the old 1971 and 1979 Acts becomes even more important because the mining industry is an important industry for New Zealand. It seems this legislation could be another nail in its coffin. Labour does not like the mining industry. It thinks it destroys the ground. It thinks it is anti-environment. It does not like it. Yet modern mining can be environmentally very safe very conducive with sound environmental outcomes. If I am wrong on that I want the next Labour speaker in this debate to tell us how many permits the department has allowed for Crown minerals on that Crown-owned land because I assert that this Government does not like mining. It is making sure that existing licences cannot be renewed that their terms cannot be varied with this legislation. I was told the select committee was advised by officials that they had no record of the Department of Conservation approving permits for mining on that Crown-owned land for those Crown-owned minerals. 
That is why the National Party is so concerned about this legislation. It is a twofold problem. The first is that the legislation extinguishes any possible rights for people who believed the officials. What is so bad about that is the unfairness. It is so unfair to turn around and say that those who put in an application to vary the term of or extend their licence prior to 5 p.m. on 19 September 2002 will be all right; they will preserve their existing rights. But those who believed the officials and did not apply to extend the term of a licence will see their possible rights extinguished. I stress they are only “possible” rights because the court process is not completed yet. Those possible rights should be left up to the court to determine. That is the only fair thing but given that some people have already started that court process to extinguish those rights for other people treats citizens differently. That is not fair. That is our first objection to this legislation. 
As I have said our second objection is that the legislation really is anti-mining. Since the Crown Minerals Act was passed and passed in good faith by this Parliament we have seen Crown-owned land—Department of Conservation land—not being made available where it is appropriate for mining. This legislation will just be one further nail in the coffin of mining. That is why National opposes it. 
MARK PECK (NZ Labour—Invercargill) 
: 
 That is a typical speech of “never let the facts get in the way of a good story”. I say to the member who preceded me that had National treated its own member Maurice Williamson somewhat better it might have had good representation at the Commerce Committee. The member was at least upfront enough to say that he had not attended the select committee deliberations on this matter and I thank him for that. This bill does not extinguish anybody’s rights and— 
Dr the Hon Lockwood Smith 
: Of course it does. 
MARK PECK 
: Well look if the member stopped chortling for half a minute and listened he might learn something. The bill did not extinguish anybody else’s rights either. What the bill does is protect the right of Glenharrow Holdings Ltd to go through the process that it was using and if it is going to the Privy Council then its right to do that is protected. That was the Government members’ wish as we were dealing with this legislation because there were some serious issues involved in whether Glenharrow had a case. If the member does not believe me I will show him a letter I received from Glenharrow’s legal advisers thanking the select committee for the way in which it conducted its process. I am proud of that because it is a complicated matter. 
That member’s party had the opportunity to deal with this when it was in Government. That Government in dealing with the Ngai Tahu claim—and not recognising there is a problem with vesting the pounamu to Ngai Tahu because other miners had rights that had not yet been fully realised—when it dealt with that particular bill set up the grounds for the grievance that we are now dealing with. For him to stand up in the House today and say: “This is a nail in mining’s coffin.” is being slightly too cute. This is a matter that that Government did not even have the ability to recognise at the time it did its legislation so we have had to deal with it. 
I congratulate the Hon Harry Duynhoven on the action that he took. He took a lot of flak in the media for what he had to do but it was right for people to be on notice that no further claims would be entertained. 
Now let me come to the issue as to whether there is a right. There is a right for Glenharrow to have its issue determined. Its issue is a claim to extend its mining right—not to renew but to extend. Currently Glenharrow has a 10-year right to extract pounamu. It wants to extend that to 26 years—that is what it wants to do extend it. It is not about an existing right but about an extension of a right. Glenharrow has a right to do that under the Mining Act because that is where it got its first permit from but Parliament in 1991 when Lockwood Smith was a member of a Government passed the Crown Minerals Act. 
Darren Hughes 
: He was on the front bench. 
MARK PECK 
: He was on the front bench and at that particular point it was envisaged that mining in this country would be dealt with under the Crown Minerals Act not under the Mining Act. There was a change in presumption presided over by the National Government around which the transitional provisions were not clear. This is why we now have the conundrum we have in the courts. Those who have action pending before 22 September which I think is the date— 
Dr the Hon Lockwood Smith 
: The 19th. 
MARK PECK 
: Sorry 19 September 2002. They have their right to have those issues determined protected but no one else—a total of three people. That is as it should be because Parliament is right to pass law and is right to set up new regimes. 
 And that is the other competing principle. The other competing principle is whether Parliament has the right to make laws to alter things. Let me say that Parliament has jealously guarded that particular right not just in this Parliament but also for centuries. Of course Parliament has the right to change the law so that other issues around the granting of mining licences are taken into account. Let me tell members one. If minerals were found under my house I think I as the landowner have the right to question whether my peace and quiet and occupation of that land should be disturbed by mining. People now have a right to object when mining is undertaken. 
In concluding on these particular matters I come back to the issue of Ngai Tahu. One of the reasons we dealt with the Ngai Tahu (Pounamu Vesting) Bill and the Ngai Tahu Claims Settlement Bill for Ngai Tahu was that their property rights were expropriated by Pakeha some 100-odd years ago. This nation was determined that that expropriation needed to be tidied up and it has been tidied up in those two particular pieces of legislation. Ngai Tahu has the right to manage its mineral deposits of pounamu. It is now up to Ngai Tahu as to what arrangements it will enter into with whatever mining companies that might be interested in extracting pounamu if any. The people of Ngai Tahu themselves may want to enter that market and may want to form partnerships to do so. That is their right. It is their right simply by customary use and practice which have been around for a long time. 
This is a good bill. The Minister did what he had to do. Those who had rights under the Mining Act and who were seeking to use their rights in accordance with the transition provisions have had those rights protected by this Government. I congratulate the members of the select committee who got their heads around the matter and I congratulate Glenharrow and Ngai Tahu on the way in which they dealt with this very difficult issue as this bill has progressed. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 My contribution will not be long because I was not on the select committee. My knowledge of this bill is what I have received in my briefing from my colleague Brent Catchpole who has detailed knowledge of this issue but unfortunately could not be here this afternoon as he is away on other parliamentary business. I have gained further personal knowledge from what I have read of the bill and from outside literature. 
New Zealand First cannot support this bill. I listened intently to Mark Peck who is an MP whom New Zealand First regards as a straight shooter—as it does the Hon Harry Duynhoven. They do not play the political game terribly often and we believe that they address the issues in general terms pretty forthrightly. But I think they have got it wrong and that this legislation is not doing the job it should be doing. 
I accept what Mark Peck said—that previous legislation did not address mining issues clearly. That is putting it as bluntly as I can. I would like to suggest to the Government that this might clarify the situation but it does not address mining issues fairly. I note that the last clause in a 7-page document talks about no compensation. New section 119A in clause 24 states: “No person is entitled to compensation from the Crown in respect of any losses arising from—…”. It is not necessary for me to read out the rest of this new section. It implies that people in this industry will lose and the Government is accepting of that. 
Hon Harry Duynhoven 
: No windfall claims! 
PETER BROWN 
: It goes a little deeper than that. Let me quote— 
Hon Harry Duynhoven 
: Don’t quote from the  
Independent 
. 
PETER BROWN 
: That is exactly what I am going to do. 
Hon Harry Duynhoven 
: The  
Independent 
 ran the most biased series of articles. 
PETER BROWN 
: Maybe it did but this is a sentence I must read to the House because this is absolutely shooting straight from the heart. It states that the Crown Minerals Act is “essentially anti-mining anti-private enterprise legislation” and that it “doesn’t recognise the miner’s need for security of tenure.” 
Hon Harry Duynhoven 
: Passed by the National Government. 
PETER BROWN 
: That may be so but I suggest to the Minister that he does not have it right. He might have clarified what he thinks the National Government should or should not have done but he has not put legislation in that is fair. After reading something like that—that is that the Crown Minerals Act is “essentially anti-mining anti-private enterprise legislation”—Government members should take that on board. That was reported in the  
Independent 
 newspaper on 16 April 2003. After reading that Government members should ask: “Have we got it right?” because this is a Government that prides itself on being pro - private enterprise. 
Pansy Wong 
: What? 
PETER BROWN 
: Yes it does! Government members talk to business people. Did the member not hear the questions in the House—patsy questions I admit—this afternoon? The questions were trying to give the impression that this Government is pro - private enterprise. The  
Independent 
 states that this legislation is anti - private enterprise and anti-mining. 
We could take huge advantage of the mining industry with huge economic gains and benefits for this country not only in employment but also in all other ways. However there has to be a proviso. There has to be some stipulation that the mining fraternity look after the environment—in other words it leaves it in the same pristine condition that it was before the industry set about mining in a particular area. 
We are disappointed in this legislation. We believe there is an underlying problem here but we do not believe that this has been addressed properly or fairly. When we do not have fair legislation then we get legislation that does not sit comfortably with the public. There will be amendments. If I heard the Hon Harry Duynhoven correctly he alluded to that in his speech and that he expects amendments for this bill. 
Hon Harry Duynhoven 
: With regard to coal and methane. 
PETER BROWN 
: I missed the content because a lot of talking was going on. I suggest to the Minister that there will be amendments in mining-type legislation before too long. New Zealand First cannot support this legislation. With the best will in the world we cannot support this. 
GORDON COPELAND (United Future) 
: 
 In my contribution to the second reading I outlined the reasons United Future is not able to support this bill as it stands. As I said at the time it is not so much that we object to the content of this particular bill but we object rather to the overall Crown minerals framework that exists under the Crown Minerals Act. We are concerned with the overall environment that exists in New Zealand in relation to the mining of Crown minerals. We are concerned that mining companies and in particular those situated overseas are bypassing mineral prospecting in New Zealand in favour of overseas countries that have established far better more practical and more workable prospecting and mining regimes. 
I take no delight in reporting to the House that representatives of one international mining company said to me recently that New Zealand now rates in their mind in terms of ease of access and certainty of process and fairness alongside politically unstable regimes in Africa; on the other hand the advantage of those regimes in Africa is that they are very open to bribes. I was staggered to find New Zealand categorised in that way and asked questions in an endeavour to establish why such negative perceptions exist. I will endeavour to summarise the position as mining companies see it so that these matters can be clarified in the interests of public debate and the development of this country. 
Let me say at the outset that New Zealand can kiss goodbye to returning its economy to the top half of the OECD if in areas such as hydro-electricity generation Crown minerals mining and tourism facilities the international community has formed the view that this is a risky country in which to invest. The simple truth is that if we discourage sensible development in New Zealand then we will get less of it. The other side of that public policy maxim is also true—namely that if we encourage it as an activity we will get more of it. 
Let me outline the problems. The first as I mentioned in my second reading speech is that we have a major systemic problem because one-third of New Zealand land plus the majority of our rivers and lakes are owned by the Crown but are administered by the Department of Conversation under the Conservation Act. We must not delay a review of the way that that Act is being administrated. In reality from inception it should have dealt with land management issues and have been broadened out to ensure that such management has as one of its aims the enabling of people and communities to provide for their economic well-being. When we talk about sustainability we can all too easily overlook that we must provide the means wherever possible to enable local people and their communities to become economically self-sustaining through the use of local resources. I am an environmentalist and a conservationist but we need to continually ask ourselves the question: what is the ultimate value that we are trying to achieve? As Maori rightly say: “It is people it is people it is people.” How foolish then to take more than one-third of the total area of this country willy-nilly place the label “conservation” on it then padlock it away with an enormous billboard saying: “No mining no hydro no tourism facilities.” That is not good enough and the matter needs to be urgently addressed. 
I hope for the benefit of New Zealand and its people that I do not have to go on repeatedly pointing out the problem before corrective action is taken. Some might say I am exaggerating the situation. However if I were to take as an example the Macrae mine near Reefton which may eventually be able to be progressed and go through the whole sorry saga of that particular example we will find that it proves what I am saying. In that situation there was no certainty of process no time lines were established and the Department of Conservation plus the Minister of Conservation were simply able to delay and delay and delay. 
It is exactly that kind of result that sees New Zealand given a Third World label. No one in hisor her right mind is prepared to outlay the resources—and we can be talking millions of dollars—and engage with the Department of Conservation as long as that situation continues. It is time consuming and exhausting. It is difficult to envisage anything worse than a very expensive long uncertain non-transparent process. That is exactly what we have in New Zealand at the moment when it comes to Crown minerals. Mining is not prohibited on the Department of Conservation estate—national parks excepted—but it almost might as well be. 
The second major issue in relation to the Crown Minerals Act that I believe needs to be addressed is the function of the Minister of Energy and the Ministry of Economic Development in relation to Crown minerals. At present they are not empowered to advocate for and manage the Crown-owned minerals estate. Accordingly especially when dealing with the Minister of Conservation and the Department of Conservation the position lacks any kind of ministerial symmetry.That is extremely important when specific mining possibilities go to a hearing under the Resource Management Act. The whole weight of the Minister of Conservation and his department stands against often the mining company and very often also against the wishes of the local community who believe their economic well-being will be advanced if mining were to proceed. 
The perception and more often than not the reality in that situation is that the local authority and if it goes to appeal the Environment Court give undue weight to just the conservation side of the argument. The dice are loaded against the mining company and the local community by the whole weight of the State and its limitless resources. It would be a great improvement in my view if the Minister of Energy and his department were there also to balance out the process in relation to the Crown mineral estate. After all we must not forget that finally it is the Crown that owns the minerals themselves and it is the Crown that gives the mining companies the right to extract those minerals in exchange for royalties etc. In one sense therefore we could say that the Crown itself is being negligent in relation to its own assets—assets that it effectively holds in trust for the benefit and the welfare of the people of this country. 
The value of minerals in any particular situation should not be overlooked. As pointed out by the Hon Ken Shirley in the second reading debate it is estimated to be in the tens of billions of dollars in the case of gold but of course potentially even greater sums of money may be involved with oil and gas. 
I repeat what I previously said. Extraction of Crown minerals need not necessarily be at the expense of the conservation estate and its value. Indeed the overriding criteria should in my view remain net benefit to that conservation estate—a win-win situation. I hope we might yet see the Government begin to move in that direction and I am encouraged by recent initiatives by the Minister of Conservation that he is prepared to begin dialogue with United Future. 
PANSY WONG (NZ National) 
: 
 It was interesting to listen to the speech made by Gordon Copeland of United Future. He might be able to see a ray of sunshine coming through in terms of whatever dialogue United Future will engage in with the Labour Government over a more positive future for the mining industry but I have to say I remain very sceptical. I remember that before the 1999 election the Hon Paul Swain who was an Opposition member at that stage did indeed engage the mining industry in dialogue and promised that Labour if it was elected would actually develop a strategy for the mineral industry but I have yet to see that eventuate. 
It was absolutely right for my colleagues Dr the Hon Lockwood Smith and Peter Brown of New Zealand First to point out that this legislation definitely sends the very clear message that this Labour Government is anti the mining industry. That was reinforced by the members of the mining industry when this bill was first introduced into the House in 2000 just before Christmas. I was on the Commerce Committee at that stage and members of the mining industry brought to our attention the lack of proper consultation with them. They were told when the bill was in preparation that it was being brought in to adjust or to correct or to amend administrative technical matters relating to the administration of the Crown mineral estate. So it was to their horror that just at Christmas in the year 2000 this bill was brought in to extinguish the right of mining licence holders. 
Let us reflect back a little bit. For 9 years since 1991 to the year 2000 when Glenharrow Holdings won its case in court the mining operators were repeatedly told by the officials of the Crown mineral section within the Ministry of Economic Development that their rights for renewal or variation were extinguished. So they were entitled to take the advice of those officials as being right and many of them did. But Glenharrow has never given up and engaged legal counsel who did not believe that that was the intention of the legislation passed in 1991. 
 Glenharrow won the court case. I was surprised to hear the arrogant tone used by Mark Peck the Labour member of Parliament in his speech a few minutes ago when he indicated that Glenharrow and others should be grateful that the Labour Government has brought in this legislation as if this Government is granting some favour to Glenharrow and others who had lodged their applications prior to 5 p.m. on 19 September 2002. 
I ask that member to reflect on that attitude which I think is typical of a very arrogant anti-mining Labour Government. Glenharrow and others have fought long and hard to have the fruits of victory and of course they should be allowed to keep them. But what happened to the many others who over many years listened to the advice given by the officials and did not act in time to have their property rights protected? Not only had proper consultation not been carried out on this legislation but it got worse when this bill was referred to the Commerce Committee. 
Before the committee members had had time to deliberate on the legislation the Hon Harry Duynhoven through a press statement announced another time line to extinguish the property rights. They were to expire at 5 p.m. on 19 September 2002. So many operators who had the intention of applying to renew their licence and who were waiting for the outcome of the deliberations of the Commerce Committee were dealt another blow. 
I thought all the Ministers apart from Harry Duynhoven might not have been as sympathetic to those licence holders. Surely we would have expected particularly in recent weeks Harry Duynhoven’s understanding of the frustration when a piece of legislation was found to contain provisions that were not to his advantage. The Labour Government never lost time in bringing in urgency to fix a piece of legislation for one of its own members of Parliament but it did not extend the same sympathetic attitude towards the licence holders of the mining industry. 
I also want to talk a little bit more about the lack of consultation on this bill. I brought up this point because in recent weeks we were reminded by the Minister of Local Government the Hon Chris Carter of the importance and necessity of consultation. Day after day in Parliament he lectured local government—in this case the Auckland Regional Council—for not consulting properly its ratepayers and insisted during the passing of the Local Government Bill in June this year that extensive consultation should take place with the ratepayers before local government could implement any legislation. 
I thought it was a bit rich for a Labour Minister to lecture local government on the morals and merits of consultation when the Government brought in legislation that had serious consequences on licence holders and extinguished their property rights. Indeed they were not even given the opportunity to be consulted in the first place. Then when this legislation was being considered at the Commerce Committee another time line was brought in to end their rights once and for all. 
So I would not exactly say that this legislation is a shining example of the Labour Government trying to demonstrate that it respects the process of consultation. I also reflect on the fact that if the commencement date of time lines is being brought into legislation during the select committee process what is the point of this House debating in Committee the commencement date and other related matters? Therefore I think that today is another very sad day for the mining industry which should get the message by now that this Labour Government is absolutely anti-mining. 
JILL PETTIS (NZ Labour—Whanganui) 
: 
 Listening to the speeches from the other side of the House one would have thought that National during its time in Government had got the mining legislation perfect. That is hardly the situation at all which is the reason we have this bill in front of the House at this moment. This bill makes a number of amendments that will improve the management and allocation of rights to Crown-owned minerals. The mineral industry is important to New Zealand and it makes a significant contribution to regional economies. I want to say quite clearly that this amendment will not deny mining licence holders continuing opportunities to mine Crown-owned minerals and mining licence holders will still be able to apply for a mining permit under the Crown Minerals Act. I support this bill and as I frequently say the quicker we get it passed the better it is for the mining industry. 
Hon KEN SHIRLEY (Deputy Leader—ACT NZ) 
: 
 We are debating the third reading of the Crown Minerals Amendment Bill which stands in the name of the Hon Harry Duynhoven—recently returned to this Parliament under urgency by his colleagues with a vote majority of 5. 
Phil Heatley 
: By the skin of his teeth. 
Hon KEN SHIRLEY 
: The lowest majority in this Parliament! That was a disgraceful episode. I raise that matter not to get at Harry Duynhoven at all but to point out that this is butt-covering legislation. It is retrospective butt-covering legislation which has become the wont of this Labour Government. Whenever there is a problem or something messy or whenever the courts make a decision the Government does not like it rushes into retrospective butt-covering legislation. We have here a clear High Court decision—I refer to the  
Glenharrow Holdings Ltd 
 v 
 Attorney-General 
 case—that the Government did not like so on 19 September 2002 by Government decree the Minister acted in a way that retrospectively cancelled property rights. The Minister we heard possibly should not have been in Parliament under the vacancy clauses of section 55 of the Electoral Act but be that as it may I believe he acted in a very disgraceful manner and now we have this retrospective butt-covering legislation. 
The Government calls the legislation a review of the Crown Minerals Act. I believe that the management of Crown minerals in this country has been disgraceful for a long time and I regret that a National Government brought in the Crown Minerals Act in 1991 which was fundamentally flawed. My regret is that this bill does not address those fundamental flaws in any way whatsoever. Here was an opportunity to give a bit of encouragement to the mining industry and I do observe that Harry Duynhoven is a champion of the mining industry. He believes in it but unfortunately the majority of members in his party do not share his belief. They are anti-development and anti - wealth creation—unlike that Minister who appreciates those things. Of course at every turn they try to nationalise everything and kill any initiative to create wealth in this country. 
One of the real problems and it does relate to this bill is the lost opportunity we had in the New Zealand mining industry. I repeat again that a very good report from the Institute of Geological and Nuclear Sciences Ltd in 1999 showed we had in those dollar-of-the-day value terms $86 billion worth of mineral wealth in this country. What has happened? Predominantly it is all tied up under the Department of Conservation estate. Over 80 percent is under land in the Department of Conservation estate and unfortunately the Crown Minerals Act effectively gave the landowner veto rights on access terms. So since 1991 how many access grants has the Department of Conservation as an agent acting on behalf of the Crown granted in that huge area—the over 80 percent of land under the Department of Conservation estate? I have asked that question and the answer is—not one. I have asked Ministers in the chair to name one and they have consistently failed to cite or name one Crown grant made by the Department of Conservation. 
There are some appalling examples in which developments have been frustrated. We know of the Macrae’s Mining Co. situation in Reefton where a very promising gold potential has been severely truncated. I ask the Minister who is in the House now about the Pike River coalfield which is a major development for New Zealand with premium coal—a big export earner—and wonderful coking coal for steel production when blended with other coals. Everyone is geared up for major development in that field and it is hugely important to the West Coast and to the economy at large. The Pike River Coal Company has its resource-use consents but the Department of Conservation will not grant it access over a few hectares of land. Under the terms of what is sort of a net conservation benefit the company is prepared to buy up and grant to the department whole catchments of prime pristine conservation lands but the department will not give it access to a few hectares of land even when there will be insignificant environmental impact. 
That is an appalling situation but unfortunately it happens right around the country. Under a National Government mining was closed down in the Coromandel area and I regret that. That resource-rich area of Coromandel is locked up and as a country we are turning our back on that mineral wealth. National members here should reflect on that; that was a bad decision. It was a wrong decision and we do not want to see any more. 
We are not a wealthy nation and we should be using our mineral resources. Potentially we have a very good mining industry in this country. A single gold mine at Macraes Flat just out from Palmerston is owned by GRD Macraes. The member for Otago is here and I am sure he knows that company very well. It is a very responsible mining company using top technologies. How many members in the House appreciate that that one mine earns more export earnings for this country every year than the whole of our wine industry? I am not knocking the wine industry. We have a splendid developing wine industry here doing well and I applaud that. It has a high profile but how many people realise that that one mine produces more wealth in export receipts for the country than the total wine industry including the Gisbornes the Marlboroughs the Hendersons and the whole lot? Not a lot of people would have realised that. That same example is across this whole country. 
We can take the example of the wealth of Australia. Over 50 percent of that country’s export receipts come from three minerals—coal gold and uranium. Yet this country with its foolish policies blocks access for a responsible mining industry. 
 Let us remember our early pioneering days. It was the gold rushes of Otago and of the Waihi areas that let this economy take off. Yes very crude unsophisticated techniques were used in those days and significant environmental damage occurred but one cannot see that today—it has been totally repaired; nature repaired itself. The modern mining industry is responsible. It has minimal impact on the environment and the net conservation benefit that can accrue from generating that wealth from mobilising those resources far outweighs the very limited damage that can be created which can be offset. 
I say to Government members that they should not come to the House with minor tinkering with butt-covering retrospective legislation for ministerial decrees when they should be addressing the fundamentally flawed inadequacies of the Crown Minerals Act so that we can once again have a proud flourishing and prosperous mining industry in this country. 
DAVID PARKER (NZ Labour—Otago) 
: 
The Crown Minerals Act was passed in 1991 and it repealed the prior 1971 Mining Act. At that time virtually everybody believed that no applications for renewal of 1971 Act mining privileges or for extension of their terms could be made. That view was commonly held throughout the mining industry as was demonstrated by publications to that effect issued by the mining industry itself. In the last year or two an anomaly was discovered through the efforts of Glenharrow Holdings which exploited—as it was legally entitled to do—an unexpected outcome of the legislation. 
The move from the Mining Act to the Crown Minerals Act occurred in the first place because of the age of the Mining Act. Were it still in force it would be over 32 years old. It had not moved with the times. The big change was to the rights of owners. The rights of owners whose land was to be mined were significantly improved under the Crown Minerals Act. We have heard a lot of talk today about land and the Department of Conservation estate but the more important thing for most private property owners is that the Crown Minerals Act gave them the right to refuse permission for people to mine their land. Private owners would be very concerned if this remedial legislation were not passed as it brings some of those old expiring Mining Act privileges to an end and that means they can assert their private property rights. I am surprised to hear the National Government arguing effectively against the private property rights of people whose title to land is presently undermined—figuratively and literally—by mining that is occurring. 
This legislation does not strip Glenharrow Holdings of the fruits of its judgment. It does not cause any unfairness to any party. The process of all of those who have made applications to try to take advantage of the gap in the law that Glenharrow Holdings spotted is being protected as well. This new law will apply to anyone who had not applied by the time the Minister announced his intention to pass remedial legislation but it is my submission to the House that that is not at all unfair. I recommend the legislation to the House. 
PHIL HEATLEY (NZ National—Whangarei) 
: 
 I too rise to make it clear that National opposes this bill which we refer to as the anti-mining bill. I cannot do much better than Pansy Wong who said on 21 December 2001 that in the face of a considered High Court ruling the legislation was an appalling use of executive power by an anti-business Government which dislikes the mining industry. That best reflects what people in the National Party are saying and certainly what people out in the wider community are saying. 
By way of recap I would like to clarify that this bill has arisen out of the High Court case  
Glenharrow Holdings Ltd  
v  
Attorney-General 
 which held that the principal Act did not extinguish the right of mining licensees to apply for a new mining licence or for an extension of their existing licence. The High Court said at one time that it did; again it put that in doubt. The Court of Appeal said it did not and now there is an opportunity for the Privy Council to rule. So court business has not yet been finished yet this Government has taken the opportunity to legislate and ride roughshod over those good miners in operation. 
Those people involved with Glenharrow Holdings and others who did not believe officials and take their advice but who instead put in applications for mining licences have gone to court and have got through. We are pleased about that. They will continue with their successful mining businesses. But what is unfair about this bill is that those who did believe officials and did take their advice have been blindsided by Harry Duynhoven and his announcement on 20 September 2002. They have been put in a very difficult situation whereby their businesses and their future business interests in mining are clearly under threat. As I said they have been blindsided by the Minister Harry Duynhoven who is known as the Abel Tasman of the Labour Party because he came to New Zealand for a little while did not like it and went home. 
Under the Crown Minerals Act the Government issues mining permits not mining licences that incorporate property rights. This bill prevents mining licensees from renewing their mining licences under the now repealed Mining Act and Coal Mines Act. As a result of this amendment those miners must now reapply under the Crown Minerals Act not the Mining Act or Coal Mines Act that they originally applied under. 
 Members will recall that in the first reading the Minister Paul Swain said that the proposed amendments will not be retrospective. He said that any mining licence variation application received before the amendment is enacted will be accepted in the process under the current regime. Yet new clauses 22 and 23 appear on the face of it and under intense scrutiny to contradict what the Minister said in that first reading speech. 
I bring members’ attention to those clauses. New section 111 in clause 22 “New section 111 substituted” states: “(1) If after 5 pm on 19 September 2002 a holder of an existing privilege makes an application to which any of the enactments specified in subsection (2) would have applied if this Act or the Crown Minerals Amendment Act 2001 had not been enacted then despite section 107—(a) the Acts specified in subsection (2) do not apply in respect of the application; but (b) this Act ... applies in respect of the application as if the existing privilege were a minerals permit of the appropriate kind.” meaning that someone who had not trusted the officials and had put in an application prior to 5 p.m. on 19 September 2002 would be home free but someone who had taken the advice of officials and had not put in an application instead counting on the altruistic tendencies of Harry Duynhoven would be severely caught out and his or her business would now be under threat. 
Again new section 111A in clause 23 states: “(1) No extension of the duration of a mining privilege may be granted on an application for a variation of conditions under section 103D of the Mining Act 1971 made after 5 pm on 19 September 2002.” Under that provision too someone who had not trusted the officials or the altruistic qualities of Harry Duynhoven and had put in an application would be home free but someone who had trusted them would be caught out. 
As I say the Hon Paul Swain’s statement in his speech on the first reading about the amendments not being retrospective is clearly contradicted by clauses 22 and 23. I was disappointed that Harry Duynhoven did not address that in his opening speech. He was not prepared to go back and clarify what had been said in the past which people had put great hope in putting at risk their business future. He did not address that or rise to apologise. 
Since 1991—other members have referred to this—there has been a much tighter process which has resulted in miners being denied access to the conservation estate by the Department of Conservation. Mr Copeland whom we hold out hope for and Mr Shirley who has proved his worth over recent years have already alluded to the fact that New Zealand is actually locked out of utilising 
many many minerals. It is interesting that the bill is called the Crown Minerals Amendment Bill because the Crown in the form of the Department of Conservation has all the minerals. No one else has them. It is certainly not the “People’s Minerals Bill” or the “New Zealanders’ Minerals Bill” because we cannot get at them; the Department of Conservation has them all. It is locking up large areas of this country from being used for tourism mining—as we have heard 80 percent of Crown minerals are locked away by the Department of Conservation—and hydro-electric power and now it is using marine reserves to lock the country out of fishing as well. 
It is unfortunate that the Department of Conservation is taking that approach and not sticking to its knitting. If the Department of Conservation ran around the country killing more possums and looking after its land the country would be in a much better state. In fact we have a saying in Northland and Mr Shirley might be interested in this; farmers who have farms next to Department of Conservation land in Northland say that if they kill a possum on their farmland 100 more turn up to its funeral. Do members know where they come from? They come from the Department of Conservation land. My message to the Department of Conservation today and throughout my speeches on this bill is that it should stick to its knitting instead of locking up so much land against the wishes of many many New Zealanders. 
This bill does not satisfactorily deal with the difficulties of balancing the interests of the economy and the mining industry against those of the environment and conservationists. The bill is sponsored by Mr Harry Duynhoven the Abel Tasman of the Labour Party. It is a bit ironic that he is passing a bill to retrospectively take away property rights in the light of issues brought to us in recent weeks. It is sad to say that under clause 24 no compensation is offered even though that clause clearly states that these miners lose three rights: the right to apply for new licences under either the Mining Act or the Coal Mines Act and the right to apply for extensions of durations. I am disappointed with this bill and the National Party will certainly be voting against it. 
A party vote was called for on the question  
That the Crown Minerals Amendment Bill be now read a third time. 
Ayes 61 
Labour 52; Green Party 9. 
Noes 50 
New Zealand National 21; New Zealand First 13; ACT New Zealand 8; United Future 8. 
Bill read a third time. 
Consumer Credit Bill 
Second Reading 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
: 
 I move  
That the Consumer Credit Bill be now read a second time 
. I would like to thank the Commerce Committee—in particular the chair Mark Peck—for its thorough and timely consideration of this bill. I would like to thank the submitters for their efforts in preparing very thorough submissions that have led to numerous technical enhancements of the bill and as well the officials who worked so hard to get this bill back to the committee and back to the House in time. 
This bill overhauls the credit law framework by replacing outdated statutes—the Credit Contracts Act of 1981 and the Hire Purchase Act of 1971—with innovative state-of-the-art legislation designed to protect consumers in a modern finance market. The benefit of this new legislation will be tough enforcement against creditors who flout the law and exploit consumers. In particular the legislation empowers the Commerce Commission to take action in response to breaches. The bill provides better-quality and more relevant information for consumers about the terms and costs of credit and provides flexible but fair rules relating to fees and interest charges on credit contracts. It reduces compliance costs for providers of commercial credit and simplifies the law so as to meet the needs of both creditors and consumers. 
The Commerce Committee considered this bill and the submissions on it and reported back to the House recommending that the bill be passed with some amendments. I would also like to acknowledge the strong support the bill received from both creditor and consumer interests. 
I particularly want to draw attention to two aspects of the bill as reported back. The first is the amendment concerning property buy-back schemes. I wish to draw the attention of the House to that as it was one of the key issues considered by the select committee and has resulted in a significant amendment to the bill. The Government recently placed eight companies participating in buy-back schemes into statutory management. A large number of consumers are affected by those schemes and have lost or may lose their homes. Without the new measures now in the bill there was the potential for further detriment and that is a matter that every member of Parliament every homeowner and everybody in New Zealand should be aware of. 
A property buy-back scheme involves a consumer selling his or her home to a company or an individual in return for the right to occupy the home for a fixed term with the option of repurchasing the home at the end of that term. The sale proceeds are often used to repay existing debts owed by the consumer. However the transactions are often structured so that the consumer cannot usually afford to repurchase the home. They often involve exorbitant establishment fees. I am aware of schemes in which consumers have paid between $20000 and $55000 in establishment fees. Many of the consumers involved in those schemes do not realise that they have sold their homes until they are notified of the commencement of mortgagee sale proceedings. In most cases the transactions do not meet the definition of a credit contract under the Credit Contracts Act and until now would not have met that definition under this bill. That is because the consumer does not necessarily incur a debt under the transaction. Buy-back schemes have only become prevalent as a form of consumer financing since the late 1990s which is one reason that they have slipped around the Credit Contracts Act and the bill as it was originally drafted. 
The select committee recommended amendments to the bill that will protect consumers against future losses from buy-backs as well as provide remedies for consumers already involved in buy-back schemes. The bill will require disclosure of information about buy-backs and it will also require the provision of independent legal advice to consumers entering into buy-backs and certification by solicitors that that advice has been given. The bill will prevent the transfer of property without the court’s permission when initial disclosure has not been made or when independent legal advice has not been provided. It will also ensure that the remedies against oppressive conduct in Part 5 of the bill apply to buy-back schemes. I am confident that those measures will reduce the attractiveness of buy-back schemes to financiers while enhancing the ability of consumers to understand the nature and risks of those transactions. I predict that that combination is likely to see that form of finance scheme leave the market. 
Another significant amendment made by the select committee is the inclusion of a hardship provision. Submitters from voluntary welfare and consumer groups sought the inclusion of a hardship provision in the bill equivalent to that contained in Australian legislation. The committee wrote to all submitters seeking their views on that. The Australian provision enables debtors to seek changes to credit contracts on specified grounds of unforeseen hardship such as the loss of employment or the end of a relationship that are considered to be good causes to allow debtors to apply for relief under a credit contract. If the creditor does not agree to the changes sought the debtor can apply for a court order. Most creditor submitters argued that the provision was unnecessary because responsible creditors following an approach from a consumer in unforeseen hardship would make the changes contemplated by the bill anyway. While I accept that I believe that the practice of responsible creditors should be made the standard for the whole of the credit market. 
Less reputable creditors are too quick to promote unnecessary and expensive refinancings rather than a simple variation to the original contract. The hardship provision is aimed at that sector of the market. The committee has ensured that the hardship provision has been carefully drafted to avoid abuse by debtors seeking to frustrate legitimate enforcement proceedings. For example debtors already in default on their payments cannot invoke the provisions in order to buy time. I am pleased that the committee has effectively balanced the concerns of consumers and creditors in its recommendations. 
Once again I thank all members of the select committee for the work they have put into this bill. It is a very timely bill that represents a worthy step towards improving the effectiveness of New Zealand’s core consumer legislation which is at the heart of an effective market economy. I commend this bill to the House. 
SANDRA GOUDIE (NZ National—Coromandel) 
: 
 There have been no major changes to our consumer credit laws since 1981 when the Credit Contracts Act came into force. Piecemeal development of the law over a lengthy period has meant that consumer protection is found in many laws such as the Hire Purchase Act the Credit (Repossession) Act the Door to Door Sales Act the Credit Contracts Amendment Act and the Personal Properties Securities Act which replaced the former Chattels Transfer Act and the Motor Vehicle Securities Act. I would point out that it was National that instigated a review of the credit contracts law in March 1999. 
While I was not a member of the Commerce Committee which was responsible for considering this bill I did have the opportunity to participate during some of the hearings of submissions. There has been fairly extensive consultation on the legislation with no fewer than six discussion documents. Some concern has been expressed about the necessity for a new bill as opposed to amending the existing legislation. However the need for greater disclosure and enforcement provisions has been recognised by many people and not least by creditors themselves. This bill does provide for greater disclosure. It puts in place enforcement provisions also has new provisions for hardship and of course the buy-back provisions have been added to the bill. 
However the immediate concern upon addressing this bill in its second reading is the absence of any clarity around the commencement date for the bill to become an Act. On page 7 of the commentary on the bill the select committee has recognised the need for a lead-in time for creditors given the varying compliance costs involved. Those costs are substantial and I will refer to them later. But the Minister may like to clarify the reason for adopting an Order in Council approach for determining the enactment time of the bill—the lead-in time required within the context of the bill. Eighteen months to 2 years was the lead-in time frame preferred by submitters but in the bill the provision is now for an Order in Council. So perhaps the Minister would like to clarify why a more specific time frame has not been set. [ 
Interruption 
] As my learned colleague says that could be addressed during the Committee stage. Maybe some more clarity will be given around that matter because it is of some concern. There are indeed a lot of compliance costs associated with the whole process so creditors do need a period of time in which to address them. For one submitter they were in the order of hundreds of thousands of dollars which is quite substantial. 
One of the worst aspects of the present law is the way in which interest payments are calculated when a consumer repays a loan early. The outdated and unfair rule 78 which has been banned in most other countries still applies. It means that even if people repay their loans very early they will still be liable for almost all the interest costs. Consumers are therefore effectively trapped in loan agreements because even if they find a better deal they cannot afford to change finance companies. So the decision to abolish rule 78 is a positive step. In future there will be limits on how lenders can charge interest and on the types of fees that can be imposed. 
The disclosure requirements seem to be at the very heart of many of the problems with the current credit contracts regime. Stricter disclosure requirements would result in the consumer and the lender being better informed. Disclosure requirements should therefore be improved so that consumers do understand their obligations. Loan documents will in future provide more information so that consumers can understand them better. For example lenders will be required to state clearly whether there are penalties for early repayment and model forms are to be provided in the legislation in order to assist lenders. That is a crucial issue. For most people it is too late once they have signed the documents; they will be stuck with the contract. They therefore need to be very clear about the full implications of a contract before they put pen to paper. 
As one submitter said the starkest way to bring home to consumers the meaning of a credit contract would be to have nothing on the first page of the contract other than the total sum payable in large black letters. I cannot think of a more sensible approach with regard to many of the people who enter into such contracts. However failing that simple language should be used. The provision of independent legal advice to borrowers and guarantors would be incredibly helpful but many of them could not afford that. 
The select committee considered requiring the identification of the full costs of any contract that is entered into and the discussions around that have been reflected by adding a definition of “full costs” to clause 5. However that wording does not appear to have been acted upon in the rest of the bill in terms of the disclosure provisions. A requirement to disclose the full costs of a deal that is being entered into has not been provided for in the disclosure provisions of the bill. Perhaps the Minister would care to take a call and give us an explanation of that or perhaps it could be addressed and any changes made in the Committee stage. We will certainly look forward to the Minister doing that. 
It is to be acknowledged that currently lenders and borrowers already negotiate and vary contracts in certain circumstances. However a hardship clause that is similar to section 66(1) of the Australian consumer credit code has been considered and to some degree included in the bill’s provisions. It does allow consumers to apply to the lender to vary the terms of their contract if they cannot meet their obligations in some very legitimate and reasonable circumstances. Two of the most common ones are illness or unemployment. This is an opportunity to ensure that where there are constraints on a person being able to fulfil his or her obligations but the person still wishes to remedy that and to make some arrangements they now have the opportunity to do that through this bill. 
A consumer credit contract is defined in clause 9 as being one where a debtor enters into a credit contract primarily for personal domestic or household purposes. I did note in the first reading of the bill that the words “domestic and household” were both included in that definition yet have practically the same meaning in the dictionary. I am interested to see that that still applies in the second version of the bill. I do not understand why that is the case and I ask why one of those words was not dropped out. I do not think any of the submissions addressed that matter. 
Clause 13 outlines those contracts that do not fall within the consumer contracts provision and Subpart 2 deals with the disclosure requirements. There are also one or two new additions to the bill. Those are the measure concerning buy-back schemes and the hardship provision which I have already mentioned. 
Finally there was an assertion in the preface to the original version of the bill that compliance costs would be no greater and maybe even less than was expected. However that is an extraordinary assumption. The compliance costs of this bill are incredibly substantial. I cannot understand why the compliance cost report was not carried over into the bill so that more consideration could be given to the length of and the need for certainty around the lead-in time of this bill. To suggest that compliance costs may reduce when a creditor or lessor essentially has to take a number of actions—have a compliance programme whereby employees and agents have to follow procedures implement automated procedures ensure there are methods in place to systematically identify any deficiencies in the effectiveness of the programme and promptly remedy any deficiency discovered—defies belief. After stating all that to then make an assumption that the compliance costs will not be very great or will be significantly reduced is absolutely ludicrous in the extreme. Once one has been made aware of the provisions of the bill one has to be aware of the increased compliance cost for the creditors who will be affected by this legislation. 
The matter raised by the Accident Compensation Corporation with regard to privacy has not been addressed but may be at the Committee stage. 
MARK PECK (NZ Labour—Invercargill) 
: 
 First I congratulate the Commerce Committee on the good work that it did on this bill and on two others that were reported back on the same day. I know I cannot refer to other bills that have been reported back but the Commerce Committee is a very busy committee and— 
Darren Hughes 
: A very good committee. 
MARK PECK 
: Well it is a very good committee. I also recognise that Darren Hughes is a member of that committee which is probably one of the reasons that it is such a good committee and gets through its work in a timely manner. 
This bill is quite a major piece of work. It does replace a number of statutes—the Hire Purchase Act the Credit Contracts Act—and consolidates them into one piece of legislation. The submitters were quite keen on that as it now means that we can essentially find our way through the credit contract law within one Act. That is a good thing—and it is about time it was done. 
For the record I also note that Sue Bradford was a member of the committee. Sue Bradford has long been a tireless worker on behalf of the oppressed and downtrodden and she was certainly there providing a voice for them—along with her Labour colleagues I might say who put a lot of effort into making sure that the interested consumers were well represented at that committee. 
I congratulate John Tamihere on uncovering the scam involved in the buy-back schemes. As a result of the work that he did the Minister of Consumer Affairs presented us with a Supplementary Order Paper. I congratulate her and her officials on getting that work to the committee in a timely manner as it was a major piece of work. There was a lot to consider as we went through the bill. Getting that Supplementary Order Paper included in the bill involved quite a bit of footwork but it was nicely manoeuvred along the way. That is one of the reasons that I do want to congratulate other members of the committee as well. There was unanimous agreement that the buy-back schemes needed to be dealt to. I do agree with the Minister’s speech when she said it is likely that that form of credit will disappear as a result of the provisions that are to be put into place by this legislation. 
I do not want to speak at any great length on this matter. This bill is good legislation that will protect the interests of consumers. It will also enable consumers to become informed at the time that they enter into contracts and it provides very clear transparent rules for charging interest fees calculating balances and things of that ilk. This is a good piece of new law and I look forward to its rapid progress through the House. 
DAIL JONES (NZ First) 
: 
 New Zealand First will broadly be supporting this legislation. There are two or three matters that need to be tidied up which hopefully the Government will respond to at some stage. Brent Catchpole the New Zealand First member of the select committee worked particularly hard on this bill. 
Mark Peck 
: He is a very good member. 
DAIL JONES 
: As Mr Peck has said he is a very good member. He is on another select committee at the moment having been I think in Christchurch this morning and back in Wellington this afternoon. It is unfortunate that he could not speak to the bill because I am sure he would do a much better job on it than I am about to do—although I spoke in the first reading and have a broad idea of what is involved in this legislation. 
I see that the Consumer Credit Bill was reported back from the Commerce Committee on 5 August. It went there a little while ago and has come back very promptly and the select committee as a whole is to be congratulated for its endeavours. It was called the Consumer Credit Bill and as I understand it it is now to be called the Credit Contracts and Consumer Finance Bill. So anyone looking for it will get the idea that to some extent it has gone back to the name it used to have—the Credit Contracts Act. But it is now called the Credit Contracts and Consumer Finance Bill and although it says 2002 it will become 2003. 
 One of the areas of concern already mentioned by Sandra Goudie of the National Party is the commencement of this legislation which is very unclear. The commencement as shown in clause 2 states that certain parts of the bill will come into effect when it receives the royal assent other parts when it receives the royal assent and “on a date to be fixed by the Governor-General by Order in Council” and a third section also “on a date fixed by the Governor-General by Order in Council.” 
It would be much more satisfactory for the commercial community and the public generally to know precisely when this bill will come into effect. A tremendous amount of software change will be required to give effect to this legislation and one of the important things about law is certainty. Leaving the commencement as it is will mean members of the commercial community working flat out so that they are not caught out by legislation that might suddenly be introduced in 3 months’ time—only to discover that they have changed everything but the bill does not become law until 12 months later. Certainty is important and during the select committee stage I am sure that other members of this House and other parties in this House will join New Zealand First in setting a date by which those particular sections of the Act are to come into effect. That will avoid uncertainty and a waste of time and costs for the people who have to implement this legislation. 
I was interested to read the Consumers Institute’s submissions. It is always very useful to look at certain highly regarded bodies in particular areas and the Consumers Institute is always a leading body in this area. It was concerned about enforcement procedures when dealing with disputes tribunals guarantors and suchlike. 
Overall I think that the committee has responded well especially with regard to the hardship provisions—something that appears to have been taken from Australian legislation but there is no reason that they should not apply to New Zealand. One of the problems with hardship provisions though is that granting relief to people when they never have any way of getting out of the hole they are in makes it even worse when the day of reckoning comes. I hope the people who apply the hardship provisions contained in the bill bear that in mind and do not automatically grant relief when they are just making it worse for borrowers. As far as lenders are concerned their security or amount owing gets greater and the degree of security is reduced as well. That is something to keep a close watch on. 
With this type of legislation I always look at the views of the New Zealand Law Society and perhaps a Government member will explain to me why the society’s suggestion that the “annual interest rate” be redefined was not taken up. In paragraph 3 of its submission the society stated: “The bill is apparently designed to simplify the concept of the annual interest rate annual interest or finance rate. It does this by defining ‘annual interest rate’ as ‘a rate specified in the credit contract as an annual interest rate’.” 
 That does not take us terribly far. The Law Society states: “This is problematic because it allows a creditor to decide which if any charges and fees to include in the definition which in turn defeats the purpose of facilitating meaningful comparisons between competing credit arrangements.” It refers to the ministry’s consultation document and in looking at the question of the annual interest rate it looks at schedule 1 and the way in which Parliament has prepared key information concerning consumer credit contracts. References are made in schedule 1 to the annual interest rate but apart from a couple of words being changed there do not seem to be many amendments to that schedule. I wonder whether the select committee has done enough to clarify the problem suggested by the Law Society but no doubt we will hear further if problems arise in that respect. 
The question of advances is an interesting one. Various suggestions were made as to the definition of “advances” and I am sure that people will take the matter into account. No change was made to the definition of “cash price” which I thought was a little strange but I guess that will become clearer later on. 
One of the important definitions put into the bill which I am sure all people in the finance industry will be interested in is a clearer definition of “credit contract” in clause 6A. It deletes the reference to “credit contract” in the interpretation clause and puts a special definition of “credit contract” into that provision. 
Members have already mentioned the buy-back provisions which is not a new area. In all of those fields I think it is important that an independent lawyer looks at the whole situation. Unfortunately many of those affected have borrowed far too much and are heavily encumbered. One hopes that there will be a lawyer about who will take the time to look at the proposal because sometimes the documentation is very expensive and the people involved in the buy-back do not have any money with which to do it. The appeal of a buy-back situation is usually that people do not have to outlay any money and on the face of it all it sounds good until they are caught up by the whole transaction. 
Clause 32A requires a creditor to ensure that the contract specifies the annual interest rate or rates and is probably linked up with the Law Society’s suggestion. It seems a strange place to put it but that is where it is—under “interest charges”—and to some extent it will be a matter to take into account with the earlier point I made. 
On the whole this is a very technical bill to do with credit contracts. If anyone out there remains concerned about the way the legislation is drafted I am sure all members of Parliament will be extremely interested in trying to take the matter further. 
PAUL ADAMS (United Future) 
: 
 I love lawyers like Mr Dail Jones. They go through the legislation and I really appreciate them doing that. But being a simple man I often find that when I go to see a lawyer about these types of contracts I come out more confused than when I go in. I mean no disrespect or anything by that—we need lawyers. 
This legislation is well overdue because over the years society has changed tremendously. I remember that when I was a young boy I had only cash in my pocket. It was quite simple—when it ran out it was finished. Nowadays however the young ones have the advantages and it is progress. It has been fantastic how electronic transactions have come on and that we can look at our finances on the Internet and all of those other things. It is good but likewise it has also become very easy for anybody to over-borrow. As it is often said: “If the incoming is not greater than the outgoing the shortfall will be your downfall.” 
I believe that financial pressure is one of the greatest pressures that one can live under. Those who have creditors knocking on their doors all of the time and have no ability to pay leave themselves open to the unscrupulous people in finance industries who prey upon those types of people. Because people are under pressure they are unfortunately more interested in obtaining the cash required to alleviate their immediate problem than standing back to see what the transaction will cost them. I welcome the fact that this bill requires greater transparency so that those borrowing the money will have the cost of the transaction clearly laid out before them. A small difference even in the interest rate at the point when people borrow the money can make a huge difference over the course of a loan. Just adding a few extra dollars per month to the payment on a 25-year mortgage can end up at thousands of dollars at the end of the day. 
One of the main issues is providing information to borrowers—not only at the beginning of the contract but also as the contract progresses through its term. People should be informed of these things. In the current market we see interest rates fluctuating on an incredibly regular basis. The days of signing up a mortgage for 25 years at a fixed rate for the term of the contract is long gone. Interest rates will alter at least every 90 days. Unscrupulous lenders tend to focus on those less able to pay what is necessary. I share Dail Jones’ concern about people having good legal advice so that they really do know what they are letting themselves in for. 
Internet transactions are recognised in the bill and I welcome that as this is the age we are going into. Within a short period of time most transactions will no longer be done by cash or possibly even by cheque but will become electronic. 
The high cost of interest on credit cards concerns me. I am not dead sure how these will be looked at as they alter according to the borrower but I trust that provisions will be in there. Lately I have been asking people whether they know the interest rates they are paying on their credit-card borrowings which can be 18.75 percent or higher. I have been amazed at the number who do not recognise the cost to them of those transactions. Interest seems to be a small amount when people pay it on a weekly or monthly basis. However over the years of a contract it is an incredibly large amount of money. 
In relation to the concerns about the compliance costs additional software will be required but that is just part of life these days. As things progress software always has to be updated. 
United Future is very supportive of this bill especially now that it brings in buy-back schemes. The only concern I have about those schemes is that the penalty for an offence will be up to 3 months’ imprisonment and/or a fine not exceeding $200000. Let us think about this a little bit. In many cases buy-back schemes concern the elderly who perhaps have freehold homes. All of a sudden they are told that a family member or somebody like that needs some cash and they are asked to just sign on the dotted line and not read the papers or know the full story. They then find that they have sold their houses and are now renting them and all of a sudden—a few years down the line—somebody comes knocking on their doors to take their homes away. Nobody in this House would find that acceptable. That is white-collar crime at the extreme. 
When I read that the penalties for theft by a servant which is an employee robbing his or her employer I would have to rate this type of offence in at least that league if not worse. I personally would like to see the maximum penalty for it increased to the same as for theft by a servant which is 7 years’ imprisonment. 
Dail Jones 
: Family members would have to be imprisoned as well. 
PAUL ADAMS 
: That may well be the case but that is a maximum sentence. A 3-month maximum sentence is far too short. The judiciary should have the ability to weigh up various situations and impose a maximum penalty of up to 7 years. The judiciary would have the wisdom to be able to do that. 
United Future welcomes this bill. We support it and commend it to the House. 
SUE BRADFORD (Green) 
: 
 The Green Party welcomes the Consumer Credit Bill back to the House for its second reading and is pleased that this useful and socially reforming legislation is being enacted in a much more timely manner than some of the other bills we have dealt with in this Parliament lately. 
The Green Party has been keen to see improvements in controls and accountability in relation to lenders particularly those operating at the third tier or bottom end of the market. For a long time debt has been identified as one of the main factors in the ongoing reliance by beneficiaries and other low-income people on both food banks and on that endless cycle of recoverable and non-recoverable supplementary assistance from Work and Income. Debt entrenches poverty and exacerbates the problems of individuals and families already having a hard time surviving. Debt has got out of control in this country and for those least able to obtain it and least able to understand the conditions under which they are obtaining it there has been far too little protection against the degradations of exploitative lenders. Many examples of this have littered our daily newspapers over recent years. 
This bill was the product of an extensive review of consumer credit law undertaken over 2 years between 1999 and 2001. I think that the overall support for it from a broad and diverse range of submitters during the select committee proceedings was an indication that the consultation process has worked pretty well. A large number of amendments were made during the select committee process many of them technical with others going to shore up and strengthen the intentions of the bill. 
The Green Party was particularly concerned to make sure that some hardship provisions were included in line with legislation like the Australian consumer credit code. We were disappointed that hardship provisions had been omitted in the first draft of the bill under consideration. We were therefore delighted that the select committee and the Government in particular saw fit to support our call and that of a number of submitters to incorporate hardship provisions in the revised bill as reported back to the House. With the addition of these provisions the bill now provides for far more adequate protection for people who suddenly or unexpectedly find themselves in difficulty and need some tolerance from creditors so that they can for example pay off what they owe over a longer period. We believe that this is a better situation from the perspective of both debtor and creditor. Creditors have a greater likelihood of recovering what is owed and debtors do not face having goods repossessed and a black mark on their credit rating as long as they can make good the loan over the longer renegotiated term. 
The hardship provisions that we have supported include ensuring that someone who becomes ill is injured loses his or her job or suffers the ending of a marriage or similar relationship can apply to the creditor to change the terms of his or her contract with the creditor. The bill makes it clear that such an alteration to the contract must be fair to both creditor and debtor and I really do not think that fears held by some submitters from the lending community in this area will come to pass. After all many reasonable creditors are already willing to renegotiate contracts in these types of situations. What the revised bill is doing is ensuring that this opportunity is afforded right across the board instead of just to some. 
When we first looked at the bill we had several other reservations besides the hardship clauses. One of these was in the area of small business. We felt that small-business people needed as much protection as anyone else when taking out loans especially given that many of them are on the same low incomes as personal borrowers. However during the select committee process I was convinced by the arguments of officials that most small businesses would be disadvantaged if they came under the new Act because the cost of credit would be higher due to the greater compliance costs associated with consumer lending and that the small-business people with whom they consulted understood this and did not want to be included under this legislation. 
Another area of concern for the Green Party originally was around the definition of “oppressive contract”. We felt that the definition of “oppressive” was too narrow and should have been broadened to include a wider and more explicit range of factors. However again I was persuaded by advice given to the committee that the meaning of “oppressive” has been subject to considerable judicial interpretation and that what has been lacking has been the ability of ordinary consumers rather than commercial borrowers to take action against oppressive lenders. I see that Mr Jones is nodding. I think he understands the situation. 
This bill gives the Commerce Commission additional enforcement powers so that disputes can be heard in the regular court system and the commission itself will be able to take proceedings on behalf of consumers. I hope that this will indeed help the development of good case law around the meaning of “oppression” as it relates to individual borrowers as well as upping the ante considerably and stamping out the worst practices of certain lenders. 
I turn now to the new section of the bill dealing with buy-back transactions. The Green Party is delighted that the Government had the will and the capacity to act quickly enough on this to incorporate a new section dealing with the land and housing buy-back scams that have been perpetrated against hundreds of unsuspecting people in recent times. We believe that the State does have an obligation to protect the vulnerable and people are never quite as vulnerable as when they have their homes stolen out from under them by quasi-legal fraudsters. Some of the interest rates and charges found under the buy-back scams make even the worst of third-tier lenders look pretty good. Thus we welcome the addition of amendments to this bill which include ensuring that independent legal advice will be given to protect occupiers involved in buy-back transactions; that consumers will be offered as much advice as possible about the dangers of these schemes; and that there is full disclosure at every step just as in any other credit contract. 
I believe that this bill will go a long way towards ending some of the worst excesses scams and frauds that have been perpetrated on large numbers of New Zealand people. I look forward to its being signed into law in the very near future so that the much fuller protection it provides will be afforded to all who need it as soon as possible. 
LINDSAY TISCH (NZ National—Piako) 
: 
 I will take just a brief call on this very important legislation. First I want to refer to the background of this bill and to what was in place before it came into existence. The first page of the explanatory note of the bill takes into account the fact that many of the concepts of the Hire Purchase Act of 1971 and the Credit Contracts Act of 1981 are out of date—and that is fair comment. So what this bill aims to do is to bring them up to speed and to change them. But if we look at the content of the bill and we go back to the original Credit Contracts Act which I want to quote from we see that that Act and what we are talking about today are very very similar. 
 The objectives of the current Credit Contracts Act which this new bill is supposed to replace are: “(a) Prevent oppressive contracts and conduct; (b) Ensure that all the terms of contracts are disclosed to debtors before they become irrevocably committed to them; (c) Ensure that the cost of credit is disclosed on a uniform basis in order to prevent deception and encourage competition; and (d) Prevent misleading credit advertisements;”. So the point I am making is what is different in the new bill that we are talking about today from what is already in the current Credit Contracts Act? 
It is interesting to look at the submissions that came to the select committee. I want first to look at the Law Society’s submission. Dail Jones mentioned the Law Society. When the society analyses these bills it scrutinises them very closely. Some of the points that the society made I think are very important. The bill is designed to repeal the Credit Contracts Act which is outmoded because of technological changes computerisation and financial deregulation. That is fine; we all appreciate that and we can work with that. The bill also adds a modern framework to the way that people will be able to do business. It generally applies to credit contracts entered into by people primarily for personal domestic or household purposes. But the real concern I have is that the bill does not cover business applications. We looked at some of the business submissions that came through and I will pursue those areas further during the Committee stage. 
A lot of people who are sole traders are borrowing money—they are getting credit. But one does not know whether they are borrowing it for personal use or for business use. A huge number—85 percent—of businesses in New Zealand are small businesses and most of them primarily are sole traders or sole proprietors. They are not partnerships or companies. It is very difficult to distinguish whether the money borrowed is for personal purposes or business purposes. That is an area that I want to pursue during the Committee stage. 
Some of the other major reforms include limits on the interest to be charged and clarifying that the debtor has a right to pay out the contract at any time—the full repayment—while allowing the creditor to recover a charge that does not exceed a reasonable estimate of the loss suffered on a full repayment. Those areas have been included in submissions and that is fine. 
One of the other areas that I think is important is the time frame to implement this bill. The original bill was to come into force on receiving the royal assent but this has been extended out. Business people have said—as has the Law Society—that because there will be major changes to the way this bill will be implemented then at least 12 months would be appropriate. In fact the bill achieves that and we are certainly supportive of that. 
I draw the House’s attention to a couple of areas that I want to look at during the Committee stage. The first is the cancellation of a credit contract on return of defective goods. The view has been that the bill should have been amended to provide for the release of debtors from a credit contract under the return of defective goods which comes under the Consumer Guarantees Act. But unfortunately the select committee did not accept that so during the Committee stage I will be pursuing the reason that provision was not accepted. 
The next area that I think is important is clause 13 the definition of credit fees. Credit fees should be and should include all fees or charges that are payable. A lot of people who borrow money will have add-ons. I am not talking only about the interest rate; there are also setting-up costs associated with borrowing money. There may also be insurance charges included. When I borrow money at an interest rate of say 10 percent but there are other charges associated with it then the true rate of borrowing is a lot higher. In fact it could be 30 percent. This bill does not accommodate that. I think that when we are talking about the total costs of what we are in for I will be asking some further questions. 
Another area that I think is significant is what happens with variations of existing contracts. Part of the work that I did in my previous life before coming here involved the restructuring and refinancing of businesses. One of the areas that we looked at very closely was how we could help a proposition. A lot of it revolved around money restructuring and refinancing. With that in mind I looked at variations of existing contracts—variations to lease arrangements maybe or maybe variations to mortgages that somebody had. In my time as a farm appraiser with the Rural Bank we did a lot of variations of existing mortgages. One of the areas that the Law Society said we should look at was that full disclosure should be required if any additional costs are incurred by the debtor through a creditor’s variation of a contract. That is an area that I think needs to be looked at further. The bill does not accommodate that. There is a huge market out there in the area of restructuring that looks at variations of existing leases existing mortgages or whatever. 
Another area that I think needs to be looked at is what happens with leases. There is a huge market now in leasing and there are many types of leases. There are variable leases and full operating leases. Leasing cars spring to mind. Over the years I have always leased a vehicle and huge mileages have been clocked up. I have had the opportunity to run a leased vehicle on a percentage—a monthly payment that included GST. But at the same time I have always had the option of a full operating lease that covers insurance repairs and maintenance registration and the like. So that is an area that needs further looking at. 
Of course there is a huge lease market now and not only for people in business who are looking to lease whether it is vehicles cellphones computers or other equipment; private individuals have moved into the area of leasing. They can lease vehicles for maybe $300 or $400 per month as opposed to buying a new vehicle that may cost them thousands of dollars. So a leasing option becomes increasingly important. National is supporting this bill. During the Committee stage we will put some questions to the Minister to fine-tune it and to get a better understanding of the implications of the bill. 
Bill read a second time. 
Name changed to Credit Contracts and Consumer Finance Bill





. 
Reserve Bank of New Zealand Amendment Bill 
Third Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Reserve Bank of New Zealand Amendment Bill be now read a third time 
. Obviously the bill amends the Reserve Bank of New Zealand Act. It makes some changes to corporate governance arrangements for the bank and the financial system oversight provisions that have been listed by the bank. Part 3 of the principal Act deals with the governance arrangements for the Reserve Bank and the changes in this bill arose from the review of monetary policy conducted in 2001 by Professor Lars Svensson. The bill provides for the Reserve Bank board to have a non-executive director as chairman elected by the board itself. This will enhance the board’s ability to monitor the bank’s performance and strengthen the director’s accountability for the performance of his or her duties. Part 4 of the principal Act restricts the use of the words “bank” “banker” and “banking” in a name or title. Those restrictions are aimed at preventing non-bank financial institutions from passing themselves off as registered banks and so misleading the public. The amendments to Part 4 are intended to rectify the problems that have arisen while still allowing legitimate non-bank financial institutions to continue offering and promoting banking products and services. 
Part 5 of the principal Act deals with the registration and supervision of banks and the management of bank crisis situations. The amendments in the bill are designed to strengthen the Reserve Bank’s ability to deal with those matters. The bill also adds new Part 5B to the principal Act. This new part clarifies and makes explicit the Reserve Bank’s role in overseeing the payment system in New Zealand. The new provisions allow the bank to collect and publish information relating to payment systems. New Part 5C provides for the finality of payments settled through a designated payment system and for the validity of netting under the rules of a designated payment system. It also makes the rules of a designated system valid and enforceable to the extent that they are relevant to payments finality and netting. Although payments through designated systems will be protected the underlying transactions that give rise to the payments will still be subject to challenge from a liquidator. It will still be possible also to take action against a party if it acts dishonestly or fraudulently. A wide variety of different payment systems are potentially eligible for designation including CLS Bank a system for the settlement of foreign exchange transactions and domestic payment systems. This bill has been dealt with on a multipartisan basis throughout its passage. It is supported I think by all parties in the House. I particularly welcome the input from the Finance and Expenditure Committee including of course the former governor of the Reserve Bank Dr Brash. 
Dr DON BRASH (NZ National) 
: 
 I shall make only a very small short comment. I express my appreciation to the Minister of Finance for his efforts at making this a multiparty bill. As he pointed out I was governor of the bank when this bill was first introduced into the House. Prior to its introduction the Minister was diligent in talking to all the major parties in Parliament. He sought their agreement to what he had decided to do. He got that agreement and this bill therefore reflects that consensus. It goes back 13 or 14 years when we first got a broad parliamentary consensus in favour of a structure for monetary policy in New Zealand and it is a tremendously positive development that that multiparty cross-parliamentary support has been continued in this way. I register my appreciation for the Minister’s efforts. This is a precedent that we should certainly be continuing. 
CLAYTON COSGROVE (NZ Labour—Waimakariri) 
: 
 As chairman of the Finance and Expenditure Committee I follow on from the Minister and Dr Brash by expressing my appreciation especially in respect of the committee which tends to be reasonably political most of the time. This was an example of true bipartisanship and so it should be for this measure. In particular I thank Dr Brash for his expertise in assisting the committee with this legislation. One of the major issues we dealt with was as Dr Cullen has said the use of the terms “bank” “banker” and “banking”. We were struck with a position where we did not want to restrict as Dr Cullen has said legitimate financial institutions that were non-registered banks such as credit unions and building societies. On the other hand we wanted to provide some belts and braces some integrity and security for people who were wanting to engage in legitimate banking activities but did not want to be ripped off by sharks as it were who were pretending to be banks. Mr Donald provided some assistance in trying to gain some clarity especially in respect of the definitions of those terms and I thank him for that. We have put in a disclaimer so that building societies and others have to make it clear that they are not registered banks but they can use those terms because they are engaged in banking transactions and activities. I conclude by thanking the committee. Dr Brash took us through quite a good analysis of the designated payment system and I acknowledge that. This is a sound bill. It does provide some further integrity to the Reserve Bank as an institution in this country. 
CRAIG McNAIR (NZ First) 
: 
 I do not want to spend too much time on this bill but I will just briefly thank my colleagues on the Finance and Expenditure Committee. It is always a little bit different in Parliament when all the parties in the House are supporting a bill together. I do not want to say too much apart from the fact that I am glad that there are amendments that will strengthen the powers of the bank register banks and supervise registered banks. I will go through a few points and then sit down. The amendments will allow the bank to consider extra information when registering banks; improve the bank’s powers to investigate and direct banks that are in financial difficulty or which are failing to meet disclosure requirements; improve supervisory abilities to obtain information; improve the bank’s ability to deal with bank failure; and update offence and penalty provisions. New Zealand First supports this bill. We believe that it is a good bill to vote for. 
GORDON COPELAND (United Future) 
: 
 I too would like to make just a brief comment on the third reading of this bill. Firstly I acknowledge that New Zealand truly has a world-class institution in the Reserve Bank which I know has gone through a number of evolutions. I think it is good to pay tribute to the former Governor of the Reserve Bank Don Brash for his contribution over the years he was there prior to coming into this House. 
This is a good bill. It acknowledges the importance of the bank’s prudential supervision over the New Zealand financial sector which is tremendously important to all of us and it provides for a new international payment settlement system which I think is a step forward. So it is with great pleasure that we support this bill. We wish the new Governor of the Reserve Bank Alan Bollard and his staff all the very best. We thank them for the contribution that they make to the country. 
STEPHEN FRANKS (ACT NZ) 
: 
 Although I have not previously been engaged on this bill I rise for the ACT party and it is with some concern that I do so. There is a provision in this bill that authorises the Reserve Bank when deciding on an application for registration to have regard to the home jurisdiction of the bank and to have regard to the recognition and priorities of claims of creditors or classes of creditors in the event of the insolvency of the applicant. What that provision says covers or addresses is a matter that has been worrying our Reserve Bank for years. It is a matter that the Government has known about for many years. It is a matter that has probably been the topic of secret representations and discussions between the Australian Government and Labour Ministers for some time. It is a matter that shows the degraded and weak position that this Government has brought New Zealand to in relation to Australia because that clause is the best that this Government can do to remove one of the gravest threats facing the New Zealand financial system which the Reserve Bank has known about for many years which a Deputy Governor of the Reserve Bank drew to New Zealand’s attention in July 2001 and which no Government has had the diplomatic or political clout to deal with. 
Section 13A of the Australian Banking Act says that in the event of a collapse of an Australian bank Australian depositors get paid first and there is no definition of “depositors”. In effect it says that Australians have a first mortgage and everyone else comes second or nowhere. This bill should have been the chance for the Government to fix that. In July 2001 I urged the Government to deal with it as a matter of priority. For a start I urged that it should include a provision that would enable the New Zealand Government to freeze assets of Australian banks and Australian businesses in New Zealand at least until we knew that we would get fair treatment along with the Australian depositors or until we knew that we would be given a place at the negotiating table to work out what would happen in the event of an insolvency in Australia. 
Those are not fanciful recommendations. The Deputy Governor of the Reserve Bank said in 2001 that that is a risk the system should be providing against. Almost uniquely our regulatory system for banks relies on overseas regulators. We recognise that what happens here will not be controlled by what we do; it will be controlled by the way the insolvency is dealt with in Australia or wherever else the bank is headquartered. 
That provision should have had something with teeth in it to ensure that the Australians by whom our system is dominated could not simply take the money and leave us to—in the rural phrase—suck the hind tit because that is what the law of Australia provides and so does the law of the United States but not the law of the United Kingdom. Why is that significant? Because the National Bank of New Zealand is effectively controlled from the United Kingdom which internationally probably has the best and longest experience of banking and which does not do something as silly nationalistic and as potentially damaging as to claim a preference for its citizens over the other creditors of a bank. 
That leads us to what this Government should be doing today and to what this bill should be doing. We should not be passing this bill because this may be the best and only chance for the New Zealand Government to say to the Australians: “Transaction declined.” Until the Australians come up with a law change that says that New Zealanders will be treated on an equal footing with the Australians—if our banking system is to be utterly dominated by Australia—the National Bank should not be sold to an Australian bank. If this Government were looking after the interests of New Zealanders and if it were thinking about what would happen in the event of Australia’s tangent heading off in a different direction from ours it would be saying to the Australians right now: “We would allow your applications to go through the competition law process but only if we knew that at the end of it Australian law would treat New Zealanders fairly and equally.” 
The Government has one chance now; there is some leverage. Clearly the Australians have got their hooks out for the National Bank. We learnt this morning that the ANZ had applied to the Commerce Commission for authority to buy the National Bank and this Government and this bill should be saying immediately and publicly that the Australians should truck off until they have fixed their law. 
 We are woefully over-exposed already to the financial sentiment of the Australian banking sector. When I worked with banks if the Australians had a drought and there was some rural depression the word would go out: “No more lending to farms.” It did not matter what was happening in New Zealand. It would be a system-wide instruction that suddenly farm lending had become risky and we would see a contraction in New Zealand. That is certainly what the bank managers told us. I do not know whether it was the case but it was certainly the way they explained what used to happen in the case of otherwise irrational restrictions on New Zealand business. 
But that is a matter that competition law should deal with. Conspiracies or the possibility of conspiracies in the clubs and the offices in Melbourne and Sydney are something that the competition authorities should take account of but this is clearly something for the Government. The Government should now say that the most serious risk of Australian depositors being paid first and of New Zealand with absolutely no leverage being left watching wistfully from the outside as an Australian bank mess is cleaned up should be dealt with by the Reserve Bank Act having adequate powers to hold its own pistol at the people who would otherwise benefit from the Australian law. 
We should have a simple provision that said that there was the possibility of a freeze until the Australians acknowledged the claim of New Zealanders in regard to any last-minute sums whipped out of New Zealand to the central treasuries in Sydney and Melbourne any mysterious accounting and any problem with the computer system and showing who owned what—all of which would occur in the event of an Australian collapse. There should be no question of the National Bank being sold or of it increasing the concentration of assets held in New Zealand by the Australian banking system until that is done. 
I say to Dr Cullen that it is quite simple. He has known about this since I wrote to him. Let me read Dr Cullen the question. [ 
Interruption 
] It was well before that. I am sure he did. 
Clayton Cosgrove 
: Why didn’t the member raise it at the committee? 
STEPHEN FRANKS 
: Clayton Cosgrove knows I was not on the committee. 
Hon George Hawkins 
: Why didn’t Mr Hide raise it? 
STEPHEN FRANKS 
: Government members are now asking why someone else did not do their job for them. Clayton Cosgrove says that it is serious so why did someone not do it? Let us have a look at when it was raised. The Government knew about this from the Opposition in August 2001. My question to the Minister of Finance was: “Is the Government satisfied it could set off the liability of Crown agencies and entities and State-owned enterprises against debts of Australian banks or subsidiaries of Australian banks in the event of financial stringency affecting an Australian bank in which the Crown could otherwise be adversely affected directly or indirectly by the operation of section 13A of the Banking Act (Australian)?”. Dr Michael Cullen replied: “The Crown is not responsible for the debts of Crown entities and State-owned enterprises.” 
I gave up at that stage. When I heard from Dr Cullen in his own written answer that the Crown is not responsible for the debts of Crown entities I thought that that man did not know a thing about banking. He does not know a thing about finance. He has never negotiated anything. He has never paid anyone out of money that he has earned himself. He has never employed anyone. That man is in charge of our financial system and he is putting forward a bill that does not deal with the prospect of the Australians having in effect a guaranteed subordinated capital. In fact I wonder whether under the banking capital adequacy rules they might even be able to treat New Zealand deposits as in effect a form of second-tier capital because that is where we will rank. That is a funny prospect but he should look at it. 
What this bill should be doing is very clear. Instead what is happening is that patriotic but misguided New Zealanders are asking whether they can put together a syndicate. Men like Phil Verry whom no one should trust and who is getting headlines because everyone is too scared to tell the truth about his activities are at least speaking up and asking where the New Zealanders are who would keep that asset in New Zealand hands given the risks to New Zealand and its financial system of our entire banking sector ending up with all the decisions made in Melbourne and Sydney. 
That is a risk that Dr Cullen knows about but having sacrificed all goodwill with the Australian Government having reneged on defence commitments and having unilaterally abrogated our immigration accord understandings with the Aussies he has no negotiating power with them; he now gets an opportunity with a bank for sale that has been the best run and the most profitable in New Zealand but he does not have the nerve to tell the Aussies they cannot have it. 
Bill read a third time. 
The House adjourned at 5.20 p.m.